oversight

District of Columbia: Status of Efforts to Develop a New Financial Management System

Published by the Government Accountability Office on 1997-07-09.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Accounting and Information
      Management Division

      B-277023

      July 9, 1997

      The Honorable Lauch Faircloth
      Chairman, Subcommittee on the
        District of Columbia
      Committee on Appropriations
      United States Senate

      The Honorable Charles H. Taylor
      Chairman, Subcommittee on the
        District of Columbia
      Committee on Appropriations
      House of Representatives

      Subject: District of Columbia: Status of Efforts to DeveloD a New Financial
               ManGement Svstem

      The Conference Report for the 1996 District of Columbia Appropriations Act
      Cpublic Law 104134) stated that GAO was to monitor Distict government
      efforts to acquire a new fmancial management system. Consequently, we have
      been providing comments and periodic brief@s to congressional and District
      officials on the acquisition effort. This letter responds to your request that we
      provide a status report summarizing our views on the District’s progress to date.

      BACKGROUND

      In 1976, the Congress created the Temporary Commission on F’inancial
      Oversight of the District (Commission) to develop and implement a core
      financial management system. This system, put in place in October 1979, was
      designed to perform primarily budget and accounting functions.

      According to its own report, the District has made limited modi&ations to its
      core financial management system and has provided little txaining to the
      employees who use the system.l Also, since the current system cannot perform
      all functions necessary for related programmatic objectives, the District has
      created additional systems to meet its needs. These are commonly referred to


      ‘CaDabilities Assessment of the F!inancial Management Svstem, December 1996.
      1                 GAO/AlMD-97-1OlR     District’s l?i.nancial Management System
B-277023
as “feeder systems.” For example, the Business Tax Information System was
created to capture and monitor the payments associated with business taxes.
These feeder systems contain information needed for financial management, but
operate outside of the current core financial management system. Accordingly,
an interface (either manual or automated) is required for the core financial
management system.

Given the long-standing problems with the District’s financial management, we
recommended in June 1995 that the District of Columbia Financial
Responsibility and Management Assistance Authority (Authority) study the
accounting and financial management information needs of the District2
Subsequently, the Authority and the District requested, and the Congress
approved using, funds to assess the need for, and necessity of, implementing a
new financial management system. In the 1996 District of Columbia
Appropriations Act (Public Law 104X34), the District was authorized to spend
$28 million of its revenues to implement a replacement for its current iZna.ncial
management system. Of the $28 million, $2 million was provided for a needs
analysis and assessment of the existing mcial     management environment. In
addition, Public Law 104134 made the remaining $26 million available to
procure the necessary hardware and installation of new software, system
conversion and testing, and training after the needs analysis and the assessment
was received by the Congress.

A DISCIPLINED APPROACH IS ESSENTIAL FOR
SUCCESSFUL SYSTEMS ACQUISITION

Acquiring a major new information system is an inherently rise undertaking,
not just for the District, but for any organization. Valuable lessons have been
learned by successful public and private sector organizations that should guide
the District’s efforts to design and put in place a new financial management
system.

According to a study by The Standish Group International,3 most new systems
in the private sector fail to meet expectations. In the federal government, we
have also seen many failures involving multimillion-dollar cost overruns,
schedule slippages measured in years, and dismal mission-related results. For




‘District of Columbia: Imuroved Financial Information and Controls Are
Essential to Address the Financial Crisis (GAO/T-AlMD-95176, June 21, 1995).
3Chartinn the Seas of Information Technoloav Chaos, 1994. This study is
discussed in more detail in Managing Technolonv: Best Practices Can Imurove
Performance and Produce Results (GAO/T-AIMD-97-38, January 31, 1997).
 2               GAO/AIMD-97-1OlR       District’s Financial Management System
B-277023

example, Senator William S. Cohen’s 1994 report, Commuter Chaos: highlighted
how billions of dollars have been wasted on federal computer systems that did
not meet the government’s needs. We still tid computer modernizations at
great risk because agencies have failed to tie basic steps in planning their
projects and controlling risks5

These failures are not due primarily to faulty technology. They are the result of
poor management, poor planning, and poor project execution. Leading public
and private sector organizations have reco,gnized the importance of a disciplined
approach to information management. They have developed and follow an
integrated set of practices to reduce the risks related to system acquisition and
development and dramatically increase their rate of success.’ After reviewing
scores of systems over the last 15 years, we have found that these principles are
consistently applicable to government systems. Accordingly, the Congress
incorporated these proven best practices into the Clinger-Cohen Act of 1996 in
order to reform federal information management.

