INFORMATION 

TECHNOLOGY 

OMB and Agencies 

Need to Fully 

Implement Major 

Initiatives to Save 

Billions of Dollars 

Statement of David A. Powner 

Director, Information Technology Management Issues

United States Government Accountability Office

GAO Testimony

Before the Committee on Oversight and 

Government Reform, House of 

Representatives

For Release on Delivery 

Expected at 1:00 p.m. EST 

Tuesday, January 22, 2013

GAO-13-297T
United States Government Accountability Office

Highlights of GAO-13-297T, a testimony 

before the Committee on Oversight and 

Government Reform, House of 

Representatives 

January 22, 2013 

INFORMATION TECHNOLOGY

OMB and Agencies Need to Fully Implement Major 

Initiatives to Save Billions of Dollars

Why GAO Did This Study

The federal government plans to spend 

more than $74 billion on IT 

investments in fiscal year 2013. Given 

the size of these investments and the 

criticality of many of them to the health, 

economy, and security of the nation, it 

is important that OMB and federal 

agencies provide appropriate oversight 

of 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. 

GAO was asked to testify on the 

results and recommendations from its 

selected reports that focused on key 

aspects of the federal government’s 

acquisition and management of IT 

investments. To prepare this 

statement, GAO drew on previously 

published work.

What GAO Recommends

GAO has issued numerous 

recommendations to OMB and 

agencies on key aspects of IT 

management, including (1) OMB’s 

public website, known as the IT 

Dashboard, which provides detailed 

information on federal agencies’ major 

IT investments, and (2) efforts to 

oversee IT operations and consolidate 

data centers.

What GAO Found

GAO has issued a number of key reports on the federal government’s efforts to 

efficiently acquire and operate information technology (IT) investments and found 

that if major initiatives are fully implemented, billions of dollars in savings could 

be realized. In particular, GAO has made recommendations regarding the Office 

of Management and Budget’s (OMB) public website, known as the IT Dashboard, 

which provides detailed information on federal agencies’ major IT investments; 

agencies’ efforts to perform analyses on existing IT investments; and agencies’ 

progress toward consolidating data centers. 

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, there were issues with 

the accuracy and reliability of cost and schedule data in the Dashboard, and 

GAO has recommended steps that OMB and agencies should take to improve 

these data—this is important since the Dashboard reports 190 investments 

totaling almost $12.5 billion being at risk. GAO recently reported that six federal 

agencies consistently rated the majority of their IT investments as low risk.

Further, the Department of Defense’s (DOD) ratings reflected considerations in 

addition to those OMB recommends, and consequently it did not rate any of its 

investments as high risk. However, GAO has recently reported that several DOD 

investments experienced significant performance problems and were indeed high

risk, and that DOD business systems modernization is a high-risk area. In the 

past, OMB reported trends for risky IT investments needing management 

attention as part of its annual budget submission, but discontinued this reporting 

in fiscal year 2010. GAO recommended OMB analyze agencies’ investment risk 

over time as reflected in the Dashboard’s ratings and present its analysis with the 

President’s annual budget submission. 

While agencies plan to spend billions on operational investments—more than 

$54 billion in fiscal year 2013— they have not always provided adequate 

oversight of these investments. Specifically, GAO reported in October 2012 that 

five agencies had operational investments with a fiscal year 2011 budget of over 

$3 billion that had not undergone operational analyses as required by OMB. The 

report also noted that until operational investments are fully assessed, there was

increased potential for these multibillion dollar investments to result in 

unnecessary waste and duplication. GAO recommended that the five agencies 

conduct required analyses. 

GAO reported on the federal government’s progress toward data center 

consolidation (which OMB expects will save $3 billion by 2015). In July 2012, 

GAO found that agencies updated their required inventories and plans, but only 3 

of 24 agencies in the review submitted complete inventories and only 1 agency 

submitted a complete plan, as required by OMB. Until these inventories and 

plans were complete, agencies would continue to be at risk of not realizing 

anticipated savings, improved infrastructure utilization, or energy efficiency. 

Accordingly, GAO reiterated a prior recommendation to update inventories and 

plans, and also recommended that agencies use best practices when developing 

estimates.

View GAO-13-297T. For more information, 

contact David A. Powner at (202) 512-9286 or 

pownderd@gao.gov. 
Page 1 

January 22, 2013

Chairman Issa, Ranking Member Cummings, and Members of the 

Committee:

I am pleased to be here today to discuss the highlights and 

recommendations of our selected reports that focused on key aspects of 

the federal government’s acquisition and management of information 

technology (IT) investments. As reported to the Office of Management 

and Budget (OMB), federal agencies plan to spend more than $74 billion

on IT investments in fiscal year 2013. Given the size of these investments 

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 of and adequate transparency into these 

programs. 

As we have previously reported, federal IT projects too frequently incur 

cost overruns and schedule slippages while contributing little to missionrelated outcomes.1 During the past several years, we have issued 

multiple reports and testimonies on federal initiatives to acquire and 

improve the management of IT investments.

2

As part of its response to our prior work, OMB deployed a public website 

in June 2009, known as the IT Dashboard, which provides detailed 

We made numerous 

recommendations to federal agencies and OMB to further enhance the 

management and oversight of IT programs. 

 

1

See, for example, GAO, Information Technology: Better Informed Decision Making 

Needed on Navy’s Next Generation Enterprise Network Acquisition, GAO-11-150

(Washington, D.C.: Mar. 11, 2011); and Border Security: Preliminary Observations on the 

Status of Key Southwest Border Technology Programs, GAO-11-448T (Washington, D.C.: 

Mar. 15, 2011).

