Lawsuit upends $4B DHS software buy
A $4 billion push to unify the disparate financial management systems at the Department of Homeland Security is stalled by a legal challenge from a vendor, putting at risk the latest in a long line of efforts to consolidate technology at the agency.
DHS is pursuing a two-track procurement to consolidate the multiple financial systems of its component agencies. The agency plans separate contracts for financial management software and software integration. Taken together, the procurement looks to combine financial management, asset management, procurement and business analytics across the sprawling DHS enterprise.
The effort is on pause while DHS fends off a protest lawsuit that alleges DHS designed the software part of the procurement (Enterprise Financial Management Systems or EFiMS) to privilege big vendors. The litigant is Savantage, a Maryland-based women-owned small business contractor which has supplied financial services software to DHS since the agency’s inception.
The lawsuit has been ongoing since November 2019, when the solicitations for the new contracts hit the street. The complaint is detailed and complex and gives some indication of the varied financial management environment at DHS and among its components. The agency uses financial management software from five different vendors across its 14 component agencies, a carryover from the department’s original formation in 2002. The software solicitation states that the department would like to reduce the number of vendors it relies on to no more than two to focus on more standardized software solutions, increase efficiencies and reduce expenses.
The company is asking a judge for an injunction prohibiting the department from awarding the software contract, and an order requiring DHS to revise the solicitation “to correct the many material flaws” that they say prevent a fair an open competition, according to court documents dating back to November 2019.
The Court of Federal Claims heard oral arguments in the case on Sept. 18. It’s unclear when a decision might land.
Savantage argues it has “successfully supported the financial management needs of different DHS components since 2002 and “is fully capable of providing a financial management solution that meets the [new] solicitation’s goals.” The company argues that its background makes it more than qualified to compete for the job but alleges that “DHS constructed the [software] solicitation in a manner that restricts competition and precludes small – but highly capable – businesses, like Savantage, from competing on a level playing field.”
Last month, government lawyers noted in a reply brief that Savantage, a bidder on the contract, could “very well receive an award to provide a modernized solution” but that the focus on the procurement was to replace old software, including that offered by Savantage.
“Savantage’s legacy system is over 15-years old and provides ICE customers only one-third of the necessary integrated system – financial services. Accordingly, the replacement of Savantage’s legacy, financial-only system (and legacy systems at other components) with an integrated system will occur under EFiMS.
An old story
Since its inception, the Department of Homeland Security has been looking to unify its disparate elements into a single, cohesive agency and that effort – and its many missteps – is exemplified in a bid to consolidate financial management.
There have been three efforts since the passage of the Homeland Security Act to unify the legacy financial systems of DHS component agencies into a single solution that could streamline and improve financial reporting and leverage the size and buying power of the new department to reduce procurement costs. All have failed.
“In many respects, the story of this financial management system and the integration of disparate legacy systems, is the story of DHS,” said Chris Cummiskey, a former deputy undersecretary for management who has been involved in previous efforts to stand up an integrated system. “Because when you look at the evolution of this over time, it really dates back to the first days of the department.”
The patchwork of different, individual software systems that each component agency brought with them has resulted in DHS components “operating under disparate policies and business processes” and some cases relying on “outdated technology” and “mostly non-integrated” systems, according to a 2019 DHS Office of Inspector General report.
Most of DHS component financial management systems are out of date and suffer from shortcomings inherent in legacy technologies. For example, the system used by the U.S. Coast Guard is so deficient it required the agency to obtain a waiver in lieu of an Authority to Operate on the Coast Guard network due to security concerns, according to an audit released in August. It also lacks functionality to update to current accounting classifications.
“People recognize that you can’t have 12 or 15 large financial systems across the department if you want to be able to pull the kind of data that you need to have an integrated system, to have a department that doesn’t have to do a manual data call…every time they need to respond to the Hill or maintain a clean audit opinion,” said Cummiskey.
The troubled history of the project, along with high staff turnover at the CIO office and more broadly within the department’s leadership ranks have caused overseers and appropriators in Congress to take a particular interest in monitoring the newest procurements to ensure similar mistakes that sunk past efforts aren’t repeated.