INFORMATION 

TECHNOLOGY

Reform Initiatives Can Help 

Improve Efficiency and 

Effectiveness

Statement of David A. Powner, Director

Information Technology Management Issues

Testimony 

Before the Subcommittee on Efficiency and 

Effectiveness of Federal Programs and the 

Federal Workforce, Committee on Homeland 

Security and Governmental Affairs, U.S. Senate

For Release on Delivery 

Expected at 2:30 p.m. ET

Tuesday, June 10, 2014

GAO-14-671T

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-671T a testimony before 

the Subcommittee on Efficiency and 

Effectiveness of Federal Programs and the 

Federal Workforce, Committee on Homeland 

Security and Governmental Affairs, U.S. 

Senate

June 10, 2014

INFORMATION TECHNOLOGY

Reform Initiatives Can Help Improve Efficiency and 

Effectiveness

Why GAO Did This Study

The federal government reportedly 

plans to spend at least $82 billion on IT 

in fiscal year 2014. Given the scale of

such planned outlays and the criticality 

of many of these systems to the health, 

economy, and security of the nation, it 

is important that OMB and federal 

agencies provide appropriate oversight 

and transparency into these programs 

and avoid duplicative investments, 

whenever possible, to ensure the most 

efficient use of resources.

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. Numerous best practices 

and administration initiatives are 

available for agencies that can help 

them improve the oversight and 

management of IT investments. 

GAO is testifying today on the results 

and recommendations from selected 

reports that focused on how federal IT 

reform efforts could be improved by 

more effective IT acquisition and more 

efficient management of existing IT 

systems. 

What GAO Recommends

GAO has previously made numerous 

recommendations to OMB and federal 

agencies on key aspects of IT 

management, including the IT 

Dashboard, incremental development 

approaches, and PortfolioStat 

implementation, including software 

license management. 

What GAO Found

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

efficiently acquire and manage information technology (IT). While the Office of 

Management and Budget (OMB) and agencies have taken steps to improve 

federal IT through a number of initiatives, additional actions are needed. For 

example, OMB’s IT Dashboard provides information, including ratings of risk, on 

759 major investments at 27 federal agencies. As of June 2014, according to the 

Dashboard, 576 investments were low or moderately low risk, 147 were medium 

risk, and 36 were moderately high or high risk. GAO has issued a series of 

reports on Dashboard accuracy and identified issues with the accuracy and 

reliability of cost and schedule data. Furthermore, a recent GAO report found that 

agencies had removed major investments from the Dashboard, representing a 

troubling trend toward decreased transparency. GAO also reported that, as of 

December 2013, the public version of the Dashboard was not updated for 15 of 

the previous 24 months. GAO made recommendations to ensure that the 

Dashboard includes all major IT investments and to increase its availability. 

Agencies generally agreed with the report or had no comments.

An additional key reform initiated by OMB emphasizes incremental development 

in order to reduce investment risk. In 2010 it called for agency investments to 

deliver functionality every 12 months and since 2012 has required investments to 

deliver functionality every 6 months. However, GAO recently reported that almost

three-quarters of investments reviewed did not plan to deliver capabilities every 6 

months and less than half planned to deliver capabilities in 12-month cycles. 

GAO recommended that OMB develop and issue clearer guidance on 

incremental development and that selected agencies update and implement their 

associated policies. Most agencies agreed with GAO recommendations or had 

no comment. GAO continued to believe that its recommendations were valid. 

To better manage existing IT systems, OMB launched the PortfolioStat initiative, 

which, among other things, requires agencies to conduct annual reviews of their 

IT portfolio and make decisions on eliminating duplication. GAO reported that 

agencies continued to identify duplicative spending as part of PortfolioStat and 

that this initiative had the potential to save at least $5.8 billion through fiscal year 

2015, but that weaknesses existed in agencies’ implementation of the initiative, 

such as limitations in the Chief Information Officer’s authority. Among other 

things, GAO made several recommendations to improve agencies’ 

implementation of PortfolioStat requirements. OMB partially agreed with GAO’s

recommendations and responses from 20 of the agencies varied. 

