TREASURY COMMUNICATIONS SYSTEM 

This report has been reviewed for public dissemination by the Office of Counsel to 

the Inspector General. Information requiring protection from public dissemination 

has been redacted from this report in accordance with the Freedom of Information 

Act, 5 U.S.C. section 552. 

Office of Inspector General 

United States Department of the Treasury 
DEPARTMENT OF THE TREASURY 

WASH I NGTON, D.C. 20220 

November 24, 2000 

OFFICE OF 

INSPECTOR GENERAL 

MEMORANDUM 


FROM: 

SUBJECT: 

FOR JAMES J. FLYZIK 


DEPUTY ASSISTANT SECRETARY FOR INFORMATION SYSTEMS 


Dennis S. Schindel 


Assistant 


Audit Report on Treasury Communications System 


This memorandum transmits our final audit report titled Treasury 


Communications System. We are reporting our findings and 


recommendations that will help the Department to ensure customers 


are billed appropriately for services and equipment used for the 


Treasury Communications System (TCS) program. 


Our review revealed that the Department made changes and proposals 


to improve customer satisfaction and enhance financial management. 


However, further actions are needed to ensure customers have 


access to a cost effective telecommunications infrastructure to 


carry out their missions. Our findings are summarized in the 


Overview and explained in further detail in the Audit Results 


section of the report. Also, the report includes five 


recommendations that are contained in the applicable sub-sections 


of the Audit Results section. 


Your office concurred with most of our findings and 


recommendations, and provided satisfactory implementation 


actions. You did not agree with our recommendation to develop an 


action plan to address recommendations made by the Gartner Group 


and customers concerns. However, you provided a satisfactory 


alternative action to address the issue. We have summarized the 


initiatives underway to implement the recommendations in the 


Audit Results section of the attached report and included a 


complete text of the response to our report as Appendix 4. 


We appreciate the cooperation and courtesies extended to our 


staff during the audit. If you wish to discuss this draft 


report, you may contact me at (202) 927-5400 or a member of your 


staff may contact Barry L. 
Savill, Director, Program Audits at

(202) 927-2968. 


Attachment 

1 

2 

3 

4 

5 

6 

CONTENT 

OVERVIEW 1 
 ................................................................................................. 

BACKGROUND ........................................................................................... 1 


OBJECTIVE, SCOPE AND METHODOLOGY ................................................ 3 


AUDIT RESULTS 

Changes And Proposals Made To Improve Customer Satisfaction And Enhance 

Management of TCS ................................................................................ 


Financial Activities And Program Administration Need Further Improvement ... 5 


Recommendations 11 
 ...................................................................................... 

APPENDICES 

Appendix Abbreviations 17 ........................................................................... 


Appendix 1999 TCS Accomplishments ....................................................... 18 


Appendix Preliminary Recommendations Made By The Gartner Group ........... 19 


Appendix Management Response ............................................................... 20 


Appendix Major Contributors To This Report ............................................. 26 


Appendix Report Distribution 27 ................................................................ 

OIG-01-020 TREASURY COMMUNICATIONS SYSTEM Page i 

-- 

Overview €

This report presents the results of the Office of Inspector General's (OIG) audit 

to determine if the Department is effectively managing the services offered 

through, and equipment used for, the Treasury Communications System (TCS). 

We conducted this audit to help the Department determine if customers are 

appropriately billed for services and equipment. 

Our audit revealed that the Department made several changes and proposals to €

improve customer satisfaction and enhance its management of TCS. For €

example, a corporate-wide focus on telecommunications and information €

technology (IT) was developed for the Department and TCS customers. The €

Department outlined the vision of how future telecommunications and IT €

customer needs will be met and provided goals for future plans and activities for €

achieving the vision. €

While the Department made strides to improve the TCS program, further €

improvements are needed in the areas of financial activities and program €

administration. To address these areas, we are making five recommendations €

for corrective action. €

Background €

TCS is the largest secure, private wide-area network in the United States (U.S.) 

civilian Government today. It replaced the Consolidated Data Network with a 

telecommunications infrastructure that integrates the capabilities offered through 

the Federal Telecommunications System (FTS) 2000' and network based 

services. TCS is viewed as the framework for the Department's information 

infrastructure that enables a wide selection of applications, such as providing 

simplified tax and wage reporting, linking law enforcement agencies for public 

safety, and developing an international trade database. It provides a centralized 

network and management system to support its customers' mission by 

integrating their respective information systems, and it supports a wide range of 

services, including video conferencing , multimedia applications, and 

InternetIIntranet access. 

' FTS 2000 is the Government's long-distance telecommunications program administered by the General Services 

Administration. FTS 2000 is a private network providing voice, data and video services to more than 1.4 million 

Federal employees in 3,500 locations. The Department uses FTS 2000 for all non-local voice services and for 

data services mandated by Federal Information Resources Management Regulations. 

-

OIG-01-020 TREASURY COMMUNICATIONS SYSTEM Page 1 €
Customers supported by TCS include the Department's bureaus and offices 

listed below and the Department of Justice. In January 1998, TCS served over 

6,000 nationwide customer locations accommodating over l50,OOO users and 

employing in excess of 10,000 communication circuits. The technical 

requirements for the customers vary widely. Some customers have very low 

traffic volumes and require connections between a small number of locations, 

while other customers have much greater traffic and need connections between 

and among many locations. In this report, we refer to the bureaus and offices 

as customers. 

TCS customers in the Department of the Treasury are: 

Departmental Offices' Automated Systems Division €

Bureau of Alcohol, Tobacco and Firearms €

Bureau of Engraving and Printing €

Bureau of the Public Debt €

U. S. Customs Service (Customs) €

Federal Law Enforcement Training Center €

Financial Crimes Enforcement Network (FinCEN) €

Financial Management Service €

Internal Revenue Service (IRS) €

U.S. Mint €

U .S. Secret Service (Secret Service) €

Executive Office of Asset Forfeiture (EOAF) €

Office of the Comptroller of the Currency €

Office of Inspector General €

Office of Thrift Supervision €

Treasury Information Management Information System €(TIMIS)

TCS services are provided through a 10-year Indefinite Deliveryilndefinite

Quantity contract structured to provide a flexible infrastructure to accommodate 

redefined requirements and allow the Department to harness new technologies 

as they become available. The contract was awarded in 1995 for $425 million. 

In Fiscal Year (FY) 1998, TCS customers paid $162.4 million into the Working 

Capital Fund (WCF) to cover TCS program costs. The costs include customer 

specific costs, shared costs, and Departmental Offices (DO) overhead. 

