United States Government Accountability Office

For Release on Delivery 

Expected at 2:30 p.m. EST

Wednesday, February 26, 2014

Testimony 

Before the Subcommittee on Readiness 

and Management Support, Committee on 

Armed Services, U.S. Senate

GAO-14-400T

INFORMATION 

TECHNOLOGY

Leveraging Best Practices 

and Reform Initiatives Can 

Help Defense Manage 

Major Investments

Statement of David A. Powner, Director

Information Technology Management Issues
United States Government Accountability Office

Highlights of GAO-14-400T, a testimony

before the Subcommittee on Readiness and 

Management Support, Committee on Armed 

Services, U.S. Senate 

February 26, 2014 

INFORMATION TECHNOLOGY

Leveraging Best Practices and Reform Initiatives Can 

Help Defense Manage Major Investments

Why GAO Did This Study

The federal government reportedly 

plans to spend at least $82 billion on IT 

in fiscal year 2014. Of that, Defense 

plans to spend over $39 billion—$5.5 

billion on classified systems, $9 billion 

on acquisitions, and $25 billion on 

operations and maintenance. Given 

the scale of such planned outlays and 

the criticality of many of these systems 

to the security and defense of the 

nation, it is important that these 

Defense investments are acquired on 

time and within budget and that they 

deliver expected benefits.

GAO has previously reported and 

testified that federal IT projects too 

frequently fail and incur cost overruns 

and schedule slippages while 

contributing little to mission-related 

outcomes. Further, GAO has 

highlighted several examples of 

Defense investments that have not 

delivered results within planned cost 

and schedule estimates. Numerous

best practices and administration 

initiatives are available for agencies 

that can help them improve the 

oversight and management of IT 

acquisitions.

GAO is testifying today on how best 

practices and IT reform initiatives can 

help Defense better manage major 

acquisitions and legacy investments.

What GAO Recommends

GAO has previously made numerous 

recommendations to OMB and federal 

agencies, including Defense, on key 

aspects of IT acquisition management, 

as well as the oversight and 

management of these investments.

Defense generally agreed but has not 

fully implemented these 

recommendations.

What GAO Found

Information technology (IT) acquisition best practices have been developed by 

both industry and the federal government to help guide the successful acquisition 

of investments. For example, GAO recently reported on nine factors that were 

considered as critical to successful acquisitions (see table). 

Common Critical Success Factors 

Program officials were actively engaged with stakeholders 

Program staff had the necessary knowledge and skills

Senior department and agency executives supported the programs

End users and stakeholders were involved in the development of requirements

End users participated in testing of system functionality prior to formal end user acceptance testing 

Government and contractor staff were consistent and stable

Program staff prioritized requirements

Program officials maintained regular communication with the prime contractor

Programs received sufficient funding 

Source: GAO analysis of agency data; see GAO-12-7. 

One key IT reform initiative undertaken by OMB to improve transparency is a

public website, referred to as the IT Dashboard, which provides detailed 

information on about 700 major IT investments at 27 federal agencies, including 

ratings that are to reflect the level of risk facing an investment on a scale from 1 

(high risk) to 5 (low risk). In October 2012, GAO reported that the Department of 

Defense (Defense) did not rate any of its investments as high risk on the 

Dashboard, despite significant cost, schedule, and performance issues reported 

by GAO and others. As such, GAO recommended that Defense ensure that its 

risk ratings reflect available investment performance assessments. Defense 

concurred; nonetheless, the Dashboard currently shows that for Defense’s 93 

major investments, 81 are low or moderately low risk (green), 12 are medium risk 

(yellow), and none are moderately high or high risk (red). GAO also recently 

reported that OMB and selected agencies have held multiple reviews of selected 

investments that are failing or not producing results. Included in these reviews 

was the Expeditionary Combat Support System, an investment eventually 

canceled after Defense had spent about one billion dollars on it.