Given the criticaIity of effective financial management to the District, as well as
its limited capacity and resources, it is important that the District adopt and
follow best practices in information management in order to avoid costly failure
and acquire a new financial management system that successfully meets its
needs.

Building Blocks for Svstems Acouisition

Acquiring a new information system requires following a methodology that
starts with a clear definition of the organization’s mission and strategic goals
and ends with a system that meets specific information needs. We have seen
many system efforts in the federal government fail because agencies started
with a general need (such as improving financial management) but did not
define in precise terms (1) the specific problems they were trying to solve,
(2) what their specific operational needs were, and (3) what specific
information requirements flowed from these operational needs. Instead, they
plunged into the acquisition process in the belief that these specgcs would be
defined along the way. As a result, systems were delivered well past
anticipated milestones; failed to perform as expected; and, accordingly, required
costly motications.


4Computer Chaos: Billions Wasted Buvina Federal Commuter Svstems,
Investigative Report of Senator William S. Cohen, October 12, 1994.
5Hiah-Risk Series: Information Management and Technoloa
(GAO/FIR-97-9,February 1997).
‘Executive Guide: Improving Mission Performance Through Strategic
Information Management and Technolon (GAO/AIMD-94115, May 1994).

3                GAO/AI&ID-97-1OlR        District’s Financial Management System
B-277023
A structured “building block” approach is fundamental to systems acquisition.’
It is especially important to complete three building blocks early in the project:
a concept of operations, a requirements definition, and an analysis of
alternatives to meet the defined requirements. These must be done well for the
acquisition to succeed in meeting the organization’s needs.

A concept of operations defines how the organization’s day-to-day operations
are (or will be) carried out to meet mission needs. The concept of operations
includes high-level descriptions of information systems, their interrelationships,
and information flows. It also describes the operations that must be performed,
who must perform them, and where and how the operations will be carried out.
Failure to develop a complete concept of operations can have catastrophic
consequences for the system acquisition because it is the primary building block
on which the whole effort is based.

A requirements    definition builds on the concept of operations. Requirements
are the blueprint that system developers and program managers will use to
design and develop the system. It is critical that requirements be carefully
defined and flow Tom the concept of operations. For this reason, the concept
of operations must be done before fully defining the system requirements. Ill-
defined or incomplete requirements have been identified by many system
developers and program managers as a root cause of system failure. Without
adequately detied and organizationally approved requirements, a system will
need extensive and costly changes before it can become fully operational.

Operational requirements identify the level of performance needed to
accomplish the program’s mission and provide the information that will drive
later decisions on such items as the alternatives analysis and hardware and
software designs. Examples of requirements include the amount, type,
frequency, and speed at which data and information must be gathered, edited,
correlated, updated, displayed, printed, and transmitted in support of specific
organizational needs. In addition, security, reliability, availability, and
maintainabilily must be realistically defined because these system requirements
drive subsequent system design choices and have a significant impact on system
development cost, schedule, and performance.

An alternatives    analysis   can begin after the concept of operations and
requirements definition have been completed. The purpose of an alternatives
analysis is to assess the various options that are available to meet the system
requirements. Several options should be evaluated to determine the costs,
benefits, and risks of each. Each option should be capable of meeting current
and potential future missions and be analyzed in terms of its present and future
operational effectiveness, maintainability, and cost-effectiveness. The


 Strategic Information Planning: Framework for Desi,bning and Develouing
 Svstem Architectures (GAOAMTEC-92-51, June 1992).
 4                GAO/AI&ID-97-1OlR      District’s Financial Management System
B-277023

alternatives analysis should include hardware, software, ‘communications, data
management, and security.