2

GAO, Information Technology Dashboard: Opportunities Exist to Improve Transparency 

and Oversight of Investment Risk at Select Agencies, GAO-13-98 (Washington, D.C.: Oct. 

16, 2012); Information Technology: Agencies Need to Strengthen Oversight of Billions of 

Dollars in Operations and Maintenance Investments, GAO-13-87 (Washington, D.C.: Oct. 

16, 2012); Data Center Consolidation: Agencies Making Progress on Efforts, but 

Inventories and Plans Need to Be Completed, GAO-12-742 (Washington, D.C.: July 19, 

2012); Information Technology: Critical Factors Underlying Successful Major Acquisitions,

GAO-12-7 (Washington, D.C.: Oct. 21, 2011); Information Technology: Continued 

Attention Needed to Accurately Report Federal Spending and Improve Management, 

GAO-11-831T (Washington, D.C.: July 14, 2011); and Information Technology: Investment 

Oversight and Management Have Improved but Continued Attention Is Needed, GAO-11-

454T (Washington, D.C.: Mar. 17, 2011).
Page 2 

information on federal agencies’ major IT investments,3 including 

assessments of actual performance against cost and schedule targets 

(referred to as ratings) for approximately 700 major federal IT 

investments. In addition, OMB has initiated other significant efforts 

following the creation of the Dashboard. For example, it developed a 25-

point plan for reforming federal IT (IT Reform Plan), launched an initiative 

to reduce the number of federal data centers (the Federal Data Center 

Consolidation Initiative (FDCCI)), implemented a cloud computing4 policy,

and recently initiated its PortfolioStat effort.

5

You asked us to testify on the results and recommendations from our 

selected reports that focused on key aspects of the federal government’s 

acquisition and management of IT investments. Accordingly, my 

testimony specifically discusses our recent reports on OMB’s IT 

Dashboard, IT acquisition best practices, management of IT operations 

and maintenance (O&M) investments, cloud computing, the IT Reform 

Plan, and data center consolidation.

 

6

 

3

A major IT Investment is a system or an acquisition requiring special management 

attention because it: has significant importance to the mission or function of the agency, a 

component of the agency, or another organization; is for financial management and 

obligates more than $500,000 annually; has significant program or policy implications; has 

high executive visibility; has high development, operating, or maintenance costs; is funded 

through other than direct appropriations; or is defined as major by the agency's capital 

planning and investment control process.

All work on which this testimony is 

based was performed in accordance with generally accepted government 

auditing standards or all sections of GAO’s Quality Assurance Framework 

that were relevant to our objectives. Those standards and the framework 

require that we plan and perform our audits and engagements to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

4

Cloud computing is an emerging form of delivering computing services via networks with 

the potential to provide IT services more quickly and at a lower cost. Cloud computing 

provides users with on-demand access to a shared and scalable pool of computing 

resources with minimal management effort or service provider interaction. It reportedly has 

several potential benefits, including faster deployment of computing resources, a 

decreased need to buy hardware or to build data centers, and more robust collaboration 

capabilities.

5

PortfolioStat is intended to be a tool for agencies to use to assess the current maturity of 

their IT portfolio management process and make decisions on eliminating duplication 

across their organizations. Agencies are to use data from PortfolioStats to establish 

targets for commodity IT spending reductions and deadlines for meeting those targets.

6

GAO-13-98; GAO-13-87; GAO-12-742; GAO-12-7; and GAO, Information Technology 

Reform: Progress Made; More Needs to Be Done to Complete Actions and Measure 

Results, GAO-12-461 (Washington, D.C.: Apr. 26, 2012).
Page 3 

findings and conclusions based on our audit objectives; the framework 

also requires that we discuss any limitations in our work. We believe that 

the information, data, and evidence obtained and the analysis conducted 

provide a reasonable basis for our findings and conclusions based on our 

objectives.

Background

OMB assists the President in overseeing the preparation of the federal 

budget submission and supervising budget administration in executive 

branch agencies. In helping to formulate the President’s spending plans, 

OMB is responsible for evaluating the effectiveness of agency programs, 

policies, and procedures; assessing competing funding demands among 

agencies; and setting funding priorities. Further, the agency ensures that 

the budget submission is consistent with relevant statutes and 

presidential objectives.

Each year, OMB and federal agencies work together to determine how 

much the government plans to spend on IT projects and how these funds 

are to be allocated. As reported to OMB, federal agencies plan to spend 

more than $74 billion on IT investments in fiscal year 2013, which is the 

total expended for not only acquiring such investments, but also the 

funding to operate and maintain them. Of the reported amount, agencies 

plan to spend about $20 billion on development and acquisition, and $54 

billion on O&M. Figure 1 shows the percentages of total planned 

spending for 2013. 
Page 4 

Figure 1: Percentages of Planned IT Spending for Fiscal Year 2013

However, this $74 billion does not reflect the spending of the entire 

federal government. We have previously reported that OMB’s figure 

understates the total amount spent in IT investments.7

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 

Specifically, it does 

not include IT investments by 58 independent executive branch agencies, 

including the Central Intelligence Agency, or by the legislative or judicial 

branches. Further, agencies differed on what they considered an IT 

investment; for example, some have considered research and 

development systems as IT investments, while others have not. As a 

result, not all IT investments are included in the federal government’s 

estimate of annual IT spending. OMB provided guidance to agencies on 

how to report on their IT investments, but this guidance did not ensure 

complete reporting or facilitate the identification of duplicative 

investments. Consequently, we recommended, among other things, that 

OMB improve its guidance to agencies on identifying and categorizing IT 

investments.