Customer specific costs are ongoing, recurring costs that are customer specific 

in nature due to location, use, or specific requirements. Shared costs are labor 

and program management costs to operate the TCS network, costs associated 

with shared activities that each customer utilizes, and anticipated costs for 

service enhancement. DO overhead consists of costs incurred by the Financial 

Management Division (FMD) to process financial management activities 

relating to the TCS program. 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 2 
The Office of Corporate Systems Management (CSM), also referred to as the €

Program Management Office (PMO), is responsible for the overall operation of €

the TCS program, and it operates under the direction of the Department's €

Deputy Assistant Secretary for Information Systems and Chief Information €

Officer (CIO). The PM07sduties include, but are not limited to, providing a €

full range of network and IT products and services from initial planning and €

design through development and integration, as well as operation and €

maintenance. PMO is also responsible for ensuring that telecommunications €

policies, procedures, and contractual support are provided. €

Objective, Scope and Methodology 

The overall objective of this audit was to determine if the Department is €

effectively managing the services offered through, and equipment used for, €

TCS. Specifically, we determined if customers were appropriately billed for €

services and equipment. €

We conducted our audit at the PMO facility in Washington, DC, and the joint €

facility occupied by PMO officials and the TCS contractor in McLean, Virginia, €

from April 1999 through September 1999. We attended Information Sharing €

Sessions held to exchange information between the PMO, the contractor, and €

customer users. We met with contractor representatives to determine what €

inventory data was available. We also visited TCS warehouses in Sterling, €

Virginia. In addition, we met with FMD officials to obtain an explanation of €

FMD's role in the billing process. €

We interviewed customers to discuss their participation in the TCS program and €

to identify current concerns. We met with customer personnel that handle the €

telecommunications requirements and needs for Customs, FinCEN, Secret €

Service, TIMIS, and EOAF on behalf of the Department of Justice. We €

reviewed financial and program data for FY 1998 to the second quarter of €

FY 1999. Other time periods were covered as deemed necessary to address the €

audit objective. €

A list of abbreviations used in this report is included as Appendix I. 

We conducted our work in accordance with Government Auditing Standards 

issued by the Comptroller General of the United States, and included such audit 

tests as were deemed necessary. 

OIG-01-020 TREASURY COMMUNICATIONS SYSTEM Page 3 €
Audit Results 

Changes and Proposals Made to Improve Customer Satisfaction and 

Enhance Management of TCS 

PMO made changes and proposals to improve customer satisfaction and enhance 

its management of the TCS program. The actions taken are listed below. 

Developed a Concept of Operations which is the vision of how future 

telecornmunications and IT customer needs will be met. The concept 

provides goals for future plans and activities for achieving the vision, and 

shifts the Government's role to oversight rather than implementation. 

Established an annual Service Request Resource Agreement (SRRA) for 

each customer. The SRRA quantifies the expected services required during 

the year to establish contractor resource levels and the cost of the contract to 

each customer. 

Shifted the contract structure for providing telecomrnunications and IT 

services. On October 1, 1999, the PMO initiated a performance-based 

contract that will be the umbrella for all telecomrnunications and IT 

services. During our review, PMO and the contractor were jointly 

developing performance standards to articulate schedule and quality 

parameters to include performance incentives and penalties. 

Revised the policy for maintenance on equipment used for the TCS 

program. This revision granted TCS customers the authority to choose 

between paying for time and material versus a monthly fee. 

Identified customer needs throughout the year by holding monthly 

Information Sharing Sessions attended by representatives from PMO, TCS 

contractor, and TCS customers. Appendix 2 is a list of accomplishments 

highlighted by PMO for 1999. 

The actions being worked on by the Department during our review included: 

(1) a new funding strategy; (2) a plan to standardize service ordering; 

(3) a web-based ordering system; and (4) an automated financial management 

system to standardize billing, invoice resolution, and information management 

to meet customer needs. 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 4 
The above improvements could be attributed to the transition from the 

Consolidated Data Network to TCS and the reorganization of the CIO's office. 

Senior management in the CIO office recognized the need to change information 

management. Thus, senior management made a commitment to improve key 

functions critical to building a modern information management infrastructure 

by: (1) making customer needs and mission goals the central drive of all 

organizational improvement efforts; (2) objectively measuring performance; 

(3) tightly controlling IT investmects; and (4) taking action to improve and 

maintain momentum. 

It is our belief that the actions taken and proposed will enhance program 

operations, allow greater flexibility in regards to contract support, improve the 

quality of financial activities, refine network availability, and narrow the gap 

between customer expectations and delivery of services. 

Financial Activities and Program Administration Need Further 

Improvement 

The PMO made some strides to improve customer satisfaction and enhance its 

management of TCS; however, further actions are needed to ensure customers 

have access to a cost effective telecommunications infrastructure and assets are 

safeguarded. The PMO officials were made aware that improvements are still 

needed in the areas of (1) financial activities and (2) program administration. 

TCS customers voiced their concerns to the PMO at monthly Information 

Sharing Sessions and through memoranda sent to the Director, CSM. Also, the 

Gartner Group, an outside consulting firm, made recommendations for 

improvement in these two areas to the PMO as a result of a review that was just 

completed at the time we performed our fieldwork (see Appendix 3 for the 

recommendations). While we recognize that PMO officials may not have had 

sufficient time to assimilate an action plan to address the recommendations,

PMO officials had not developed and shared a formal action plan to address 

customer concerns. Details on the specific issues relating to financial activities 

and program administration that require management's attention are contained 

in the applicable sub-section of this report. 

The Federal Managers' Financial Integrity Act of 1982 requires renewed focus 

on the need to strengthen internal accounting and administrative controls in 

order to prevent fraud, waste, and mismanagement in Federal programs and 

operations. Internal control techniques include, but are not limited to, specific 

policies, procedures, and plans of the organization. Management should adopt 

methods and procedures to ensure its goals are met. Organizational structure, 

processes, and practices used should be documented and appear in management 

directives, administrative policy, and accounting manuals. 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 5 
Financial Activities 

Five TCS customers that we visited voiced concern in three areas: (a) shared 

costs and DO overhead charges; (b) funds availableiobligated; and (c) billing 

issues. Overall, customers did not understand what they were being charged 

for, and they believed that the charges for shared costs and DO overhead were 

excessive. Furthermore, they did not always know their current TCS balances, 

and bills were not always timely and accurate. 

Shared Costs and DO Overhead Charges 

The shared costs and DO overhead of the TCS program were not clearly 

discernable to its customers. Consequently, the customers perceived that they 

were paying more than their share of these costs, and they did not understand 

what services were covered by the charges. This condition existed because 

neither the PMO nor the TCS contractor developed an adequate method to 

communicate the breakdown and line item explanation of TCS program costs. 

Although PMO attempted to explain the shared costs and DO overhead charges 

by providing a handout during the May 7, 1999 Information Sharing Session, 

the customers still did not understand what was included as shared costs and DO 

overhead charges. 

