In that budget, OMB stated  that, of approximately 1,200 major IT projects, about half—621  projects, representing about $22 billion—were on a Management  Watch List. OMB Established Processes and Criteria for Identifying Weak Projects, but It Did Not Use an Aggregate List to Perform Its Analysis or Oversight

According to OMB officials, including the Deputy Administrator of  OIRA and the Chief of the Information Technology and Policy  Branch, OMB staff identified projects for the Management Watch  List through their evaluation of the exhibit 300s that agencies submit  for major IT projects as part of the budget development process. According to OMB management, individual analysts were  responsible for evaluating projects and determining which projects  met the criteria to be on the Management Watch List for their  assigned agencies. 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, because they  did not see such an activity as necessary in performing OMB’s  predominant mission. 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 Monitoring of Projects Was Inconsistent, and Agency Follow- up Activities Were Not Tracked Centrally

OMB asked agencies to take corrective actions to address  weaknesses associated with projects on the Management Watch  List, but it did not develop a structured, consistent process or  criteria for deciding how to follow up on these actions. 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 projects). 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 readily ascertain 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. However, the office has not taken the next  step—to develop a single, aggregate list identifying the projects and  their weaknesses—and it has not developed a structured, consistent  process for deciding how to follow up on corrective actions. Developing an aggregated list  would help OMB to realize more fully the potential benefits of using  the Management Watch List as a tool for monitoring and analyzing  IT investments governmentwide. ●  Analyze the prioritized list to develop governmentwide and agency  assessments of the progress and risks of IT investments, identifying  opportunities for continued improvement. ●  Report to the Congress on progress made in addressing risks of  major IT investments and management areas needing attention. In commenting on a draft of this report, OMB’s Administrator of the  Office of E-Government and Information Technology expressed  appreciation for our review of OMB’s use of its Management Watch  List. Nonetheless, based on OMB’s inability to  easily report which of the 621 investments on the Management  Watch List remained deficient or how much of the $22 billion cited  in the President’s Budget remained at risk, we continue to believe  that an aggregate list would facilitate OMB’s ability to track  progress.
Why GAO Did This Study

Federal spending on information technology (IT) is over $60 billion this year and is expected to continue to rise. Accordingly, it is essential that federal IT investments are managed efficiently. Of the 1,200 major IT projects in the President's Budget for Fiscal Year 2005, OMB stated that it had placed about half--621 projects, representing about $22 billion--on a Management Watch List to focus attention on mission-critical IT investments that need management improvements. GAO was asked to testify on the findings and recommendations made in a report that it recently completed (GAO-05-276), which describes and assesses 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 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 projects with weaknesses, individual 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 for fiscal year 2005, the office polled its individual analysts and compiled the result. However, OMB officials told GAO that because they did not see such an activity as necessary, they did not compile a single list. Accordingly, OMB has not fully exploited the opportunity to use its watch list as a tool for analyzing IT investments on a governmentwide basis. OMB asked agencies to take corrective actions to address weaknesses associated with projects on the Management Watch List, but it did not develop a structured, consistent process for deciding how to monitor agency corrective actions. According to OMB officials, decisions on 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 agency 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. To help enable OMB to take advantage of the potential benefits of using the Management Watch List as a tool for analyzing and following up on investments, GAO's report included recommendations that OMB develop a single, aggregate Management Watch List and that it develop and use criteria for prioritizing and monitoring the projects on the list. GAO also recommended that the office use the prioritized list for reporting to the Congress as part of its statutory reporting responsibilities. In commenting on a draft of this report, OMB did not agree that the aggregated governmentwide list recommended by GAO is necessary for adequate oversight and management. However, GAO continues to believe that an aggregated Management Watch List would contribute to OMB's ability to analyze IT investments governmentwide and track progress in addressing deficiencies.