GAO also recently reported on software license management—one PortfolioStat 

focus area—and determined that better management was needed to achieve 

significant savings government-wide. In particular, 22 of the 24 major federal 

agencies did not have comprehensive license policies. GAO recommended that 

OMB issue needed guidance to agencies and made more than 130 

recommendations to the agencies to improve their policies and practices for 

managing licenses.OMB disagreed with the need for guidance. However, without 

it the management of agencies’ licenses may be weakened. Most agencies 

generally agreed with the recommendations or had no comments.

View GAO-14-671T. For more information, 

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

pownerd@gao.gov. 
 

Page 1 GAO-14-671T 

Chairman Tester, Ranking Member Portman, 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 federal 

government 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. Given the scale of 

such planned outlays and the criticality of many of these systems to the 

health, economy, and security of the nation, it is important that OMB and 

federal agencies provide appropriate oversight and transparency into 

these programs and avoid duplicative investments, whenever possible, to 

ensure the most efficient use of resources.

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 

 

1

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

Effectively Implement Major Initiatives to Save Billions of Dollars, 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).
 

Page 2 GAO-14-671T 

management of IT investments.2 In those reports, we made numerous 

recommendations to federal agencies and OMB to further enhance the 

management and oversight of IT programs.

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

federal IT reform efforts could be improved by more effective IT systems 

acquisition and more efficient management of existing IT systems. 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 

 

2

See, for example, GAO, Federal Software Licenses: Better Management Needed to 

Achieve Significant Savings Government-Wide, GAO-14-413 (Washington, D.C.: May 22, 

2014); 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 3 GAO-14-671T 

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

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 

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

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.

 

3

GAO-14-361; GAO-14-413; GAO, Information Technology: Additional OMB and Agency 

Actions are Needed to Achieve Portfolio Savings, GAO-14-65 (Washington, D.C.: Nov. 6, 

2013); IT Dashboard: Agencies are Managing Investment Risk, but Related Ratings Need 

to Be More Accurate and Available, GAO-14-64 (Washington, D.C.: Dec. 12, 2014);

GAO-13-524; GAO-13-378; GAO-13-98; GAO-12-742; 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 Needs to 

Improve Its Guidance on IT Investments, GAO-11-826 (Washington, D.C.: Sept. 29, 

2011); Data Center Consolidation: Agencies Need to Complete Inventories and Plans to 

Achieve Expected Savings, GAO-11-565 (Washington, D.C.: Jul. 19, 2011); 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).

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. 

Background
 

Page 4 GAO-14-671T 

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 the Department of Defense’s 

(Defense) acquisition process for IT systems was too long, ineffective, 

and did not accommodate the rapid evolution of IT.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.

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 $82 billion on IT investments in fiscal year 2014, which is the 

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

funding to operate and maintain them. Of the reported amount, 27 federal 

agencies6 plan to spend about $75 billion: $17 billion on development and 

acquisition and $58 billion on operations and maintenance (O&M).7 Figure 

1 shows the percentages of total planned spending for 2014 for the $75 

billion spent on development and O&M.

 

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).

6

The 27 agencies are the Departments of Agriculture, Commerce, Defense, Education, 

Energy, Health and Human Services, Homeland Security, Housing and Urban 

Development, the Interior, Justice, Labor, State, Transportation, the Treasury, and 

Veterans Affairs; U.S. Army Corps of Engineers, Environmental Protection Agency, 

General Services Administration, National Aeronautics and Space Administration, National 

Archives and Records Administration, National Science Foundation, Nuclear Regulatory 

Commission, Office of Personnel Management, Small Business Administration, 

Smithsonian Institution, Social Security Administration, and U.S. Agency for International 

Development.

