1. The National Finance Center and Hurricane Katrina
Business Description:
USDA organization with a Government-wide service charter
Payroll: 132 Federal organizations; 565,000 employees paid each pay period; disburse $72B annually
Federal Health Benefit Reconciliation: 4 million employees and retirees health benefit selections reconciled with carriers to ensure appropriate coverage and premium
Direct Premium Remittance: operate Government-wide health benefit coverage extensions
Financial Services:
John White, Deputy Director
June 2006

2. USDA, Office of the Chief Financial Officer
Chief Financial Officer’s View -
USDA Characteristics:
110,000 14,000 offices and field locations
300+ national programs
$77B in annual spending
$128B in assets
$100B in loans
Program Management Responsibility Includes:
Financial leadership across the enterprise; roughly equivalent in size to 6th largest private sector firm in U.S.
Financial policy and planning
Financial systems and operations
Government-wide service delivery through the National Finance Center (NFC)

3. Scope of USDA CFO Operations in New Orleans (co-located)
National Finance Center (NFC)
Government-wide payroll/personnel for 585,000 employees
Government-wide Human Resource services
Government-wide Health Benefits Programs
Disbursements and Collections
Data Center Services
At time of Katrina, over 1300 employees
CFO Controller Operations Division
Provides financial services to USDA agencies, including administrative payments (2.5 million annually), interagency payments, reconciliations, and vendor file
Assembles USDA financial reports, including FACTS I & II, and annual consolidated financial statements
At time of Katrina, almost 300 employees
CFO Financial Systems Division
Operates the corporate consolidated financial system for all USDA agencies
Operates administrative systems, such as travel and property, for all USDA agencies
Creates and reconciles data extracts for consolidated audit and financial statements
At time of Katrina, over 70 employees

4. Prolog: Accountability – Guiding Principles
Embrace that you are in charge and responsible for your organization, its finances, and people.
Be prepared to go it alone, do what is necessary to get the job done and care for your staff. In a major situation, there may be no one else to consult about how to proceed.
Never forget that during a crisis, people demand leadership, decisions must be made--often in a vacuum, stick to the plan but be flexible.

5. Preface: Risk Management – Guiding Actions
Managing to deliver the expected business results by considering risks in doing what we do.
Focusing on most significant risks associated with the nature of the business:
Economic – controls & testing based on what is at stake
Operational – environmental, internal, natural, compliance, technical, organizational, and human risks
Keys to successful risk management:
Understand the risk profile of the business
Leadership sets the tone
Integrate risk management into day-to-day practices and decisions
Evaluate on clarity, transparency, integrity, & performance

6. Preface: Business Continuity Approach – Prepare!
Business Impact Assessment
Disaster Recovery Plan
Business Continuity Plan
Uninterruptible Power Supply
Emergency Power Supply
Two annual NFC drills
USDA and Government wide drills
Three historical near misses

8. Hurricane Katrina Activated DR on Friday evening
Initial Timeline:
Activated DR on Friday evening
Deployed Advanced Teams on Saturday morning
Completed payroll late Saturday evening
Shutdown data center and facility early Sunday
Made disaster declaration Sunday evening
Began implementation of COOP on Monday

9. COOP Concept
Concept of operations:
Subscription service for data center, workstations, and bulk print and mail
Philadelphia site used for data center and 101 data center staff seats
Grand Prairie site used for 150 business operations seats
Plans all geared to loss of New Orleans facilities

11. Realities of Katrina Implications were larger than anyone imagined
Initial reactions:
Implications were larger than anyone imagined
This would be a long-term situation
Immediate focus was:
Service to the customers
Accountability and caring for employees
Fiscal accountability
Balance delivery and personal needs

12. Oversight Priorities
View from the top:
Incorporating local efforts into Departmental and Government-wide efforts
Keeping long-term, big picture in focus
Finding ways to add value while allowing those on the line to keep things moving:
Policies
Resources
Contracting
Financial
Liaison
Monitoring and Reporting

13. Locating and Deploying Staff
First 14 days:
Local telecommunications infrastructure mostly inoperable
Pre-planned out-of-town contact numbers functioning
No single data base for locating people in shelters
Travel impacted by roads and gas shortages
Family issues had to be addressed

14. Expanding Capabilities to Meet Long-Term Deployment
First 14 days:
Duration of COOP means more seats needed
Trailers acquired in Atlanta
USDA sites used in D.C., Kansas City, Roslyn, and Alexandria
Customer sites in Birmingham and Fairfax leveraged
Secure connectivity and postal mail were two key infrastructure challenges to achieve

15. First Job, First Critical data center resources are recovered
First 14 days:
Critical data center resources are recovered
Essential services are restored
Payroll is made timely while migrating 60,000 new payees (565,000 total)
Financial systems returned online

16. Settling In for the Long Haul
First 14 days:
Subscription service requires sharing of resources during 6-week recovery period
Essential services require dedicated resources
Impact of Katrina implies 6 months not 6 weeks
Customer dedicated connectivity key issue
Decision made to build out in “cold site”

