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DATA CENTERS AND THE CLOUD: IS THE GOVERNMENT 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 THIRTEETH CONGRESS 

FIRST SESSION 

MAY 14, 2013 

Serial No. 113–26 

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 MAY 14, 2013 .............................................................................. 1 

WITNESSES 

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

U.S. Government Accountability Office 

Oral Statement ................................................................................................. 7 

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

Mr. Bernard Mazer, Chief Information Officer, U.S. Department of the Interior 

Oral Statement ................................................................................................. 33 

Written Statement ............................................................................................ 35 

Mr. Steve O’ Keefe, Founder, Meritalk 

Oral Statement ................................................................................................. 49 

Written Statement ............................................................................................ 52 

Ms. Teresa Carlson, Vice President, World Wide Public Sector, Amazon Web 

Services 

Oral Statement ................................................................................................. 56 

Written Statement ............................................................................................ 58 

Mr. Kenyon Wells, Vice President of U.S. Federal, CGI Federal 

Oral Statement ................................................................................................. 63 

Written Statement ............................................................................................ 65 

APPENDIX 

Statement for the Record Submitted by Facebook, Inc. ................................ 82 

The Government IT Network, The FDCCI Big Squeeze ............................... 86 

Data Center ‘‘Statistics’’ ................................................................................... 90 

Statement for the Record of Thomas A. Schatz ............................................. 91 

(1) 

DATA CENTERS AND THE CLOUD: IS THE 

GOVERNMENT OPTIMIZING NEW INFORMATION TECHNOLOGIES OPPORTUNITIES TO 

SAVE TAXPAYERS MONEY? 

Tuesday, May 14, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON GOVERNMENT OPERATIONS, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The subcommittee met, pursuant to call, at 2:49 p.m., in the 

Meese Conference Room in Mason Hall at George Mason University, 4379 Mason Pond Drive, Fairfax, Virginia, Hon. John Mica 

[chairman of the subcommittee] presiding. 

Present: Representatives Mica and Connolly. 

Staff Present: Alexia Ardolina, Assistant Clerk; Richard A. 

Beutel, Senior Counsel; and Mark D. Marin, Director of Oversight. 

Mr. MICA. Well, good afternoon. I am Congressman John Mica. 

I am pleased to chair one of the Oversight and Reform subcommittees, which is Government Operations, and have the opportunity to 

be here today. 

The Democrat leader of the subcommittee is the distinguished 

gentleman and Congressman from this district—I believe we are in 

his district—— 

Mr. CONNOLLY. Yes. 

Mr. MICA. —Mr. Connolly. So, with that partnership, we have 

the responsibility to conduct various oversight hearings and look at 

government operations. 

But today I call and convene the subcommittee hearing to order 

in this district. And the title of today’s hearing is ‘‘Data Centers 

and the Cloud: Is the Government Optimizing New Information 

Technology Opportunities to Save Taxpayer Dollars?’’ And that is 

the subject. 

And we are here, actually, at the request of the ranking member, 

Mr. Connolly. What we try to do is operate the panel in a bipartisan manner, and areas of interest or particular expertise, we like 

to highlight the priorities of Members. And Mr. Connolly has been 

very active and a leader in trying to consolidate some of the duplicative and costly data centers in the Federal Government. He has 

been on this issue before I got the opportunity to chair this subcommittee, so he has a long history. And it was one of his priority 

requests that we conduct the hearing. And, jointly, we decided that 

this would be a great place, Fairfax County, George Mason University, to have a field hearing here. 

2 

I apologize for the delay. My plane was on time, but, as I told 

Mr. Connolly, the traffic in northern Virginia is horrendous. In 

spite of my efforts to help with the rail connection to Dulles and 

all, we still have a ways to go. But we are delighted to be here. 

The order of business—I will step out of order for just a second 

because we are here at a very distinguished university. If I could, 

maybe I could ask the ranking member to introduce the president 

of this university, and we could inject a few comments before we 

get to the business of the subcommittee. 

Again, we are delighted to be here. I think it is great to come 

to a university setting. I don’t know if we have students, professors, or others here, but it’s an awesome opportunity. I see some 

of us may, in fact, be recorded. And, again, it is an actual hearing 

of Congress and part of our realtime work. So we are pleased to 

be here. 

Would you do us the honors, Mr. Connolly? 

Mr. CONNOLLY. I would. Thank you, Mr. Chairman. And thank 

you so much for being here. And we all apologize for our traffic, but 

when you were both the ranking member and the chairman of the 

Transportation and Infrastructure Committee, you were very sympathetic and supportive of our efforts to extend rail to Dulles Airport. And we want to thank you for your support, because you did 

get it, about how serious the congestion is here. 

It is my privilege to introduce the president of George Mason 

University, Angel Cabrera. We just actually celebrated the installation ceremony for our new president. He comes to us after many 

years of serving in the southwest part of the United States in other 

academic endeavors, and we are delighted to have him here. 

George Mason University is about a little over 40 years old now 

and in that 40-year time period has grown to become the largest 

single university in the Commonwealth of Virginia, which always 

surprises people at UVA, Mr. Jefferson’s university, which is over 

200 years old, and Virginia Tech, also a very large campus. So it 

just tells you a lot about what is going on in terms of academic programs here in northern Virginia. And it is a center of excellence, 

especially for the technology community, but for so many other 

things as well. 

So welcome, President Cabrera. 

Mr. CABRERA. Well, thank you so much. 

Thank you, Mr. Chairman. 

Mr. MICA. You might come over. I don’t know, are these live 

right here? 

Mr. CABRERA. Yes. Thank you so much, Chairman Mica and Congressman Connolly, for moving the business of Congress across the 

river. And I hope the air of Fairfax will make the meeting very, 

very productive. 

I want to point out that even though we have a problem with 

physical transportation of vehicles, the transportation of bits 

through the Internet couldn’t be any faster than it is in northern 

Virginia, which I think is one of the reasons why this is a perfect 

location to have this discussion. 

I would also point out that we are, of course, in one of the most 

educated and one of the wealthiest counties in America. Those two 

things go hand-in-hand. And one of the reasons why this area has 

3 

become probably the world’s hotbed for the Internet and for cloud 

computing and other information technologies is precisely because 

we have universities like George Mason that right now ranks in 

the top 200 of research universities in the world. 

So it is a privilege to have you here. I wish you a very productive 

meeting. And thank you so much for having chosen George Mason 

University to conduct your business. Thank you. 

Mr. MICA. Well, thank you. And, again, we are pleased to be 

here. 

And we will proceed. We are a little bit late in beginning the proceedings, but the order of business will be as follows: I will start 

with an opening statement. I will yield to Mr. Connolly. Then we 

have two panels of witnesses. I will introduce the two panels. One 

is primarily government; the second looks like primarily private 

sector. We will proceed with questions after we have heard from 

the witnesses, the first two on the first panel and then the second 

panel. 

So, with that, we will go ahead and proceed, and I will recognize 

myself to sort of set the stage and talk about the topic. 

Today’s hearing, actually, again, is the result of some of the work 

of the Democrat leader of the committee. Some several years ago, 

the GAO began some work and looked at some of the data center 

consolidations. In fact, today, coinciding with this hearing, there is 

the release of this report, ‘‘Data Center Consolidation: Strengthened Oversight Needed to Achieve Cost-Savings Goals.’’ And the 

subject matter contained in this report will be discussed by the 

GAO representative. 

But some of the background here is that GAO reports, in fact, 

that in fiscal year 2011 the government funded 622 separate 

human resources systems, costing $2.4 billion; some 580 financial 

management systems, costing some $2.7 billion; 777 supply chain 

management systems, costing some $3.3 billion; and so the list continues. Most of these systems perform, unbelievably, the same 

function. 

To address some of this wasteful duplication, and with much fanfare, the OMB, the Office of Management and Budget, rolled out 

a program in 2010 entitled the Federal Data Center Consolidation 

Initiative. Sometimes you will hear me refer to it as the FDCCI. 

But they trumpeted the fact that they thought that they could close 

40 percent of the data centers by 2015 and save taxpayers a welcome $3 billion. That would have meant that, in closing 1,253 of 

the 3,133 total Federal database centers, we could save that much 

money. 

To accomplish this savings, 24 of the CFO Act agencies were 

tasked by the OMB to do several things: first of all, to conduct an 

initial inventory of data center assets by April 30th of 2010; and 

then, secondly, to develop a plan by June 30th, 2010; and report 

quarterly on their closures and savings via an online portal called 

data.gov. 

Today, GAO has released the latest of its three reports, the one 

I referred to. In that report, we will find that the GAO uncovered 

the fact that the program was not being effectively implemented, 

unfortunately, and, also unfortunately, that taxpayers are not 

4 

going to recognize or realize the projected savings that were anticipated. 

Specifically, OMB and the agencies, some of the findings—again, 

not mine, but theirs—were that the agencies were delinquent on finalizing their data consolidation, their migration plans. And, also, 

we have, I think, a chart up here that shows the cells in orange, 

and we see missing data in these cells, lots of question marks. 

So we also found in that report that we lacked a basic system to track cost savings so that progress toward that $300 billion costsavings goal could be measured. GAO states, and let me quote 

them, ‘‘As of November 2012, the total savings to date had not been 

tracked but were believed to be, unfortunately, minimal.’’ Again, 

their commentary. 

OMB recently announced its plan to roll up the FDCCI into its 

broader—a new process called PortfolioStat, potentially losing focus 

and motivation to carry out this much-behind consolidation of the 

original intended government data centers, again, consolidation. 

At a time of fiscal austerity and tight budgets, it has never been 

more important for the Federal Government to drive efficiencies 

and cost savings through effective management of its information 

technology systems. It is absolutely essential that IT assets should 

be optimized to maximize the return on investments, reduce operational risk, and provide responsive services to its citizens. 

We must, I believe, accelerate data center optimization by urging 

agencies to complete meaningful transition and consolidation plans 

for their data centers and, also, accurately track these savings. 

And another thing that we are going to have to do is support 

broader transition to the cloud solutions for Federal IT resources 

and hopefully drive broader efficiencies in the use and deployment 

of IT data centers. We are going to hear from some of the private 

sector in here a little bit about how we might achieve some of that 

in our second panel. 

So, with that sort of setting the stage for where we are in this 

hearing and, again, the review of what is taking place with this 

consolidation effort, let me now yield to the gentleman from Virginia, Mr. Connolly. 

Mr. CONNOLLY. Thank you so much, Mr. Chairman. And thank 

you for your gracious willingness to have this field hearing here in 

the 11th District of Virginia at George Mason University. I have 

very much appreciated the spirit in which you and I have been able 

to work, beginning this year when this subcommittee was first 

formed. And my hat is off to you in terms of bipartisan cooperation 

and comity, and I thank you. 

We have something like 3,100 data centers in the Federal Government, and that is an astounding number. It is a stovepipe kind 

of operation, and it is expensive and inefficient. 

And what we are trying to do here is identify ways to optimize, 

you know, the purpose here, through private-sector cloud computing, through some remaining Federal data centers that may 

make sense, but to try to achieve efficiencies, especially right now 

when we are in budget contraction. 

It is imperative for agencies to be able to expand their scope and 

to be able to try to replace through better deployment of technology 

lost dollars in their bottom line in terms of the budget. If we don’t 

5 

do that, if we are not, you know, seized with a sense of urgency 

about that mission, then, you know, Federal agencies are going to 

have to do less with less. And that will not serve the American people very well. 

And so this, while for some a dry topic, is really at the cutting 

edge of, can we organize ourselves in the Federal Government to 

replicate what the private sector has done in terms of the utilization of technology, better investments in technology, smarter investments in technology? 

We have had hearings, as the chairman knows, on the Oversight 

and Government Reform Committee where it is estimated that, of 

the $81-billion-a-year Federal information technology budget, perhaps as much as $20 billion of it is spent in less-than-optimum 

ways, some of it maintaining very old legacy systems. 

Now, the good news about that, as was pointed out in one of our 

hearings, was that the Chinese don’t know how to hack into those 

legacy systems. So maybe that’s an upside. But in terms of efficiency for the future and making sure that we’re ready to go for 

the future, I’m not sure it’s the kind of investment we want to be 

maintaining forever. 

And so data center consolidation is one piece of a larger piece of 

Federal IT policy. And as the chairman indicated, I requested the 

GAO report—and we are going to hear about it today in testimony 

from Mr. Powner—on how are we doing. And you can see from this 

chart, as the chairman just pointed out, well, I wouldn’t give us an 

A in terms of compliance with trying to consolidate and eliminate 

duplicative data centers. 

For some agencies, it may just be that it is not a priority. For 

others, maybe they don’t share the goal. But we have got to reach 

the OMB goal of 40 percent reduction, or consolidation, and we 

want to actually go way beyond that, because that still leaves us 

with 1,100 or 1,200 data centers, and it’s not at all clear that we 

need all of them. 

And so this is an important part of a larger picture. This bill that 

I introduced on data center consolidation is an entire title of what 

is known as the FITARA bill that Chairman Issa, Chairman Mica, 

myself, and Ranking Member Elijah Cummings have introduced in 

this Congress that would be the most comprehensive rewrite of 

Federal IT acquisition policy since—well, in 20 years. And so this 

is a vital piece of it, and that’s what we’re doing here today, to try 

to really focus on how can we do better at the Federal level. We 

need to do better. 

So thank you all for being here. 

And, again, Mr. Mica, thank you so much for having this hearing. 

Mr. MICA. Again, pleased to be here. 

And what we will do is, we have additional statements that 

Members may like to submit. And, also, if the public or anyone else 

is interested in submitting, it has to be done through a Member, 

so in this case it would be Mr. Connolly or another member of our 

subcommittee panel. But, without objection, the record will be left 

open for 7 days, with Mr. Connolly’s concurrence. 

6 

Mr. MICA. And I also see that Facebook has a written statement 

that they would like to be entered into the record. Mr. Connolly 

asked that that be permitted. 

Without objection, so ordered. 

Mr. MICA. Now we will turn to our first panel of witnesses. And 

we have two distinguished panelists: Mr. David A. Powner, and he 

is the director of information technology management issues with 

the U.S. Government Accountability Office. We refer to it commonly as GAO. Then we have Mr. Bernard Mazer, and he is the 

Chief Information Officer of the Department of the Interior. 

Now, I think we’ve got two more witness little plaques out there. 

And I’m not a happy camper, Mr. Connolly, that OMB and GSA 

have chosen not to provide us a witness this morning. And they are 

not going to squirm out of appearing before the panel, so we will 

schedule another hearing. It may not be here, but it will be in 

Washington. And we will call them in either voluntarily or however 

we have to do it, because we do—this is about saving taxpayers significant sums of money and achieving something that they set out 

to do. So we need answers, and we want it straight from those individuals involved. 

Mr. CONNOLLY. Mr. Chairman? 

Mr. MICA. Yes, Mr. Connolly. 

Mr. CONNOLLY. I concur in your sense of disappointment with 

OMB. I conveyed my disappointment to folks at the White House 

directly and to OMB directly for their nonparticipation today. 

None of that should, of course, detract from the fact that we are 

delighted to have the witnesses we do have. 

Mr. MICA. Yes, and we’ll start it, and we’ll start it here in Fairfax at George Mason, and we’ll get to the bottom of it. Sometimes 

it takes more time. 