7

According to the analytical perspectives associated with the President’s fiscal year 2014 

budget request, the remainder is comprised of classified Defense IT investments. 
 

Page 5 GAO-14-671T 

Figure 1: Percentages of Planned IT Spending for Fiscal Year 2014 

However, this $75 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.8 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.

In September 2011, we reported that the results of OMB initiatives to 

identify potentially duplicative investments were mixed and that several 

federal agencies did not routinely assess their entire IT portfolios to 

identify and remove or consolidate duplicative systems.9 In particular, we 

 

8

GAO-11-826. 

9

GAO-11-826. 
 

Page 6 GAO-14-671T 

said that most of OMB’s recent initiatives had not yet demonstrated 

results, and several agencies did not routinely assess legacy systems to 

determine if they were duplicative. As a result, we recommended that 

OMB require federal agencies to report the steps they take to ensure that 

their IT investments are not duplicative as part of their annual budget and 

IT investment submissions. OMB generally agreed with this 

recommendation and has since taken action to implement it. Specifically, 

in March 2012, OMB issued a memorandum to federal agencies 

regarding its PortfolioStat initiative, which is discussed in more detail in 

the following section.

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

fragmentation among government programs or activities could be 

harbingers of unnecessary duplication.10 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.

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 759 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 

 

10GAO, 2013 Annual Report: Actions Needed to Reduce Fragmentation, Overlap, and 

Duplication and Achieve Other Financial Benefits, GAO-13-279SP (Washington, D.C.: 

Apr. 9, 2013); 2012 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).

OMB Has Launched Major 

Initiatives for Overseeing 

Investments
 

Page 7 GAO-14-671T 

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.

As of June 2014, according to the IT Dashboard, 183 of the federal 

government’s 759 major IT investments—totaling $10 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 June 2014
 

Page 8 GAO-14-671T 

• 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.

• 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”

11

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.

• IT Reform Plan. In December 2010, OMB released its 25 point plan to 

reform federal IT.12 This document established an ambitious plan for 

achieving operational efficiencies and effectively managing largescale IT programs. In particular, as part of an effort to reduce the risk 

associated with IT acquisitions, the plan calls for federal IT programs 

to deploy capabilities or functionality in release cycles no longer than 

12 months, and ideally, less than 6 months. The plan also identifies 

key actions that can help agencies implement this incremental 

development guidance, such as working with Congress to develop IT 

budget models that align with incremental development and issuing 

contracting guidance and templates to support incremental 

development.

 

11“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.

12OMB, 25 Point Implementation Plan to Reform Federal Information Technology 

Management (Washington, D.C.: Dec. 9, 2010). 
 

Page 9 GAO-14-671T 

• 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 agency-wide IT 

portfolio review to, among other things, reduce commodity IT13

spending and demonstrate how their IT investments align with the 

agency’s mission and business functions.

14 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.

Given the magnitude of the federal government’s annual IT budget, which 

is expected to be more than $82 billion in fiscal year 2014, it is important 

that agencies leverage all available opportunities to ensure that their IT 

investments are acquired in the most effective manner possible. To do so, 

agencies can rely on IT acquisition best practices, incremental 

development, and initiatives such as OMB’s IT Dashboard and OMBmandated TechStat sessions. Additionally, agencies can save billions of 

dollars by continuing to consolidate federal data centers and by 

eliminating duplicative investments through OMB’s PortfolioStat initiative.

Best Practices Are Intended to Help Ensure Successful Major 

Acquisitions

In 2011, we identified seven successful acquisitions and nine common 

factors critical to their success and noted that (1) the factors support 

OMB’s objective of improving the management of large-scale IT 

acquisitions across the federal government and (2) wide dissemination of 

 

13According to OMB, commodity IT includes services, such as enterprise IT systems (email; identity and access management; IT security; web hosting, infrastructure, and 

content; and collaboration tools); IT infrastructure (desktop systems, mainframes and 

servers, mobile devices, and telecommunications); and business systems (financial 

management, grants-related federal financial assistance, grants-related transfer to state 

and local governments, and human resources management systems). 

