VA cancels financial IT modernization portions of FLITE project

The Veterans Affairs Department said July 13 that it will not go forward with a planned financial system modernization project on which it has already spent $16 million.

The project, along with an also-canceled related data warehouse effort, was part of a program dubbed Financial and Logistics Integrated Enterprise and would have cost up to around $333 million to complete, according to figures VA Chief Information Officer Roger Baker gave while speaking to reporters.

The VA will continue to develop the strategic asset management IT system portion of FLITE, Baker said; that system is already undergoing pilot testing in the Milwaukee VA Medical Center.

Unlike the strategic management portion of FLITE, the VA has not awarded any implementation contracts for the accounting system or the data warehouse portions. According to an October 2009 Government Accountability Office report, the VA has spent $90.8 million on FLITE so far, of which $73 million was spent on contractors.

The $16 million figure refers to what the VA has spent specifically on planning the accounting system portion of FLITE, Baker said. The VA hired Mitre Corp, Booz Allen Hamilton and Fairfax, Va.-based YRCI in various financial system support roles, according to VA procurement documents (.doc).

The cancellation stems from doubts over program execution, as well as re-prioritization of limited resources, Baker said. "We'd like to make certain we can be successful on a project before we start," he said, adding that "we can't do everything."

In lieu of one large financial management system effort, the VA will roll out series of smaller financial modernization projects, Baker said. The Office of Management and Budget told agencies on June 28 not to initiate new development spending on federal financial management systems worth more than $20 million until OMB has reviewed spending plans.

"I would say we made this decision in conjunction with OMB," Baker said, without specifying whether the VA decided to cancel the project before or after OMB came out with the June 28 memo.

The July 13 announcement marks the second time the VA has canceled a financial system modernization effort; in July 2004, it terminated a system called CoreFLS after spending more than $249 million on development.

Information technology management has recently come under heightened scrutiny at the VA with the June 2009 establishment of an effort known as the Program Management Accountability System. However, whether PMAS will be sufficient to correct problems at a department with a string of high-profile IT failures in its recent past is unknown. A May 2010 GAO report said that the VA "has not yet demonstrated that it can sustain the wholesale change in management of IT projects that PMAS represents or that this new approach will be sufficiently robust to prevent or correct weaknesses."

For more:
- listen to an audio recording of VA CIO Roger Baker announcing the program's cancellation; also on the call is Federal CIO Vivek Kundra
- read a redacted fiscal 2010 FLITE Exhibit 300 (.pdf)
- download the October 2008 GAO report on FLITE, GAO 10-40 (.pdf)
- download the May 2010 GAO report on VA IT management, GAO 10-579 (.pdf)

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