Agencies Have Spent Billions on Failed and Poorly Performing Investments

To assist agencies in managing their IT investments, Congress enacted  the Clinger-Cohen Act of 1996, which requires OMB to establish  processes to analyze, track, and evaluate the risks and results of major  capital investments in information systems made by federal agencies and  report to Congress on the net program performance benefits achieved as  a result of these investments. In addition to these projects, the IT Dashboard identifies other at-risk  investments. OMB generally agreed with  this recommendation and has since taken action to implement it. Given the importance of transparency, oversight, and  management of the government’s IT investments, in June 2009 OMB  established a public website, referred to as the IT Dashboard, that  provides detailed information on approximately 700 major IT  investments at 27 federal agencies, including ratings of their  performance against cost and schedule targets. OMB  believes that the PortfolioStat effort has the potential to save the  government $2.5 billion over the next 3 years by, for example,  consolidating duplicative systems. OMB and Agencies Have Taken Steps to Improve the Acquisition and Management of IT Investments, but Additional Actions Are Needed

Over the past several years, we have highlighted OMB and agency efforts  to improve the transparency into and oversight of underperforming federal  IT investments, more effectively manage IT, and address duplicative  investments. Notably, we issued a series of reports on: the IT Dashboard;  OMB and agency efforts to address troubled projects through TechStat  reviews; critical factors underlying successful acquisitions; and OMB and  agency efforts to improve the management of IT through federal data  center consolidation efforts, as well as address duplication through  PortfolioStat. OMB has taken significant steps to enhance the oversight, transparency,  and accountability of federal IT investments by creating its IT Dashboard,  and by improving the accuracy of investment ratings. However, we found  weaknesses with the accuracy and reliability of cost and schedule data,  and we recommended steps that OMB should take to improve these data. However, the number of at-risk TechStats held to date was  relatively small compared to the current number of medium- and high-risk  IT investments. In addition, we reported that OMB and selected agencies had tracked and  reported positive results from TechStats, with most resulting in improved  governance. Agencies also reported projects with accelerated delivery,  reduced scope, or termination. We also found that OMB reported in 2011  that federal agencies achieved almost $4 billion in life-cycle cost savings  as a result of TechStat sessions. However, we were unable to validate  OMB’s reported results because OMB did not provide artifacts showing  that it ensured the results were valid. We therefore recommended that OMB validate the resulting cost  savings from TechStats that it reports to Congress and require agencies  to conduct TechStats for each IT investment rated with a moderately  high- or high-risk CIO rating on the IT Dashboard. More recently, we reported and testified that the 24 FDCCI  agencies made progress towards OMB’s goal to close 40 percent, or  1,253 of the 3,133 total federal data centers, by the end of 2015, but  OMB had not measured agencies’ progress against its other goal of  $3 billion in cost savings by the end of 2015. We therefore recommended that OMB’s Federal CIO track and report  on key performance measures, extend the time frame for achieving  planned cost savings, and improve the execution of important  oversight responsibilities. However, our April 2013 report noted that key data-center-related  performance metrics of the combined initiative were not yet fully defined. As a result, we recommended that OMB  track and annually report on key data center consolidation performance  measures, such as the size of data centers being closed and cost savings  to date. OMB agreed with our recommendation. We have ongoing work looking at OMB’s PortfolioStat initiative, including  determining whether agencies completed key required PortfolioStat  actions, evaluating selected agencies' plans for making portfolio  improvements and achieving associated cost savings, and describing  OMB's plans to improve the PortfolioStat process. The federal government can also build on the momentum of progress on  agencies’ data center closures as the federal data center consolidation  effort is integrated with PortfolioStat. Appendix I: Examples of IT Project Failures and Challenges

The federal government continues to spend billions of dollars on troubled  IT investments. Failed Investments

Since 2003, a number of major IT projects at federal agencies have  failed. We have ongoing  recommendation follow-up work regarding this issue. As of January 2013, IRS  reported that there have been no significant problems with the system.
Why GAO Did This Study

The federal government reportedly plans to spend at least $82 billion on IT in fiscal year 2014. Given the scale of such planned outlays and the criticality of many of these systems to the health, economy, and security of the nation, it is important that OMB and federal agencies provide appropriate oversight and adequate transparency into these programs. Nevertheless, IT projects too frequently incur cost overruns and schedule slippages, and result in duplicate systems while contributing little to mission-related outcomes. Additionally, projects sometimes fail or operate inefficiently, at the cost of billions of dollars.
GAO was asked to testify on the results and recommendations from its selected reports that focused on key aspects of the federal government's management of IT investments. To prepare this statement, GAO drew on previously published work, as well as ongoing follow-up on prior recommendations.

What GAO Found

GAO has issued a number of key reports on the federal government's efforts to efficiently acquire and manage information technology (IT). While the Office of Management and Budget (OMB) and federal agencies have taken steps to address underperforming IT projects and more effectively manage IT through a number of major initiatives, additional actions are needed. For example, OMB has taken significant steps to enhance the oversight accountability of federal investments by creating the IT Dashboard, an OMB public website which provides detailed information on federal agencies' major investments. However, GAO previously found there were issues with the accuracy and reliability of cost and schedule data in the Dashboard and recommended steps that OMB and agencies should take to improve these data--this is important since the Dashboard currently reports 154 investments totaling almost $10.4 billion being at risk. OMB agreed with the recommendations.
GAO recently reported that OMB and selected agencies have held multiple reviews--known as TechStats--of selected investments that are failing or are not producing results. Positive outcomes have been tracked and reported from these reviews, with most producing improved governance, as well as projects with accelerated delivery, reduced scope, and termination. However, for the selected agencies, GAO found that the number of at-risk TechStats held to date was only about 33 percent of the current number of medium- and high-risk investments. GAO was also unable to validate OMB's reported results of almost $4 billion in life-cycle cost savings. GAO therefore recommended that OMB validate the resulting cost savings and require agencies to conduct TechStats for each investment rated with a moderately high- or high-risk rating on the IT Dashboard. OMB generally agreed with the recommendations.
GAO has also issued several reports on the federal government's progress towards consolidating its growing number of data centers. Most recently, in April 2013, GAO reported that agencies closed 420 data centers by the end of December 2012; however, OMB had not tracked and reported on other key performance measures, such as progress against the initiative's cost savings goal of $3 billion by the end of 2015. In addition, GAO identified weaknesses that existed in the oversight of the data center consolidation initiative, including not ensuring the completeness of agencies' data center inventories and consolidation plans. GAO recommended that OMB track and report on key performance measures and improve the execution of important oversight responsibilities. OMB agreed with these recommendations.
In March 2012, OMB launched PortfolioStat, which requires agencies to conduct annual reviews of its IT investments and make decisions on eliminating duplication, among other things. OMB believes this effort has the potential to save $2.5 billion over the next 3 years. OMB has since made significant changes to PortfolioStat in March 2013, including integrating it with its data center consolidation initiative and establishing new reporting requirements. However, GAO recently reported that OMB had not yet established revised data center metrics and goals for the combined initiative. GAO has ongoing work looking at PortfolioStat, including determining whether agencies are completing key actions.

What GAO Recommends

GAO has issued numerous recommendations to OMB and agencies on key aspects of IT management, including OMB's public website, known as the IT Dashboard, which provides detailed information on federal agencies' major investments; reviews of underperforming projects, known as TechStats; and efforts to consolidate federal data centers.