Department of Veterans Affairs 

Office of Inspector General 

Audit of 

VA's Management of 

Information Technology 

Capital Investments 

Report No. 08-02679-134 May 29, 2009

VA Office of Inspector General 

Washington, DC 20420 
To Report Suspected Wrongdoing in VA Programs and Operations 

Telephone: 1-800-488-8244 between 8:30 and 4:00 PM Eastern Time, 

Monday through Friday, excluding Federal Holidays 

E-mail: vaoighotline@va.gov
Audit of VA's Management of Information Technology Capital Investments 

Contents 

Page 

Executive Summary .....................................................................................................i-v

Introduction

Purpose............................................................................................................................. 1

Background...................................................................................................................... 1

Scope and Methodology .................................................................................................. 2

Results and Conclusions ....................................................................................4 

Improved Management and Oversight of IT Capital Investments 

 Is Needed To Minimize Potential Cost Overruns, Schedule Slippages, 

 and Performance Problems ............................................................................................. 4

Appendixes 

A. Acting Assistant Secretary for Information and Technology Comments............... 10 

B. OIG Contact and Staff Acknowledgments .............................................................. 13 

C. Report Distribution .................................................................................................. 14 

VA Office of Inspector General 
Audit of VA's Management of Information Technology Capital Investments 

Executive Summary 

Results in Brief 

The Office of Inspector General (OIG) conducted an audit to evaluate whether VA was 

managing its information technology (IT) capital investments effectively and efficiently. 

The audit objectives were to determine why VA was late in submitting Exhibit 300s 

(an agency’s funding justifications for IT capital investments) to the Office of 

Management and Budget (OMB) for budget year (BY) 2010 and if VA had implemented 

the corrective actions needed to prevent delinquent Exhibit 300 submissions in the future. 

The Office of Information and Technology (OI&T) did not submit VA’s Exhibit 300s to 

OMB by the September 08, 2008, deadline. Although OI&T submitted all of the 

Exhibit 300s to OMB 3 months later, it had not taken the corrective actions needed to 

ensure VA will not miss OMB’s annual reporting deadline again in the future. More 

importantly, OI&T’s delayed submission of VA’s Exhibit 300s signifies a much broader 

and more serious issue—VA’s inability to adequately manage and ensure effective 

oversight of its IT capital investments. 

In fiscal year (FY) 2006, VA initiated a realignment of its IT program to provide greater 

accountability and control over its resources. However, OI&T (in conjunction with VA) 

did not adequately plan the transition from a decentralized to a centralized management 

structure. Instead, OI&T managed the transition as ad hoc or on a trial and error basis, 

inadvertently creating an environment with relaxed management controls and inadequate 

oversight. Even though this transition was a significant undertaking, OI&T lacked a 

written transition plan to guide the move to full implementation of centralized 

management under the Chief Information Officer (CIO) and did not dedicate a transition 

team to manage the large number of tasks associated with the realignment of IT resources 

and the development of new centrally managed processes. 

Although VA is now more than two years into the transition, VA’s CIO and senior OI&T 

officials indicated that OI&T has not yet fully defined and documented the new policies 

and procedures needed for IT capital investment management. For example, OI&T has 

not clearly defined the roles of IT governance boards responsible for facilitating budget 

oversight and management of IT capital investments and has not established the 

governance board criteria used to select, review, and assess IT capital investments. Key 

elements of these new critical processes will not be completed until FY 2011. 

Until OI&T develops and implements policies, procedures, and management controls that 

ensure it can manage VA’s IT capital investments effectively and efficiently, VA will 

have little assurance that appropriate investment decisions are being made and that annual 

funding decisions are making the best use of VA resources. 

