ANOTHER VIEW: Homeland agencies will be wards of OMB

Stephen Ryan

The Office of Management and Budget has the power to turn the money spigot on and off to agencies and programs. The proposed creation of a Homeland Security Department has created a political opportunity for even greater OMB involvement than usual, at a time when there is no bureaucratic or congressional counterweight for it.

The government will incur significant costs in fashioning a new department from a disparate set of agencies. These costs likely will be the subject of a supplemental appropriation during the lame-duck session following this fall's congressional elections. The administration must find savings sufficient to claim that this new department won't cost more than the sum of its parts.

So OMB ordered a freeze of most spending on IT systems for infrastructure, finance, personnel and other basics at agencies slated for transfer to the department. Why? Potential redundancies.

These component agencies are about to become bureaucratic orphans. The departments these orphans are exiting will not fight for them. At this point, only President Bush knows the likely identity of a Homeland Security secretary, the one person who might fight the freeze.

Vendors who think their incumbency at an important Homeland Security agency is a predictable annuity could get a kick in the pants. Possibly a single company or team will end up with the bulk of the IT revenue, making it likely there will be more losers than winners.

I'm not convinced OMB can make critical distinctions between money that should be spent on maintaining or enhancing deployed, modernized systems and money spent on brand-new systems. The latter are investments that probably ought to wait. Instead, OMB has simply stopped spending, although agencies can plead to continue projects on case-by-case basis.

This hard stop is impossible because all software requires technical support and updating for current users. Neither OMB nor anyone else can make this need disappear with a magic bureaucratic wand.

It will take a while for the new department to create a comprehensive IT architecture for mundane office tasks such as financial management, software maintenance or acquisition. Instead, the new secretary and his or her management team should and undoubtedly will be more concerned with building and consolidating systems that let them address biological warfare and terrorism. This includes the online delivery of real-time intelligence information to those who must see it.

Therefore, OMB's interruption of less sexy systems, such as a financial system that the Immigration and Naturalization Service began deploying in 1997, may be a multiyear freeze.

Unfortunately, many agencies that have invested in new technology have not yet been able to turn off creaky legacy systems because they are still paying for deploying the new systems while they run the legacy systems in tandem. If they are not permitted to finish the new technology, they potentially will end up running three systems'the old legacy system, the partially deployed replacement system and some new system dictated by the Homeland Security architecture.

Good luck to all agencies facing this problem.

This type of decision should be left to the management of the new department and Congress, two parties that are in a better position to make the judgment. If and when the ink is dry on the homeland security bill, OMB should get out of the way.

Stephen M. Ryan is a partner at Manatt, Phelps & Phillips in Washington. E-mail him at sryan@manatt.com.

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