I understand last night, apparently in response to this hearing— 

and these hearings do actually make things happen, believe it or 

not—GSA, which is a no-show, updated their data posting from 

zero to 74 planned data centers closings on data.gov. So we sometimes can get some things moving along. And that’s part of this 

process, is the constant oversight that we’re responsible for in this 

important committee and subcommittee. 

So those are the two witnesses we have from GAO and the Department of the Interior. 

This is an investigative panel, and it is part of the procedures 

of the panel to swear in our witnesses. So I would ask you to stand, 

if you can, Mr. Powner and Mr. Mazer. Raise your right hand. 

Do you solemnly swear or affirm that the testimony you are 

about to give and provide this subcommittee of Congress is the 

whole truth and nothing but the truth? 

Mr. MAZER. Yes, I do. 

Mr. POWNER. Yes, I do so solemnly swear. 

Mr. MICA. Let the record reflect that the witnesses answered and 

responded in the affirmative. 

So, with that, the way we proceed, for everyone’s information, is 

first I will call on GAO’s representative, Mr. Powner, and then Mr. 

Mazer, in that order. 

And we have a little bit of extra time. We try to hold it to 5 minutes. If you have prepared information or background data that you 

7 

would like submitted to the record, just request it to the chair, and 

that will be accomplished. 

So, with that, we welcome you. 

And, Mr. Powner, first, you are recognized. 

STATEMENT OF DAVID A. POWNER 

Mr. POWNER. Chairman Mica, Ranking Member Connolly, we appreciate the opportunity to testify on the Federal Government’s efforts to consolidate its data centers and to save taxpayers billions 

of dollars. 

In a time when we hear too often about fraud, waste, and duplicative Federal programs, the Data Center Consolidation Initiative 

is an effort that is good government. Its goals are to reduce costs, 

increase current low-server utilization rates, and shift to more efficient computer platforms and technologies. The specific goals are 

very clear and aggressive: close 40 percent of the government’s over 

3,000 data centers and save the taxpayers $3 billion. 

This afternoon, we are releasing our third report on this initiative. The first two highlighted holes in agencies’ inventories and 

plans and made recommendations to ensure that inventories were 

complete and that agency plans clearly had comprehensive schedules to close centers and associated cost savings. 

For example, last summer, we reported that only three agencies 

had complete inventories: SSA, HUD, and the National Science 

Foundation. And only one agency had a completed plan, that being 

the Department of Commerce. 

While incomplete, these plans still showed great opportunities for cost savings. For example, DOD claimed that it could save $2.2 billion. In its recent budget submission, DOD plans to save $575 million in fiscal year 2014 alone. And I think that is represented on 

your chart up there, fiscal year 2014. 

This afternoon, I will provide a progress report on closure and 

cost-saving goals and recommendations to ensure progress continues. My comments will also address the importance of FITARA 

in this area. 

Data center closures to date and those planned are promising. 

Four hundred centers were closed by the end of December, and another 400 are planned to be closed by September of this year, as 

your chart shows up there. And the plan is to close well over 1,000 

centers by December 2015. 

Despite impressive progress and visibility into the closure situation, this is not the case regarding progress and transparency toward the cost-savings goal of $3 billion. In fact, OMB is not tracking cost savings. This lack of such data raises questions about the 

government’s ability to meet its overall goal. 

But let’s be very clear on the cost savings issue: Closing over 800 

centers should yield significant cost savings. The Department of 

Agriculture recently reported to the Appropriations Committee that 

it saved nearly $50 million in fiscal year 2013. DHS is reporting 

$20 million of savings in fiscal year 2013. And we’ve already discussed DODs plans to save $575 million in fiscal year 2014. 

Now is not the time to take our foot off the accelerator regarding 

associated cost savings, and FITARA would be extremely helpful 

since it requires the tracking and reporting of cost savings. 

8 

OMB has recently integrated the data center effort with the 

broader PortfolioStat initiative and is in the process of revamping 

metrics in this area. OMB stated that its new goal is to close 40 

percent of the non-core data centers and that additional metrics in 

areas like energy consumption are to be developed by the data center task force. 

Folding the data center effort under this initiative is fine as long 

as the right metrics are in place, including cost savings, and that 

it provides the appropriate level of transparency. Mr. Chairman, 

having the right metrics and transparency moving forward is currently a big question mark. 

Our recommendations are to track and annually report on key 

data center metrics, including cost savings to date, extend the time 

frame for achieving cost savings beyond the current 2015 horizon 

because significant savings will occur beyond that date, given 

where agencies are at today. 

Regarding governance, we need better leadership out of OMB 

and the GSA program office if we expect the data center initiative 

to be successful. With OMB, this leadership starts with the Federal 

CIO. In addition, each CIO needs this to be one of their top priorities and at any point in time should be able to report on closures 

and cost savings to date and those planned for the next fiscal year. 

If these simple questions cannot be answered, we do not have adequate governance at the agency level. 

And, finally, codifying the data center optimization consolidation 

effort the way FITARA does will ensure cost savings are tracked 

and reported and that this initiative will span multiple administrations. 

I would also like to mention, Mr. Chairman, your comment about 

GSA’s data changing, that really shows the importance of this committee’s oversight. Your staff made a couple of key questions to 

GSA, and clearly we went from zero reported centers to 74 in a 

couple days. And having that reported is very important so that we 

can perform the appropriate oversight so, in fact, those 74 data 

centers do get closed, with their associated cost savings, and then 

we can think about optimizing the centers that remain open. 

So this concludes my statement, Mr. Chairman and Ranking 

Member Connolly. Thank you for your leadership on this topic, and 

I look forward to answering your questions. 

Mr. MICA. Thank you. 

[Prepared statement of Mr. Powner follows:] 

9 


Insert offset folio 1 here 81280.001

For Release on Delivery 

Expected at 2:30 p.m. EDT 

Tuesday, May 14, 2013 

GAO-13-627T 

C nited States Government Accountability Office 

Testimony 

Before the Subcommittee on Government Operations 

Committee on Oversight and Government Reform 

House of Representatives 

DATACENTER 

CONSOLIDATION 

Strengthened Oversight 

Needed to Achieve Billions 

of Dollars in Savings 

Statement of David A. Powner. Director 

Information Technology Management Issues 
10 


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tnitiatrw:e-an eff311 to l..'Qnsohdate tie 

!;ltcwhg "lumber of !eoerar data 

""nlers In JJly 2011 ana J"ly 20' 2. 

GAQ evalJaled 24 agencies' p'ogress 

and reported Ihat nearly all of :he 

a9,,"c,e$ had nol completed a data 

cer~ttl"r JOvel1to·y O~ 'consolidation, plar 

and recoMmended thal they 00 $0 

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sayings gru;Jls.' and assessed thp., 

extenl to which the overslghl 

organizalion'Pul in place by OMS for 

lhe Faderal Data Cen:er Consolidation 

lJ'litlat~~ 'ar~ adequately performing 

oversight of agooy1es' eff:orts to meet 

these goals In Ihis repolt, GAO 

assessed agencies' progress againsl 

OMS:. goals, anatyzed Ih" a""cuban 

of Qversjgl'lt roles and responsibilities, 

and interviewed OMS. GSA. and Data 

Center Consolidation Task'force 

official~ about the.ir efforts to overs~e 

age-ndes' consolidation 'efforts,. 

What GAt) Recommends 

In rts report, GAO recommended that 

OMS's Federai Chief .Information 

Officer track anq report on key 

perfof!llance measures, extend the 

flln" frame for achieving planned cost 

savings. and impro~ the ex~cution of 

important oversighl responslbi"lbes. 

OMB agreed with MO of GAO's 

recommendations and plans to 

~~alu!'l~e the remam~ng 

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the time frame. 

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pO'M'le1d@Sao'gov 

DATA CENTER CONSOLIDATION 

Strengthened Oversight Needed to Achieve Billions 

of Dollars in Savings 

What GAO Found 

The 24 agencies participating in the Federal Data Center Consolidation Initiative 

made progress towards the Office of Management and Budget's (OMS) goal to 

close 40 percent, or 1 ,253 of the 3,133 total federal data centers, by the end of 

2015, but OMB has 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 have plans to close an additional 548 to reach 

968 by December 2015-285 closures short of OMB's goal. OMB has not 

determined agencies' progress against its cost savings goal because, according 

to OMB staff, the agency has not determined a consistent and repeatable 

method for tracking cost savings. This lack of information makes it uncertain 

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

tracks and reports on performance measures such as cost savings, it wi!! be 

limited in its ability to oversee agencies' progress against key goals. 

Pursuant to OMB direction, three organizations-the Data Center Consolidation 

Task Force. the General Services Administration (GSA) Program Management 

Office, and OMS-are responsible for federal data center consolidation oversight 

activities; while most activities are being performed, there are still several 

weaknesses in oversight. Specifically, 

While the Data Center Consolidation Task Force has established several 

initiatives to assist agencies in their consolidation efforts, such as holding 

monthly meetings to facilitate communication among agencies, it has not 

adequately overseen its peer review process for improving the quality of 

agencies' consolidation plans. 

The GSA Program Management Office has collected agencies' quarterly 

data center closure updates and made the information publically available on 

an electronic dashboard for tracking consolidation progress, but it has not 

fully performed other oversight activities, such as conducting analyses of 

agencies' inventories and plans. 

OMB has 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. However. the agency has not approved the plans on the basis of 

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

cost savings. 

The weaknesses in oversight of the data center consolidation initiative are due, in 

part, to OMS not ensuring that assigned responsibilities are being executed. 

Improved oversight could belter position OMB to assess progress against its cost 

savings goal and minimize agencies' risk of not realizing expected cost savings. 

In March 2013. OMB issued a memorandum that integrated the Federal Data 

Center Consolidation Initiative with the PortfolioStat initiative, which requires 

agencies to conduct annual reviews of its information technology investments 

and make decisions on eliminating duplication, among other things. The 

memorandum also made significant changes to the federal data center 

consolidation effort, including the initiative's reporting requirements and goals. 

Specifically. agencies are no longer required to submit the previously required 

consolidation plans and the memorandum does not identify a cost savings goal. 

_____________ United States Government Accountability Office 
11 


Insert offset folio 3 here 81280.003

GAO U,S, GOV£R!\MENT ACCOUNTABILITY OFnCE 

441 G St, KW, 

·Washington, DC 20548 

Chairman Mica, Ranking Member Connolly, and Members of the 

Subcommittee: 

I am pleased to be here today to discuss federal agencies' continuing 

efforts to consolidate their data centers, As federal agencies have 

modernized their information technology (IT) operations, put more of their 

services online, and increased their information security profiles, their 

need for computing power and data storage resources has resulted in a 

dramatic increase in the federal data centers and a corresponding 

increase in operational costs, In response, the Office of Management and 

Budget's (OMB) Federal Chief Information Officer (CIO) launched the 

Federal Data Center Consolidation Initiative (FDCCI) in 2010, 

Over the past few years, we have reported and testified' on federal data 

center consolidation, noting that, while the initiative has the potential to 

provide billions of dollars in savings, improvements in the oversight of 

agencies' efforts are needed, For example, in July 2012, we reported on 

the progress the 24 partiCipating federal departments and agencies' were 

making on this initiative and found that, while progress had been made, 

nearly all of the agencies had not yet completed a data center inventory 

or the consolidation plans needed to implement their consolidation 

initiatives, 

1GAO, Information Technology: OMB and Agencies Need to Fulfy Implement Major 

Initiatives to Save Biftions of Dollars, GAO-13-297T (Washington, D.C.: Jan. 22, 2013); 

Data Center Consolidation: Agencies Making Progress on Efforts, but Inventones and 

Plans Need to Be Completed, GAO-12-742 (Washington, D.C.: July 19, 2012); Information 

Technology Reform: Progress Made; More Needs to Be Done to Comp/ete Actions and 

Measure Results, GAO-12-745T (Washington, D.C.: May 24, 2012); Information 

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

Measure Results, GAOM12~461 (Washington, D.C.: Apr. 26, 2012); and Data Center 

Consolidation. Agencies Need to Complete Inventones and Plans to Achieve Expected 

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

2The 24 major departments and agencies that participate in the Federal Data Center 

Consolidation Initiative are the Departments of Agriculture, Commerce, Defense, 

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

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

Veterans Affairs; the Environmental Protection Agency, General Services Administration. 

National Aeronautics and Space Administration, National Science Foundation, Nuclear 

Regulatory Commission, Office of Personnel Management. Small Business 

Administration, Socia! Security Administration, and U.S. Agency for International 

Development 

Page 1 GAO~13-627T 
12 


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Background 

You asked us to testify on our report being released today that evaluated 

agencies' reported progress against OMB's planned consolidation and 

cost savings goals and assessed the extent to which the oversight 

organizations put in place by OMB for FDGGI are adequately performing 

oversight of agencies' efforts to meet these goals. 3 This report contains a 

detailed overview of our scope and methodology, including the steps we 

took to assess the quality of data that we relied on. 

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 reasonable basis for our findings and conclusions based on 

our audit objectives. 

Over the last 15 years, the federal government's increasing demand for IT 

has led to a dramatic rise in the number of federal data centers and a 

corresponding increase in operational costs. According to OMB, the 

federal government had 432 data centers in 1998 and more than 1,100 in 

2009. Operating such a large number of centers is a significant cost to the 

federal government, including costs for hardware, software, real estate, 

and cooling. For example, according to the Environmental Protection 

Agency, the electricity cost to operate federal servers and data centers 

across the government is about $450 million annually. According to the 

Department of Energy, data center spaces can consume 100 to 200 times 

more electriCity than a standard office space. According to OMB, reported 

server utilization rates as low as 5 percent and limited reuse of data 

centers within or across agencies lend further credence to the need to 

restructure federal data center operations to improve efficiency and 

reduce costs. 

Page 2 

Data Center Consolidation.' Strengthened Oversight Needed to Achieve Cost 

Goal. GAO·13·378 (Washington, D.C.: Apr. 23. 2013). 

GAO-13-627T 
13 


Insert offset folio 5 here 81280.005

OMB and the Federal cro 

Established the Federal 

Data Center Consolidation 

Initiative 

Concerned about the size of the federal data center inventory and the 

potential to improve the efficiency, performance, and the environmental 

footprint of federal data center activities, OMB, under the direction of the 

Federal CIO, established FOCCI in February 2010. This initiative's four 

high-level goals are to 

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; and 

shift IT investments to more efficient computing platforms and 

technologies. 

As part of FOCCI, OMB required the 24 agencies to identify a senior, 

dedicated data center consolidation program manager to lead their 

agency's consolidation efforts. In addition, agencies were required to 

submit an asset inventory baseline and other documents that would result 

in a plan for consolidating their data centers. The asset inventory baseline 

was to contain detailed information on each data center and identify the 

consolidation approach to be taken for each one. It would serve as the 

foundation for developing the final data center consolidation plan. The 

data center consolidation plan would serve as a technical road map and 

approach for achieving the targets for infrastructure utilization, energy 

efficiency, and cost efficiency. 