 

7

See GAO, Information Technology: OMB Needs to Improve Its Guidance on IT 

Investments, GAO-11-826 (Washington, D.C.: Sept. 29, 2011).
Page 5 

report to Congress on the net program performance benefits achieved as 

a result of these investments.8

Many of these investments are critical to our nation. For example, they 

include systems to process tax returns, secure our nation, and control 

aircraft. 

Further, the act places responsibility for 

managing investments with the heads of agencies and establishes chief 

information officers (CIO) to advise and assist agency heads in carrying 

out this responsibility.

However, the federal government has spent billions of dollars on poorly 

performing IT investments, as the following examples illustrate:

• In July 2010, OMB directed the National Archives and Records 

Administration (NARA) to halt development of its Electronic Records 

Archive system at the end of fiscal year 2011 (1 year earlier than 

planned). OMB cited concerns about the system’s cost, schedule, and 

performance and directed NARA to better define system functionality 

and improve strategic planning. Through fiscal year 2010, NARA had 

spent about $375 million on the system. We issued several reports 

and made recommendations to improve this system.

9 These findings 

and recommendations contributed to the decision to halt the system.

• In January 2011, the Secretary of Homeland Security ended the 

Secure Border Initiative Network program after obligating more than 

$1 billion to the program because it did not meet cost-effectiveness 

and viability standards. Since 2007, we have identified a range of 

issues and made several recommendations to improve this 

 

8

40 U.S.C. § 11302(c).

9

See, for example, GAO, Electronic Records Archive: Status Update on the National 

Archives and Records Administration’s Fiscal Year 2010 Expenditure Plan, GAO-10-657

(Washington, D.C.: June 11, 2010); Electronic Records Archive: The National Archives 

and Records Administration’s Fiscal Year 2009 Expenditure Plan, GAO-09-733

(Washington, D.C.: July 24, 2009); and National Archives: Progress and Risks in 

Implementing its Electronic Records Archive Initiative, GAO-10-222T (Washington, D.C.: 

Nov. 5, 2009).
Page 6 

program.10 For example, in May 2010 we reported that the final 

acceptance of the first two deployments had slipped from November 

2009 and March 2010 to September 2010 and November 2010, 

respectively, and that the cost-effectiveness of the system had not 

been justified.11 We concluded that the Department of Homeland 

Security (DHS) had not demonstrated that the considerable time and 

money being invested to acquire and deploy the program was a wise 

and prudent use of limited resources. As a result, we recommended 

that the department (1) limit near-term investment in the first 

incremental block of the program, (2) economically justify any longerterm investment in it, and (3) improve key program management 

disciplines. This work contributed to the department’s decision to

cancel the program.

• In February 2011, the Office of Personnel Management canceled its 

Retirement Systems Modernization program after several years of 

trying to improve the implementation of this investment.12

 

10See, for example, GAO, Secure Border Initiative: DHS Needs to Strengthen 

Management and Oversight of Its Prime Contractor, 

According to 

the Office of Personnel Management, it spent approximately $231 

million on this investment. We issued a series of reports on the 

agency’s efforts to modernize its retirement system and found that the 

Office of Personnel Management was hindered by weaknesses in 

several important management disciplines that are essential to 

GAO-11-6 (Washington, D.C.: Oct. 

18, 2010); Secure Border Initiative: DHS Needs to Reconsider Its Proposed Investment in 

Key Technology Program, GAO-10-340 (Washington, D.C.: May 5, 2010); Secure Border 

Initiative: DHS Needs to Address Testing and Performance Limitations That Place Key 

Technology Program at Risk, GAO-10-158 (Washington, D.C.: Jan. 29, 2010); Secure 

Border Initiative: DHS Needs to Address Significant Risks in Delivering Key Technology 

Investment, GAO-08-1086 (Washington, D.C.: Sept. 22, 2008); and Secure Border 

Initiative: SBInet Expenditure Plan Needs to Better Support Oversight and Accountability, 

GAO-07-309 (Washington, D.C.: Feb. 15, 2007).

11GAO, Secure Border Initiative: DHS Needs to Reconsider Its Proposed Investment in 

Key Technology Program, GAO-10-340 (Washington, D.C.: May 5, 2010). 

12GAO, OPM Retirement Modernization: Longstanding Information Technology 

Management Weaknesses Need to Be Addressed, GAO-12-226T (Washington, D.C.: 

Nov. 15, 2011).
Page 7 

successful IT modernization efforts.13 Accordingly, we made 

recommendations in areas such as project management, 

organizational change management, testing, cost estimating, and 

earned value management. In May 2008, an Office of Personnel 

Management official cited the issues that we identified as justification 

for issuing a stop work order to the system contractor, and the agency 

subsequently terminated the contract. 

• In March 2011, we reported that while the Department of Defense’s 

(DOD) Navy Next Generation Enterprise Network investment’s first 

increment was estimated to cost $50 billion, the program was not wellpositioned to meet its cost and schedule estimates.14 Accordingly, we 

recommended DOD limit further investment until it conducts an interim 

review to reconsider the selected acquisition approach and addresses 

its investment management issues. DOD stated that it did not concur 

with the recommendation to reconsider its acquisition approach, but 

we maintained that without doing so, DOD could not be sure it was

pursuing the most cost-effective approach.

