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General government

Consolidating federal data centers provides opportunity to improve government efficiency and achieve significant cost savings

Why Area Is Important


The federal government's demand for information technology (IT) is ever-increasing. Over time, this increasing demand has led to a dramatic rise in the number of federal data centers (defined as data processing and storage facilities over 500 square feet with strict availability requirements)—and a corresponding increase in operational costs. The growth in the number of federal data centers, many offering similar services and resources, has resulted in overlap and duplication among the centers.

In February 2010, the Office of Management and Budget (OMB) launched the Federal Data Center Consolidation Initiative to guide federal agencies in developing and implementing data center consolidation plans. OMB plans to oversee the agencies' plans and measure their progress.

What GAO Found

In recent years, as federal agencies modernized their operations, put more of their services online, and increased their information security profiles, they have demanded more computing power and data storage resources. According to OMB, the number of federal data centers grew from 432 in 1998 to more than 2,000 in 2010. These data centers often house similar types of equipment and provide similar processing and storage capabilities. These factors have led to concerns associated with the provision of redundant capabilities, the underutilization of resources, and the significant consumption of energy.

Operating such a large number of centers places costly demands on the government. In 2010, the Federal Chief Information Officer (CIO) reported that operating and maintaining such redundant infrastructure investments was costly, inefficient, and unsustainable, and had a significant impact on energy consumption. While the total annual federal spending associated with data centers has not yet been determined, the Federal CIO has found that operating data centers is a significant cost to the federal government, including hardware, software, real estate, and cooling costs. For example, according to the Environmental Protection Agency, the electricity cost to operate federal servers and data centers across the government is about $450 million annually. According to the Department of Energy, data center spaces can consume 100 to 200 times as much electricity as standard office spaces. Reported server utilization rates as low as 5 percent and limited reuse of these data centers within or across agencies lends further credence to the need to restructure federal data center operations to improve efficiency and reduce costs.

In February 2010, OMB and the Federal CIO announced the Federal Data Center Consolidation Initiative and outlined four high-level goals:

  • Promote the use of Green IT by reducing the overall energy and real estate footprint of government data centers.
  • Reduce the cost of data center hardware, software, and operations.
  • Increase the overall IT security posture of the government.
  • Shift IT investments to more efficient computing platforms and technologies.

As part of this initiative, OMB directed federal agencies to prepare an inventory of their data center assets and a plan for consolidating these assets by August 30, 2010, and to begin implementing them in fiscal year 2011. In October 2010, OMB reported that all of the agencies submitted their plans. OMB plans to monitor agencies' progress through annual reports and has established a goal of closing 800 of the over 2,100 federal data centers by 2015.

Data center consolidation makes sense economically and as a way to achieve more efficient IT operations, but challenges exist. For example, agencies face challenges in ensuring the accuracy of their inventories and plans, providing upfront funding for the consolidation effort long before any cost savings accrue, integrating consolidation plans into fiscal year 2012 agency budget submissions (as required by OMB), establishing and implementing shared standards (for storage, systems, security, etc.), establishing reimbursement mechanisms to fund the centralized operations, overcoming cultural resistance to such major organizational changes, and maintaining current operations during the transition to consolidated operations. Mitigating these and other challenges will require commitment from the agencies and continued oversight by OMB and the Federal CIO.

Actions Needed

Moving forward, it will be important for individual agencies to move quickly to correct any missing items in their plans, establish sound baselines so that progress and efficiencies can be measured, begin their consolidation efforts, track their progress, and report to OMB on their progress over time. It will also be important for OMB to work with agencies to establish goals and targets for consolidation (both in terms of cost savings and reduced data centers), maintain strong oversight of the agencies' efforts, and look for consolidation opportunities across agencies. Doing so will more fully address unnecessary overlap and duplication, and could achieve further operational improvements, efficiencies, and financial benefits.

As part of their individual consolidation plans, each federal department and agency was expected to estimate cost savings over time. In ongoing work, GAO reviewed 15 of the 24 agencies' consolidation plans. In these plans, agencies provided the following information on estimated savings:

  • Seven agencies estimated savings totaling over $369 million between fiscal years 2011 and 2015; however, actual savings may be even higher because three of these agencies' estimates were only partial estimates. They included expected energy savings but not savings from other sources, such as facilities or equipment reductions.
  • Two agencies reported that net savings would not accrue until fiscal years 2017 and 2018, respectively.
  • Six agencies did not provide estimated cost savings; however, two of these agencies suggested that they plan to develop cost-benefit analyses in the future.

Although some agencies reported that it was too soon to estimate cost savings because they are just beginning to plan to consolidate and other agencies noted that near-term savings were offset by consolidation costs, the opportunity for long-term savings is significant. In October 2010, a council of chief executive officers representing technical industry companies estimated that the federal government could save $150 billion to $200 billion over the next decade, primarily through data center and server consolidation.

GAO has ongoing work reviewing the Federal Data Center Consolidation Initiative as well as federal agencies' efforts to develop and implement consolidation plans.

Framework for Analysis

As part of an ongoing review of the Federal Data Center Consolidation Initiative, GAO analyzed 15 of 24 federal agencies' data center consolidation plans and inventories to identify plans and anticipated cost savings, and discussed challenges to the consolidation initiative with those agencies. GAO also met with agency officials to discuss data center consolidation initiatives at OMB, the Agency for International Development, the Department of Agriculture, the Department of Defense, the Department of Energy, the Department of Homeland Security, the Department of the Interior, the Department of Labor, the Department of State, the Department of the Treasury, the Environmental Protection Agency, the National Aeronautics and Space Administration, the Nuclear Regulatory Commission, the Small Business Administration, the Department of Commerce, the Department of Education, the Department of Health and Human Services, the Department of Housing and Urban Development, the Department of Justice, the Department of Transportation, the Department of Veterans Affairs, the General Services Administration, the National Science Foundation, the Office of Personnel Management, and the Social Security Administration.

Area Contact

For additional information about this area, contact David Powner at (202) 512-9286 or

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