To better manage the department’s existing IT systems and ensure their efficient, 

cost effective operation, Defense is consolidating the department’s almost 2,000 

reported data centers which could lead to billions in savings, according to the 

department. The department is also continuing to identify duplicative spending as 

part of an OMB initiative known as PortfolioStat, which, among other things, 

requires agencies to conduct annual reviews of its IT investments and make 

decisions on eliminating duplication. The department estimates $3.2 to $5.2 

billion in savings through fiscal year 2015 and an additional $1.3 to $2.2 billion in 

efficiencies per year beginning in fiscal year 2016. With a continued focus on this 

important effort, including obtaining support for estimated cost savings, Defense 

can realize significant benefits through the elimination of duplicative and 

inefficient IT investments. 

View GAO-14-400T. For more information, 

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

pownerd@gao.gov. 
Page 1 GAO-14-400T

Chairman Shaheen, Ranking Member Ayotte, and Members of the 

Subcommittee:

I am pleased to be here today to discuss how best practices and major 

information technology (IT) reform initiatives can help the Department of 

Defense (Defense) better acquire and manage IT investments. As 

reported to the Office of Management and Budget (OMB), federal 

agencies plan to spend at least $82 billion on IT in fiscal year 2014. Of 

this amount, Defense plans to spend about $39.6 billion, or 48 percent of 

the government’s total IT spending. Given the size of the department’s

investments and the criticality of many of these systems to the security 

and defense of the nation, it is important that Defense successfully 

acquire them—that is, ensure that they are acquired on time and within 

budget, and that they deliver expected benefits and results.

However, as we have previously reported and testified, federal IT projects 

too frequently fail and incur cost overruns and schedule slippages while 

contributing little to mission-related outcomes.1 During the past several 

years, we have issued multiple reports and testimonies on best practices 

for major acquisitions and federal initiatives to acquire and improve the 

management of IT investments.2

 1

See, for example, GAO, Information Technology: OMB and Agencies Need to More 

Effectively Implement Major Initiatives to Save Billions of Dollars, 

In those reports, we made numerous 

recommendations to federal agencies and OMB to further enhance the 

GAO-13-796T

(Washington, D.C.: July 25, 2013); Secure Border Initiative: DHS Needs to Reconsider Its 

Proposed Investment in Key Technology Program, GAO-10-340 (Washington, D.C.: May 

5, 2010); and Polar-Orbiting Environmental Satellites: With Costs Increasing and Data 

Continuity at Risk, Improvements Needed in Tri-agency Decision Making, GAO-09-564

(Washington, D.C.: June 17, 2009).

2

See, for example, GAO, Information Technology: Leveraging Best Practices to Help 

Ensure Successful Major Acquisitions, GAO-14-183T (Washington, D.C.: Nov. 13, 2013); 

Information Technology: Additional Executive Review Sessions Needed to Address 

Troubled Projects, GAO-13-524 (Washington, D.C.: June 13, 2013); Data Center 

Consolidation: Strengthened Oversight Needed to Achieve Billions of Dollars in Savings, 

GAO-13-627T (Washington, D.C.: May 14, 2013); Data Center Consolidation: 

Strengthened Oversight Needed to Achieve Cost Savings Goal, GAO-13-378

(Washington, D.C.: Apr. 23, 2013); 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); 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 GAO-14-400T

management and oversight of IT programs. Further, we highlighted 

several examples of Defense investments that failed to, or only partially 

delivered results within planned cost and schedule estimates.

As discussed with subcommittee staff, I am testifying today on how best 

practices and major IT reform initiatives can help Defense better acquire 

and manage IT investments. Accordingly, my testimony specifically 

focuses on the critical success factors of major IT acquisitions and their 

importance to improving IT investment oversight and management. I will 

also address several initiatives put into place by OMB to address the 

transparency of IT investments and to review troubled and duplicative 

existing projects. 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 

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. A more detailed discussion of the objectives, scope, and 

methodology of this work is included in each of the reports on which this 

testimony is based.3

Background

Information technology should enable government to better serve the 

American people. However, despite spending hundreds of billions on IT

since 2000, the federal government has experienced failed IT projects 

and has achieved little of the productivity improvements that private 

industry has realized from IT. Too often, federal IT projects run over 

 3

GAO-13-524; 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); 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); 

