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request for the implementation of a Financial Management System does not include any funding for customization.
Question. Has the AOC considered having another Legislative Branch agency cross service its financial operations instead of implementing its own financial system? Did you solicit bids from other Legislative/Executive agencies to cross service the AOC? How do you know that buying and implementing your own system is more cost beneficial than cross servicing?
Answer. The AOC considered having another Legislative Branch agency cross service its financial operations instead of implementing a new financial system. Most of the Legislative Branch agencies are currently operating their financial systems in a main-frame environment with software that is near the end of its life cycle. The AOC did not want to incur significant implementation costs migrating to an older system, and then have to incur the costs again in a few years when the cross servicing agency migrated to a more modern system.
Question. How many employees are devoted full time to the financial management system acquisition and implementation project? Have you budgeted for the increased financial management system staff in the current year? How much will this staff cost in the out years?
Answer. Currently, there is a project director assigned full time to the project. Six additional staff will be hired gradually over the next 4-9 months in order to have the full project team on board when the software is purchased. Two of the additional staff are planned to be hired in July 1999, with the remaining coming on board in the first 3 months of fiscal year 2000. The cost of the increase in staff for fiscal year 1999 is included in our budget. The cost of the staff in the initial out years is estimated at $400,000 per year. After the complete implementation of the system, the staff will be reduced to the resources required to maintain the system.
Question. How confident are you with your procurement and implementation schedule for your financial management system?
Answer. The AOC's current procurement schedule of purchasing a system by the end of calendar year 1999 is considered aggressive. Depending on the number of proposals received and "down-selected" additional time may be necessary to evaluate the vendor proposals, and to conduct Operational Capabilities Demonstrations for each package under consideration.
The AOC is confident in the implementation schedule of beginning production operations by the end of fiscal year 2001 as long as the procurement stays on schedule. A significant delay in the procurement would affect the implementation date.
Question. What business practices will you change as a result of implementing a new financial system? What procedures/policy changes will you implement?
Answer. The financial system that is purchased by the AOC is expected to provide the configuration flexibility to allow the AOC to continue its current business practices if desired. However, it is expected that the increase in functionality provided by the new system will lead to improvement of certain business practices. The actual changes that will occur will be determined during the configuration sessions with user groups during the beginning stages of the implementation. In order to limit the impact on users, the AOC may pursue implementing certain business process changes using a phased approach after the initial implementation. An example of a business process that will be changed is the "requisition for goods and services" process. The requisition process will be improved to transform a paper intensive process to a fully electronic process.
Question. What staff changes, if any, do you believe will be necessary to implement and operate your new financial management system? How much will you save in staff years once you have automated your existing procedures?
Answer. We have determined that additional staff of 6 people (plus a project director) is required to implement the Financial Management System. This level of staff assumes an implementation where considerable contractor support is utilized. The amount of staff required to maintain the system after it is implemented has not been determined, but it is expected to be less than the AOC staff required to implement the system.
The implementation of a new Financial Management System is not expected to affect current staffing requirements in the AOC except in the Accounting Division. The Accounting Division may require 1-2 additional professional staff because of the increase in workload required to maintain a standard general ledger, produce financial reports and perform reconciliations.
The implementation of a new financial management system is not expected to save staff years. Any savings realized through the automation of manual processes will be offset by additional time spent on value added processes, such as providing better customer service or performing strategic analysis.
Question. Have you done a skills requirement analysis to determine if existing staff will have the necessary skills to operate in a new automated environment? If so, what did that analysis reveal?
Answer. A skills analysis to determine if existing staff have the necessary skills required by the new system has been performed for the technical staff, but not for the functional staff. The analysis for the functional staff is planned to be performed during this calendar year prior to the purchasing of the financial management system. Since the initial implementation of FMS will most likely involve only the current financial system users, it is assumed that the users will have the basic skills to operate an automated system. However, the AOC does plan to evaluate the users ability to operate in a "windows and mouse" environment, and if necessary have users attend training classes in these areas. In addition, the AOC will also determine if the complexity of the new system requires higher level employees such as GS-0510 accountants rather than GS-0525 accounting technicians.
The AOC has determined that its technical staff lacks the required skills to operate in the new technical environment. In order to obtain the necessary skills, the AOC is in the process of hiring staff experienced in the new technology and is sending current staff to training. It is expected that the technical staff will have 6 months experience in the new technical environment by the time the financial management package is purchased. The AOC technical staff is then expected to receive on-the-job training from the contractor during the implementation of the system. Question. We recommended that you follow GAO guidance that your financial system project director report directly to the Architect. However, he reports to the CFO. What is your rationale for not accepting the GAO recommendation?
Answer. The AOC established the organization structure for the financial system project director to report to the CFO since this is the reporting relationship typically used by Federal agencies. Although the AOC is not covered by the CFO Act of 1990, the act specifies that the agency CFO should oversee all financial management activities including the "development and maintenance of an integrated agency accounting and financial management system".
In order to partially comply with the GAO recommendation that the financial system project director report directly to the Architect, the Architect has issued a Delegation of Authority making the financial system project director directly responsible for the proper implementation of the financial management system. The financial management system project director will continue to report to the CFO, but will meet with the Architect on a weekly basis to discuss the project status and outstanding issues relative to the implementation of the new system. The financial system project director will be the primary contact of the Architect for all financial system implementation and integration matters.