KEY ISSUES NEED RESOLUTION
TO REDUCE RISK, CONTROL COSTS, AND
PRODUCE A CXJALITY SYSTEM

The District has not yet completed a concept of operations, requirements
definition, or alternatives analysis, though it has taken some initial steps in
these areas. The District is aware of the need to do more detailed work in
these three areas and plans to hire a contractor to assist in this effort.

Concert of Ouerations Needs to Be Developed

Regarding a concept of operations, the District’s Chief Financial Officer (CFO)
has developed a draft strategic plan’ outlining high-level goals for the District,
such as ensuring that financial information is timely, accurate, and trustworthy;
ensuring that the budget is structurally balanced; and regaining an investment
rating for the District’s securities. These are important and laudable goals that
provide the basis for developing operatig concepts. But they do not in
themselves constitute a complete concept of operations because they do not
provide the information or level of detail needed to define the requirements for
a new financial management system.

One critical item we would expect to see in the District’s concept of operations
is how the various components of its financial management system will interact.
The District has key underlying feeder systems that provide the core system
with accounting, program, and performance information on various operational
units’ activities. The concept of operations needs to clearly describe the needed
information inputs and outputs for each of these feeder systems.

For example, the Child and Family Services Agency (currently under
receivership) is in the process of developing a new management information
system, one component of which is a financial management system. The
agency plans to issue a request for such a system and have it operational by
October 1, 1997. However, as of March 1997, neither the CFO nor the Authority
had been involved in deciding how the Child and Family Services Agency’s
financial management operations would be designed or how the system that the
District envisions would interact with this feeder system-or whether it will even
be needed once a new core system is in place.




81997 Strategic Plan for the Office of the Chief Financial Officer, Government of
the District of Columbia (Draft), January 15, 1997.
5                GAO/AIMD-97-1OlR       District’s Financial Management System
B-277023

Comulete Reauirements Definition and
Alternatives Analvsis Are Imr>ortant

Although a concept of operations has not been completed, the District has
nevertheless begun to define its information requirements and assess system
acquisition alternatives. As noted earlier, requirements cannot properly be
defined without first having a sound concept of operations. Likewise,
alternatives cannot be assessed without a clear definition of the requirements
that the new system is supposed to satisfy,

The requirements that the District has already identified focus on needs
stemming fiorn the CFO’s accounting function. They do not yet focus more
broadly on the District’s financial requirements, such as those stemming from
the need to integrate the core &m.ncial system with feeder systems. Nor have
end-user requirements been fully identified and assessed.. Additionally,
although the District has identified a requirement for its financial management
system to be Year 2000 compliant, its capabilities assessment does not provide
enough information to define the nature, size, or complexity of this problem.g

While the District has completed a preliminary economic analysis for a new
system, it has not yet performed the necessary work for an alternatives analysis.
Specifically, the preliminary economic analysis

- was not based on a concept of operations or system requirements, because
  these documents are not yet completed;

- only included the costs for three alternatives-using the existing system,
  modifying the existing system, or acquiring a commercial off-the-shelf system;
  and

- did not include the benefits and risks associated with each alternative.

Until a concept of operations and requirements analysis are complete, it will be
impossible for the District to determine which alternative will best meet its
financial management system needs.




?I’he Year 2000 problem is rooted in the way dates are recorded and used in
many computer systems. Many systems use two digits to represent the year.
For example, the way that the year 2001 (01) is represented in many systems
makes it indistin,@i.shable from 1901 (01). As a result of this ambiguity, system
or application programs that use dates to perform calculations, comparisons, or
sorting may generate incorrect results when working with the years after 1999.
Systems that are Year 2000 compliant do not have this date problem.

