Federal agencies expect to spend at least $82 billion in fiscal year 2014 to meet their increasing demand for information technology (IT). In recent years, GAO and the Office of Management and Budget (OMB) have highlighted a number of potentially duplicative, wasteful, low-value IT investments. For example, in September 2011 GAO reported that there were hundreds of IT investments providing similar functions across the federal government, including 781 supply chain management investments (659 at the Department of Defense and 122 at other agencies) and 661 human resource management investments (363 at the Department of Defense and 298 at other agencies).
More recently, in February 2012 GAO reported on efforts at the Departments of Defense, Energy, and Homeland Security to identify duplicative IT investments. Specifically, GAO noted that although these departments use various investment review processes to identify duplicative investments, 37 of GAO’s sample of 810 investments were potentially duplicative at the Departments of Defense and Energy. These investments accounted for $1.2 billion in spending for fiscal years 2007 through 2012. It is important that federal agencies avoid investments that are determined to be duplicative whenever possible in order to ensure the most efficient use of resources.
In March 2012, OMB launched an initiative, referred to as PortfolioStat, to maximize the return on IT investments across the government’s portfolio. PortfolioStat is designed to assist agencies in assessing the current maturity of their IT investment management process, making decisions on eliminating duplicative investments, and moving to shared solutions (such as cloud computing) within and across agencies. According to OMB, PortfolioStat has the potential to save the government $2.53 billion through fiscal year 2015.
Cloud computing is an emerging form of delivering computing services via networks with the potential to provide IT services more quickly and at a lower cost. Cloud computing provides users with on-demand access to a shared and scalable pool of computing resources with minimal management effort or service provider interaction.
In November 2013, GAO reported that while the 26 federal agencies required to participate in PortfolioStat had made progress in implementing OMB’s initiative, shortcomings in their implementation of key requirements could undermine the savings the PortfolioStat effort is expected to achieve:
In addition, GAO reported in November 2013 that while OMB was working to improve its oversight of federal agencies’ implementation of PortfolioStat through additional guidance, these efforts could be strengthened in order to address weaknesses GAO identified in the implementation of the initiative. In particular, OMB’s 2013 guidance does not require agencies to document how they verified their commodity IT baseline data or disclose any limitations of these data or to report on the completion of their two 2012 migration efforts. Without such requirements, it will be more difficult for OMB to hold agencies accountable for identifying and achieving potential cost savings. In addition, while OMB’s memorandum has indicated that agencies must now report on how their policies, procedures, and CIO authorities are consistent with OMB Memorandum 11-29, “Chief Information Officer Authorities,” OMB’s prior guidance and reporting requirements have not been sufficient to address the implementation of CIO authority at all agencies. OMB’s 2013 PortfolioStat guidance also does not require agencies to disclose any limitations CIOs might have in their ability to exercise their authority. Until CIOs are able to exercise their full authority, they will be limited in their ability to implement PortfolioStat and other initiatives to improve IT management.
Furthermore, OMB’s overall estimate of the number of opportunities and cost savings from PortfolioStat is underreported. According to OMB, agencies reported a total of 98 consolidation opportunities and $2.53 billion in planned cost savings and avoidance for fiscal years 2013 through 2015. However, among other things, OMB’s estimates do not include the Departments of Defense and Justice because these agencies did not report their plans in the template OMB was using to compile its overall estimate. GAO’s analysis of data collected from the 26 agencies, including the Departments of Defense and Justice, shows that they are reporting 204 opportunities and at least $5.8 billion in savings through fiscal year 2015, at least $3.3 billion more than the number initially reported by OMB. While OMB acknowledged that the $2.53 billion in planned cost savings and avoidance was underreported when it issued the estimate, it did not disclose that the Departments of Defense and Justice’s estimates were not included in its total. Until OMB discloses any limitations or qualifications to the data it reports on the agencies’ consolidation efforts and associated savings and avoidance, the public and other stakeholders may lack crucial information needed to understand the current status of PortfolioStat and agency progress in meeting the goals of the initiative.
