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82–434 PDF 2013

DATA CENTERS AND THE CLOUD, PART II: THE 

FEDERAL GOVERNMENT’S TAKE ON OPTIMIZING NEW INFORMATION TECHNOLOGIES 

OPPORTUNITIES TO SAVE TAXPAYERS MONEY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT OPERATIONS 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

JULY 25, 2013 

Serial No. 113–52 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

CYNTHIA M. LUMMIS, Wyoming 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY L. BENTIVOLIO, Michigan 

RON DESANTIS, Florida 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

JACKIE SPEIER, California 

MATTHEW A. CARTWRIGHT, Pennsylvania 

MARK POCAN, Wisconsin 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

DANNY K. DAVIS, Illinois 

PETER WELCH, Vermont 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

STEPHEN CASTOR, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

SUBCOMMITTEE ON GOVERNMENT OPERATIONS

JOHN L. MICA, Florida, Chairman 

TIM WALBERG, Michigan 

MICHAEL R. TURNER, Ohio 

JUSTIN AMASH, Michigan 

THOMAS MASSIE, Kentucky 

MARK MEADOWS, North Carolina 

GERALD E. CONNOLLY, Virginia Ranking 

Minority Member 

JIM COOPER, Tennessee 

MARK POCAN, Wisconsin 

(III) 

C O N T E N T S 

Page 

Hearing held on July 25, 2013 ............................................................................... 1 

WITNESSES 

Mr. David Powner, Director, Information Technology Management Issues, 

U.S. Government Accountability Office 

Oral Statement ................................................................................................. 6 

Written Statement ............................................................................................ 9 

The Hon. Steven Vanroekel, Acting Deputy Director for Management, Federal 

Chief Information Officer, Administrator for E-Government and Information Technology 

Oral Statement ................................................................................................. 58 

Written Statement ............................................................................................ 60 

Mr. David L. McClure, Associate Administrator, Office of Citizen Services 

and Innovative Technologies, U.S. General Services Administration 

Oral Statement ................................................................................................. 64 

Written Statement ............................................................................................ 66 

APPENDIX 

Questions for the Record ......................................................................................... 88 

(1) 

DATA CENTERS AND THE CLOUD, PART II: 

THE FEDERAL GOVERNMENT’S TAKE ON 

OPTIMIZING NEW INFORMATION TECHNOLOGIES OPPORTUNITIES TO SAVE TAXPAYERS MONEY 

Thursday, July 25, 2013, 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON GOVERNMENT OPERATIONS, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The subcommittee met, pursuant to call, at 9:34 a.m., in Room 

2154, Rayburn House Office Building, Hon. John Mica [chairman 

of the subcommittee] presiding. 

Present: Representatives Mica, Meadows, Connolly, and Pocan. 

Staff Present: Alexia Ardolina, Majority Assistant Clerk; Richard 

A. Beutel, Majority Senior Counsel; Caitlin Carroll, Majority Deputy Press Secretary; John Cuaderes, Majority Deputy Staff Director; Linda Good, Majority Chief Clerk; Tyler Grimm, Majority Professional Staff Member; Mark D. Marin, Majority Director of Oversight; Sarah Vance, Majority Assistant Clerk; Jaron Bourke, Minority Director of Administration; Adam Koshkin, Minority Research 

Assistant; Safiya Simmons, Minority Press Secretary; and Cecelia 

Thomas, Minority Counsel. 

Mr. MICA. Good morning. I would like to call this hearing of the 

Subcommittee on Government Operations to order. 

Welcome, everyone, this morning. The topic of today’s hearing is 

Data Centers in the Cloud, Part II: The Federal Government’s 

Take on Optimizing New Information Technologies and Opportunities to Save Taxpayers Money. 

Mr. Issa usually gives a little statement of our mission, but that 

title almost sums it up. We are looking and have the responsibility 

to review various operations of the Federal Government and representing the taxpayers; looking for the most efficient, economical, 

and responsible means of carrying out the positions and conducting 

proper oversight of the agencies that perform those responsibilities. 

Today we have one panel and three witnesses. We welcome them. 

And our order of business will be as follows: we will start with 

opening statements by members and then we will proceed to hear 

from our three witnesses, and after that we will move to questions. 

We will hold the questions until we have heard from all of the panelists. 

2 

With that, I will recognize myself for an opening statement and 

then turn to our Democrat leader, the ranking member, Mr. 

Connolly, for his comments. 

I again have to state that our responsibility is that we look at 

what the various agencies are doing, in particular, some of this activity of our subcommittee may not be the flashy part of serving in 

Congress, with the hearings and all of the cameras and all of that, 

but, nonetheless, this is probably as important a responsibility as 

we have. This is the meat and potatoes, finding out where the 

money is being spent. 

On the particular program of IT, we spend a lot of money. It is estimated, I think, $84 billion annually. And we have had witnesses. This is our second hearing. Unfortunately, we didn’t have 

OMB and GSA representatives at the last hearing; I am glad they 

came this time. But because, again, of the sheer size and scope of 

this activity, the estimates, again, of potential savings are maybe 

as much as 50 percent of what we are currently saving. If we can 

consolidate, if we can use the mechanism of cloud computing, a 

whole host of efficiencies brought into this process, we have the potential for saving in a time when we are approaching a $17 trillion 

deficit. Substantial money. 

So I again welcome the witnesses. As we face this time of tight 

budgets, it has never been more important for the Federal Government to continue its efforts. 

Today’s hearing actually looks at, unfortunately, an attempt by 

the Administration, dates for several years now in trying to maximize the return on investment and reduce the operational risk and 

provide responsive services to citizens through some IT consolidations. We, unfortunately, have found through our investigation that 

we don’t have a pretty good track record; that maybe the intent 

was good, but unfortunately what was set out as some goals and 

new approaches to achieve success, have not worked. 

We have two charts here that I want to point to, and they show, 

unfortunately, failed IT investments since 2003. The long and the 

short of it is we have lost about $9.2 billion in those failed attempts, a pretty significant amount. 

The second chart shows the number of troubled IT investments. 

That is enumerated on the chart that you see up on the screen. But 

this is startling: $102 billion is currently at risk from, again, a simple evaluation information we have received. So this is quite troubling. 

While GAO had indicated initially that we had some I think it 

was 3,133 data centers, the most current data we have received 

says that that estimate is some now 7,145. So a pretty dramatic 

departure from what was originally estimated as the number of 

these non-core centers; and that totals 6,650. 

Unfortunately, since 2010 they have closed or consolidated 484 of 

these non-core centers. At the current rate, and that is over two 

years, while they estimate by the end of the year they will have 

855. But they plan, at least the plans we have been told, to close 

3,400, about half of the new estimate non-core. Unfortunately, if 

they keep it up at the pace that they have begun, it looks like it 

is almost impossible to achieve that goal. That is part of what we 

want to hear, how we are recalculating and how we plan to again 

3 

reach a significant goal, which was originally estimated, I think, at 

some $3 billion. The current calculations indicate that we will be 

at a $2.4 billion shortfall. 

Unfortunately, the duplications of common IT systems are pretty 

widespread, and GAO itself has reported that the Government 

funded 622 separate human resource systems at a cost of $2.4 billion, 580 financial systems at a cost of $2.7 billion, and 777 supply 

chain systems at $3.3 billion; and the list continues. Many of these 

systems perform, unfortunately, the same function. 

OMB has the responsibility to oversee large IT projects, but often 

rolling out new and large management initiatives, when they do 

with great fanfare, unfortunately it doesn’t appear a lot is done to 

follow up or implement these programs; and we are going to look 

at one example, the Federal Data Center Consolidation Initiative, 

which was rolled out again in 2010. As I point out and predicted, 

they close a lot more of these centers, 40 percent of them, by 2015 

and save that $3 billion. The target is, again, very illusive from 

what we can see with the statistics and facts of accomplishment to 

date. 

So OMB, unfortunately, has grossly underestimated the number 

of data centers. Now we have to deal with a much larger number 

than originally reported. Unfortunately, OMB’s savings to date are 

minimal, probably about $300 million, or 10 percent of the promised $3 billion that had been promised. 

Unfortunately, we also find that OMB is also skeptical about 

their own new process and how it will work. Its own testimony 

identifies deficiencies, and we will look at how that IT Dashboard 

hasn’t worked. We will also have to find out, firsthand today, how 

OMB plans to accelerate its use of key management initiatives and 

look at how, again, we are going to achieve these savings. So we 

want this to be a positive hearing; find out, again, what has gone 

wrong, and then see how we can correct it. 

We want to work with OMB and GSA. Unfortunately, GSA, I 

found, has failed to develop or roll out its own critically needed new 

system to streamline the fashion by which contracting officers ensure contracts are responsible vendors. That system, called SAM, 

System for Award Management, was completely restructured after 

multiple failures and millions of dollars wasted. 

And then, finally, what the GSA, I think they set a poor example 

themselves with over 109 core data centers. I am told they have 

only actually closed one to date. So we will want to get an update 

on where one of our principle agencies responsible for procurement 

and heavy involvement in the IT business has failed itself. 

So those are some opening commentaries. I have been picking up 

from Mr. Issa and also Mr. Connolly their efforts to try to get this 

to work better, be more effective, find ways to consolidate, find 

ways to streamline and provide the leadership to make that happen. 

So let me yield now to Mr. Connolly, our ranking member. 

Mr. CONNOLLY. Thank you, Mr. Chairman, and thank you and 

your staff for holding this second hearing on this subject. And I 

agree with you, this is the sexiest subject in town. Data center consolidation, it is amazing the press just isn’t here in overflow, really. 

4 

But it actually is one of those building blocks, as you said, Mr. 

Chairman, of Government that is actually very important. 

First of all, I want to welcome our witnesses. I am glad they are 

here. Some of the things that have happened since our field hearing, one of which is Mr. VanRoekel is now at OMB. So that, to me, 

is a heartening development because I think now we can better integrate OMB’s management responsibilities with the goals we have 

here, rather than sort of as a set-aside nice thing to do. So integrating that into key management decision-making in the Executive Branch I think is a real step forward. 

Mr. VanRoekel, congratulations on that new role. I know that is 

going to serve all of us well. 

From my point of view, and I certainly am open to testimony 

that would suggest otherwise, I share the chairman’s concern that 

we seem, when we are looking at metrics, and it isn’t just our opinion, it is the Government Accountability Office, we seem to be falling behind. Good news: we have doubled the number of companies 

certified under FedRAMP since our field hearing, from three to six. 

But there are a lot of companies that would like to qualify and that 

would qualify but for a rather glacial pace of certification. We want 

to be thorough, but golly, gosh, darn, it seems to me we could do 

better. 

There are issues, as the chairman indicated, with the IT Dashboard. And in terms of data center consolidation, any way you 

measure it, we may be more accurate in defining what a data center is and, thus, the proliferation in numbers that might seem to 

suggest we are actually going in the wrong direction but in fact we 

are more accurate in trying to capture what is a data center, and 

that is good. But if you look at agency performance, agency by 

agency, essentially only four agencies are playing in the game, that 

is not acceptable. That is not acceptable. 

Finally, I would say to the Administration, and I guess Mr. 

VanRoekel, primarily through you as maybe the senior Administration official here, but this committee, including the chairman, 

passed a bill, FATAR. It is the first comprehensive rewrite of Federal IT acquisition in 20 years. It is designed to update and, in 

many ways, sort of replace Clinger-Cohen. It is the friendliest, 

most sympathetic bill you are going to get out of the Congress. It 

is, in large measure, a codification of, in fact, initiatives and reforms undertaken by this Administration, mirabile dictu coming 

out of this Republican Congress. 

But if the Administration decides to spurn that legislation, that 

has passed the House already, I would just say to you you are 

going to have problems on both sides of the aisle. This represents, 

I think a real bipartisan effort. We work very hard to try to get 

this right. We tried to consult with the Administration. We consulted extensively with industry. 

The chairman, Mr. Issa, could have filed this bill back in October. To his credit, to the staff’s credit, they kept it open, negotiating with us, with industry, with the Administration, with others 

from October until we filed it finally late in February. And we were 

willing to take additional modifications to try to make sure we get 

it right. This is a bill designed to try to be helpful, to try to spur 

5 

the very reforms undertaken by this Administration, by Mr. 

VanRoekel and his predecessor. 

So I urge you to go back and consider support for this legislation. 

If there are changes, great, but a position of opposition is not going 

to sit well in this Congress on both sides of the aisle. So please consider it the helpful tool it was intended to be. We think that this 

is a subject matter that needs attention. And while it may not 

draw big crowds, as the chairman indicated, in terms of potential 

for savings, potential for the deployment of technology as a tool, an 

instrument for augmenting the decline in resources for so many 

agencies is profound; and we need you as a partner and we want 

to be a partner. 

So, with that, I look forward to the testimony, Mr. Chairman, 

and, as you know, I may have to sneak out to manage an amendment on the floor, but I will be back. And again I thank the chair 

for holding this hearing. 

Mr. MICA. Thank you, Mr. Connolly. 

Other members? Mr. Meadows? 

Mr. MEADOWS. Thank you, Mr. Chairman. I am just going to be 

very brief. 

Welcome. Thank you so much. The chairman has highlighted 

very accurately some of the concerns. I look forward to hearing 

your testimony today on how we can start to really make progress. 

As I read the report, I am very troubled that we continue to start 

and we restart and we start again, and yet the other part that we 

are not doing is, when we are looking at $3 billion in program 

goals, there is not really a measurable matrix on whether we are 

getting there or not. And it is very troubling when I sit there as 

a business guy and say, well, how do we know if we are making 

great progress when we are not even really accurately measuring 

it. 

I represent a district that has one of the greatest data centers 

in the world, Google. They know how to do it. And to find that we 

have 622 human resource systems out there, another 580 financial 

management systems, and 777 supply chain systems, many of 

which don’t talk to one another, one of the advantages of big government should be the efficiencies of systems and the management 

thereof; and what we have done is we are acting like we are a private company with thousands of different systems that don’t work. 

So I look forward to hearing it. I know that we have a Leviathan 

here. I mean, this is a big problem. But the other aspect, it is very 

difficult for me to go back home and tell the people why we have 

wasted $10 billion on terminated projects; why we can’t figure it 

out on a lot of these before we spend the amount of money that we 

spend, before we make a determination it is not going to work. So 

I would be interested in hearing from each one of you the matrix 

of which we are going to be measuring it, the goals that we are 

going to do, and how we incentivize you to do that. 

The chairman has held a hearing on some 13,000 Federal buildings, and we heard that the GAO really didn’t want to get rid of 

them because, if the money gets sold, it doesn’t go back to the 

GAO. I mean, I also am finding it amazing that we have most of 

our expenditures in the fourth quarter; that we have this disVerDate Aug 31 2005 09:21 Sep 30, 2013 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 C:\DOCS\82434.TXT APRIL
6 

proportionate amount of purchases that happens in the last quarter 

of every fiscal year. 

We all know what the problem is, but it really lacks accountability. So I look forward to hearing from you on how we are going 

to measure it and how we are going to fix it going forward, and 

I thank the chairman. I yield back. 

Mr. MICA. I thank the gentleman. 

Other members? Mr. Pocan, welcome. 

If no other members seek recognition, we will turn to our panel 

of witnesses, and, again, we have three witnesses, and welcome 

them. 

First we have Mr. David Powner. He is the Director of Information Technology Management Issues for GAO, the Government Accountability Office; Mr. Steven VanRoekel. He is the Acting Deputy 

director for Management and Federal Chief Information Officer for 

the Office of Management and Budget; and Mr. David McClure is 

the Associate Administrator of the General Services Administration’s Office of Citizen Services and Innovative Technologies. 

Welcome to the witnesses. 

This is an investigative and oversight committee of Congress 

and, in light of that, we do swear in our witnesses. If you will 

stand, raise your right hand. 

Do you solemnly swear or affirm that the testimony you are 

about to give before this subcommittee of Congress is the whole 

truth and nothing but the truth? 

[Witnesses respond in the affirmative.] 

Mr. MICA. Let the record reflect that the witnesses have responded in the affirmative. 

So I welcome you and we will turn to our first witness. We will 

go to GAO first, Mr. David Powner. You are welcome and recognized. 

What we usually do is, it is a small panel today, but try to keep 

it to five minutes. Then we will go through the three of you and 

then come back for questions. 

So welcome again, Mr. Powner. You are recognized. 

STATEMENT OF DAVID POWNER 

Mr. POWNER. Chairman Mica, Ranking Member Connolly, and 

members of the subcommittee, we appreciate the opportunity to 

testify on the Federal Government’s efforts to better manage its annual $80 billion investment in IT. My comments will focus on three 

areas: one, the Federal Government’s poor track record when it 

comes to delivering on large-scale IT acquisitions and the need for 

greater transparency and governance; two, the importance of the 

data center consolidation effort; and, three, the need to eliminate 

duplicative IT spending. 

Fortunately, for each of these three areas, poor delivery, unused 

data center capacity, and duplication, OMB has excellent initiatives in place. GAO’s work over the years has shown that the Government has a poor track record when it comes to managing and 

delivering IT acquisitions. My written statement lays out a comprehensive list of the many failed and troubled projects that are 

highlighted here. Specifically, 15 of these projects are examples 

7 

where billions of taxpayers’ dollars have been wasted, with little to 

show for it. 

To address this situation, OMB rolled out the Federal IT Dashboard in 2009 to improve the transparency of approximately 700 

major IT investments, and since 2010 this information has been 

used to hold TechStat sessions to terminate and turn around IT investments that are failing and not producing results. This increased transparency has resulted in improved governance, reduced 

scope, and even terminated projects. 

Clearly, the Dashboard and TechStat sessions have made a difference, but this is not enough because some agencies are still not 

reporting Dashboard information accurately. In particular, DOD is 

reporting no red investments. We have highlighted DOD’s inaccurate reporting at multiple hearings and will continue to do so. 

When an agency is spending $34 of the $80 billion and not reporting accurately, something needs to change to make sure our tax 

dollars are being appropriately overseen. Also, DOD has not updated most of their Dashboard CIO ratings for about two years. 

Regarding the TechState sessions, our work shows the number of 

TechStats held to date is relatively small compared to the currently 

reported 160 at-risk investments that total $10 million. 

So for troubled projects we need more accurate transparency on 

the Dashboard and even greater executive oversight. 

Turning to data centers. This consolidation effort was initiated to 

improve the Government’s low server utilization rates, which was 

estimated between 5 and 15 percent, far below the goal of 60 to 70 

percent; and this effort is to result in $3 billion in savings. Data 

center closures to date and those planned are promising. About 500 

centers have been closed and it is expected that over 800 will be 

closed by September. In addition, some agencies are already reporting savings. The Department of Agriculture recently reported that 

it has saved $50 million this year, and DOD plans to save $575 

million in fiscal year 2014 alone. 

Our report recently delivered for this committee showed that 

OMB, GSA, and the Data Center Task Force need to step up efforts 

to track cost savings and to find metrics for those centers that remain. In fact, OMB has not been tracking cost savings. FATAR 

would be extremely helpful, since it requires the tracking and report of cost-savings and would ensure that this important initiative 

would span multiple administrations. 

Mr. Chairman, in addition to tracking cost-savings, there needs 

to be better transparency on how many centers are out there. 

When we testified before this subcommittee in May, we reported 

that there were about 3100 data centers Government-wide, only to 

learn from our audit work that the Government had 3,000 additional centers. Last week, OMB briefed congressional staff that 

there are actually 4,000 more centers, bringing the total to more 

than 7,000; and there are some fundamental questions whether the 

Government really knows what it has and why there isn’t better 

transparency here. Timely transparency on how many data centers 

are out there, closures, and cost-savings is needed. 

We also need to tackle duplication more aggressively. The Administration’s PortfolioStat process is an excellent initiative to address this duplication. OMB states that the Portfolio results so far 

8 

have been significant and that agencies have identified nearly 100 

opportunities to consolidate or eliminate duplicative investments 

that is to result in savings of approximately $2.5 billion through 

2015. 

The latest PortfolioStat initiative is promising if carried out effectively. However, I would like to make two specific observations 

regarding it: savings are much higher than $2.5 billion and are 

more in the $5 billion to $6 billion range; and, secondly, CIO authorities need to be strengthened at many agencies if CIOs are to 

carry this out. We are currently learning that not all CIOs have 

authority over commodity IT, which is not a very high bar. 

In summary, many of the initiatives over the past years have 

great promise; however, each requires more leadership from OMB 

and agency CIOs so that billions of taxpayers’ dollars are not wasted. 

Chairman Mica, Ranking Member Connolly, this concludes my 

statement. I look forward to your questions. 

[Prepared statement of Mr. Powner follows:] 

9 


Insert offset folio 1 here 82434.001

GAO 

For Release on Delivery 

EX1Jected at 9:30 am. EDT Thursday, July 25, 2013 

GAO·13·796T 

United States Government Accountability Office 

Before the Subcommittee on 

Government Operations, Committee on 

Oversight and Government Reform, 

House of Representatives 

INFORMATION 

TECHNOLOGY 

OMB and Agencies Need to 

More Effectively Implement 

Major Initiatives to Save 

Billions of Dollars 

Statement of David A. Powner, Director 

Information Technology Management Issues 
10 


Insert offset folio 2 here 82434.002

INFORMATION TECHNOLOGY 

OMB and Agencies Need to More Effectively 

Implement Major Initiatives to Save Billions of 

Dollars 

What GAO Found 

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

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

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

address underperforming IT projects and more effectively manage IT through a 

number of major initiatives, additional actions are needed. For example, OMB 

has taken significant steps to enhance the oversight accountability of federal 

investments by creating the IT Dashboard, an OMB public website which 

provides detailed information on federal agencies' major investments. However, 

GAO previously found there were issues with the accuracy and reliability of cost 

and schedule data in the Dashboard and recommended steps that OMB and 

agencies should take to improve these data-this is important since the 

Dashboard currently reports 154 investments totaling almost $10.4 billion being 

at risk. OMB agreed with the recommendations. 

GAO recently reported that OMB and selected agencies have held multiple 

reviews-known as T echStats-of selected investments that are failing or are not 

producing results. Positive outcomes have been tracked and reported from these 

reviews, with most producing improved governance, as well as projects with 

accelerated delivery, reduced scope, and termination. However, for the selected 

agencies, GAO found that the number of at-risk TechStals held to date was only 

about 33 percent of the current number of medium- and high-risk investments. 

GAO was also unable to validate OMB's reported results of almost $4 billion in 

life-cycle cost savings. GAO therefore recommended that OMB validate the 

resulting cost savings and require agencies to conduct TechStats for each 

investment rated with a moderately high- or high-risk rating on the IT Dashboard. 

OMB generally agreed w~h the recommendations. 