 6                GAO/AIMD-97-1OlR      District’s Financial Management System
B-277023
TIME FRAMES FOR COMPLETING
CRITICAL TASKS ARE UNKNOWN

In March 1997, the District, in consultation with officials from the Office of
Management and Budget (OMB), developed a project mariagement schedule for
assessing its financial management operations. This plan was broken into five
broad areas: project strategy, requirements definition, solicitation of system
support, solicitation of the system, and implementation. As we have just
discussed, developing a concept of operations, defining system requirements,
and performing an alternatives analysis will be the key elemeints in determining
the ultimate success of this effort. We are concerned that the current plan does
not have a scheduled completion date for the concept of operations and
requirements definition phases. This, in turn, makes it unclear when an
alternatives analysis can be done. Despite this uncertainty, the District has
established a target date of August 1997 for the acquisition of a new system.

Based on our experience in reviewing hundreds of information system efforts,
we believe there is a high risk that the District will be driven by its ambitious
acquisition schedule and will not allow itself time to develop the kind of quality
analysis that it must have in order to manage this important project, which is so
critical to the District’s financial recovery. Although District officials have
acknowledged that the time frames associated with this plan are aggressive,
they believe that the necessary work can be accomplished and the overall end
date of August 1997 can be met because they have been working on this project
for some time and can use previous work.

We have heard similarly optimistic statements f?om other agencies and have
subsequently reviewed the bleak consequences of rushing through these all-
important initial steps. Moreover, the District has experienced significant
systems development problems with past projects. In its 1995 Information
Technologv Strategic Plan 19951998, the District noted a “high incidence of
projects that are started and abandoned, and projects that do not satisfy the
needs of the end-user.” It also noted that “[iImproper planning, coupled with
pressure from top management to deliver complex systems tomorrow, has
resulted in many unsuccessful information systems, wasted funds, and useless
equipment in District agencies.”

Given the complexity of the project and the District’s track record in acquiring
systems, it is critical that the District approach this effort diligently and with
deliberation. The quality of these initial elements of the acquisition needs to be
high, and the Congress needs to be satisfied that the District has laid a solid
foundation for this acquisition before going on to the selection of a specific
system.




                 GAO/AIMD-97-1OlR       District’s Financial Management System
B-277023

COMMENTS AND OUR EVALUATION

We requested written comments on a draft of this letter from the Chief
Financial Officer of the District of Columbia and the Chairman of the Authority.
They provided us with comments that are reprinted in enclosures I and II,
respectively.

The District’s CFO stated that the District has acquired a project management
team and that this partnership with the private sector will result in a
satisfactory concept of operations and requirements definition process. The
CFO stated that this approach will enable the District to assess the alternatives
and implement a system that supports its financial and project management
needs.

The CFO and the project management staff responsible for this project also
stated that they have decided to acquire a commercial off-the-shelf (COTS)
system” and that the District has begun its requirements definition, which will
continue throughout the acquisition process. They also noted that the District
is not envisioning extensive changes to the COTS package because

- it is committed to modifying its business practices to reduce the
  customization needed rather than modifying the acquired system to match its
  current processes;

- the acquired package already meets the requirements of other state and local
  governments, which reduces the level of requirements that must be identified
  before selection; and
-       it is planning to focus on a public/private partnership that allows outsourcing
        the development and operation of the new system. (According to District
        officials, this approach has been successfully used by several local
        governments and at least one state government.)

At this stage, it is essential that the District complete the concept of operations,
the requirements del?nition process, and the alternatives analysis. For example,
the District has identified a number of systems not operated by the CFO that
directly relate to the District’s financial management needs. According to
project management staff, this list is currently being reviewed to determine how
many can be eliminated by using the new financial management system. In


‘*On June 23, 1997, the Authority issued a solicitation to acquire a new financial
management system. (Statement of Work to Provide the District of Columbia
With a ComDrehensive. State of the Art Financial Management Services
Solution, DCFRA Solicitation #97-R-012). We have not reviewed this solicitation
in detail. Therefore, this letter does not include an assessment or comments on
this document.
    8                  GAO/AlMD-97-1OlR       District’s Financial Management System
B-277023

some cases, the District already knows that some systems (feeder systems) will
feed summary data to the new financial management system while other
systems will likely be replaced by it. However, how this interface will work and
what data will be provided for each feeder system have not yet been defined.