GAO-12-7; Information Technology: OMB Has Made Improvements to Its Dashboard, but 

Further Work Is Needed by Agencies and OMB to Ensure Data Accuracy, GAO-11-262

(Washington, D.C.: Mar. 15, 2011); and Information Technology: OMB’s Dashboard has 

Increased Transparency and Oversight, but Improvements Needed, GAO-10-701

(Washington, D.C.: July 16, 2010).
Page 3 GAO-14-400T

budget, behind schedule, or fail to deliver results. In combating this 

problem, proper oversight is critical.

Both OMB and federal agencies have key roles and responsibilities for 

overseeing IT investment management and OMB is responsible for 

working with agencies to ensure investments are appropriately planned 

and justified. However, as we have described in numerous reports,4

Agencies have reported that poor-performing projects have often used a 

“big-bang” approach—that is, projects that are broadly scoped and aim to 

deliver capability several years after initiation. For example, in 2009 the 

Defense Science Board reported that Defense’s acquisition process for IT 

systems was too long, ineffective, and did not accommodate the rapid 

evolution of IT.

although a variety of best practices exist to guide their successful 

acquisition, federal IT projects too frequently incur cost overruns and 

schedule slippages while contributing little to mission-related outcomes.

5 The board reported that the average time to deliver an 

initial program capability for a major IT system acquisition at Defense was

over 7 years.

 4

See, for example, GAO, FEMA: Action Needed to Improve Administration of the National 

Flood Insurance Program, GAO-11-297 (Washington, D.C.: June 9, 2011); GAO-10-340; 

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); and GAO-09-564.

5

Defense Science Board, Report of the Defense Science Board Task Force on 

Department of Defense Policies and Procedures for the Acquisition of Information 

Technology (Washington, D.C.: March 2009).
Page 4 GAO-14-400T

As previously mentioned, and as seen in figure 1, Defense accounts for 

48 percent of the fiscal year 2014 federal government’s IT budget.

Figure 1: Defense Percentage of Federal Fiscal Year 2014 IT Spending (dollars in 

billions)

Source: GAO analysis of OMB data.

Of the department’s $39.6 billion IT budget, approximately 14 percent is 

to be spent on classified systems. Of the remaining $34 billion, about 

one-quarter is to be spent on acquiring new investments, and the rest is 

to be spent operating and maintaining existing or legacy systems. This is 

illustrated in figure 2.
Page 5 GAO-14-400T

Figure 2: Defense’s Fiscal Year 2014 IT Spending (dollars in billions)

Source: GAO analysis of OMB data.

Further, over the past several years, we have reported that overlap and 

fragmentation among government programs or activities could be 

harbingers of unnecessary duplication.6

 6

GAO, 2013 Annual Report: Actions Needed to Reduce Fragmentation, Overlap, and 

Duplication and Achieve Other Financial Benefits, 

Thus, the reduction or elimination 

of duplication, overlap, or fragmentation could potentially save billions of 

tax dollars annually and help agencies provide more efficient and 

effective services.

GAO-13-279SP (Washington, D.C.: 

Apr. 9, 2013), Annual Report: Opportunities to Reduce Duplication, Overlap and 

Fragmentation, Achieve Savings, and Enhance Revenue, GAO-12-342SP (Washington, 

D.C.: Feb. 28, 2012), and Opportunities to Reduce Potential Duplication in Government 

Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: 

Mar. 1, 2011).