Additionally, customers noted that total shared costs and DO overhead charges 

exceeded their total specific costs. Total shared costs and DO overhead charges 

increased as the specific costs decreased. More than half of the customers' 

funds that were put into the WCF covered shared costs and DO overhead 

charges. Table 1 is a breakdown of funds put into the WCF to cover TCS 

program costs for FYs 1998 and 1999, respectively. 

TCS Program Costs 

Customer Specific Costs 


Shared Costs 


DO Overhead 


Table 1 

FY 1998 

(in millions) 

$ 113.5 (70 percent) 

$ 42.7 (26 percent) 

$ 6.2 ( 4 percent) 

FY 1999 

(in millions) 

$ 57.3 (44 percent) 

$ 66.7 (52 percent) 

$ 5.0 (4 percent) 

Total TCS Program Costs $ 162.4 (100 percent) $ 129 (100 percent) 

Source: Consolidated Fiscal Year TCS Costs (Financial Plans) 

Officials in the PMO and FMD stated that they were aware of the customers' 

concerns regarding TCS costs. The Gartner Group recommended that a 

rigorous analysis and evaluation of the entire TCS cost structure should be 

undertaken. However, by the end of our fieldwork, a rigorous analysis had not 

been conducted to evaluate the entire TCS cost structure. To address shared 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 6 
costs, PMO officials stated that they are looking into reducing the customers' 

costs by obtaining appropriations to cover a portion of shared costs related to all 

provided telecommunication services. 

To address DO overhead concerns, FMD officials explained that a statement of 

work was prepared for a contractor to look at how DO overhead was developed 

for all WCF activities. Currently, all programs under the WCF pay the same 

four percent rate for DO overhead. The contractor will determine if the DO 

overhead rate is fair and equitable across all WCF activities and programs. 

Funds AvailableIObligated 

Customers found it difficult to develop their financial plans (budget needs), and 

they did not always know their TCS-related fund balances. Consequently, the 

true cost for the TCS program was unknown to its customers, and the risk of 

violating anti-deficiency rules was present. In fact, as discussed below, one 

customer was unaware of a provided service that should have been included in 

its financial plan and another customer had to re-program $1.2 million late in 

the fiscal year to cover its TCS costs. These problems can be attributed to the 

failure to provide sufficient financial guidance and descriptive invoices. 

Sufficient financial guidance is needed for two reasons: (I) to provide a 

realistic cost estimate and (2) to assist in the reconciliation of TCS-related 

funds. TCS customers operate on a FY basis, but activities funded through the 

WCF are no-year funds. No-year funds can be counted on for use in multi-year 

projects, thus eliminating the need to spend all funds within a given FY. 

An example to support the need to provide cost estimate guidance and, as 

discussed in the Billing Issues sub-section of this report, descriptive invoices is 

IRS' payment of a T-1 communications line that should have been paid by 

FinCEN. The cost for this line was substantial, but FinCEN was unaware that 

the line cost should have been included in its financial plan. Upon discovery, 

FinCEN had to retroactively pick up the cost of the line for the last 2 years. 

Several customers stated that it is very difficult to project the budget and to 

trace bills back to the service request and FY. For example, the Secret Service 

had to quickly obtain $1.2 million to avoid anti-deficiency. Secret Service used 

funds from one of its non-appropriated programs to cover this cost.* Many 

customers stated that they would like to have integrated systems to help them 

manage their funds. 

' Secret Service's TCS costs were obtained from the Asset Forfeiture Program and not from its appropriations 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 7 
Customers were not timely provided bills for recurring TCScharges and 

maintenance trouble ticket charges for verification, and the bills did not 

sufficiently describe the service provided. ills also contained numerous 

discrepancies, and billing issues were not timely resolved. The customers 

believe that many of these billing problems are attributed to the lack of 

documentation maintained by the contractor and the lack of integrated systems 

to effectively manage the program. Neither the contractor nor the PMO had 

accurate TCS financial records. Due to these many billing problems. customers 

refused to approve certain invoices for payment. Examples of billing problems 

are provided below. 

Q 	 Bills were not timely submitted and did not sufficiently describe the service 

provided. Customers received bills for trouble ticker maintenance costs 

dating back to 1996. This issue was addressed at the Information Sharing 

Session held on July 16, 1999. A PMO official disclosed that the contractor 

for maintenance from 1996 to December 1998, and 

r 1998 to the present. However, payment to the 

contractor was being withheld until contract issues, such as who could 

authorize services, were resolved and the bills were verified. It was agreed 

during this meeting that the contractor would work with the customers 

towards resolution. 

Q 	 Secret Service was overcharged in excess of due to a calculation 

error in the TCS billing system's formula for lease-to-own property. The 

system multiplied the cost per unit by the number of units twice (e.g., 

per unit x 3 units x 3 units). Secret Service officials identified the error, 

and it took the contractor more than 2 months to correct the formula. These 

officials questioned the system's accuracy, and stated that they were unable 

to reimburse customers for shared costs and 0 overhead charges as errors 

are found. 

Q 	 TIMIS was charged for site-drawing revisions that were certified as being 

completed, but TIMIS discovered that the drawings were never done. 

Additionally, the contractor offered to refund the money even though TIMIS 

never paid for the drawings. 

TIMIS was paying maintenance on items that were in a warehouse for 3 

years in the original boxes. These items were never installed; they were 

excessed after being declared non-Year 2000 compliant. TIMIS officials 

stated that similar financial and billing problems existed over the years, and 

TIMIS has gotten no satisfaction towards expedient resolution. . 
It is vital for the Department to employ sound financial management of the TCS 

program. A method needs to be established as soon as possible to provide the 

Department and the TCS customers with an itemized and detailed explanation of 

all TCS costs. Additionally, a financial management system is needed to 

provide customers with detailed cost information and adequate documentation to 

manage their program. Finally, financial related problems need to be promptly 

resolved and adjustments made to all affected customer(s) accounts when errors 

are identified, including errors found in shared costs and DO overhead charges. 

Program Administration 

Administration of the TCS program needs to be strengthened to: ensure 

customers have the necessary resources to identify and effectively apply 

approved TCS policies and procedures, avoid the need for temporary alternative 

services, and control assets. Our review disclosed that customers did not 

receive sufficient guidance and requested work was not always timely 

performed. These conditions existed because the contractor was not held to all 

of the contract's deliverables due to other priorities. Also, a user-friendly 

method for tracking and identifying TCS equipment was not in place. An 

independent and complete physical inventory was not taken because the 

contractor had responsibility for managing the inventory and allowed customers 

to submit documentation in lieu of a physical count in support of their 

inventory. 