GAO has also issued several reports on the federal government's progress 

towards consolidating its growing number of data centers. Most recently, in April 

2013, GAO reported that agencies closed 420 data centers by the end of 

December 2012; however, OMB had not tracked and reported on other key 

performance measures, such as progress against the initiative's cost savings 

goal of $3 billion by the end of 2015. In addition, GAO identified weaknesses that 

existed in the oversight of the data center consolidation initiative, including not 

ensuring the completeness of agencies' data center inventories and 

consolidation plans. GAO recommended that OMB track and report on key 

performance measures and improve the execution of important oversight 

responsibilities. OMB agreed with these recommendations, 

In March 2012, OMB launched PortfolioStat, which requires agencies to conduct 

annual reviews of its IT investments and make decisions on eliminating 

duplication, among other things. OMB believes this effort has the potential to 

save $2.5 billion over the next 3 years. OMB has since made significant changes 

to PortfolioStat in March 2013, including integrating it with its data center 

consolidation initiative and establishing new reporting reqUirements, However, 

GAO recently reported that OMB had not yet established revised data center 

metrics and goals for the combined initiative. GAO has ongoing work looking at 

PortfolioStat, including determining whether agencies are completing key actions. 

_____________ United States Government Accountability Office 
11 


Insert offset folio 3 here 82434.003

Chairman Mica, Ranking Member Connolly, and Members of the 

Subcommittee: 

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 Sudget (OMS), 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 OMS 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. 

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

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

muttiple reports and testimonies on federal initiatives to acquire and 

improve the management of IT investments2 In those reports, we made 

numerous recommendations to federal agencies and OMS to further 

enhance the management and oversight of IT programs. 

1See, for example, GAO, Information Technology: Better Informed Decision Making 

Needed on Navy's Next Generation Enterprise Network Acquisition, GAO-11-1S0 

(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). 

2See, for example, GAO, Information Technology: Additional Executive Review Sessions 

Needed to Address Troubled Projects, GAO-13-S24 (Washington, O.C.: June 13, 2013); 

GAO, 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);lnfonnation Technology: Continued 

Attention Needed to Accurately Report Federal Spending and Improve Management, 

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

Oversight and Management Have Improved but Continued Attention Is Needed, 

GAO-11-454T (Washington, D.C .. Mar. 17,2011). 

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12 


Insert offset folio 4 here 82434.004

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

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

on federal agencies' major IT investments,' including assessments of 

actual performance against cost and schedule targets (referred to as 

ratings) for approximately 700 major federal IT investments. In addition, 

OMS has initiated other significant efforts following the creation of the 

Dashboard. For example, OMS began leading reviews-known as 

TechStat Accountability Sessions (TechStats)-of selected IT 

investments to increase accountability and improve performance; 

launched an initiative to reduce the number of federal data centers (the 

Federal Data Center Consolidation Initiative (FDCCI)); and initiated 

PortfolioStat, which requires agencies to conduct annual reviews of their 

IT investments and make decisions on eliminating duplication. 

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

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

management of IT investments. Accordingly, my testimony specifically 

discusses our past work on OMS's IT Dashboard, TechStat reviews, IT 

acquisition best practices, FDCCI, and PortfolioStat, as well as failed and 

challenged IT projects' My testimony also discusses ongoing follow-up 

work on our prior recommendations from these reports. All work on which 

this testimony is based was performed in accordance with generally 

accepted government auditing standards. Those standards require that 

we plan and perform the audit to obtain sufficient, appropriate evidence to 

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

audit objectives. We believe that the evidence obtained provides a 

3According to OMS guidance, 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 paHcy 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. 

'See, for example, GAO-13-S24; GAO-13-378; GAO-13-98; GAO-12-742; GAO, 

Information Technology: Critical Factors Underlying Successful Major Acquisitions, 

GAO-12-7 (Washington, D.C.: Oct. 21, 2011); DOD Financial Management: 

Implementation Weaknesses in Anny and Air Force Business Systems Could Jeopardize 

DOD's Auditabili/y Goals, GAO-12-134 (Washington, D.C.: Feb. 28, 2012); Secure Border 

Initiative: DHS Needs to Strengthen Management and Oversight of Its Prime Contractor, 

GAO-11-6 (Washington, D.C.: Oct. 18,2010); and Polar-Orbiting Environmental Satellites: 

With Costs Increasing and Data Continuity at Risk, Improvements Needed in Tn-agency 

Decision Making, GAO-09-564 (Washington, D.C.: June 17, 2009). 

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Background 

Agencies Have Spent 

Billions on Failed and 

Poorly Performing 

Investments 

reasonable basis for our findings and conclusions based on our audit 

objectives. 

Information technology should enable government to better serve the 

American people. However, according to OMB, despite spending more 

than $600 billion on IT over the past decade, the federal government 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 promised functionality. In combating this 

problem, proper oversight is critical. 

Both OMB and federal agencies have key roles and responsibilities for 

overseeing IT investment management. OMB is responsible for working 

with agencies to ensure investments are appropriately planned and 

justified. Additionally, 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. 

To assist agencies in managing their IT investments, Congress enacted 

the Clinger-Cohen Act of 1996, which requires OMB to establish 

processes to analyze, track, and evaluate the risks and results of major 

capital investments in information systems made by federal agencies and 

report to Congress on the net program performance benefits achieved as 

a result of these investments.' 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. 

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

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

returns. However, the federal government has spent billions of dollars on 

failed and poorly performing IT investments, as the following examples 

illustrate: 

50MB, 25 Point Implementation Plan to Reform Federal Information Technology 

Management (Washington, D.C.: December 2010). 

'40 U.S.C. § 11302(c). 

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In December 2012, the Department of Defense (DOD) canceled the 

Air Force's Expeditionary Combat Support System after having spent 

more than a billion dollars and missing multiple milestones, including 

failure to achieve deployment within 5 years of obligating funds. 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.' Among other 

things, we had recommended that DOD ensure that any future system 

deficiencies identified through independent assessments are resolved 

or mitigated prior to further deployment of the system. 

In January 2011, the Department of Homeland Security ended the 

Secure Border Initiative Network (SBlnet) program after obligating 

more than $1 billion to the program because it did not meet costeffectiveness and viability standards. Since 2007, we had identified a 

range of issues and made several recommendations to improve this 

programS For example, in May 2010 we reported that the final 

acceptance of the first two deployments had slipped from November 

2009 to September 2010 and from March 2010 to November 2010, 

and that the cost-effectiveness of the system had not been justified· 

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 longer-term investment in it, and (3) improve 

key program management disciplines. This work contributed to the 

department's decision to cancel the program. 

7GAO-12-134 and DOD Business Transformation: Improved Management Oversight of 

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

2010). 

8See, for example, GAO-11-6; GAO, 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 

LimitaNons That Place Key Technology Program at Risk, GAO-10-158 (Washington, D.C.: 

Jan. 29, 2010); Secure Border IniNaNve: DHS Needs to Address Significant Risks in 

Delivering Key Technology Investment, GAO-0B-1086 (Washington, D.C.: Sept. 22. 2008); 

and Secure Border Initiative: SB/net Expenditure Plan Needs to Better Support Oversight 

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

9GAO-10-340. 

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In February 2010, a task force led by the President's Office of Science 

and Technology Policy decided to disband the National Polar-orbiting 

Operational Environmental Satellite System (NPOESS), a weather 

satellite program managed by three different agencies, after having 

spent 16 years and almost $5 billion on the program, We issued a 

series of reports on the NPOESS program that highlighted the 

technical challenges, cost growth, and tri-agency management 

challenges facing the program,10 For example, in June 2009 we 

reported that the program's approved cost and schedule baselines 

were not achievable, and that costs could grow by approximately $1 

billion over the then-current $13,95 billion estimate,11 We further noted 

that schedules for the launch of a demonstration satellite and the first 

two operational satellites were expected to be delayed, increasing the 

risk of a gap in satellite continuity, However, after the program's 

cancellation, the agencies were directed to undertake separate 

acquisitions, 

Appendix I provides further details on federal IT projects that have failed 

or faced significant challenges, 

In addition to these projects, the IT Dashboard identifies other at-risk 

investments, Specifically, as of July 2013, according to the IT Dashboard, 

154 of the federal government's approximately 700 major IT 

investments-totaling about $10.4 billion-were in need of management 

attention (rated to indicate the need for attention or to indicate significant 

concerns), (See fig, 1,) 

108ee, for example, GAO-09-564; GAO, Environmental Satellites: Polar-orbiting Satellite 

AcquisWon Faces Delays; Decisions Needed on Whether and How to Ensure Climate 

Data Continuity, GAO-08-518 (Washington, D,C .. May 16, 2008); Polar-orbiffng 

Operational Environmental Satellites: Restructuring Is Under Way, but Technical 

Challenges and Risks Remain, GAO-07-498 (Washington, D.C.: Apr. 27, 2007); and 

Polar-orbiting Environmental Satellites,· Information on Program Cost and Schedule 

Changes, GAO-04-1054 (Washington, D,C,: Sept. 30, 2004). 

"GAO-09-554. 

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Federal IT Spending Is 

Burdened with Inefficient 

Operations and 

Duplication 

Figure 1: Overall Performance Ratings of Major Investments on the IT Dashboard, 

as of July 2013 

Dollars in billions 

,------- 29 investments 

125 investments 

L-________ 586 investments 

Key 

Norma! 

Needs attention 

Significant concerns 

Source:OMB'sITDashboard, 

In addition to poorly performing investments, federal IT spending is 

hampered by inefficient operations and duplication, as the following 

examples illustrate: 

Federal data centers. In March 2011, we reported that the increasing 

demand for IT had led to a dramatic rise in the number of federal data 

centers, with many housing similar types of equipment and providing 

similar processing and storage capabilities." As federal agencies 

have modernized their operations, put more of their services online, 

and increased their information security profiles, they have demanded 

12GAO, Opportunities to Reduce Potent;al Duplication in Government Programs, Save 

Tax Dol/ars, and Enhance Revenue, GAO-"-3'8SP (Washington, D.C.: Mar. 1,2011). 

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more computing power and data storage resources. According to 

OMB, the number of federal data centers grew from 432 in 1998 to 

more than 2,000 in 2010. The grow1h in the number offederal data 

centers, many offering similar services and resources, has resulted in 

overlap and duplication among the centers. In addition, according to 

OMB, in August 2009 the average utilization rate for servers ranged 

from 5 percent to 15 percent. In contrast, OMB's 2012 Data Center 

Consolidation Plan guidance states that the target for server utilization 

is 60 to 70 percent. 

Duplicative IT investments. In September 2011, we reported that 

limitations in OMB's guidance hindered efforts to identify IT 

duplication.13 Specifically, although OMB's guidance to federal 

agencies on how to categorize IT investments allowed for analysis of 

investments with similar functions, it did not go far enough to allow 

identification of potentially duplicative investments. Specifically, since 

the fiscal year 2004 budget cycle, OMB had required agencies to 

categorize their IT investments according to primary function and 

subfunction. In their fiscal year 2011 submissions, agencies reported 

the greatest number of IT investments in Information and Technology 

Management (1,536 investments), followed by Supply Chain 

Management (777 investments), and Human Resource Management 

(622 investments). Similarly, planned expenditures on investments 

were greatest in Information and Technology Management, at about 

$35.5 billion. Figure 2 depicts, by primary function, the total number of 

investments within the 26 federal agencies that report to the IT 

Dashboard, as of July 2011. 

13GAO, Information Technology: OMB Needs to Improve Its Guidance on IT Investments, 

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

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18 


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Figure 2: Number of Government IT Investments by Primary Function. as of July 2011 

Primary function 

Infonnatlon and Management Technology ~~~~~~~~~~~;;~~:==2~==Z;=ill;J1,536 ~ (535.5\ 

Hu:a~::s:::: .::::::::: ti;:~;::;:;';i::~::;;:~~:::;:;:':j-'-='-' 

Financial Management 

Health 

'1IIIi~~~;' ~ 

General Science and Innovation 

Defense and National Security i~~~~~ 

Ad:~a::::::a;::::~nn~ ~~~~~~~=~ Environmental Management 

200 4tlO 600 800 1,000 1,200 1,"'" 1,600 1,800 2,000 

Number of IT investments (dollars in billions) 

Souree' GAO analysis of el/l1ibit 53 data 

However, we noted that categorizing IT investments according to 

primary function and subfunction limited OMS's ability to identify 

potentially duplicative investments both within and across agencies 

because similar investments may be organized under different 

functions. Accordingly, we recommended that OMS revise guidance 

to federal agencies on categorizing IT investments to ensure that the 

categorizations are clear and that it allows agencies to choose 

secondary categories, where applicable. OMB generally agreed with 

this recommendation and has since taken action to implement it. 

Specifically, OMS updated its policy to enable agencies to select one 

primary category and up to four secondary categories for each IT 

investment. 

We also reported that results of OMS 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. Specifically, we said that most of 

OMS's recent initiatives had not yet demonstrated results, and several 

agencies did not routinely assess legacy systems to determine if they 

are 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 

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19 


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OMB Has Launched Major 

Initiatives for Overseeing 

IT Investments 

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 implementing PortfolioStat reviews. As previously 

mentioned, these reviews are intended to assist in ending the 

investment in duplicative IT investments. In addition, as part of this 

effort, OMB is requiring agencies to document their cost savings and 

cost avoidance due to consolidation beginning in their fiscal year 2014 

budget submissions. 

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. 

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

TechStats 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. 

FDCCI. Concerned about the growing number of federal data centers, 

in February 2010 the Federal CIO established FDCCI. This initiative's 

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four high-level goals are to promote the use of "green 1T"14 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 agency-wide IT 

portfolio review to, among other things, reduce commodity IT15 

spending and demonstrate how their IT investments align with the 

agency's mission and business functions." 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. 

14~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. 

15According 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 administratlve functions). 

160MB, Implementing PortfolioS/at, Memorandum, M-12-10 (Washington D.C.: Mar. 30, 

2012). 

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OMB and Agencies 

Have Taken Steps to 

Improve the 

Acquisition and 

Management of IT 

Investments, but 

Additional Actions 

Are Needed 

Over the past several years, we have highlighted OMS and agency efforts 

to improve the transparency into and oversight of underperforming federal 

IT investments, more effectively manage IT, and address duplicative 

investments. Notably, we issued a series of reports on: the IT Dashboard; 

OMS and agency efforts to address troubled projects through TechStat 

reviews; critical factors underlying successful acquisitions; and OMS and 

agency efforts to improve the management of IT through federal data 

center consolidation efforts, as well as address duplication through 

PortfolioStat. 

OMB Launched the IT Dashboard to Increase Oversight and 

Transparency, but Improvements Needed 

OMS has taken significant steps to enhance the oversight, transparency, 

and accountability of federal IT investments by creating its IT Dashboard, 

and by improving the accuracy of investment ratings. However, we found 

weaknesses with the accuracy and reliability of cost and schedule data, 

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

Our July 2010 report17 found that the cost and schedule ratings on 

OMS'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 OMS report on its planned 

changes to the Dashboard to improve the accuracy of performance 

information and provide guidance to agencies to standardize 

milestone reporting. OMS 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, OMS had initiated several efforts to increase the Dashboard's 

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

management." 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 

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

Oversight, but improvements Needed, GAO-10-701 (Washington, D.C .. July 16, 2010). 

16GAO, 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). 

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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 OMS improve how it rates 

investments relative to current performance and schedule variance. 

Most agencies generally concurred with our recommendations; OMS 

agreed with our recommendation for improving ratings for schedule 

variance. It disagreed with our recommendation to improve how it 

refiects 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 report in 2011" noted that that the accuracy of 

investment cost and schedule ratings had improved since our July 

2010 report because OMS 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 OMS'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 OMS 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. 20 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 

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, the Department of Homeland Security and Office of 

Personnel Management reported more investments with reduced risk 

"GAO, 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). 

2oGAO-13-98. 

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23 


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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 the President's 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 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. 21 In July 2012, the DOD 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. DOD's CIO rated 

the Defense Enterprise Accounting and Management System 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 

"GAO, DOD Financial Management: Reported Status of Department of Defense's 

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

and GAO-12-134. 

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24 


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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. 

Additional TechStat Reviews Needed to Address Tronbled Projects 

Regarding TechStat reviews, we reported that OMB and selected 

agencies had held multiple TechStats, but 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.22 

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

79 TechStats, which focused on 55 investments at 23 federal agencies. 

Further, 4 selected agencies-the Departments of Agriculture, 

Commerce, Health and Human Services, and Homeland Securityconducted 37 TechStats covering 28 investments. About 70 percent of 

the OMB-Ied 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 to date was 

relatively small compared to the current number of medium- and high-risk 

IT investments. Specifically, the OMB-Ied TechStats represented roughly 

18.5 percent of the investments across the government that had a 

medium- or high-risk CIO rating. For the 4 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 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 resuHs because OMB did not provide artifacts showing 

that it ensured the results were valid. From our selected agencies, three 

investments had cost implications. AgenCies provided supporting 

documentation for about $22.2 million in cost savings and avoidances. 

We concluded that until OMB obtains and shares information on the 

22GAO-13-524. 

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25 


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methods used to validate reported results, it would be difficult for the 

results to be independently validated and for OMS to provide assurance 

to Congress and the public that TechStats were achieving their intended 

impact. We therefore recommended that OMS validate the resulting cost 

savings from TechStats that it reports to Congress and require agencies 

to conduct TechStats for each IT investment rated with a moderately 

high- or high-risk CIO rating on the IT Dashboard. We also made 

recommendations to the selected agencies to strengthen their TechStat 

processes. OMS and the Department of Commerce officials generally 

agreed with our recommendations. The Department of Agriculture 

partially agreed with our assessment; neither it nor the Department of 

Health and Human Services commented on the recommendations. 

Critical Factors Underlying Snccessful Major Acquisitions 

Subsequent to the launch of the Dashboard and the TechStat reviews, 

and 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 23 

Specifically, we reported that department officials identified seven 

successful investment acquisitions, in that they best achieved their 

respective cost, schedule, scope, and performance goals.24 In addition, 

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 

"GAO-12-7. 

24The 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. 

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26 


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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. 

Strengthened 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 the FDGGI. 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 

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. 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. 

In July 2011, we issued a report on the status of FDGGI and found 

that only 1 of the 24 agencies had submitted a complete inventory and 

no agency had submitted complete plans. 25 Further, OMB had not 

required agencies to document the steps they had taken, if any, to 

verify the inventory data. We concluded that until these inventories 

and plans were complete, 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 GIO 

require that agencies, when updating their data center inventory, state 

what actions were taken to verify the infonmation in the inventory and 

to identify any associated limitations on the data, and to complete the 

missing elements in their inventories and consolidation plans. OMB 

generally agreed with our report and has since taken actions to 

address our recommendations. For example, in July 2011, OMB 

25GAO, Data Center Consolidation: Agencies Need to Complete Inventories and Plans to 

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

Page 16 GAO-13-796T 
27 


Insert offset folio 19 here 82434.019

required agency GIOs to submit a letter that identified steps taken to 

verify their data center inventory information and attest to the 

completeness oftheir consolidation plan. In addition, in March 2012, 

OMB required that all agencies, by the end of the fourth quarter of 

every fiscal year, complete all elements missing from their 

consolidation plans. 

Additionally, in July 2012, we updated our review of FOGGl's status 

and found that, while agencies' 2011 inventories and plans had 

improved as compared to their 2010 submissions, only 3 agencies 

had submitted a complete inventory and only 1 agency had submitted 

a complete consolidation plan.26 In addition, we noted that 3 agencies 

had submitted their inventory using an outdated format, in part, 

because OMB had not publicly posted its revised guidance. 

Notwithstanding these weaknesses, we found that 19 agencies 

reported anticipating about $2.4 billion in cost savings between 2011 

and 2015. 

We also reported that none offive selected agencies had a master 

program schedule or cost-benefit analysis that was fully consistent 

with best practices. To assist agencies with their data center 

consolidation efforts, OMB had sponsored the development of a 

FOGG I total cost of ownership27 model that was intended to help 

agencies refine their estimated costs for consolidation; however, 

agencies were not required to use the cost model as part of their cost 

estimating efforts. Accordingly, we reiterated our prior 

recommendation that agencies complete missing plan and inventory 

elements and made new recommendations to OMB to publically post 

guidance updates on the FOGGI website and to require agencies to 

use its cost model. OMB generally agreed with our recommendations 

and has since taken steps to address them. More specifically, OMB 

posted its 2012 guidance for updating data center inventories and 

plans, as well as guidance for reporting consolidation progress, to the 

FOGGI public website. Further, the website has been updated to 

provide prior guidance documents and OMB memoranda. In addition, 

OMB's 2012 consolidation plan guidance required agencies to use the 

cost model as they developed their 2014 budget request. 

26GAO_12_742. 

270MB refers to total cost of ownership as all associated data-center-related activities and 

costs without regard to ownership, project association, or funding line. 

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More recently, we reported" and testified" that the 24 FDCCI 

agencies made progress towards OMS's goal to close 40 percent, or 

1,253 of the 3,133 total federal data centers, by the end of 2015, but 

OMS had not measured agencies' progress against its other goal of 

$3 billion in cost savings by the end of 2015. Agencies closed 420 

data centers by the end of December 2012 and had plans to close an 

additional 548 to reach 968 by December 2015-285 closures short of 

OMS's goal. OMS had not determined agencies' progress against its 

cost savings goal because, according to OMS staff, the agency has 

not determined a consistent and repeatable method for tracking cost 

savings. We reported that this lack of information makes it uncertain 

whether the $3 billion in savings is achievable by the end of 2015. We 

concluded that until OMS tracks and reports on performance 

measures such as cost savings, it will be limited in its ability to 

oversee agencies' progress against key goals. 

Further, we reported that, pursuant to OMS direction, three 

organizations-the Data Center Consolidation Task Force,'o the 

General Services Administration Program Management Office, and 

OMS-are responsible for federal data center consolidation oversight 

activities. We found that while most activities were being performed, 

there were still several weaknesses in oversight. For example, while 

the General Services Administration's Program Management Office 

had collected agencies' quarterly data center closure updates and 

made the information publically available on an electronic dashboard 

for tracking consolidation progress, it had not fully performed other 

oversight activities, such as conducting analyses of agencies' 

inventories and plans. In addition, while OMS had implemented 

several initiatives to track agencies' consolidation progress, such as 

establishing requirements for agencies to update their plans and 

inventories yearly and to report quarterly on their consolidation 

progress, the agency had not approved the plans on the basis of their 

completeness or reported on progress against its goal of $3 billion in 

29GAO-13-627T. 

30The Data Center Consolidation Task Force is comprised of the data center consolidation 

program managers from each agency. According to its charter, the Task Force is critical to 

supporting collaboration across the FOGGI agencies, including identifying and 

disseminating key pieces of information, solutions, and processes that will help agencies 

in their consolidation efforts. 

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29 


Insert offset folio 21 here 82434.021

cost savings. The weaknesses in oversight of the data center 

consolidation initiative were due, in part, to OMB not ensuring that 

assigned responsibilities are being executed. We concluded that 

improved oversight could better position OMB to assess progress 

against its cost savings goal and minimize agencies' risk of not 

realizing expected cost savings. 