• In December 2012, DOD canceled the Air Force’s Expeditionary 

Combat Support System after having spent more than a billion dollars 

and missing multiple milestones. We issued several reports on this 

system and found that, among other things, the program was not fully 

following best practices for developing reliable schedules and cost 

estimates.15

In addition to these poorly performing investments, the IT Dashboard 

identifies other at-risk investments. Specifically, as of August 2012, 

 

 

13GAO, Office of Personnel Management: Retirement Modernization Planning and 

Management Shortcomings Need to Be Addressed, GAO-09-529 (Washington, D.C.: Apr 

21, 2009); Office of Personnel Management: Improvements Needed to Ensure Successful 

Retirement Systems Modernization, GAO-08-345 (Washington, D.C.: Jan 31, 2008); 

Comments on the Office of Personnel Management’s February 20, 2008 Report to 

Congress Regarding the Retirement Systems Modernization, GAO-08-576R (Washington, 

D.C.: Mar 28, 2008); and Office of Personnel Management: Retirement Systems 

Modernization Program Faces Numerous Challenges, GAO-05-237 (Washington, D.C.: 

Feb 28, 2005).

14GAO-11-150. 

15GAO, DOD Business Transformation: Improved Management Oversight of Business 

System Modernization Efforts Needed, GAO-11-53 (Washington, D.C.: Oct. 7, 2010) and 

DOD Financial Management: Implementation Weaknesses in Army and Air Force 

Business Systems Could Jeopardize DOD’s Auditability Goals, GAO-12-134 (Washington, 

D.C.: Feb. 28, 2012).
Page 8 

according to the IT Dashboard, 190 of the federal government’s 

approximately 700 major IT investments—totaling almost $12.5 billion—

were in need of management attention (rated “yellow” to indicate the need 

for attention or “red” to indicate significant concerns). (See fig. 2.)

Figure 2: Overall Performance Ratings of Major Investments on the IT Dashboard, 

as of August 2012

OMB’s Recent Major Initiatives for Overseeing IT Investments

As previously mentioned, in June 2009, to further improve the 

transparency into and oversight of agencies’ IT investments, OMB 

publicly deployed the IT Dashboard. As part of this effort, OMB issued 

guidance directing federal agencies to report, via the Dashboard, the 

performance of their IT investments. Currently, the Dashboard publicly 

displays information on the cost, schedule, and performance of over 700 

major federal IT investments at 26 federal agencies. Further, the public 

display of these data is intended to allow OMB, other oversight bodies, 
Page 9 

and the general public to hold the government agencies accountable for 

results and progress. 

In December 2010 OMB released its 25-point plan to reform federal IT. 

Among other things, the plan noted the goal of turning around or 

terminating at least one-third of underperforming projects by June 2012. 

To its credit, OMB’s IT Reform Plan provided specific actions to agencies 

so they could (1) more effectively manage IT acquisitions and (2) achieve 

operational efficiencies. To effectively manage IT acquisitions, the plan 

identified key actions such as improving accountability and governance 

and aligning acquisition processes with the technology cycle. To achieve 

operational efficiencies, the plan outlined actions required to adopt cloud 

solutions and leverage shared services. One of these actions was the 

consolidation of data centers as described in OMB’s FDCCI, which was 

announced in February 2010 and included a high-level goal to reduce the 

cost of data center hardware, software, and operations. Another action 

that was identified was related to cloud computing. OMB developed a 

“Cloud First” policy that required each agency CIO to fully migrate three 

services to a cloud solution by June 2012, and implement cloud-based 

solutions whenever a secure, reliable, and cost-effective cloud option 

exists.

As part of the IT Reform Plan, in 2011 the Federal CIO Council launched 

an initial Best Practices platform on http://www.CIO.gov to provide agency 

case studies that demonstrate best practices in managing federal IT 

systems.16

Further, since June 2010, OMB has required agencies to develop and 

carry out an operational analysis (OA) policy for examining the ongoing 

performance of existing operational IT investments to measure, among 

other things, whether the investment is continuing to meet business and 

customer needs and is contributing to meeting the agency’s strategic 

goals. OMB’s guidance calls for the policy to provide for an annual OA of 

each investment that addresses the following: cost, schedule, customer 

satisfaction, strategic and business results, financial goals, and 

innovation. 

According to OMB, agencies have been encouraged to 

develop practices that focus on early, frequent, and constructive 

communication during the acquisition process so that the government 

clearly understands the marketplace and can obtain an effective solution 

at a reasonable price.

 

16Federal CIO Council, http://cio.gov/category/best-practices/. 
Page 10 

More recently, the Federal CIO initiated the PortfolioStat effort for 

commodity IT in March 2012. OMB requires agency Deputy Secretaries 

or Chief Operating Officers to lead PortfolioStats—IT portfolio reviews—

working in coordination with CIOs, Chief Financial Officers, and Chief 

Acquisition Officers. Such an effort, as planned, is appropriate given the 

numerous investments performing the same function, as we reported in 

February 2012.17

Figure 3: Number of Government IT Investments by Primary Function, as of July 2011 

For example, 27 major federal agencies planned to 

spend $2.7 billion on 580 financial management systems in 2011. See 

figure 3 for the total number of investments within the 27 federal 

agencies, by function.

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.