Program administration includes providing direction and guidance to the 

customers and managing the program's operation to effectively and efficiently 

meet its goal. Managing the contract includes assuring that the contractor is 

responsive to the customers needs and requirements, milestones and timeframes 

are met, and deliverables are provided. 

Guidance 

Although the contract included a requirement to provide documented policies 

and procedures, we noted that several were not documented, such as billing 

procedures. Also, draft policies and procedures were submitted to the TCS 

customers for comment but were never finalized. As reflected below, several 

documents have been in draft for a long period of time. 

Draft property management policies and procedures, dated 

February 11, 1998.

e Draft revision on the policy for TCS Service requests/service order, dated 

May 12, 1998. 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 9 
Draft flowchart to explain the financial management process that consisted 

of budget formulation and fund administration, dated October 8, 1997. 

For those policies and procedures that were in draft, customers have been 

following them even though the policies and procedures were not finalized. 

New policies and procedures must be forwarded to the legal division for review 

and approval before they are finalized. 

According to PMO officials, the contractor did not document all policies and 

procedures because some contract deliverables were outdated and repetitive. 

The officials further stated that a consultant will be obtained to assist the PMO 

in documenting TCS policies and procedures, and the draft documents will be 

finalized once approved by the legal division. 

Service Requests 

Customers perceived that the contractor was not complying with the TCS 

contract because the contractor had not done sufficient or timely work. 

Specifically, the contractor was not able to handle all service requests and took 

too long to get requested work done. Since certain service requests were not 

timely completed, customers had to absorb unnecessary expenses. For 

example, a customer had to obtain an alternative telecommunications service to 

perform necessary work because the contractor did not timely respond to the 

request for service. The customer planned to cancel the alternative service 

when TCS is operational. According to PMO officials, other priorities may 

have taken place. 

Inventory Control Methodology 

Several customers maintained their own TCS property inventory system because 

the contractor's inventory methodology was not compatible with their needs and 

requirements. In our attempt to conduct a physical inventory at selected sites, 

we also found the contractor's method difficult to associate with the equipment. 

We were only able to identify TCS equipment items with assistance from the 

PMO, customer representative, andlor the contractor. The difficulty in 

identifying the equipment occurred because contract line item numbers were 

used to track and identify each part, rack, assembly kit, accessory, and 

equipment item instead of serial numbers or bar codes. Same model items did 

not contain a unique identifier to designate ownership. In addition, the 

contractor used another method of tracking and identifying excess equipment 

located at the TCS warehouse. The contractor tracked excess equipment by 

location in the warehouse and used a separate program to track incoming and 

outgoing items. 

OIG-01-020 TREASURY COMMUNICATIONS SYSTEM Page 10 
Physical Inventory 

The PMO lacked assurance that an accurate physical inventory of TCS assets 

was taken. In FY 1999, a physical inventory of TCS equipment was taken for 

the first time since the present contract was awarded in 1995. TCS customers 

were permitted to have the contractor verify the inventory for a fee or verify it 

themselves. Several large customers used their own property management 

system for verification because, as discussed above, the contractor's records 

were not user-friendly. By not requiring a party independent of the contractor 

to perform the physical inventory, the Department and its customers are 

exposed to potential fraud, waste, and abuse. 

It is vital for the Department to make further improvements to: ensure 

customers have the necessary resources to identify and effectively apply 

approved TCS policies and procedures, avoid the need for temporary alternative 

service, and control assets. Formal controls provide reasonable assurance that: 

the program is achieving its intended results; cost-effective measures are taken; 

and assets are protected from waste, fraud, and mismanagement. Effective 

internal controls also help in managing change to cope with shifting 

environments and evolving demands and priorities. As programs change and as 

agencies strive to improve operational processes and implement new 

technological developments, management must continually assess and evaluate 

its internal controls to assure that the control activities being used are effective 

and updated when necessary. 

Recornmendations 

1. 	The Deputy Assistant Secretary for Information Systems and Chief Information 

Officer should ensure that an action plan is developed and documented to address 

the TCS recommendations made by the Gartner Group and customer concerns. For 

each recommendation and concern, the action plan should contain: action to be 

taken, individual or group responsible for implementing the action, milestone(s) to

fully implement the action, and date the action was completed. In the event no 

action will be taken on an item, management should document the reason(s). To 

effectively manage TCS and satisfy its customers, the action plan should be 'kept 

up-to-date on the status of each item and periodically disseminated to appropriate 

management officials and stakeholders. 

Management Response and OIG Comment 

The C10 believes that the development of an action plan is not necessary. It would 

place an unnecessary burden on the TCS program staff. Program direction, 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 11 
activities, and results, which support the Gartner recommendations, are already 

discussed and documented in the forums mentioned below. The Gartner Group 

report referenced in this recommendation was a result of a task from the CIO's 

office to analyze and document recommendations to improve the TCS Program. 

The report was fully briefed and discussed at a TCS Board of Directors meeting. 

As a result, the Board recognized these issues, and together with the development 

of a TCS Concept of Operations, provided the necessary direction for the staff to 

improve the TCS Program. 

A number of Treasury forums and groups have been actively involved in moving 

the program forward to meet the recommendations in the Gartner Group report. 

These include: 

-	 The TCS Information Sharing Session. This group is comprised of bureau 

program managers meeting monthly to discuss program direction, new 

requirements, and common issues and problems. 

-	 Capital Investment Review Board. This senior Treasury executive investment 

board receives quarterly updates on the strategic direction of TCS. Corporate 

funding, management topics and economic analysis of TCS directions are 

actively discussed. 

-	 Treasury Communications Enterprise Strategic Working Group. This group 

was formed in May 2000, after bureau representatives attended a strategic 

training session sponsored by the General Services Administration. This group 

began focusing on the overall strategic direction of TCS, and is an example of 

developing a cohesive, multi-bureau group to move the program forward, and to 

breakdown the traditional stovepipe behavior which in the past has inhibited the 

program from moving forward. 

The OIG believes that the proposed action addresses the intent of the 

recommendations as long as TCS program staff maintain documentation to show 

program direction, activities, and results including milestones to fully implement 

the action and the date the action was completed. In the event no action will be 

taken on any item, management should be prepared to explain the reason(s).

2. 	 The Deputy Assistant Secretary for Information Systems and Chief Information 

Officer should ensure that an analysis is conducted on all TCS related costs to 

determine those costs that should be charged to TCS customers. It is critical that 

the study be conducted as soon as possible to manage the TCS program in the most 

cost-effective manner. Upon completion, customers should be briefed on the 

analysis to ensure understanding and reasonable agreement with the final results. 