We therefore recommended that OMB's Federal CIO track and report 

on key performance measures, extend the time frame for achieving 

planned cost savings, and improve the execution of important 

oversight responsibilITies. OMB agreed with two of our 

recommendations and stated that it plans to evaluate the remaining 

recommendation related to extending the time frame. 

Finally, as part of ongoing follow-up work, we reported that agencies 

had closed an additional 64 data centers compared to the total 

number of reported closures through the end of December 2012. 

More 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, we also found that the number of federal data centers had 

grown Significantly since OMB had reported in December 2011 that 

there were approximately 3,133 data centers. Specifically, as of July 

2013,22 of the 24 FDCCI agencies had collectively reported 6,836 

data centers in their inventories,31 which is approximately 3,700 data 

centers more than OMB's previous estimate from December 2011.32 

OMB Launched PortfolioStat to Address Duplicative Investmeuts 

To address duplicative IT investments, OMB launched PortfolioStat in 

March 2012, which is designed to assist agencies in assessing the 

current maturity of their IT portfolio management process, making 

decisions on eliminating duplication, and moving to shared services in 

order to maximize the return on IT investments across the portfolio. 

31TWQ agencies had not yet provided updated inventories-the Social Security 

Administration and the Department of Veterans Affairs. 

32Department of Agriculture officials stated that, in December 2012, the department added 

approximately 2,200 data centers to its inventory to account for its county office locations 

that each have one IT server. 

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30 


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We recently reported" and testified" on OMS's PortfolioStat initiative, 

including that, in March 2013, OMS issued a memorandum documenting 

additional guidance to help strengthen the initiative. In its memorandum, 

OMS noted that the results from PortfolioStat so far had been 

significant-including that agencies had identified and committed to 

nearly 100 opportunities to consolidate or eliminate commodity IT 

investments and also described plans to strengthen the initiative by 

integrating PortfolioStat and FDCCI, streamlining agency reporting 

requirements, and establishing guidance for conducting PortfolioStat 

sessions in fiscal year 2013. 35 For example, to improve the outcomes of 

PortfolioStat and to advance agency IT portfolio management, OMS's 

memorandum consolidated previously collected IT plans, reports, and 

data calls into three primary collection channels-an information 

resources management strategic plan," an enterprise road map," and an 

integrated data collection channel. 38 Agencies' draft versions of their 

strategic plans and enterprise road maps were due to OMS in May 2013, 

as well as their first integrated data collections. The integrated data 

collections are to be updated quarterly beginning in August 2013 and the 

strategic plans and road maps are to be updated after Congress receives 

the President's budget for fiscal year 2015. 

33GAO-13-378. 

34GAO, Information Technology: OMB and Agencies Need to Focus Continued Attention 

on Eliminating Duplicative Investments, GAO~13-685T (Washington, D.C.: June 11, 2013) 

and GAO-13-627T. 

350MB, Fiscal Year 2013 PortfolioStat Guidance: Strengthening Federal IT Portfolio 

Management, Memorandum M-13-09 (Washington, D.C.: Mar. 27, 2013). 

360MB, Management of Federal Information Resources, Circular A-130 (Washington, 

D,C.: Nov. 30,2000). According to OMS Circular A-130, an agency's information 

resources management strategic plan should describe how information resources 

management activities help accomplish agency missions, and ensure that information 

resource management decisions are integrated with organizational planning, budget, 

procurement, financial management, human resources management, and program 

deCisions. 

37 OMS, Increasing Shared Approaches to Information Technology Services (Washington, 

D.C.: May 2,2012). The enterprise road map is to include a business and technology 

architecture, an IT asset inventory, a commodity IT consolidation plan, a line of business 

service plan, and an IT shared service plan. 

3aThe integrated data collection channel will be used by agencies to report structured 

information, such as progress in meeting IT strategic goals, objectives, and metrics, as 

well as cost savings and avoidances resulting from IT management actions. 

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31 


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However, our April 2013 report noted that key data-center-related 

performance metrics of the combined initiative were not yet fully defined. 

For example, OMB's March 2013 memorandum" stated that, to more 

effectively measure the efficiency of an agency's data center assets, 

agencies would also be measured by the extent to which their data 

centers are optimized for total cost of ownership by incorporating metrics 

for data center energy, facility, labor, and storage, among other things. 

Although OMB had indicated which performance measures it planned to 

use going forward, it had not documented the specific metrics for 

agencies to report against. OMB's March 2013 memorandum indicates 

that these would be developed by the Data Center Consolidation Task 

Force, but did not provide a time frame for when this will be completed. 

Further, our report noted that OMB's integration of FDCCI with 

PortfolioStat also included a modification to the previous data center 

consolidation goal of closing approximately 40 percent of the total number 

of agency data centers. Specifically, OMB stated an agency's data center 

population will now be placed into one of two categories-core and noncore data centers-but for which the memorandum did not provide 

specific definitions. OMB further stated that its new goal is to close 40 

percent of non-core data centers but, as noted, the definitions of core and 

non-core data centers were not provided. Therefore, the total number of 

data centers to be closed under OMB's revised goal could not be 

determined. 

We also reported that, although OMB had previously stated that 

PortfolioStat was expected to result in savings of approximately $2.5 

billion through 2015, its March 2013 memorandum did not establish a 

new cost savings goal that reflected the integration of FDCCL Instead, 

OMB stated that all cost savings goals previously associated with FDCCI 

would be integrated into broader agency efforts to reshape their IT 

portfolios, but did not provide a revised savings estimate. We concluded 

that the lack of a new cost savings goal would limit OMB's ability to 

determine whether or not the new combined initiative is on course toward 

achieving its planned objectives. As a result, we recommended that OMB 

track and annually report on key data center consolidation performance 

measures, such as the size of data centers being closed and cost savings 

to date. OMB agreed with our recommendation. 

Memorandum M-13-09. 

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32 


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We have ongoing work looking at OMB's PortfolioStat initiative, including 

determining whether agencies completed key required PortfolioStat 

actions, evaluating selected agencies' plans for making portfolio 

improvements and achieving associated cost savings, and describing 

OMB's plans to improve the PortfolioStat process. 

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. 

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, additional 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. In addition, the expanded 

use of the common factors critical to the successful management of largescale IT acquisitions should result in the more effective delivery of 

mission-critical systems. 

The federal government can also build on the momentum of progress on 

agencies' data center closures as the federal data center consolidation 

effort is integrated with PortfolioStat. OMB recently released additional 

guidance that expanded this important initiative's scope and reported that 

significant progress had been made to date, including more than 100 

opportunities to consolidate or eliminate commodity IT investments. 

Moving forward, it will be important for OMB to be transparent on 

agencies' progress against key performance metrics, such as data center 

consolidation cost savings, in order to ensure that the PortfolioStat 

initiative is meeting its established objectives. Overall, the implementation 

of GAO recommendations can help further reduce wasteful spending on 

poorly managed, unnecessary, and duplicative investments. 

Chairman Mica, Ranking Member Connolly, 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. 

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33 


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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), Justin Booth, Rebecca Eyler, Lee A. McCracken, Jonathan 

Ticehurst, and Kevin Walsh. 

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Appendix I: Examples of IT Project Failures 

and Challenges 

Failed Investments 

The federal government continues to spend billions of dollars on troubled 

IT investments. This appendix identifies examples of major IT 

investments that have failed or faced significant challenges. In this 

regard, we focused on IT projects that were considered major 

development or acquisition efforts, based on their size or mission 

criticality. We considered a project to have failed if it was terminated by 

the agency after substantial investment and without delivering significant 

planned capabilities. A project was considered to be challenged if we had 

identified Significant issues in its performance or management and made 

recommendations for improvement. To identify these projects, we 

reviewed our work published since January 1, 2003, that addressed the 

performance or management of federal agency IT projects. We did not 

include a project on our lists if it was not the subject of a GAO report. 

Since 2003, a number of major IT projects at federal agencies have 

failed. Specifically, agencies canceled the following investments after 

spending millions of dollars: 

Department of Defense's (DOD) Expeditionary Combat Support 

System (ECSS) 

DOD's Defense Integrated Military Human Resources System 

(DIMHRS) 

Department of Homeland Security's (DHS) Computer-Assisted 

Passenger Prescreening System (CAPPS II) 

DHS's Electronically Managing Enterprise Resources for Government 

Effectiveness and Efficiency (eMerge2) 

DHS's Next Generation Homeland Security Information Network 

(HSIN Next Gen) 

DHS's Secure Border Initiative Network (SBlnet) 

Federal Bureau of Investigation's (FBI) Virtual Case File (VCF) 

General Services Administration's (GSA) e-Authentication Program 

National Archives and Records Administration's (NARA) Electronic 

Records Archive (ERA) 

National Polar-orbiting Operational Environmental Satellite System 

(NPOESS) 

Office of Personnel Management's (OPM) Retirement Systems 

Modernization 

Veterans Affairs' (VA) Scheduling Replacement Project 

VA's Core Financial and Logistics System (CoreFLS) 

VA's Financial and Logistics Integrated Technology Enterprise 

(FLITE) Program 

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35 


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Appendix I: Examples of IT Project Failures 

and Challenges 

VA's Health Information Systems and Technology ArchitectureFoundations Modernization (VistA-FM) 

These projects were canceled after going over budget, missing schedule 

milestones, or failing to deliver intended capabilities. In many of these 

cases, we had identified issues in the management of these programs 

and made recommendations for improvement. These issues were often 

related to a lack of disciplined and effective management, such as project 

planning, requirements definition, and program oversight and 

governance. The following provides additional information on these failed 

IT investments. 

DOD's Expeditionary Combat Support System (ECSS) 

In December 2012, DOD canceled ECSS after having spent more than a 

billion dollars and missing multiple milestones, including failure to achieve 

deployment within 5 years of obligating funds. 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.' Among other things, we had recommended that DOD ensure 

that any future system deficiencies identified through independent 

assessments be resolved or mitigated prior to further deployment of 

ECSS. 

DOD's Defense Integrated Military Human Resources System 

(DIMHRS) 

In February 2010, DIMHRS was canceled after 10 years of development 

and approximately $850 million spent, due, in part, to a lack of strategiC 

alignment, governance, and requirements management, as well as the 

overall size and scope of the effort" The system was intended to provide 

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

System Modernization Efforts Needed, GAO-"-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). 

2GAO, Information Technology: Departments of Defense and Energy Need to Address 

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

Page 25 GAO-13-79ST 
36 


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Appendix I: Examples of IT Project Failures 

and Challenges 

a joint, integrated, standardized personnel and pay system for all military 

personnel. In 2008, we had reported that Army officials had concerns 

about the extent to which Army requirements were being incorporated 

into DIMHRS and that DOD had not established a clear, well-defined 

process for maintaining effective communications to better prepare the 

Army to deploy DIMHRS. 3 We had recommended that DOD develop a 

clearly defined process for effectively communicating the differences 

between DIMHRS's capabilities and the Army's requirements. However, 

subsequent to the cancellation decision, each military service is now 

responsible for developing its own integrated personnel and pay system. 

DHS's Computer-Assisted Passenger Prescreening System (CAPPS 

II) 

In August 2004, DHS canceled its CAPPS II program-a Transportation 

Security Administration (TSA) initiative to develop a system to identify 

passengers requiring additional security attention-due to a variety of 

delays and challenges. In February 2004, we reported that, according to 

program officials, approximately $41.5 million had been allocated for the 

system's acquisition to date and that the program faced a number of 

implementation challenges.' Specifically, key activities in the development 

of CAPPS II had been delayed, and TSA had not completed important 

system planning activities. In addition, TSA had not completely addressed 

seven of the eight issues identified by Congress as key areas of interest 

related to the development, operation, and public acceptance of CAPPS 

II. We also identified other challenges, including developing the 

international cooperation needed to obtain passenger data, managing the 

possible expansion of the program's mission beyond its original purpose, 

and ensuring that identity theft could not be used to negate the security 

benefits of the system. We recommended, among other things, that DHS 

develop project plans, including schedules and estimated costs, to guide 

development; establish a plan for completing critical security activities; 

and develop a process by which passengers can get erroneous 

information corrected. CAPPS II was eventually replaced by the Secure 

3GAO, DOD Systems Modernization: Maintaining Effective Communication Is Needed to 

Help Ensure the Army's Successful Deployment of the Defense Integrated Military Human 

Resources System, GAO-08-927R (Washington, D.C.: Sept. 8, 2008). 

4GAO, Aviation Security: Computer-Assisted Passenger Prescreening System Faces 

Significant Implementation Challenges, GAO-04-385 (Washington, D.C.: Feb. 12, 2004). 

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Appendix I: Examples of IT Project Failures 

and Challenges 

Flight system, which in turn was completely revamped and replaced by a 

new version of Secure Flight that finally became operational. 

DHS's Electronically Managing Enterprise Resources for 

Government Effectiveness and Efficiency (eMerge') 

DHS canceled its eMerge' project in December 2005 after an 

unsuccessful pilot program that began in January 2004 and lasted about 

2 years. The project was expected to integrate financial management 

systems across the entire department and address financial management 

weaknesses. According to DHS, it had spent a total of about $52 million 

for the eMerge' project, including approximately $18 million in contractor 

costs. As we reported in June 2007, DHS officials stated that several of 

the work products developed for eMerge' would be useful as they move 

forward with their financial management modernization efforts, regardless 

of the strategic financial management direction ultimately selected by the 

department.' However, we found that key work products were of limited 

value. Specifically, the concept of operations did not contain an adequate 

description of the legacy systems and a clear articulation of the vision that 

should guide the department's improvement efforts, and key requirements 

developed for the project were unclear and incomplete. We 

recommended, among other things, that, going forward, DHS employ best 

practices in defining its financial management system strategy, such as 

developing a comprehensive concept of operations document, 

standardizing business processes, and using disciplined processes to 

minimize project risk. 

DHS's Next Generation Homeland Security Information Network 

(HSIN Next Gen) 

In October 2010, DHS terminated the acquisition of its HSIN Next Gen 

system, which was to be the follow-on to its original HSIN system, the 

department's primary IT system for sharing terrorism-related information. 

The department cited, among other things, continuing cost, schedule, and 

performance shortfalls and the lack of key IT management controls and 

capabilities that are essential to mitigating such shortfalls and ensuring 

successful system delivery. In 2008 we reported that DHS had yet to 

Homeland Security: Departmentwide Integrated FinanCial Management Systems 

Challenge, GAO-07-536 (Washington, D.C.: June 21,2007). 

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Appendix I: Examples of IT Project Failures 

and Challenges 

implement the full set of controls essential to effectively manage the 

acquisition of HSIN Next Gen.6 We recommended that DHS strengthen its 

acquisition management controls before it started to implement the 

system. The termination of HSIN Next Gen resulted in a cost reduction of 

$128,969,000. 

DHS's Secure Border Initiative Network (SBlnet) 

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

program after obligating more than $1 billion to the program because it 

did not meet cost-effectiveness and viability standards. Since 2007, we 

had identified a range of issues and made several recommendations to 

improve this program" For example, in May 2010 we reported that the 

final acceptance of the first two deployments had slipped from November 

2009 to September 2010 and from March 2010 to November 2010, and 

that the cost-effectiveness of the system had not been justified· We 

concluded that 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 longer-term investment in it, and 

(3) improve key program management disciplines. This work contributed 

to the department's decision to cancel the program. 

6GAO, Information Technology: Management Improvements Needed on the Department 

of Homeland Security's Next Generation Information Sharing System, GAO-09~40 

(Washington, D.C.: Oct. 8, 2008). 

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

and Oversight of lis Prime Contractor, 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-0B-1086 (Washington, D.C.: Sept. 22, 2008); and Secure Border 

Initiative: SB/net Expenditure Plan Needs to Better Support Oversight and Accountability, 

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

8GAO-10-340. 

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Appendix I: Examples of IT Project Failures 

and Challenges 

FBI's Virtual Case File (VCF) 

In March 2005, the FBI discontinued the VCF component of its Trilogy 

project after investing 3 years and $170 million. The FBI terminated the 

project after Trilogy's overall projected costs grew from $380 million to 

$537 million, the program fell behind schedule, and pilot testing showed 

that completion of VCF was infeasible and cost prohibitive. Among 

reasons we and others cited for VCF's failure were poorly defined system 

requirements, ineffective requirements change control, limited contractor 

oversight, and human capital shortfalls due to, for example, a lack of 

continuity in certain management positions and a lack of trained staff for 

key program positions' 

GSA's e-Authentication Program 

In October 2003, it was reported that GSA had terminated plans to 

develop an "e-Authentication gateway," which was to provide a 

consolidated electronic authentication service to support the egovernment initiatives sponsored by OMB. We had reported 1 month 

earlier in September 2003 that, according to agency OffiCials, 13 agencies 

had provided a total of $13.5 million to GSA for the gateway as of August 

18, 2003, with another $3 million expected from another agency by the 

end of fiscal year 2003." However, GSA had achieved few of its project 

objectives and extended the milestone for completing a fully operational 

system. We noted that the modest progress that had been achieved to 

date called into question the likelihood that the project could successfully 

field an operational gateway, even within the revised schedule. Further, 

the project faced a number of challenges, including developing 

procedures and guidance defining the specific technologies to support 

different authentication requirements, agreeing upon technical standards 

to provide a basis for ensuring interoperability, and taking full measures to 

9GAO, Information Technology: FBI Following a Number of Key Acquisition Practices on 

New Case Management System, but Improvements Still Needed, GAO-O? -912 

(Washington, D.C.: July 30, 2007); Information Technology: FBI Has Largely Staffed Key 

Modernization Program, but Strategic Approach to Managing Program's Human Capital Is 

Needed, GAO-07-19 (Washington, D.C.: Oct. 16.2006); and Informalion Technology: FBI 

Is Building Management Capabilities Essential to Successful System Deployments, but 

Challenges Remain. GAO-05-1014T (Washington, D.C.: Sept. 14,2005). 

10GAO, Electronic Government: Planned e-Authentication Gateway Faces Formidable 

Development Challenges, GAO-03-9S2 (Washington. D.C.: Sept. 12,2003). 

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Appendix I: Examples of IT Project Failures 

and Challenges 

ensure that the gateway system was adequately secured and that privacy 

information adequately protected. 

NARA's Electronic Records Archive (ERA) 

In July 2010, OMB directed NARA to halt development of its ERA system 

at the end of fiscal year 2011 (a 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, noting, among other things, that NARA's plans for 

ERA lacked sufficient detail to clearly show what functions had been 

delivered or were to be included in future increments and at what cost; 

the agency had been inconsistent in its use of earned value management 

to monitor the project's progress; and NARA lacked a contingency plan 

for ERA to ensure system continuity in the event that normal operations 

were disrupted'" These findings and recommendations contributed to the 

decision to halt the system. 

National Polar-orbiting Operational Environmental Satellite System 

(NPOESS) 

In February 2010, a presidential task force decided to disband NPOESS 

after having spent 16 years and almost $5 billion on the program. 

NPOESS was a tri-agency weather satellite program managed by the 

National Oceanic and Atmospheric Administration (NOAA), DOD, and the 

National Aeronautics and Space Administration (NASA). We issued a 

series of reports on the NPOESS program that highlighted the technical 

challenges, cost growth, and tri-agency management challenges facing 

11S99, for example, GAO, Electronic Records Archive: Status Update on the National 

Archives and Records Administration's Fiscal Year 2010 Expenditure Plan, GAO-10-55? 

(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 Nafional Archives: Progress and Risks in 

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

Nov. 5, 2009). 

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Appendix I: Examples of IT Project Failures 

and Challenges 

the program." For example, in June 2009 we reported that the program's 

approved cost and schedule baselines were not achievable, and that 

costs could grow by approximately $1 billion over the then-current $13.95 

billion estimate.'s We further noted that schedules for the launch of a 

demonstration satellite and the first two operational satellites were 

expected to be delayed, increasing the risk of a gap in satellite continuity. 

We had also found that the NPOESS program's tri-agency executive 

council was ineffective, and we made recommendations aimed at 

improving this executive-level oversight. However, after the program's 

cancellation, the agencies were directed to undertake separate 

acquisitions. 

OPM's Retirement Systems Modernization 

In February 2011, OPM canceled its Retirement Systems Modernization 

program after several years of trying to improve the implementation of this 

investment." This was the agency's third major effort over a more than 

20-year period to automate the processing of federal employee retirement 

claims. According to OPM, 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 agency was hindered 

by weaknesses in several important management disciplines that are 

12See, for example, GAO, Polar-Orbiting Environmental Satellites: VVith Costs Increasing 

and Data Continuity at Risk, Improvements Needed in Tn-agency Decision Making, 

GAO~09~564 (Washington, D,C.; June 17, 2009); Environmental Satellites: Polar-orbiting 

Sate/lite Acquisition Faces Delays; Decisions Needed on Whether and How to Ensure 

Climate Data Continuity, GAO-08-518 (Washington, D.C.: May 16, 2008); Poiar-olbiUng 

Operational Environmental Satellites: Restructuring Is Under Way, but Technical 

Challenges and Risks Remain, GAO-07-498 (Washington, D.C.: Apr. 27, 2007); and 

Polar-orbiting Environmental Satemtes: Information on Program Cost and Schedule 

Changes, GAO-04-1054 (Washington, D.C.: Sept. 30, 2004). 

"GAO, Polar-OlbiUng Environmental Satellites.' With Costs Increasing and Data 

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

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

14GAO, OPM Retirement Modernization: Longstanding Information Technology 

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

Nov, 15,2011). 

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essential to successful IT modernization efforts." Accordingly, we made 

recommendations in areas such as project management, organizational 

change management, testing, cost estimating, and earned value 

management. In May 2008, an OPM 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, which 

resulted in a cost reduction of $136.5 million between fiscal years 2009 

and 2013. 

VA's Scheduling Replacement Project 

In September 2009, VA terminated its Scheduling Replacement Project, 

after spending an estimated $127 million over 9 years. The investment 

was to modernize its more than 25-year-old outpatient scheduling system, 

but the department had not yet implemented any of the planned system's 

capabilities. VA began a new initiative that it refers to as HealtheVet 

Scheduling on October 1, 2009. In May 2010, we reported that VA's 

efforts to successfully complete the Scheduling Replacement Project 

were hindered by weaknesses in several key project management 

disciplines and a lack of effective oversight that, if not addressed, could 

undermine the department's second effort to replace its scheduling 

system. As the department proceeded with future development, we 

recommended that it take actions to improve key processes, including 

acquisition management, system testing, and progress reporting, which 

are essential to the department's second outpatient scheduling system 

effort. 

VA's Core Financial and Logistics System (CoreFLS) 

VA's first attempt to develop an integrated financial and asset 

management system, CoreFLS, began in 1998 but was discontinued by 

the department in 2004 because the pilot system failed to support VA's 

15GAO, 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). 