 

17GAO, Information Technology: Departments of Defense and Energy Need to Address 

Potentially Duplicative Investments, GAO-12-241 (Washington, D.C.: Feb. 17, 2012). 
Page 11 

We previously reported and testified on the issue of duplicative IT 

investments at DOD and the Department of Energy.18

Opportunities Exist to Improve Acquisitions and Operations of IT 

Investments 

Specifically, we 

found 37 potentially duplicative investments, accounting for about $1.2 

billion in total IT spending for fiscal years 2007 through 2012. We made 

recommendations to those agencies to report on the progress of efforts to 

identify and eliminate duplication, where appropriate.

Over the past several years, we have highlighted OMB efforts to enhance 

oversight of IT acquisition. Most notably, we issued a series of reports on 

the IT Dashboard. In addition, we identified common factors critical to 

successful IT investments.

IT Dashboard

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, there 

were issues with the accuracy and reliability of cost and schedule data, 

and we recommended steps that OMB should take to improve these data. 

• Our July 2010 report19

 

18

found that the cost and schedule ratings on 

OMB’s Dashboard were not always accurate for the investments we 

reviewed, because these ratings did not take into consideration 

current performance. As a result, the ratings were based on outdated 

information. We recommended that OMB report on its planned 

changes to the Dashboard to improve the accuracy of performance 

information and provide guidance to agencies to standardize 

milestone reporting. OMB agreed with our recommendations and, as 

a result, updated the Dashboard’s cost and schedule calculations to 

include both ongoing and completed activities. Similarly, in March 

2011, OMB had initiated several efforts to increase the Dashboard’s 

value as an oversight tool, and had used its data to improve federal IT 

GAO-12-241 and GAO, Information Technology: Potentially Duplicative Investments 

Exist at the Departments of Defense and Energy, GAO-12-462T (Washington, D.C.: Feb. 

17, 2012).

19GAO, Information Technology: OMB's Dashboard Has Increased Transparency and 

Oversight, but Improvements Needed, GAO-10-701 (Washington, D.C.: July 16, 2010).
Page 12 

management.20 However, agency practices and the Dashboard’s 

calculations contributed to inaccuracies in the reported investment 

performance data. These included, for instance, missing data 

submissions or erroneous data at each of the five agencies we 

reviewed, along with instances of inconsistent program baselines and 

unreliable source data. As a result, we recommended that the 

agencies take steps to improve the accuracy and reliability of their 

Dashboard information, and that OMB improve how it rates 

investments relative to current performance and schedule variance. 

Most agencies generally concurred with our recommendations; OMB 

agreed with our recommendation for improving ratings for schedule 

variance. It disagreed with our recommendation to improve how it 

reflects current performance in cost and schedule ratings, but more 

recently made changes to Dashboard calculations to address this 

while also noting challenges in comprehensively evaluating cost and 

schedule data for these investments.

• Our subsequent report21 noted that that the accuracy of investment 

cost and schedule ratings had improved since our July 2010 report 

because OMB had refined the Dashboard’s cost and schedule 

calculations. Most of the ratings for the eight investments we reviewed 

were accurate, although more could be done to inform oversight and 

decision making by emphasizing recent performance in the ratings. 

We recommended that the General Services Administration comply 

with OMB’s guidance for updating its ratings when new information 

becomes available (including when investments are rebaselined) and 

the agency concurred. Since we previously recommended that OMB 

improve how it rates investments, we did not make any further 

recommendations.

• More recently, in October 2012 we found that opportunities existed to 

improve transparency and oversight of investment risk at our selected 

agencies.22

 

20GAO, Information Technology: OMB Has Made Improvements to Its Dashboard, but 

Further Work Is Needed by Agencies and OMB to Ensure Data Accuracy,

Specifically, CIOs at six federal agencies consistently 

rated the majority of their IT investments as low risk. These agencies 

rated no more than 12 percent of their investments as high or 

GAO-11-262

(Washington, D.C.: Mar. 15, 2011).

21GAO, IT Dashboard: Accuracy Has Improved, and Additional Efforts Are Under Way to 

Better Inform Decision Making, GAO-12-210 (Washington, D.C.: Nov. 7, 2011). 

22GAO-13-98. 
Page 13 

moderately high risk, and two agencies (DOD and the National 

Science Foundation) rated no investments at these risk levels. Over 

time, about 47 percent of the agencies’ Dashboard investments 

received the same rating in every rating period. For ratings that 

changed, DHS and Office of Personnel Management reported more 

investments with reduced risk when initial ratings were compared with 

those in March 2012; the other four agencies reported more 

investments with increased risk. In the past, OMB reported trends for 

risky IT investments needing management attention as part of its 

annual budget submission, but discontinued this reporting in fiscal 

year 2010. Accordingly, we recommended OMB analyze agencies’ 

investment risk over time as reflected in the Dashboard’s CIO ratings 

and present its analysis with the President’s annual budget 

submission, with which OMB concurred. 

Further, agencies generally followed OMB’s instructions for assigning 

CIO ratings, which included considering stakeholder input, updating 

ratings when new data become available, and applying OMB’s six 

evaluation factors. DOD’s ratings were unique in reflecting additional 

considerations, such as the likelihood of OMB review, and 

consequently DOD did not rate any of its investments as high risk. 

However, in selected cases, these ratings did not appropriately reflect 

significant cost, schedule, and performance issues reported by GAO 

and others. Although three DOD investments experienced significant 

performance problems and were part of a GAO high-risk area 

(business systems modernization), they were all rated low risk or 

moderately low risk by the DOD CIO. For example, in early 2012, we 

reported that Air Force’s Defense Enterprise Accounting and 

Management System (DEAMS) faced a 2-year deployment delay and

an estimated cost increase of about $500 million from an original lifecycle cost estimate of $1.1 billion (an increase of approximately 45 

percent), and that assessments by DOD users had identified 

operational problems with the system, such as data accuracy issues, 

an inability to generate auditable financial reports, and the need for 

manual workarounds.

