Information Technology:

Additional OMB and Agency Actions Needed to Ensure Portfolio Savings Are Realized and Effectively Tracked

GAO-15-296: Published: Apr 16, 2015. Publicly Released: Apr 16, 2015.

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What GAO Found

Agencies decreased their planned PortfolioStat savings by at least 68 percent from what they reported to GAO in 2013. Specifically, while agencies initially had planned to save at least $5.8 billion between fiscal years 2013 and 2015, these estimates were decreased to approximately $2 billion. The Departments of Defense and Homeland Security accounted for most of the difference (see fig. below). Further, although the Office of Management and Budget (OMB) made its data center consolidation initiative part of PortfolioStat in 2013, agencies have not consistently included planned savings from this initiative in their PortfolioStat reporting. As a result, the total amount that agencies expect to save through fiscal year 2015 is understated.

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As of January 2015, agencies reported having achieved approximately $1.1 billion in PortfolioStat-related savings during fiscal years 2013 and 2014. However, only 9 of 26 agencies met or exceeded their revised planned savings goals. Further, inconsistencies in OMB and agencies' reporting make it difficult to reliably measure progress in achieving PortfolioStat savings: (1) OMB included fiscal year 2012 savings in reporting against the fiscal years 2013 to 2015 goal, and (2) agencies had additional cost-savings initiatives they reported to GAO but not to OMB, and vice versa.

Three selected agencies explained how they reinvested their PortfolioStat savings, but did not always provide supporting documentation. For example, the Department of Homeland Security reported reinvesting the $176 million from its data center consolidation and enterprise licensing agreements initiatives in multiple efforts, but did not provide supporting documentation.

Agencies completed 26 of 112 action items resulting from the 2013 PortfolioStat process, such as improve project delivery. However, almost 80 percent of the 86 incomplete items did not have associated time frames for completion. During our review, OMB stated they did not believe time frames were needed to monitor the status of the action items. However, establishing such time frames would increase agencies' accountability for completing the activities.

Why GAO Did This Study

In March 2012, OMB launched an initiative, referred to as PortfolioStat, which requires agencies to conduct annual reviews of their IT investments and make decisions on eliminating duplication, among other things. In March 2013, OMB launched the second iteration of this initiative, with the goal of eliminating duplication and achieving savings through specific actions and time frames.

GAO was asked to review the implementation of the second iteration of PortfolioStat. GAO's specific objectives were to (1) assess agencies' plans for achieving PortfolioStat savings, (2) determine agencies' progress in achieving planned savings, (3) describe the extent to which selected agencies have reinvested PortfolioStat savings, and (4) describe action items resulting from the PortfolioStat process and determine the extent to which agencies have addressed them. To do so, GAO determined planned savings amounts for fiscal years 2013 through 2015, evaluated whether initiatives have yielded anticipated savings, analyzed data from three agencies based on expected savings for fiscal year 2013, and identified the status and time frames of action items.

What GAO Recommends

GAO is making recommendations to OMB and Defense aimed at improving the reporting of achieved savings, documenting how savings are reinvested, and establishing time frames for PortfolioStat action items. OMB agreed and Defense partially agreed. GAO modified the recommendation to Defense based on its response.

For more information, contact David Powner at (202) 512-9286 or pownerd@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: OMB has taken several actions to fully address this recommendation. Specifically, in September 2016, OMB officials told GAO that agencies would start reporting their data center consolidation savings separately, rather than integrated with PortfolioStat savings data, and that this would help improve the accuracy of the savings data in the reports to Congress about the results of IT reform efforts. In addition, OMB officials told GAO they believed the reporting instructions provided to agencies in the Data Center Optimization Initiative (DCOI) User Guide would help improve the quality of reported data center savings. In April 2018, OMB reported additional actions they had taken that addressed this recommendation, including ensuring that agencies have maximum control and access to reported data and providing agencies guidance and example files to prevent formatting issues from affecting, complicating, or impairing reported savings data. Our ongoing work on agencies' data center optimization efforts has shown improvements in the quality of the reported savings data as a result of OMB's actions, and, in April 2019, we found agencies' information on completed and planned data center closures to be "sufficiently reliable." In addition, in a separate effort to follow up on a recommendation made in GAO-14-65, we determined that OMB had taken sufficient action to improve the quality of the cost savings and avoidance data it publicly reports on non-DCOI consolidation efforts,