VA Office of Inspector General i 
Audit of VA's Management of Information Technology Capital Investments 

Background 

Congress enacted the Clinger-Cohen Act to improve the management of Federal 

agencies’ IT resources in 1996. The Act requires agencies to use a disciplined capital 

planning and investment control (CPIC) process to acquire, use, and maintain IT. OMB 

was charged with promoting and responsible for improving the acquisition, use, and 

disposal of IT. As part of the budget process, OMB was also required to develop 

measures for analyzing, tracking, and evaluating the risks and results of all major IT 

capital investments. Accordingly, OMB developed policy for planning, budgeting, 

acquiring, and managing major IT capital investments. As part of this policy, OMB 

Circular A-11, Part 7 (Section 300-Planning, Budgeting, Acquisition, and Management of 

Capital Assets) and OMB’s Capital Programming Guide (Supplement to Part 7 of 

Circular A-11) directs agencies to develop, implement, and use a capital programming 

process to build their capital asset portfolios. 

Section 300 requires agencies to develop capital asset plans and business cases on 

Exhibit 300s for all of their major IT capital investments. Each major IT capital 

investment is reported annually to OMB on an individual Exhibit 300, and it is also 

reported collectively on an Exhibit 53. The Exhibit 300 is the agency's funding 

justification for an IT capital investment, while the Exhibit 53 is used to provide a full 

and accurate accounting of the agency's total IT capital investment portfolio as required 

by the Clinger-Cohen Act. The Exhibit 300 is designed to coordinate OMB’s collection 

of agency information for its annual report to Congress on the performance of an 

agency’s IT capital investments. It is a reporting mechanism intended to enable an 

agency to demonstrate to its own management and OMB that a major IT capital 

investment is based upon a strong business case; is well planned; has sound project 

management; and has well-defined cost, schedule, and performance goals. 

IT capital investment portfolios are comprised of major and non-major investments. 

Major IT capital investments generally are acquisitions requiring special management 

attention because of their importance to the mission or function of the agency. IT 

acquisitions for financial management that obligate more than $500,000 annually are also 

considered major IT capital investments. Similarly, acquisitions with high development, 

operating, or maintenance costs or high visibility are considered major IT capital 

investments. Finally, investments that do not fall within these parameters are considered 

non-major investments. 

VA’s IT investment portfolio for BY 2009 included about $2.2 billion for major IT 

capital investments and $351 million for non-major IT capital investments. VA’s IT 

investment portfolio for BY 2010 included about $3.5 billion for major capital 

investments and $375 million for non-major IT capital investments. 

VA Office of Inspector General ii 
Audit of VA's Management of Information Technology Capital Investments 

Improved Management and Oversight of IT Capital Investments Is 

Needed To Minimize Potential Cost Overruns, Schedule Slippages, 

and Performance Problems 

OI&T lacked effective policies, procedures, and management controls to ensure that VA 

managed its IT capital investments effectively, efficiently, and in accordance with 

applicable criteria. Specifically, OI&T failed to submit capital asset plans and business 

cases (Exhibit 300s) for BY 2010 to OMB by September 8, 2008, as required. Further, 

OI&T has not successfully implemented the management controls needed to ensure that it 

does not miss future Exhibit 300 submission deadlines. These conditions occurred 

because OI&T did not adequately plan the transition of VA’s IT resources and budget 

from a decentralized to a centralized management structure. They also occurred because 

OI&T had not fully established how to identify and manage VA’s IT capital investments, 

which led to a loss of control over them. As a result, VA had no assurance that 

appropriate investment decisions were being made and that annual funding decisions for 

IT capital investments made the best use of VA’s available IT resources. 

Conclusion 

OI&T failed to submit Exhibit 300s for BY 2010 to OMB by September 8, 2008, as 

required. In addition, OI&T has not successfully implemented the management controls 

needed to ensure that it does not miss future Exhibit 300 submission deadlines. These 

conditions occurred because OI&T did not adequately plan the transition of VA’s IT 

resources and budget from a decentralized to a centralized management structure. They 

also occurred because OI&T had not fully established how to identify and manage VA’s 

IT capital investments, which led to a loss of control over them. Management controls to 

ensure that basic statutory requirements such as Exhibit 300 submissions are met must be 

established and monitored. OI&T needs to develop a comprehensive written plan to 

achieve more robust and disciplined centralized management processes across VA so that 

it can ultimately realize improved management, oversight, and accountability over VA’s 

IT capital investments. The plan needs to establish measurable goals, objectives, 

milestones, and responsibilities. Finally, a dedicated team needs to be established in 

order to manage and execute the comprehensive written plan. 

