Could Private IT Best Practices Save Feds $220 Billion?

Wiser use of technology can save the government money, cut healthcare costs and improve services, according to an American Council for Technology-Industry Advisory Council report.

Patience Wait, Contributor

November 14, 2012

3 Min Read

14 Amazing DARPA Technologies On Tap

14 Amazing DARPA Technologies On Tap

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The U.S. government could save up to $220 billion annually by using IT to help solve some of its biggest challenges, according to the American Council for Technology-Industry Advisory Council.

That ACT-IAC offered that savings projection in its newly released Quadrennial Government Technology Review, a collection of reports generated by government and industry volunteers working under the auspices of the association's Institute for Innovation.

Approximately $100 billion could be saved by implementing best practices recommended by private sector CEOs, said Lee Holcomb, VP for strategic initiatives for Lockheed Martin and topic lead for the report titled "Unleashing the Power of IT Innovation to Reduce the Budget Deficit." The $100 billion in potential savings would come from supply chain improvements, monetizing federal assets, infrastructure consolidation and increased use of shared services, according to the report.

[ How much money can cloud services save the government? Read Vets. Dept. Signs $36 Million HP-Microsoft Cloud Deal. ]

Another $70 billion could potentially be wrung from healthcare costs by applying analytics to data. Holcomb cited a McKinsey study that estimated the use of big data to pursue efficiencies and better quality of care could save as much as $300 billion in the U.S. economy, a third of which could be chalked up as government savings, particularly tied to the Medicare and Medicaid programs.

The remaining $50 billion in projected savings could be realized if the Internal Revenue Service were to use IT to improve tax collections, according to ACT-IAC. There's a "tax gap" of about $385 billion a year in uncollected taxes and more than $100 billion in improper payments, Holcomb said. About 10% of that total amount, or roughly $50 billion, could be recovered per year, he said.

In one of the reports, titled "Delivering Mission Results by Aligning Business and IT," the ACT-IAC argued in favor of increased alignment of federal goals and IT. The three most significant aspects of such alignment are effectiveness, efficiency and security, said Ramon Barquin, a member of the Technology Review steering committee and president of Barquin International.

The report recommended that agency CIOs be given more leadership responsibilities, including the opportunity to influence investments to improve mission outcomes and streamline operations. "Historically, the CIO's role has been complicated by the decentralized organizational structure of most departments, diffused budgets and a common lack of understanding about the power of technology to transform business processes," the report observed. "These challenges all remain, but today there is an even more acute need for transformational change powered by new technological capabilities."

Giving CIOs a broader role should also lead to improved IT security, the report said, because they're "best positioned to evaluate technology risks, facilitate senior-level cross-agency deliberations and balance programmatic needs against security requirements."

In addition to evaluating IT's potential to trim the federal deficit, the Technology Review examined the role of IT in improving science, technology, engineering, and math education. "STEM jobs are growing three times as fast as other jobs in our economy," said Wendy Henry of Deloitte and a member of the steering committee. The Government Technology Review proposed ways that technology could enhance and expand the public's interactions with government. A report on how identity management and information sharing can improve national security is due for release in the next few weeks.

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Patience Wait


Washington-based Patience Wait contributes articles about government IT to InformationWeek.

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