Modernizing Financial Systems and Improving Transparency

“The mission of my office,” says Troy Edgar, “is to make sure that we have the right resources in the right places at the right time.”

During our recent conversation on The Business of Government Hour, Edgar underscored his critical duty to be a steward of the taxpayer dollars DHS uses every day to help secure the homeland. While the threat environment in which DHS operates consistently changes and requires the department to adapt to new challenges as they occur, he never loses sight of remaining accountable and transparent to the American people. We discussed the department’s financial management strategy, efforts to modernize its financial systems, key priorities, and the impact of COVID-19 on the department’s finances. The following is an edited excerpt of that discussion.

What is it like being the chief financial officer at DHS?

It is a very exciting job. It encompasses two distinctly different roles one having to do with compliance role and the other strategic advisory.  As CFO, I must ensure the department complies with all the relevant laws, statutes, and requirements related to financial reporting and such. Along with the compliance side, we have all the various DHS components implementing policies across the organization a significant part of my job is to help them implement those policies correctly and within the law.

I come from a corporate CFO background with McDonnell Douglas and Boeing. From there, I went to Pricewaterhouse Coopers. From these major mergers and acquisitions, I learned how to get into very large organizations and quickly get up to speed with the processes, the systems, but most importantly the people recognizing the importance of integrating and being effective.

A major focus of mine as CFO, and one of the key reasons I am doing your show, is I want to get the message out to people outside of DHS and the Beltway about the unbelievably dedicated people who work at DHS and within my office. With all the good management efforts happening within government agencies, largely the work of dedicated public servants, federal departments need to do a better job of telling their stories about the great work being done on behalf of the American taxpayers. Our commitment to accountability within DHS remains absolute, as is evidenced in the department earning its eighth consecutive unmodified (clean) audit opinion on our financial statements for FY 2020.

What is most challenging about being DHS CFO?

The size, breadth, and diverse mission set of the U.S. Department of Homeland Security, bringing together 22 disparate entities into a single department makes it all quite challenging. Add a workforce of over 250,000 and a budget of $88.6 billion and the importance of allocating resources wisely and according to the law to protect the homeland takes on a whole new layer of complexity. But, challenge breeds opportunity and the people of DHS, from my colleagues in the management directorate to those in the components have proven time again the importance of putting mission first. No doubt our is a challenging mission, but it becomes ever more doable when you are surrounded by excellent colleagues and the terrific and dedicated people of DHS.

Would you outline the your financial management strategy and key priorities?

I broke my strategy into two categories: short-term, which means right away, or from when I became CFO to the end of this term and longer-term priorities. I wanted to make sure that I could focus on four things between now and the end of this term. Let me briefly identify the short-term priorities:

• Strengthen audit and internal controls, and improve transparency - within the first goal, we are focusing on the audit side. This includes such efforts as identifying how we can get DHS off the GAO High Risk List and really addressing material weaknesses in general.
• Complete Financial Systems Modernization – the next priority is completing the department’s Financial Systems Modernization (FSM), recognizing recent successes, capitalizing on those successes, and then rebranding the effort going forward to move beyond the cumulative baggage.
• Strengthen our working relationship with DHS’s Office of Legislative Affairs – I want to work to ensure that DHS has a single voice with Congress. My third strategic goal is to really work hard to build a great relationship with OLA, build a great relationship with the budget director within my shop, and make sure we’re all working together for the betterment of the department. We must have one clear DHS voice on finance and budget, making sure we are working together with the Hill to set and fund the right priorities.
• Transform OCFO service delivery – this priority focuses documenting and communicating all the good work being done within the department and in financial management area. There is significantly advanced activity going on within DHS that rival efforts at Fortune 500 and it is not being talked about. Doing this interview fits into this priority nicely. We have successes to share and under this focus area we want to make sure the message gets out.

Can you tell us about DHS’ Financial Systems Modernization (FSM)?

As I was going through the Senate confirmation, I kept hearing about this troubled DHS project knowns FSM. I started reading congressional and audit reports on the project. The story of this project goes back some 13 years. About two years ago, the current DHS leadership driven by the chief procurement officer, the chief information officer, and the office of chief financial officer got together with its biggest vendor and said: “we’re doing this differently now.” The CXOs were going to make decisions together. They established a joint program office to basically bring control back into DHS HQ and what they have done together is turn the project around. FSM went live recently in the DHS Countering Weapons of Mass Destruction Office (CWMD) with plans next up for the Transportation Security Administration (TSA), and then possibly the U.S. Coast Guard after that.

Once we go live at the Coast Guard I would like to claim victory and rebrand the effort. This would involve retiring the FSM brand, if you will, and with it the proverbial albatross of a project. The reality of the last two years has been distinctly different then the decade prior. We need to take the lessons learned and recast the way we modernize the financial systems across the remaining DHS components. A big part of this is reevaluating how we do post-production support. We need to find a more affordable way of supporting these very expensive systems. Sometimes, it can be done internally. Or, sometimes it is more affordable to have it done outside the department. I am working with the CIO to see how we can use department savings in the most effective way.  

How did the pandemic impact DHS’ financial and budget areas?

Fee-based organizations within DHS were hit very hard by the economic shutdown. For example, U.S. Citizen and Immigration Services (USCIS) is one such DHS component whose financial operations were critically impacted by the COVID-19 pandemic. About 98% of its operations are funded by fees. If you took that one month and you extrapolated it out, they were basically on a very short path to having to do pretty significant furloughs.

What we did is establish a monthly fee tracker almost like what you would do in industry for leading economic indicators. We took the nine most important fees across four organizations within DHS and we track them both year to date and trends. We put this data out every month giving department leadership and Congress a better view of how DHS fee-based organizations are operating. We also put these same organizations on monthly cashflow statements. This helps us know where fee-based organization are on a monthly as oppose to quarterly basis. In these instances, we have been able to apply tools typically used in the corporate sector and use them to benefit how fee-based government agencies manage their resources and better anticipate financial and budgetary disruption.