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operations after the department reportedly spent more than $249 million 

on development. The department conducted three independent 

assessments of the initiative that collectively identified 141 findings, which 

the department categorized into functional areas of responsibility such as 

acquisition management, organizational change management, program 

management, and systems engineering, VA aggregated these findings 

into a repository of lessons learned to inform future efforts. However, we 

reported in September 2008 that the department had not taken corrective 

actions to address all the findings, and recommended that it do SO.'6 

Subsequently, VA officials provided documentation showing that all items 

in the repository had been addressed. 

VA's Financial and Logistics Integrated Technology Enterprise 

(FLlTE) Program 

In October 2011, VA terminated its FLiTE program, an effort to deliver an 

integrated financial and asset management system for the department. 

Begun in 2005, the system was intended to be delivered by 2014 at a 

total estimated cost of $608.7 million but was canceled due to challenges 

in managing the program, including an unsuccessful pilot of the Strategic 

Asset Management system, The FLiTE program was VA's second effort 

to develop such a system, We had reported in October 2009 that the 

department had not yet fully established capabilities needed to ensure 

that the program will be successfully implemented and recommended that 

it take steps to improve program management.17 

VA's Health Information Systems and Technology ArchitectureFoundations Modernization (VistA-FM) 

In October 2010, VA terminated its VistA-FM program, which was to 

address the need to transition the VA electronic medical record system to 

a new architecture, As we reported in October 2009, the program, which 

had been estimated to cost $1,9 billion, had significant weaknesses in its 

earned value management processes, and we estimated that the 

16GAO, Veterans Affairs: Additional Details Are Needed in Key Planning Documents to 

Guide the New Financial and Logistics Initiative, GAO-08-l097 (Washington, D.C.: Sept. 

22,2008), 

17 GAO, Information Technology: Actions Needed to Fully Establish Program Management 

Capability for VA's Financial and Logistics Initiative, GAO-10-40 (Washington, D,C' Oct 

26,2009). 

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Challenged IT 

Investments 

Appendix I: Examples of IT Project Failures 

and Challenges 

program would likely overrun its budget at completion by about $350.2 

million." As a result of our recommendations and an internal department 

evaluation of the program, multiple components of the program were 

suspended, before the program was finally terminated in 2010. 

In addition to canceling many failed projects, the government has 

continued to invest in challenged IT projects. The following are selected 

examples of such investments that have faced significant challenges: 

Department of Commerce/Census Bureau's 2010 Decennial Census 

Department of Commerce/NOAA's Geostationary Operational 

Environmental Satellite-R (GOES-R) Series 

DHS's Rescue 21 Program 

DHS's United States Visitor and Immigrant Status Indicator 

Technology (US-VISIT) Program 

DOD's Anmed Forces Health Longitudinal Technology Application 

(AHLTA) 

DOD's Defense Enterprise Accounting and Management System 

(DEAMS) 

DOD's Global Combat Support System-Anmy (GCSS-Army) 

DOD's Global Combat Support System-Marine Corps (GCSS-MC) 

DOD's Navy Enterprise Resource Planning System (Navy ERP) 

DOD's Navy Next Generation Enterprise Network (NGEN) 

DODlDepartment of the Treasury's Navy Cash Program 

DODNA's Integrated Electronic Health Record (iEHR) 

DO DNA's Federal Health Care Center (FHCC) 

Food and Drug Administration's (FDA) Mission Accomplishments and 

Regulatory Compliance Services (MARCS) 

Internal Revenue Service's (IRS) Customer Account Data Engine 

(CADE) 

NASA's James Webb Space Telescope (JWST) 

U.S. Department of Agriculture's (USDA) Modernize and Innovate the 

Delivery of Agricultural Systems (MIDAS) Program 

We have identified challenges facing these projects, many due to 

ineffective or undisciplined management, and have made 

18GAO, Information Technology: Agencies Need to Improve the Implementation and Use 

of Eamed Value Techniques to Help Manage Major System Acquisitions, GAO~10-2 

(Washington, D.C.: Oct 8, 2009). 

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recommendations for improvement. The following provides additional 

information on these challenged IT investments. 

Department of Commerce/Census Bureau's Decennial Census 

At a cost of about $13 billion, the 2010 Decennial Census was the 

costliest in history. This was due, in part, to cost overruns and major 

performance problems with key IT systems. For example, the Census 

Bureau's Field Data Collection Automation (FDCA) program, originally 

estimated to cost $596 million, was intended to use handheld mobile 

devices to support field data collection for the census, including in-person 

follow-up with those who did not return their census questionnaires 

(nonresponse follow-up). However, we testified in March 2008 that the 

program was experiencing significant problems, including schedule 

delays and cost increases from changes in requirements. '

• We had 

previously reported that the FDCA project office had not implemented the 

full set of acquisition management capabilities that were needed to 

effectively manage the program and that the changes to requirements 

had been a contributing factor to both schedule delays and cost increases 

experienced by the FDCA program. 

In April 2008, due to problems identified during testing and cost overruns 

and schedule slippages, the Secretary of Commerce announced a 

redesign of the 2010 Census, resulting in a $205 million increase in lifecycle costs. Also in April 2008, the Census Bureau decided not to use the 

handheld devices for non response follow-up, but did continue to use the 

devices for other decennial census operations. Dropping the use of 

handhelds for nonresponse follow-up and replacing them with a paperbased system increased the cost of the Census by up to $3 billion. 

Although the bureau worked aggressively to improve the paper-based 

system that replaced the handheld computers, we reported in December 

2010 that the paper-based system also experienced significant issues 

when it was put in operation." For example, performance problems with 

the IT system used to manage the nonresponse follow-up process led to 

19GAO, Information Technology: Significant Problems of Critical Automation Program 

Contribute to Risks Facing 2010 Census, GAO-08-550T (Washington, D.C .. Mar. 5, 2008). 

2oGAO, 2010 Census: Data Collection Operations Were Generally Completed As 

Planned, but Long-Standing Challenges Suggest Need for Fundamental Reforms, 

GAO-11-193 (Washington, D.C.: Dec. 14,2010). 

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processing backlogs, which hindered the bureau's ability to fully 

implement quality assurance procedures as planned. We recommended, 

accordingly, that the bureau incorporate best practices in its IT acquisition 

management policy. In September 2012, we reported that the Census 

Bureau still needed to implement key IT management practices to select, 

control, and evaluate its IT investments and effectively manage system 

development, as well as key practices for effective workforce planning, 

and recommended it take eight actions to do SO.21 Until such steps are 

taken, the bureau faces the risk that the same kind of IT management 

and implementation challenges that faced the 2010 Decennial Census will 

impact the 2020 Census. 

Department of Commerce/NOAA's Geostationary Operational 

Environmental Satellite-R (GOES-R) Series 

The Department of Commerce's NOAA, with the aid of NASA, is to 

procure the next generation of geostationary operational environmental 

satellites-a series of four satellites intended to replace existing weather 

satellites that will likely reach the end of their useful lives in about 2015. 

This new series is considered critical to the United States' ability to 

maintain the continuity of data required for weather forecasting. NOAA 

estimates that the GOES-R series will cost $10.9 billion through 2036; the 

launch of the first satellite is planned for October 2015. In September 

2010, we reported that, since 2006, the launch dates of the first two 

satellites in the series have been delayed by about 3 years, which could 

lead to a gap in coverage if the existing weather satellites fail 

prematurely." We also found that NOAA had not established adequate 

continuity plans in the event of a satellite failure with no backup available 

and that the agency had not adequately involved users at federal 

agencies that rely on GOES data in developing and prioritizing 

requirements. We recommended that NOAA address weaknesses in its 

continuity plans and improve its processes for involving other federal 

agencies. Subsequently, NOAA established a continuity plan for GOES-R 

21GAO, Information Technology: Census Bureau Needs to Implement Key Management 

Practices, GAO-12-915 (Washington, D.C.: Sept. 18, 2012). 

22GAO, Geostationary Operational Environmental Satellites: Improvements Needed in 

Continuity Planning and Involvement of Key Users, GAO-10-799 (Washington, D.C.: Sept. 

1,2010). 

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and developed a communications plan for involving agencies that depend 

on GOES data. 

In June 2012 we reported that technical problems with instruments and 

spacecraft, among others, had delayed key reviews and led to increased 

complexity for the development of GOES-R. 23 While the program reported 

having $1.2 billion in reserve to manage future delays and cost growth, 

significant development remained, and we concluded that the program 

may not be able to ensure that it has adequate resources to cover 

ongoing challenges and unexpected problems. In addition, we found that 

the program's schedule contained deficiencies, and it had not fully 

implemented risk management best practices. We recommended that 

NOAA assess and report reserves needed over the life of the program 

and address the issues with its schedules and risk management. NOAA 

reported that it would take steps to implement these recommendations. 

DHS's Rescue 21 Program 

DHS's Rescue 21 program is intended to modernize the U.S. Coast 

Guard's maritime search and rescue communications capability. Since 

2003, we have reported on significant weaknesses in the oversight and 

management of the program, including continued cost growth and 

schedule delays.2. For example, in May 2006, we found that the 

estimated total acquisition cost for Rescue 21 had increased from $250 

million in 1999 to $710.5 million in 2005, and the time line for achieving 

full operating capability had been delayed from 2006 until 2011.25 We 

recommended that executive-level management oversee Rescue 21 's 

progress toward cost and schedule milestones and manage risks; 

establish milestones to complete an integrated baseline review; and 

23GAO, Geostationary Weather Satellites: Design Progress Made, but Schedule 

Uncertainty Needs to be Addressed, GAO-12-576 (Washington, D.C.: June 26, 2012). 

24GAO, Information Technology Gast Estimation: Agencies Need to Address Significant 

Weaknesses in Policies and Practices, GAO-12-629 (Washington, D,C.: July 11, 2012); 

Information Technology: Agencies Need to Establish Comprehensive Policies to Address 

Changes to Projects' Cost, Schedule, and Performance Goals, GAO-08-925 (Washington, 

D.C.: July 31,2008); United States Coast Guard: Improvements Needed in Management 

and Oversight of Rescue System Acquisition, GAO-OO-623 (Washington, D.C.: May 31, 

2006); and Coast Guard: New Communications System to Support Search and Rescue 

Faces Challenges, GAO-03-1111 (Washington, D.C .. Sept. 30, 2003). 

25GAO-06-623. 

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develop revised cost and schedule estimates. More recently, in July 2012, 

we reported'6 that the Rescue 21 program's life-cycle cost estimate had 

grown to approximately $2.7 billion-an increase of approximately $2.4 

billion since 1999'7-and that completion was delayed to 2017.. Program 

officials stated that increases in the cost estimate were due, in part, to 

additional schedule delays and more realistic estimates of future costs for 

ongoing system technology refreshment. However, we noted that the 

program's cost estimate did not exhibit all qualities of a reliable cost 

estimate and recommended that DHS direct responsible officials to 

update future life-cycle cost estimates using cost-estimating practices that 

address the weaknesses we identified. 

DHS's United States Visitor and Immigrant Status Indicator 

Technology (US-VISIT) Program 

DHS's US-VISIT program is charged with developing a biometric 

verification capability for non-U.S. citizens entering and leaving the 

country. From fiscal year 2002 to fiscal year 2012, DHS's US-VISIT 

program was appropriated over $3.5 billion, and the program has 

successfully developed a massive biometric database and deployed an 

entry capability. However, the program had not developed an exit 

capability and last conducted an exit pilot in 2009. We have reported on 

issues associated with key aspects of US-VISIT program management, 

such as risk management and the reliability of cost estimates and 

program schedules, as well as the lack of a completed strategic plan and 

the results of the 2009 exit pilot. 28 We recommended that DHS review the 

27The Rescue 21 program's original cost estimate, developed in 1999, only included 

system acquisition costs and did not include costs for operating and maintaining the 

system. These costs were subsequently included in the program's 2005 revisions to the 

cost estimate. 

28GAO, Homeland Security: US-VISIT Pilot Evaluations Offer Limited Understanding of Air 

Exit OpUons, GAO-10-860 (Washington, D.C.: Aug. 10, 2010): Homeland Security: Key 

US-VISIT Components at Varying Stages of Completion, but Integrated and Reliable 

Schedule Needed, GAO-10-13 (Washington, D.C.: Nov. 19,2009): Homeland Security: 

US. Visitor and Immigrant Status Indicator Technology Program Planning and Execution 

Improvements Needed, GAO-09-96 (Washington, D.C.: Dec. 12,2008): Homeland 

Security: Strategic Solution for US-VISIT Program Needs to Be Better Defined, Justified, 

and Coordinated, GAO-08-361 (Washington, D.C.: Feb. 29, 2008): and Homeland 

Security: US, Visitor and Immigrant Status Program's Longwstanding Lack of Strategic 

Direction and Management Controls Needs to Be Addressed, GAO-07 -1065 (Washington, 

D.C.: Aug. 31, 2007). 

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program's approach to risk management and earned value management, 

and that DHS develop a plan and integrated schedule for a 

comprehensive exit capability. We also recommended that the program 

incorporate additional sources of information when making future 

decisions about an exit capability. However, there are no known current 

plans to develop an exit process, and the President's fiscal year 2013 

budget request called for eliminating a standalone US-VISIT program 

office and incorporating the program's mission into Customs and Border 

Protection and Immigration and Customs Enforcement. We have ongoing 

recommendation follow-up work regarding this issue. 

DOD's Armed Forces Health Longitudinal Technology Application 

(AHLTA) 

DOD has obligated approximately $2 billion over 13 years to acquire an 

electronic health record system-referred to as its AHL TA initiative. In 

October 2010, we reported that DOD had delivered various capabilities 

for outpatient care and dental care documentation, but it scaled back 

other capabilities it had originally planned to deliver, such as replacement 

of legacy systems and inpatient care management. 29 In addition, users 

continued to experience Significant problems with the performance 

(speed, usability, and availability) of the portions of the system that have 

been deployed. These problems were due in part to weaknesses in key 

acquisition management and planning processes. DOD initiated efforts to 

improve system performance and enhance functionality and plans to 

continue its efforts to stabilize the AHLTA system through 2015, as a 

"bridge" to the new electronic health record system it intends to acquire. 

According to DOD, the planned new electronic health record systemknown as the EHR Way Ahead-is to be a comprehensive, real-time 

health record for service members and their families and beneficiaries. To 

help better manage these efforts, we recommended that DOD take six 

actions to help ensure that it has disciplined and effective processes in 

place to manage the acquisition of further electronic health record system 

capabilities. 

29GAO, Opportunities Exist to Improve Management of DOD's Electronic Health Record 

Initiative, GAO-ii-50 (Washington, D.C.: Oct. 6, 2010). 

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DOD's Defense Enterprise Accounting and Management System 

(DEAMS) 

The Air Force's DEAMS is the agency's target accounting system 

designed to provide accurate, reliable, and timely financial information. In 

March 2012, we reported that DEAMS faced a 2-year deployment delay 

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

percent." Further, in February 2012, we reported 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. 31 We recommended that DOD 

take actions to ensure the correction of system problems prior to further 

system deployment, including user training. In July 2012, the DOD 

Inspector General reported that the DEAMS schedule delays were likely 

to diminish its intended cost savings and would jeopardize the 

department's goals for attaining an auditable financial statement. 

DOD's Global Combat Support System-Army (GCSS-Army) 

GCSS-Arrny is intended to improve the Army's supply chain management 

capabilities and provide accurate equipment readiness status reports, 

among other things. In March 2012, we reported that GCSS-Arrny was 

experiencing a cost overrun of approximately $300 million on an original 

life-cycle cost estimate of $3.9 billion (an increase of approximately 8 

percent) and a deployment delay of approximately 2 years.32 Among other 

things, we recommended that DOD ensure any future system deficiencies 

identified through independent assessments are resolved or mitigated 

prior to further deployment of the system. In addition, because the DOD 

CIO rated GCSS-Arrny as low or moderately low risk from July 2009 

through March 2012 on OMB's federal IT Dashboard, we recommended 

that the department's CIO reassess the department's considerations for 

assigning risk levels to investments on the Dashboard, to include external 

assessments of performance and risk. 

30GAO, DOD Financial Management Reported Status of Department of Defense's 

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

2012) 

31GAO-12-134. 

32GAO-12-565R. 

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DOD's Global Combat Support System-Marine Corps (GCSS·MC) 

GCSS-MC is intended to provide the deployed warfighter enhanced 

capabilities in the areas of warehousing, distribution, logistical planning, 

depot maintenance, and improved asset visibility. In July 2008, we 

reported that not effectively implementing key IT management controls, 

such as economically justifying investment in the system, had in part 

contributed to a 3-year schedule slippage and a cost overrun of about 

$193 million on the first phase of the program and would likely contribute 

to future delays and overruns if not corrected." Accordingly, we made 

recommendations to address the identified deficiencies, such as cost and 

schedule estimating, risk management, and system quality measurement 

weaknesses. In October 2010,34 we reported that GCSS-MC faced a 3-

year deployment delay on phase 1. We also reported in March 2012 that 

GCSS-MC faced an estimated cost increase of about $970 million from its 

original life-cycle cost estimate of $126 million'S As of December 2011, 

the life-cycle cost estimate was estimated to be $1.1 billion, and a revised 

full deployment date was being considered. 

DOD's Navy Enterprise Resource Planning System (Navy ERP) 

Navy ERP is intended to standardize the acquisition, financial, program 

management, maintenance, procurement, plant and wholesale supply, 

and workforce management capabilities of the Navy. In March 2012, we 

reported that Navy ERP faced a 2-year deployment delay and an 

estimated cost increase of about $1 billion from its original life-cycle cost 

estimate of $1.87 billion'S This estimate was later revised in August 2004, 

December 2006, and again in September 2007 to $2.4 billion. In October 

2010," we reported that these slippages occurred, in part, because of 

problems experienced in data conversion and adopting new business 

33GAO, DOD Business Systems Modemization: Key Marine Corps System Acquisition 

Needs to Be Better Justified, Defined, and Managed, GAO-08-822 (Washington, D.C.: 

July 28, 2008). 

34GAO-11-53. 

35GAO-12-565R, DOD's GCSS-MC Program Management Office and historical data as 

reported in GAO-11-53. 

36GAO-12-565R. 

37GAO-11-53. 

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procedures associated with implementing the Navy ERP. Moreover, in 

September 2008,38 we reported that not effectively implementing key IT 

management controls, such as earned value management, had 

contributed to the more than 2-year schedule delay and almost $600 

million cost overrun on the program since it began, and would likely 

contribute to future delays and overruns if not corrected. Accordingly, we 

made recommendations to address the identified deficiencies, such as 

improving cost and schedule estimating, earned value management, and 

risk management weaknesses. 

DOD's Navy Next Generation Enterprise Network (NGEN) 

DOD's NGEN is to replace the Navy Marine Corps Intranet program and 

include capabilities such as secure transport of voice and data, data 

storage, and e-mail, to be incrementally acquired through multiple 

providers. The program, which is expected to cost about $38 billion 

through fiscal year 2024, had weaknesses in its acquisition approach. 

Specifically, in March 2011, we reported that the program was not well 

positioned to meet its cost and schedule estimates. 39 For example, the 

department had not sufficiently analyzed alternative acquisition 

approaches and did not have a reliable schedule for executing NGEN. 

We recommended DOD limit further investment until it conducted an 

interim review to reconsider the selected acquisition approach and 

addresses its investment management issues. In September 2012, we 

reported that while DOD had revised its acquisition approach, it was still 

suffering from management issues related to measuring cost 

effectiveness, completing milestones on schedule, and mitigating risk.4O 

38GAO, DOD Business Systems Modernization: Important Management Controls Being 

Implemented on Major Navy Program, but Improvements Needed in Key Areas, 

GAO-08-896 (Washington, D.C.: Sept. 8, 2008). 

39GAO, Information Technology: Better Informed Decision Making Needed on Navy's Next 

Generation Enterprise Network Acquisition, GAO-11-150 (Washington, D.C.: Mar. 11, 

2011). 

4oGAO, Next Generation Enterprise Networl<: Navy Implementing Revised Approach. but 

Improvement Needed in Mitigating Risks. GA0-12-956 (Washington, D.C.: Sept. 19. 

2012). 

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DOD/Department of the Treasury's Navy Cash Program 

Initiated in 2001, Navy Cash is a joint Department of the Navy and 

Department of the Treasury Financial Management Service program to 

create a cashless environment on ships using smart card technology. It 

was estimated to cost about $320 million to fully deploy. In 2008, we 

reported that the system had not been assessed and defined in a way to 

ensure that it was not duplicative of programs in the Air Force and the 

Army that use smart card technology, nor economically justified on the 

basis of reliable analyses of estimated costs and expected benefits over 

the program's life. 41 In addition, we reported that system requirements 

and system security had not been effectively managed. Program 

oversight and management officials acknowledged the weaknesses and 

cited turnover of staff in key positions and their primary focus on 

deploying Navy Cash as reasons for the state of some of the IT 

management controls. We concluded that after investing about 6 years 

and $132 million on Navy Cash and planning to invest an additional $60 

million to further develop the program, the department had yet to 

demonstrate through verifiable analysis and evidence that the program, 

as currently defined, was justified. Accordingly, we recommended that 

investment of modernization funding in the program be limited until a 

basis for informed decision making was established, and that other 

program management weaknesses were corrected. 

DODNA's Integrated Electronic Health Record (iEHR) 

DOD and VA have been challenged over the last 15 years on a variety of 

initiatives to share data among the departments' health information 

systems. In March 2011, the Secretaries of DOD and VA committed their 

two departments to developing a new common iEHR, and in May 2012 

announced their goal of implementing it across the departments by 2017. 

According to the departments, the decision to pursue iEHR would enable 

DOD and VA to align resources and investments with common business 

needs and programs, resulting in a platform that would replace the two 

departments' electronic hea~h record systems with a common system. 

The departments estimated the life-cycle cost of this effort at about $25 

billion. However, as we noted in a recent testimony, the Secretaries 

41GAO, DOD Business Systems Modernization: Planned Investment in Navy Program to 

Create Cashless Shipboard Environment Needs to Be Justified and Better Managed, 

GAO-08-922 (Washington, D.C.: Sept. 8, 2008). 

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announced in February 2013 that instead of developing a new common 

integrated electronic health record system, the departments would focus 

on integrating health records from separate DOD and VA systems. 42 VA 

has stated that it will continue to modernize its existing system, called 

VistA, while pursuing the integration of health data, while in May 2013, 

DOD announced that it planned to purchase a commercial off-the-shelf 

product. The Secretaries offered several reasons for this new direction, 

including cutting costs, simplifYing the problem of integrating DOD and VA 

health data, and meeting the needs of veterans and service members 

sooner rather than later. Nevertheless, the departments' recent change in 

the program's direction and history of challenges to improving their health 

information systems heighten concern about whether this latest initiative 

will be successful. 