Classified

$5.5 

14%

Acquisitions

$9.4 

24%

Operations and 

maintenance

$24.7 

62%
Page 6 GAO-14-400T

OMB Has Launched Major Initiatives for Overseeing Investments

OMB has implemented a series of initiatives to improve the oversight of 

underperforming investments, more effectively manage IT, and address 

duplicative investments. These efforts include the following: 

• IT Dashboard. Given the importance of transparency, oversight, and 

management of the government’s IT investments, in June 2009 OMB 

established a public website, referred to as the IT Dashboard, that 

provides detailed information on approximately 700 major IT 

investments at 27 federal agencies, including ratings of their 

performance against cost and schedule targets. The public 

dissemination of this information is intended to allow OMB; other 

oversight bodies, including Congress; and the general public to hold 

agencies accountable for results and performance. Among other 

things, agencies are to submit Chief Information Officer (CIO) ratings, 

which, according to OMB’s instructions, should reflect the level of risk 

facing an investment on a scale from 1 (high risk) to 5 (low risk) 

relative to that investment’s ability to accomplish its goals. Ultimately, 

CIO ratings are assigned colors for presentation on the Dashboard, 

according to the five-point rating scale, as illustrated in table 1.

Table 1: IT Dashboard CIO Rating Colors, Based on a Five-Point Scale for CIO 

Ratings

Rating (by agency CIO) Color 

1-High risk Red 

2-Moderately high risk Red 

3-Medium risk Yellow 

4-Moderately low risk Green 

5-Low risk Green 

Source: OMB’s IT Dashboard.

• TechStat reviews. In January 2010, the Federal CIO began leading 

TechStat sessions—face-to-face meetings to terminate or turnaround 

IT investments that are failing or are not producing results. These 

meetings involve OMB and agency leadership and are intended to 

increase accountability and transparency and improve performance. 

Subsequently, OMB empowered agency CIOs to hold their own 

TechStat sessions within their respective agencies. According to the 

former Federal CIO, the efforts of OMB and federal agencies to 

improve management and oversight of IT investments have resulted 

in almost $4 billion in savings.
Page 7 GAO-14-400T

• Federal Data Center Consolidation Initiative. Concerned about the 

growing number of federal data centers, in February 2010 the Federal 

CIO established the Federal Data Center Consolidation Initiative. This 

initiative’s four high-level goals are to promote the use of “green IT”7

by reducing the overall energy and real estate footprint of government 

data centers; reduce the cost of data center hardware, software, and 

operations; increase the overall IT security posture of the government; 

and shift IT investments to more efficient computing platforms and 

technologies. OMB believes that this initiative has the potential to 

provide about $3 billion in savings by the end of 2015.

• PortfolioStat. In order to eliminate duplication, move to shared 

services, and improve portfolio management processes, in March 

2012 OMB launched the PortfolioStat initiative. Specifically, 

PortfolioStat requires agencies to conduct an annual agencywide IT 

portfolio review to, among other things, reduce commodity IT8

spending and demonstrate how their IT investments align with the 

agency’s mission and business functions.9

 7

“Green IT” refers to environmentally sound computing practices that can include a variety 

of efforts, such as using energy efficient data centers, purchasing computers that meet 

certain environmental standards, and recycling obsolete electronics.

PortfolioStat is designed to 

assist agencies in assessing the current maturity of their IT 

investment management process, making decisions on eliminating 

duplicative investments, and moving to shared solutions in order to 

maximize the return on IT investments across the portfolio. 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.

8

According to OMB, commodity IT includes services such as IT infrastructure (data 

centers, networks, desktop computers and mobile devices); enterprise IT systems (e-mail, 

collaboration tools, identity and access management, security, and web infrastructure); 

and business systems (finance, human resources, and other administrative functions).

9

OMB, Implementing PortfolioStat, Memorandum, M-12-10 (Washington D.C.: Mar. 30, 

2012).
Page 8 GAO-14-400T

Opportunities Exist to Improve Defense’s Acquisition and 

Management of Major IT Investments

Given the magnitude of Defense’s annual IT budget, which was $39.6 

billion in fiscal year 2014, it is important that the department leverage all 

available opportunities to ensure that its IT investments are acquired in 

the most effective manner possible. To do so, the department can rely on

IT acquisition best practices, and initiatives such as OMB’s IT Dashboard, 

and OMB-mandated TechStat sessions.

