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Federal Diary

Treasury Flunks Audit of High-Tech, High-Cost Personnel System

By Stephen Barr
Thursday, March 10, 2005; Page B02

A high-tech personnel system for the Treasury Department has cost more than similar systems elsewhere in the government and has not lived up to expectations, a recent audit found.

Getting Treasury's HR Connect up and running cost $173 million, substantially more than similar human resources computer systems at two other agencies -- the U.S. Coast Guard, which spent $24 million, and the Agriculture Department, which spent $15 million, according to the audit report prepared by the Treasury Inspector General for Tax Administration.

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TIGTA, as the inspector general's office is known, calculated that $41 million may have been wasted in the development of HR Connect. Treasury rejected that finding but agreed with most other TIGTA findings and is taking steps to overhaul the program's management.

The audit report underscores the importance of management oversight and contract administration in the rollout of complex technology systems, two areas in which the government often falls short, according to critics.

The HR Connect project goes back to the mid-1990s, when the Internal Revenue Service decided to replace 20 aging computer systems that processed timekeeping, payroll, training, recruiting, hiring and other personnel actions. In fiscal 1997, the IRS project was overtaken by a Treasury decision to create a department-wide system known as HR Connect. Some of the project's goals fell by the wayside when the Bush administration chose to consolidate federal payroll processing at four major centers.

During HR Connect's development, Treasury's program office failed to provide adequate management oversight and relied too heavily on a contractor, which was paid $109 million, according to the audit report.

In addition to spending too much to build the system, which became fully operational in May 2004, the report suggests that Treasury is probably paying too much to operate and maintain it.

Treasury has paid about $22 million annually to run HR Connect, far more than the $5 million to $6 million a year paid by the Coast Guard and the Agriculture Department to operate their systems, the report says.

"Treasury was unable to provide adequate cost data for us to evaluate why its implementation and operating costs are so much higher," the report says.

The contractor on which Treasury relied to manage the HR Connect project is never named in the audit.

The contractor developed project budget requests that cannot be verified independently, the report says. In addition, Treasury's program office allowed the contractor to prepare annual budget documents submitted to the Office of Management and Budget and status reports for the House and Senate Appropriations committees. The contractor also was allowed to order equipment and make purchases without much supervision, the report says.

Some officials said they were aware of only two custom modifications to the off-the-shelf software used in the system, but the contractor provided a list of 1,283 modifications. The list did not identify the costs or benefits of each modification, the report says.

In addition to not naming the contractor, the audit report does not identify Treasury officials in charge of HR Connect. The report notes that Treasury executives responsible for the system left in fiscal 2003 "to attain positions at the Department of Homeland Security."

Ira L. Hobbs, who became Treasury's chief information officer last summer, said his staff is strengthening oversight of HR Connect. "We tried to focus on how do we make the best of what we have [and] make sure that this does not happen again," he said.

"We are going to find ways to bring its costs down and improve effectiveness and efficiency," Hobbs said.


A federal family is saying farewell at the Agriculture Department. David Kincannon, program manager at the Farm Services Agency, will retire April 1 after 36 years of government service. Syble Kincannon, management analyst at the U.S. Forest Service, retires on the same day after 39 years of government service.

E-mail: barrs@washpost.com

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