DODNA's Federal Health Care Center (FHCC) 

DOD and VA jointly undertook an IT project to support the FHCC in North 

Chicago, Illinois, which is the first medical facility to serve both 

departments' patient populations while operating under a single line of 

authority. As we reported in February 2011, despite an investment of 

more than $122 million, none of the FHCC's required IT capabilities had 

been implemented as planned when the center opened in October 

201043 While system components to support single sign-on and singlepatient registration became operational in December 2010, a component 

to support medical consults was not expected to be completed until 

March 2013, and the departments did not have a schedule for completion 

of the component to support pharmacy. We recommended that the 

departments strengthen their joint IT system planning efforts for the 

FHCC by developing plans that include scope definition, cost and 

schedule estimation, and project plan documentation and approval. We 

also noted that the two departments face barriers in three key IT 

management areas-strategic planning, enterprise arcMecture, and 

investment management-and recommended steps for improvement. 

42GAO, Electronic Health Records,' Long History of Management Challenges Raises 

Concerns about VA's and DOD's New Approach to Sharing Health Information, 

GAO-13-413T (Washington, D.C.: Feb. 27, 2013). 

43GAO, Electronic Health Records,' DOD and VA Should Remove Barriers and Improve 

Efforts to Meet Their Common System Needs, GAO-11-265 (Washington. D.C.: Feb. 2, 

2011). 

Page 44 GA0-13-796T 
55 


Insert offset folio 47 here 82434.047

Appendix I: Examples of IT Project Failures 

and Challenges 

FDA's Mission Accomplishments and Regulatory Compliance 

Services (MARCS) 

FDA's MARCS program is intended to automate workflow, help track and 

manage information about firm compliance with FDA's regulations, and 

eliminate FDA's existing stove-piped databases. However, the program 

has been rebaselined five times since 2002, the total estimated cost has 

grown from $221.4 million to $282.7 million, and the estimated completion 

date for initial development has slipped from September 2008 to October 

2016. According to OMB exhibit 53s from 2004 to 2013, FDA has spent 

approximately $160 million from fiscal year 2002 to fiscal year 2011 on 

MARCS. In March 2012, we reported FDA had not developed a 

comprehensive integrated master schedule for MARCS that would allow 

the agency to effectively gauge progress." We further reported that the 

agency was reevaluating the scope of the initiative and concluded that, 

until this assessment was complete, it was uncertain how or when much 

of the intended functionality and improvements associated with MARCS 

would be delivered. We recommended that FDA, in completing the 

assessment of MARCS, develop an integrated master schedule that 

identifies which legacy systems will be replaced and when; identifies all 

current and future tasks to be completed; and defines and incorporates 

information reflecting needed resources and critical dependencies. We 

further recommended that the agency use this schedule to monitor the 

progress of MARCS, 

IRS's Customer Account Data Engine (CADE) 

In December 2011, IRS ended further development of CADE, its effort to 

replace legacy systems for storing, managing, and accessing individual 

taxpayer accounts. IRS started developing this system in 2002 to replace 

the legacy Individual Master File processing system and house tax 

information for more than 40 million taxpayers while providing faster 

return processing and refunds. In December 2009, we reported that after 

over 5 years and $400 million, CADE was only processing about 15 

44GAO, Information Technology: FDA Needs to Fully Implement Key Management 

Practices to Lesson Modemization Risks, GAO-12-346 (Washington, D.C.: Mar. 15, 

2012). 

Page 45 GAO-13-796T 
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Appendix I: Examples of IT Project Failures 

and Challenges 

percent of the functionality originally planned for completion by 201245 In 

addition, each successive release of the system was expected to process 

more complex returns, but several technical challenges had not been 

addressed. Given this, IRS estimated that full implementation of CADE 

would not be achieved until at least 2018 or possibly as late as 2028. As 

a consequence, in 2011 IRS decided to stop development of new CADE 

functionality and rethink its strategy for modernizing individual taxpayer 

accounts to determine whether an alternative approach could deliver 

improvements sooner. This led to the development of CADE 2, a new 

program for replacing the Individual Master File. Beginning in January 

2012, IRS started using CADE 2 to process returns daily and issue 

refunds faster for about 84 million taxpayers. As of January 2013, IRS 

reported that there have been no significant problems with the system. 

NASA's James Webb Space Telescope (JWST) 

NASA's JWST project is designed to advance understanding of the origin 

of the universe. Since 2006, we have identified a range of issues with the 

project. For example, in July 2006, we reported" that the JWST project 

had experienced cost growth exceeding $1 billion-which increased its 

life-cycle cost estimate from $3.5 billion to $4.5 billion-and its launch 

date had slipped nearly 2 years to 2013. We also found that the program 

was not fully adhering to a knowledge-based acquisition approach, which 

ensures that resources match requirements in terms of knowledge, time, 

and money before program start. Accordingly, we recommended that the 

program apply such an approach. In October 2009, we reported that as of 

May 2009, the JWST contractor exceeded its planned cost target by 

$224.7 million and had not completed $9.4 million in planned work.47 A 

key driver in this cost overrun was greater-than-expected complexity in 

the work, which required additional resources. We concurred with the 

contractor's estimate that it would overrun its budget-worth 

approximately $1.3 billion-by $448.5 million. We also found that the 

program had not fully implemented practices for earned value 

management and recommended steps for improvement. In 2011, the 

45GAO, 2009 Tax Filing Season: IRS Met Many 2009 Goals, but Telephone Access 

Remained Low, and Taxpayer Service and Enforcement Could Be Improved, GAO-10-225 

(Washington, D.C.: Dec. 10, 2009). 

46GAO-06-634. 

47 GAO-l 0-2. 

Page 46 GA0-13-796T 
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(311292) 

Appendix I: Examples of IT Project Failures 

and Challenges 

project finalized a major replanning that resulted in further growth to the 

project's expected costs, as well as additional delays to its expected 

launch date. On the basis of the replanning, NASA announced that the 

project would be rebaselined at approximately $8.8 billion-a 78 percent 

increase to the project's life-cycle cost compared to the previous 

baseline-and would launch in October 2018-a delay of 52 months. 

USDA's Modernize and Innovate the Delivery of Agricultural 

Systems (MIDAS) Program 

USDA's MIDAS program is intended to modernize the IT systems 

supporting the Farm Service Agency's 37 farm programs. As we reported 

in July 2011, the implementation cost estimate is approximately $305 

million, with a life-cycle cost of approximately $473 million.4

' However, we 

found that the implementation cost estimate was uncertain because it had 

not been updated since 2007, and the program schedule had not been 

updated to account for delays. In addition, we reported that the program's 

management approach, while including many leading practices, could be 

strengthened. Finally, we found there was a lack of clarity and definition 

regarding the roles of executive-level governance bodies responsible for 

overseeing the program. We recommended that USDA update cost and 

schedule estimates, address management issues, and clarify the roles 

and coordination among governance bodies. 

46GAO, USDA Systems Modernization: Management and Oversight Improvements AroNeeded, GAO-11-586 (Washington, D.C.: July 20, 2011). 

Page 47 GAO-13-796T 
58 

Mr. MICA. Thank you. 

We will go now to OMB, Mr. VanRoekel. You are recognized. 

STATEMENT OF THE HONORABLE STEVEN VANROEKEL 

Mr. VANROEKEL. Thank you. Good morning, Chairman Mica and 

members of the committee. Thank you for this opportunity to testify on the Administration’s efforts to improve the management of 

Federal information technology. 

Since day one, the Administration has focused on harnessing 

technology to improve the operations of Government and better 

serve the American people. As I saw through my nearly 20 years 

in the private sector, including a stint as an assistant to Microsoft’s 

founder, Bill Gates, the innovative application of technology can 

transform organizations, enabling them to improve service delivery 

and expand customer value, while also cutting costs. As a Federal 

Chief Information Officer and now Acting Deputy Director for Management at the Office of Management and Budget, I am charged 

with bringing my experience and tools from the private sector to 

help take Government built for the 20th century into the 21st. 

This fundamentally requires a shift in how we think and how we 

operate. As leading private sector companies do, we must relentlessly focus on outcome and results; work collaboratively across traditional organizational boundaries; drive innovation; foster accountability; and, above all, put our customer, the American people, first. 

High-performing organizations are results-driven, focused on customer-facing outcomes rather than inward-looking outputs. They 

set business-oriented targets, such as revenue and profit goals, and 

then let operating units determine how best to achieve them. 

This thinking underpins our revamped approach to data center 

consolidation. Whereas, early on we looked primarily at raw outputs, tasking agencies with counting the number of data centers 

and tallying closures, we are now building on that first work by 

taking an outcome-and incentive-based approach, focusing on optimizing total cost of ownership and efficiency of operations instead 

of just the number of data centers. Agencies are now developing 

metrics that drive the outcomes we want to see: lower costs and 

higher productivity. Beyond closures and savings, we are now 

tracking metrics, including energy, facilities, labor, virtualization, 

and cost per operating system in these data centers. 

Additionally, successful enterprises are not constrained by traditional organizational boundaries, and operate in an integrated and 

unified manner. In the case of IT’s, this means treating CIO’s as 

strategic partners, on par with the other parts of the business. 

That is why, through PortfolioStat, a data-driven review of agency 

IT portfolios, I am pulling together agency leaders: deputy secretaries, CIO’s, CFO’s, CAO’s, chief human capital officers, and program officials. We all sit around the table and ask them to engage 

beyond their individual roles to make decisions collaboratively with 

a focus on delivering value to the American people. 

In taking this holistic approach to governance, we are aiming to 

avoid one-off isolated actions that can lead to unintended consequences. And by working as an integrated leadership team, we 

can better identify and eliminate duplicative and redundant investVerDate Aug 31 2005 09:21 Sep 30, 2013 Jkt 000000 PO 00000 Frm 00062 Fmt 6633 Sfmt 6633 C:\DOCS\82434.TXT APRIL
59 

ments that drain vital resources from mission-facing programs and 

activities. 

However, just as with any leading private sector initiative, the 

success of PortfolioStat hinges on being able to hold leadership accountable for results. This is why a key part of the annual 

PortfolioStat process is following up on commitments made in the 

previous cycle and evaluating agencies on progress over the prior 

year, something we do quarterly. 

This is also why we are sharing the results of our efforts to generate efficiencies across the IT portfolios with Congress through our 

IUIT report, the way we track cost-savings. To date, agencies have 

reported over $800 million in savings from PortfolioStat alone, with 

more on the way, and I am very proud that, as of this morning, 

slightly over a year of having this process in place and this costsaving track in place, we are announcing that we reached $1.37 billion. 

But to achieve breakthrough results, we must drive innovation 

throughout the Government. Innovative new technologies such as 

cloud computing, open data, mobile, are transforming how IT services are delivered and consumed. Through these new technologies, 

CIOs must shift from maintaining high-risk, high-failure monolithic systems, many of which you have highlighted here, that sap 

these IT development budgets. We need to shift to using services 

comprised of small, agile modules that lower risk and support 

emerging needs. 

In the end, all of our efforts must be in service for the customer, 

the American people. The aim is to provide agencies the ability to 

allocate their resources to high-value, mission-oriented activities, 

rather than commodity and back office functions, so the Government can focus on what matters most, the citizen. 

We have made significant progress over the past year, but work 

is yet to be done. We must continue to engage agency leadership 

through the PortfolioStat process, hold agencies accountable for the 

results, track savings, and keep our sights set on building the Government on the 21st century. 

Thank you. 

[Prepared statement of Mr. VanRoekel follows:] 

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[EMBARGOED UNTIL 9:30 AM, JULY 25] 

EXECUTIVE OFFICE OF THE PRESIDENT 

OFFICE OF MANAGEMENT AND BUDGET 

WASHINGTON, D.C. 20503 

TESTIMONY OF STEVEN VANROEKEL 

ACTING DEPUTY DIRECTOR FOR MANAGEMENT 

FEDERAL CHIEF INFORMATION OFFICER, 

ADMINISTRATOR FOR E-GOVERNMENT AND INFORMATION TECHNOLOGY, 

OFFICE OF MANAGEMENT AND BUDGET 

BEFORE THE HOUSE COMMITTEE ON OVERSIGHT AND GOVERNMENT 

REFORM 

SUBCOMMITTEE ON GOVERNMENT OPERATIONS 

UNITED STATES HOUSE OF REPRESENTATIVES 

July 25,2013 

Good morning, Chairman Mica, Ranking Member Connolly, and Members of the Subcommittee. 

Thank you for this opportunity to testify on the Administration's efforts to improve the 

management of Federal Information Technology (IT) investments and the use of data centers and 

cloud computing across the Federal Government. 

Since day one, the Administration has been focused on harnessing the power of technology to 

improve the operations of Government and deliver better service to the American people. While 

our IT investments make up a relatively modest portion of total Government spending, they have 

far-reaching impacts and touch upon almost every aspect of Government activity. And as I saw 

throughout my nearly twenty year career in the private sector, the innovative application of 

technology can transform organizations - enabling them to tap into new markets, streamline 

operations, and do more with less. As the federal ChiefInformation Officer (CIO) and Acting 

Deputy Director for Management at the Office of Management Budget (OMB), I am charged 

with bringing that same mindset to Government agencies. I come to work every day with my 

sights set on building the IT organization of the future, the agency of the future, and the 

Government of the future that will best serve the American people. 

We have already taken significant steps forward to help get us there. In March 2012, OMB 

launched PortfolioStat 1 to take an objective, data-driven look across agencies to identify 

common areas of spending with the intent of reducing duplication and lowering costs. So far, we 

have identified nearly 100 opportunities to consolidate or eliminate redundant or otherwise 

unnecessary IT investments representing more than $2.5 billion in potential savings that can be 

1 http;//\V\\IW. whitchousc.gov/silcs!dcfaultJfi1es/omb!mcmoranda/2012!m-12-I 0 I.pdt: 
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achieved from Fiscal Year (FY) 2013 through FY 2015. Agencies have already reported 

approximately $800 million in realized savings and more on the way. Currently, we are in the 

process of conducting FY 2013 PortfolioStae sessions and we look forward to continued 

progress and identification of further opportunities for improvement across the Federal IT 

portfolio. Under PortfolioStat, we are rationalizing our outdated IT infrastructure through the 

Federal Data Center Consolidation Initiative (FDCCI). As of May 2013, agencies have closed 

484 data centers, with a total of855 planned closures by the end ofFY 2013. 

To innovate our government, we launched the Digital Government Strategy in May of2012. 

This effort enabled us to reboot how our Government architects and operates IT systems, open 

up Government data to stream line agency operations and harness the innovative spirit of the 

American people, and drive the use of mobile computing and other innovative technologies and 

approaches. In May 2013, the President issued an Executive Order3 and launched the 

Administration's new Open Data Policy, taking concrete steps to make Government data more 

accessible and useful for the public and entrepreneurs to ignite economic growth and innovation. 

We look forward to continuing to build on these accomplishments as we move forward, as 

today's challenging economic times only emphasize the need to continue to drive innovation and 

efficiency in our Government. We need to continue to harness the transformative power ofIT to 

enable our government to deliver more for the American people at lower costs. And as 

technology evolves at an ever-increasing pace, we need to continually look for new ways to 

better serve the citizen. We must keep our sights set on building the IT organization of the 

future. We must continually strive for ideal. 

Technology Organizations Designed to Deliver 

Information technology enables us to deliver mission services to customers - in our case, the 

American people. The most effective technology organizations are able to focus on highervalue, mission-oriented activities rather than on commodity and back-office functions, as those 

activities are routinely being implemented well. For example, instead of focusing on email 

traffic, they focus on air traffic; instead of focusing on server farms, they focus on serving 

farmers. Chief Information Officers should also serve as catalysts for innovation - bringing in 

new technologies, such as cloud services and mobile computing, to improve customer service, 

maximize return-on-investment, and spark innovation across the agency. Agency CIOs must 

partner with those leading mission delivery units to together focus on most efficiently and 

effectively delivering customer-facing outcomes. 

Getting There 

2 http://v.ww. whitehouse.gov Isitcs/defaultlfiles/omb/memoranda/20l3/m-13-09 .pdf. 

3 hHp:ii\\ W\\,.gpo<gO\/fasys/pkg!DCPD~2() 1300318!pd !/DCPD-20 [300318J2ill: 
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Getting to the ideal IT organization, within agencies, requires a shift in how we think and how 

we operate. To get this right, we need to think not in terms of how to do things but rather in 

terms of what to do; not in terms of individual investments or stove piped organizational silos but 

rather in terms of entire investment portfolios and integrated management teams; not in terms of 

monolithic purpose-built systems but rather in terms of reusable component-based solutions. 

This is the shift we are undertaking now through PortfolioS tat and other management efforts. 

Focusing on Outcomes: Shifting From "How" to "What" 

To be truly effective, CIOs need to be able to exercise leadership in IT governance, spending, 

security, and program management across the enterprise. The needs of our customers - the 

American citizens - drive the "what" the CIOs help to determine the "how." This thinking 

underpins the recent shift in the approach to data center consolidation. In the initial stages of the 

effort, it was necessary to focus on data center counts and physical closures. Today, we are 

looking at new incentives are focused on a more outcome-based approach, to improve the overall 

efficiency and effectiveness of data center operations to optimize total cost of ownership. To this 

end, as we evolve the FOCCI as part of the FY 2013 PortfolioStat process, we are developing a 

comprehensive suite of outcome-focused metrics. The metrics - to be finalized later this 

summer - will span the full range of data center capabilities, and include energy, facility, labor, 

storage, virtualization, and cost-per-operating system metrics. 

Additionally, given the current state of technology, we realized it does not make sense to treat all 

data centers the same. We first expanded the scope of our data center inventory to a broader 

range of sizes to better assess the current state, and we then established the concepts of core and 

non-core data centers. A core data center is a highly-optimized, multi-use facility that serves as a 

fulcrum for mission service delivery, anchors the agency's platform for shared services, and 

provides rigorous and ironclad processes for security and redundancy. Non-core data centers are 

any remaining agency data centers not meeting this definition. 

To best achieve our desired outcomes, we are asking agencies to continue to consolidate noncore data centers and to optimize the efficiency of core data centers for total cost of ownership 

under the FOCCI. We believe this approach provides agencies with the right incentives and 

measures to drive behavior that will optimize the Federal Government's use and allocation of its 

computing resources. 

Designing for Re-Use 

Recent advances in technology, such as cloud computing and collaborative, modular 

development, are transforming how IT services are delivered and consumed. These shifts are 

forcing agencies to think more in terms of reusable components as opposed to purpose built 

systems. By providing "technology-as-a-service," cloud and services based approaches offer a 

viable alternative to building more data centers. In most cases, agencies no longer need to make 
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costly investments in large-scale data centers when computing power and IT services are readily 

available on demand. ChiefInformation Officers can shift from maintaining monolithic systems 

that sap budgets for new development to establishing platforms built on smaller modules that 

reduce the risk surface oflarge investments and support emerging needs across the agency. 

Analyzing the Enterprise 

TechStats, initiated in January 2010, were designed as face-to-face, evidence-based 

accountability reviews ofIT investments that enabled the Federal Government to intervene to 

turn around, halt or terminate agency IT projects that were failing or not producing results for the 

American people. As such, TechStats were an important first step in curbing wasteful IT 

spending. 

PortfolioStat represents the next step in shifting the focus for how we manage Federal IT. The 

intent of PortfolioStat is to provide agency leadership with a forum to collectively examine IT 

strategies, targeted outcomes, and overarching management processes across the portfolio, and to 

identify opportunities for improvement. 

By taking this more holistic view of IT at the portfolio level, rather than at a siloed investment 

level, it allows us to uncover additional opportunities for streamlining IT investments and 

reducing IT spending. So, while the initial success of PortfolioStat generated significant cost 

reduction opportunities in areas of commodity IT by consolidating or eliminating duplicative 

systems, or through making bulk IT purchases, going forward we are taking PortfolioStat to the 

next level by further analyzing spending and integrating FDCCI and cloud efforts with enterprise 

portfolio management decisions. In taking such a broad, integrated view, we can get at the root 

of the systemic issues which have led to the large-scale failures, cost overruns and schedule 

delays that have for too long plagued our largest and often most important IT investments. 

Agency leaders, whether CIOs, Chief Acquisition Officers, Chief Financial Officers, Chief 

Human Capital Officers or Program Officials, must engage beyond their individual roles and be 

strategic partners to ensure that decisions are driven by cross-functional data in the best interests 

of the American people. The PortfolioStat process fosters this cultural shift by driving 

consensus-driven decision making, rather than one-off, isolated actions that may lead to 

unintended consequences, benefitting one organization at the expense of another. 

I appreciate this committee's interest and continuing support. Thank you again for the 

opportunity to appear before the committee today and I look forward to answering your 

questions. 
64 

Mr. MICA. Thank you. 

We will hear from our final witness on the panel, Mr. David 

McClure, and he is with GSA. Welcome and you are recognized. 

STATEMENT OF DAVID L. MCCLURE 

Mr. MCCLURE. Thank you, Chairman Mica, and thanks, members of the subcommittee, for having me here today to talk about 

our efforts in data center consolidation and our partnership with 

OMB and our sister agencies to optimize new technologies being 

put into the Government. I want to focus on how my office at GSA 

is working in concert with OMB, the CIO Council to strengthen 

Government approaches to IT management, including consolidation 

and cloud security. 

As Steve noted in his remarks, our present approach with data 

center consolidation efforts in the Federal Government is focused 

on economies of scale and achieving greater efficiencies and overall 

IT portfolios by optimizing core data center performance. This is 

more meaningful than a singular focus on closure counts as the primary measure of success. 

Our role at GSA is to work in concert with OMB, the CIO Council, and its Federal Data Center Consolidation Task Force to assemble a complete view of the data center inventory and key variables affecting operational performance, and we do that by providing practical tools, standard data collection templates, guidance 

to the agencies for planning and executing their strategies, and 

consolidating their data centers. 

For example, we have created an online inventory portal where 

agencies can download the data being requested for their strategies 

and plans. We have developed a tool that helps agencies identify 

and select their core data centers. The tool uses nine draft criteria 

that we have reached consensus on Government-wide. Most importantly, we have built a world-class total cost of ownership model to 

facilitate robust data analysis, optimization planning, and datadriven decision-making, and it is now being used by all 24 CFO Act 

agencies. 

Industry experts and GAO have given the model very positive assessments. It allows agencies to analyze different scenarios to calculate the effects of different data center optimization strategies. It 

also allows, for the first time, an apples-to-apples comparison with 

other agencies as they examine outsourcing and cloud infrastructure options. Of course, we continue to expect to enhance the model 

with continued input from the CIO Council and from OMB. 

We are working in concert with the community on multiple 

fronts to get better results with IT investments being made in the 

Federal Government. The Federal Government, for the first time, 

has a comprehensive inventory of its data centers, one of the largest cost items in the Federal IT portfolio. As a result of our data 

collection and our TCO data model, agency CIO’s have more transparency into how these centers are being utilized and viable options for optimizing their operational performance. 