Best Practices Are Intended to Help Ensure Successful Major 

Acquisitions

In 2011, we identified seven successful investment acquisitions and nine 

common factors critical to their success, and noted that the factors

support OMB’s objective of improving the management of (1) large-scale 

IT acquisitions across the federal government, and (2) wide dissemination 

of these factors could complement OMB’s efforts.

10 Specifically, we 

reported that federal agency officials identified seven successful 

investment acquisitions, in that they best achieved their respective cost, 

schedule, scope, and performance goals.11 Notably, all of these were 

smaller increments, phases, or releases of larger projects. For example, 

the Defense investment in our sample, Defense Global Combat Support 

System-Joint (Increment 7), was a smaller portion of an ongoing 

investment. The common factors critical to the success of three or more 

of the seven investments are generally consistent with those developed 

by private industry and are identified in table 2.

 10GAO-12-7.

11The seven investments were (1) Commerce’s Decennial Response Integration System, 

(2) Defense’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 9 GAO-14-400T

Table 2: Common Critical Success Factors 

Program officials were actively engaged with stakeholders

Program staff had the necessary knowledge and skills

Senior department and agency executives supported the programs

End users and stakeholders were involved in the development of requirements

End users participated in testing of system functionality prior to formal end user 

acceptance testing

Government and contractor staff were consistent and stable

Program staff prioritized requirements

Program officials maintained regular communication with the prime contractor

Programs received sufficient funding

Source: GAO analysis of agency data.

Regarding Defense’s Global Combat Support System-Joint (Increment 7),

officials cited six factors that were critical to this investment’s success. 

Among others, officials noted that senior department executives

supported the program, end users and stakeholders were involved in the 

development of requirements which were then prioritized, and 

government and contractor staff were consistent and stable. 

IT Dashboard Can Improve the Transparency Into and 

Oversight of Defense IT Investments

The IT Dashboard serves an important role in allowing OMB and other 

oversight bodies to hold agencies accountable for results and 

performance. However, we reported in October 2012 that opportunities 

existed to improve transparency and oversight of investment risk at 

selected agencies, including Defense.12

 12

Specifically, we found that among 

the agencies we reviewed, Defense was unique in that its CIO ratings on 

the Dashboard reflected additional considerations beyond OMB’s 

instructions. For example, briefing slides prepared for DOD’s 2011 CIO 

rating exercise identified the need to “balance” CIO ratings, and advised 

that yellow or red ratings could lead to an OMB review. That report further 

noted that Defense did not rate any of its investments as either high or

moderately high risk and that in selected cases, these ratings did not 

appropriately reflect significant cost, schedule, and performance issues 

reported by GAO and others.

GAO-13-98.
Page 10 GAO-14-400T

We also highlighted three Defense investments that experienced 

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

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

or moderately low risk by the Defense CIO. For example, in early 2012, 

we reported that Air Force’s Defense Enterprise Accounting and 

Management System faced a 2-year deployment delay and an estimated 

cost increase of about $500 million from an original life-cycle cost 

estimate of $1.1 billion (an increase of approximately 45 percent), and 

that assessments by Defense 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.13

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

the ratings, which reduces their value for investment management and 

oversight. Therefore, we recommended that Defense ensure that its CIO 

ratings reflect available investment performance assessments and its risk 

management guidance. Defense concurred with our recommendation.

Nonetheless, the Dashboard currently shows that for Defense’s 93 major 

investments, 81 are low or moderately low risk (green), 12 are medium 

risk (yellow), and none are moderately high or high risk (red).

In 

July 2012, the Defense Inspector General reported that the system’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. Defense’s CIO rated the Defense Enterprise 

Accounting and Management System low risk or moderately low risk from 

July 2009 through March 2012.

TechStat Reviews Can Help Highlight and Evaluate Poorly 

Performing Investments

TechStat reviews were initiated by OMB to enable the federal government 

to intervene to turnaround, halt, or terminate IT projects that are failing or 

are not producing results. In 2013, we reported that OMB and selected 

agencies had held multiple TechStats, but that additional OMB oversight 

was needed to ensure that these meetings were having the appropriate 

impact on underperforming projects and that resulting cost savings were 

 13GAO, DOD Financial Management: Reported Status of Department of Defense’s

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

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 11 GAO-14-400T

valid.14

We also found that as of April 2013, OMB reported conducting 79 

TechStats on 55 investments at 23 federal agencies, including Defense. 