IT capital investments can provide solutions that significantly enhance the delivery of 

veteran healthcare services and benefits. On the other hand, if not properly planned and 

managed, they can become costly, risky, and unproductive mistakes. The estimated 

dollar magnitude of VA’s IT portfolio (almost $4 billion for BY 2010), the risks inherent 

in VA’s current capital investment control environment, and VA’s inability to identify IT 

capital investment needs by the established deadlines make it vital for OI&T to take 

immediate actions to strengthen its oversight to ensure the overall success of VA’s IT 

capital investment program. If these measures are not taken, VA runs the risk that its IT 

VA Office of Inspector General iii 
Audit of VA's Management of Information Technology Capital Investments 

capital investments will not meet cost, schedule, and performance goals impacting VA’s 

ability to timely and adequately provide veteran healthcare services and benefits. 

Recommendations 

1. We recommend that the Acting Assistant Secretary for Information and Technology 

establish management controls that ensure future Exhibit 300s are submitted in 

accordance with OMB requirements. 

2. We recommend that the Acting Assistant Secretary for Information and Technology 

develop a comprehensive written plan with measurable goals, objectives, milestones, 

and responsibilities (to include status reports to the Deputy Secretary) to guide OI&T 

with its centralized management of VA’s IT capital investments. 

3. We recommend that the Acting Assistant Secretary for Information and Technology 

establish a dedicated team to implement OI&T’s comprehensive written plan. 

4. We recommend that the Acting Assistant Secretary for Information and Technology 

clearly define the roles of the IT governance boards responsible for providing 

oversight and management of VA’s IT capital investments. 

5. We recommend that the Acting Assistant Secretary for Information and Technology 

establish the criteria IT governance boards will use to select, review, and assess IT 

capital investments. 

Management Comments and OIG Response 

The Acting Assistant Secretary for Information and Technology concurred with our 

findings and recommendations and provided plans to implement corrective actions. 

OI&T will review established management controls to ensure processes and procedures 

are in place to make certain future Exhibit 300s are submitted in accordance with OMB 

requirements. The Office of IT Enterprise Strategy, Policy, Plans, and Programs will 

develop an IT Multi-Year Programming Plan and conduct program management and 

milestone reviews. The office will monitor compliance with cost, schedule, and 

performance goals for all major IT investments and brief the Deputy Secretary during 

monthly Information Technology Leadership Board meetings. A dedicated team within 

the Office of IT Programming, Management, Assessment, and Compliance will manage 

and execute the Multi-Year Programming Plan. Finally, OI&T is defining the roles of the 

governance boards and establishing criteria for the governance boards to use when 

selecting, reviewing, and assessing IT capital investments. 

VA Office of Inspector General iv 
Audit of VA's Management of Information Technology Capital Investments 

VA Office of Inspector General v 

We consider these planned actions acceptable, and we will follow up on their 

implementation. We will close the recommendations when all proposed actions have 

been completed by OI&T. Appendix A contains the full text of the Acting Assistant 

Secretary’s comments. 

 (original signed by:)

BELINDA J. FINN 

Assistant Inspector General 

for Auditing 
Audit of VA's Management of Information Technology Capital Investments 

VA Office of Inspector General 1 

Introduction 

Purpose 

The purpose of the audit was to evaluate whether VA was managing its IT capital 

investments effectively and efficiently. The audit objectives were to determine why VA 

was not timely in submitting Exhibit 300s (an agency’s funding justifications for IT 

capital investments) to OMB for BY 2010 and if VA has implemented appropriate 

corrective actions to prevent delinquent Exhibit 300 submissions in the future. 