14OMB, Implementing PortfolioStat, Memorandum M-12-10 (Washington, D.C.: Mar. 30, 

2012).

Opportunities Exist to 

Improve Acquisition 

and Management of 

IT Investments
 

Page 10 GAO-14-671T 

these factors could complement OMB’s efforts.15 Specifically, we reported 

that federal agency officials identified seven successful acquisitions, in 

that they best achieved their respective cost, schedule, scope, and 

performance goals.16 Notably, all of these were smaller increments, 

phases, or releases of larger projects. The common factors critical to the 

success of three or more of the seven acquisitions are generally 

consistent with those developed by private industry and are identified in 

table 2.

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.

These critical factors support OMB’s objective of improving the 

management of large-scale IT acquisitions across the federal 

government; wide dissemination of these factors could complement 

OMB’s efforts.

 

15GAO-12-7. 

16The seven investments were (1) Department of 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) Department of Homeland Security’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 11 GAO-14-671T 

IT Dashboard Can Improve the Transparency into and Oversight of 

Major 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 have issued a series of reports highlighting 

deficiencies with the accuracy and reliability of the data reported on the 

Dashboard.17 For example, we reported in October 2012 that Defense 

had not rated 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 us and 

others. We recommended that Defense ensure that its CIO ratings reflect 

available investment performance assessments and its risk management 

guidance. Defense concurred and has revised its process to address 

these concerns.

Further, while we reported in 2011 that the accuracy of Dashboard cost 

and schedule data had improved over time,18 more recently, in December 

2013, we found that agencies had removed investments from the 

Dashboard by reclassifying their investments—representing a troubling 

trend toward decreased transparency and accountability.19 Specifically, 

the Department of Energy reclassified several of its supercomputer 

investments from IT to facilities and the Department of Commerce 

decided to reclassify its satellite ground system investments. Additionally, 

as of December 2013, the public version of the Dashboard was not 

updated for 15 of the previous 24 months because OMB does not revise it 

as the President’s budget request is being prepared.

We also found that, while agencies experienced several issues with 

reporting the risk of their investments, such as technical problems and 

delayed updates to the Dashboard, the CIO ratings were mostly or 

completely consistent with investment risk at seven of the eight selected 

agencies.20 Additionally, the agencies had already addressed several of 

 

17GAO-14-64; GAO-13-98; GAO-12-210; GAO-11-262; and GAO-10-701. 

18GAO-12-210. 

19GAO-14-64. 

20The eight agencies selected for the review were the Departments of Agriculture, 

Commerce, Energy, Justice, Transportation, the Treasury, and Veterans Affairs; and the 

Social Security Administration.
 

Page 12 GAO-14-671T 

the discrepancies that we identified. The final agency, the Department of 

Veterans Affairs (VA), did not update 7 of its 10 selected investments 

because it elected to build, rather than buy, the ability to automatically 

update the Dashboard and has now resumed updating all investments. 

To their credit, agencies’ continued attention to reporting the risk of their 

major IT investments supports the Dashboard’s goal of providing 

transparency and oversight of federal IT investments.

Nevertheless, the rating issues that we identified with performance 

reporting and annual baselining,21 some of which are now corrected, 

serve to highlight the need for agencies’ continued attention to the 

timeliness and accuracy of submitted information in order to allow the 

Dashboard to continue to fulfill its stated purpose. We recommended that 

agencies appropriately categorize IT investments and that OMB make 

Dashboard information available independent of the budget process. 

OMB neither agreed nor disagreed with these recommendations. Six 

agencies generally agreed with the report or had no comments and two 

others did not agree, believing their categorizations were appropriate. We 

continue to believe that our recommendations are valid.