23

 

23GAO, DOD Financial Management: Reported Status of Department of Defense’s 

Enterprise Resource Planning Systems,

In July 2012, the DOD Inspector General 

reported that the DEAMS’s schedule delays were likely to diminish the 

cost savings it was to provide, and would jeopardize the department’s 

goals for attaining an auditable financial statement. DOD’s CIO rated 

GAO-12-565R (Washington, D.C.: Mar. 30, 2012) 

and GAO-12-134. 
Page 14 

DEAMS low risk or moderately low risk from July 2009 through March 

2012.

Moreover, DOD did not apply its own risk management guidance to 

the ratings, which reduces their value for investment management 

and oversight. Therefore, we recommended that DOD ensure that its 

CIO ratings reflect available investment performance assessments 

and its risk management guidance. DOD concurred with our 

recommendation. 

Critical Factors Underlying Successful Major Acquisitions

To help the federal agencies address the well-documented acquisition 

challenges they face, we identified seven successful investment 

acquisitions and nine common factors critical to their success in 2011. 24

Specifically, we reported that department officials identified seven 

successful investment acquisitions, in that they best achieved their 

respective cost, schedule, scope, and performance goals.25

 

24

The nine 

common factors critical to the success of three or more of the seven 

investments were: (1) program officials were actively engaged with 

stakeholders; (2) program staff had the necessary knowledge and skills; 

(3) senior department and agency executives supported the programs; (4) 

end users and stakeholders were involved in the development of 

requirements; (5) end users participated in testing of system functionality 

prior to formal end user acceptance testing; (6) government and 

contractor staff were stable and consistent; (7) program staff prioritized 

requirements; (8) program officials maintained regular communication 

with the prime contractor; and (9) programs received sufficient funding.

Further, officials from all seven investments cited active engagement with 

program stakeholders as a critical factor to the success of those 

investments. These critical factors support OMB’s objective of improving 

the management of large-scale IT acquisitions across the federal 

government, and wide dissemination of these factors could complement 

OMB’s efforts.

GAO-12-7. 

25The seven investments were (1) Commerce’s Decennial Response Integration System, 

(2) DOD’s Defense Global Combat Support System-Joint (Increment 7), (3) Department of 

Energy’s Manufacturing Operations Management Project, (4) DHS’s Western Hemisphere 

Travel Initiative, (5) Department of Transportation’s Integrated Terminal Weather System, 

(6) Internal Revenue Service’s Customer Account Data Engine 2, and (7) Veterans Affairs 

Occupational Health Record-keeping System. 
Page 15 

In addition to efficiently acquiring IT investments, it is also important for 

the federal government to efficiently manage operational investments, 

especially since agencies are planning to spend about $54 billion in fiscal 

year 2013 on operational systems. Accordingly, we issued key reports on

the federal government’s oversight of IT investments in O&M, progress 

toward meeting OMB data center consolidation goals, and progress 

toward cloud computing as specified in the “Cloud First” policy.

Oversight of Investments in O&M

While agencies spend billions on operational investments, they have not 

always provided adequate oversight of these investments. Specifically, 

assessments of the performance of such investments—commonly 

referred to as OAs—varied significantly, as we reported in October 

2012.

26

We reviewed five agencies

OMB guidance calls for agencies to develop an OA policy and 

perform such analyses annually to ensure O&M investments continue to 

meet agency needs. The guidance also includes 17 key factors 

(addressing areas such as cost, schedule, customer satisfaction, and 

innovation) that are to be assessed. 

27

 

26

and found that they varied in the extent to 

which they followed OMB guidance. For example, DHS and HHS 

developed a policy which included all OMB assessment factors and 

performed OAs. However, they did not include all investments and key 

factors. In particular, DHS analyzed 16 of its 44 steady state investments, 

meaning 28 investments with annual budgets totaling $1 billion were not 

analyzed; HHS analyzed 7 of its 8 steady state investments. For OAs 

performed by DHS and HHS, both fully addressed approximately half of 

the key factors. In contrast, DOD, Treasury, and VA did not develop a 

policy and did not perform analyses on their 23 major steady state 

investments with annual budgets totaling $2.1 billion. Overall, these five 

agencies have steady state investments with a fiscal year 2011 budget of 

over $3 billion that had not undergone needed analyses, and while OMB 

called for agencies to perform OAs, its existing guidance did not provide 

mechanisms that ensure the OAs are completed and allow public 

transparency into the results of the assessments. As a result, we 

recommended that DOD, Treasury, and VA develop an OA policy and 

conduct annual OAs; DHS and HHS ensure OAs are being performed for 

GAO-13-87. 

27The agencies in our review were DHS, DOD, the Departments of Health and Human 

Services (HHS), the Treasury, and Veterans Affairs (VA).
Page 16 

all investments and that all factors are fully assessed; and OMB revise its 

guidance to include directing agencies to report on the IT Dashboard the 

results from the OAs. The five agencies and OMB agreed with our 

recommendations.

Data Center Consolidation

Agencies have developed plans to consolidate data centers; however, 

these plans were incomplete and did not include best practices. We 

issued two reports on the federal government’s effort to consolidate data 

centers and made several recommendations for improvements.