Background 

The Federal government must effectively manage its portfolio of IT capital assets to 

ensure that scarce resources are wisely invested. According to a Government 

Accountability Office (GAO) executive guide, investments in IT can significantly enrich 

and improve organizational performance. However, IT projects can also become risky, 

costly, unproductive mistakes. Unfortunately, Federal IT projects have all too frequently 

incurred cost overruns and schedule slippages while contributing little to mission-related 

outcomes. Consequently, it is crucial that Federal agencies make use of disciplined, 

repeatable, and successful techniques to control and manage their IT investments.1

In 1996, Congress enacted the Clinger-Cohen Act to improve the management of Federal 

agencies’ IT resources. The Act requires agencies to use a disciplined CPIC process to 

acquire, use, and maintain IT. In response to the Clinger-Cohen Act and other statutes, 

OMB developed policy for planning, budgeting, acquiring, and managing major IT 

capital investments. As part of this policy, OMB Circular A-11, Part 7 (Section 300-

Planning, Budgeting, Acquisition, and Management of Capital Assets) and OMB’s 

Capital Programming Guide (Supplement to Part 7 of Circular A-11) directs agencies to 

develop, implement, and use a capital programming process to build their capital asset 

portfolios. 

Agencies develop capital asset plans and business cases based on Section 300 using 

Exhibit 300s for all of their major IT capital investments. Each major IT capital 

investment is reported annually to OMB on an Exhibit 300. The Exhibit 300 is designed 

to coordinate OMB’s collection of agency information for its annual report to Congress 

on the performance of an agency’s IT capital investments. It is a reporting mechanism 

intended to enable an agency to demonstrate to OMB and its own management that a 

major IT capital investment is based on a strong business case; is well planned; has sound 

project management; and has well-defined cost, schedule, and performance goals. 

 

1

Government Accountability Office, Executive Guide: Information Technology Investment Management; A 

Framework for Assessing and Improving Process Maturity (Report No. GAO-04-379G), June 2008. 
Audit of VA's Management of Information Technology Capital Investments 

In addition to the Exhibit 300, OMB has developed tools to improve Federal IT capital 

investment management. For example, OMB maintains a Management Watch List as a 

means of identifying poorly planned projects based on its evaluation of agencies’ funding 

justifications (Exhibit 300s). OMB uses this list to help ensure that investments of public 

resources are justified and wisely spent. 

Similarly, OMB works with agencies to develop a High Risk IT Project List. High risk 

projects are those projects requiring special attention from oversight authorities and the 

highest level of agency management because of one or more of the following reasons: 

• The agency has not consistently demonstrated the ability to manage complex projects. 

• The projects have exceptionally high development, operating, or maintenance costs. 

• The projects are addressing deficiencies in the agencies’ ability to perform an 

essential mission program or function of the agency. 

• Delay or failure of the project would introduce for the first time unacceptable or 

inadequate performance or failure of an essential mission function. 

IT capital investment portfolios, a composite of all of an agency’s Exhibit 300s, are 

comprised of major and non-major investments. Major IT capital investments are 

generally acquisitions requiring special management attention because of their 

importance to the mission or function of the agency. IT acquisitions for financial 

management that obligate more than $500,000 annually are also considered major IT 

capital investments. Similarly, acquisitions with high development, operating, or 

maintenance costs or high visibility are also considered major IT capital investments. 

Investments not falling within these parameters are considered non-major investments. 

VA’s IT investment portfolio for BY 2009 included about $2.2 billion for major IT 

capital investments and another $351 million for non-major IT capital investments. VA’s 

IT investment portfolio for BY 2010 included about $3.5 billion for major capital 

investments and $375 million for non-major IT capital investments. 

VA’s CIO is responsible for monitoring and evaluating the performance of VA’s IT 

capital investment portfolio. The CIO is also responsible for ensuring that there are 

adequate controls over VA’s IT budget and for overseeing capital planning and execution 

of IT capital investments. 

Scope and Methodology 

To evaluate whether VA is managing its IT capital investments effectively, efficiently, 

and in accordance with applicable criteria, we reviewed Federal laws and regulations 

along with VA policies, procedures, and internal controls applicable to the CPIC process. 

We also interviewed senior personnel from the OI&T and the Office of Management. 

