Federal Agencies Lagging On IT Savings Mandate

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Federal agencies are lagging behind on a key initiative designed to eliminate wasteful IT investments, which is jeopardizing the government's ability to achieve hundreds of millions of dollars in savings, according to anew report from the General Accountability Office.

In the course of its investigation, GAO found that some federal agency CIOs still lacked authority to review and approve the entire IT portfolio of their agencies. In other cases, agencies failed to list all of their IT investments. And in other instances, some agencies were unable to ensure the completeness of their commodity IT baseline inventories.

Of the 26 major federal agencies required to participate in the Office of Management and Budget's PortfolioStat initiative, which monitors IT investments, only one agency managed to address all of the requirements established by OMB, according to the GAO report. The remaining agencies have, at best, addressed only four of seven of the requirements, GAO said.

The three requirements that have proved difficult for some agencies to achieve involve developing a commodity IT baseline, developing a complete action plan to carry out the initiative and migrating two commodity IT areas to shared services.

Specifically, 22 of the 26 agencies have not yet developed a complete action plans to address key elements, such as establishing criteria to identify wasteful, low-value, or duplicative IT investments, GAO found.

As for the other two requirements, only 14 of the 26 agencies have developed commodity IT baselines and only 13 of the 26 have successfully migrated two commodity IT areas -- such as enterprise IT systems and IT infrastructure -- to shared service, GAO said.

GAO also analyzed OMB's performance in monitoring and guiding PortfolioStat. In so doing, the watchdog agency determined that OMB failed to furnish a complete and accurate estimate of the potential savings that the federal government can realize from the initiative.

Federal agencies are expected to spend at least $82 billion on IT products and services in fiscal 2014, according to GAO.

OMB's initial estimate of 100 existing consolidation opportunities representing a potential of savings of $2.5 billion is not accurate, mainly because it does not include estimates from the departments of Defense or Justice, GAO said.

To remedy this, GAO conducted its own assessment of the potential savings if Defense and Justice were included. GAO's revised estimates, which includes the two large agencies, is that collectively the 26 agencies have as many as 200 consolidation opportunities for a potential savings of at least $5.8 billion through fiscal 2015.

GAO also found that the agencies varied in their use of processes recommended by OMB to identify consolidation opportunities. A more consistent approach might produce even more consolidation opportunities, GAO said.

Six agencies told GAO that their CIO lacked authority to review and approve the entire portfolio, GAO said.

In its fiscal 2013 PortfolioStat guidance, GAO said the OMB did identify a number of planned improvements, but it did not specifically address limitations in CIO authority, weakness in agencies' commodity IT baselines, accountability for migrating selected commodity IT areas or the information on agencies' progress that OMB intends to make public.

Additional actions by the OMB and the agencies participating in PortfolioStat are necessary if the initiative is to be successful and achieve maximum savings, GAO said.

Among the watchdog agency's recommendations are that OMB require agencies to fully disclose all limitations in CIOs' ability to exercise authority and that 24 of the 26 agencies take steps to improve their PortfolioStat implementation.

In its comments on the GAO findings, OMB said it continuously tracks individual agency progress on IT consolidation required through PortfolioStat and reports the progress to Congress on a quarterly basis. However, GAO said that it uncovered more than two dozen instances where a required element, such as the consolidation of commodity IT spending under the CIO, was not addressed and an equal number of instances where a required element was only partially addressed.

OMB also disagreed with GAO's recommendation to improve transparency by disclosing consolidation efforts and related cost savings by each agency. On that matter, OMB said some details are deliberative or procurement sensitive, and therefore it would not be appropriate to disclose them.

GAO countered stating that while OMB does report realized savings on a quarterly basis, the budget agency fails to report the realized savings against the planned savings. "Doing this would greatly enhance Congress's insight into agencies' progress and hold them accountable for reducing duplication and achieving planned cost savings and would not require reporting deliberative or procurement-sensitive information," GAO said.