The four Defense investments that were reviewed included the 

Expeditionary Combat Support System, which received three TechStats. 

We recently testified that in December 2012, Defense canceled the 

Expeditionary Combat Support System after having spent about a billion 

dollars and missing multiple milestones, including failure to achieve 

deployment within 5 years of obligating funds.

We noted that OMB and selected agencies had tracked and 

reported positive results from TechStats, with most resulting in improved 

governance. Agencies also reported projects with accelerated delivery, 

reduced scope, or termination. We also found that OMB reported in 2011 

that federal agencies achieved almost $4 billion in life-cycle cost savings 

as a result of TechStat sessions. However, we were unable to validate 

OMB’s reported results because OMB did not provide artifacts showing 

that it ensured the results were valid. Among other things, we 

recommended that OMB require agencies to report on how they validated 

the outcomes. OMB generally agreed with this recommendation.

15 The system was to 

provide the Air Force with a single, integrated logistics system that was to 

control and account for about $36 billion of inventory. 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.16

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

Defense to efficiently manage its existing IT systems, especially since the 

agency plans to spend about $25 billion in fiscal year 2014 on these 

systems. To do so, Defense can rely on federal initiatives designed to 

reduce inefficiencies, redundancy, and duplication in IT investments, as 

discussed in the following section.

Among other things, we had recommended that 

Defense ensure that any future system deficiencies identified through 

independent assessments be resolved or mitigated prior to further 

deployment of the Expeditionary Combat Support System.

 14GAO-13-524.

15GAO-13-796T.

16GAO, 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 12 GAO-14-400T

Defense Could Consolidate Hundreds of Data Centers,

Leading to Billions in Savings

In an effort to consolidate the growing number of federal data centers, in 

2010, OMB launched a data center consolidation initiative. As part of this 

initiative, agencies developed plans to consolidate data centers; however, 

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

addition, although we reported that agencies had made progress on their 

data center closures, OMB had not determined initiative-wide cost 

savings, and oversight of the initiative was not being performed in all key 

areas.17 Among other things, we recommended that agencies complete 

inventories and plans, with which most agencies agreed. Finally, as part 

of ongoing follow-up work, we determined that agencies closed additional 

data centers, but that the number of federal data centers was significantly 

higher than previously estimated by OMB. Specifically, we testified in 

2013 that OMB reported approximately 3,133 data centers in December 

2011.18

PortfolioStat Can Be Used to Address Duplicative Defense 

Investments and Realize Cost Savings

However, as of July 2013, 22 of the 24 agencies had collectively 

reported 6,836 data centers in their inventories, an increase of 

approximately 3,700. Of these, Defense reported 1,922 facilities. Since 

Defense’s original goal was to consolidate from 936 data centers to 392 

and to save an estimated $2.2 billion, this increase in inventory opens the 

possibility of consolidating even more centers and realizing billions in cost 

savings.

OMB’s PortfolioStat initiative is designed to assist agencies in assessing 

the current maturity of their IT portfolio management process and making 

decisions on eliminating duplication—which we reported on in February 

2012. Specifically, we found 31 potentially duplicative investments totaling 

approximately $1.2 billion at Defense, but that the department had begun 

taking actions to address this duplication.19

 17GAO, Data Center Consolidation: Agencies Need to Complete Inventories and Plans to 

Achieve Expected Savings, 

For example, according to 

Defense officials, four of the Navy acquisition management investments—

GAO-11-565 (Washington, D.C.: Jul. 26, 2011) and Data 

Center Consolidation: Agencies Making Progress on Efforts, but Inventories and Plans 

Need to Be Completed, GAO-12-742 (Washington, D.C.: Jul. 19, 2012).

18GAO-13-796T.