While OMS is primarily responsible for FOCCI, the agency designated 

two agency CIOs to be executive sponsors to lead the effort within the 

Federal CIO Council,5 the prinCipal interagency forum to improve ITrelated practices across the federal government. In addition, OMB 

identified two additional organizations to assist in managing and 

overseeing FOCCI: 

IT" refers to environmentally sound computing practices that can include a variety 

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

certain environmental standards, and recycling Obsolete electronics. 

sAs of February 2013, OMB had assigned one CIO from the Department of the Interior. 

InitiaUy there had been two executive sponsors, but one resigned and OMS stated that 

they had no plans to fill the second position. 

Page 3 GAO-13-627T 
14 


Insert offset folio 6 here 81280.006

The GSA FOCCI Program Management Office is to support OMB in 

the planning, execution, management, and communications for 

FOCCI. 

The 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 FOCCI agencies, including identifying and disseminating 

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

agencies in their consolidation efforts. 

In an effort to accelerate federal data center consolidation, OMB has 

directed agencies to use cloud computing' as an approach to migrating or 

replacing systems with Internet-based services and resources. In 

December 2010, in its 25 Point IT Reform Plan,7 OMB identified cloud 

computing as having the potential to playa major part in achieving 

operational efficiencies in the federal government's IT environment. 

According to OMB, cloud computing brings a wide range of benefits, 

including that it is (1) economical-a low initial investment is required to 

begin and additional investment is needed only as system use increases, 

(2) flexible-computing capacity can be quickly and easily added or 

subtracted, and (3) fast-long procurements are eliminated, while 

providing a greater selection of available services. To help achieve these 

benefits, OMB issued a "Cloud First" policy that required federal agencies 

to increase their use of cloud computing whenever a secure, reliable, and 

cost-effective cloud solution exists. 

We have previously reported that, while selected federal agencies had 

made progress in implementing cloud computing, they also faced 

challenges. 8 For example, agencies identified cloud computing 

challenges related to meeting federal security requirements that are 

6Cloud computing is an emerging fonn of delivering computing services via networks with 

the potential to provide IT services more quickly and at a lower cost Among other things, 

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

resources with minimal management effort or service provider interaction 

70MB, 25 Point Implementation Plan to Reform Federa/lnformation Technology 

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

8GAO, Information Technology Reform: Progress Made but Future Cloud Computing 

Efforts Should be Beffer Planned, GAO-12-7S6 (Washington, D.C .. July 11,2012) and 

Information Security: Federal Guidance Needed to Address Control Issues with 

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

Page 4 
15 


Insert offset folio 7 here 81280.007

unique to government agencies, such as continuous monitoring and 

maintaining an inventory of systems, Agencies also noted that, because 

of the on-demand, scalable nature of cloud services, it can be difficult to 

define specific quantities and costs and, further, that these uncertainties 

make contracting and budgeting difficult due to the fluctuating costs 

associated with scalable and incremental cloud service procurements. 

Finally, agencies cited other challenges associated with obtaining 

guidance, and acquiring knowledge and expertise, among other things. 

More recently, in March 2013, OMS issued a memorandum documenting 

the integration of FDGGI with the PortfolioStat initiative. 9 Launched by 

OMS in March 2012, PortfolioStat requires agencies to conduct an annual 

agency-wide IT portfolio review to, among other things, reduce 

commodity ITlO spending, demonstrate how its IT investments align with 

the agency's mission and business functions, and make decisions on 

eliminating duplication.'1 OMS's March 2013 memorandum discusses 

OMS's efforts to further the PortfolioStat initiative by incorporating several 

changes, such as consolidating previously collected IT-related plans, 

reports, and data submissions. The memorandum also establishes new 

agency reporting requirements and related time frames. Specifically, 

agencies are no longer required to submit the data center consolidation 

plans previously required under FDGGI. Rather, agencies are to submit 

information to OMS via three primary means-an information resources 

management strategic plan, 12 an enterprise road map, 13 and an 

integrated data collection channel. 14 

Fiscal Year 2013 PortfolioStat Guidance: Strengthening Federal IT Portfolio 

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

10According to OMS, commodity IT includes services such as IT infrastructure (data 

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

collaboration toois, identity and access management, security, and web infrastructure): 

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

110MB, Implementing PortfolioStat, MemorandUm M~12-10 (Washington D.C.: Mar. 30, 

2012) 

120MB, 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. 

Page 5 
16 


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Repolied on Significant 

Weaknesses in Agencies' 

Inventories and Plans 

In July 2012, we issued a report on the status of FOCCI and found that. 

while agencies' 2011 inventories and plans had improved as compared to 

their 2010 submissions, significant weaknesses still remained. 15 

Specifically, while all 24 agencies reported on their inventories to some 

extent, only 3 had submitted a complete inventory,16 The remaining 21 

agency submissions had weaknesses in several areas. For example, 

while most agencies provided complete information on their 

virtualization 17 efforts, network storage, and physical servers, 18 agencies 

did not provide complete data center information, such as data center 

type, gross floor area, and target date for closure. In particular, several 

agencies fully reported on gross floor area and closure information, but 

partially reported data center costs. In addition, 17 agencies did not 

provide full information on their IT facilities and energy usage. For 

example, the Department of Labor partially reported on total data center 

IT power capacity and average data center electricity usage and did not 

report any information on total data center power capacity. We also noted 

that 3 agencies had submitted their inventory using an outdated format, in 

part, because OMS had not publicly posted its revised guidance. Figure 1 

provides an assessment of the completeness of agencies' 2011 

inventories, by key element. 

130MB, Increasmg Shared Approaches to Information Technology ServIces (Washington, 

DC,; 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, 

14The integrated data collectIOn channel wl11 be used by agencies to report structured 

infonnation, such as progress in meeting IT strategic goa!s, objectives, and metrics, as 

weI! as cost savings and avoidances resu!ting from IT management actions, 

15GAO-12-742. 

16These agencies were the Department of Housing and Urban Development, the National 

Science Foundation, and the Social Security Administration. 

17Virtualization is a technology that allows multiple, software-based machines with 

different operating systems, to run in isolation, side-by-side, on the same physical 

machine. 

Page 6 
17 


Insert offset folio 9 here 81280.009

Figure 1: Twenty-one Agencies' Completion of Required Information for Data 

Center Inventory Key Elements, as of June 2011 

b~ 0

0 Jt" tfg ~~ §!q;o, (J'~~ :Il' ~",tJ., § ..... ~g "''I' .f!f' 

,r 1::/ Q'If,~..o 

~ 

No 

Partial 

Ye, 

Source GAO anafysl$ of agency data 

Officials from several agencies reported that some of the required 

information was unavailable at certain data center facilities. We reported 

that, because the continued progress of FDCCI is largely dependent on 

accomplishing goals built on the information provided by agency 

inventories, it will be important for agencies to continue to work on 

completing their inventories, thus providing a sound basis for their 

savings and utilization forecasts. 

In addition, while all 24 agencies submitted consolidation plans to OMB, 

only 1 had submitted a complete plan.18 For the remaining 23 agencies, 

selected elements were missing from each plan. For example, among the 

18This agency was the Department of Commerce. 

Page 7 GAO-13..G27T 
18 


Insert offset folio 10 here 81280.010

24 agencies, all provided complete information on their qualitative 

impacts, and nearly all included a summary of the consolidation 

approach, a well-defined scope for data center consolidation, and a highlevel timeline for consolidation efforts, However, most notably, 21 

agencies did not fully report their expected cost savings; of those, 13 

agencies provided partial cost savings information and 8 provided none, 

Among the reasons that this information was not included, a Department 

of Defense official told us that it was challenging to gather savings 

information from all the department's components, while a National 

Science Foundation official told us the information was not included 

because the agency had not yet realized any cost savings and so had 

nothing to report, Other significant weaknesses were that many agencies' 

consolidation plans did not include a full cost-benefit analysis that 

included aggregate year-by-year investment and cost savings 

calculations through fiscal year 2015, a complete master program 

schedule, 19 and quantitative goals, such as complete savings and 

utilization forecasts, Figure 2 provides an assessment of the 

completeness of agencies' 2011 consolidation plans, by key element. 

19A master program schedule was to be created for the entire agency, from the detailed 

implementation schedules provided by each of the data center managers as well as driven 

by related federal government activities (e.g., OMS reporting, budget submission, or 

beginning of a new fiscal year) 

PageS GAO·13-627T 
19 


Insert offset folio 11 here 81280.011

Figure 2: Twentywfour Agencies' Completion of Required Information for Data Center Consolidation Plan Key Elements, as of 

September 2011 

Percentage 

100 

90 

80 

70 

60 

50 

40 

30 

20 

10 

NfA - this element is not applicable 

No - the agency does not provide information for this inventory element 

Partial - the agency provides some. but not all. of the Information for this inventory elemen! 

Yes - the agency provides complete information for this inventol)' element 

SOl/rca GAOanaIYS'5ofagancyda\~, 

Officials from several agencies reported that the plan information was still 

being developed. We concluded that, in the continued absence of 

completed consolidation plans, agencies are at risk of implementing their 

respective initiatives without a clear understanding of their current state 

and proposed end state and not being able to realize anticipated savings, 

improved infrastructure utilization, or energy efficiency. 

We also found that while agencies were experiencing data center 

consolidation successes, they were also encountering challenges. While 

almost 20 areas of success were reported, the 2 most often cited focused 

on virtualization and cloud services as consolidation solutions, and 

working with other agencies and components to find consolidation 

opportunities. Further, while multiple challenges were reported, the two 

most common challenges were both specifically related to FDCCI data 

Page 9 GAO-13-6211 
20 


Insert offset folio 12 here 81280.012

reporting required by OMS: obtaining power usage information and 

providing a quality data center asset inventory. 

We further reported that, to assist agencies with their data center 

consolidation efforts, OMS had sponsored the development of a FDCCI 

total cost of ownership 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. We 

stated that, until OMS requires agencies to use the model, agencies will 

likely continue to use a variety of methodologies and assumptions in 

establishing consolidation estimates, and it will remain difficult to 

summarize projections across agencies. 

Accordingly, we reiterated our prior recommendation that agencies 

complete missing plan and inventory elements and made new 

recommendations to OMS to publically post guidance updates on the 

FDCCI website and to require agencies to use its cost model. OMS 

generally agreed with our recommendations and has since taken steps to 

address them. More specifically, OMS posted its 2012 guidance for 

updating data center inventories and plans, as well as guidance for 

reporting consolidation progress, to the FDCCI public website. Further, 

the website has been updated to provide prior guidance documents and 

OMS memoranda. In addition, OMS's 2012 consolidation plan guidance 

requires agencies to use the cost model as they develop their 2014 

budget request. 

Page 10 GAO·13-G27T 
21 


Insert offset folio 13 here 81280.013

Consolidation of 

Federal Data Centers 

is Under Way, but 

Initiativewide Cost 

Savings Have Not 

Been Detennined 

We and other federal agencies 20 have documented the need for initiatives 

to develop performance measures to gauge progress. According to 

government and industry leading practices. performance measures 

should be measurable, outcome-oriented, and actively tracked and 

reported. For FDCCI, OMB originally established goals for data center 

closures and the expected cost savings. Specifically, OMB expected to 

consolidate approximately 40 percent of the total number of agency data 

centers and achieve $3 billion in cost savings by the end of 2015, and 

established the means of measuring performance against those goals 

through several methods. 

The 24 agencies have collectively made progress towards OMB's data 

center consolidation goal to close 40 percent. or approximately 1,253 of 

the 3,133 data centers, by the end of 2015. To track their progress, OMB 

requires agencies to report quarterly on their completed and planned 

performance against that goal via an online portal. After being reviewed 

for data quality and security concerns, the GSA FDCCI Program 

Management Office makes the performance information available on the 

federal website dedicated to providing the public with access to datasets 

developed by federal agencies, http://data.gov. 

As of February 2013, agencies had collectively reported closing a total of 

420 data centers by the end of December 2012,21 and were planning to 

close an additional 396 data centers-for a total of 816-by September 

2013. 22 While the number of data centers that agencies are planning to 

20GAO, Aviation Weather. Agencies Need to Improve Performance Measurement and 

Fully Address Key Challenges, GAO-10-843 (Washington, D.C.: Sept. 9, 2011): GAO, 

NextGen Air Transportation System: FAA IS Metrics Can Be Used to Report on Status of 

Individual Programs, but Not of Overall NextGen Implementation or Outcomes, 

GAO-10-629 (Washington, D.C.: Jury 27,2010): OMS, Guide to the Program Assessment 

Rating Tool (Washington, D.C.: January 2008); Department olthe Navy, Office of the 

Chief !nformatlon Officer, Guide for Developing and Using IT Performance Measurements 

(Washington, D.C.: October 2001); and GSA, Performance-Based Management: Eight 

Steps To Develop and Use Information Technology Performance Measures Effectively 

(Washington, D.C .. 1996). 

210f the 24 agencies, 17 reported closing at least one data center by the end of 

December 2012. The remaining 7 agencies did not report dosing any data centers during 

this time. 

220f the 24 agencies, 19 reported plans to close at least one data center by the end of 

September 2013. The remaining 5 agencies did not report plans to close any data centers 

in this time frame. 

Page 11 GAQ·13·627T 
22 


Insert offset folio 14 here 81280.014

close from October 2013 through December 2015 (the planned 

completion date of FDCCI) is not reported on http://data.gov, OMB's July 

2012 quarterly report to Congress23 on the status of federal IT reform 

efforts contains other information on agencies' data center closure plans. 

Among other things, the report states that agencies have collectively 

committed to closing a total of 968 data centers by the end of 2015. 

According to OMB staff from the Office of E-Government and Information 

Technology, this figure represents the number of commitments reported 

by agencies, as compared to the initiative's overall goal of closing 1,253 

data centers by December 2015. The agencies have not identified the 

remaining 285 consolidation targets to achieve that goal. OMB's January 

2013 quarterly report to Congress" does not provide any new information 

about either planned or completed agency data center closures. See 

figure 3 for a graphical depiction of agencies' progress against OMB's 

data center consolidation goal. 

230MB, Quarterly Report to Congress: Integrated, EffIcient, and Effective Uses of 

Information Technology (Washington, D.C.: July 30,2012) 

240MB, Quarterly Report to Congress: Integrated, 

Information Technology (WashlOgton. D.C.: Jan. 31, 

Page 12 

and Effective Uses of 

GAO-13-S27T 
23 


Insert offset folio 15 here 81280.015

Figure 3: Agencies' Progress against OMS's Data Center Consolidation Goal (as of 

February 2013) 

Data Center Closings 

1,400 

1,200 

1,000 

800 

'00 

"'0 

200 

Dec. Sept 

2012 2013 

Year 

Dec. 

2015 

{

Data center 

_ consolidation 

goaJ.... t253 data center cloSings 

Total completed data center closings 

Total planned data center closings 

Source GAO analYSIS of OMS and GSA data 

However, OMS has not measured agencies' progress against the cost 

savings goal of $3 billion by the end of 2015, According to a staff member 

from OMS's Office of E-Government and Information Technology, as of 

November 2012, the total savings to date had not been tracked but were 

believed to be minimal. The staff member added that, although data 

center consolidation involves reductions in costs for existing facilities and 

operations, it also requires investment in new and upgraded facilities and, 

as a result, any current savings are often offset by the reinvestment of 

those funds into ongoing consolidation efforts, Finally, the staff member 

stated that OMS recognizes the importance of tracking cost savings and 

is working to identify a consistent and repeatable method for tracking cost 

savings as part of the integration of FDCCI with PortfolioStat, but stated 

that there was no time frame for when this would occur. 

