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

USDA, Office of the Chief Financial Officer Chief Financial Officer’s View - USDA Characteristics: 110,000 employees @ 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)

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

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.

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

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

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

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

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

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

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

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

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

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”

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

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

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

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

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

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

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

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

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

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

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.

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.

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

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

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.

Lagniappe Canal Street in CBD

Lagniappe Lower 9th Ward

Lagniappe Mold

Lagniappe The lake is on the other side of the building

Lagniappe Boat came 3 miles inland

NATIONAL FINANCE CENTER Lagniappe Before Lagniappe Before NATIONAL FINANCE CENTER

Lagniappe After Lagniappe After

Lagniappe Anyone missing a hot tub?

Lagniappe A quite country road Lagniappe A quiet country road Lagniappe A quite country road

Lagniappe Main bridge into Eastern New Orleans

Lagniappe A view from the elevated expressway

Lagniappe Bourbon Street – Never so clean!

NSAA IT Conference Thanks!