19GAO, Information Technology: Departments of Defense and Energy Need to Address 

Potentially Duplicative Investments, GAO-12-241 (Washington, D.C.: Feb 17, 2012). 
Page 13 GAO-14-400T

two for Naval Sea Systems Command and two for Space and Naval 

Warfare Systems Command—would be reviewed to determine whether 

these multiple support systems are necessary. In addition, Defense

reported that the Air Force was in the process of developing a single 

contract writing system to replace the five potentially duplicative 

investments we had identified. Additionally, in September 2013, we found 

additional potential duplication within Defense’s health care and dental 

management investments, totaling over $30 million.20

We recently reported

Again, department 

officials described plans to address this. The existence of this potential 

duplication reinforces the need for the department to continue to take firm 

actions to address IT duplication and inefficiencies.

21 and testified22

Accordingly, we recommended that Defense take steps to improve its 

PortfolioStat implementation. The department concurred with our 

recommendation to obtain support for estimated savings, but disagreed 

with our recommendation to fully describe the consolidation of commodity 

IT spending under the CIO in future OMB reporting. The department 

stated that it did not intend to follow OMB’s guidance to consolidate 

on PortfolioStat, including 

Defense’s efforts to address duplication through the initiative. Specifically, 

we noted that, although OMB had previously stated that PortfolioStat was 

expected to result in savings of approximately $2.5 billion through fiscal 

year 2015, the 26 Defense PortfolioStat initiatives alone, including data 

center consolidation, were expected by the department’s CIO to save 

between $3.2 billion and $5.2 billion through fiscal year 2015, and to 

result in efficiencies between $1.3 billion and $2.2 billion per year 

beginning in fiscal year 2016. However, Defense was unable to show 

support for how all of these savings were calculated, citing a variety of 

reasons such as dependence on accurate reporting by departmental 

components and the lack of granular information from accounting 

systems. While recognizing the challenges the department faces in 

obtaining the support for consolidation opportunities identified by its 

components, we also noted that obtaining this information is critical to 

ensuring that planned savings and cost avoidance are realized. 

 20GAO, Information Technology: Key Federal Agencies Need to Address Potentially 

Duplicative Investments, GAO-13-718 (Washington, D.C.: Sep. 12, 2013). 

21GAO, Information Technology: Additional OMB and Agency Actions Are Needed to 

Achieve Portfolio Savings, GAO-14-65 (Washington, D.C.: Nov. 6, 2013); and 

GAO-13-378.

22GAO-13-685T and GAO-13-627T.
Page 14 GAO-14-400T

commodity IT spending under the CIO. However, by not following OMB’s 

guidance, Defense is missing an opportunity to achieve additional cost 

savings across the department.

To manage its annual investment of over $39 billion in IT, Defense needs 

to leverage best practices, improve transparency of its major investments, 

and review troubled projects through TechStat reviews. To do so, 

Defense can use the common factors critical to the successful 

management of large-scale IT acquisitions, which should result in the 

more effective delivery of mission-critical systems. Further, Defense

needs to continue to improve the accuracy of its information on the 

Dashboard in order to provide greater transparency and even more 

attention to the billions of dollars invested in troubled projects. In addition, 

more departmental TechStat reviews are needed to focus management 

attention on additional troubled projects and establish clear action items 

to turn the projects around or terminate them.

With the possibility of over $5.3 billion in savings from the data center

consolidation and PortfolioStat initiatives, Defense should continue to 

identify consolidation opportunities in both data centers and commodity 

IT. In addition, better support for the estimates of cost savings associated 

with the opportunities identified would increase the likelihood that these 

savings will be achieved.

Chairman Shaheen, Ranking Member Ayotte, and Members of the 

Subcommittee, this completes my prepared statement. I would be 

pleased to respond to any questions that you may have at this time.

GAO Contact and Staff Acknowledgments

If you or your staffs have any questions about this testimony, please 

contact me at (202) 512-9286 or at pownerd@gao.gov. Individuals who 

made key contributions to this testimony are Dave Hinchman (Assistant 

Director), Rebecca Eyler, and Kevin Walsh.

(311404)
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