Agencies Need to Establish and Implement Incremental 

Development Policies to Better Achieve Cost, Schedule, and 

Performance Goals for IT Investments

Incremental development can help agencies to effectively manage IT 

acquisitions and, as such, OMB has recently placed a renewed emphasis 

on it. In particular, in 2010 OMB called for IT investments to deliver 

functionality every 12 months, and since 2012 has required investments 

to deliver functionality every 6 months.

However, as discussed in our recent report, most selected agencies had 

not effectively established and implemented incremental development 

approaches.22 Specifically, although all five agencies in our review—the 

Departments of Defense, Health and Human Services (HHS), Homeland 

Security (DHS), Transportation (Transportation), and VA—had 

 

21At times, a project’s cost, schedule, and performance goals—known as its baseline—are 

modified to reflect changed development circumstances. These changes—called a 

rebaseline—can be done for valid reasons, but can also be used to mask cost overruns 

and schedule delays.

22GAO-14-361. 
 

Page 13 GAO-14-671T 

established policies that address incremental development, the policies 

usually did not fully address three key components we identified for 

implementing OMB’s guidance. Table 3 provides an assessment of each 

agency’s policies against the three key components of an incremental 

development policy.

Table 3: Assessment of Selected Agencies’ Incremental Development Policies 

Component Defense HHS DHS Transportation VA 

Require delivery of functionality every 6 

months

○ ○ ○ ○ ●

Define functionality ◐ ○ ○ ○ ●

Define a process for enforcing 

compliance

◐ ◐ ○ ○ ●

Key:

●=Fully met—the agency provided evidence that addressed the component.

◐=Partially met—the agency provided evidence that addressed about half or a large portion of the 

component.

○=Not met—the agency did not provide evidence that addressed the component or provided 

evidence that minimally addressed the component.

Source: GAO analysis of agency documentation.

Among other things, agencies cited the following reasons that contributed 

to these weaknesses: (1) OMB’s guidance was not feasible because not 

all types of investments should deliver functionality in 6 months and (2) 

the guidance did not identify what agencies’ policies are to include or time 

frames for completion. We agreed that these concerns have merit.

Additionally, the weaknesses in agency policies enabled inconsistent 

implementation of incremental development approaches. Specifically, 

almost three-quarters of the selected investments we reviewed did not 

plan to deliver functionality every 6 months and less than half planned to 

deliver functionality in 12-month cycles. Table 4 shows how many of the 

selected investments at each agency planned on delivering functionality 

every 6 and 12 months during fiscal years 2013 and 2014.
 

Page 14 GAO-14-671T 

Table 4: Number of Selected Investments Planning to Incrementally Deliver 

Functionality

Agency

Total number 

of selected 

investments

Investments planning to 

deliver functionality every 

6 months 

Investments planning

to deliver 

functionality every 12 

months

Defense 37 1 11

HHS 14 9 11

DHS 12 2 6 

Transportation 20 5 7 

VA 6 6 6 

Totals 89 23 41

Source: GAO analysis of agency documentation.

Considering agencies’ concerns about delivering functionality every 6 

months and given that so few are planning to deliver functionality in that 

time frame, our report noted that delivering functionality every 12 months, 

consistent with OMB’s IT Reform Plan, would be an appropriate starting 

point and a substantial improvement. Until OMB issues realistic and clear 

guidance and agencies update their policies to reflect this guidance, 

agencies may not consistently adopt incremental development 

approaches, and IT expenditures will continue to produce disappointing 

results—including sizable cost overruns and schedule slippages and 

questionable progress in meeting mission goals and outcomes. We 

recommended that OMB develop and issue realistic and clear guidance 

on incremental development, and that Defense, HHS, DHS, and 

Transportation update and implement their incremental development 

policies, once OMB’s guidance is made available. OMB stated that it 

agreed with our recommendation to update and issue incremental 

development guidance, but did not agree that its current guidance is not 

realistic. However, slightly more than one-fourth of selected investments 

planned to deliver functionality every 6 months—and less than one-half 

planned to do so every 12 months. Additionally, there were three types of 

investments for which it may not always be practical or necessary to 

expect functionality to be delivered in 6-month cycles. Thus, we continued 

to believe that delivering functionality every 6 months is not an 

appropriate requirement for all agencies and that requiring the delivery of 

functionality every 12 months, consistent with OMB’s IT Reform Plan, is a 

more appropriate starting point. We therefore maintained that OMB 

should require projects associated with major IT investments to deliver 

functionality at least every 12 months.
 

