Tech Industry's Pain Is Federal IT's Gain

In his Government Technologist column, John Foley argues in favor of the federal freeze on financial system projects, despite an industry backlash.
The Obama administration's decision to freeze more than two dozen financial system projects has sent "shivers" through the technology industry, according to the Wall Street Journal. Now industry group TechAmerica is responding to this perceived threat by forming a commission that will recommend how the federal government can improve IT procurement and implementation.

TechAmerica's new Commission on the Government Technology Opportunity for the 21st Century seems well intentioned. Its goal is to develop a roadmap to help the federal government transform IT acquisition and management. The commission plans to produce the roadmap in time for the government's fiscal 2012 budget.

But the creation of the commission is also an act of self interest. TechAmerica's 1,200 member companies -- which include IBM, Intel, Microsoft, Oracle, Red Hat, and RIM, as well as systems integrators Boeing, Lockheed Martin, Northrup Grumman, and Raytheon -- worry that a freeze on federal IT projects will negatively impact their business. The approximately 30 financial system projects under review account for $3 billion in annual spending by the U.S. government and have a total value of $20 billion.

Two days after OMB director Peter Orszag announced on June 28 steps to re-evaluate those financial system projects, TechAmerica issued the following statement: "We are concerned that an across the board freeze, of an undetermined duration, would mean greater costs for taxpayers and less competition for the government’s business, undermining stated goals of this Administration....Because of the freeze, companies will have no choice but to reassign some of their best talent, meaning it will be hard to reboot government programs that pass muster with the Administration. There could be a chilling effect on the marketplace that discourages commercial companies from pursuing government business."

In other words, TechAmerica would have us believe that the government's financial system freeze is bad for everyone -- the public, the feds, and the tech industry. But common sense tells us otherwise. Putting a temporary halt to financial system upgrades while Federal CIO Vivek Kundra reviews these multi-million dollar projects is exactly the right thing to do.

Case in point: There were no howls of protest from taxpayers when Veterans Affairs CIO Roger Baker revealed this week that the VA is terminating a planned $500 million overhaul of its core financial system. Baker said the decision was spurred by the OMB review.

What about TechAmerica's assertion that the government's financial system freeze will make it hard to "reboot" projects and have a "chilling effect" on the market? Deal with it. You can be sure that for every vendor unable or unwilling to restart on-hold projects, a dozen others will be eager to step in.

Kundra is now conducting detailed reviews of the "highest risk" IT projects in federal government; agencies will be required to develop improvement plans for those that are behind schedule or over budget, and risk losing funding for those they can't fix.

The goals of these and other recent oversight efforts by OMB are to scale back over-sized IT projects in federal government and, in the process, to reduce cost, complexity, and risk. Tech companies that do business with the feds shouldn't be caught flat-footed the next time Uncle Sam postpones or kills an IT project, because it's sure to happen.

Here's how we know that: OMB says it expects a "significant reduction" in the money it's spending on financial systems as some of the projects under review get downsized or eliminated, while elsewhere agency CIOs are plotting out data center consolidation initiatives that will cause them to rethink how they're spending money. In May, the U.S. Army took the bold step of issuing a moratorium on server purchases as it aligns hardware acquisition with its data center and cloud computing efforts.

Tech vendors must learn to adapt to these efforts and support them, as TechAmerica's new commission plans to do, rather than complain. They will find little sympathy if their inconveniences are the byproduct of a more effective federal IT strategy.

John Foley is editor of InformationWeek Government and his Government Technologist column is a regular feature.

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