To address this  issue, in March 2012, OMB launched the PortfolioStat initiative, which  requires 26 agencies to conduct an annual review of their commodity IT  portfolio to, among other things, achieve savings by identifying  opportunities to consolidate investments or move to shared services. 2. In March 2013, OMB initiated the second round of PortfolioStat. Specifically, while  agencies initially planned to save at least $5.8 billion between fiscal years  2013 and 2015, they decreased their estimates to approximately $2 billion  as of January 2015. Estimates for Revised Planned Savings Are Understated

While agencies reported revised savings plans, the new estimates of the  total amount they expect to save are understated—likely by hundreds of  millions of dollars—because agencies have not consistently included  planned savings for their data center consolidation initiatives as directed  by OMB. Most Agencies Reported Lower Achieved PortfolioStat Savings than Planned, but Actual Results Are Difficult to Determine Due to Inconsistent Reporting

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. Although agencies reported to us that they saved $1.1 billion in fiscal  years 2013 and 2014, inconsistencies in how these savings have been  reported make it difficult to determine actual progress. Selected Agencies Explained How PortfolioStat Savings Were Reinvested but Were Not Always Able to Provide Supporting Documentation

One of the goals for PortfolioStat articulated by OMB in its fiscal year  2013 guidance is the reinvestment of savings achieved through  eliminating unnecessary and lower-value investments, and reducing   Consistent with this goal, the three selected agencies  operating costs.we reviewed—DHS, the Department of Agriculture, and the Department  of Veterans Affairs (VA)—explained how they reinvested the PortfolioStat  savings for their two initiatives that were expected to yield the highest  savings in fiscal year 2013. Specifically:
DHS reported achieving approximately $176 million in savings from its  Data Center Consolidation and Enterprise Licensing Agreements  initiatives. However, they did not provide documentation  to support this. Of the 86 incomplete action items, about 78 percent do not have any  associated time frames or due dates for completion. He stated he did  not believe time frames were needed to follow up on the status of the  action items, particularly in cases when time frames established in policy  have already passed (such as for the implementation of the Internet  Protocol version 6). Recommendations for Executive Action

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; track agencies’ planned savings and use them as a baseline for  measuring reported actual savings; require agencies to document specifically how the cost savings  achieved from PortfolioStat have been reinvested; and establish time frames for completing assigned PortfolioStat action  items and hold agencies accountable for meeting those time frames. Appendix I: Objectives, Scope, and Methodology

Our 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 describe action items resulting from the PortfolioStat process and  determine the extent to which agencies had addressed them, we  reviewed agencies’ action item memoranda resulting from the  PortfolioStat sessions, and analyzed them to identify the action items,  their status (whether completed or not), and specific time frames that  each agency and OMB had agreed to as part of the PortfolioStat process.
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 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.
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.

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.