Page 15 GAO-14-671T 

Four agencies—Defense, HHS, DHS, and VA—generally agreed with the 

report or had no comments and one agency—Transportation—did not 

agree that its recommendation should be dependent on OMB first taking 

action. Specifically, the department explained that relying on another 

agency to concur with one of our recommendations before Transportation 

can take action leaves the department with the potential challenge of a 

recommendation that cannot be implemented. However, as previously 

stated, OMB agreed with our recommendation to update and issue 

incremental guidance, meaning that OMB committed to taking the actions 

necessary to enable Transportation to begin addressing our 

recommendation. Accordingly, we continued to believe that our 

recommendations were warranted and can be implemented.

TechStat Reviews Can Help Highlight and Evaluate Poorly 

Performing Investments

TechStat reviews were initiated by OMB to enable the federal government 

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 valid.23

Specifically, we determined that, as of April 2013, OMB reported 

conducting 79 TechStats, which focused on 55 investments at 23 federal 

agencies. Further, four selected agencies—the Departments of 

Agriculture, Commerce, HHS, and DHS—conducted 37 TechStats 

covering 28 investments. About 70 percent of the OMB-led and 76 

percent of agency-led TechStats on major investments were considered 

medium to high risk at the time of the TechStat.

However, the number of at-risk TechStats held was relatively small 

compared to the current number of medium- and high-risk major IT 

investments. Specifically, the OMB-led TechStats represented roughly 

18.5 percent of the investments across the government that had a 

medium- or high-risk CIO rating. For the four selected agencies, the 

number of TechStats represented about 33 percent of the investments 

that have a medium- or high-risk CIO rating. We concluded that, until 

 

23GAO-13-524.
 

Page 16 GAO-14-671T 

OMB and agencies develop plans to address these weaknesses, the 

investments would likely remain at risk.

In addition, we reported that OMB and selected agencies had tracked and 

reported positive results from TechStats, with most resulting in improved 

governance. Agencies also reported projects with accelerated delivery, 

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

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

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

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

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

recommended that OMB require agencies to report on how they validated 

the outcomes. OMB generally agreed with this recommendation.

Continued Oversight Needed to Consolidate Federal Data Centers 

and Achieve Cost Savings

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

2010, OMB launched a consolidation initiative intended to close 40 

percent of government data centers by 2015, and, in doing so, save $3 

billion. Since 2011, we have issued a series of reports on the efforts of 

agencies to consolidate their data centers.24 For example, in July 2011 

and July 2012, we reported that agencies had developed plans to 

consolidate data centers; however, these plans were incomplete and did 

not include best practices.25 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. Among other things, we 

recommended that OMB track and report on key performance measures, 

such as cost savings to date, and improve the execution of important 

oversight responsibilities. We also recommended that agencies complete 

inventories and plans. OMB agreed with these two recommendations, 

and most agencies agreed with our recommendations to them.

Additionally, as part of ongoing follow-up work, we have determined that 

while agencies had closed data centers, the number of federal data 

centers was significantly higher than previously estimated by OMB. 

 

24GAO-13-378; GAO-12-742; and GAO-11-565. 

25GAO-12-742 and GAO-11-565.
 