In summary, the partnership that Steve and I have forged between our offices for management change is grounded in our own 

private sector experience, using industry-leading practices that emphasize data-driven decision-making. I think Steve is bringing the 

65 

power of performance metrics to bear on the Federal CIOs as a 

lever for change. 

I want to thank you for having me here this morning. I am 

happy to answer any questions about GSA and our role. I really appreciate the leadership of this subcommittee and the full committee, because it is paramount to IT reform success, and we welcome continued interactions with you and your staff as we find 

meaningful ways to facilitate effective Federal IT investment results. And I would be happy to answer any questions from the subcommittee. 

[Prepared statement of Mr. McClure follows:] 

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STATEMENT OF 

Dr. David McClure 

Associate Administrator 

Office of Citizen Services and Innovative Technologies 

General Services Administration 

BEFORE THE 

HOUSE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

SUBCOMMITTEE ON GOVERNMENT OPERATIONS 

"Data Centers and the Cloud, Part II: The Federal Government's Take 

on Optimizing New Information Technologies Opportunities to Save 

Taxpayers Money" 

July 25,2013 
67 


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Chairman Mica, Ranking Member Connolly, and Members of the Subcommittee: 

Thank you for the opportunity to appear before you today to discuss GSA's role in the 

Federal Data Center Consolidation Initiative (FDCCI). We are fully committed to 

helping our agency partners achieve significant government-wide gains in efficiency 

and operational excellence through data center consolidation, and appreciate the 

Committee's leadership in ensuring the effectiveness of this important initiative. 

Background 

The Administration launched the Federal Data Center Consolidation Initiative (FDCCI) 

in 2010 to stem the large increase in federal data centers that had occurred over the 

past decade. Establishment of the FDCCI coincided with the initial drive to migrate 

federal IT infrastructure to cloud computing solutions, providing a framework for 

development of a baseline inventory that would enable agencies to make data-driven 

decisions about hoW to gain efficiencies and achieve cost savings within their IT 

infrastructure. Initially, four high level goals were defined: 

• Promote the use of Green IT 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 

• Shift IT investments to more efficient computing platforms and technologies 

In February 2010, the then Federal CIO issued guidance requiring agencies to identify 

their existing data center assets and formulate detailed consolidation plans that 

include a road map and consolidation targets. Specific requirements include: 

2 
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• Conduct an initial inventory of data center assets and provide a complete 

inventory update annually 

• Formulate and maintain a data center consolidation plan that identifies centers 

for consolidation, opportunities for optimization through server virtualization or 

cloud computing, and incorporate this plan into annual agency budgets 

• Prepare a high level road map to transition to the consolidated end state 

architecture 

Over the past three years, these goals and requirements have evolved to shift 

emphasis toward portfolio management, as agencies work to optimize and consolidate 

their data center populations. 

GSA Role 

GSA's Office of Citizen Services and Innovative Technologies administers the inventory 

of agency assets, collects data from agencies. and supports the Federal CIO Council's 

Data Center Task Force (Task Force). We provide agencies with practical tools, 

templates and guidance to effectively plan and execute their strategies to consolidate 

and close data centers. 

We also maintain the on-line data center inventory portal, and provide analytics to Office 

of Management and Budget (OMS) based on the inventory data submitted by agencies. 

Each agency is responsible for the quality and accuracy of the data they submit; agency 

Chief Information Officers (CIOs) are responsible for the validity of the inventory data 

submitted. We are responsible for reviewing agency inventories to identify missing 

information -- data fields that have not been completed. We do not verify or determine 

the extent to which the data provided accurately reflects an agency's actual assets. We 

coordinate closely with the Task Force members and OMB to help agencies achieve our 

shared objectives, and strive to meet emerging needs with on-going program 

improvements. 

Inventory Reporting 

Initially, OMB required agencies to report only data centers that were greater than 500 

square feet in size and that met one of the tier data center classifications defined by the 

3 
69 


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Uptime Institute. Based on that definition, the first data center inventory, reported in 

October 2010, identified the data center asset baseline as 2,094 data centers. In 

December 2010, OMB issued the 25 Point Implementation Plan to Reform Federal 

Information Technology Management, which set a target for agencies to consolidate at 

least 800 data centers, which was approximately close 40% of agency reported data 

centers, by the end of 2015. 

Once these initial results were examined, OMB determined that this approach did not 

capture a significant segment of agency infrastructure assets that could be consolidated 

and optimized. Data provided through April 30, 2013 indicated that more than 70% of 

agency data center assets are less than 500 square feet, with many of those assets 100 

square feet or less. Although the individual budgets for these server 'closets' are low 

and often contain embedded costs in overall building utilities, in aggregate across 

government, the costs of these data centers are significant. To achieve meaningful and 

sustainable infrastructure optimization, it is critical that agencies plans include the 

consolidation of these smaller assets into large, core data centers that address broad 

agency needs, for example shared and enterprise services. 

To address this gap, the data center definition was changed in late 2011 and officially 

clarified in March 2012. Under the FDCCI, a data center is now defined as "a closet, 

room, floor or building for the storage, management, and dissemination of data and 

information. Such a repository houses computer systems and associated components, 

such as database, application, and storage systems and data stores. A data center 

generally includes redundant or backup power supplies, redundant data 

communications connections, environmental controls (air conditioning, fire suppression) 

and special security devices housed in leased (including by cloud providers), owned, 

collocated, or stand-alone facilities. I 

As you would expect, this broader definition resulted in agencies identifying and 

reporting higher number of data centers. While this has created challenges in defining 

the government-Wide inventory baseline, it provides a far more accurate view of each 

agency's enterprise assets, and enables more comprehensive portfolio analysis. 

Agencies directly upload asset inventory information using standard templates to an 

on-line Inventory Portal that we developed to automate reporting and ensure 

I This definition excludes facilities exclusively devoted to communications and network equipment (e.g., 

telephone exchanges and telecommunications rooms). 

4 
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consistency, Agencies are responsible for data quality, accuracy, and completeness, 

and can review, correct and augment information as needed, As required by OMB, 

they must update closure information quarterly and their entire inventory on an annual 

basis, Each agency has access to its own information, but cannot access information 

of other agencies, The portal provides portfolio level transparency, enabling analysis 

and planning, both by agency managers and OMB, It gives OMB insight on 

government-wide asset inventory accuracy and completeness, which is critical to 

achieve optimization of the Federal IT enterprise, 

Core Data Center Selection 

The FDCCI has shifted from focusing strictly on closures to measuring efficiency of 

agency data centers in the context of overall agency IT portfolios, Based on the March 

27,2013 PortfolioStat memo from OMB, the FDDCI Task Force (Task Force) is 

categorizing agency data center populations into two categories: 

core and non-core, Core Data Centers are fundamental components of the agency's 

post consolidation environment. They will serve as primary consolidation points for 

enterprise IT services allowing the Department/Agency to achieve economies of scale 

and deliver the lowest possible Cost per Operating System per Hour (COSH), They are 

required to have sufficient power and cooling to support anticipated operations, 

appropriate redundancy to meet availability requirements, adequate space for 

anticipated growth, appropriate levels of physical security, support delivery of IT 

services for a diverse community of customers over a wide geographic area, and to 

comply with Federal and industry best practices for energy efficiency and operations, 

These categories will encourage agencies to concentrate on optimizing their core 

centers across total cost of ownership metrics, while striving to reach the governmentwide goal of closing 40% of non-core data centers. 

In conjunction with the Task Force, GSA developed a tool to help agencies identify 

and select their core data centers, It defines nine draft criteria that are key attributes 

for core data centers, Using these criteria, in addition to other agency information, 

agencies are currently identifying their core data centers in this year's PortfolioStat 

process: 

• Power usage effectiveness (PUE) must be lower than 3,0 

• Data center must be metered for use of electricity 

• Agency must have sufficient information to calculate a cost of operating system 

per hour (COSH) score 

5 
71 


Insert offset folio 59 here 82434.059

• Virtualization must be at least 40% - Virtualization is defined as a technology that 

allows multiple, software-based machines, with different operating systems, to 

run in isolation, side-by-side, on the same physical machine. 

• There must be at least a ratio of 10 servers per full time equivalent (FTE) 

• Power capacity must be at least 30 watts per square foot 

• Facility utilization must be between 20% and 80% of the data center space 

• Data center must meet at least the Tier One standards defined by the Uptime 

Institute 

• Data center must be agency owned, leased or in the cloud 

Total Cost of Ownership (TCO) Model 

Under the guidance of the FDCCI Task Force, GSA also developed a Total Cost of 

Ownership (TCO) model to facilitate robust data analysis and optimization planning by 

agencies. It models alternative consolidation paths, supports development of 

projected and modeled cost savings figures and funding needs, and enables informed, 

data driven decision making. The model was first made available to agencies in early 

2012 as a planning tool. Agencies were encouraged to use it and vet the business 

rules governing data normalization and processing. In addition, GAO reviewed the 

logic and business rules of the model. All 24 CFO Act agencies are now using the 

TCO model. Furthermore, the TCO Model is being migrated into a cloud-hosted 

application that agencies can easily access and use. 

The primary TCO model's primary capabilities are: 

• Aggregates data center costs and calculates the cost of delivering an operating 

system, whether virtual or physical. This allows agencies to compare data center 

costs to alternative hosting solutions and provides an overall snapshot of cost 

models. 

• Provides information and analysis for CIOs to make educated, cost-based 

decisions on what data centers to optimize and consolidate, assess the impact of 

potential optimization and consolidation decisions, and to determine where to 

most cost effectively deploy applications across their portfolio. 

• Provides an executive level dashboard for agencies to analyze different 

scenarios to calculate the potential return on conSOlidation/optimization 

investments - e.g. how much will increasing virtualization save the agency? 

As recommended by commercial and public sector best practice, the TCO Model uses 

the operating system (OS) as the base commodity for measuring efficiency and cost. It 

breaks down costs associated with data center ownership to the cost per OS per hour 

6 
72 


Insert offset folio 60 here 82434.060

(COSH) level. Commoditization of data center resources at the OS level allows for 

direct, apples to apples comparison with other agencies and across agency subcomponents. as well as with cloud-based Infrastructure, outsourcing and other 

infrastructure options. Agencies can make better, more informed consolidation and 

optimization decisions by using the TCO Model to analyze alternatives and associated 

projected costs. It enables agencies to weigh specific factors against of series of 

optimization and consolidation actions which, if taken, should enable improved mission 

service delivery. 

As agencies have gained experience with the tool and its applicability to IT planning, 

they have requested updates and changes. GSA and the FDCCI Task Force's 

Configuration Change Control Board evaluate all change requests, and prioritize 

approved changes. The model has been modified and enhanced over time to reflect 

these recommendations. 

Conclusion 

The FDCCI has made significant strides identifying, analyzing and optimizing Federal 

data centers across government. To date, over 484 data centers have been closed, 

with another 855 scheduled for closure by the end of FY 13. Data Center 

consolidation is an important part of broader federal IT reform focused on optimizing 

investments and resulting operational efficiencies that improve mission. results. GSA 

is providing valuable, practical tools and support to agencies that enable accurate, 

complete data center inventories and analysis. While there is much to be 

accomplished in the years ahead, we afe assembling a more complete, accurate and 

transparent inventory of data center assets than has previously existed. 

7 
73 

Mr. MICA. Okay, we will catch all of you right now, and I will 

start off with some questions. 

First of all, let’s look, Mr. Powner, Mr. VanRoekel. We started 

out in June of 2012, I guess, actually, in April of 2013 we were told 

that there were 3,133 data centers. Now we are told it is over 

7,000. Kind of a slight miscalculation. And then I think there were 

a couple gasps from members of the panel, joint bipartisan gasps 

when you said, Mr. Powner, that the Federal Government really 

doesn’t know what it has. What is going on? 

Let’s start with Powner. 

Mr. POWNER. Well, first of all, the 3100, we did report that at 

your May field hearing, and GAO found through our audit followup, we follow up with each agency, that there were an additional 

3,000 centers that were reported. 

Mr. MICA. So do you think the next time you come back we will 

be up to like 10? 

Mr. POWNER. Well, we are up to 7,100 now. 

Mr. MICA. I mean, there was a collective gasp when you said 

Government maybe really doesn’t know what it has. 

Mr. POWNER. And I stand by that statement. I think there are 

7100 now. Hopefully, we know what we have, but I wouldn’t put 

money on it. 

Mr. MICA. And I think, actually, now, wasn’t it you also, I have your little notes here, you said the savings could exceed $5 billion 

to $6 billion, rather the $3 billion that was projected? 

Mr. POWNER. Well, with the PortfolioStat initiative we have 

agencies reporting to us there is a $2.5 billion number floating 

around out there. Most agencies reported 2.4, then DOD came in 

alone and said they could save somewhere between $3 billion and 

$5 billion. So I think the $5 billion to $6 billion range is very accurate for savings on PortfolioStat. 

Mr. MICA. Then VanRoekel, he comes up and says today he is 

proud to announce the $1.37 billion in savings. That is your new 

number? Where did you get that? 

Mr. VANROEKEL. So, sir, we report quarterly to Congress through 

a mechanism called the IUIT report. That IUIT report cleared yesterday and was transmitted to Congress. 

Mr. MICA. For today? So instead of, where the hell were we here? We were at, this is projected savings were about $300 million by 

OMB according to a May report, and now you are saying we have 

jumped a billion? 

Mr. VANROEKEL. There are sort of two numbers that we are 

tracking simultaneously here. 

Mr. MICA. Is that from the closure of the 484? It says you have 

a total plan closure of almost double that, 855. So have you had 

a sudden lightening expansion. 

Mr. VANROEKEL. You are actually looking at two separate tracks 

of numbers. One number is just data. The number you are quoting 

with the $300 is just data centers. 

Mr. MICA. Okay. 

Mr. VANROEKEL. There is a broader set of IT savings which have 

data center implications. 

Mr. MICA. So this is sort of a self-reporting and they are telling 

you that they have saved money by doing that. 

74 

Mr. VANROEKEL. No. We actually track at the investment level 

through the IUIT report, and I would encourage you to check it 

you. 

Mr. MICA. So it wouldn’t be reflected in this. Then this $300 still 

stands, $300 million savings OMB as of May? 

Mr. VANROEKEL. In May, yes. In May, yes. 

Mr. MICA. So this is another billion. And where would you attributed that billion coming from? 

Mr. VANROEKEL. I am happy to share, with the permission of the 

Appropriations Committee, who we submit this report to, the report. 

Mr. MICA. Some data? 

I think it would be good for us to know. If you are making 

progress and it can be documented, we would like to know about 

it. 

Again, from the consolidation standpoint, we are somewhat still 

stuck in neutral, Mr. Powner? Actually, it looks like we are not 

only in neutral; it looks like we have gone in reverse because we 

actually have found more of these non-core centers than we anticipated. So we are behind the eight ball a bit. 

Mr. POWNER. On the data center consolidation, that now has 

been merged with PortfolioStat, but to be real clear on data center 

consolidation, there is to be 800 centers closed, more than 800 centers closed by the end of this fiscal year, by September. 

Mr. MICA. What happened is we start out, even if we close the 

800, that would have been 800 out of 3,100, and now we are looking at 7,100 or more, because we are not sure exactly. So it doesn’t 

appear that we are making progress. If it was 800 of 3,000, that 

would be somewhat more significant. 

Mr. POWNER. Mr. Chairman, I think there are fundamental questions about how many we will ultimately close and what the savings will be, and we agree that we need to optimize what remains, 

but still, with that large number of closures, there should be associated savings with that. 

Mr. MICA. Well, again, it sounds like you have testified, too, that 

there is even more potential savings, so we would hope that can 

be, the problem seems to be, VanRoekel has great credentials for 

his position, coming from the private sector and observing sort of 

the Federal mess and trying to straighten it out, but we have tried 

several tools that don’t seem to be that effective. We had this data 

consolidation, whatever the FDCCI, and then we have gone to this 

Pro whatever it is, and it doesn’t appear that these tools are that 

effective. 

Okay, we are developing matrix. You said we are continuing to 

developing matrix to, again, get a handle on this or to move forward with realizing these savings and consolidation. But is this an 

evolution of the two or three sort of programs you have already set 

up? Are they an evolution? Explain what you are doing to get these 

agencies to maximize the potential for consolidation and savings. 

Mr. VANROEKEL. I think the key is every day in the private sector you think about what impact are you driving, what is the result 

you are trying to affect. It could be selling products; it would be 

moving the stock price; it could be creating value. And thinking 

about that impact in working your way back from that is key. 

75 

So what we hope for here is definitely cost-savings and closures. 

That is an ends, not a means. And the means to get to that is 

thinking about what applications am I running; how many email 

systems do I have; what kind of things am I deploying; what are 

the characteristics of the outcome I want to drive. So if you ask any 

CEO their advice, they will say measure what you care about, and 

what I care about is the optimization. 

Mr. MICA. That is the end results in providing the IT services, 

but when you have, okay, let’s go back to Powner is telling me, 

what did you testify, server use is 5 to 10 percent? 

Mr. POWNER. Well, when we started the data center consolidation initiative, it was because average server utilization across the 

Federal Government was 5 to 15 percent. So that is a lot of unused 

capacity. 

Mr. MICA. Exactly. Exactly. That would be one of the sort of fundamental things I have. Setting up servers, the energy they use, 

the space they use, the inefficiency of 5. Where are we now? 

VanRoekel, it seems to me like you would look at that to begin 

with. I mean, getting the mission done is good, but you have people, they can certainly do the mission with lots of servers and all 

of these centers, but somehow the core expense and the consolidation efficiency goes back to the equipment, the hardware and the 

utilization of software that we aren’t—Powner, do you continue to 

monitor this? Where are we at now with, say, the utilization of 

servers? 

Mr. POWNER. We are not monitoring that now. We were monitoring that at one time because that was stated in agency consolidation plans, which we don’t currently have visibility into that. I 

think a key question is this: The core centers that remain, so we 

are going to close several non-core centers. The core centers that 

remain, where are we at on utilization on those. That ought to be 

a key metric. 

I agree with Steve, and there are a lot of metrics on power usage, 

efficiency, and those types of things, but if we are attempting to 

solve a problem of low server utilization, the core ones that remain, 

did we fix the problem. And we are ready to go out and measure 

that once those core centers are up. 

Mr. MICA. But, to me, that would be sort of fundamental. You 

are probably not going to do away with the core centers, but better 

utilization. 

Mr. POWNER. Absolutely. 

Mr. MICA. And if you are not doing that and you want to accomplish a mission, you look at the alternative. If it isn’t using that 

core, going to cloud or some other more efficient thing. But the 

problem is you go back to the matrix. We have had a couple of 

plans to kind of get this thing going and to try to move the consolidation, better utilization of the assets that we have, but that 

hasn’t, apparently, worked. 

Now, we will probably be here in six months and haul everybody 

back, and we may get more discovery of non-core data centers and 

maybe a few more of those closed, but it doesn’t appear like we are 

really getting a good handle on a means to make this happen. 

And then you have McClure here, who comes from GSA. 

McClure, you guys haven’t set a very good example in your own opVerDate Aug 31 2005 09:21 Sep 30, 2013 Jkt 000000 PO 00000 Frm 00079 Fmt 6633 Sfmt 6633 C:\DOCS\82434.TXT APRIL
76 

erations. You have closed only one, less than one percent. You have 

115 non-core data centers. What about yourself not operation? Anything to say on that? 

Mr. MCCLURE. Well, I think that data that you are looking at 

was the second quarter reporting from GSA. Since then there has 

been a lot of movement. GSA owns, primarily, non-core data centers, small data centers, and we were in the middle of collecting 

the date when that second quarter—— 

Mr. MICA. So what is the good news? 

Mr. MCCLURE. Well, the good news is we expect to close 75 of 

our 116 non-core data centers. 

Mr. MICA. Expect to, but how many? 

Mr. MCCLURE. Thirty-eight will be done by the end of fiscal year 

2013; another 37 in fiscal year 2014. 

Mr. MICA. So we will run from one to add 37 more is what you 

are telling us now. 

Okay. And, again, you have cited some of the things you are trying to do. Let me look at my notes here. You ever listen to WTOP 

in the morning? They have all these guys advertising that they can 

do this. That is the lighter side. I listen to WTOP in the morning 

and I swear they have 10 ads, by the time I am through shaving, 

on who can consolidate IT centers and how they do such a great 

job. It doesn’t sound like anyone is listening, though. 

But you are still developing tools to evaluate all of this and you 

have put some tool, the data center optimization. Explain that and 

how it works. 

Mr. MCCLURE. Well, I think it gets at the heart of what Dave 

was saying and what Steve was saying, and what you are saying, 

Mr. Chairman. We have to have a data-driven decision-making 

process and transparency into that data. The GSA, our office has 

created a total cost of ownership model which would provide data 

into a lot of these areas that we are have been talking about this 

morning; power capacity, utilization. 

Mr. MICA. But you are laying out sort of the things that you 

could do; it is not things that you should or must do? 

Mr. MCCLURE. No, no, this model exists. It is in the hands of all 

the agencies. It is an optimization planning tool that they can look 

at. 

Mr. MICA. Again, part of the solution would be to, and I have gotten to this. I have run out of time, but is to make certain, maybe 

VanRoekel has the tools to do this. Maybe from a procurement 

standpoint you would dictate or mandate that such-and-such has to 

be achieved. VanRoekel has to go in and sort of force them. I have 

always said we give you budget authority, and they aren’t performing and you just, you know, you have to have some teeth in 

the process to get people to do things. 

But I will leave it at that. I will come back. I want to give others 

an opportunity. 

Mr. Pocan. 

Mr. POCAN. Thank you, Mr. Chairman. 

This is a question maybe for Mr. McClure. According to the GSA 

website, the goals of the FedRAMP program include increasing the 

confidence and security of cloud solutions and security assessVerDate Aug 31 2005 09:21 Sep 30, 2013 Jkt 000000 PO 00000 Frm 00080 Fmt 6633 Sfmt 6633 C:\DOCS\82434.TXT APRIL
77 

ments. Under the process, cloud service providers must adhere to 

certain security requirements and undergo an independent audit. 

I am wondering a little bit about the confidence that agencies 

like DHS and DOD and NSA can have with information that is 

stored on the cloud, that it won’t be compromised in some way. 

Mr. MCCLURE. It is a great question. I think if we follow the 

baseline security requirements that we have established in 

FedRAMP and we do the independent certifications by these thirdparty assessment organizations that know how to assess cloud security, I think we will have much, much greater confidence that 

our data at all trust levels is really secure. I think FedRAMP is 

trying to instill in the Government a trust level that has not been 

there before, and to date we are finding it really does improve the 

confidence and trust of both the agencies and the providers that 

they are doing that. 

Mr. POCAN. And given all the controversy about cyber attacks 

and things, what confidence do we have that, as hackers are constantly revising how they are finding ways in, how confident are 

you that that FedRAMP process will provide enough flexibility that 

we can keep up with any evolving schemes or new technologies to 

try to break through? 

