These  memorandums instructed selected agencies to (1) cease temporarily new  IT infrastructure and business systems (i.e., financial management,  procurement, and human resources systems) investments above $500,000  pending a review of the investment plans of all proposed DHS component  agencies; (2) identify and submit to OMB information on any current or  planned spending on these types of initiatives; and (3) participate in  applicable IT investment review groups co-chaired by OMB and the Office  of Homeland Security. In fulfilling  this role, the review group relied on an informal process, which was not  documented. Although the review group reviewed the few investments that  component agencies submitted, according to OMB and DHS IT officials, the  group generally addressed broader issues related to the transition to the  new department. However, it is not known whether, or the extent to which,  savings have resulted from the memorandums. In particular, OMB did not  track the savings associated with the July memorandums because,  according to OMB IT representatives, budgetary savings had not occurred  when the review group was in place. DHS’s CIO agreed that savings are expected to result from the department’s  consolidation and integration of systems. Moreover, he stated that DHS will  be tracking such savings and has established a mechanism for doing so. DHS Has Initiated Reviews of Component Agency IT Investments, but Its Processes Are Still Evolving

Once DHS became operational and the investment review group  established by the July memorandums no longer existed, the department  established an IT investment management process that includes  departmental reviews of component agency IT investments meeting certain  criteria. In addition, as of January 26, 2004, the department’s  highest level investment management board had performed control  reviews of nine investments that had reached key decision points. In particular, as of  January 2, 2004, the department had identified about 100 IT programs that  were eligible for review by its two top-level departmental boards and,  according to IT officials, is having difficulty in bringing all of these  programs before the boards in a timely manner. Moreover, DHS has not  established a process to ensure that control reviews of component agency  IT investments are performed in a timely manner. Conclusions

OMB took a prudent step in issuing its July memorandums directing federal  agencies that were expected to be part of the new department to  temporarily cease funding for new IT infrastructure and business systems  investments in anticipation of the establishment of DHS. Nevertheless,  according to OMB IT representatives, budgetary savings as a result of the  July memorandums had not occurred at the time that the review group was  in place. Although DHS has begun to establish a mechanism to track such  savings in the future, until savings resulting from the consolidation and  integration of systems and services are identified, tracked, and reported, it  will remain unknown whether OMB’s July memorandums and the  subsequent establishment of DHS have achieved the millions of dollars in  potential economies identified by OMB. At that time, we will send copies of this report to the Secretary  of Homeland Security and the Director, Office of Management and Budget.
Why GAO Did This Study

In July 2002, the Office of Management and Budget (OMB) issued two memorandums directing agencies expected to be part of the Department of Homeland Security (DHS) to temporarily cease funding for new information technology (IT) infrastructure and business systems investments and submit information to OMB on current or planned investments in these areas. GAO was asked to (1) explain OMB's implementation of these memorandums, (2) identify any resulting changes to applicable IT investments, and (3) ascertain if DHS has initiated its own investment management reviews and, if so, what the results of these reviews have been.

What GAO Found

The July 2002 memorandums established an investment review group cochaired by OMB and the Office of Homeland Security to review submitted investments and estimated that millions of dollars potentially could be saved as a result of consolidating and integrating component agency investments. The investment review group relied on an informal, undocumented process to fulfill its responsibilities. Nevertheless, according to OMB and DHS IT officials, the review group both reviewed five component agency investments that were submitted and addressed long-term IT strategic issues related to the transition to the new department. OMB and DHS IT officials cited some changes to agency IT infrastructure and business systems investments because of the July memorandums. In addition, DHS IT officials cited other benefits that resulted from the memorandums. However, it is not known whether, or the extent to which, savings have resulted from the memorandums. In particular, OMB did not track savings associated with the July memorandums because, according to OMB IT staff, anticipated budgetary savings had not occurred at the time the review group was in place. DHS's chief information officer stated that the department plans to track savings related to the consolidation and integration of systems and has established a mechanism for doing so. However, until such savings are identified, tracked, and reported it will remain unknown whether the July memorandums and the subsequent establishment of DHS have achieved the potential economies identified by OMB. Once DHS became operational and the investment review group no longer existed, the department established its own IT investment management process, which is still evolving. As part of this process, between May 2003 and late January 2004, the DHS's highest level investment management board performed reviews of nine investments that had reached key decision points. Even with this progress, the department has identified about 100 IT programs that are eligible for review by its two top department-level boards. However, DHS has not established a process to ensure that key reviews of such IT investments are performed in a timely manner.