OIG-01-020 TREASURY COMMUNICATIONS SYSTEM Page 12 
Management Response and OIG Comment 

The CIO indicated that CSM has several initiatives underway which will enable the 

TCS customers and PMO to better manage and monitor shared costs, funds 

availablelobligated and billedlunbilled items. These initiatives include: 

a) 	 Establishment of a structured financial planning process. This process enabled 

the CSM Financial Management Office, TCS program staff, and customers to 

build jointly developed out-year IT plans and budget formulation plans for 

FY s 2001-2002. This effort resulted in better quality financial plans for 

FY 2001 for both shared costs and bureau specific cost items. 

b) Establishment of improved, documented processes for financial accounting 

activities. The CIO's response indicated that CSM is establishing standard 

operating procedures as well as standard reports which will enable and enhance 

communications with the customers on financial plan amounts/adjustments, 

delivery order tracking and monitoring, planned and actual expense tracking and 

funds availablelcarryover. This information will be readily available to TCS 

customers. 

c) 	 Establishment of improvements in the billinglinvoicing area. These 

improvements focus on changes in the financial plan task categories, which will 

assist TRW and FMD, to track and invoice TCS services effectively. 

Historically, the bureaus have submitted service requestlservice orders for 

processing without having properly identified funding mechanisms in place, or 

without adequate funding available, which has negatively impacted billing and 

invoice accuracy. To remedy this problem, separate delivery orders were 

created for the following activities: maintenancelcircuits, bureau specific special 

projects, and network moves, adds and changes. Establishing these separate 

delivery orders will allow CSM to implement usage based billing and fee for 

service financiallbilling processes, which will drive down the shared costs and 

allow each bureau to pay for services based on the services they actually use. 

The result will be improved and equitable accounting processeslsystems.

The OIG believes that the initiatives underway address the intent of the 

recommendation to provide the Department and the TCS customers with 

detailed cost information and adequate documentation to manage their program. 

3. 	The Deputy Assistant Secretary for Information Systems and Chief Information 

Officer should ensure that sound financial management and inventory processes and 

systems are maintained. The financial management process should require: 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 13 
documentation be maintained to support invoices; invoices include a description for 

each charge; and prompt resolution and adjustment for all affected customer(s) 

accounts when errors are identified, including errors found in shared costs and DO 

overhead charges. The financial management system should provide timely and 

sufficient information to meet the TCS customer needs, such as current account 

balances, date and description of service requested, and date services were 

completed. To safeguard assets, the TCS property and equipment should be 

controlled in a manner to easily identify each item's location and owner. A party 

independent of the contractor should perform the physical inventory. 

Management Response and OIG Comment 

The CIO indicated that CSM, TCS PMO, TCS customers, and the TCS contractor 

all have specific responsibilities to maintain effective financial management and 

inventory processes for the TCS program. Specifically, regarding inventory 

management, each party has a responsibility to maintain accurate records of 

inventory information and to track and monitor their inventory effectively. 

During the Year 2000 (Y2K) Program, CSM facilitated efforts with all parties to 

ensure that as Treasury prepared for the millennium change, its systems were 

baselined, each item tracked, and either upgraded or replaced to mitigate any 

system risks to the Department. TCS Y2K activities were successful and problemfree for the Treasury Department. During Y2K, CSM tasked several independent 

contractors to validate and cross check the inventory databases for accuracy. These 

independent contractors' tasks proved very valuable to CSM, as they were able to 

identify several inaccuracies and allowed CSM to improve the inventory baseline 

for the Y2K effort. The CIO further indicated that while CSM is confident that the 

inventory is accurate, it is not easily obtained and formatted to allow user-friendly 

analysis. CSM is in the process of analyzing how to make improvements in this 

area. 

CSM has made financial management improvements. Specifically, CSM created a 

system for tracking and approving invoices. This system is called Corporate 

Financial Invoice Tracking System (CFITS). Significant savings in productivity 

have been realized during the short life of the system. The time spent on 

coordination and approving manual invoicing has been drastically reduced. 

Although CFITS has improved the invoice process, it does not address the issues of 

invoice errors or withhold procedures when completed services and costs are not 

a1igned . 

In FY 2001, the CSM Financial Management Office will have standard operating 

procedures for invoicelbilling resolution in alignment with prompt pay regulations, 

and propertyiinventory management procedures in alignment with the Treasury 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 14 
Capital Assets Tracking guidelines. Also, in preparation for FY 2001, CSM has 

established new standard reports for Treasury and the bureaus to improve tracking 

of funding amounts, account balances, expenses, and contractor workload start and 

completion information. 

The OIG believes that the changes and proposed actions address the intent of the 

recommendation. 

4. 	 The Deputy Assistant Secretary for Information Systems and Chief Information 

Officer should ensure policies and procedures are promptly designed, documented, 

finalized, and distributed to the TCS stakeholders. Priority should be given to 

finalizing and providing adequate financial guidance to the TCS customers. The 

guidance should address formulating and executing the budget and relating how the 

budget process works in relation to service requestslorders. 

Management Response and OIG Comment 

The CIO believes that CSM is making improvements in terms of the way by which 

it conducts business with its customers. CSM is developing "business rules" with 

its constituents to solidify and improve how Treasury will work more effectively 

with its customers. These guidelines will enable CSM to better define expectations 

from both various organizational entities as well as customers. In preparation for 

FY 2001, CSM is defining and documenting the following key areas: 

Program Management - Expectations and roles and responsibilities for program 

service level expectations of TreasuryiCSM and bureau CIOiStaffs;

* 	 Budget Formulation - Expectations and roles and responsibilities for financial 

planltimelines, joint requirementlworkload planning and cost estimating for 

bureau specific service requestslservice orders; and 

Budget Execution - Expectations and roles and responsibilities for invoicing, 

timely payment of services delivered, etc. 

Also, in FY 2001, the CSM organization is refining and solidifying the CIO 

Information Technology Manual, a Treasury CIO policy directive which will 

articulate to the customerslbureaus specific guidelines for utilizing services from 

CIOICSM corporate systems, such as TCS. In addition, working with the CIO 

Financial Management Office, CSM is refining the overall lifecycle of the budget 

formulation process for its programs. 

The OIG believes that the changes and proposed actions address the intent of the 

recommendation. 

OIG-01-020 TREASURY COMMUNICATIONS SYSTEM Page 15 
5. 	The Deputy Assistant Secretary for Information Systems and Chief Information 

Officer should hold the contractor accountable to eliminate unnecessary expenses 

due to the contractor's inability to respond to a service request. For example, a 

timeline for submitting the request for service and completing the work could be 

determined and agreed to by the Department, contractor, and TCS customers. 

Management Response and OIG Comment 

According to the CIO, CSM has initiated several changes in FY 2000 to the TCS 

contract in terms of how to effectively hold the TCS contractor accountable for 

timeliness of services delivered. 