The lack of initiativewide cost savings data makes it unclear whether 

agencies will be able to achieve OMS's projected savings of $3 billion by 

the end of 2015, In previous work, we found that agencies' cost savings 

Page 13 
24 


Insert offset folio 16 here 81280.016

projections were incomplete and, in some cases, unreliable. Specifically, 

in July 2012,25 we reported that most agencies had not reported their 

expected cost savings in their 2011 consolidation plans. Officials from 

several agencies reported that this information was still being developed. 

Notwithstanding these weaknesses. we found that agencies collectively 

reported anticipating about $2,4 billion in cumulative cost savings by the 

end of 2015 (the planned completion date of FOCCI).26 With less than 3 

years remaining to the 2015 FOCCI deadline. almost all agencies still 

need to complete their inventories and consolidation plans and continue 

to identify additional targets for closure. Because closing facilities is a 

significant driver in realizing consolidation savings, the time required to 

realize planned cost savings will likely extend beyond the current 2015 

time frame. With at least one agency not planning on realizing savings 

until after 2015 and other agencies having not yet reported on planned 

savings, there is an increased likelihood that agencies will either need 

more time to meet the overall FOCCI savings goal or that there are 

additional savings to be realized in years beyond 2015. Until OMB tracks 

cost savings data, the agency will be limited in its ability to determine 

whether or not FOCCI is on course toward achieving planned 

performance goals. Additionally, extending the horizon for realizing 

planned cost savings could provide OMB and FOCCI stakeholders with 

input and information on the benefits of consolidation beyond OMB's 

initial goal. 

260ne agency-the Department of Defense-estimated about $2.2 billion in cost savings 

by the end of 2015, which accounts for about 92 percent of the total anticipated cost 

savings. However, the department's consolidation plan noted that their cost savings 

estimates do not account for any up-front costs associated with the consolidation effort 

Page 14 GAO·13·627T 
25 


Insert offset folio 17 here 81280.017

Oversight of FDCCI is 

Not Being Performed 

in All Key Areas 

We have previously reported that oversight and governance of major IT 

initiatives help to ensure that the initiatives meet their objectives and 

performance goals. 27 When an initiative is governed by multiple entities, 

the roles and responsibilities of those entities should be clearly defined 

and documented, including the responsibilities for coordination among 

those entities. We have further reported,28 and OMB requires,29 that an 

executive-level body be responsible for overseeing major IT initiatives, 

Among other things, we have reported that this body should have 

documented pOlicies and procedures for management oversight of the 

initiative, regularly track progress against established performance goals, 

and take corrective actions as needed. 

Oversight and governance of FDCCI is the responsibility of several 

organizations-the Task Force, the GSA FDCCI Program Management 

Office, and OMB. Roles and responsibilities for these organizations are 

documented in the Task Force charter and OMB memoranda, while 

others are described in OMB's January 2013 quarterly report to Congress 

or have been communicated by agency officials. See table 1 for a listing 

of the FDCCI oversight and governance entities and their key 

responsibilities. 

USDA Systems Modernization: Management and Oversight Improvements Are 

GAO-11-586 (WashIngton, D.C.: July 20, 2011): Untted States Coast Guard 

Improvements Needed in Management and Oversight of Rescue System Acquisition, 

GAO-06-623 (Washington, D.C.: May 31,2006): and information Technology Investment 

Management: A Framework for Assessing and Improving Process Maturity, GAO-04-394G 

(Washington, D. C.: March 2004) 

28GAO-11-586, GAO-06-623, and GAO-04-394G. 

290MB, Capital Programming Guide, V. 3.0, Supplement to OMB Circular A-11: Planning, 

Budgeting, and Acquisition of Capital Assets, (Washington, D.C .. July 2012). The Capital 

Programming GUide is Intended to help agencies effectively plan, procure, and use capital 

assets. 

Page 15 GAO·13-627T 
26 


Insert offset folio 18 here 81280.018

Table 1: Key Responsibilities of FOCCI Oversight and Governance Organizations 

GSA FDCCI Program Management Office 

OMS 

Communicate and coordinate agency best practices 

Identify policy and implementation issues that could negatively impact agencies' abli'ltles to meet 

their FOCCI goals 

Assist agencies with development of their consolidation plans 

Develop and manage the data center total cost of ownership model (GSA)i! 

Develop an electronic govemmentwide marketplace for data center availability (GSA and 

OMS) 

Oversee the agency consolidation plan peer review process 

Collect agencies' consolidation Inventories and plans annually (Inventories in June; pJans in 

September) 

Under OMS direction. coBect and disseminate data related to the FOcel closure updates 

Provide ad~hoc and quarterly reports to OMS regarding agencies' reported consolidation updates 

Maintain and update FOCCI-related online portals, such as http://CIO.govand http://data,gov(Le., 

the consolidation progress dashboard) 

Develop and manage the data center total cost of ownership model (Task Force) 

Provide agency support including technical assistance on the total cost of ownership model and 

clarifying rnventory and plan requirements 

Develop an electronic governmentwide marketplace for data center availability (Task Force 

and OMS) 

Conduct analysis of FDCe! Inventories and plans, including reviewing agencies' submissions for 

errors 

Establish and manage FDGel 

Provide Federal CIO poliCY and gUIdance to the initiative 

Launch an electronic pUbliC dashboard to track consolidation progress 

Develop an electronic govemmentwide marketplace for data center availability (Task Force 

and GSA) 

Approve federal agency consolidation plans 

Report quarterly to the Senate and House Committees on Appropriations identifying the savings 

achieved by OMB's governmentwide IT reform effort. which includes FOCGI 

Provide executive~jeve! oversight of FOCCI 

Note: Bo!d text indicates a responsibility that is shared with the entities indicated in parentheses. 

aThlS model is intended to provide agenCies with a comprehensive tool to help inform decision 

making, model paths, and the development of cost savings figures and funding needs 

The Task Force, the GSA FDCCI Program Management Office, and OMB 

have performed a wide range of FDCCI responsibilities. For example, the 

Task Force holds monthly meetings to, among other things, communicate 

and coordinate consolidation best practices and to identify policy and 

implementation issues that could negatively impact the ability of agencies 

to meet their goals. Further, the Task Force has assisted agencies with 

Page 16 GAO·13·627T 
27 


Insert offset folio 19 here 81280.019

the development of their consolidation plans by discussing lessons 

learned during its monthly meetings and disseminating new OMB 

guidance, GSA has collected responses to OMB-mandated document 

deliveries, including agencies' consolidation inventories and plans, on an 

annual basis, In addition, GSA has collected data related to FOGGI data 

center closure updates, disseminated the information publically on the 

consolidation progress dashboard on http://data,gov, and provided ad hoc 

and quarterly updates to OMB regarding these data, Lastly, as the 

executive-level body, OMB issued FOGGI policies and guidance in a 

series of memoranda that, among other things, required agencies to 

provide an updated data center asset inventory at the end of every third 

quarter and an updated consolidation plan at the end of every fourth 

quarter. In addition, OMB launched a publically available electronic 

dashboard to track and report on agencies' consolidation progress, 

However, oversight of FOGGI is not being performed in other key areas, 

For example, 

The Task Force has not provided oversight of the agency 

consolidation peer review process, According to officials, the purpose 

of the peer review process is for agencies to get feedback on their 

consolidation plans and potential improvement suggestions from a 

partner agency with a data center environment of similar size and 

complexity, While the Task Force documented the agency pairings for 

2011 and 2012 reviews, it did not provide agencies with guidance for 

executing their peer reviews, including information regarding the 

specific aspects of agency plans to be reviewed and the process for 

providing feedback, As a result, the peer review process did not 

ensure that significant weaknesses in agencies' plans were being 

identified, As previously mentioned, in July 2012, we reported 30 that 

all of the agencies' plans were incomplete except for one, In addition, 

we noted that three agencies had submitted their June 2011 inventory 

updates, a required component of consolidation documentation, in an 

incorrect format-an outdated template, 

The GSA FOGGI Program Management Office has not executed its 

responsibilities related to analyzing agencies' inventories and plans 

and reviewing these documents for errors, In July 2012, we reported 

on agencies' progress toward completing their inventories and plans 

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Insert offset folio 20 here 81280.020

and found that only three agencies had submitted a complete 

inventory and only one agency had submitted a complete plan, and 

that most agencies did not fully report cost savings information and 

eight agencies did not include any cost savings information. 31 The 

lack of cost savings information is particularly important because, as 

previously noted, initiativewide cost savings have not been 

determined-a shortcoming that could potentially be addressed if 

agencies had submitted complete plans that addressed cost savings 

realized, as required. 

Although OMB is the approval authority of agencies' consolidation 

plans, it has not approved agencies' submissions on the basis of their 

completeness. In an October 2010 memorandum, OMB stated that its 

approval of agencies' consolidation plans was in progress and would 

be completed by December 2010. However. OMB did not issue a 

subsequent memorandum indicating that it had approved agencies' 

plans, or an updated time frame for completing its review. This is 

important because, in July 2011 and July 2012, we reported that 

agencies' consolidation plans had significant weaknesses and that 

nearly all were incomplete. 32 

OMB has not reported on agencies' progress against its key 

performance goal of achieving $3 billion in cost savings by the end of 

2015, Although the 2012 Consolidated Appropriations Act included a 

provision directing OMS to submit quarterly progress reports to the 

Senate and House Appropriations Committees that identify savings 

achieved through governmentwide IT reform efforts, 33 OMB has not 

yet reported on cost savings realized for FOCCI. Instead, the agency's 

quarterly reports had only described planned FOCCI-related savings 

and stated that future reports will identify savings realized. As of the 

January 2013 report, no such savings have been reported. 

These weaknesses in oversight are due, in part, to OMB not ensuring that 

assigned responsibilities are being executed. Improved oversight could 

belter position OMB to assess progress against its cost savings goal and 

minimize agencies' risk of not realizing anticipated cost savings. 

31GAO-12-742. 

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

33ConsoHdated Appropriations Act, 2012, Pub. l. No, 112-74, div C, title II, 125 Stat 786 

896 (2011). 

Page 18 GAO-13-627T 
29 


Insert offset folio 21 here 81280.021

Recent Integration 

with PortfolioStat 

Changes FDCCI, but 

Reporting 

Requirements and 

Goals Are Not Fully 

Defined 

OMB's recent integration of FOCCI and PortfolioStat made significant 

changes to data center consolidation oversight and reporting 

requirements. According to OMB's March 2013 memorandum,34 to more 

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

agency progress will no longer be measured solely by closures. Instead, 

agencies will also be measured by the extent to which their data centers 

are optimized for total cost of ownership by incorporating metrics for 

energy, facility, labor, and storage, among other things. In addition, OMB 

stated that the Task Force will categorize agencies' data center 

populations into two categories-core and non-core data centers-for 

which the memorandum does not provide specific definitions. Additionally, 

as previously discussed, agencies are no longer required to submit the 

data center consolidation plans previously required under FOCCI. Rather, 

agencies are to submit information to OMB via three primary means-an 

information resources management strategic plan, an enterprise road 

map, and an integrated data collection channel. Using these tools, an 

agency is to report on, among other things, its approach to optimizing its 

data centers; the state of its data center population, including the number 

of core and non-core data centers; the agency's progress on closures; 

and the extent to which an agency's data centers are optimized for total 

cost of ownership, 

However, OMB's memorandum does not fully address the revised goals 

and reporting requirements of the combined initiative. Specifically, OMB 

stated that its new goal is to close 40 percent of non-core data centers 

but, as previously mentioned, the definitions for core and non-core data 

center were not provided, Therefore, the total number of data centers to 

be closed under OMB's revised goal cannot be determined. In addition, 

although OMB has indicated which performance measures it plans to use 

going forward, such as those related to data center energy and labor, it 

has not documented the specific metrics for agencies to report against. 

The memorandum indicates that these will be developed by the Task 

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

Lastly, although OMB has previously stated that PartfolioStat is expected 

to result in savings of approximately $2.5 billion through 2015, its 

memorandum does not establish a new cost savings goal for FOCCI, nor 

does it refer to the previous goal of saving $3 billion, Instead, OMB states 

that all cost savings goals previously associated with FOCCI will be 

340MB Memorandum, M-13-09. 

Page 19 
30 


Insert offset folio 22 here 81280.022

Implementation of 

Recommendations 

Could Help Ensure 

Improvements in 

Oversight 

integrated into broader agency efforts to reshape their IT portfolios, but 

does not provide a revised savings estimate. The lack of a new cost 

savings goal will further limit OMS's ability to determine whether or not 

the new combined initiative is on course toward achieving its planned 

objectives. 

In addition, several important oversight responsibilities related to data 

center consolidation have not been addressed. For example, with the 

elimination of the requirement to submit separate data center 

consolidation plans under the new combined initiative, the memorandum 

does not discuss whether either the Task Force or the GSA Program 

Management Office will continue to be used in their same oversight roles 

for review of agencies' documentation, In addition, while the 

memorandum discusses OMS's responsibility for reviewing agencies' 

draft strategic plans. it does not discuss the responsibility for approving 

them, In the absence of defined oversight assignments and 

responsibilities, it cannot be determined how OMS will have assurance 

that agencies' plans meet the revised program requirements and, moving 

forward, whether these plans support the goals of the combined initiative, 

In our report being released today, we are making recommendations to 

better ensure that FDCCI achieves expected cost savings and to improve 

executive-level oversight of the initiative, Specifically, we are 

recommending that the Director of OMS direct the Federal CIO to 

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; 

extend the time frame for achieving cost savings related to data 

center consolidation beyond the current 2015 horizon, to allow time to 

meet the initiative's planned cost savings goal; and 

establish a mechanism to ensure that the established responsibilities 

of designated data center consolidation oversight organizations are 

fully executed, including responsibility for the documentation and 

oversight of the peer review process, the review of agencies' updated 

consolidation inventories and plans, and approval of updated 

consolidation plans. 