Page 17 GAO-14-671T 

Specifically, as of May 2013, agencies had reported closing 484 data 

centers by the end of April 2013 and were planning to close an additional 

571 data centers—for a total of 1,055—by September 2014. However, as 

of July 2013, 22 of the 24 agencies participating in the initiative had 

collectively reported 6,836 data centers in their inventories—

approximately 3,700 data centers more than OMB’s previous estimate 

from December 2011. This dramatic increase in the count of data centers 

highlights the need for continued oversight of agencies’ consolidation 

efforts.

We have ongoing work looking at OMB’s data center consolidation 

initiative, including evaluating the extent to which agencies have achieved 

planned cost savings through their consolidation efforts, identifying 

agencies’ notable consolidation successes and challenges in achieving 

cost savings, and evaluating the extent to which data center optimization 

metrics have been established.

Agencies’ PortfolioStat Efforts Have the Potential to Save Billions of 

Dollars

OMB launched the PortfolioStat initiative in March 2012, which required 

26 executive agencies26 to, among other things, reduce commodity IT 

spending and demonstrate how their IT investments align with the 

agencies’ mission and business functions.27 In March 2013, OMB issued 

a memorandum commencing the second iteration of its PortfolioStat 

initiative and strengthening IT portfolio management.28

In November 2013, we reported on agencies’ efforts to complete key 

required PortfolioStat actions and make portfolio improvements.29 We 

noted that all 26 agencies that were required to implement the 

PortfolioStat initiative took actions to address OMB’s requirements. 

 

26Of the 27 previously mentioned agencies, 1 agency—the Smithsonian Institution—is not 

required to participate in the PortfolioStat initiative.

27OMB, Implementing PortfolioStat, Memorandum M-12-10 (Washington, D.C.: Mar. 30, 

2012). 

28OMB, Memorandum for the Heads of Executive Departments and Agencies: Fiscal Year 

2013 PortfolioStat Guidance: Strengthening Federal IT Portfolio Management, M-13-09 

(Washington, D.C.: Mar. 27, 2013).

29GAO-14-65. 
 

Page 18 GAO-14-671T 

However, there were shortcomings in their implementation of selected 

requirements, such as addressing all required elements of an action plan 

to consolidate commodity IT and migrating two commodity areas to a 

shared service by the end of 2012. Further, we found that several 

agencies had weaknesses in selected areas, such as the CIO’s authority 

to review and approve the entire portfolio. While OMB had issued 

guidance and required agencies to report on actions taken to implement 

CIO authorities, it was not sufficient to address the issue. For example, 

although HHS reported having a formal memo in place outlining the CIO’s 

authority and ability to review the entire IT portfolio, it also noted that the 

CIO had limited influence and ability to recommend changes to it. 

Similarly, the Office of Personnel Management reported that the CIO 

advises the Director, who approves the IT portfolio, but this role was not 

explicitly defined. As a result of OMB’s insufficient guidance, agencies 

were hindered in addressing certain responsibilities set out in the ClingerCohen Act of 1996,30 which established the position of CIO to advise and 

assist agency heads in managing IT investments.

We also observed that OMB’s estimate of about 100 consolidation 

opportunities and a potential $2.5 billion in savings from the PortfolioStat 

initiative was understated because, among other things, it did not include 

estimates from Defense and the Department of Justice. Our analysis, 

which included these estimates, showed that collectively the 26 agencies 

reported about 200 opportunities and at least $5.8 billion in potential 

savings through fiscal year 2015—at least $3.3 billion more than the 

number initially reported by OMB.

We made more than 50 recommendations to improve agencies’ 

implementation of PortfolioStat requirements. We also recommended that 

OMB require agencies to fully disclose limitations with respect to CIO 

authority. OMB partially agreed with our recommendations, and 

responses from 20 of the agencies commenting on the report varied.31

 

30See 40 U.S.C. § 11101, et seq. 

31Of the 20 agencies commenting on the report, 12 agreed with our recommendations 

directed to them, 4 disagreed or partially disagreed with our recommendations directed to 

them, and 4 provided additional clarifying information. 
 

