For fiscal year 2014,  federal agencies plan to spend about $82 billion. PortfolioStat is structured around five phases: (1) baseline data gathering  in which agencies are required to complete a high-level survey of their IT  portfolio status and establish a commodity IT baseline; (2) analysis and  proposed action plan in which agencies are to use the data gathered in  phase 1 and other available agency data to develop a proposed action  plan for consolidating commodity IT; (3) PortfolioStat session in which  agencies are required to hold a face-to-face, evidence-based review of  their IT portfolio with the Federal Chief Information Officer (CIO) and key  stakeholders from the agency to discuss the agency’s portfolio data and  proposed action plan, and agree on concrete next steps to rationalize the  agency’s IT portfolio that would result in a final plan; (4) final action plan  implementation, in which agencies are to, among other things, migrate at  least two commodity IT investments; and (5) lessons learned, in which  agencies are required to document lessons learned, successes, and  challenges. All 26 agencies that were required to implement the PortfolioStat process  took actions to address OMB’s requirements. However, there were  shortcomings in their implementation of selected requirements, such as  addressing all required elements of the final action plan and migrating two  commodity areas to a shared service by the end of 2012. However, OMB’s overall estimate of the  number of opportunities and cost savings is underreported. Among other  things, it does 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. Our analysis of data collected from the 26 agencies 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. Selected Departments’ Plans Identified Billions in Potential Cost Savings Using Various Processes, but Support for These Savings Is Uneven

In their portfolio improvement plans, the five agencies selected for our  review—the Departments of Agriculture, Defense, the Interior, the  Treasury, and Veterans Affairs—identified a total of 52 initiatives  expected to achieve at least $3.7 billion in potential cost savings or  avoidance through fiscal year 2015, as well as several improvements of  processes for managing their IT portfolios. More consistently using the processes  recommended by OMB could assist agencies in identifying further  opportunities for consolidation and shared services. In addition, four  agencies did not always provide support for their estimated savings or  show how it linked to the estimates. These consolidation opportunities include those classified as  Business Systems, IT Infrastructure, and Enterprise IT. In  addition, Treasury has yet to develop a valuation model for assessing the  value of its IT investments. 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. Specifically, OMB agreed with the recommendation to  require agencies to disclose limitations their CIOs might have in  exercising the authorities and responsibilities provided by law and  OMB guidance but stated that it had already addressed this issue as  part of its fiscal year 2013 PortfolioStat process. We therefore  removed the recommendation from the report. In written comments, the Social Security Administration agreed with  one recommendation and disagreed with the other. Appendix I: Objectives, Scope, and Methodology

Our objectives were to (1) determine the status of efforts to implement  key required PortfolioStat actions, (2) evaluate selected agencies’ plans  for making portfolio improvements and achieving associated cost savings,  and (3) evaluate Office of Management and Budget’s (OMB) plans to  improve the PortfolioStat process. In addition, to improve the U.S. Army Corps of Engineers’ implementation  of PortfolioStat, we recommend that the Secretary of Defense direct the  Secretary of the Army to take the following two actions:  In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) consolidate commodity IT spending under  the agency CIO; (2) target duplicative systems or contracts that  support common business functions for consolidation; (3) establish  criteria for identifying wasteful, low-value, or duplicative investments;  and (4) establish a process to identify these potential investments and  a schedule for eliminating them from the portfolio..
Report on the agency’s progress in consolidating eCPIC to a shared  service as part of the OMB integrated data collection quarterly  reporting until completed.
Why GAO Did This Study

Federal agencies plan to spend at least $82 billion on IT in fiscal year 2014, and GAO has previously reported on challenges in identifying and reducing duplicative IT investments. In 2012, OMB launched its PortfolioStat initiativea process where agencies gather information on their IT investments and develop plans for consolidation and increased use of shared-service delivery models.GAO was asked to review the implementation of PortfolioStat. GAOs objectives were to (1) determine whether agencies completed key required PortfolioStat actions, (2) evaluate selected agencies plans for making portfolio improvements and achieving associated cost savings, and (3) evaluate OMBs plans to improve the PortfolioStat process. To do this, GAO analyzed plans, status reports, and other documentation from agencies and interviewed agency and OMB officials. GAO also interviewed officials and reviewed documentation from five agencies selected based on their IT expenditures and management structures.

What GAO Found

The 26 major federal agencies that were required to participate in the PortfolioStat initiative fully addressed four of seven key requirements established by the Office of Management and Budget (OMB). However, only 1 of the 26 agencies addressed all the requirements. For example, agencies did not develop action plans that addressed all elements, such as criteria for identifying wasteful, low-value or duplicative information technology (IT) investments, or migrate two commodity IT areassuch as enterprise IT systems and IT infrastructureto a shared service by the end of 2012.
Further, OMBs estimate of about 100 consolidation opportunities and a potential $2.5 billion in savings from the PortfolioStat initiative is understated because, among other things, it did not include estimates from the Departments of Defense and Justice. GAOs analysis, which includes these estimates, shows that, collectively, the 26 agencies are reporting about 200 opportunities and at least $5.8 billion in potential savings through fiscal year 2015.
Five selected agenciesthe Departments of Agriculture, Defense, the Interior, the Treasury, and Veterans Affairsidentified 52 consolidation initiatives, along with other IT management improvements, and estimated at least $3.7 billion in potential cost savings through fiscal year 2015. However, four agencies did not always provide sufficient support for all of their estimates, and they varied in their use of processessuch as an enterprise architecture and a method for assessing the value of investmentsrecommended by OMB to identify consolidation opportunities. More consistently using these tools may reveal further opportunities for consolidation, and better support for estimated savings may increase the chances that they will be achieved.
OMBs fiscal year 2013 PortfolioStat guidance identifies a number of planned improvements but does not fully address certain weaknesses in the implementation of the initiative, such as limitations in CIOs authority, weaknesses in agencies commodity IT baselines, accountability for migrating selected commodity IT areas, or the information on agencies progress that OMB intends to make public.

What GAO Recommends

GAO is recommending, among other things, that OMB require agencies to fully disclose limitations in CIOs ability to exercise their authority and that 24 agencies take steps to improve their PortfolioStat implementation. OMB agreed with some of the recommendations and disagreed with others; and responses from the 21 agencies commenting on the report varied. GAO continues to believe that the majority of the recommendations are valid, but has removed two, and modified one, as discussed in the report.