The Federal CIO stated that the agency concurred with the first and third 

recommendation. Regarding the second recommendation, OMS neither 

agreed nor disagreed. However, the Federal CIO stated that, as the 

Page 20 GAO·13·627T 
31 


Insert offset folio 23 here 81280.023

FOCCI and PortfolioStat initiatives proceed and continue to generate 

savings, OMB will consider whether updates to the current time frame are 

appropriate, 

In summary, after more than 3 years into FOCCI, agencies have made 

progress in their efforts to close data centers, However, many key 

aspects of the integration of FDCCI and PortfolioStat, including new data 

center consolidation and cost savings goals, have not yet been defined, 

Further compounding this lack of clarity, total cost savings to date from 

data center consolidation efforts have not been determined, creating 

uncertainty as to whether OMB will be able to meet its original cost 

savings goal of $3 billion by the end of 2015, In the absence of tracking 

and reporting on cost savings and additional time for agencies to achieve 

planned savings, OMB will be challenged in ensuring that the initiative, 

under this new direction, is meeting its established objectives, 

Recognizing the importance of effective oversight of major IT initiatives, 

OMB directed that three oversight organizations-the Task Force, the 

GSA FDCCI Program Management Office, and OMS-be responsible for 

federal data center consolidation oversight activities, These organizations 

have performed a wide range of FOCCI responsibilities, including 

facilitating collaboration among agencies and developing tools to assist 

agencies in their consolidation efforts, However, other key oversight 

activities have not been performed, Most notably, the lack offormal 

guidance for consolidation plan peer review and approval increases the 

risk that missing elements will continue to go undetected and that 

agencies' efforts will not fully support OMS's goals, Further, OMB's March 

2013 memorandum does not address whether the Task Force and GSA's 

Program Management Office will continue their oversight roles, which 

does not help to mitigate this risk, Finally, while OMS has put in place 

initiatives to track consolidation progress, consolidation inventories and 

plans are not being reviewed for errors and cost savings are not being 

tracked or reported, The collective importance of these activities to 

federal data center consolidation success reinforces the need for 

oversight responsibilities to be fulfilled in accordance with established 

requirements, 

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, 

Page 21 GAO-13-S27T 
32 


Insert offset folio 24 here 81280.024

GAO Contact and 

Staff 

Acknowledgments 

(311288) 

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, Nancy Glover, and Jonathan Ticehurst. 

Page 22 GAO-13-627T 
33 

Mr. MICA. And we will hold the questions until we have heard 

from Mr. Mazer. And he is the Chief Information Officer at the Department of the Interior. 

Welcome, sir, and you are recognized. 

STATEMENT OF BERNARD MAZER 

Mr. MAZER. Good afternoon, Chairman Mica and Ranking Minority Member Connolly. I would like to summarize my testimony and 

submit the full testimony for the record. 

Mr. MICA. Without objection, we’ll submit the additional data. 

Mr. MAZER. My name is Bernard Mazer. I currently serve as the 

Chief Information Officer for the Department of the Interior. As a 

representative of the Federal CIO Council, I also serve as an executive sponsor of the Federal Data Center Consolidation Task Force. 

Thank you for providing the opportunity to testify regarding 

cloud computing and optimization of data centers across the Federal Government. 

The Federal Government information technology infrastructure 

is a massive collection of networks. In the span of 11 years, from 

1998 to 2009, the number of Federal data centers drastically increased from 432 to more than 1,100. The result was an inefficient 

Federal data center population with unnecessary operations and 

maintenance costs. 

To reverse this trend, OMB in February of 2010 launched the 

Federal Data Center Consolidation Initiative, referred to as 

FDCCI. A year later, in February 2011, the Federal Data Center 

Consolidation Task Force was chartered. The task force is comprised of agency representatives who are working together to share 

progress toward individual agency goals and the overall Federal 

goal of optimization and consolidation. 

Today, the task force has contributed to the FDCCI by advising 

on policy and implementation; sharing information, best practices, 

and lessons learned; and by working with agencies to assess the 

benefits and challenges of cloud computing. 

One of the critical roles of the task force has been to share best 

practices. For example, the Department of the Interior has 

launched an IT transformation initiative to consolidate IT infrastructure operations at the department level, including data center 

operations, in order to eliminate redundancy and speed the adoption of new technologies, such as the migration to cloud computing. 

Information provided by the task force has helped evolve the 

FDCCI. Under the March 13th OMB memorandum on 

PortfolioStat, the FDCCI was formally integrated into PortfolioStat 

and shifted the FDCCI focus from consolidation to both optimizing 

core data centers and consolidating non-core data centers. Through 

PortfolioStat, agencies have already realized $300 million in savings, some of which is attributed to data center consolidation. 

The expected benefits of moving to the cloud can be great and 

are driving the transition from existing hosting environments that 

focus on managing servers to modern cloud-based environments. 

These benefits include improving service delivery to customers, 

modernizing computing capabilities, enhancing collaboration, and 

replacing legacy information technology infrastructure. Moreover, 

34 

as agencies refine their business processes during cloud migration, 

they can also realize significant cost savings. 

The deployment of cloud tech computing also presents challenges, including culture and change management, data interoperability and portability, and the lack of expertise or experience in 

implementation of migrating to cloud-computing technologies. 

Another challenge agencies have experienced is calculating cost 

savings related to optimization and consolidation. This requires calculation of a total cost of ownership which is much more comprehensive than just equipment or energy cost. That is why the 

task force, working with participating agencies and GSA and OMB, 

are developing a total-cost-of-ownership model. This model is now 

being used as a planning tool as agencies optimize and consolidate 

their data centers. 

Agencies are at different stages of moving IT applications to the 

cloud and, in doing so, can leverage offerings from the Federal Risk 

and Authorization Management Program, known as FedRAMP, 

that provide a standardized approach to security for cloud products 

and services. 

In conclusion, Federal agencies are continuing to make progress 

toward optimizing and consolidating data centers. Since launching 

the FDCCI, agencies have closed 484 data centers as of last week, 

with plans to close 855 by the end of the fiscal year 2013. The 

progress is being publicly tracked through data.gov. 

FDCCIs integration into PortfolioStat is expected to strengthen 

the focus on tracking cost savings, increase the number of tracked 

metrics, facilitate collaboration across agencies, expedite implementation of best practices, and should result in a consistent method 

for tracking costs. All of this is expected to result in a more accurate assessment of the benefits of this initiative. 

I am confident that cloud computing and data center consolidation has the potential to provide modernized IT at a significant cost 

savings. It is our job as chief information officers to provide the evidence of these benefits to the American people. 

Chairman Mica, Ranking Member Connolly, this concludes my 

prepared statement, and I would be happy to answer any questions 

that you may have at this time. 

[Prepared statement of Mr. Mazer follows:] 

35 


Insert offset folio 25 here 81280.025

Testimony before the Subcommittee on Govemment Operations, 

Committee on Oversight and Government Reform, 

U.S. House of Representatives 

May 14, 2013 

Benefits and Challenges of Cloud Computing 

and the Optimization of Data Centers for the Federal 

Government 

Bernard Mazer 

Chief Information Officer 

U.S. Department of the Interior 
36 


Insert offset folio 26 here 81280.026

Officer l!5, ofthe Interior 

Introduction 

Good afternoon Chairman Mica, Ranking Minority Member Connolly, and distinguished members of the 

Subcommittee, My name is Bernard Mazer and I currently serve as the Chief Information Officer for the 

U5, Department of the Interior. As a representative of the Federal CIO Council, I also serve as an 

executive sponsor of the Federal Data Center Consolidation Task Force', Thank you for providing the 

opportunity to testify regarding the benefits and challenges of cloud computing and of the optimization 

of data centers across the Federal government. 

The Federal Government's information technology (IT) infrastructure is a massive, heterogeneous 

collection of networks, unparalleled in private industry or other governmental organizations, In the 

span of 11 years, from 1998 to 2009, the number of Federal government data centers drastically 

increased from 432 at the time, to more than 1,100', During this time period, the Federal Government's 

spending on technology increased at a rate of 7% annually', with little impetus to optimize, share, or 

rationalize IT infrastructure, The result was an inefficient Federal data center population, with 

unnecessary operation and maintenance costs, which requires capital that would be better spent on 

innovative activities that deliver better, more efficient services to the American people, 

To reverse this trend, in February 2010, the Office of Management and Budget (OM B) launched the 

Federal Data Center Consolidation Initiative' (FDCCI), By optimizing and consolidating redundant and 

wasteful data centers, the government will reduce the cost of data center hardware, software, and 

operations; shift IT investments to more efficient computing platforms such as cloud solutions; promote 

sustainability within our data centers and improve our nation's cybersecurity posture, 

Since then, there has been a halt of net-new data centers being built. In fact, as of last week, agencies 

have closed 484 data centers5

, with plans to close 855 by the end of fiscal year 2013, reducing the 

overall infrastructure footprint of the Federal Government. 

The Federal Data Center Consolidation Initiative Task Force 

The Federal CIO Council's Federal Data Center Consolidation Task Force, which I currently chair, was 

chartered in February 2011, subsequent to its inclusion in OMB's 25 Point Plan to Reform Federal IT", 

The Task Force is comprised of agency representatives who are responsible for working together to 

share progress toward individual agency goals and the overall Federal goals of optimization and 

consolidation, 

Today, the Task Force has contributed to the FDCCI by: (i) advising on FDCCI policy and implementation; 

(ii) sharing information, best practices, and lessons learned; and (iii) working with agencies to assess the 

benefits and challenges of cloud computing, 

1 0MB. (Dec. 9, 2010). 25 Point Implementation Plan to Reform Federal In/ormation Technology Management. Retrieved from 

www.whitehouse.gov 

1 0MB. (Feb. 26, 2010). Federal Data CenterConsoUdation Initiative. Retrieved from www.whitehouse.gov 

3 0MB. The PreSident's Budget for Fiscal Year 2014, Analytical Perspectives, Chapter 19. Retrieved from 

http:Uwww,whitehouse.gov/omb/budget 

4 0MB. (Feb, 26, 2010). Federal Data Center Consolidation Initiative. Retrieved from www.whitehouse.gov 

5 See FDCCI Data Center Closings 2010-2013. Retrieved from www,Data,gov, May 2013 

,; OMB. (Dec. 9, 2010). 25 Point Implementation Plan to Reform Federal Information Technology Management. Retrieved from 

www.whitehouse,gov 

Page 2 of6 
37 


Insert offset folio 27 here 81280.027

Office of the Chief Information Officer u.s. Department of tDe Interior 

Advising on FDCCI Policy and Implementation 

One of the critical roles of the Task Force has been to relate the "boots on the ground" experience of 

optimization and consolidation to agencies and policymakers across the government, Given that the 

landscape of Federal IT infrastructure is at varying levels of maturity across the government, there is 

valuable insight to be gleaned from actual practices. For example, the Department of the Interior has 

launched an IT Transformation initiative to consolidate IT infrastructure operations at the Departmentlevel, including data center operations, in order to eliminate redundancy and speed the adoption of new 

technologies, such as the migration to cloud computing. Our experiences, and the experiences of other 

agencies, help identify issues such as whether there are program gaps which can be addressed via policy 

or whether there are different criteria by which agencies can measure and document data center 

optimization and consolidation progress. 

Information provided by the Task Force helped inform the evolution of the FDCCI, as recently outlined in 

the March 2013 OMB Memorandum on PortfolioStat (M-13-09).' PortfolioStat, implemented by OMB in 

2012, requires agencies to conduct annual agency-wide IT portfolio reviews, to reduce commodity IT 

spending, and demonstrate how IT investments align with an agency's mission and business functions. 

The data gathered, with the assistance of the Task Force, in this process led to recognition that agencies 

should focus on an enterprise-wide approach to address all commodity IT, including data centers, in an 

integrated, comprehensive plan. 

M-13-09 noted that, "Agencies with advanced IT portfolio management see eliminating duplication, 

such as closing duplicative data centers, as a means of optimizing computing power for the enterprise. 

These agencies have found that cloud computing is a more scalable and transparent way to provision IT 

services, giving agencies a viable enterprise alternative to major and often stove-piped, capital IT 

investments. By procuring technology "as-a-service," agencies can quickly stand up enterprise IT 

solutions, paying only for what they need, and reducing duplication." Through PortfolioStat, agencies 

have already realized nearly $300 million in savings', some of which is attributed to data center 

consolidation. 

Under M-13-09, the FDCCI was formally integrated into PortfolioStat. Additionally, based on input 

provided by the Task Force which noted that focusing solely on consolidating data centers was not 

yielding optimal outcomes, M-13-09 shifted the FDCCI from having a singular focus on consolidation to a 

dual track focus: optimizing core data centers and consolidating non-core data centers. From the Task 

Force's perspective, too many agencies were still treating their data centers as the end, rather than as 

the means, to deliver optimized infrastructure services, enabling agencies to meet their diverse 

missions. A data center exists to support mission delivery, and execution and optimizing these assets, 

which are central to these missions, was recognized in M-13-09. 

Sharing Information, Best Practices, and Lessons Learned 

Any complex, government-wide initiative needs a forum and group to serve as a community of practice, 

exchanging ideas from a variety of sources, learning from what works and what doesn't, and, on a 

7 0MB. (Mar. 27, 2013). Fiscal Year 2013 PortfalioStat Guidance: Strengthening Federal IT Portfolio 

Management. http://www.whitehause.govfsitesfdefaultffilesfombfmemorandaf2013fm-13-09.pdf. 

S OMS. (Mar. 27, 2013). PortjolioStat 2.0: Driving Better Management and Efficiency in Federal IT blog post. Retrieved from 

www.whitehouse.gov 

6 
38 


Insert offset folio 28 here 81280.028

Office of the Ch ief Officer U5, of -::he interior 

continual basis, assisting others to innovate, trying out novel ideas which improve outcomes and results. 

The Task Force is no different and I am extremely proud of the work done in this arena, Agencies have 

presented on a variety of topics, including consolidation planning, energy efficiency, application 

mapping, using cloud computing and deploying enterprise applications to drive optimization and 

consolidation. These are all available publicly on ClO.gov, the web platform of the Federal CIO Council. 

Working with Agencies to Assess the Benefits and Challenges of Cloud Computing 

The expected benefits from moving to the cloud can be great and are driving the transition from existing 

hosting environments that focus on managing servers to modern cloud-based environments. These 

benefits include: (i) improving service delivery to internal and external customers, (ii) modernizing 

computing capabilities, such as scalability, on demand provisioning, and resource pooling, (iii) enhancing 

collaboration within each agency and with external stakeholders, and (iv) replacing legacy IT 

infrastructure that is nearing the end of its useful lifespan. Moreover, as agencies refine their business 

processes during cloud migrations, they can also realize significant cost savings. 

The deployment of cloud computing also presents challenges, including (i) culture and change 

management of users and customers who are not comfortable migrating from their existing hosting 

solutions; (ii) data interoperability and portability due to highly customized nature of many legacy IT 

systems; and (iii) a lack expertise or experience in implementation. The Task Force is helping address 

these challenges by providing ideas on ways to inform and educate existing system and business 

owners; pointing out ways agencies can assess legacy systems and highlighting the need to train existing 

staff on cloud technologies. 

Another challenge agencies have experienced is calculating cost savings related to optimization and 

consolidation, Federal data centers are spread across agency missions, program and functions. In some 

cases, the costs of agency data centers are shared between different offices and contracts, Providing 

the total cost of ownership continues to be a challenge as it is much more comprehensive than just 

energy or equipment costs. That is why the Task Force worked with participating agencies, GSA, and 

OMB to develop a total cost of ownership model, based on agency-provided inventory data, built on 

best practices in the public and private sectors, and tailored to reflect the Federal Government's 

operational structure. The model is now being used as a planning tool as agencies optimize and 

consolidate their data centers. 

In support of the Federal cloud-first policy, agencies are also leveraging cloud-based technologies to 

accelerate their consolidation efforts. Agencies are in different stages of moving IT applications to the 

cloud and in doing so can leverage offerings from the Federal Risk and Authorization Management 

Program (Fed RAMP), a government-wide program that provides a standardized approach to security 

assessment, authorization, and continuous monitoring for cloud products and services. 

Conclusion 

Federal agencies are continuing to make progress towards optimizing and consolidating data centers. As 

of May 2013, 484 data centers have been reported closed and agencies are publicly tracking their 

consolidation progress through Data.gov, the Administration's platform to increase public access to high 

value, machine readable datasets generated by the Executive branch. 