Page 19 GAO-14-671T 

Last month, we also reported on OMB’s and agencies’ policies and 

management of software licenses—one PortfolioStat focus area.32 We 

found that OMB’s PortfolioStat policy did not guide agencies in 

developing comprehensive license management policies, and of the 24 

major federal agencies, 2 had comprehensive policies for managing 

enterprise software license agreements; 18 had them but they were not 

comprehensive; and 4 had not developed any. The weaknesses in 

agencies’ policies were due, in part, to the lack of a priority for 

establishing software license management practices—such as whether 

agencies’ employed a centralized approach to software license 

management and established a comprehensive inventory of the software 

licenses—and a lack of direction from OMB. Table 5 lists the leading 

practices and the number of agencies that had fully, partially, or not 

implemented them.

Table 5: 24 Major Agencies’ Implementation of Software License Management 

Leading Practices

Leading practice

Fully 

implemented

Partially 

implemented

Not 

implemented

Centralized management 4 15 5 

Established software license 

inventory 2 20 2 

Tracking and maintain 

inventory 0 20 4 

Analyzing software license data 0 15 9 

Providing sufficient training 0 5 19

Source: GAO analysis of agency data.

Additionally, the inadequate implementation of leading practices in 

software license management, such as centralized management and a 

comprehensive inventory, was partially due to weaknesses in agencies’ 

policies. As a result, we noted that agencies’ oversight of software license 

spending was limited or lacking, and they may miss out on savings. The 

potential savings could be significant considering that, in fiscal year 2012, 

DHS reported saving approximately $181 million by consolidating its 

enterprise license agreements.

 

32GAO-14-413. 
 

Page 20 GAO-14-671T 

We also stated that agencies lacked comprehensive software license 

inventories that were regularly tracked and maintained. Of the 24 

agencies, 2 had a comprehensive inventory of software licenses; 20 had 

some form of an inventory; and 2 did not have any inventory of their 

software licenses purchased. We recommended that OMB issue a 

directive to help guide agencies in managing licenses and made more 

than 130 recommendations to the 24 agencies to improve their policies 

and practices for managing licenses. OMB disagreed with the need for a 

directive. However, until this gap in guidance is addressed, agencies will 

likely continue to lack the visibility into what needs to be managed, and be 

unable to take full advantage of OMB’s tools to drive license efficiency 

and utilization. Most agencies generally agreed with the 

recommendations or had no comments.

We have ongoing work looking at the second iteration of OMB’s 

PortfolioStat initiative, including identifying action items and associated 

time frames from joint OMB-agency PortfolioStat meetings, determining 

agencies’ progress in addressing these action items, and evaluating the 

extent to which agencies have realized planned savings.

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

transparency and oversight of federal spending, but continued leadership 

and attention are necessary to build on the progress that has been made. 

The expanded use of the common factors critical to the successful 

management of large-scale IT acquisitions should result in more effective 

delivery of mission-critical systems. Additionally, federal agencies need to 

continue to improve the accuracy and availability of information on the 

Dashboard to provide greater transparency and even more attention to 

the billions of dollars invested in troubled projects. Further, agencies need 

to implement incremental development approaches in order to increase 

the likelihood that major IT investments meet their cost, schedule, and 

performance goals. Additionally, agencies should conduct additional 

TechStat reviews to focus management attention on troubled projects and 

establish clear action items to turn the projects around or terminate them.

The federal government can also build on the progress of agencies’ data 

center closures and eliminating duplicative IT investments. With the 

possibility of over $5.8 billion in savings from the data center 

consolidation and PortfolioStat initiatives, agencies 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. Finally, until OMB and the agencies focus on 
 

Page 21 GAO-14-671T 

improving policies and processes governing software licenses, they will 

likely miss opportunities to reduce costs.

Chairman Tester, Ranking Member Portman, 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.

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.

GAO Contact and 

Staff 

Acknowledgments

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