We conducted our audit work from July 2008 through February 2009. 

VA Office of Inspector General 2 
Audit of VA's Management of Information Technology Capital Investments 

To address our audit objective, we did not rely on computer-processed data. 

Consequently, we did not assess the reliability of computer-processed data. Our 

assessment of internal controls focused only on those controls related to our audit 

objective. Our assessment was not intended to form an opinion on the adequacy of 

internal controls overall, and we do not render such an opinion. We conducted this 

performance audit in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and conclusions based 

on our audit objective. We believe that the evidence obtained provides a reasonable basis 

for our findings and conclusions based on our audit objective. 

VA Office of Inspector General 3 
Audit of VA's Management of Information Technology Capital Investments 

Results and Conclusions 

Improved Management and Oversight of IT Capital 

Investments Is Needed To Minimize Potential Cost Overruns, 

Schedule Slippages, and Performance Problems 

OI&T did not have effective policies, procedures, and management controls in place to 

ensure that VA managed its IT capital investments effectively, efficiently, and in 

accordance with applicable criteria. Specifically, OI&T failed to submit capital asset 

plans and business cases (Exhibit 300s) for BY 2010 to OMB by September 8, 2008, as 

required. Also, OI&T has not successfully implemented appropriate management 

controls to ensure that it does not miss future Exhibit 300 submission deadlines. These 

conditions occurred because OI&T did not adequately plan the transition of VA’s IT 

resources and budget from a decentralized to a centralized management structure. OI&T 

had also not fully established how to identify and manage VA’s IT capital investments, 

which led to a loss of control over them. As a result, VA had no assurance that 

appropriate investment decisions were being made and that annual funding decisions for 

IT capital investments made the best use of VA’s available IT resources. Ultimately, VA 

runs the risk that its IT capital investments will not meet cost, schedule, and performance 

goals impacting VA’s ability to timely and adequately provide veteran health services 

and benefits. 

OI&T Did Not Meet the Deadline for Submitting Exhibit 300s to OMB for BY 2010. 

OI&T did not have adequate management controls in place to ensure that VA’s 

Exhibit 300s for BY 2010 were submitted to OMB by the September 8, 2008, deadline. 

According to VA’s CIO, VA’s IT capital investment submissions (Exhibit 300s) did not 

always adequately reflect VA’s IT capital investment needs nor did they always line up 

with VA’s IT capital budget submissions. To correct these inconsistencies, OI&T, at the 

direction of the CIO, implemented a multi-year capital investment programming process 

in FY 2008 with the intent of developing IT capital investments that were clearly aligned 

with VA’s IT needs and budget. 

As part of the multi-year capital investment programming transition, the CIO directed 

VA’s IT system sponsors (in collaboration with OI&T program managers) to develop and 

submit concept papers to better identify all of VA’s IT capital investment needs. The 

goals of this new process were to add rigor and uniformity to VA’s IT capital planning 

and investment control (CPIC) process and to allow investments to be consistently 

evaluated, which would facilitate OI&T’s ability to decide which programs and projects 

should be included in VA’s IT capital investment portfolio. The CIO took this action 

because he believed VA was not completely aware of its total IT needs. The concept 

papers were expected to identify VA’s complete IT capital investment needs and support 

the creation of BY 2010 Exhibit 300s. 

VA Office of Inspector General 4 
Audit of VA's Management of Information Technology Capital Investments 

The CIO established a December 21, 2007, deadline for concept paper submission in the 

multi-year programming guidance dated November 26, 2007, but OI&T did not receive 

the concept papers in time to develop and submit the Exhibit 300s for BY 2010 by the 

OMB established deadline. Contributing to the delay was an inability of OI&T to obtain 

complete buy-in and cooperation from the administrations. Senior OI&T officials 

indicated that administration personnel were reluctant to develop the concept papers, 

which led to OI&T personnel developing many of the concept papers for the 

administrations’ IT capital investment needs. 

