OMB plays a key role in overseeing the implementation and management  of federal IT investments. According to OMB, agencies with projects on the Management Watch List  are to submit remediation plans addressing the weaknesses. While these changes—generally referred to as rebaselining—can be done  for valid reasons—including, for example, changes in a project’s  objectives, scope, requirements, or funding stream—they can also be used  to mask cost overruns and schedule delays. The guide also identifies best practices that are relevant to  rebaselining policies. Hundreds of Projects Totaling Billions of Dollars in Estimated Expenditures for Fiscal Year 2009 Are Poorly Planned or Poorly Performing

OMB and federal agencies have identified approximately 413 IT projects— totaling at least $25.2 billion in expenditures for fiscal year 2009—as being  poorly planned, poorly performing, or both. Finally, 26 projects  totaling $3 billion have been identified as both poorly planned and poorly  performing. Steps Have Been Taken to Improve the Identification of Management Watch List and High Risk Projects, but Projects Totaling Billions of Dollars Still Require Oversight

OMB has taken steps to improve the identification of the Management  Watch List and high-risk projects since we testified last September,  including publicly disclosing reasons for placement on the Management  Watch List, and clarifying high-risk project criteria, however, more needs  to be done by both OMB and the agencies to fully address  recommendations we have previously made to improve the planning,  management, and oversight of the poorly planned and poorly performing  projects so that potentially billions in taxpayer dollars are not wasted. High-Risk Projects: To improve the identification and oversight of the  high-risk projects, in 2006 we recommended, among other things, that  OMB establish a structured, consistent process to update the list of high- risk projects on a regular basis, including identifying new projects and  removing previous ones to ensure that the list is current and complete. About Half of Major IT Projects Have Been Rebaselined Using Policies that Are Not Fully Consistent with Best Practices

Given that cost and schedule variances are the primary reason for poorly  performing projects, having accurate and transparent cost and schedule  information is essential to effective oversight. In a report being released  today, we estimate that about 48 percent of the federal government’s  major IT projects have been rebaselined. Of those rebaselined projects, 51  percent were rebaselined at least twice, and about 11 percent were  rebaselined 4 times or more. These projects were rebaselined for several  reasons, including changes in project goals and changes in funding. While  the major agencies have all established rebaselining policies, these  policies are not comprehensive. Specifically, none of the policies are fully  consistent with best practices, including describing a process for  developing a new baseline and requiring the validation of the new  baseline, identified in our cost assessment guide. Agencies’ policies vary in  part because OMB has not issued guidance specifying what elements these  policies are to include. About Half of IT Projects Were Rebaselined for Several Reasons

In our report we project that 48 percent of the major projects federal  agencies plan to fund in fiscal year 2008 have been rebaselined, and about  half of those have been rebaselined at least twice. 2. 3. 4. Require management review.
Why GAO Did This Study

The federal government spends billons of dollars on information technology (IT) projects each year. Consequently, it is important that projects be managed effectively to ensure that public resources are wisely invested. To this end, the Office of Management and Budget (OMB), which plays a key role in overseeing the federal government's IT investments, identifies major projects that are poorly planned by placing them on a Management Watch List and requires agencies to identify high-risk projects that are performing poorly (i.e., have performance shortfalls). Having accurate and transparent project cost and schedule information is also essential to effective oversight. At times, changes to this information--called a rebaselining-- are made to reflect changed development circumstances. These changes can be done for valid reasons, but can also be used to mask cost overruns and schedule delays. GAO has previously testified on the Management Watch List and high risk projects. GAO was asked to (1) provide an update on these projects, (2) identify OMB's efforts to improve the identification and oversight of these projects, and (3) summarize the results of GAO's IT project rebaselining report being released today. In preparing this testimony, GAO analyzed current Management Watch List and high risk project information.

What GAO Found

OMB and federal agencies have identified approximately 413 IT projects--totaling at least $25.2 billion in expenditures for fiscal year 2008--as being poorly planned, poorly performing, or both. Specifically, through the Management Watch List process, OMB determined that 352 projects (totaling about $23.4 billion) are poorly planned. In addition, agencies reported that 87 of their high risk projects (totaling about $4.8 billion) were poorly performing. Twenty-six projects (totaling about $3 billion) are considered both poorly planned and poorly performing. OMB has taken steps to improve the identification of the Management Watch List and high-risk projects since GAO testified last September, including publicly disclosing reasons for placement on the Management Watch List and clarifying high-risk project criteria. However, more needs to be done by both OMB and the agencies to address recommendations GAO has previously made to improve the planning, management, and oversight of poorly planned and performing projects so that potentially billions in taxpayer dollars are not wasted. In its rebaselining review, GAO reports that 48 percent of the federal government's major IT projects have been rebaselined for several reasons, including changes in project goals and changes in funding. Of those rebaselined projects, 51 percent were rebaselined at least twice and about 11 percent were rebaselined 4 times or more. In addition, while the major agencies have all established rebaselining policies, these policies are not comprehensive. Specifically, none of the policies were fully consistent with best practices, including describing a process for developing a new baseline and requiring the validation of the new baseline. Agencies' policies varied in part because OMB has not issued guidance specifying what elements these policies are to include. In its report, GAO makes recommendations to OMB to issue guidance for rebaselining policies and to the major agencies to develop comprehensive rebaselining policies that address identified weaknesses.