District officials told us that their approach will adequately address these
concerns and will result in a system acquisition process in which requirements
are fully defined. They also said that the efforts of the public/private
partnership will result in a cost-effective system that meets the District’s needs.
This will be a challenge because the District currently performs both state and
local functions. The localities it is modeling its system after perform either
state or local functions, not both.

To reduce the risks associated with this effort, the District tist needs to
successfully complete its concept of operations, requirements documents, and
alternatives analysis. Furthermore, the District is vulnerable if several critical
assumptions are not completely valid. Examples of these assumptions include
the following:

-   The belief that a CUTS package meeting the needs of a state and local
    government, such as the District, already exists and can be used with little
    modification.   If this assumption is not fully correct, costly modifications
    may be required and the risk of failure greatly increases.

- The belief that the District will be able to modifjl its existing processes
  while bringing in a new system to reduce the needed customization . If
    these reengineering efforts are unsuccessful or do not meet the District’s
    needs, additional customization may be required, which will increase the
    acquisition cost and risks.

The Chairman of the Authority also provided comments on this letter and noted
that on May 15, 1997, the Congress was notified of the Authority’s decision to
outsource the development and operation of the new financial management
system. This appears consistent with the approach taken by the CFO, which
was discussed earlier. The Authority was concerned that the focus of this letter
was on federal agencies and system fa8ures that the District experienced prior
to the establishment of the Authority and the appointment of the current CFO.
We believe that the types of problems we discussed are not unique to federal
agencies, but rather apply to the District as well as the private sector. The
Authority’s concern was one reason we referred to past system failures at the
District because such failures are not unique to the federal government. We
also concur with the Authority’s comment that “the District does not have the
vast resources available to federal agencies.” Therefore, it is even more
important that the District undertake all possible measures to reduce its risks.




                  GAO/&MD-97-101R        District’s Financial Management System
B-277023

The Authority also wanted us to recognize that GAO was a participant in the
meetings that established the time frames and that GAO agreed with the
milestones that were set by the group. GAO was asked to attend these
meetings and provided views on various issues. This report reflects the views
GAO expressed in those meetings.



We are sending copies of this letter to the Ranking Minority Members of your
subcommittees and the Chairmen and Ranking Minority Members of the
Subcommittee on Oversight of Government Management, Restructuring, and the
District of Columbia; the Senate Committee on Governmental Affairs; and the
Subcommittee on the District of Columbia, House Committee on Government
Reform and Oversight. We are also sending copies to the Director of the Office
of Management and Budget, the Chairman of the District of Columbia F’inancial
Responsibility and Management Assistance Authority, and the Chief Financial
Officer of the District of Columbia

                                               me at (202) 512-9510.




Director, Governmentwide Audits

Enclosures




 10               GAO/AIMD-97-1OlR      District’s Financial Management System
ENCLOSURE   I                                                                                          ENCLOSURE   I

                 COMMENTS                FROM THE DISTRICT OF COLUMBLA



                               GO-                  OFTHE DETRICT OF COLUMNA
                                                  clliefFinind;ller




                May 23.1997

                Mr. GregoryM. Holloway
                Director,Governmentwid=-
                                       Audits
                Acconntingand InfotmationManagcmcnt
                       Division
                GeneralAccountingOffice
                Wtshingto~    DC 20548

                       Re: District’s Fmncial ManagemmtSystem
                       REF: GAO/AIMD-974OIR

                DearMr. Holloway:

                Many of the concernsaddressed
                                            in your letterhavebeenrmkwed in the Control
                BoadCFO/CongrcsdOMB/GAO/OIG        SteeringCommitteemeetingof which you area
                member.Although, theywez vaiid at a point in time,I bc&vc that the ageauents
                reacheddative to the imphmtation approachandsn emphasison outsourcing
                mitigatesthoset?xx&m andI amrespondingto than in that context.