OI&T Has Not Developed and Implemented Effective Corrective Actions. During 

routine monthly discussions between OMB and OI&T, it was agreed that VA’s 

Exhibit 300s would be submitted to OMB by mid-December 2008. Although OI&T was 

able to meet the new deadline, OI&T had not implemented effective management 

controls to ensure that it would not miss future Exhibit 300 submission deadlines. When 

we were trying to determine if appropriate actions had been taken to ensure that future 

Exhibit 300s would be submitted to OMB on time, the CIO indicated that since the 

Exhibit 300s are now better aligned with the budget, it will be easier for project managers 

to prepare them. Further, during a subsequent meeting with other senior OI&T officials, 

they indicated that OI&T had only about a 50 percent chance of meeting the BY 2011 

Exhibit 300 submission deadline. In short, OI&T provided no clear indication that 

management controls had been implemented to ensure that future Exhibit 300s 

submissions to OMB would not be delayed or meet VA’s IT capital investment needs. 

OI&T Has Not Fully Established How It Will Manage and Control VA’s IT Capital 

Investments. OI&T’s delayed submission of VA’s Exhibit 300s for BY 2010 signifies a 

much broader and more serious issue—a lack of effective OI&T oversight and control 

over VA’s IT capital investments. In FY 2006, VA initiated a realignment of its IT 

program to provide greater accountability and control over its resources. The goals of the 

realignment were to centralize IT management under the CIO and to standardize 

operations through the use of new management processes based on industry best 

practices. 

However, OI&T (in conjunction with VA) did not adequately plan the transition of VA’s 

IT resources and budget from a decentralized to a centralized management structure. 

Instead, OI&T managed the transition as ad hoc or on a crisis management basis, 

inadvertently creating an environment with relaxed management controls and inadequate 

oversight. Although this transition was a significant undertaking, OI&T did not have a 

written transition plan to guide the move to full implementation of centralized 

management under the CIO. OI&T also did not dedicate a transition team to manage the 

large number of tasks associated with the realignment of IT resources and the 

development of new centrally managed processes. By not having a transition plan and a 

dedicated transition team, OI&T increased the risk that critical tasks would be delayed or 

possibly omitted altogether. 

VA Office of Inspector General 5 
Audit of VA's Management of Information Technology Capital Investments 

VA originally planned on having its new centrally managed processes implemented by 

July 2008. Although VA is now more than two years into the transition, VA’s CIO and 

senior OI&T officials indicated that OI&T has not yet fully defined and documented the 

new policies and procedures needed for IT capital investment management. For example, 

OI&T has not clearly defined the roles of IT governance boards responsible for 

facilitating budget oversight and management of IT capital investments. Similarly, OI&T 

has not established the governance board criteria used to select, review, and assess IT 

capital investments. According to VA’s December 2007 IT Strategic Plan, key elements 

of these new critical processes will not be completed until FY 2011. Given that VA has 

had a longstanding issue with managing its IT capital investments, VA may continue to 

experience an increase in IT risk without having the criteria needed to manage its 

investments effectively. 

VA has had a longstanding problem concerning its management of IT capital 

investments. All 40 of VA’s BY 2009 IT capital investments submitted to OMB were on 

OMB’s Management Watch List while 37 were on OMB’s High Risk IT Project List, 

indicating that VA’s IT capital investments were both poorly planned and poorly 

performing. Until OI&T develops and implements policies, procedures, and management 

controls that ensure it can manage VA’s IT capital investments effectively, efficiently, 

and in accordance with applicable criteria, VA will have little assurance that appropriate 

investment decisions are being made and that annual funding decisions are making the 

best use of VA resources. In addition, VA has substantially increased the risk that its IT 

capital investments will not meet cost, schedule, and performance goals, which has been 

evidenced in recent projects. The following three examples illustrate the types of 

problems likely to continue until OI&T strengthens its oversight of VA’s IT capital 

investment program: 

• Replacement Scheduling Application. A March 20, 2009, memorandum from the 

Under Secretary for Health to the Acting Assistant Secretary for Information and 

Technology stated that the Replacement Scheduling Application (RSA) program has 

not developed a single scheduling capability it can provide to the field nor is there any 

expectation of delivery in the near future. The Veterans Health Administration 

(VHA) initiated the program in 2001, and the initial effort led by VHA lasted more 

than 5 years and cost more than $75 million, yet it failed to deliver a useable product. 