The TCS contract is a performance based contract with an award fee incentive, 

based on outcome-oriented results and agreed to customer expectations (e.g ., 

timelines). 

9 	 The TCS contract will migrate from the former process of managing by service 

request to managing by customer-driven statement of work and Government 

negotiated delivery orders. This approach will enable TCS customers and 

Treasury contract staff to better monitor and manage the workload of the TCS 

contractor and delivery date schedules, using positive and negative incentives to 

allocate contractor payment. 

These TCS contract changes will enable CSM to manage and monitor the 

contractor's performance and costs related to bureau taskslrequirements more

effectively. The service request process will atrophy over time, due to the 

implementation of project and performance management principles and 

guidelines within the TCS program. CSM is migrating to a results-oriented 

focus, which will encourage the TCS contractor to perform better to receive the 

positive incentives associated with timely, quality service delivery. 

As CSM migrates the TCS program from its legacy technologies and program 

structure to a commercial service oriented program, service level agreements will 

drive the delivery of service offerings. Service level agreements are in place today 

for some of the new work that CSM initiated for its customers in FY 2000. These 

agreements will be further refined, and new ones developed to insure that the TCS 

program is delivering dependable, timely services. 

The OIG believes that the changes and proposed actions address the intent of the 

recommendation. 

OIC-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 16 
Appendix 1 

CFITS 

CSM 

Customs 

CIO 

DO 

EOAF 

FinCEN 

FMD 

FTS 2000 

FY 

IRS 

IT 

OIG 

PMO 

Secret Service 

SRRA 

TCS 

TIMIS 

WCF 

Corporate Financial Invoice Tracking System 

Corporate Systems Management 

U.S. Customs Service 

Chief Information Officer 

Departmental Offices 

Executive Office of Asset Forfeiture 

Financial Crimes Enforcement Network 

Financial Management Division 

Federal Telecommunications System 2000 

Fiscal Year 

Internal Revenue Service 

Information Technology 

Office of Inspector General 

Program Management Office 

U.S. Secret Service 

Service Request Resource Agreement 

Treasury Communications System 

Treasury Integrated Management Information Systems 

Working Capital Fund 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 17 
Appendix 2 

Subcontracts Successfully Completed for Commercial Interchange Carrier Service 

Completed Year 2000 for Critical Systems 

Developed Concept of Operations for Treasury Communications Enterprise 

Operated Network Successfully 

Met All Service Level Commitments - Reorganized to Reduce Service Timelines and 

Streamlined Processes 

Implemented New Integrated Network Management Service Capability 

Continued to Work Customer Requirements Proactively 

Implemented New Internet Architecture to Improve Service 

Planned and Initiated New Technology 

Initiated a Performance-based Contract on October 1, 1999 

Progressed in Planning and Implementing "Fee for Service" to Reduce 

costs 

Moved to a New Facility to Support "Production Line" Organization 

- -

OIG-01-020 TREASURY COMMUNICATIONS SYSTEM Page 18 
Appendix 3 

AD 

THEGARTNERGRO 

Address the business leadership challenges around a shared network utility. The Department, its 

bureaus, supported organizations, and business partners must achieve alignment on goals and 

objectives for TCS to be effective, and if the Concept of Operations is to be realized. - Stakeholders need to reach and demonstrate agreement on their support for TCS and Concept of 

Operations. Behavior will visibly signal their support for the Department's intent. 

The Bureaus, PMO, and contractor need to establish their costs and applyluse that information in 

making sound investment and supportlstaffing decisions. A rigorous analysis and evaluation of the 

TCS cost structure should be undertaken. 

The program must establish and maintain an accurate inventory and baseline. The contractor must 

be strongly encouraged to continue its recovery from historical program issues (inventory, billing, 

and backlog). 

Information sharing sessions should be used to steer the Department and network direction. The 

program should consider using professionally facilitated workshops to develop the right parameters 

and tools for this unique networking environment. 

Performance parameters should be incorporated into performance improvement processes and used 

as tools to promote learning. The use of parameters or service level agreement data to change 

vendors without customer's knowledge or consent, or illustrate Bureaus' inability to plan should not 

be tolerated. I 

Integrated, on-going planning processes need to be developed with the participation of key 

stakeholder organizations. Forecasting rigor and discipline need to evolve into core organizational 

competencies. 

With improvements in parameters and performance management, the establishment of a cooperative 

work environment, and improvements in forecasting and planning, the contractor must be 

encouraged to revamp internal processes to reduce cycle times and improve its perceived 

responsiveness. 

PMO should be given the budget authority to support its prograrn responsibilities. With budget, 

PMO must improve its technical competencies and deliver value to the Bureaus by directing and 

guiding key process improvement initiatives. 

Treasury, its Bureaus, and key stakeholders must resolve funding issues associated with the lack of 

synchronization between multi-year programs and single-year budgets. 

The Indefinite Deliverylhdefinite Quantity contract structure and€contract line item number format 

should be replaced with a market and client needs focused agreement. 

-	 Rather than call out specific ports and cables, the structure should center around agreed upon 

"common denominators" for data networking services -- a limited number of standard 

configurations and services. 

- The agreement should incorporate incentives to motivate desired behaviors and outcomes. 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 19 
Appendix 4 

Page 1 of 6 

DEPARTMENT OF THE TREASURY 

WASHINGTON, D.C.20220 

September 22,2000 

MEMORANDUM FOR DENNIS S. SCHINDEI, 

ASSISTANT INSPECTOR GENERAL FOR AUDIT 

FROM: James J. Flyzi 

ation Svstems 

and chief ~nfohdation&cer 

SUBJECT: 	 Draft Office of Inspector General Audit (OIG) Report on 

Treasury Communications System (TCS), (Ref. Memorandum: 

Draft Report on Treasury Communications System. August 25,2000) 

This memo is written in response to the Office of the Inspector General's (OIG) draft audit 

report, whch addresses two key areas of concern regarding the Treasury Communications 

System (TCS) Program managed by the Corporate Systems Management (CSM) Office. The 

areas of specific review in the report include: 

0 	 Determining if the Department is effectively managing the services offered 

through TCS 

0 	 Determining if customers are being billed appropriately for services and 

equipment 

We appreciate the analysis and time spent by the OIG to take note and validate the progress our 

office has made within the TCS Program. As noted in your report. during the timeframe the 

audit was conducted. we were in the process of implementing many steps to improve customer 

satisfaction and enhance our financial management processes. Since the end of the audit period 

in September 1999. we have made considerable additional strides to improve our business 

processes and customer relations in the areas of financial management and billing. These are 

noted in the paragraphs in response to your proposed recommendations. 