                We believethat the District is ableto utilize thecxpczi- of many state and local
                g--pmcmrm            entsandappiicationsIOe&&ate the problemsthat you identifitd.
                Since them are opemtional state and local systems which create and providethe same
                dstaquircd Bornthe District,cxtmive andcostlymodificationswill be unn=essary.
                The building block appmc& is cssattialin anyacquisition,but the dcgm that is rquircd
                will vaxybasedon applicationavaiiability,customization   rupdredandWiUingncssto
                changettle operatiorL
                Siice OUTplan is not to createor imphmt a customdesignedsystembut to acquirea
                COTSapplication.  theled of detail rrquiml is diffcm~ We believethat the analysis
                donein the Arthur Andcrscnmarketstudyof availableappiicationsandthe ongoing
                requircmunsreviewswe am conductingat eachagencywith bothprogramand financial
                managancntand staffswill provideus with tit needed   informationto addressthe
                requircmwtsneededfor the new financialmanaganent     qmem. Basedon the cxpahce
                of othersxatcand locai govamnmts,the Arthurhdersen study,our foEusgroupand
                agencyreviewswe havesatisfiedtherequirements    for a conceptof operationsand system
                rcquircxnmtsdefinition. ( WCwili contimxeto rcfmetherequirements.)
                             4414th Skeet. N.W., Suite lxiON,   WI&S-   DC   2UlOl   202{727-2476




11                                    GAOIAIMD-97-101R District’s Financial Management System
ENCLOSUREI                                                                                        ENCLOSURE1




             GregoryM. Holloway
             May 23.1997
             Page2



             A key premisefor the new FMS systemis thatany financialfbnctionwili be avaiIabl&in
             the coresystem,which wouideliminatetheneedfor manyof the currentf&x systems.
             During our agencyreviews,we haveidentiiiedthoseagencieswhosefeedersystemswe
             anticipatebecomingpart of thecore. Thereqzimnens identifiedrepresentreviewsfrom
             Disttict wide agenciesandfunctions,individualsthataredirectly in&facing with FMS
             andthosethatareusersof thedataprovided.The non financialstaffshavebeen
             contactedfor their input to ensutethe new systemwill providetiormation andbe&me
             theresomcetheyneedto managetheir businesses.This work will continuethroughout
             the impieme,mion.,andwill havethe supportof the privatesectorpartnershipwhich we
             areinitiating thatusedtheswxesdl Pbiladelpbiamodel.

             Sincewe are a&ally iookingfor a bestof breedapplicationthat is cum&y installedin a
             stateor local environmentwhichwiil providethe functionsneededto operatethe
             Diet’s financialandprogrammanagement      activities,we haveadopteda methodology
             whichwill providethe kvel of requirementiafarmationrequired.Sinceour plan is to
             implementchauges    tooarcumntprocsso~o~~n~~lmdastandwhatour
             kustomerrequimments’    areandensuretheproposedapplicationprovidesus the
             flexiiility to meetthoseneeds.

             The ProjectMsnagementTeamwill assistus in ensuringtbatthe requirementshavebeen
             adequatelydefinedto provideselectionof tbeappropriateappiication,assistin the
             creationandanalysisof the inputnccmsaqto redefineour processesandidentify the
             arzaswherelimited customizationis required.

             We believethatwe will havethe necesszyresourceswith the PMT andthe privatesector
             partnashipandhavesa&ied the conceptof operationsandrequiranentdetition
             informationneededto assessthealtemativesandimplementa systemto supportthe
             needsof the financialandprojectmanagementfor the District
             Additionally,asyou areaware,we agreedin our steeringcommitteemeetingsto
             undertakea v         to utilizeoutsourcingasthe vehicleto solutionmanyof the concems
             identifiedinyourrepo* Weareag%rcsivelypumkgthatstmtegyandhaveinitiated
             the following activitiesto supportit: 1) Selecteda PMT Contractor(JamesMartin) who
             hz3extensiveoutsourcingespeIien~2)Plarltoto                 the FMS sokitation RFP to
             focuson outsourcingasa prloriy, 3) scheduledvisits to severaljmkdictions (the city
             Indianapolis,Indiana,Westchester   CountyNew York, andthe stateof Connecticut)who
             haveor who arecmently outsourcingall or paxtof their informationsystemsactivities:
             and 4) Piiig      a Public/PrivatePartnershipto facilitatea smoothtransitionto a new
              PMS.




