Quote of the day:
"You will find that the State is the kind of organization which, though it does big things badly, does small things badly, too." -- John Kenneth Galbraith

1. Editor's Note: Bungling Bureaucrats

Just when you think the business and IT incompetence of bureaucrats can't get any more profound, they come roaring back to exceed our expectations.

Until this week, my high-water mark for government IT ineptitude was the abandoned FBI Virtual Case File system. This fiasco resulted in $170 million being flushed down the toilet. Now it's going to be replaced, we're told, by a project whose price tag has grown a modest 135%—to $400 million. When all else fails, spend more taxpayer money, the government apparently reasons.

While that $400 million is huge, it's not too much greater than the sheer waste uncovered in a new report on how much money the IRS threw away this year.

Software used by the IRS to screen returns for signs of fraud was to be replaced with a Web-based application by January 2006, but when there was no end in sight to the $20.5 million project, the IRS tried to resurrect the old system. That older program, however, could not be returned to operation in time to handle 2005's returns. The feds themselves believe they may have issued $318 million in fraudulent refunds. I think we can safely assume the $20 million spent on new software is a total loss, so let's round the total to $340 million.

This is just the latest in an often-repeated set of government IT blunders: poorly managed projects with unrealistic expectations that fail to deliver, causing them to be scrapped amid the havoc they wreak. In one form or another, taxpayers foot the bill, and that bill keeps getting bigger. (Rhetorical question: How come these gaffes always seem to benefit crooks and not the legitimate taxpayers?)

The same day as the IRS report, another government oversight agency said more than 40% of federal health insurance contractors and state Medicaid agencies reported experiencing a privacy breach involving personal health information in the past two years. How significant is the threat to your personal medical data? The contractors and agencies involved have access to such data for more than 100 million, or more than one in three, Americans.

These two reports indicate once again that we shouldn't have a high degree of confidence in our government's ability to protect data or run professional IT operations.

But events of the past year, especially high-profile data breaches, suggest it's not only government that needs to get its IT house in order.

In fact, here at InformationWeek we're pretty convinced that we can all learn lessons from big IT blunders and use them to prevent new ones. Early next month, we'll be publishing a special report on some of the biggest IT blunders of all time. Stay tuned for what promises to be an eye-opening report, and feel free to weigh in on the biggest causes of IT blunders at my blog entry.

Tom Smith
tsmith@cmp.com
www.informationweek.com