CFOs changing software procurement

Vendors who provide financial management software to federal agencies are trying to block proposed changes to the mandatory schedule through which agencies acquire the software.

The Chief Financial Officers Council is spearheading reform of the Federal Financial Systems Software (FMSS) Schedule, through which all agencies must purchase core financial management software systems. The council is working with the Office of Management and Budget, the General Services Administration and the Joint Financial Management Improvement Program to speed up the procurement process, revamp the testing of software products and provide stable funding and personnel for the schedule.

Vendors that sell financial management software say the changes could jeopardize agencies' ability to account for tax dollars and would make the federal market less attractive to software providers. Prices for financial management software systems would rise, the vendors say. Six of the nine vendors on the FMSS schedule, along with about 40 small businesses and individuals (ranging from former OMB Director James C. Miller III to Clean Cars Inc.), have formed the Coalition for Federal Financial Accountability to fight the changes. The coalition has taken out advertisements in several publications (including Government Executive) and is petitioning members of Congress to stop the schedule changes.

"Members of the coalition feel that this schedule is one of the things that government has done right," said Michael F. Canning, Jr., an Annapolis, Md., attorney who is executive director of the coalition. "The proposed changes appear to have originated from bureaucrats seeking to radically change a process that isn't broken."

Under the FMSS schedule program, GSA tests software packages to ensure they comply with federal financial and accounting standards, then certifies them for other agencies to purchase. The testing process and its results are not made public--not even to agencies--because the information is considered procurement-sensitive. GSA holds an open season every couple of years to allow new products onto the schedule. Currently, nine vendors have gone through the process and offer products on the schedule. When an agency plans to acquire a new financial system, it must send out a "letter of interest" to all nine companies, allowing them to compete for the agency's business. Agencies sometimes re-test software packages to check compliance with their requirements.

In March 1996, the CFO Council released a report outlining a broad range of complaints about the FMSS schedule from agencies and vendors. Both sides complained that the testing process was too secretive. Agencies also told the council that the schedule should not be mandatory and that procuring software took too long, because of the letter of interest requirement and because agencies felt compelled to re-test software. Vendors complained about the costs of the testing and the government's secrecy about software requirements. In addition, vendors have developed new products and systems integrators have created packages that include financial management programs. The new software programs defy the schedule's 1989 definitions, leaving the schedule behind the times, some critics say.

In response to the agency and vendor complaints, the CFO Council created a Joint Systems Solution Team to come up with changes to the schedule. After more than two years of deliberation and studies, the council plans a number of changes, including:

• Moving the FMSS schedule from the Federal Technology Service to the Federal Supply Service at the beginning of fiscal year 2000. The FMSS schedule would be folded into the supply service's "Group 70" schedule, which includes most other information technology products and services.
• Making the schedule non-mandatory.
• Allowing vendors to join the schedule at any time.
• Eliminating the letter of interest requirement. Instead, agencies would issue task orders, and would only be required to notify at least three vendors of their interest in financial management software.
• Creating a Program Management Office at the Joint Financial Management Improvement Program that would have permanent responsibility for testing financial software. By completely separating the procurement process from the testing process, the office would be able to publicly announce federal requirements and fully explain the testing process to agencies and vendors. The House version of the 1999 Treasury-Postal appropriations bill allows GSA to use up to $3 million from credit card rebates to fund the office. The Senate version does not include the provision, so the fate of the Program Management Office will be decided in conference committee.

"Doing away with the FMSS schedule will weaken agencies' abilities to meet their financial management responsibilities," Blythe said.

In addition, eliminating the letter of interest requirement would make the federal market less attractive to vendors because the system would seem less fair, he said.

Blythe said he supports the testing process changes.

Despite vendor concerns, the government is slowly moving ahead with the FMSS schedule changes. The General Services Administration would not comment on the schedule changes, nor would R. Schuyler Lesher, deputy CFO at the Interior Department and chairman of the CFO Council's financial systems committee, which is overseeing the reforms.

The FMSS schedule was originally set to expire on Sept. 30, but GSA has delayed the revamp of the schedule until October 1999. The Joint Financial Management Improvement Program says it needs the extra year to devise a new testing process. As the first step in the redesign, JFMIP will establish an electronic repository of federal financial systems requirements.