July 14, 2010, 4:13 PM — The U.S. Department of Veterans Affairs has dropped a large portion of its work on a four-year, $500 million project to modernize its financial and asset management systems, citing cost concerns.
Under a new, sharply scaled back plan, the VA will continue with development work on the strategic asset management part of the program, but will stop work on the much larger financial system, an agency spokeswoman said today.
Canceling the financial component will result in savings of $80 million in fiscal year 2010-2011 alone. So far, the VA estimates it has spent about $16 million on planning the financial management system. Nearly 40 VA employees working on the project have been reassigned to other tasks.
The VA project, known as the Financial and Logistics Integrated Technology Enterprise (FLITE) program was launched in 2008 to overhaul the department's aging financial and asset management systems. It was meant as a replacement for another VA project called the Core Financial and Logistics System, which the agency launched in 1998 but was discontinued in 2004 after more than $305 million was spent on that effort.
The original goal of the FLITE program was to develop a strategic asset management (SAM) system for managing physical assets and inventories, and a separate financial management component referred to as the Integrated Financial Accounting System (IFAS).
VA CIO Roger Baker and federal CIO Vivek Kundra decided to discontinue work on the financial system because of cost concerns and the fact that it was not aligned with the VA's business priorities, the spokeswoman said. "The huge amount of money needed for a financial management system did not compare favorably with other more pressing needs for IT dollars," within the department, she said. One example of a higher-priority project is a new system for disability claims processing, she said.
Under the newly scaled back plans for FLITE, the VA will continue to work on "shorter-term, lower-cost fixes" designed to bolster the capabilities of its existing financial management system, the spokeswoman added.
The VA's decision comes just a few days after the White House Office of Management and Budget (OMB) ordered a governmentwide review of agency efforts to modernize their financial IT systems.