However, we do recognize that TCS program improvement is a continuing process to deliver 

services in a timely. dependabie manner and within an efficient financial cost structure. The 

principles and directions outlined in your recommendations are in agreement with the TCS 

Board of Directors guiding concept of operations, program principles, and directions. As such, 

the recommendations proposed, especially those described in recommendation number one, are 

being actively pursued and implemented by my office. As noted in our response to 

recommendation one. I feel that the requirement of an action pian is not necessary. and will only 

add an unnecessary burden to the TCS Program office. 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 20 
Appendix 3 

Page 2 of 6 

In summaq, it is our expectation that the processes underway will improve the financial 

accountability of our program, increase customer satisfaction, and provide bener service deliver\. 

for the TCS Program and its customers. 

1 ) OIG Recommendation: 

Deputy Assistant Secretary for Information Systems and Chief Information Officer should 

ensure that an action plan is developed and documented to address the TCS recommendations 

made by the Gartner Group and customer concerns. For each recommendation and concern, the 

action plan should contain: action to be taken. individual or group responsible for implementing 

the action. milestone(s) to filly implement the action, and date the action was completed. In the 

event no action will be taken on an item? management should document the reason(s). To 

effectively manage TCS and satisfy its customers, the action plan should be kept up-to-date on 

the status of each item and periodically disseminated to appropriate management officials. 

CIO Response: 

The Gartner Group report referenced in this recornmendaiion was a result of a taskffom my 

oflce to analyze and document recommendations to improve the TCS Program. The report was 

fully briefed and discussed at a TCS Board of Directors Meeting. As a result, the Board 

recognized these issues, and together with the development of a TCS Concept of Operations, 

provided the necessa? direction for my staff to improve the TCS Program. 

In addition. a number of Treasuryforums and groups have been acrivelv involved in moving the 

program forward ro meet the recommendations in the report. These include. 

-	 The TCS informailon Sharing Session This group rs comprised ojbureau program 

managers meeting monthly to dlscuss program direction, new requrrements, and common 

rssues and probiems 

-	 Capiral Investment Revrew Board. This senror Treasury executive investment board receives 

quarterly updares on the strategic direction of TCS. Corporate-funding,management ropics 

and economic analysis of TCS directlorn are acrively drscussed 

- TCE Strategrc Working Group. This group was formed rn May 2000, afier bureau 

representatrves attended a straregic training sessron sponsored 6)-GSA. This group began 

focusing on the overali strategic directron ojTCS. and is an examp/c ofdeveloping a 

cohesive, multl-bureau group ro move the program forward. and ro breakdown tile 

traditional stoveprpe behavior which in the past has inhibited rhe program-from moving 

for ward. 

As noted above, and in our responses to other OIG recommendations, a number of acrivities 

current1.v exist to meet fhe objectives of the Garrner report The development of an actron plan is 

not necessary. It would place an unnecessary burden on the TCS program stafl Program 

drrecrion, activrries, and results, which suppurl the Gartner recommendations, are already 

discussed and documenred rn the forums mentroned above. 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 21 
Appendix 4 

Page 3 of 6 

2) OIG Recommendation: 

The Deputy Assistant Secretary for information Systems and Chief Information Officer should 

ensure that an analysis is inciuded for all TCS related costs to determine those costs that should 

be charged to TCS customers. It is critical that the study be conducted as soon as possible to 

manage the TCS Program in the most cost-effective manner. Upon compietion customers should 

be briefed on the analysis to ensure understanding and reasonable agreement with the final 

results. 

CIO Response: 

Corporate Systems Management has several initiatrves underwa.v whrch will enable the TCS 

cusromers and the TCS Program Management O@ce (PMO) to better manage and rnoniror 

shared costs,funds available/obligated and billedhnbilled items These initratives znclude: 

a) Establishment of a structured financial planning process. This process enabled the 

CSM Financial Management Ofice, TCS program staff; and customers to build 

joinrl,~developed out-year IT plans and budget formulation plans for FY0l -02. This 

eflort resulted in better qualityfinancial plans for FYOl for borh shared costs and 

bureau specific cost items. 

b) €Establishment of improved, documented processes for financial accounting activities. 

We are establishing standard operating procedures as well as standard reports which 

will enable and enhance communications with the customers on jirzancial plan 

amounrs/aqjustmet~rs,delivery order tracking and monitoring, planned and acrual 

expense tracking, and finds availabIe/carryover. This information will be readily 

available ro our customers. 

c) €Establishment of improvements in the billing /invoicing area. These improvements 

focus on changes in the financial plan task categories, which will assisf TRW ar~dthe 

Financial Managemenr Division (Fh4D), m rrack and invoice TCS services 

effective!v. Hisforically, the burraus have submitted Service Request/Service Orders 

(SRs/SOsl .for processing without having properly idenrrfied .funding mechanisms in 

place, or without adequate jirnding avuilahle, which has negatively impacted billing 

and invoice accuracy. To remedy this problem, we created separate delivery orders 

for the following acriviries: Maintenance/Circuirs. Bureau spec~flcSpecial Projects, 

and Network Moves, Adds and Cilanges. Establishing rhese separate delivery orders 

will allow CSM to implemenr usage based billing and fee .for service ,financlal/billing 

processes, which will drive down the shared costs and allow each bureau ro pay.for 

services based on the services they acrually we. The result will be improved and 

equitable accounting processes/sysrem.r. 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 22 
Appendix 4 

Page 4 of 6 

3) OIG Recommendation: 

The Deputy Assistant Secretary for Information Systems and Chief Information Officer should 

ensure that sound financial management and inventory processes and systems are maintained. 

The financial management process should require that: documentation be maintamed to support 

invoices including a description for each charge; and prompt resolution and adjustment for all 

affected customer(s) accounts when errors are identified, inclclding errors found in shared costs 

and Departmental Office (DO) overhead charges. The financial management system should 

provide timely and sufficient information to meet TCS customers needs, such as current account 

balances, date and description of service requested and date services were completed. To 

safeguard assets, TCS property and equipment should be controlled in a manner allowing easy 

identification each item location and owner. A party independent of the contractor should 

perform the physical inventory. 

CIO Response: 

Corporate Systems A4anagement, the TCS PMO, TCS'customers, and the TCS Contractor all 

have speclfic responsibiliries to maintain effective financial management and inventory 

processes for rhe TCS Program. Specifically, regarding inventory nranagemenr, each parry has 

a responsibility fo marnfain accurate records of inventory information and to track and moniror 

their invenrory effictively. 

During the Y2K Program. CSMfacilitated efforts with all parties to ensure that as we prepared 

for the miIIenium change, our systems were baselzned, each item tracked, and eirlzer upgraded or 

replaced ro mitigate any system risks to the Department. Because of the due diligertce of our 

stufls, TCS I'ZK acriviries were successjitl and prob1em:free .for the Treasury Deparrment. 

