OMB plays a key role in overseeing the implementation and management  of federal IT investments. OMB’s responsibilities under the act include  establishing processes to analyze, track, and evaluate the risks and results  of major capital investments in information systems made by executive  agencies. OMB must also report to Congress on the net program  performance benefits achieved as a result of major capital investments in  information systems that are made by executive agencies. Accordingly, we  made several recommendations to agencies to improve their practices. Poorly Planned and Performing Projects Total at Least $10 Billion in Estimated Expenditures for Fiscal Year 2008

OMB and federal agencies have identified approximately 227 IT projects— totaling at least $10.4 billion in expenditures for fiscal year 2008—as being  poorly planned, poorly performing, or both. Table 1 provides a historical perspective of  the number of these projects and their associated budget since OMB  started reporting on the Management Watch List in the President’s budget  request for 2004. OMB Has Taken Steps to Improve the Identification and Oversight of Management Watch List and High Risk Projects, but Additional Efforts Are Needed

OMB has taken steps to improve the identification and oversight of the  Management Watch List and high risk projects by addressing some of the  recommendations we previously made, but additional efforts are needed  to more effectively perform these activities and ultimately ensure that  potentially billions of taxpayer dollars are not wasted. Specifically, we  previously recommended that OMB take action to improve the accuracy  and reliability of exhibit 300s and application of the high risk projects  criteria, and perform governmentwide tracking and analysis of  Management Watch List and high risk project information. However, questions remain as to whether all high risk projects with  shortfalls are being reported by agencies. To its credit, OMB started publicly releasing aggregate lists of the  Management Watch List and high risk projects in September 2006, and has  been releasing updated versions on a quarterly basis by posting them on  their website. While this is a positive step, OMB does not publish the  specific reasons that each project is placed on the Management Watch  List, nor does it specifically identify why high risk projects are poorly  performing, as we have done in appendix II. Providing this information  would allow OMB and others to better analyze the reasons projects are  poorly planned and performing and take corrective actions and track these  projects on a governmentwide basis. Such information would also help to  highlight progress made by agencies or projects, identify management  issues that transcend individual agencies, and highlight the root causes of  governmentwide issues and trends. In summary, the Management Watch List and high risk projects processes  play important roles in improving the management of federal IT  investments by helping to identify poorly planned and poorly performing  projects that require management attention. Until further improvements in the identification and  oversight of poorly planned and poorly performing IT projects, potentially  billions in taxpayer dollars are at risk of being wasted.
Why GAO Did This Study

The Office of Management and Budget (OMB) plays a key role in overseeing federal information technology (IT) investments. The Clinger-Cohen Act, among other things, requires OMB to establish processes to analyze, track, and evaluate the risks and results of major capital investments in information systems made by agencies and to report to Congress on the net program performance benefits achieved as a result of these investments. OMB has developed several processes to help carry out its role. For example, OMB began using a Management Watch List several years ago as a means of identifying poorly planned projects based on its evaluation of agencies' funding justifications for major projects, known as exhibit 300s. In addition, in August 2005, OMB established a process for agencies to identify high risk projects and to report on those that are performing poorly. GAO testified last year on the Management Watch List and high risk projects, and on GAO's recommendations to improve these processes. GAO was asked to (1) provide an update on the Management Watch List and high risk projects and (2) identify OMB's efforts to improve the identification and oversight of these projects. In preparing this testimony, GAO summarized its previous reports on initiatives for improving the management of federal IT investments. GAO also analyzed current Management Watch List and high risk project information.

What GAO Found

OMB and federal agencies have identified approximately 227 IT projects--totaling at least $10.4 billion in expenditures for fiscal year 2008--as being poorly planned (on the Management Watch List), poorly performing (on the High Risk List with performance shortfalls), or both. OMB has taken steps to improve the identification and oversight of the Management Watch List and High Risk projects by addressing recommendations previously made by GAO, however, additional efforts are needed to more effectively perform these activities. Specifically, GAO previously recommended that OMB take action to improve the accuracy and reliability of exhibit 300s and consistent application of the high risk projects criteria, and perform governmentwide tracking and analysis of Management Watch List and high risk project information. In response to these recommendations, OMB, for example, started publicly releasing aggregate lists of Management Watch List and high risk projects by agency in September 2006 and has been updating them since then on a quarterly basis. However, OMB does not publish the reasons for placing projects on the Management Watch List, nor does it specifically identify why high risk projects are poorly performing. Providing this information would allow OMB and others to better analyze the reasons projects are poorly planned and performing, take corrective actions, and track these projects on a governmentwide basis. Such information would also help to highlight progress made by agencies or projects, identify management issues that transcend individual agencies, and highlight the root causes of governmentwide issues and trends. Until OMB makes further improvements in the identification and oversight of poorly planned and poorly performing IT projects, potentially billions in taxpayer dollars are at risk of being wasted.