• Our July 2011 report found that agency consolidation plans indicated 

that agencies anticipated closing about 650 data centers by fiscal year 

2015 and saving about $700 million in doing so.28 However, only one 

of the 24 agencies submitted a complete inventory and no agency 

submitted complete plans. Further, OMB did not require agencies to 

document the steps they took, if any, to verify the inventory data. We 

noted the importance of having assurance as to the accuracy of 

collected data and, specifically, the need for agencies to provide OMB 

with complete and accurate data and the possible negative impact of 

that data being missing or incomplete. We concluded that until these 

inventories and plans were completed, agencies would not be able to 

implement their consolidation activities and realize expected cost 

savings. Moreover, without an understanding of the validity of 

agencies’ consolidation data, OMB could not be assured that 

agencies were providing a sound baseline for estimating consolidation 

savings and measuring progress against those goals. Accordingly, we 

made several recommendations to OMB, including that the Federal 

CIO require that agencies, when updating their data center 

inventories, state what actions have been taken to verify the 

inventories and to identify any associated limitations on the data.

• In a subsequent report29

 

28GAO, Data Center Consolidation: Agencies Need to Complete Inventories and Plans to 

Achieve Expected Savings,

 we noted that agencies updated their 

inventories and plans, but key elements were still missing. 

Specifically, as of September 2011, 24 agencies identified almost 

2,900 total centers, established plans to close 1,186 of them by 2015, 

and estimated they would realize over $2.4 billion in cost savings in 

doing so. OMB noted that the savings would be even greater and 

GAO-11-565 (Washington, D.C.: July 19, 2011).

29GAO-12-742. 
Page 17 

estimated that FDCCI would realize $3 billion in savings by 2015.30

However, while OMB required agencies to complete missing elements 

in their data center inventories and plans by the end of September 

2011, only 3 agencies submitted complete inventories, and only 1 

agency submitted a complete plan. Further, in their consolidation 

plans, 13 agencies did not provide a full master program schedule, 

and 21 agencies did not fully report their expected cost savings. Our 

report noted that until these inventories and plans were complete, 

agencies would continue to be at risk of not realizing anticipated 

savings, improved infrastructure utilization, or energy efficiency. We 

also reiterated our recommendation that the agencies complete the 

missing elements of their inventories and plans. 

In addition, while OMB required a master program schedule and a 

cost-benefit analysis (a type of cost estimate) as key requirements of 

agencies’ consolidation plans, none of the five agencies we reviewed 

had a schedule or cost estimate that was fully consistent with the four 

selected attributes of a properly sequenced schedule (such as having 

identified dependencies) or the four characteristics that form the basis 

of a reliable cost estimate (such as being comprehensive and welldocumented). OMB had established a standardized cost model to aid 

agencies in their consolidation planning efforts, but use of the model 

was voluntary. As a result, we recommended that the five selected 

agencies should implement recognized best practices when 

establishing schedules and cost estimates for their consolidation 

efforts and that OMB ensure agencies utilize its standardized cost 

model across the consolidation initiative. OMB and three agencies 

agreed with our recommendation, and two did not agree or disagree 

with it.

Finally, we highlighted consolidation successes, such as the benefits 

of focusing on key technologies and the benefits of working with other 

agencies and components to identify consolidation opportunities. 

However, agencies continued to report a number of the same 

challenges that we first described in 2011, while other challenges 

were evolving. For example, 15 agencies reported continued issues 

with obtaining power usage information, and 9 agencies reported that 

their organization continued to struggle with acquiring the funding 

required for consolidation. In light of these successes and challenges, 

we noted that it was important for OMB to continue to provide 

 

30OMB, Analytical Perspectives, Budget of the U.S. Government, Fiscal Year 2013. 
Page 18 

leadership and guidance, such as—as we previously recommended—

using the consolidation task force to monitor agencies’ consolidation 

efforts. Therefore, we recommended that OMB ensure that all future 

revisions to the guidance on data center consolidation inventories and 

plans are defined in an OMB memorandum and posted to the FDCCI 

public website in a manner consistent with the guidance published in 

2010. OMB agreed with our recommendation.

Cloud Computing

Implementing cloud computing has security implications, which federal 

agencies began addressing. Further, agencies made progress 

implementing OMB’s “Cloud First” policy. We reported on these two 

issues and made recommendations. 

• In May 2010, we reported that cloud computing can both increase and 

decrease the security of information systems in federal agencies.31

Risks included dependence on the security practices and assurances 

of a vendor, dependency on the vendor, and concerns related to 

sharing of computing resources. Federal agencies had begun efforts 

to address information security issues for cloud computing, but key 

guidance was lacking and efforts remained incomplete. Although 

individual agencies had identified security measures needed when 

using cloud computing, they had not always developed corresponding 

guidance. For example, only nine agencies reported having approved

and documented policies and procedures for writing comprehensive 

agreements with vendors when using cloud computing. Agencies had 

also identified challenges in implementing existing federal information 

security guidance and the need to streamline and automate the 

process of implementing this guidance. These concerns included 

having a process to assess vendor compliance with government 

information security requirements and the division of information 

security responsibilities between the customer and vendor. Among 

other things, we recommended that OMB establish milestones for 

completing a strategy for implementing the federal cloud computing 

initiative.

• Federal agencies made progress in implementing OMB’s “Cloud First” 

policy, as we reported in July 2012.

32

 

31GAO, Information Security: Federal Guidance Needed to Address Control Issues with 

Implementing Cloud Computing,

Consistent with this policy, each 

GAO-10-513 (Washington, D.C.: May 27, 2010).