Durrng Y2K CSA4 tusked several independen! contractors ro vaiidare and cross check our 

inventory da~abases.for accuracy These independent conrractor tasks proved very valuable to 

CSh4, as we were uble to idenrrb several inaccuracies, and allow us to improve our invenror?] 

baseline for the 12A'efforr While we are confidenr that our inventory is accurare, it is not easil? 

obtained andformarred (o allow ~ser~fiiendlyanaiysts %'e are in the process of analyzing how 

we can make improvements in this area. 

CSM has made significant Financial Managemen[ improvemenrs. SpeciJically, we have created a 

system for rracklng and approvrng invoice This' system is called Corporare Financial Invoice 

Trackrng System (CFITS). Signrficanr savings in productivi~have been realized during the 

shorr ilfe ofrhe system. The rime spent on coordination and approving manual invoicing has 

been drasricalljj reduced Alfhough CFITS has improved the invoice process, ir does no[ 

address fhe issues of rnvoice errors or ~~irhholdprocedures when completed services and cosrs 

are nor aligned. 

In FYOI, the CS.24 Financial Manugement Office wil/ have standard operating procedures ,for 

invoice/billing resoiution in alignment with prompt pay regulations, and proper~~/inventnry 

management procedures in alignmenr ~irhthe Treasur.y Capital Assets Trackrng guidelines. 

Also in preparation for FmI, CSM has established neMt srandard reporrs for Treasury and the 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 23 
Appendix 4 

Page 5 of 6 

Bureaus to improve tracking of finding amounts, accounr balances, expenses, and conrracror 

workload start and completion information 

4) OIG Recommendation: 

The Deputy Assistant Secretary for Information Systems and Chief Information Officer should 

ensure policies and procedures are promptly designed, documented, finalized. and distributed to 

the TCS Stakeholders. Priority should be given to finalizing and providing adequate financial 

guidance to TCS customers. The guidance should address formulation and execution, of the 

budget, and communicating how the budget process works in relation to service requests and 

service orders. 

CIO Response: 

CSM is makrng major improvements in terms of the way by which we conduct business with our 

customers. We are developing "business rules" with our constituents to solid~fiand improve 

how Treasun will work more efectively with our customers. These guidelines will enable CSM 

to berrer define expectations +om both our various organizafional entities as well as our 

cusromers. Zn preparation for FYOI CSM is defining and documenting thefollowing key areas: 

Program Management - Expectations and roles and responsibilities for Program 

Le~lelSew~ceLevel expectations of Treasury/CSM and bureau C/O/Sraffs 

Budget Formulalion - Expectations and roles and responsibilities .for financral 

plan/tlmelines. join! requirement/workload planning and cost estimating for bureau 

specrfic Service Requests/Service Orders 

* 	 Budget Execution - Expectations and roles and responsibilitiesjor invoicing, limelv 

paymeni qf services delivered etc 

Also In FYOI, the CSM organization is refinrng and solid1J5iirtgthe CIO Informafion techno lo^ 

Manual, a Treasury C/O policy directive which will arrictdate io the customers/bureaus specifir 

guidelines for utilizing services .from ClO/CSM corporate sysierns, such us TCS. In addition, 

working with the C/O Financial Management Oflice, we are refining rhe overall I~fecycleofthe 

hudget formularion process.for CSM programs. 

TREASURY COMMUNICATIONS SYSTEM Page 24 
Appendix 4 

Page 6 of 6 

5) OIG Recommendation: 

The Deputy Assistant Secretary for Information Systems and Chief Information Officer should 

hold the TCS Contractor accountable to ehminate unnecessary expenses due to the Contractor's 

inability to respond to service requests. For example, a t~melinefor submitting the request for 

service and completing the work could be determined and agreed to by the Department, TCS 

Contractor. and TCS customers. 

CIO Response: 

CSM has initiated several significant changes in FYOO to the TCS Contract in terms of how to 

eflectivel,~hold the TCS Contracror accountable.for timeliness ofservices delivered. 

* 	 The TCS Contract is a Performance Based Contract with an Award Fee incentive, 

based on outcome-orienred resulrs and agreed to customer expectations (e.g., 

rimelines). 

The TCS Contract will migrare fiom the former process of managing by service 

requests to managing by a customer-driven Statement of Work (SOW) and 

Governmenf negotiated Delivery Orders (DOs). This approach will enable TCS 

cusromers and Treasury contrac! sraff to better monitor and manage [he workload of 

rhe TCS Contracror and delivery date schedules, using positive and negative 

incenfives to allocate Contractor pa-yment. 

0 	 These TCS Conrract changes will enable CSM to manage and monitor the 

Contractor's performance and costs related to bureau tasks/requirements more 

eflectiveiy The Serwce Request process will atrophy over time, due to the 

impicmenration of project and performance management principles and gztidelines 

wirhin the TCS Program. We are migrating to a resulw-oriented focus, which will 

encourage the TCS Contraclor to perform better to receive the posirive incentives 

assocrated with timely, qualiry service deliver)?. 

As we migrate the TCSprogramfiom ils legacy technologies andprogram srructure. to a 

commercial service orientedprogram, service level agreements (SLAs) will drive the delivery 

of service oflerings. SLAs are in place todayfor some of rhe new work we initiatedfor our 

customers rn FYOO. These SLAs will befurther rejined, and new ones developed to insure 

thar the TCS program is delivering dependable, timely services. 

TREASURY COMMUNICATIONS SYSTEM Page 25 
Appendix 5 

Program Au 

Barry Savill, Director, Program Audits 


Maria Carmona, Audit Manager 


Inez Jordan, Auditor-in-Charge 


Vivian Dupuy, Management Analyst 


OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 26 
Appendix 6 

Treasury Departmental Offices 

Deputy Assistant Secretary for Information Systems and Chief Information Officer 

Director, Financial Management Division 

Office of Strategic Planning and Evaluations 

Office of Budget 

Office of Accounting and Internal Control 

Office of Corporate Systems Management 

Director, Office of Corporate Systems Management 

Assistant Director for Program ManagementBtrategic Planning 

Assistant Director for Services Delivery 

Customs Service 

Acting Branch Chief Network Engineering 

Executive Office of Asset Forfeiture - Department of Justice 

Assistant Director, Asset Forfeiture Management Staff 

Financial Crimes Enforcement Network 

Assistant Director, Office of Information Technology and 

Chief Information Officer 

United States Secret Service 

Assistant Division Chief, Information Technology Infrastructure 

Audit Liaison, Office of Inspections 

Treasury Integrated Management Information Systems 

Director, Treasury Integrated Management Information Systems 

Office of Management and Budget 

OIG Budget Examiner 

OIG-0 1-020 TREASURY COMMUNICATIONS SYSTEM Page 27