Page 4 6 
39 


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Office of the Chief Information Officer U5. Department of the Interior 

As discussed above, the FDCCI has been integrated into OMB's PortfolioStat program. This integration is 

expected to strengthen the focus on tracking cost savings, increase the number of tracked metrics, 

facilitate collaboration across agencies, expedite implementation of best practices seen across the 

private sector, and should result in a consistent and repeatable method for tracking costs. All this is 

expected to result in a more accurate assessment of the benefits to this initiative. 

I am confident that cloud computing and data center consolidation has the potential to provide 

modernized IT at a significant cost savings. It is our job as ClO's to provide the evidence of these 

benefits to the American people. 

Chairman Mica, Ranking Member Connolly, and Members ofthe Subcommittee, this concludes my 

prepared statement. I would be happy to answer any questions that you may have at this time. 

Page 5 6 
40 

Mr. MICA. Well, we’ll go ahead with some questions. 

And let me first ask our GAO representative, while one of the basic questions is that this whole project was projected to save $3 

billion, and I think that was by 2015, I think I quoted the report 

as saying that the savings to date had not been tracked but were 

believed to be minimal. 

It seems pretty apparent now we’re getting some data in as a result of this hearing. But do you think they’re going to be able to 

approach the goal and meet the goal? Or what is your prediction 

now looking at—— 

Mr. POWNER. So a couple comments here. 

If you look at the projected cost savings—at one time we had 

plans that were being updated; now those plans are off the table 

since this is being merged under PortfolioStat. But at one time we 

had about $2.4 billion in very preliminary plans. Inventories 

weren’t complete yet. $2.2 billion of that came from DOD. 

Now, there were some things where upfront costs needed to be 

considered. But if you look at this chart up here, the Ag and the 

DHS numbers, that comes from a report that goes to the appropriation committees. Those agencies are reporting already in fiscal year 

2013 a savings. And if you just project—I mean, 800 closures in DOD alone, $575 

million in fiscal year 2014 alone. Our thought is this: If you extend 

it beyond 2015 out to—and it’s great to have these stretched goals 

near term, but I think $3 billion is very realistic. And when this 

initiative was started, there was a goal of $3 billion. At one time, 

OMB was talking about a $5 billion cost savings, and they went 

back to $3 billion. 

So it’s somewhere—who knows, really, where it is? But I think 

that’s why you need good hard numbers on these closures. And if 

we have over 1,000 centers that we are closing, there has to be significant associated cost savings. 

Mr. MICA. Uh-huh. Well, what’s interesting, now entering on the 

scene we have this PortfolioStat. I’m wondering if the consolidation 

efforts were to merge with this new thing, is this all going by the 

wayside? Or do you see them as compatible? 

Mr. POWNER. They’re clearly compatible. So if you look at the 

PortfolioStat initiative—and that’s something we looked at very 

closely for the Congress—PortfolioStat—— 

Mr. MICA. Tell me how that’s going to work, how you see it working. 

Mr. POWNER. Yeah, so what PortfolioStat is, that takes commodity IT, so you can think of it more as administrative systems, 

and it puts them in groupings, so HR systems, financial management systems, email systems? 

And OMB has an initiative, which we highly commend their efforts on that, where they went to each of the agencies, and they 

identified about 100 opportunities at 24 major departments and 

agencies to save $2.5 billion. Okay? And that was the first cut in 

PortfolioStat. 

Now, clearly, when you start looking at consolidating commodity 

IT and moving to the cloud, there is a lot of overlap with data center consolidation. So movement to the cloud-based center consolidation, PortfolioStat, their shared service approaches—all these difVerDate Aug 31 2005 10:04 Jun 12, 2013 Jkt 000000 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 C:\DOCS\81280.TXT APRIL
41 

ferent terms that they have. But the bottom line on all of this, Mr. 

Chairman, is you have significant effort, PortfolioStat and $2.5 billion in savings; data center consolidation, $3 billion in savings. 

They did some TechStat reviews looking at troubled projects. The 

committees looked at that. Chairman and Ranking Member 

Connolly, I know you’ve looked at a lot of the troubled projects. But 

there were $3 billion in savings. 

All of a sudden, you do the math real quickly, and there is $7 

billion or $8 billion in savings that we could spend more appropriately on modernizing government IT operations and furthering 

our mission. So that’s why these savings are very significant. If we 

do things much more efficiently and save a significant amount of 

money, it will be in the ballpark of, you know, $7 billion to $8 billion, $9 billion. 

Mr. MICA. Okay. 

Now, there are three components to making this consolidation effort work, as I understand. One is supposed to be OMB and sort 

of its oversight; GSA, and they have a program management office 

involved; and then we have the task force. 

Now, you said we need better leadership with sort of a general 

statement with the CIOs, but somehow some thing is lacking here. 

We don’t even have OMB willing to come in today and testify. 

I mean, please be frank with us. Has OMB dropped part of the 

ball, an important part of the ball, that is making this not work? 

Mr. POWNER. So our report is fairly balanced here, Mr. Chairman—— 

Mr. MICA. No, no, just be honest. You don’t have to be balanced. 

Mr. POWNER. —OMB, GSA, and the task force, and they have 

done some things well. 

OMB has actually set the goals well. And we’ve got the ball rolling on—— 

Mr. MICA. But they’re not—— 

Mr. POWNER. —they’re not driving it to closure. 

GSA, they have a program office responsible for plans and inventories. Our work over there shows the plans and the inventories 

have not been complete. Okay? We’ve got agencies like DOT where 

FAA wasn’t reporting their air traffic control facilities. 

And then when you look at what Mr. Mazer is doing, I think he’s 

done a great job with the task force and the like, but we pointed 

out the peer-review process was not where it needed to be. 

So all three organizations we felt needed to do more from a leadership perspective. 

Mr. MICA. Okay. And since we’ve got Mazer here, we’ll pick on 

him a little. How can their effort be improved? And do you cite that 

here in the report? 

Mr. POWNER. Yeah, we did cite that. 

That was a time—so the task force was put in place to perform 

peer reviews of the various agencies. And we clearly made a very 

clear point that we thought there could be more peer review going 

across the agencies to help each other out. 

And I commend Mr. Mazer for his efforts to date and for him 

being here and what he’s done to date, but I also think that that 

task force can do better, similar to GSA and OMB. 

42 

Mr. MICA. Well, with that being said, Mr. Mazer, and as chair 

of the task force, where do you see, again, us going from here in 

your particular role? You’re an important part of the equation. 

Mr. MAZER. Chairman, where I see the role of the task force is— 

we appreciated GAO’s examination of the overall FDCCI activities. 

In previous years, they were looking at the paucity of information 

populating what constitutes a data center. 

We are going to take into earnest the incorporation of the peerto-peer reviews. We had those in the past. It will keep agencies on 

course in terms of their schedules and in terms filling out their inventory. 

The Federal Data Center Consolidation Initiative task force, as 

it’s being integrated into PortfolioStat, it’s really linked to the 

shared services activities that we’re engaged upon, about looking at 

these duplicative business systems like HR and financial management systems. It’s related to the TechStat activities that we’re 

looking at. 

What the Federal Data Center Consolidation Initiative is going 

to do is identify criteria for examining what will become core data 

centers and what will become non-core data centers. Non-core data 

centers, we’re going to encourage those data centers either to move 

to the core data center or to move out into the cloud. 

But we’re following the approach of optimizing the portfolio, 

which includes applications—— 

Mr. MICA. Can you define a little bit better the core and the noncore, just for the record? 

Mr. MAZER. Chairman Mica, core data centers are those that are 

capable of delivering enterprise or private-sector-like class services. 

They’re reliable, they’re secure, they’re following green IT, and they 

have the capability to deliver a variety of services across an agency 

or across agencies. 

Non-core data centers are activities that might be specific to a 

location or they might be supporting a particular scientific or monitoring-type of system. Many of the non-core data centers are, in effect, really small data centers. You could sometimes characterize 

them as closets, so they’re 500 square feet or less, with a lot of cost 

inefficiencies about maintaining those. 

So we’re going to encourage those to move to the core. Or if they 

have applications, then we’re going to look at the promise of moving those out into the cloud. 

Mr. MICA. Okay. 

Well, finally—and I want to give Mr. Connolly plenty of time— 

is there—now, we are considering, again, some update in legislation and are working together on that. Have you looked at that? 

Is there anything that we are missing that would give us the tools 

to move forward, from what you have seen, either on an agency 

basis, on the whole consolidation? 

Maybe you’ve reviewed some of what we have proposed, but—and 

we want to pursue giving all the tools necessary to expedite this. 

And sometimes, you know, you have to have language that actually 

mandates certain actions because the agencies are so inclined to 

stay static and not take initiatives. 

But maybe you could both quickly comment on, or briefly comment on anything you see. 

43 

Mr. POWNER. Yeah, so on FITARA and the data center optimization section, a couple key things that we’re very supportive of the 

bill is in the area of tracking and reporting key metrics. 

Not only do you want to track and report closures and cost savings—and that is very clear, because there are cost savings that 

need to be had—but you also have aspects of that bill that talk 

about optimization metrics, where you look at energy usage and 

those types of things, higher server utilization rates and that type 

of thing. So, obviously, you want both. You want the right metrics 

on closures and cost savings, but you want also the right metrics 

on optimizing what remains. And, clearly, I think that’s something 

that the task force is charged to do going forward as part of the 

PortfolioStat. 

So I see your bill being very consistent with the direction that 

the administration is going. What it does is it mandates, codifies 

it in law, and it will ensure that it will span multiple administrations. Because, regardless of whether you want to look at this in 

2015 or not, this is a long-term initiative that will go beyond 2015. 

Mr. MICA. Right. 

Mr. MAZER. Chairman Mica, the administration I don’t believe 

has a position yet on the bill, but I have examined the bill from 

a data center perspective, metrics perspective. A lot of those costtracking metrics are what the Federal Data Center Consolidation 

Initiative is looking at. 

There are some things that we’re looking at, about power usage 

effectiveness; we’re looking at cost per operating system 

virtualization; we’re looking at ratios of employees to the amount 

of servers; and we’re also looking at facility and storage utilization. 

One of the activities that I feel good about the Federal Data Center Consolidation Initiative is, as we’re looking at metrics, or we’re 

attempting to look at metrics and all that that have meaning and 

salience and trying to comport ourselves into the 21st-century information technology. 

Mr. MICA. Great. 

I am a little bit more frosted as we go on and not seeing the two 

other witnesses. We’ll have to definitely reschedule that, and we 

may have to have at least one of the witnesses back. 

Let me yield now to Mr. Connolly. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

And I think the answer I just heard to your question of, did we 

get it right on the FITARA bill we introduced, I thought I heard 

both Mr. Powner and Mr. Mazer say we got it absolutely right and 

don’t change a word, it’s perfect. 

I want to thank our panel for being here. 

Mr. Powner, you’ve had a chance to look at the legislation, which 

stands for Federal Information Technology Acquisition Reform Act, 

which I referred to in my opening statement. And I heard your answers to the chairman’s question, that it does encapsulate some of 

the reforms we’re trying to make, including what the task force is 

doing, and going even back to the 25-point plan that Vivek Kundra 

put out when he was CTO. 

Can you elaborate just a little bit about what it might achieve 

and how, if that legislation could perhaps help us with better compliance and better metrics and data center consolidation? 

44 

Mr. POWNER. Well, I clearly think from a metrics point of view 

it will help significantly, because it makes it very clear that cost 

savings are significant and that has to be reported and tracked. 

The other part of the bill that I think will help is CIO authority. 

This is a CIO issue in every department and agency. And, clearly, 

you know, it varies in terms of the progress and the reported cost 

savings that CIOs are currently making. You know, we’re all trying 

to get to a position where IT is more effectively managed at $80 

billion, and we know that’s understated based on some of the prior 

hearings that you’ve held. So I think in addition to the data center 

section, the CIO authority section also could play a significant role 

in moving the ball forward in this area. 

Mr. CONNOLLY. At the moment, are you satisfied that OMB has 

consistent methods of evaluation to capture cost and cost savings 

with respect to data centers? 

Mr. POWNER. No, I’m not—we’re not. In fact, what OMB told us 

is that they were not tracking cost savings and that the savings 

were minimal. So if you’re going to establish a goal of closures and 

cost savings, we need to then track that and ensure that we actually drive it to closure. 

We have a lot of good plans in D.C. at times in the IT area; what 

we don’t do is implement them completely. And, also, folks aren’t 

held accountable to implement them completely. This is a prime example. 

Mr. CONNOLLY. Well, if they’re not tracking cost savings, what do 

they think the consolidation effort is for? 

Mr. POWNER. That’s a very good question, Mr. Chairman. 

So we did not agree; that’s why we made the recommendation in 

our report that cost savings needs to be front and center in terms 

of metrics. And we can talk about optimization goals and all this 

other stuff, but we’re optimizing the stuff that remains. Okay? 

All those closures, and even if those are all small wiring closets, 

800 of them, there’s a lot of money to be had with those. And if 

we get to a point where we have 1,100 or 1,200 centers, which 

would get to the 40 percent—— 

Mr. CONNOLLY. Can you refresh our memory, Mr. Powner, on 

how much these data centers expend, what it costs the taxpayers 

every year just on energy consumption? 

Mr. POWNER. I don’t have good numbers on that. 

Mr. CONNOLLY. Would about $450 million roughly sound right to 

you? 

Mr. POWNER. I would have to get back to you on that, but likely 

even higher, though, if you start adding all the departments and 

agencies. You look at DOD alone and you look at their centers—— 

Mr. CONNOLLY. Yeah. 

Mr. POWNER. And, frankly, they’re reporting some numbers there 

that they probably would have missed. They don’t have a complete 

inventory yet. 

Mr. CONNOLLY. It underscores your frustration, Mr. Chairman, 

which I share. We’ve got to have some consistent measurement by 

OMB. And, for goodness’ sake, obviously cost savings are part of 

the goal here, not the only goal, but a pretty important part of the 

goal. 

45 

And if they’re not consistently measuring that or even seeing it 

as a significant factor in making the decision about to stay open, 

to close, to consolidate, then they’re not with the program. And, 

certainly, they’re not consistent with the legislation we’ve introduced. 

Would that be a fair statement, Mr. Powner? 

Mr. POWNER. Yeah, so if you look at the IT budget—we spend $80 billion on IT in the Federal Government, and 70 percent of 

that is operations and maintenance, which includes data centers. 

And the challenge going forward is to take some of that O&M 

spend and move it into systems development and acquisition so we 

modernize the government and further the mission. But we spend 

a lot of money keeping the lights on, and if we can do it more efficiently in this example, or movement to the cloud, we need to do 

more of that. 

Mr. CONNOLLY. Yeah. Absolutely. 

Mr. Mazer, you are a constituent. I cannot imagine a better 

spokesperson for this whole subject than yourself, hailing, as you 

do, from Annandale. 

But just a couple of questions. You chair the task force. What is 

the mandate of the task force? 

Mr. MAZER. The mandate of the task force, it was initially chartered to provide information sharing, examining best practices, to 

examine activities like power usage effectiveness, and to follow and 

optimize—or to follow working with the agencies on the schedules 

and all that for closure on activity. 