OI&T continued the RSA development effort after project responsibility transferred to 

OI&T as part of the VA IT realignment in 2006. Although future expenditures are 

now estimated to be over $215 million, OI&T is unable to demonstrate that the 

project can be a success. Accordingly, OI&T and VHA agreed to suspend the 

program until an independent analysis of alternatives can be completed. 

• HealtheVet. According to a GAO report, VA’s Health Information System 

Modernization project (HealtheVet) should be fully implemented by 2018 at a total 

estimated cost of about $11 billion. HealtheVet is a complex project that calls for 

replacing 104 applications currently in use with 67 applications to be developed. 

VA Office of Inspector General 6 
Audit of VA's Management of Information Technology Capital Investments 

VA Office of Inspector General 7 

Eight major software development projects supporting the overall project are 

currently under way. VHA began this initiative in 2001, but VA did not have a 

comprehensive project management plan to guide the development and integration of 

the sub-projects. GAO reported that the project lacked a fully implemented 

governance structure. For example, although governance boards had been 

established, milestone reviews had not been scheduled. Consequently since 2003, the 

timeframe for completing HealtheVet has slipped from 2012 to 2018.2

• CoreFLS. In 2004, VA discontinued the Core Financial and Logistics System 

(CoreFLS) project after spending more than $249 million on developing it after an 

OIG report identified significant project management weaknesses and pilot tests 

indicated that the system failed to fully support VA’s operations.3

 VA is currently 

developing a new system known as the Financial and Logistics Integrated Technology 

Enterprise (FLITE), which is the successor to the CoreFLS project. VA expects the 

FLITE system to be fully deployed by FY 2014. 

Conclusion 

OI&T failed to submit Exhibit 300s for BY 2010 to OMB by September 8, 2008, as 

required. In addition, OI&T has not successfully implemented the management controls 

needed to ensure that it does not miss future Exhibit 300 submission deadlines. These 

conditions occurred because OI&T did not adequately plan the transition of VA’s IT 

resources and budget from a decentralized to a centralized management structure. They 

also occurred because OI&T had not fully established how to identify and manage VA’s 

IT capital investments, which led to a loss of control over them. Management controls to 

ensure that basic statutory requirements such as Exhibit 300 submissions are met must be 

established and monitored. OI&T needs to develop a comprehensive written plan to 

achieve more robust and disciplined centralized management processes across VA so that 

it can ultimately realize improved management, oversight, and accountability over VA’s 

IT capital investments. The plan needs to establish measurable goals, objectives, 

milestones, and responsibilities. Finally, a dedicated team needs to be established in 

order to manage and execute the comprehensive written plan. 

IT capital investments can provide solutions that significantly enhance the delivery of 

veteran healthcare services and benefits. On the other hand, if not properly planned and 

managed, they can become costly, risky, and unproductive mistakes. The estimated 

dollar magnitude of VA’s IT portfolio (almost $4 billion for BY 2010), the risks inherent 

in VA’s current capital investment control environment, and VA’s inability to identify IT 

capital investment needs by the established deadlines make it vital for OI&T to take 

 

2

Government Accountability Office, Health Information System Modernization Far from Complete; Improved 

Project Planning and Oversight Needed (Report No. GAO-08-805), June 2008. 3

VA Office of Inspector General, Issues at VA Medical Center Bay Pines, Florida and Procurement and 

Deployment of the Core Financial and Logistics System (Report No. 04-01371-177), August 11, 2004. 
Audit of VA's Management of Information Technology Capital Investments 

immediate actions to strengthen its oversight to ensure the overall success of VA’s IT 

capital investment program. If these measures are not taken, VA runs the risk that its IT 

capital investments will not meet cost, schedule, and performance goals impacting VA’s 

ability to timely and adequately provide veteran healthcare services and benefits. 