Finally, GAO previously reported that the public reporting of agencies’ data, such as IT investment data showing assessments of actual performance against cost and schedule targets, allows OMB, other oversight bodies, and the general public to hold the agencies accountable for results and progress. While OMB officials have stated that they intend to make agency-reported data and the best practices identified for the PortfolioStat effort publicly available, they have not yet decided specifically which information they will report. Until OMB publicly reports data agencies submit on their commodity IT consolidation efforts, including planned and actual cost savings, it will be more difficult for stakeholders, including Congress and the public, to monitor agencies’ progress and hold them accountable for reducing duplication and achieving cost savings.
OMB required agencies establish a commodity IT baseline which included the number of systems and fiscal year 2011 obligations for those systems providing 13 types of commodity IT services. OMB has defined these 13 types of commodity IT investments in three broad categories: (1) enterprise IT systems (including e-mail; identity and access management; IT security; web hosting, infrastructure, and content; and collaboration tools); (2) IT infrastructure (including desktop systems, mainframes and servers, mobile devices, and telecommunications); and (3) business systems (including financial management, grants-related federal financial assistance, grants-related transfer to state and local governments, and human resources management systems).
OMB’s survey did not specifically require agencies to disclose limitations their CIOs might have in their ability to exercise the authorities and responsibilities provided by law and OMB guidance. Thus it is not clear whether all those who have such limitations reported them or whether those who reported limitations disclosed all of them.
See Pub. L. No. 104-106, Div. E, 110 Stat. 186, 679 (1996); Pub.L. No. 104-208, 110 Stat. 3009, 3009-393 (1996); 40 U.S.C §11101, et seq.
OMB M-11-29 states that CIOs must be empowered by the agency head to have authority over IT governance, commodity IT systems, information security, and IT program management in order to drive efficiencies.
Subsequent to its report of agencies’ planned consolidation initiatives and associated savings, OMB issued the 2013 PortfolioStat memorandum requiring agencies to submit an updated list of consolidation initiatives and estimated cost savings and avoidance by May 15, 2013. Some agencies reported to GAO that the information provided in this submission has changed from what they reported in 2012.
In November 2013, GAO made the following two recommendations to multiple agencies to improve their implementation of PortfolioStat requirements.
In addition, to help ensure the success of the PortfolioStat initiative, GAO recommended in November 2013 that the Director of OMB direct the Federal Chief Information Officer to take the following five actions:
Taking these actions will provide greater assurance that agencies will realize the nearly $6 billion dollars in savings they estimated they will achieve through fiscal year 2015.
The information contained in this analysis is based on the November 2013 report in the related GAO products section. GAO obtained documentation from the 26 agencies that were required to comply with OMB’s memorandum for implementing the PortfolioStat initiative and compared it to the memorandum’s requirements and supporting guidance. In addition, GAO obtained a briefing book which OMB provided to the agencies that, among other things, summarized the agencies’ commodity IT baseline data. GAO assessed the reliability of OMB’s reporting of these data through interviews with OMB officials regarding their processes for compiling the briefing books and used the briefing books to describe the federal investment in commodity IT at the time of the 2012 PortfolioStat.
GAO also assessed the reliability of agencies’ commodity IT baseline data by reviewing the processes agencies described they had in place to ensure that all investments were captured in the baseline. GAO identified issues with the reliability of the agencies’ commodity IT baseline data and highlighted these issues throughout the November 2013 report, as appropriate. GAO compiled the list of commodity IT opportunities and the total estimated savings or cost avoidance that agencies identified using the cost target templates agencies provided to OMB in September 2012 and the action plans the Departments of Defense and Justice provided to OMB in August 2012.
GAO also reviewed OMB’s guidance for the 2013 PortfolioStat and interviewed OMB’s PortfolioStat Lead regarding plans for improving the PortfolioStat process. In addition, GAO analyzed the information obtained from federal agencies against the requirements in the 2013 guidance and the information obtained from OMB staff to determine whether OMB’s plans for improving PortfolioStat addressed the implementation issues identified in the report. Table 18 in appendix IV lists the programs GAO identified that might have opportunities for cost savings.