Mr. CONNOLLY. Okay, but there is a goal, an end goal, which is 

to promote this consolidation. 

Mr. MAZER. It’s to promote the consolidation. And it’s also to promote—this task force, we had a year gap of the peer review. But 

when the peer reviews that we had going forth on all that was having one agency encouraging another agency to either follow the intention of the schedule or to follow intention with the scope or to 

look at the missing inventory elements that are a part of what a 

data center consists of. 

Mr. CONNOLLY. What are some of—could you enumerate for us 

a little bit the process and the criteria used in the process for determining, or for helping to determine in that task force process, 

‘‘You know, that sounds like an inefficiency. Ought to close, ought 

to consolidate, or go entirely to the private sector?’’ What are the 

criteria whereby you look at something going, ‘‘That’s great, don’t 

change a thing,’’ versus, ‘‘That’s not so great, and maybe it ought 

to be closed?’’ 

Mr. MAZER. Well, what we’re looking at is, in terms of the—you 

know, initially the task force was chartered to reflect on best practices, and a reflection of noticing that we are having a problem 

coming to grips with what we have in our inventory. We started 

working on a series of metrics and all of that, in terms of criteria. 

So some of the metrics that we’re looking at are how much 

virtualizing we’ve done of the boxes. And we’re establishing a 

standard for the U.S. Government. We’re looking at metrics in 

terms of how much floor space that we’re using. We’re looking at 

metrics in terms of the energy costs that we are looking at and establishing a baseline there for those activities. We also are looking 

46 

at metrics in terms of what’s the ratio of things that are out in the 

cloud as opposed to things that are actually to be put on premises. 

And right now the task force is engaged in establishing these 

metrics as a baseline which will serve as the basis for when the 

PortfolioStat sessions start in the summer so that agencies will 

have a good apples-to-apples comparison of what costs are and 

what we should strive to. 

Mr. CONNOLLY. I assume utilization is one of the criteria? 

Mr. MAZER. Yes, sir. Utilization is a heavy criteria—one of the 

criteria. We’ve got about nine criteria. I’d be happy to submit for 

you a—— 

Mr. CONNOLLY. That would be very helpful, I think, to all of us 

here. Thank you. 

Mr. CONNOLLY. Yeah, because I would think, in some ways, utilization alone could be a qualifier or disqualifier. I mean, if you find 

something grossly underutilized, it’s a strong candidate for consolidation or elimination. 

Mr. MAZER. Yes. Many of our servers are at 5 percent or 10 percent—— 

Mr. CONNOLLY. Yeah. 

Mr. MAZER. —utilization, which does fit the—— 

Mr. CONNOLLY. I think that—could you repeat that? Because I’m 

not sure that’s fully appreciated. When we’re looking at data consolidation, it isn’t because we’re obsessed with smaller numbers. It 

is because we’re looking at how efficient it is. 

Mr. MAZER. Right. When the teams have gone out and done either using automated tools or on-site examination of the capacity 

of servers, many of them are woefully underutilized. There’s more 

efficiency by putting multiple operating systems or applications on 

one particular server, particularly given the state of technology 

that it is today. 

Mr. CONNOLLY. Right. Thank you. 

And a final question for now. You mentioned FedRAMP. Could 

you just remind us all what FedRAMP is and give us a status as 

to where it is? 

Mr. MAZER. The status I will defer to my colleagues from GSA, 

but I will tell you—— 

Mr. CONNOLLY. Yeah, but they’re not here, Mr. Mazer. 

Mr. MAZER. FedRAMP—well, what FedRAMP is looking at is, 

you know, the security is a very important issue concerning the 

U.S. Government and how do we protect our data and our content. 

And what we have done over the past 10 years, with the advent 

of the FISMA laws and all that, is really establish a set of controls. 

And if agencies can subscribe to those particular controls, whether 

it’s, like, access, availability, those types of activities, then they’re 

saying, okay, they’re reasonably protected given the categorization 

of that security. 

FedRAMP is a model where, if anyone can subscribe to these set 

of controls, then they can be delivering that particular service. So 

FedRAMP is a model that, let’s say if a private-sector company 

says, ‘‘I’d be able to do something for you, the U.S. Government,’’ 

they will follow the standards as promulgated by FedRAMP, and 

you’ll have an independent auditor or a validator come in and say, 

‘‘Yes, they’re matching these controls.’’ 

47 

And it actually establishes a common baseline, so rather than 

every agency doing its own set of, ‘‘I think the security should be 

this,’’ or, ‘‘I think the security should be that,’’ it subscribes to a 

standard baseline by which all private-sector companies should 

subscribe to. 

Mr. CONNOLLY. So another way of putting it would be, Mr. 

Mazer, that what FedRAMP is designed to do is to set some common standards that people, other agencies buy in to. And that 

helps us in terms of the acquisition process because the private sector now doesn’t have to deal with 100 variations. 

Mr. MAZER. Right. The private sector doesn’t have to divine the 

intentions of each individual agency. 

Mr. CONNOLLY. And are we expected to finalize that process 

soon? 

Mr. MAZER. The FedRAMP process is ongoing. There are a couple 

of, they call them—there’s an acronym; forgive me if I can’t break 

it out—3PAOs, that they are that qualified to look at a private-sector company as they are offering cloud services to the U.S. Government. 

Mr. CONNOLLY. So can we expect something soon? 

Mr. MAZER. There are three—as services, as agencies are migrating to the cloud, they will avail themselves of the FedRAMP. The 

private-sector companies will avail themselves of the FedRAMP. 

Mr. CONNOLLY. But you are anticipating we will proceed with 

FedRAMP as planned? 

Mr. MAZER. Yes, sir. 

Mr. CONNOLLY. Thank you. 

Thank you, Mr. Chairman. 

Mr. MICA. Just a final question, a follow-up question. In your review, who is getting it right? Examples to look toward? 

Mr. POWNER. Agencies that are getting it right? 

Mr. MICA. Yeah. 

Mr. POWNER. We can look at some of those agencies. You know, 

typically, DOD is the agency that we point a lot of flaws out when 

it comes to the IT management recently with the IT Dashboard. 

Obviously, there’s a lot of opportunity there for them to get it right. 

I turn to Mr. Mazer’s organization, Interior; they’re at the top of 

the list. You know, GSA was a latecomer up there, as we mentioned. But you have a number—DHS is also a leader. I mean, they 

were planning on going from 43 to 2 at one time, and now their 

numbers are a little bit different. But DOD, DHS, and Interior are 

clearly leaders up there. 

Mr. MICA. Okay. 

Did you have anything else, Mr. Connolly? 

Mr. CONNOLLY. Not at this time, Mr. Chairman. 

Mr. MICA. Well, what we’re going to have to do is thank you for 

being with us. We’ll probably submit some additional questions to 

you from the committee. I didn’t get to all that I wanted answered. 

Mr. MICA. And this is kind of a meat-and-potato hearing, as you 

fellow geeks would love this one, but—— 

Mr. CONNOLLY. All the acronyms. 

Mr. MICA. Yes, exactly. Well, I have to sort through them. I kept 

going back to make certain I knew what they were talking about. 

And you’ve been doing this, focusing on this a lot more than I. But 

48 

very important. I mean, we’re talking saving billions and actually 

much more efficiently operating. 

Sometimes when I go back after we have done our hearings together, Gerry, we see the debt we’re in and the situation we’re in 

financially. If we could just start implementing these things on a 

fast track, we could—— 

Mr. CONNOLLY. Yeah. 

Mr. MICA. —take that column of losses and get us into a much 

better fiscal condition. 

Now, again, I thank you for coming. 

I want to—particularly, we’re going to ask Mr. Powner to probably come back when we have the other two witnesses, and maybe 

again you, too, Mr. Mazer. You could see how we have to have 

some other answers from OMB and GSA, who are not with us 

today. 

So, at this time, again, I thank you. We’ll excuse you, and I’ll call 

up our second panel. 

Our second panel of witnesses I will introduce as they’re taking 

their seats. 

We have Mr. Steve O’Keeffe, and he is the founder of MeriTalk. 

We have Ms. Teresa H. Carlson. She is the vice president, worldwide public sector, of Amazon Web Services. We have Mr. Kenyon 

Wells, vice president of U.S. Federal, CGI Federal. 

Those are our three industry panel witnesses. I think this will 

be an interesting panel. I always think it’s great to hear from the 

government witnesses, and we had two key witnesses here today 

who provided us with their perspective. But I think those from the 

outside that are involved in IT and also data center consolidation 

that they undertake for the private sector and the public sector, to 

get their on-the-ground, firsthand evaluation and provide that to 

our subcommittee today. 

So, with that, I welcome again Mr. O’Keeffe, Ms. Carlson, and 

Mr. Wells. 

As I indicated before, this is an investigative panel of Congress, 

so if you haven’t done so, we’re going to do it now. We’re going to 

ask you to stand and be sworn in. 

Do you swear that the testimony you are about to give before 

this subcommittee of Congress is the whole truth and nothing but 

the truth? 

Mr. O’KEEFFE. Yes. 

Ms. CARLSON. I do. 

Mr. WELLS. Yes. 

RPTS MCCONNELL 

DCMN CRYSTAL 

Mr. MICA. The witnesses have all answered in the affirmative. 

Let the record reflect that. 

And again, welcome you. We are fairly informal today, but we’re 

trying to make certain that—I read, pre-read some of your testimony. Some of it’s pretty long, but if you can consolidate your 

points, and if you have additional information, certainly your whole 

testimony will be included in the record. And then we’ll go through 

all three of you, and then we’ll do the questions rather than after 

each witness testifies. So I’m looking forward to all three of your 

testimonies. I have read a little bit of Mr. O’Keeffe’s, and welcome 

49 

him at this time, and recognize him. And thank you again for participating. 

STATEMENT OF STEVE O’KEEFFE 

Mr. O’KEEFFE. Thank you. Chairman Mica, Ranking Member 

Connolly, and members of the subcommittee, thank you for the opportunity to speak to you today. My name is Steve O’Keeffe and I 

am not the voice for the GEICO gecko, as has been asked before. 

I’m, in fact, the founder of MeriTalk, the Data Center and Cloud 

Computing Exchanges. These are public-private partnerships focused on delivering tangible increases in efficiency in government 

IT. I have spent more than 20 years listening to Federal IT leaders 

talk about their challenges, their opportunities, and their frustrations. You have already heard a lot of numbers here today, but I’d 

like to cut to what’s really important: tangible savings. I’m afraid 

the Federal IT reform is like a bad reality TV show. There is no 

budget. The actors are powerless. The end is predictable. But somehow we still keep watching. We need to change the script. 

As you’ve noted, it is sad that OMB and GSA are not here. So 

when Vivek Kundra announced FDCCI in February of 2010, we 

talked about this, OMB said that taxpayers would save between $3 

billion and $5 billion by 2015. That’s a lot of hamburgers. And so 

as we set tangible goals we need to report against those goals, and 

I think that’s what this is all about. 

Cloud, too, was billed as an IT budget crusher. Today we are 18 

months from the FDCCI savings deadline, and we have no idea 

how much money we have saved the taxpayer, which is not right. 

I would argue we don’t need to keep counting data centers. We 

need to understand how much we’ve saved, which agencies are 

doing it right, and what we need to do to accelerate savings. Let’s 

get straight about this. 

To help surface some answers MeriTalk recently released a new 

study, and I’m Ross Perot-style going to use some charts to illustrate. 

Mr. O’KEEFFE. The study is called ‘‘FDCCI: The Big Squeeze,’’ 

and it is based on a survey of the operators in the agencies. What 

we want to do is learn from people on the frontlines what’s going 

on. So a couple of statistics. 

Fifty-six percent of data center leads give their agencies a C 

grade or below on FDCCI. I think earlier Congressman Connolly 

asked if we were getting an A. It seems we’re getting a C or below. 

I wouldn’t be very excited if my children brought that grade home. 

Only half of Feds believe their agency is on target to meet the 

FDCCI number of closures. Ironically in this case, one of the questions you asked earlier about electricity savings, Feds believe that 

power is a significant area where we’re going to save a lot of 

money. But based on our meetings with Federal data center leads, 

we found that 1 in 20 data center executives have an understanding of what they pay for electricity. So that’s a significant 

blind spot. 

What about top obstacles? What we see is the Fed site, budget 

constraints, mission-owner objections, and the inability to consolidate applications as the biggest obstacles to progress, which gives 

me the impression that the model for the data center leads should 

50 

really be that beatings will continue until morale improves. They 

have no ability, they’re not empowered to change the equation. 

So it’s great to point out what the challenges are, but let’s go on 

the positive side and look at what we should do in order to remedy 

the situation. We call this our five-point plan. 

And the points are, number one, don’t hide. Our concern is that 

by merging FDCCI with PortfolioStat we are going to be gerrymandering the metrics. And so we are concerned about that. We 

need to set realistic goals in the open and publish real status on 

success and failures. And yes, failures if that’s what transpired. 

OMB has a total cost of ownership model. I think Mr. Mazer referenced it. In this era of open government, why does OMB insist 

on keeping this a secret? Why not publish the TCO model so we 

can find out where the money is? 

Number two, there is no money. Recognize that there is no new 

money to fund data center optimization. And so with that, we need 

to empower the CIOs to rationalize applications and maybe trust 

new approaches because we know the old ones have failed. 

Number three, application rationalization. If you do not cut the 

number of applications, you will not cut the number of data centers. The Army is running over 100 operating systems because it 

has so many legacy platforms. I think GAO flagged this. Uncle 

Sam does not need 622 HR systems. I think we can all agree on 

that. 

Four, marry IT and facilities. Wouldn’t it seem logical that the 

data center lead should understand and own the budget for the 

total data center environment? GSA owns most of the facilities and 

pays the electricity bills. Why not publish the energy bills for each 

data center so we’d have a better sense for how to proceed? There 

are a series of new energy contracts out there, the energy savings 

performance contracts, and we’d like to see those moving forward 

more aggressively. 

Five, public-private partnership, please. Why don’t we recognize 

that government is not the only organization that operates data 

centers? We can learn a huge amount from industry. Organizations 

like NASDAQ have put forth data center consolidation optimization 

initiatives. Let’s look at some of those metrics. 

Now to cloud. The onramp to Federal cloud, FedRAMP, is horribly congested. We talked about problems with traffic earlier. In 

fact, you can hear the honking on the digital highway right now 

as software companies line up trying to get through cloud certification. 

After almost a year in operation, GSA’s FedRAMP team has only 

certified two cloud service providers. How are agencies supposed to 

move to cloud when there are only two applications? It’s just not 

feasible. If the cost of FedRAMP certification and the delays outweigh the volume of business that solution providers receive from 

agencies, that industry will take another road. That said, cloud acquisition vehicles are sorely needed. 

In closing, it’s time to get real about Federal IT modernization. 

Are the agency CIOs really in charge, and therefore accountable for 

results? This question has very real implications for FITARA. Richard Spires’ recent experience at Department of Homeland Security 

makes all CIOs question whether they have authority or not. 

51 

We are ready and willing to discuss our initiatives and recommendations. We look forward to working with you to deliver improved efficiency in Federal IT, and welcome any of your questions. 

Thank you for the opportunity to talk today. 

