Agencies Reported Achieving Billions of Dollars in Savings from Implementation of OMB’s IT Reform Efforts

As previously stated, beginning in 2010, OMB launched a series of IT  reform initiatives in the areas of data center consolidation, cloud  computing, and shared services migration, among other things, intended  to help agencies achieve greater efficiency in their IT investments, as well  as identify and execute opportunities for savings. In total, 24 of the 26 agencies reported achieving approximately $3.6  billion in cost savings and avoidances from the implementation of OMB’s  IT reform efforts between fiscal years 2011 and 2014. Data center consolidation and optimization cost savings and avoidances  comprise slightly more than half of the $3.6 billion total, while PortfolioStat  and other initiatives (such as cloud computing and shared services  migration) comprise the remainder of the cost savings and avoidances. Agencies Have Incomplete Plans for Reinvesting Savings

Most agencies did not fully implement OMB’s guidance for submitting  reinvestment plan information. Of the 27 agencies required to submit reinvestment plan information to  OMB, 5 had fully implemented OMB’s guidance, while the remaining 22  agencies had partially implemented the guidance. Only One-Third of Agencies’ Fiscal Year 2014 Reduction and Reinvestment Plans Were Complete

Most agencies did not follow OMB’s guidance for proposing one-time  fiscal year 2014 IT reductions of 10 percent and reinvestments of  between 50 and 100 percent of the savings in their budget submissions  for that fiscal year. The two agencies that did not submit one-time fiscal year 2014 reduction  and reinvestment plan information—Defense and HHS—provided varying  reasons for not doing so. Specifically, agencies should have submitted a total of $7.6 billion in  reductions and proposed reinvestments between $3.8 and $7.6 billion. In addition, none of the four selected agencies had tracked the  performance results of their planned reinvestments. Until OMB requires agencies to report actual reinvestment performance  and defines performance targets to guide agency reinvestment efforts, it  will be limited in its ability to ensure that agencies are reinvesting funds as  planned and may not be able to hold agencies accountable. Finally, without improved  tracking of reinvestments through the use of existing governance  mechanisms and the implementation of FITARA, Interior and Labor may  lack assurance that their component agencies are reinvesting in areas  consistent with agency-wide goals. While the four agencies that we selected documented key governance  processes and fully embraced OMB’s “cut and reinvest” guidance by  proposing to reinvest the full amount of their proposed reductions in their  fiscal year 2014 budget submissions, none of the four agencies was able  to provide support that they had tracked the actual performance of their  proposed reinvestments. Specifically, OMB and 12 agencies agreed  with our recommendations, while 1 (State) did not state whether it agreed  or disagreed, 3 had no comments, and 1 (Defense) partially agreed. Until such requirements are in  place, agencies may be challenged to ensure that their considerable  savings are being used in the most efficient and effective manner  possible and OMB will be limited in its ability to ensure that agencies’  reinvestments are occurring as planned. Agriculture also noted that it supports our  recommendations to OMB to define targets for agency reinvestment  and require that agencies complete their reinvestment plans and track  actual performance. Appendix I: Objectives, Scope, and Methodology

Our objectives were to (1) assess agencies’ progress in achieving  savings from their information technology (IT) reform efforts; (2) evaluate  the extent to which agencies have established plans to reinvest their  savings; and (3) evaluate how selected agencies have reinvested their  savings, including the extent to which IT governance processes are in  place to oversee such reinvestments. We rated this requirement as “fully implemented” if the  agency’s submission met or exceeded OMB’s reduction and  reinvestments targets and included all required supplemental information;  “partially implemented” if the agency’s submission either did not meet  OMB’s reduction and reinvestment targets or did not include the required  supplemental information for each of the proposed reductions and  reinvestments; and “not implemented” if the agency did not meet OMB’s  reduction and reinvestment targets and did not provide supplemental  information for all required fields, or the agency did not submit the  required documentation to OMB. For evaluating how selected agencies have reinvested their savings,  including the extent to which IT governance processes are in place to  oversee such reinvestments, we selected four federal agencies (the  Departments of Education, Interior, and Labor, and the Social Security  Administration) based on their fiscal year 2014 proposed IT reductions  and reinvestments, as documented in their budget submission  documentation.
Why GAO Did This Study