32GAO, Information Technology Reform: Progress Made but Future Cloud Computing 

Efforts Should be Better Planned, GAO-12-756 (Washington, D.C.: July 11, 2012).
Page 19 

of the seven agencies in our review incorporated cloud computing 

requirements into their policies and processes. Further, each of the 

seven agencies met the OMB deadlines to identify three cloud 

implementations by February 2011 and to implement at least one 

service by December 2011. However, two agencies did not plan to 

meet OMB’s deadline to implement three services by June 2012, but 

planned to do so by calendar year’s end. Each of the seven agencies 

also identified opportunities for future cloud implementations, such as 

moving storage and help desk services to a cloud environment. While 

each of the seven agencies submitted plans to OMB for implementing 

the cloud solutions, all but one plan were missing key required 

elements. As a result, we recommended that the seven agencies 

develop key planning information, such as estimated costs and legacy 

IT systems’ retirement plans, for existing and planned services. The 

agencies generally agreed with these recommendations.

IT Reform Plan

OMB’s IT Reform Plan acknowledged many of these acquisition and 

operation issues by requiring 25 actions to be completed by 2012. For 

example, it required agencies to launch a best practices collaboration 

platform and shift to a “Cloud First” policy. We reported on the federal 

government’s progress toward implementing these actions in April 2012.

33

• stand-up contract vehicle for infrastructure,

 

OMB and key federal agencies had made progress on action items in the 

IT Reform Plan, but there were several areas where more remained to be 

done. Specifically, we reviewed 10 actions and found that 3 were 

complete: 

• reform and strengthen investment review boards, and

• design a cadre of specialized IT acquisition professionals.

Additionally, 7 items were partially completed:

• complete plans for data center consolidation, 

• issue guidance on modular development, 

• shift to a “Cloud First” policy, 

• work with Congress to create budget models for modular 

development, 

• work with Congress to consolidate routine IT purchases under agency 

CIO,

• launch a best practices platform, and

 

33GAO-12-461. 
Page 20 

• redefine the role of agency CIO and CIO Council.

OMB reported greater progress than we determined. While OMB officials 

acknowledged that there is more to do in each of the topic areas, they 

considered the key action items to be completed because the IT Reform 

Plan has served its purpose as a catalyst for a set of broader initiatives. 

They explained that work will continue on all of the initiatives even after 

OMB declares that the related action items are completed under the IT 

Reform Plan. We disagreed with this approach and noted that in 

prematurely declaring the action items to be completed, OMB risked 

losing momentum on the progress it has made to date. We recommended 

that three agencies complete key IT Reform action items. We also 

recommended that OMB accurately characterize the status of the IT 

Reform Plan action items in the upcoming progress report in order to 

keep momentum going on action items that are not yet completed.

Further, OMB and key agencies planned to continue efforts to address 

the seven items that we identified as behind schedule, but lacked time 

frames for completing most of them. For example, OMB had planned to 

work with congressional committees during the fiscal year 2013 budget 

process to assist in exploring legislative proposals to establish flexible 

budget models and to consolidate certain routine IT purchases under 

agency CIOs. However, OMB had not established time frames for 

completing five of the seven IT Reform Plan action items that were behind 

schedule. Accordingly, we recommended that OMB ensure that the action 

items called for in the IT Reform Plan be completed by the responsible 

parties prior to the completion of the IT Reform Plan’s 18-month deadline 

of June 2012, or if the June 2012 deadline could not be met, by another 

clearly defined deadline; and provide clear time frames for addressing the 

shortfalls associated with the action items.

Last, OMB had not established performance measures for evaluating the 

results of most of the IT reform initiatives we reviewed. Specifically, OMB 

established performance measures for 4 of the 10 action items, including 

data center consolidation and cloud computing. However, no performance 

measures existed for 6 other action items, including establishing the best 

practices collaboration platform and developing a cadre of IT acquisition 

professionals. Thus, we recommended that OMB establish outcomeoriented measures for each applicable action item. 

In summary, OMB’s and agencies’ recent efforts have resulted in greater 

transparency and oversight of federal spending, but continued leadership 

and attention is necessary to build on the progress that has been made. 
Page 21 

For example, federal agencies need to continue to improve the accuracy

of information on the Dashboard to provide greater transparency and 

even more attention to the billions of dollars invested in troubled projects. 

Further, the expanded use of the common factors critical to the 

successful management of large-scale IT acquisitions should result in the 

more effective delivery of mission-critical systems. In addition, the federal 

government can more efficiently manage operational systems by ensuring 

the $54 billion in O&M is continuing to improve mission performance, in 

particular the $3 billion which had not undergone required analyses. The 

federal government can also build on the momentum of the $2.4 billion in 

estimated savings as a result of data center consolidation efforts. Overall, 

implementation of outstanding GAO recommendations can help further 

reduce wasteful spending on poorly managed, unnecessary, and

duplicative investments.

Chairman Issa, Ranking Member Cummings, and Members of the 

Committee, this concludes my statement. I would be pleased to answer 

any questions at this time.

GAO Contact and Staff Acknowledgments 

If you should have any questions about this testimony, please contact me 

at (202) 512-9286 or by e-mail at pownerd@gao.gov. Individuals who 

made key contributions to this testimony are Dave Hinchman, Assistant 

Director; Gary Mountjoy, Assistant Director; Rebecca Eyler; Kevin Walsh; 

and Shawn Ward.

(311286)
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