To examine OMB’s processes for developing the list, we requested a copy  of the Management Watch List; we reviewed related OMB policy guidance,  including its Circular A-11 and Capital Programming Guide, as well as the  Analytical Perspectives for the President’s Budget submissions for fiscal  years 2005 and 2006; and we interviewed OMB analysts and their managers,  including the Deputy Administrator of OIRA and the Chief of the  Information Technology and Policy Branch, to identify the processes and  criteria they have in place to determine which IT projects to include on the  Management Watch List. To derive the  total number of projects on the list that were reported for fiscal year 2005,  OMB polled the individual analysts and compiled the numbers. OMB officials said that they did not aggregate these projects into a single  list describing projects and their weaknesses. According to these officials,  they did not construct a single list of projects meeting their watch list  criteria because they did not see such an activity as necessary in  performing OMB’s predominant mission: to assist in overseeing the  preparation of the federal budget and to supervise agency budget  administration. Nevertheless, OMB has not fully exploited the opportunity to use its  Management Watch List as a tool for analyzing IT investments on a  governmentwide basis. OMB’s Follow-up on Projects Was Inconsistent, and Follow-up Activities Were Not Tracked Centrally

OMB did not develop a structured, consistent process or criteria for  deciding how to follow up on corrective actions that it asked agencies to  take to address weaknesses associated with projects on the Management  Watch List. OMB officials also stated that those Management Watch List projects that  did receive follow-up attention were not tracked centrally, but only by the  individual OMB analysts with responsibility for the specific agencies. Accordingly, OMB could not readily tell us which of  the 621 watch list projects for fiscal year 2005 were followed up on, nor  could it use the list to describe the relationship between its follow-up  activities and the changes in the numbers of projects on the watch list  between fiscal year 2005 (621 projects) and fiscal year 2006 (342). In addition, major projects with significant management deficiencies may  have continued to absorb critical agency resources. Without tracking specific follow-up activities, OMB  could not know whether the risks that it identified through its Management  Watch List were being managed effectively; if they were not, funds were  potentially being spent on poorly planned and managed projects. Conclusions

By scoring agency IT budget submissions and identifying weaknesses that  may indicate investments at risk, OMB is identifying opportunities to  strengthen investments. However, OMB has not developed a single, aggregate list identifying the  projects and their weaknesses, nor has it developed a structured,  consistent process for deciding how to follow up on corrective actions. We agree that our review described and  assessed OMB’s processes for (1) placing the 621 projects representing  about $22 billion on its Management Watch List and (2) following up on  corrective actions established for projects on the list.
Why GAO Did This Study

For the President's Budget for Fiscal Year 2005, the Office of Management and Budget (OMB) stated that of the nearly 1,200 major information technology (IT) projects in the budget, it had placed approximately half--621 projects, representing about $22 billion--on a Management Watch List, composed of mission-critical projects with identified weaknesses. GAO was asked to describe and assess OMB's processes for (1) placing projects on its Management Watch List and (2) following up on corrective actions established for projects on the list.

What GAO Found

For the fiscal year 2005 budget, OMB developed processes and criteria for including IT investments on its Management Watch List. In doing so, it identified opportunities to strengthen investments and promote improvements in IT management. However, it did not develop a single, aggregate list identifying the projects and their weaknesses. Instead, OMB officials told GAO that to identify IT projects with weaknesses, individual OMB analysts used scoring criteria that the office established for evaluating the justifications for funding that federal agencies submit for major projects. These analysts, each of whom is typically responsible for several federal agencies, were then responsible for maintaining information on these projects. To derive the total number of projects on the list that OMB reported for fiscal year 2005, OMB polled its individual analysts and compiled the result. However, OMB officials told GAO that they did not compile a list that identified the specific projects and their identified weaknesses. The officials added that they did not construct a single list because they did not see such an activity as necessary. Thus, OMB has not fully exploited the opportunity to use the list as a tool for analyzing IT investments on a governmentwide basis. OMB had not developed a structured, consistent process for deciding how to follow up on corrective actions that its individual analysts asked agencies to take to address weaknesses associated with projects on its Management Watch List. According to OMB officials, decisions on follow-up and monitoring of progress were typically made by the staff with responsibility for reviewing individual agency budget submissions, depending on the staff's insights into agency operations and objectives. Because it did not consistently require or monitor follow-up activities, OMB did not know whether the project risks that it identified through its Management Watch List were being managed effectively, potentially leaving resources at risk of being committed to poorly planned and managed projects. In addition, because it did not consistently monitor the follow-up performed on projects on the Management Watch List, OMB could not readily tell GAO which of the 621 projects received follow-up attention. Thus, OMB was not using its Management Watch List as a tool in setting priorities for improving IT investments on a governmentwide basis and focusing attention where it was most needed.