Mr. MCCLURE. I think it will do it in two ways: number one, we 

are always going to be changing the FedRAMP security program. 

As the NIST security guidelines change, we incorporate that into 

the FedRAMP baseline, so it is always going to be up to speed with 

what NIST is recommending the Federal agencies do. 

Secondly, we are putting a lot of stock in the ability of these 

agencies to do continuous monitoring so that they have a real-time 

operational view of their security posture of themselves and their 

cloud providers. That is the best defense we can put in place, is 

having very robust, continuous monitoring. 

Mr. POCAN. And these audits, who is going to do the audits and 

what do they typically consist of? 

Mr. MCCLURE. The audits that are done for FedRAMP certification are done by independent assessment organizations either off 

a list that we have put together, where companies have passed our 

accreditation that they actually have the capability to do the cloud 

assessments, or independent ones that exist in the marketplace. 

Based upon those audits, we can then review that in my program 

management office and determine whether there are any follow-up 

questions. Or the agencies can use them and feel much more confident that the audit has been done consistently, according to baseline standards, and is repeatable, can be reused across Government. 

Mr. POCAN. And the timeline for FedRAMP to be fully operational? 

Mr. MCCLURE. It is moving into fully operational status now. We 

have run it for a year in what we call an interim operating capability. We didn’t want to roll this out Government-wide until, if you 

pardon the expression, kick the tires, so we wanted to make sure 

this worked. We wanted an opportunity to refine it for success, and 

we think we are ready now. 

Mr. POCAN. Thank you, Mr. Chairman. I yield back the remainder of my time. 

78 

Mr. MICA. I thank the gentleman. 

Mr. Meadows, the gentleman from North Carolina. 

Mr. MEADOWS. Thank you. I appreciate the insight. I must say 

that I am troubled by some of the things that I am hearing here. 

Mr. McClure, let me start with you. So, to date, you have closed 

one data center, is that correct? 

Mr. MCCLURE. I will check as of today. I don’t know if it is one 

or more, but there are several that we are nearing the close. 

Mr. MEADOWS. My data says that you have closed one in three 

years. And you are going to now, according to your testimony, you 

are going to close 37 in two months? What happened to go from one 

in three years to 37 in the next two months? How do you plan to 

accomplish that? 

Mr. MCCLURE. Well, I don’t operationally own the task myself, 

the CIO of GSA does. 

Mr. MEADOWS. So if it doesn’t happen you can blame them? 

Mr. MCCLURE. I am not blaming, I am just stating a matter of 

fact. 

Mr. MEADOWS. Well, we need to know where does the buck stop. 

Does it stop with you or does it stop with GAO? 

Mr. MCCLURE. It should stop with the head of the agency, as 

with all these matters. 

Mr. MEADOWS. So it stops with you. 

Mr. MCCLURE. I am not the head of the agency; I am the head 

of an office that provides the tools that we talked about to help get 

this job done. 

Mr. MEADOWS. So if we bring you back in two months and 37 of 

them are not shut down, who should we hold accountable? 

Mr. MCCLURE. Well, the CIO holds responsibility in each agency 

for doing the data center consolidation work and for estimating 

plan closures, so the CIO owns the issue. The head of the agency 

is ultimately responsible. So those are the two individuals at GSA 

that have their eyeballs on the situation. 

Mr. MEADOWS. So what happens if they don’t make the 37? 

Mr. MCCLURE. I think you should ask for an explanation. 

Mr. MEADOWS. So Ms. Coleman would need to come here and say 

why she couldn’t get it done? 

Mr. MCCLURE. I would recommend that, yes. 

Mr. MEADOWS. All right. 

Mr. MCCLURE. I think that would be true, by the way, across the 

board for every agency. A lot of the responsibility here lies at the 

CIO and head of the agency level. So the same conversation could 

be repeated across multiple agencies. 

Mr. MEADOWS. So essentially we have a whole bunch of people 

that come and give testimony before Congress, but really don’t 

have the responsibility for implementing those things. So we have 

hearing after hearing after hearing and nothing gets done? Is that 

what happens? 

I mean, I am at a loss on how one got closed. I think you have 

three core centers, 115 non-core centers, and we have one closure 

in the last three years, and now, all of a sudden, we are going to 

ramp up. Why is that? I mean, who made that decision to ramp 

up and how is that going to happen? 

79 

Mr. MCCLURE. Well, I think the thing to remember is that, 

again, we had a definition change. That is the reason why the 

number of data center number changes. 

Mr. MEADOWS. Okay, but we have heard from testimony, I think 

over here, that actually the number of data centers have increased. 

But they really haven’t, so they have stayed static. 

I think OMB, according to your briefing, you knew as far back 

as June of 2012 that we actually had 6700 centers, and that has 

grown to 7100 now, is that correct? 

Mr. VANROEKEL. Sir, I actually evolved and put more rigor behind the definition to expand the definition. 

Mr. MEADOWS. Of what a data center is? 

Mr. VANROEKEL. Of what a data center is. What I didn’t want 

to do is have Federal agencies either splitting up big ones and putting them in small rooms or hiding computing resources, because 

you add up those small ones, you are going to get as much as a 

big one, and I want to track all of them. Our prior definition only 

tracked the very large. If we change the definition—— 

Mr. MEADOWS. So your prior definition of large ones—— 

Mr. VANROEKEL. Was over 500 square feet, I believe. 

Mr. MEADOWS. Okay. And that was 6700? 

Mr. VANROEKEL. Was the 3,000. 

Mr. MEADOWS. Is the 3,000 number that they originally reported. 

Mr. VANROEKEL. So I came in and said I don’t want anything 

hidden, I don’t want resources in dark corners. 

Mr. MEADOWS. Okay, that is reasonable. 

Mr. VANROEKEL. I expanded the definition to say we are going 

to go into the small ones too. That contributed, then, to the—— 

Mr. MEADOWS. Okay. So what you are saying is that expansion 

is really a function of changing the criteria of what we call a data 

center. 

Mr. VANROEKEL. To be more comprehensive and derive better inventory. 

Mr. MEADOWS. All right, so let me pick up on one other line of 

questioning, then, because I think what we are saying is our server 

capacity right now, according to Mr. Powner, we are operating at 

5 to 15 percent. Would you agree with that? 

Mr. VANROEKEL. I don’t have raw data, but that is probably an 

industry—— 

Mr. MEADOWS. So why are we continuing to buy new servers, 

then? And I am not talking about replacing existing servers. We 

are actually purchasing additional servers. So why are we doing 

that if we have excess capacity? 

Mr. VANROEKEL. The way that technology grew up and the way 

that we built data centers very much follows what the private sector did, which it was—— 

Mr. MEADOWS. Well, if I did this in the private sector I would 

go out of business. 

Mr. VANROEKEL. Until about mid-2000, the private sector did 

this. 

Mr. MEADOWS. I understand. 

Mr. VANROEKEL. Server utilization for corporate customers—I 

was part of the leadership to the server division of Microsoft—was 

7 percent utilization prior to this new technology coming onboard 

80 

called virtualization that allows you to put more stuff on physical 

hardware. You need new hardware to run that technology. There 

is new investment. 

Mr. MEADOWS. But that is what I am saying, this is not replacement of existing servers; these are actually additional servers, according to the data that I have. 

Is that correct, Mr. Powner? 

Mr. POWNER. The increased inventory is existing, what currently 

exists at these agencies, where we are discovering more based on 

the new definition that Steve laid out. So—— 

Mr. MEADOWS. So this is just a definitional change, it is not an 

actual increase in the number? Are you all sure about that? 

Mr. POWNER. I think it is both. I think it is both. Here is what 

happened. Initially we started off, the definition was 500 square 

feet or larger. Then we expanded the definition and things were 

smaller. Steve did the absolute right thing because there were a lot 

of opportunities to save by including these additional things. So the 

definitional thing resulted in an uptick. 

But I think over time, based on our audit work, because we go 

in and ask agencies what their inventories are, we see these inventories continuing to grow over time. So it is twofold, it is the increase, it is the change in definition, and it is also they are discovering more what they have. 

Mr. MEADOWS. All right. So let me go back and pick up on the 

national security. If we have 7100 data centers, from a security 

standpoint how do we manage that security aspect from the standpoint of cybersecurity, a number of things in terms of attack? Because it seems like it would be the more concentrated it is, the 

easier it is to provide a higher level of security. So, as we grow that 

out, is there a matrix right now that you are looking at to try to 

say, well, optimum efficiency would be to get down to 2,000 servers? I mean, do you have a number? 

Mr. VANROEKEL. It is less about the raw, the number of data 

centers, of course, is important, as we are talking about today. 

Cybersecurity related to data centers is just a little bit different in 

the way you think about that. And the way we build our cyber capabilities is grounded in FISMA, the Federal Information Security 

Management Act, and we use a process called CyberStat, much like 

PortfolioStat, that tracks key metrics, and effectively what you 

want to make sure you are doing is that when traffic comes and 

goes from these centers, that they are going through these trusted 

Internet connections and that we have capabilities there—— 

Mr. MEADOWS. But fewer data centers would make that an easier 

task or not? 

Mr. VANROEKEL. I think it would make it an easier task, definitely, and that is a byproduct of—— 

Mr. MEADOWS. So where do we need to be? If you had control 

over all the other agencies and you are the guy that is in charge 

and ultimately the buck stopped with you, how many data centers 

do we end up? What would you do if you were a private sector guy 

trying to make money here? What would you do? 

Mr. VANROEKEL. Fewer is better and optimized is better. 

Mr. MEADOWS. How many fewer? 

81 

Mr. VANROEKEL. It would depend on the size of the agency, the 

mission of the agency, what is the relationship of that. Homeland 

Security, for example, has defined three core data centers. 

Mr. MEADOWS. Sure. 

Mr. VANROEKEL. I think that is a good target to think about. 

And these are highly optimized, they follow all the guidelines that 

we have put forth in this approach to say where we need to go. I 

can’t extrapolate for the whole of Government. 

Mr. MEADOWS. And that is fine, but so we don’t just have hearing after hearing, I would ask if you would go ahead and try to put 

together what the plan is so we know whether—one of the criticisms of your agency, and I understand this is a new role, is that 

you are not measuring, that you are not effectively measuring, and 

I think that that can be maybe accurate in some ways and inaccurate in others. I will give you that. What I would love to see is 

how do we know whether we are being successful or not, so really 

would love for you to follow up on that, have your staff follow up 

on that. 

The second part of this, and this is probably as critical, what can 

we do as Congress to give a real incentive for us to save money. 

I have hearing after hearing where we save billions and billions of 

dollars, but yet we ask for more and more money. So what I would 

love to do is to find a real way where you say, Mr. Meadows, if we 

did this, if you offered us this, we could assure that we could get 

$50 billion in savings or over the life, or whatever it is. 

But I am talking about real incentives where, hopefully in a bipartisan way, we can come up with something that gives you incentive. I would love to hear that from each one of you, not in terms 

of answering that question, but as a follow-up, if you would submit 

that to us. 

Thank you so much. I yield back, Mr. Chairman. 

Mr. MICA. I thank the gentleman from North Carolina and recognize our ranking member, Mr. Connolly now. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

Forgive me, Mr. VanRoekel and Mr. McClure, for not being here 

for your testimony, but I have been trying to catch up. I had to 

move an amendment on the Floor and the Republican manager accepted my amendment. So I don’t know whether it means it was 

just awful and brilliant or whether apparently I wrote an amendment that was so weak that even for them it was acceptable. I 

don’t know, but I will take the gift. 

Mr. Powner, if I understood your testimony correctly, you, inter 

alia, said we seem to be sliding backwards in terms of certain 

metrics with respect to, for example, data center and Dashboard, 

is that correct? 

Mr. POWNER. I think in terms of the Dashboard, yes, on the data 

centers what we want to do is we want to track savings. I think 

we want to know what the inventory is, transparency on what the 

inventory is, what the savings are, and then how we optimize what 

remains. And transparency around that is key. 

Mr. CONNOLLY. Okay. I also thought I heard you say there is 

some concern that the Government doesn’t fully know what it has 

when it comes to data centers. 

82 

Mr. POWNER. Well, when we see the inventories growing as they 

have over time, you can just take the snapshots in time; it keeps 

growing, so there is still a concern have we still captured everything. 

Mr. CONNOLLY. And I also thought I heard you say that you 

thought the FATAR legislation passed out of this committee and 

passed on the floor of the House would be actually helpful to the 

Government in trying to get its arms around this subject matter. 

Mr. POWNER. On data center consolidation optimization, it would 

codify that in law, clearly. 

Mr. CONNOLLY. Mr. VanRoekel, your reaction to those elements 

of Mr. Powner’s testimony? 

Mr. VANROEKEL. As I mentioned earlier, I do agree that there is 

a level at which the inventory management, when you cast a net 

across the Federal Government, there will be things you probably 

aren’t finding just given the sheer size. I think our rigor around the 

definition and modifying that definition over time to capture more 

of what is out there has been the driving force behind the number 

increasing, less about sort of inventory management. But I do 

think there will be edge cases where we will have more come up 

in different cases. 

Mr. CONNOLLY. Can I interrupt you there? I take that point, but 

if you look at GAO’s report agency-by-agency how you are doing in 

data center consolidation even before the announcement of an additional 4,000, it is pretty slim pickings for most Federal agencies. 

Mr. VANROEKEL. If you visit a data center and understand how 

a data center works, it is not literally walk up and pull the plug 

and say I am going to shut this thing down. And the incentive 

structure you want to establish here needs to be one where you 

drive to optimization, because if you lay a metric out and say close 

data centers, cut them by 30 percent, cut them by 40 percent off 

just a denominator of inventory, what you will have happen is Federal agencies, in many cases, will literally take a forklift, pick up 

small data centers, move them to a larger room and plug them 

back in. 

Mr. CONNOLLY. And that is called compliance. 

Mr. VANROEKEL. And that is called compliance. So you have two 

next to each other and they remove the wall between them, thus 

reducing that by 50 percent. That doesn’t get where we want to go, 

which is to get that utilization up, get the optimization up, get the 

service out of that data center to increase in such a way that you 

drive better outcomes for the mission of that agency and for the 

American people. 

So the incentive structure has to match to the measurement in 

a way that I think needs to drive the behavior we want to see and 

the outcomes we want to drive. So the uncertain budget environment we have been in for a while, CIO authorities, which the 

FATAR bill looks at that, and other driving factors contribute to 

this phenomenon of not being able to just shut one off. 

Mr. CONNOLLY. I do want to be clear. The FATAR legislation is 

not sort of a Luddite approached to the subject matter; it actually 

does require tracking and it does have other measurements about 

utilization and so forth that are incorporated into the concept. So 

I think we kind of took your point. But I would also say to you that 

83 

the metrics of the number of data centers and the need to reduce 

them came out of this Administration. I mean, that wasn’t something that ended up here; that was something that came out of the 

White House. 

Mr. VANROEKEL. And we still stand behind that direction. 

Mr. CONNOLLY. We kind of hope you do. We take your point, and 

we are not always good about nuance, but we are going to try to 

be responsive on a nuance way, the bottom line is efficiency, utilization. But we have to have some metric that says we have too 

many of these things, and that alone tells us we are inefficient; 

that tells us, you know, sort of there’s no place like home syndrome: I know Steve has a better one, but kind of like ours right 

here, and we are not going to give it up willingly, and we are going 

to use every bureaucratic trick in the book to protect and preserve 

it, irrespective of utilization. Utilization, we can have Harry and 

Shirley go there twice a day instead of once a day and get up to 

utilization; it doesn’t really get to what we are trying to get at. 

And I was saying to the chairman, he shares my view that I 

think the fact that you are now also at OMB gives us some hope 

that from a management point of view we can perhaps persuade 

people that there is a better way of doing this and it is win, win, 

win. We can save on energy, we can save on budgets, especially in 

a time of contracting budgets, and we can make ourselves more effective. So we want to be supportive of that, but we are frustrated 

that the numbers are not particularly felicitous. And I hope you 

can understand that, from our point of view, that is to say. 

Mr. VANROEKEL. Yes, I can definitely understand that. 

Mr. CONNOLLY. Okay. The IT Dashboard, the Department of Defense reports zero investments with significant concerns and has 

not updated the status of most of its investment over two years, 

and that more TechStat reviews obviously need to occur, as Mr. 

Powner said in his report. What are we doing about that? I mean, 

that is actually, to me, astounding. Here is the biggest expenditure 

of Federal dollars, here is the biggest investor of Federal dollars, 

here is the biggest client we have, from your point of view, and it 

hasn’t even essentially updated its Dashboard in two years. Huh. 

I guess we have been busy doing other things. 

Mr. VANROEKEL. I think it speaks to a couple aspects. One is we 

don’t, in OMB, in my office, track the self-reported status as the 

key indicator of performance on investments. It is a fool’s errand 

to track a self-reporter. You would never have a contractor self-report their results or things like that. So we go deeper than that 

and look at how often do they change schedules; where are they on 

budget, are they hitting budget; what is their time to delivery on 

services, all of these kinds of things. 

I have actually added features to the IT Dashboard in the last 

couple years that give me indications when agencies go in and do 

re-baselines, meaning they have changed their data in some fundamental way. Those, to me, are the red flags you want to look at. 

And where we will lift up and say there is something going on 

there, where self-assessment will never do that for you. And I 

agree that it is laughable, to some degree, on DOD not reporting 

any core investments, but we know; we track and we know where 

those are. 

84 

The second part of it is CIO authorities. And I think looking at 

the authority of the CIO, the person whose picture is next to all 

those investments is Terry Takai. Terry Takai has very little influence over most of the investments that you are looking at on that 

Dashboard and has very much an inability—you know, she is reporting what she gets from the self-reported aspects of the people 

out in the periphery, and I think it speaks to a larger theme of 

something we need to look at in Government around what is the 

authority of the CIO or whose picture should be next to that. 

Mr. CONNOLLY. Well, funny you should bring up that subject, Mr. 

VanRoekel. FATAR addresses that issue in terms of the streamlining of CIOs in Federal agencies and the infusion of authority, responsibility, accountability in a CIO, a principal CIO for each of the 

26 major agencies. And I think Mr. Powner, in previous testimony, 

has highlighted that as well. So I commend the bill again to you, 

because I think it tries to move us in that direction without a 

heavy hand. But it is trying to inculcate more flexibility for a chief 

CIO. It doesn’t abolish all other CIOs, but I would commend it to 

you that it is designed, again, to address the very thing you are 

talking about. 

Now, DOD, because of jurisdictional issues, is not directly addressed, but sooner or later it will be, and we will be glad to work 

with the Administration to make that happen. 

Some questions have come up recently about energy savings performance contracts, and let me ask what is the role of OMB in approving such projects. 

Mr. VANROEKEL. OMB doesn’t, accept for interpretation of policy 

or matters where procurements reach a certain threshold where we 

have a review board process that is part of our normal Office of 

Federal Procurement Policy work, review those and provide counsel 

to agencies; it is the agency’s decision to go forward and the Procurement Office to go forward with the procurement. 

Mr. CONNOLLY. So OMB is not going to play any kind of direct 

role in the awarding of such contracts, the approval of such contracts, the extension of such contracts, or even just conceptually 

the general approbation of or disapproval of those as a tool. 

Mr. VANROEKEL. We provide guidance in that context. 

Mr. CONNOLLY. Okay. I thank you. 

And, Mr. McClure, when we had our field hearing there were 

concerns raised about GSA’s performance with respect to data center consolidation. You were not there to answer those questions, so 

I want to give you, as my last question before we have to vote, an 

opportunity. How is it going? I think after the hearing you did have 

some announcements, and that was good. It would have been nice 

to have them at the hearing. But the concern is that this is a sustained trajectory, not just a let’s please them and give them something to report, and it kind of looked like the latter more than the 

former. So reassure us that that is not true, please. 

Mr. MCCLURE. Well, I do want to reassure you. I think it might 

have the appearance of that, but, as I was explaining while you 

were gone, there was a lot of data collection going on that had not 

ended by the second quarter reporting period, which is the data 

that the committee had at that time. So, as a result, shortly after 

the hearing, with updated numbers, our situation looks much betVerDate Aug 31 2005 09:21 Sep 30, 2013 Jkt 000000 PO 00000 Frm 00088 Fmt 6633 Sfmt 6633 C:\DOCS\82434.TXT APRIL
85 

ter; 38 planned closures by the end of fiscal year 2013 and an additional 37 in fiscal year 2014. 

Mr. CONNOLLY. Can I interrupt you there, Mr. McClure, just to 

satisfy myself? The chairman was reminding me the report we had 

was you have done one. Now you have 37 more in the pipeline, but 

how could we have taken so long to just have one? 

Mr. MCCLURE. Well, I will give you some explanation that revolves around what Steve just said, and that is that CIOs in the 

Federal Government often don’t have complete control over all data 

centers in that department or agency. That was the case until May 

of this year, June of this year, in which Administrator Tangherlini 

consolidated CIO authority under a single CIO. So the ability to 

collect this data I think has been greatly enhanced with that kind 

of authority being vested in the CIO. 

Mr. CONNOLLY. So, in other words, for example, had the FATAR 

bill been law, we might have been able to have happier numbers 

much sooner. 

Mr. MCCLURE. I think it can help, because it has helped there. 

Mr. CONNOLLY. Stop right there; you are doing fine. 

[Laughter.] 

Mr. CONNOLLY. Okay, we have to go vote. This is part of a dialogue. I certainly appreciate you being here. I hope we have conveyed, through our frustrations we share on a bipartisan basis. We 

also, on a bipartisan basis, want to be partners. We want to help. 

This is an important part of Government that doesn’t get sufficient 

attention. But in terms of our future, the investments we make in 

technology are going to drive everything, not just something. And 

from megadata evaluation to cybersecurity attacks to wonderful 

ability to do great things more efficiently, you all have the keys in 

your hands to help us make that happen and we want you to be 

successful. 

So we want to try to help create an environment for success, so 

I hope you look at it in that spirit. Congress has an oversight role 

and we have to throw the flag down when we think something has 

gone wrong, but that is not the end game for us. And I can say my 

partner here, the chairman, Mr. Mica, has gone out of his way to 

try to create this subcommittee as a forum to be helpful and to be 

useful. So we look forward to working with you and thank you so 

much for being here today. 

Thank you, Mr. Chairman, for the hearing. 

Mr. MICA. Thank you, Mr. Connolly. 

I will re-echo his comments that we are trying to find some constructive means of helping you move forward, both GSA has an important role, certainly OMB, and we want to talk some more, Mr. 

VanRoekel. I want to also see if the legislation we have pending 

provides you with the tools. You need some teeth. You are a nice 

guy. You came from the private sector and mission-oriented. 

I love all that, but the difference is in the private sector the people that are involved are business people who are bottom-line people; they are doing everything they can to bring the cost down, the 

efficiencies, maximize the assets that they have. Here you have a 

Federal agency; it is just more manna from the Treasury and they 

don’t have that same incentive. But we are going to figure out a 

way to give you all the tools you need to help us get the job done. 