Beginning in 2010, OMB initiated a series of IT reform efforts to consolidate the growing number of data centers and eliminate duplicative spending. In May 2012, the agency began a “cut and reinvest” effort that required agencies to propose fiscal year 2014 IT reductions and reinvestments.
GAO was asked to review agencies' savings from OMB's IT reform efforts and determine how those savings are being reinvested. The objectives were to (1) assess agencies' progress in achieving savings from their IT reform efforts, (2) evaluate agencies' plans to reinvest their savings, and (3) evaluate how selected agencies have reinvested their savings and governance processes to oversee the reinvestments. GAO assessed 26 agencies' cost savings and avoidance documentation, evaluated 27 agencies' (including the Smithsonian Institution) reinvestment plans against OMB's guidance, and compared 4 of the agencies' governance processes against best practices. The 4 agencies were selected, in part, because they had the highest dollar amounts of proposed IT reinvestments.

What GAO Found

Twenty-four of the 26 federal agencies participating in the Office of Management and Budget's (OMB) information technology (IT) reform initiatives reported achieving an estimated total of $3.6 billion dollars in cost savings and avoidances between fiscal years 2011 and 2014. Slightly more than half (or about $2.0 billion) of the savings and avoidances were from data center consolidation and optimization efforts. Notably, of the $3.6 billion total, the Departments of Defense, Homeland Security, Treasury, and the Social Security Administration accounted for about $2.5 billion (or 69 percent).
Most agencies did not fully meet OMB's requirements to submit reinvestment plan information. Of the 27 agencies required to submit reinvestment plans (including one-time and ongoing plans), 5 agencies had fully implemented OMB's guidance, while the remaining 22 had only partially implemented it. For example, most agencies had not fully implemented OMB's guidance for submitting one-time fiscal year 2014 IT reduction and reinvestment plans as part of OMB's “cut and reinvest” effort. As a result, agencies' plans were substantially short of OMB's overall fiscal year 2014 targets: $3.0 billion in proposed reductions and $2.1 billion in proposed reinvestments, compared to OMB's targets of $7.6 billion in reductions and as much as $7.6 billion in reinvestments. Agencies provided varied reasons for not meeting OMB's requirements, such as that their components had not fully tracked and reported how their savings were to be reinvested. Until agencies complete their ongoing reinvestment plans, they will be challenged to ensure that their considerable savings are being used in the most efficient and effective manner possible.
Four selected agencies—the Departments of Education, Interior, Labor, and the Social Security Administration—had documented key governance processes to guide the development of their fiscal year 2014 budget submission, which included proposed IT reinvestments of $350 million. However, none of the four agencies had tracked the reinvestment performance results. They provided varied reasons for not doing so, and two agencies noted the lack of visibility into their components' reinvestments. The lack of performance tracking is also due to OMB not requiring agencies to document actual results. In addition, OMB has not defined targets for reinvestments beyond fiscal year 2014. Until OMB requires agencies to track actual reinvestment performance and defines targets, it will be limited in its ability to ensure that agencies are actually reinvesting funds as planned and may not be able to hold them accountable. Finally, without improved tracking, selected agencies may lack assurance that their components are reinvesting in areas consistent with agency-wide goals.

What GAO Recommends

GAO recommends that agencies complete their IT savings reinvestment plans and improve tracking, and that OMB define targets for agency reinvestment and require that agencies complete their plans and track actual reinvestment performance. OMB and 12 agencies agreed with GAO's recommendations, 1 did not state whether it agreed or disagreed, 3 had no comments, and 1 partially agreed.