Audit of the new management system (NMS) status

USAID"s actions have been partially responsive to the 3/97 report. USAID has agreed to fully implement recommendations to (1) appoint a Chief Information Officer (CIO) responsible for implementing disciplined IRM processes; (2) assign an NMS program manager and prepare plans to identify technical deficiencies, apply disciplined processes to NMS, and identify implementation alternatives; (3) develop and manage a performance-based acquisition plan; and (4) suspend NMS contractor development. USAID agreed to partially implement the fifth recommendation -- to suspend operation of the Worldwide Accounting and Control System (AWACS) -- by suspending AWACS operation at missions, while continuing to operate it in Washington. USAID has made progress implementing the recommendations, but continued attention is needed to ensure success. Specifically, the CIO has begun implementing processes to manage information technology as an investment, but faces important organizational challenges because USAID has limited capability to implement major systems. Similarly, although the CIO has appointed an NMS Program Manager, the NMS project still lacks clear lines of authority and responsibility. USAID has also done a thorough job identifying NMS technical and implementation problems and has begun implementing disciplined processes for future NMS development efforts. Although USAID officials have not yet completed a performance-based acquisition plan, they have initiated important action to do so. A recent analysis confirmed that severe technical and implementation problems plague the NMS; none of its four subsystems perform the functions necessary to support essential business processes or to meet regulatory requirements. Technical deficiencies include the following: (1) The application architecture, which describes the division of computer processing responsibilities among system components, is not appropriate for a system of the size and complexity of NMS. (2) The database design is inadequate, resulting in a lack of integration between the four NMS subsystems. (3) Both database and application software code is of poor quality and contains many defects. (4) Security capabilities were not effectively included in the NMS, thus increasing financial management risks. (5) The system was not designed to process Y2K transactions and contains many Y2K- related deficiencies. Finally, in continuing to rely on AWACS as its primary accounting and financial management system in Washington, USAID continues to operate a financial management system that is exposed to internal control and security risks. It is recommended that the CIO complete a detailed analysis of the costs, benefits, and risks of (1) implementing commercial procurement and budget packages and/or (2) using cross servicing for procurement and budget functions before deciding to repair the NMS Acquisition and Assistance and Budget subsystems. USAID concurred with the recommendation and identified actions the Agency is taking to implement best practices in NMS software acquisition and program management.