86 

And thanks, Mr. Powner. Keep us posted as you reveal more of 

the findings that cause a bipartisan gasp in any panel of Congress 

like you did today. 

So, with that, I am going to ask that we leave the record open 

for two weeks. We have additional questions we didn’t get to. We 

want to have those answered in the record. So, without objection, 

so ordered. 

There being no further business before the Government Operations Subcommittee, this hearing is adjourned. Thank you. 

[Whereupon, at 10:53 a.m., the subcommittee was adjourned.] 

(87) 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

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Insert offset folio 61 here 82434.061

"Data Centers and the Cloud, Part II: The Federal Government's Take on 

Optimizing New Information Technologies Opportunities to Save Taxpayers 

Money" 

Questions for the Record 

Fed RAMP (the Federal Risk and Authorization Management Program) is a standardized 

approach to cloud security certification that will save the government money, time, and 

staff by eliminating redundant individual agency security assessments. GSA claims it will 

save an estimated $200,000 per authorization. FedRAMP is a critical part of OMB cloudfirst policy. Yet, we continue to hear complaints from the agencies and industry about the 

program's slow progress. 

The Committee is aware that, as of July 2013, eight cloud services providers are now 

compliant with FedRAMP requirements. Five cloud providers have been granted 

government-wide provisional authority, including AT&T, Autonomic Resources, CGI 

Federal, Hewlett-Packard and Lockheed Martin. Three other cloud providers have been 

granted agency Authority to Operate, including Amazon Web Services' GovCloud and US 

EastJWest offerings, each receiving authorization by the Health and Human Services 

Department. The Agriculture Department's National Information Technology Center 

(secure government cloud provider) has been granted an authority to operate by the USDA 

Office of the CIO. 

The Committee continues to hear complaints from the agencies and industry about 

FedRAMP's slow progress. In fact, the program currently stands at just eight cloud 

services providers including the ones granted by individual agencies. Mr. VanRoekel 

stated in his response to the QFR following OGRs full committee's 1/23 hearing--

"The FedRAMP program office at GSA anticipates that additional Provisional 

Authorizations will be forthcoming with continued authorizations during FY 2013." 

Ql: What is the current status of FedRAMP and how many cloud services providers do 

you anticipate to have under the government-wide FedRAMP by the end of FY2013 and 

FY2014? 

GSA Response: 

The FedRAMP Program Management Office (PMO) is currently working with ten different 

cloud services through the provisional authorization process with the FedRAMP Joint 

Authorization Board (JAB) while also maintaining the continuous monitoring programs for the 

five provisionally authorized cloud services. The FedRAMP PMO anticipates capacity to 

increase over the course of the next year to enable processing of about fifteen cloud services 

while maintaining the continuous monitoring activities of those services provisionally 
89 


Insert offset folio 62 here 82434.062

authorized. Additionally, the FedRAMP PMO assists agencies across the Government, like the 

U.S. Department of Health and Human Services and U.S. Department of Agriculture, through 

their own security authorization processes to ensure the cloud services they use meet the 

FedRAMP requirements, 

As the June 2014 deadline approaches for agencies to comply with FedRAMP, the FedRAMP 

PMO anticipates an increase in agency authorizations along with the JAB provisional 

authorizations that meet the FedRAMP requirements, The FedRAMP PMO is assisting the 

Office of Management and Budget (OMB) to verify agency compliance through PortfolioStat 

reporting and reviews, Additionally, the FedRAMP PMO continues outreach to Federal agencies 

to assist with leveraging the current provisional authorizations, 

The FedRAMP PMO anticipates having another three services provisionally authorized by the 

JAB through the end of the FY 2013, for a total of eight services through the JAB. Additionally, 

the FedRAMP PMO anticipates having another twelve provisional authorizations by the end of 

2014, for a total of twenty services through the JAB. 

Q2: Do you believe the FedRAMP process will deliver thc cost savings predicted? 

GSA Response: 

Yes, Preliminary results from agencies leveraging F edRAMP authorizations show that agencies 

are attaining cost avoidance of more than $200,000 per authorization leveraged. 

The System for Award Management (SAM) is an E-Gov initiative aims to integrate 10 

different legacy acquisition systems into a single shared system - streamlining processes, 

eliminating redundant data, and saving taxpayer money, Late last fiscal year (9/2012), the 

initial launch of this system failed. The Committee is aware that OMB and GSA (SAM's 

program management organization) has since held TechStat reviews and restructured the 

program. 

Q3: Please provide a short chronology (month and year) outlining the initiative's 

inception, deployment, and efforts made by the new leadership; 

GSA Response: 

System for Award Management (SAM) 

High Level Chronology 

(as provided in July 2013 to the House Committee on Government Oversight and Reform) 

Ju129,2012 

Aug 13, 2012 

SAM Go-live - Early challenges in system stability 

First day SAM was operational continuously for 24 hours for reps & certs 

(legacy Online Representations and Certifications Application (ORCA) 

and registrations (legacy Central Contractor Registration (CCR) database 

!Federal Agency Registration (FedReg) database) 

2 
90 


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Aug 21, 2012 Department of Defense (000) issues class action deyiation for yendor 

registration in SAM in order to issue awards 

Oct 22.2012 Administrator Tangherlini announces change in management of 

SAM/Integrated Award Environment (rAE) to a Federal Acquisition 

Service (FAS)i Office of Chief Information Officer (CIO) partnership 

Nov 21.2012 Exclusions functionality (Excluded Parties List System (EPLS) 

operational in SAM (Legacy contract support ended January 2013) - Early 

stability challenges with search features 

Nov 27-Dec 10 GSA re-worked SAM search functionality and stabilized operations 

Dec 12, 2012 DoD ends Class Action Deviation - SAM 

January 2013 GSA initiated the analysis of alternatives to establish the long-tenn 

strategy for the rAE portfolio modernization 

Mar 8, 2013 Security Vulnerability detected - patch applied immediately, vulnerable 

users contacted, at-risk population offered with credit monitoring. GSA 

re-worked the SAM security framework over the coming weeks for 

permanent resolution 

May 23,2013 Draft alternatives analysis presented to agency stakeholders and OMB 

concurrence received 

June 26, 2013 608 notification letter sent to the Subcommittee on Financial Services and 

General Govemment Committee on Appropriations and the House and 

Senate Committees on Appropriations notifying change in management 

structure and funding sources supporting the IAE program 

JulI2,2013 Launch of redesigned Federal Service Desk website 

Systems Releases Scheduled Systems releases December 2012 and January, February, April, 

May, June, and July of 20 13 - corrected over 4,000 defects and usability 

issues, and incorporating Federal policy requirements and improved 

functionality. 

Outreach/Training Hosted six live public webinars for approximately 5,000 attendees 

regarding: Migrating from CCR to SAM for companies, Grantee Users of 

SAM, and SAM for Govemment Users 

Q4: Please provide estimated dollars spent on SAM thus far and the current estimate for 

the planned approach; 

GSA Response: 

3 
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Insert offset folio 64 here 82434.064

Estimated dollars spent on SAM thus far: As GSA works to stabilize SAM from its initial July 

2012 launch, continued consolidation of systems is frozen and key processes remain within 

legacy applications. The current SAM application contains functionality of the three legacy 

systems, CCR, ORCA, and EPLS. and has cost 553 million to develop and maintain from its 

inception in FY 2010 through June 30. 2013. 

Estimated cost for planned approach: GSA met with OMB at a TechStat and did work to 

establish a path forward. Once the final sequencing of milestones has been established, coupled 

with acquisition strategies, the long-term estimated costs of the overall program will be better 

understood. GSA feels confident that the overall cost of the program, as well as our approach 

moving forward, will offer the best overall value to the taxpayers. Our intention is that the 

proposed approach moving forward will lower the life-cycle costs of the program as compared to 

the costs incurred for simply operating the existing legacy systems indefinitely. 

Q5: The Committee understands that the GSA CIO was not involved in the SAM program 

until after OMB held a TechStat and the program was reorganized. Please explain why the 

CIO was not involved in the development of a critical IT system that is used by ALL 

agencies. Please provide the current status, including program management organization 

structure and the names of the individuals responsible for the success of the program going 

forward. 

GSA Response: 

When the SAM system was launched and the program flaws became evident, it was apparent that 

much greater IT leadership and CIO involvement was necessary, in addition to the ACE 

governance. In October 2012, the GSA Administrator transferred the technical oversight of the 

SAM/IAE program to GSA's CIO so that the technical flaws in the system could be identified 

and rectified, the system could be stabilized, and a long-term strategy could be established for 

the IAE. 

Building on the lessons learned from the SAM/lAE program, the GSA Administrator also 

conducted a top to bottom review of the GSA IT organization, and empowered the GSA CIO to 

undertake a consolidation program, bringing together all IT programs, projects and investments, 

under the direct oversight of the GSA CIO. This consolidation process is well underway, and 

several teams are working to bring together the personnel, processes, resources, contracts, and 

budgets into one, cohesive IT organization. Under this new model, the GSA CIO will be directly 

accountable and empowered to oversee all GSA IT investments, projects, and initiatives. 

Software Acquisition. The Federal Government uses a huge number of copies of COTS 

software. When people move or change their computers, some of these licenses become 

dormant and become what is often called 'shelf-ware.' Some say we have numerous such 

shelf-wares licenses, but we do not know for sure because agencies do not have a 

comprehensive inventory of their IT assets; despite the statutory requirement under the 

Clinger-Cohen Act for IT inventory. Moreover, even if an agency wants to utilize such 

shelf-ware or excess software licenses, they are often prohibited under the user-license 

agreement from transferring it to the other federal agencies. The Committee is aware that 

4 
92 


Insert offset folio 65 here 82434.065

the UK Government is structuring its software license agreements so that the entire UK 

Government is one user. 

Q6: In your response to the QFR following OGR full committee's 1123 hearing, you 

indicated--

"OMB has followed the work of the UK closely in regards to COTS software 

purchases and the move to a single user model. The approach is quite interesting 

and there are a number of initiatives that are helping the UK better purchase at 

scale and reduce the number of duplicative contracts and licenses." 

Please share your findings regarding possible U.S. adoption of the successful UK approach. 

GSA Response: 

Please see answer provided by the Office of Management and Budget. 

Q7: How do you think the government can better manage its software user licenses so that 

there are no software licenses we purchase but do not use? 

GSA Response: 

Please see answer provided by the Office of Management and Budget. 

Cloud First Initiatives. As part of the administration's cloud-first policy, each agency is 

required to identify at least three legacy systems that could be replaced by cloud solutions. 

Q8: Please provide the list and status of the major cloud migration initiatives in the 

Federal Government. 

GSA Response: 

Please see answer provided by the Office of Management and Budget. 

PortfolioStat. Initiated in March, 2012, the OMB PortfolioStat initiative is a tool that 

agencies use to make decisions on eliminating duplication and moving to shared solutions 

in order to maximize the return on IT investments across the enterprise. Through the 

PortfolioStat process, agencies are expected to develop a clearer picture of where 

duplication exists across their respective bureaus and components. This analysis should 

inform the budget process and help agency Deputy Secretaries eliminate waste and 

duplication within the IT portfolio. OMB projects PortfolioStat will save $2.5B. 

Q9: How many PortfolioStats have been held and with which agencies? 

GSA Response: 

5 
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Insert offset folio 66 here 82434.066

Please see answer proyided by the Office of Management and Budget. 

QI0: Why was the pre\ious PortfolioStat sayings goal of $2.5B not re\ised to reflect the 

merger of FDCCI into PortfolioS tat? Considering the $3B sa\ings goal for FDCCI, 

shouldn't the new combined savings be $5.5B? 

GSA Response: 

Please see answer proyided by the Office of Management and Budget. 

Qll: We've heard from GAO today that CIO authority is an issue with implementing 

PortfolioStat. What actions are you taking to address CIO authority? 

GSA Response: 

Please see answer provided by the Office of Management and Budget. 

Q12: Will data center consolidation lose focus if it is merged under PortfolioStat? 

GSA Response: 

Please see answer provided by the Office of Management and Budget. 

TechStat Accountability Sessions (TechStats), which are evidence-based reviews of each 

investment aimed at turning aronnd or stopping tronbled investments. In December 2010, 

OMB stated that these sessions resulted in $3 billion in reduced life-cycle costs and 

subsequently incorporated the TechStat model into its 25-point plan for reforming Federal 

IT management. 

OMB is holding Icss number of TechStats and overly relying on each agency. OMB held 59 

TechStats in 2010, 5 in 2011, and at least 6 in 2012. GAO reported that OMB-led 

TechStats represented only 18.5% of the tronbled investments. For the 4 selected agencies 

GAO reviewed, the number of TechStats represented 33% of the investments that have a 

medinm or high-risk rating. 

Q13: GAO reported that OMB-Ied TechStats represented only 18.5% of the troubled 

investments. How many OMB-Ied TechStat sessions were held in 2012 and 2013? 

Shouldn't 100% ofthe troubled investments be reviewed? 

GSA Response: 

Please see answer provided by the Office of Management and Budget. 

Q14: It is the Committee's understanding that TechStat was created, in part, because 

agency CIOs were not doing appropriate reviews oftheir IT investments. Yet 3 years later 

6 
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Insert offset folio 67 here 82434.067

OMB seems to be returning back to relying upon agency CIOs. Will OMB stay engaged in 

TechStats? 

GSA Response: 

Please see answer provided by the Office of ;v!anagement and Budget. 

Q15: What programs are on your TechStat radar screen? Specifically, what programs 

have you recently reviewed and what programs are on your schedule to review? How 

many TechStats does OMB plan to hold in FY2013 and FY2014? 

GSA Response: 

Please see answer provided by the Office of Management and Budget. 

IT Acquisition Workforce. Between fiscal years 2002 and 2012, acquisition spending by the 

Federal Government expanded by 95 percent, from $264 billion to roughly $514 billion. 

While contract spending has risen dramatically, the number of acquisition professionals 

did not keep pace. Even more troubling, a significant portion of the current acquisition 

workforce will be eligible to retire over the next decade. 

Q16: Do you believe that the government's acquisition workforce is adequate, in terms of 

size, experience, and expertise, to carry out the activities required for effective use of 

strategic sourcing, transition to the cloud, and shared services for Information 

Technology? 

GSA Response: 

The acquisition workforce (comprising contracting professionals, contracting officer's 

representatives, and program/project managers) has grown modestly over the last several years. 

OMB is encouraging agencies to retain these critical members of the Federal workforce in this 

tight budgetary environment because they can help agencies save money for mission critical 

support. Investment in our acquisition workforce is critical to ensure we have the necessary 

capabilities to execute agency missions. 

For nearly 30 years, OMB has partnered with GSA to operate the Federal Acquisition Institute 

(F AI) in order to train and develop a professional and capable acquisition workforce. GSA 

works closely with OMB who leads agencies in an acquisition workforce planning process each 

year to ensure agencies understand their acquisition workforce and plan their training and 

development. Both GSA and OMB are committed to ensuring the acquisition workforce is 

adequate for executing IT acquisitions. FAI currently leads the ProgramJProject Managers 

(PIPM) Functional Advisory Board and has recommended that IT competencies be incorporated 

into the PIPM certification process for IT Program Managers. 

Forty percent of the civilian agency 1 J 02 workforce is able to retire in the next five years. 

Another third have fewer than five years of experience. GSA works with OMB and the civilian 

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agencies every day to ensure the workforce is recruited, trained, developed, and retained to 

deliver the best value for taxpayer dollars. 

The U.S. Office of Personnel Management (OPM) and the Chief Human Capital Officers 

Council have desiguated acquisition one of the five Government-wide mission critical 

occupations that are strategic priorities for skills gap closure. OPM is partnering with the 

Federal Acquisition Institute (FAI) and Defense Acquisition University (DAU) to increase the 

percentage of the acquisition workforce that is certified to deliver effective support for agency 

contracting operations. Progress against this goal is reported on www.performance.gov as one of 

the President's Cross Agency Priority (CAP) Goals. 

Contract duplication (i.e., many contracts for the same or similar senices across the 

federal enterprise), especially in IT, is a major challenge facing the Federal procurement 

system. It increases costs for government and industry, costs that are ultimately borne by 

the taxpayer. Contract duplication increases bid and proposal, administration and 

overhead costs for all. 

Q17: Duplicative cloud contracts are being established by various agencies for 

requirements such as infrastructure or cloud-brokerage services (e.g., GSA, DOl, DISA for 

infrastructure-as-a-service), wasting government & industry resources. What can be done 

about reducing the amount of duplication in contracting vehicles available to Federal 

agencies? 

GSA Response: 

Because agencies often have complex and unique requirements, ordering procedures, service 

level agreements, and financial systems, the use of our existing cloud Blanket Purchase 

Agreement (BPA) is proving difficult for some, leading them to enter into their own contracts. 

In addition, many agencies opted to move their e-mail to the cloud prior to GSA awarding the 

Email as a Service BP A. What GSA has been finding is that we have to pay close attention to 

creating extremely flexible acquisition vehicles that incorporate carefully gathered and 

implemented lessons learned. 

Regarding promoting the use of governmentwide contracts as opposed to the proliferation of 

agency-specific vehicles, we suggest greater education of contracting officers as to the 

availability and pros and cons of using these contracts. In addition, we must eliminate agency 

barriers preventing the greater use of external contracts. For example, one agency requires their 

contracting officers to prepare a Determination and Findings when using external contracts. This 

requirement discourages busy contracting officers from using governmentwide contracts. 

We suggest the review of Multiple-Award Contracts and governmentwide contracts, and 

increased scrutiny over the creation of single agency contract vehicles. The proliferation of 

single agency contract vehicles dilutes the government's buying power. Aggregated buying 

power can be leveraged through the use of GSA Governmentwide Acquisition Contracts and 

other pre-competed GSA contract vehicles. In addition, the use of GSA's pre-competed contract 

vehicles can shorten the procurement cycle. In an agency mission-centric culture, it is 

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characteristic that an agency program office/requiring activity will seek and demand the sh0l1est 

and quickest road to accomplish its mission. The contracting activity for single agency vehicles 

generally takes one to two years to award. 

Government duplication of alreadv existing software capabilities The Committee is aware 

of numerous instances where the government has decided to "make" or deyelop its own 

software systems, despite the ready availability of commercially viable products. 

• For example, GSA has determined to build a government reverse auction platform, 

despite the availability of commercial reverse auction software packages. 

• OPM has developed HR software, which it is offering to other federal agencies, 

despite the availability of mature HR software packages in the private sector. 

• OMB, in its recent policy memorandum M-13-08, appears to be focused upon 

government development of financial management systems, despite the ready 

ayailability of commercial alternatives. 

Q18: Why did GSA decide to build its own internal reverse auction tool 

(ReyerseAuctions.gsa.goy) ("RA platform") rather than engage existing commercially 

ayailable solutions? 

GSA Response: 

GSA conducted a basic make or buy decision considering the cost of internal development 

(making) versus the cost of purchasing commercial offerings (buying). Although commercial 

fee models varied, the overall cost to the government was determined to be lower if GSA 

developed an offering in-house. In-house development costs were low because the GSA's 

Reverse Auction Platform is built on existing GSA IT infrastructure and leverages GSA eBuy 

and GSAAuctions.gov software and expertise. 

a. What was the cost to GSA of that initial development effort? 

The initial development effort cost about $600,000 because we were able to redeploy 

existing GSA infrastructure for a modified purpose. 

b. Did GSA personnel access other reverse auction provider websites or software for 

purposes of, or related to, researching, designing or building the RA platform? 

As part of market research, GSA reviewed a variety of publicly available websites and 

other information related to electronic auction and reverse auction concepts. GSA 

contracts and BP As are also available on a commercial reverse auction website. 

c. What are the ongoing annual costs of maintaining tbe system and continuing to 

develop system enhancements to the RA platform? 

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As deployed today, the annual maintenance costs are approximately S300,000. On the 

basis of customer feedback and customer usage of the platform and enhancements, an 

additional S3 million in development is planned for FY 2014, inclusive of maintenance 

for the system as it exists today. Once complete, the on-going maintenance costs of the 

system are expected to be approximately SI million per year. 

d. 'Vhat cost/benefit analysis did GSA conduct prior to contracting out the design and 

development of the RA platform? 

It should be noted that the GSA Reverse Auction Platform is a derivative of two existing 

GSA web platforms: GSA eBuy and GSAAuctions. Government full time equivalent 

employees and contractor resources were used (0 modify existing GSA technology to 

perform a new function. 

On the basis of market research, GSA found the current reverse auction market is 

approximately $1 to 2 billion in auction value per year. Considering commercial fees 

range from 1 to 3 percent of the auction value, GSA estimates the government spends 

between $10 million ($1 billion times I percent) and $60 million (2 billion times 3 

percent) per year on reverse auction sefYices. The potential savings, low cost, and low 

risk associated with the reuse of existing GSA technology led to the decision to create an 

in-house system. 

Secondary "soft benefits" were also considered. Specifically, the ability to collect 

transaction-level pricing data is a key feature that will help drive better buying across 

government. Additionally, the GSA Reverse Auction Platform is a value-added feature 

of the GSA Multiple Award Schedules program and other GSA contracts. Making GSA 

contracts more valuable will reduce the need for other Agencies to award similar 

contracts. 

Q19: GSA has clearly indicated that its RA platform is competing with commercial 

platforms, highlighting "No Additional Fees" as a management benefit in its overview slide 

deck. What are GSA's long-term goals with respect to its RA platform's effect on 

commercial providers? 

GSA Response: 

It is the mission of GSA to "deliver the best value in real estate, acquisition, and technology 

sefYices to government and the American people." Providing a Reverse Auction Platform within 

our existing fee structure increases GSA's value to customers, and therefore, is consistent with 

the mission of GSA. GSA's long-term goal is to fulfill our mission. Commercial providers are 

considered in the context of the "make or buy decision" GSA conducted when determining 

which approach would be more valuable to government and the American people. 

Q20: Does OMB or the CIO Council review government initiatives to develop government 

IT solutions when commercial alternatives are available? Does the government utilize any 

form of "make/buy" analysis? 

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GSA Response: 

Please see answer provided by the Office of Management and Budget. 

Q2l: Under what circumstances is the government better suited to develop and deploy 

internal IT systems than to acquire these requirements form the commercial market? 

Whether private sector or government, the decision to in-source or to outsource the development 

and deployment of IT systems is a complex one. As needs for systems are identified, a rather 

structured decision process is called for in order to consider the many factors that will constitute 

the optimal approach and assure results that adequately meet the agency's requirements. A 

critical success factor independent of deciding whether to build or buy is identifying the right 

mix of contractors and Federal employees for effective support of the system throughout its life 

cycle, and ensuring that project management and contract oversight reflect sufficient expertise to 

validate that commercial work products and performance meet contract requirements and 

standards, scheduled milestones, and budget constraints over the course of the system/application 

lifecycJe. 

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