The 26 agencies are the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, the Interior, Justice, Labor, State, Transportation, the Treasury, and Veterans Affairs; the Environmental Protection Agency, General Services Administration, National Aeronautics and Space Administration, National Archives and Records Administration, National Science Foundation, Office of Personnel Management, Small Business Administration, Social Security Administration, U.S. Agency for International Development, U.S. Army Corps of Engineers, and the U.S. Nuclear Regulatory Commission.
We used the action plans for the Departments of Defense and Justice because they did not provide information on the number of opportunities or potential cost savings in the cost target templates required by OMB
In commenting on a draft of the November 2013 report on which this submission is based, 10 agencies (Agriculture, Commerce, General Services Administration, Housing and Urban Development, Interior, National Aeronautics and Space Administration, U.S. Nuclear Regulatory Commission, Office of Personnel Management, State, and Veterans Affairs) generally agreed with the recommendations directed to them, 4 (Defense, Environmental Protection Agency, Social Security Administration, and OMB) either partially agreed or disagreed with the recommendations directed to them, and 4 (Labor, Small Business Administration, Transportation, and U.S. Agency for International Development) stated they had no comments. However, GAO continued to believe that the recommendations to the agencies that partially agreed or disagreed were valid.
In particular, Defense partially concurred with the recommendation to develop a complete commodity baseline, stating that the department has efforts under way to further refine the baseline. In addition, both the Environmental Protection Agency and the Social Security Administration disagreed with our recommendation to develop a complete commodity IT baseline, stating they had already submitted one. However, GAO found that neither agency had a process in place to ensure the completeness of the information and therefore could not be assured that their data were complete.
Lastly, OMB disagreed with the recommendations to (1) disclose the limitations of any data reported on agency consolidation efforts and (2) improve transparency and accountability for PortfolioStat by disclosing consolidation efforts and related cost savings by agency. Regarding the first recommendation, OMB stated it had disclosed some limitations. However, OMB did not disclose that information from the departments of Defense and Justice was not included in the consolidation estimates reported, which, considering the scope of Defense’s efforts in this area (at least $3.2 billion), is a major gap. For the second recommendation, OMB stated that it performs work to ensure accountability and transparency but that some details of agency efforts are deliberative or procurement sensitive and it would therefore not be appropriate to disclose them. While OMB currently reports realized savings by agency on a quarterly basis, these savings are not measured against 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. Therefore, we stand by all recommendations made to these agencies and OMB.
GAO provided a draft of this report section to the following 18 agencies: OMB, the Departments of Agriculture, Commerce, Defense, Housing and Urban Development, Interior, Labor, State, Transportation, Veterans Affairs; the Environmental Protection Agency, General Services Administration, National Aeronautics and Space Administration, U.S. Nuclear Regulatory Commission, Office of Personnel Management, Small Business Administration, Social Security Administration, and U.S. Agency for International Development. One agency (U.S. Nuclear Regulatory Commission) agreed with the report section. Four agencies commented on efforts to address our recommendations. Specifically, Environmental Protection Agency reported actions underway and plans to address our recommendations. Housing and Urban Development referenced its December 2013 response to the report in which it agreed with the recommendations made and stated that the department’s next PortfolioStat update to OMB was scheduled for February 2014. The Small Business Administration stated that it was working to better identify, control, record, and audit their commodity IT baseline. The Social Security Administration stated that the agency now requires commodity IT and associated costs to be identified and reported as part of its IT budget. In addition, the agency anticipates completing its consolidation of geospatial architecture by September 2014. Ten agencies (Agriculture, Commerce, Defense, General Services Administration, Interior, Labor, Office of Personnel Management, State, U.S. Agency for International Development, and Veterans Affairs) stated they had no comments. Two agencies (National Aeronautics and Space Administration and Transportation) had technical comments which we incorporated as appropriate. OMB did not provide comments on this issue.
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