    Recommendation: To better ensure that the PortfolioStat initiative improves governmental efficiency and achieves cost savings, the Director of OMB should direct the Federal CIO to ensure that its reports to Congress about the results of IT reform efforts accurately reflect savings generated from all PortfolioStat initiatives, including those associated with FDCCI.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  2. Status: Open

    Comments: In updates on the status of this recommendation, OMB has commented that it has asked agencies to only report "realized" savings and cost avoidances. In April 2018, the agency stated that this is because agency feedback and streamlining of data collection efforts have shown that collecting realized savings are more valuable than collecting planned savings. As of November 2018, OMB was still not requiring agencies to report planned savings as we recommended. However, in a March 2019 update on efforts to address a related recommendation we made in GAO-14-65, OMB stated that it was "refining the PortfolioStat process toward driving better conversations and outcomes with agencies" and "exploring better approaches to cost savings as reported by agencies to the IT Dashboard." We are following up with OMB to determine whether the approaches it is exploring include the reporting of planned savings.

    Recommendation: To better ensure that the PortfolioStat initiative improves governmental efficiency and achieves cost savings, the Director of OMB should direct the Federal CIO to track agencies' planned savings and use them as a baseline for measuring reported actual savings.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  3. Status: Open

    Comments: Since May 2017, agencies have had the option to report on how savings from initiatives such as PortfolioStat will be reinvested in the quarterly integrated data collection report they submit to OMB. In April 2018, OMB told us they had not made this reporting a requirement because some agencies have a challenge determining how funds are repurposed due to the way funding is appropriated. As of November 2018, OMB had still not required agencies to document how their cost savings have been reinvested. Nevertheless, as noted in our report, documenting how cost savings achieved from PortfolioStat have been reinvested would provide OMB and Congress with greater assurance that agencies are effectively using savings generated through the PortfolioStat process. We will continue to follow up with OMB on this recommendation.

    Recommendation: To better ensure that the PortfolioStat initiative improves governmental efficiency and achieves cost savings, the Director of OMB should direct the Federal CIO to require agencies to document specifically how the cost savings achieved from PortfolioStat have been reinvested.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  4. Status: Closed - Implemented

    Comments: OMB's December 2015 M-15-14 Memorandum on Management and Oversight of Federal Information Technology instructed agencies to report on the status of their PortfolioStat action items during their quarterly PortfolioStat sessions with OMB (the sessions were previously held annually). In addition, OMB started requiring agencies to report on their action items, including due dates, in their quarterly integrated data collection submissions to OMB. These actions should help ensure agencies' accountability for meeting action item time frames.

    Recommendation: To better ensure that the PortfolioStat initiative improves governmental efficiency and achieves cost savings, the Director of OMB should direct the Federal CIO to establish time frames for completing assigned PortfolioStat action items and hold agencies accountable for meeting those time frames.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  5. Status: Closed - Implemented

    Comments: The Department of Defense partially concurred with our recommendation, stating that its "federated approach" did not align with the 25 cost savings initiatives it had reported to us in GAO-14-65. In addition, the department noted that a number of the 25 initiatives had been ineffective in generating savings, or had not been achievable. In an August 2018 update, the department stated that, while it did not have any information on the 25 initiatives, it was tracking cost savings and avoidances for other initiatives it was pursuing. In February, 2019, the department provided supporting documentation its claims. Specifically, it provided savings it had reported to OMB for several IT reform initiatives as part of the quarterly integrated data collection process. While the report does not include savings for the 25 cost initiatives GAO reported in GAO-14-65, it includes commodity IT savings, and therefore addresses the intent of the recommendation to track and report such savings to OMB.

    Recommendation: The Secretary of Defense should direct the Chief Information Officer to revisit the 25 cost initiatives GAO reported in GAO-14-65 to identify those that have achieved savings and cost avoidances and report those savings and avoidances to OMB.

    Agency Affected: Department of Defense

 

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