  12                             GAOIAIMD-S’i-1OlR               District’s Financial Management System
ENCLOSURE   I                                                                                ENCLOSURE   I




                GregoryM. Holloway
                May 23,1997
                Page3



                If you would lie   todiscussthis further,pleasecontactme at (202)727-2476.
                Sincerely,

                CQZ(/k
                AnthonyA. Williams
                ChiefFinancialC@er
                Disaict of Columbia




13                        GAO/AIMD-97-101R                  District’s    Financial     Management   System
ENCLOSURE   II                                                                                   ENCLOSURE II

COMMENTS    FROM THE DISTRICT OF COLIIMEXA FINANCI& REX#?ONSIfHLlTY AND
                   MANAGEMENT ASSISTANCE AUTHORITY     _


                                Diet of Columbial3nanciaIkponsibiiiy
                                   andhhnagemattAssisrmu Au&oriy
                                          Wahington, D.C
                                                  June4.1997
                 Mr.GmeL.Dodam
                 Assisantc0nlpIroi1erGenaal
                 AccountingandInformationDivision
                 U.S.GeneraAccouutingOffice
                 441 G beet, N.W.
                 ‘hshingto~ D-C. 20548

                 DearMr. Dodam:

                      The District of ColumbiaFii         Respoosibili~ and Managementk&stance
                 Authority (“Authority”) bas reviewed the draft report eutitled. ‘Status of Dici of
                 Columbia’sEfforts to Developa New Fiiciai MauaganeutSystem”(~QMh4D-97-
                 IOIR May 1997). We havesevemlconcemsabout this draft rqmrt
                          Whilethedraftreportaarmptsto~tbecurrmtstatusofeffarrstodeveiopa
                 new Fiiial      ManagementSystem(TMS”), this is au ongoing processtherefore it is
                 difficult for key informationto remain cment. For &ance, on May 15. 1997. the
                 Au&&y notified the Congressthat the District was acceptingthe suggestionof the
                 Congress to causoutcethe developmentand operationof the FMS. We have the
                 followingadditionalconcemsmgaxdingthe draftrepoC
                          Pagcifaiagragrh2--Th+reponstatesthrP”thtDisrrictwasprovidtdaratalof
                  S28million.. .“. Whi~ethisisfhctudlyaCcuQX it is important to note that theseate
                  local lids generatedby District tax revenues,and not FederaIfimds. Furrhemnoce.
                                                                                               the
                  finds were requestedas part of the Diis        fiscal year 19% budget. which was
                  ~rathath2Jl”provided”byCOItgnss.

                        Page2 Paragrsph4-T&e is no citationgiven for SenatorCohen’s.kpo~‘L
                        Pages2-3-Much of the dkussion focus on Federal agency systems and
                  experience.However,it is impmant to notethat the District is not a Federaiagency,but
                  rathera municipal goveumIeIItlacking the vast rcmmcesthat Federsiagencieshave at
                  IbeirdkposaL
                         Page4-The la line on the page refas to “a ddt strategicplan”. This is
                  unclear.Is this a retkenceto CFO 2000- A Paf6nnance ImprovementInitiative ?
                         Pages6-7-The report should recoguizethe participation of the General
                   AccountingOf&e (GAO) in the meetings that estabhhed the time fknes. and
                   agreementof GAO with them&tones thatweresetby the group.




 L




                                  GAO/AIMD-97- 101R District’s                  Financial Management System
ENCLOSURE   II                                                                                        ENCLOSURE   11




                       Page7 pamgraphiT’.the first line a refkrenceis madeto ‘We District’s past
                     record in acquiringsystnns”. This matteris not previouslydiscussedand, those
                 track
                 acquisitionswereaccomplish&prior to the appointmentof the Authority and the CFO.
                 Theinferencehereis that the Authority andCFOwouldnot approachthe effort diligently
                 andwirh deliberation.Then is no basisfor this inference.
                         we hopethatthesecommentsareheIpz%iin preparingthe final report.


                                                                                                      .   1




                                      GAO/AIMD-97-1OlR               District’s Financial Management System
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