Question. You intend to interface some of your present systems with the new financial management system. What systems will that be and how much will it cost to develop interfaces? When do you anticipate having those interfaces completed? Answer. The new financial management system will interface with the following systems: Human Resource System (currently the USDA payroll system); Computer Assisted Facilities Management System (CAFM); and Project Tracking System. The interface with the existing payroll system will be implemented along with the initial implementation of the financial system by the end of fiscal year 2001. A preliminary estimate of $160,000 (1,280 hours) has been developed for contractor support in the design, coding and testing of the payroll interface. This estimate assumes the interface will be similar to the current interface which updates the financial system with payroll and benefit costs on a bi-weekly basis. The estimate does not include any additional costs that may be charged to the AOC by the USDA for changes in the data format.
Estimates for the development of interfaces with the CAFM system and the Project Tracking System have not been developed. The interfaces to these systems are expected to be implemented during the latter stages of the implementation towards the end of fiscal year 2003. The CAFM system is currently in the beginning stages of implementation at the AOC and the current project tracking system may be replaced prior to the end of fiscal year 2003. The cost estimates for the CAFM and Project Tracking interfaces will be developed by the end of fiscal year 2000 and included in the fiscal year 2002 budget request.
Question. Will the AOC seek funding in the future to enhance existing non-financial systems? If so, how much, when, and for what systems?
Answer. The following table reflects the AOC's fiscal year 2000 budget request and future fiscal year requests for non-financial system installations. These systems include a Human Resources system, the continuation of the installation of the Computer Aided Facilities Management (CAFM) system, and the upgrade and continued expansion of the agencies computer network. The five year total is $12,282,000. The
Network Installation and Upgrade project will support all current system and e-mail applications as well as the new or expanded Financial Management, Human Resources and CAFM systems.
Senator BENNETT. Thank you.
Thank you very much. It has been very informative. We appreciate your responsiveness and congratulate you on the progress that you have made.
Mr. HANTMAN. Thank you very much.
Senator FEINSTEIN. Thank you very much.
[Whereupon, at 11:50 a.m., Wednesday, March 3, the subcommittee was recessed, to reconvene subject to the call of the Chair.]
The subcommittee met at 9:35 a.m., in room SD-116, Dirksen Senate Office Building, Hon. Robert F. Bennett (chairman) presiding.
Present: Senators Bennett and Feinstein.
JOINT COMMITTEE ON TAXATION
STATEMENT OF HON. BILL ROTH, VICE CHAIRMAN
OPENING STATEMENT OF HON. ROBERT F. BENNETT
Senator BENNETT. The subcommittee will come to order.
We welcome you to our second hearing on the fiscal year 2000 budget for the legislative branch of Government. We have three panels testifying this morning: the Joint Committee on Taxation, the Joint Economic Committee, and the Office of Compliance.
Our first witness will be Senator Bill Roth on behalf of the Joint Committee on Taxation, joined by Lindy Paull, the Chief of Staff of the Joint Committee. The budget request is for $6,256,000 for fiscal year 2000. This includes a cost-of-living adjustment for staff and a slight increase of $67,000 for non-personnel expenses.
Senator Feinstein, we welcome you. You braved your way through the storm as the rest of us did, and we are honored that you are here. Do you have any opening statement?
Senator FEINSTEIN. No. Thank you, Mr. Chairman, except to welcome the distinguished Senator to our esteemed subcommittee.
Senator BENNETT. Mr. Chairman, we look forward to hearing from you.
Senator ROTH. Well, thank you, Mr. Chairman and Senator Feinstein. I greatly appreciate the opportunity to appear today before the subcommittee on behalf of the fiscal year 2000 appropriation request for the Joint Committee on Taxation.
As you well know, Bill Archer and I have submitted a written statement, and I ask that this written statement be made part of the written record.
Senator BENNETT. Without objection.
Senator ROTH. Mr. Chairman, I will just make a couple of brief points regarding this appropriation request. Actually you have touched on them already, but I will review them once more.
As you said, the Joint Committee is requesting an appropriation for fiscal year 2000 of $6,256,000. This represents a $290,600 increase over the fiscal year 1999 appropriation. This is a 4.87 percent increase. As you pointed out, Mr. Chairman, $223,000 of this amount will be allocated to cost-of-living increases for personnel expenses, and the remaining $67,000 will be allocated to proposed increases in non-personnel expenses.
Mr. Chairman, increased responsibilities have been assigned to the Joint Committee under the IRS Restructuring and Reform Act that was passed last summer. The Joint Committee estimated during consideration of the IRS Reform Act that these additional responsibilities would require approximately $290,000 of additional staff resources annually.
The Joint Committee is requesting 1.5 more FTE's for fiscal year 2000 to hire additional staff economists. These economists will work on revenue estimates so that the Joint Committee is able to respond to more Member requests. I think Lindy said we are responding roughly in the 80's.
Ms. PAULL. Right, 80 percent.
Senator ROTH. 80 percent.
In addition, the additional employees will allow the Joint Committee to devote more staff resources to the effort to develop macroeconomic estimating capability. I think that is a very important development.
Senator FEINSTEIN. You did say macro.
Senator ROTH. Yes, ma'am. And I think they are making some real progress, but they have a ways to go yet.
REPORT ON THE STATE OF THE FEDERAL TAX SYSTEM
Under the IRS Reform Act, the Joint Committee is required to report at least once each Congress to the Senate Finance Committee and the House Ways and Means Committee on the overall state of the Federal tax system and to make specific recommendations for changes to the tax laws. The IRS Reform Act provided that this report is to be done subject to amounts being specifically appropriated to the Joint Committee for this purpose.
The fiscal year 2000 appropriation request does not contain any amount for this purpose. If the subcommittee decides to fund this added responsibility, the Joint Committee estimates an additional annual appropriation of $200,000 and three additional FTE's would be required.
Mr. Chairman and Senator Feinstein, I want to thank the subcommittee for its continued recognition of the important role the Joint Committee plays in the development of revenue legislation. I hope that the subcommittee will continue to support the operation of the Joint Committee for fiscal year 2000.