Recommendations 

1. We recommend that the Acting Assistant Secretary for Information and Technology 

establish the management controls needed to ensure that future Exhibit 300s are 

submitted in accordance with OMB requirements. 

2. We recommend that the Acting Assistant Secretary for Information and Technology 

develop a comprehensive written plan with measurable goals, objectives, milestones, 

and responsibilities (to include status reports to the Deputy Secretary) to guide OI&T 

with its centralized management of VA’s IT capital investments. 

3. We recommend that the Acting Assistant Secretary for Information and Technology 

establish a dedicated team to implement OI&T’s comprehensive written plan. 

4. We recommend that the Acting Assistant Secretary for Information and Technology 

clearly define the roles of the IT governance boards responsible for providing 

oversight and management of VA’s IT capital investments. 

5. We recommend that the Acting Assistant Secretary for Information and Technology 

establish the criteria IT governance boards will use to select, review, and assess IT 

capital investments. 

Management Comments and OIG Response 

The Acting Assistant Secretary for Information and Technology concurred with our 

findings and recommendations and provided plans to implement corrective actions. 

OI&T will review established management controls to ensure processes and procedures 

are in place to make certain future Exhibit 300s are submitted in accordance with OMB 

requirements. The Office of IT Enterprise Strategy, Policy, Plans, and Programs will 

develop an IT Multi-Year Programming Plan and conduct program management and 

milestone reviews. The office will monitor compliance with cost, schedule, and 

performance goals for all major IT investments and brief the Deputy Secretary during 

monthly Information Technology Leadership Board meetings. A dedicated team within 

the Office of IT Programming, Management, Assessment, and Compliance will manage 

and execute the Multi-Year Programming Plan. Finally, OI&T is defining the roles of the 

governance boards and establishing criteria for the governance boards to use for 

selecting, reviewing, and assessing IT capital investments. Appendix A contains the full 

text of the Acting Assistant Secretary’s comments. 

VA Office of Inspector General 8 
Audit of VA's Management of Information Technology Capital Investments 

VA Office of Inspector General 9 

We consider these planned actions acceptable, and we will follow up on their 

implementation. We will close the recommendations when all proposed actions have 

been completed by OI&T. Appendix A contains the full text of the Acting Assistant 

Secretary’s comments. 
Audit of VA's Management of Information Technology Capital Investments 

Appendix A 

Acting Assistant Secretary for Information and 

Technology Comments 

VA Office of Inspector General 10 
Audit of VA's Management of Information Technology Capital Investments 

VA Office of Inspector General 11 
Audit of VA's Management of Information Technology Capital Investments 

VA Office of Inspector General 12 
Audit of VA's Management of Information Technology Capital Investments 

Appendix B 

OIG Contact and Staff Acknowledgments 

OIG Contact Mario Carbone (214) 253-3301 

Acknowledgments William Bailey 

Theresa Cinciripini 

Jehri Lawson 

Jamie McFarland 

Kristin Nichols 

Chau Pham 

VA Office of Inspector General 13 
Audit of VA's Management of Information Technology Capital Investments

Appendix C 

Report Distribution 

VA Distribution

Office of the Secretary 

Veterans Health Administration 

Veterans Benefits Administration 

National Cemetery Administration 

Assistant Secretaries 

Office of General Counsel 

Non-VA Distribution

House Committee on Veterans’ Affairs 

House Appropriations Subcommittee on Military Construction, Veterans Affairs, and 

Related Agencies 

House Committee on Oversight and Government Reform 

Senate Committee on Veterans’ Affairs 

Senate Appropriations Subcommittee on Military Construction, Veterans Affairs, and 

Related Agencies 

Senate Committee on Homeland Security and Governmental Affairs 

National Veterans Service Organizations 

Government Accountability Office 

Office of Management and Budget 

This report will be available in the near future on the OIG’s Web site at 

http://www.va.gov/oig/publications/reports-list.asp. This report will remain on the OIG 

Web site for at least 2 fiscal years after it is issued. 

VA Office of Inspector General 14