Federal Financial Management Systems in Transition: The JFMIP Role

By Alderman, Karen Cleary | The Journal of Government Financial Management, Summer 2001 | Go to article overview

Federal Financial Management Systems in Transition: The JFMIP Role


Alderman, Karen Cleary, The Journal of Government Financial Management


The policies that govern the acquisition of information systems to support federal agencies have evolved with the development of the information technology industry:

* In the 1960s and 1970s, the federal government led in the development of automated systems to support programs such as Social Security, military pay and Medicare. Government agencies--working on their own or teamed with private industry--built unique systems to manage programs and underlying administrative functions. The key decision was whether to build automated solutions or support the programs with manual processes. "Make-or-buy" decisions were irrelevant: the government did not have standard requirements to present to the information technology industry and the information technology industry was not organized to provide standard solutions.

In the 1980s, the government began pushing the concept of using commercial off-the-shelf (COTS) systems. However, the number of products that met federal requirements was limited, as was the desire of federal agencies to use commercial products.

In the 1990s, government policy focused more on integration of systems and use of commercial sources and cross-servicing.

Not only have federal government policies evolved, but what is considered "current technology" has evolved as well--from mainframes to microprocessors, to client-servers, to web-based systems--and continues to evolve. The functional requirements that agencies must meet are also constantly changing.

This article begins with a review of the government's case for implementing COTS solutions to meet financial and administrative needs. That review looks at changes in the legislative landscape and updates the business case for COTS products. The article then presents a discussion about how the Joint Financial Management Improvement Program (JFMIP) has added value to the government's strategy by shaping the marketplace to ensure the availability of viable COTS products that meet the government financial management community's needs. That discussion includes a description of JFMIPs recent tasking to address interdepartmental eliminations.The Fiscal Year 2000 FInancial Report of the United States Government, released in March, identified the inability of federal agencies to identify and properly account for transactions with each other as a major barrier to the government's ability to achieve a clean audit opinion on the governmentwide statement.

The Government's Case for COTS Systems

The federal government first promulgated its strategy to use COTS products in 1985 when the Office of Management and Budget (OMB) issued Circular A-127. That circular set five major policy objectives for federal financial systems:

* Use of contemporary technology to provide managers with timely, useful information.

* Systems integrity through reasonable internal controls.

* Adequate support for agency budgets.

* Adequate support for program and administrative managers.

* Full financial disclosure and accountability

The challenge for government agencies has been to take advantage of current technological capabilities to meet functional requirements, without having to underwrite all the development costs.

The Changing Policy Framework

The legislative and policy framework of the 1990s changed federal financial accountability from simply tracking budget and appropriations to more robust and "commercial style" accrual accounting and reporting. It also directed federal agencies toward reliance on commercially developed system solutions, when cost effective. The following elements of the framework are key to improving executive branch decision-- making, performance and accountability, as well as congressional oversight:

* Shift from input processes to results-oriented management and accountability as required by the Government Performance and Results Act (GPRA). …

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