17. Focus on Service Delivery
First 14 days:
Resuming all services requires that all resources (human, technical, and other) be available
Service delivery focus is for Agency customers, payees, vendors, and employees
Give employees the challenge and the tools and stay out of their way

18. New Orleans Critical to a Timely Return to Full Service
Next 60 Days:
Returning to full service required a full staff
Deployed status had limited seat availability, some security concerns, was costly, and came at a personal sacrifice to many
The New Orleans facility has the infrastructure to address business needs and support the additional population

19. Reconstitution in New Orleans
Next 60 Days:
Housing, family issues, telecommunications, postal services, and local infrastructure had to be addressed
Security
Logistics
Habitation necessities
Health care
Family & friends, FEMA trailers, and cruise ships address most housing needs

20. It’s Nice to Have Friends
Keys to success:
USDA Secretary Johanns and entire USDA family strongly supported COOP needs and the employees
Tremendous outreach by Federal colleagues, local Government, local organizations, and people in deployed locations
Food, clothing, education opportunities, friendship, and other assistance

21. It’s Nice to Be Prepared
Keys to success:
Managers and involved staff built the plan
Same managers and staff practiced the plan
Live and desktop drills under varying scenarios honed the mental and technical readiness
We know our customers rely on our mission delivery in order to sustain theirs

22. Lessons Learned – Governmentwide
Consolidated information source needed to support decision-making
Central clearinghouse for needs and resources
Designation of essential services and associated rights is needed
Handbook to guide Federal Agencies through extraordinary authorities
Single coordination point for Federal efforts and issues

23. Lessons Learned - NFC
Learned:
Communications are always the challenge; planned communications channels are a real aid
Having a well-drilled plan allows for the basics to be accomplished with little intervention and allows management to focus on exceptions and surprises

24. Lessons Learned - NFC
Learned:
Subscription service not an ideal model for essential service provider
Administrative support a key aspect of support for long-term deployed staff
For long-term deployment, coordination of outreach efforts targeting employees becomes an essential task

25. Lessons Learned - NFC
Learned:
Some organizations benefit from close proximity with one another
Must revalidate plan assumptions, plan contents, and business requirements annually
You cannot assume infrastructure items will be there for you

26. Working to Mitigate Future Risks
Data Center equipment will remain at subscription service location until new primary facility is selected
New AWS alternatives being explored
All business operations are being reassessed based on experiences
Lessons learned are being incorporated into revised DR and COOP plans

27. People, Planning, & Practice
People who understand & believe in DR and COOP make it happen
Plans have to account for your threats, the business requirements for COOP, and the people side of things
Practice is the best teacher. Practice on a regular schedule (top priority) and against changing scenarios. Capture the valuable lessons from each exercise.

28. Epilog
Facing the most devastating natural disaster to impact the United States, the employees of NFC set aside their personal concerns and focused on delivering for their customers.
Given such an event, the best came out of people, far and wide, and we are all better because of it.

29. One-Year Review of Key Indicators
Housing rehabilitation and demolition are well underway while the housing market tightens
Pace of demolitions has accelerated in the last six months
Number of permits issued for rehab has nearly doubled
Rent prices have increased by 39% and home sale prices have spiked in suburban parishes
Public services and infrastructure remain thin and slow to rebound
Approximately half of the bus and streetcar routes running with only 17% of buses in use
Gas service reaching 41%; electricity reaching 60% of pre-Katrina customer base

30. One-Year Review of Key Indicators
Labor force in the region is 30% smaller than one year ago with slow growth over the last six months
Unemployment rate remains higher than pre-Katrina
The New Orleans metro area lost 190,000 workers
In the past six months, 3.4% more jobs but much of that may reflect the rise in new job seekers
Unemployment rate is now 7.2%, higher than last August
Over $100 billion in federal aid dedicated to serving families and communities impacted by hurricanes Katrina, Rita, and Wilma
Number of displaced and unemployed workers remains high
Federal government approved approximately $109 billion in federal aid to the Gulf Coast states
Half has been dedicated to emergency and longer-term housing
Estimated 278,000 workers are still displaced
23% remain unemployed

40. Questions??? Please ask us questions important to you.
“Lagniappe” is a New Orleans’ term often used to indicate getting something extra in a transaction. Our lagniappe for you today includes additional pictures of the post-Katrina New Orleans area.

41. Lagniappe Canal Street in CBD

42. Lagniappe Lower 9th Ward

43. Lagniappe Mold

44. Lagniappe The lake is on the other side of the building

45. Lagniappe Boat came 3 miles inland

46. NATIONAL FINANCE CENTER
Lagniappe Before
Lagniappe Before
NATIONAL FINANCE CENTER

47. Lagniappe After
Lagniappe After

48. Lagniappe Anyone missing a hot tub?

49. Lagniappe A quite country road
Lagniappe A quiet country road
Lagniappe A quite country road

50. Lagniappe Main bridge into Eastern New Orleans

51. Lagniappe A view from the elevated expressway

52. Lagniappe Bourbon Street – Never so clean!

53. NSAA IT Conference
Thanks!