Mr. MICA. Well, thank you. Thank you for your testimony and 

your candor. 

[Prepared statement of Mr. O’Keeffe follows:] 

52 


Insert offset folio 30 here 81280.030

Testimony of Stephen W.T. O'Keeffe 

Founder, MeriTalk 

Data Center Exchange and Cloud Computing Exchange 

before the: 

House Committee on Oversight and Government Refonn, 

Subcommittee on Government Operations 

Hearing Titled: 

"Data Centers on the Cloud: Is the Government Optimizing New Information 

T eehnologies Opportunities to save Taxpayers Money?" 

May 14, 2013, 2:30 p.m. 

"FDCCI and Cloud - Show Me the Money" 

Chairman Mica, Ranking Member Connolly, and ~(embers of the Subcommittee, thank you 

for the opportunity to speak to you today. name is Steve O'Keeffe and T am the founder of 

MeliTalk's Data Center Exchange and Cloud Exchange, pubhc-printe partnerships 

focused on cross pollinating best practices in data center consohdaLion and cloud computing 

efforts. Our partnership includes Federal agencies and leading private-sector companies who work 

together collaboratively to mo\"e the ball forward on the Federal Data Center Consolidation 

Initiative (FDCCI) and cloud computing. In that role, I have spent years listening to Federal leads 

talk about successes and challenges, as well as to industry experts who provide the technology that 

makes it possible. On behalf of Data Center Exchange, Cloud Computing Exchange, its industry 

members and Federal thought leaders, we are pleased to be here today. 

W11Cn Yi,-ek Kundra announced the Federal Data Center Consolidation I niriatiye - FDCCI 

in February 2010, OM!) said that the Federal goycrnment owned 1,100 data centers;. We were 

told that Uncle Sam's power processors gulped 6 billion KwH of electricity in 2006 - and warned 

that power draw could double by 2011 \vithout a "fundamental" shifr in bchayior'. The bottom-line 

promise, $3 billion in FDCCI savings by 2015'. Cloud was also billed as a IT budget crusher. Out 

of the 580 billion in Federal IT spend, it is estimated that almost half goes to infrastructure. 

Notably, data centers occupy the most substantial portion of agencies' infrastructures. So, looking 

for sayings in the data centers makes a whole lot of sense. 

Today, 18 months from the FDCCI savings deadline, we now have 2,713 data centers - yes 

that's definitely an increase4 \,;rhile cloud is in the forecast, it hasn't changed the outlook. Now, let 

me be clear, the data center headcount is not simplY a guestion of Feds finding mainframes under 

1 Office of Management and Budget, "Memorandum for Chief Information Officers: Federal Data Center 

Consolidation Initiative," February 26, 2010 

2 Office of Management and Budget, "Memorandum for Chief Information Officers: Federal Data Center 

Consolidation Initiative," February 26, 2010 

3 PClp, "Heanng Set to Probe Data Center Progress," Mar 6, 2013 

4 Calculations based on Go"ernment Accountability Office, "Data Center Consolidation: Agencies Making 

Progress, but Inyentories and Plans Need to Be Completed," July 2012 and DAT,.\'.goy 
53 


Insert offset folio 31 here 81280.031

the bed - Ol\ffi has changed the ddinition of what is a data center repeatedly since February of 

2010. That sent Federal data center leads chasing their tails counting and recounting to answer the 

multiple data calls. 

So far. GS.\ tells us that we haye shuttered ·+20 data centers'- The D.\ T\.gm- siteand latitude of the closed data centers, but it docs 

much money we han, .. \, the PDCCI deadline looms large - again, it's less 

than 18 months away now's a good time to get real about the bottom-line benetits. _\ccorcling to 

Ol\ffi's math. we neeJ to close 780 more data centets by 2015'. \X'e need to understand which 

agencies are doing it right and '\vhat do \ve need to do to accelerate sayings. 

FDCCI - The Big Squeeze 

l\fcriTalk hosts a public-printe community focused specifically on Federal data centers -

the Data Center Exchange7 We meet with Feds regularly to understand their challenges and 

opportunities in FDCCI. On Monday. we released a new study based on feedback from Federal 

data center operators - "The FDCCl Big Squeeze'''. \\'e would underline that the only way to 

achicye better results from Federal data center optimization is to listen to the Federal data center 

operators - they know their enyironments and they are "cry focused on doing the right tbing by the 

tax payer. 

Here's what the study tells us. Fifty-six percent of data center leaJs gi'T their agencies a C 

grade or below for FDCCI. Seycnty-one percent note they haye closed some data centers, with an 

avcrage of 31 data center closures per agency. Only half of Feds believc that their agenc,' is on 

target to meet the target FDCCI number of closures - 1,200. 

Considering the source for savings, Feds see energy bills as a top opportunity. This is a 

recurring theme in the Data Center Exchange's studies over the last three yeats. It's ironic, as giyen 

the separation of IT and facilities cost centers, 95 percent of Federal data center leads don't pay the 

electric bill or cycn know what it costs. This is a major blinJ spot in the Ylsion to sa'-c money 

from data center optimization. You'll note that O]VlB has dropped the discussion about power 

savings from its FDeC! platform. 

So, what do the Feds tell us about obstacles? Let's consider the top three challenges. 

l\1ission-owner objections - that's interesting in light of the recent resignation of Richard Spires, 

fOlmer CIO at DHS - he ran into significant challenges trying to take control of IT from mission 

owners that had other ideas. The ramifications for FITAR.;\ arc profound. If we do not support 

CIOs that try to stand up to mission owners and agency component CIOs, then what's the point in 

caDing for CIO empowermento There are 23 CIOs at USDA. What CIO will step over Richard 

Spires to en!()rcc better IT management? 

5 Steve O'Keeffe, "My Cup ofIT - IT Genymandering?," J\pril4, 2013 

6 Calcnlations based on Gm-ernment Accountability Office, "Data Center Consolidation: Agencies Making 

Progress, but Inventories and Plans Need to Be CC:mpleted." July 2012 and DATA.gov 

7 :MeriTalk's Data Center Exchange, w\\'\v.rneritalk.com/dcx 

8 MeriTalk, "The FDCCI Big Squeeze," www.mcritalk.com/fdcci·big-squeeze.php.May 13.2013 

2 
54 


Insert offset folio 32 here 81280.032

The other top challenges arc abo telling and should be taken together. No budget for 

consolidation and inability to shut clo\Hl and consolidate applicatiOn>. Nothing comes from 

nothing. CIOs need to be able to prioritize applications and consolidate functionality this goes 

back to (;.\O's report about 622 I lR and 777 supply chain In this fiscal climate, think it's 

safe to say there is no new IT money. CIOs can't rationalize application>, then there's no 

money to con:-;olidate - \\'hich tnean;.; there be no co:-:;t sayings. Something need::; to giyc. 

In the study. I 'cds point to DoD, Dl-lS. and NO.'L\ as leaders in data center optimization. 

A call out here to Darren Smith and the team at NCl.\.\ - they are blazing tire trail in modernization 

and are one of the fe\\' agencies that know and manage their electricity bill. It's sad and ironic that 

Feds looked to DHS - and Rjchard Spires leadership as a model for change. A.gain, '-.vith Spires 

out, what other CIO ",>ill step up to challenge the components and mission owners? Lessons for 

FITARA .. 

Recommendations - The Five-Point Plan 

Here arc the Data Center Exchange'S rccommcndations for how to achie,-c better outcomes 

in data center ()ptimi~ation: 

1. Don't Hide - C;errymandering FDCCr to make it look like a success by combining it with 

Portfolio:;lat is not the way to go. Let's put the cards on the table - set realistic goals in the 

open and publish the real status on success and failure. OMB has a data center TCO model. 

In trus era of open gm-crnment, why is trus model kept secret~ Publish the model so that 

government and industry understand how we're keeping score 

2. No ll1on~y - Recognize that there is no new money for data center optimization. Empower 

the CIO to rationalize applications - it's the only way to fund the path to make things berter. 

j\genc), leadership and Congress need to support the CIO in the inevitable clashes "'-1th the 

rrllssion c)\vners and components 

3. Application Rationalization - Touched on this above, but it bears another mention. \Ve do not 

need 600 HR systems. Prioriti~ation is the key to changing the value and financial equation 

4. A1arry IT and i<"aciiitie.f- One data center executive needs to understand and own the budget 

for total data center cost. GS.\ owns most of the facilities and pays the electricity bilL \'(.'hy 

not publish the energy bills for each data center? How do we pick which data centers to 

close if we don't know what they cost to operate? Interesting to note that, according to 

Uptime Institute, 12 percent of data center operational cost is electricity'o 

5. Pub/it-Primte Partnersbip -l\-1eriTalk champions public-private partnership. That said, we 

need more and deeper public-printe collaboration. \\'h" don't we recognize that 

gm'ernment is not the only organization that operates data centers? There are existing 

definitions of what is a data center - why not embrace these rather than keep creating our 

own in government? \X·'hv not utilize industry standards, data center efficiency 

measurements -like Power Usage Fffectiveness (PUE)? Leaders like Jake \'\'ooley at the 

9 Govern1nent Accountability Office, "Informat.ion Technology: Potentially Duplicatiyc IllYCstlnents Exist at 

the Department of Defeme and Energy," February 17. 2012 

10 Uptime Institute, \\'\\"\y.uptimeinstitute.com 

3 
55 


Insert offset folio 33 here 81280.033

of Lncrg~- can help data center leads aU oyer gO\-ernlncDt 

How did it take "-i\:O;D,\Q to do its data center 

did it take? ~Iow did sa\-c~ L the tnission exactly 

\bsoltltciy \"eS 

Cloud Congestion 

Turning 10 cloud, the forccast is better than thc weather. The onrarnp to cloud - FedR. \1\11' 

is horribk congested. (;5.\ launched the program of2(l12, and according to (;S,\'s SilC. 

today there arc on],' ["\'0 apprm'cd Cloud Sen,icc ]fthe cost for FedlL\1\lP certification 

and the delays out\ycigh the \"o!un1c of business that solution proyiders receiyc frOln the 

indusn"\' \\~ll sidestep the process. That said, cloud acquisition "chicles arc soreh' needed. 

needs to get real about the ,'aJue of the process. Beware of OCI concerns - how can Cluud 

Sen,ice Prm,iders also sen'e as Cloud Brokers or 3P.\Os~ Is it true that GS:\ is looking to 

out source the selection process for CJoud Brokers) Trdng to distance yourself ii'om t be 

responsibility is not an ans\\-cr. 

There arc a couple of silwr linings. First, cloud email/ collaboration. 

arc competing bard and the ,poils in cloud mail. This LUllllJUJUUU 

winners. _Amazon and arc winning in hosting 

selTice-desk applications. Intere,tingh-, the of c\mazon i, forcing 

suppliers to cut their prices and improye "\gain, competition is good for 

tax payer. 

and the 

\\'c'd like to see a better accounting of ho\\- cloud is 

goyernmcnt and to build the Federal Cloud Computing 

money. MeriTalk worked with 

Calculator". Let's put the 

progranls into the and SUI11 (he sayings. 

Conclusion 

In closing, data center optimization and cloud migration are critical to improying Federal IT 

efficiency and enhancing sen' ices as well as enabling business agility. Let's get real about who's 

driX'ing the bus on Federal IT modc-rnization. Arc the agency eros in - and therefore 

accountable for results? The efficiency of Federal IT is about much more the ~81l billion 

budget - it plays a critical role in reinw'nting goyernment and deli"ering better sen,ices 10 ,\merica. 

lfwe don't assign real responsibility, the future "ill look much like the pa,t - and c\mcrica's tax 

payers can't afford that. 

\X'e arc ready and to discuss our initiariycs and recommendations. \Ve look f()rward 

to working with ,-ou and the to bring about additional imprm'ements to Federal IT 

efficiency and FDCCI in the Federal goyernment. 

11 General Services Administration, FedRAMP.gov 

l2 MeriTalk Cloud Computing Savings Calculator, www.meritalk.com/saving;s-calculator.php 

4 
56 

Mr. MICA. Let’s turn next to Teresa Carlson, vice president for 

Amazon Web Services. 

Welcome, and you’re recognized. 

STATEMENT OF TERESA CARLSON 

Ms. CARLSON. Good afternoon, Chairman Mica and Ranking 

Member Connolly. 

Mr. MICA. She is not coming in very loud. 

Ms. CARLSON. Good afternoon, Chairman Mica and Ranking 

Member Connolly. My name is Teresa Carlson, and I’m the vice 

president, Amazon Web Services World Wide. Thank you very 

much for inviting me to testify today on the Federal data center optimization and transition to cloud computing, and to discuss how 

the U.S. Federal agencies can do more with less and to save taxpayer dollars. I’d like to submit my written testimony for the 

record. 

Mr. MICA. Without objection, your entire statement will be part 

of the record. 

Ms. CARLSON. Also, I wanted to thank the university for having 

us here today. I spent many, many Saturdays and Sundays here 

at swim meets with my sons, and it is in beautiful Fairfax County, 

and it is a beautiful day. So I really appreciate them having us 

here as well. 

Companies that leverage Amazon Web Services in the commercial sector range from large enterprises, such as Bristol-Myers 

Squibb, Shell, NASDAQ, to innovative startups like Pinterest and 

Dropbox. Throughout the U.S. Federal Government, agencies and 

departments are adopting AWS for a wide range of technology infrastructure services and applications, to include groups like the 

U.S. National Institutes of Health, NASA’s Jet Propulsion Laboratory, and the U.S. Department of the Navy, Navy, and the U.S. Securities & Exchange Commission. 

AWS is passionately committed to sharing the benefits we can 

achieve as a cloud provider to Federal Government agencies, and 

our economies of scale have resulted in the rapid innovation of public cloud services and lowering the price for our customers. Specifically, we have lowered our cloud computing prices 31 times since 

2006. Let me repeat, 31 times with no one pressuring us to lower 

those prices. We lowered those prices based on our savings and providing them back to the customer. 

Given the proven secure and game-changing efficiencies of cloud 

computing, we believe that the FDCCI should be directly linked to 

the Office of Management and Budget’s ‘‘Cloud First’’ policy in 

order to be truly successful in the data optimization model. While 

there is no doubt that since Federal Government workloads can 

continue to operate in government-owned data centers, there are a 

very large number of workloads that should be more suitable and 

efficiently managed in large-scale commercial cloud platforms. 

Therefore, the adoption of cloud computing services should be a 

central part of the Federal strategy. 

One way to think about cloud computing is that instead of buying and owning and maintaining their own data centers or servers, 

Federal agencies can acquire technology resources and compute 

power and storage on an as-needed basis and dispose of it when it’s 

57 

no longer needed. In fact, we have something called a Trusted Advisor service where we actively work with our customers to turn off 

servers when they’re not being utilized, and they actually don’t 

even have to worry about what their electric bill is because that’s 

part of the service we provide and it’s part of the pricing model, 

so they’ll know that in real time. And users only pay for what they 

use by the compute hours, or storage-gigabyte, and they are not 

locked, they are not locked to any long-term contracts. They can 

choose long-term contracts, but they are not locked into anything 

like that. 

There’s many, many examples of Federal agencies that have 

begun to embrace the cloud. A couple I’d like to highlight for you 

today is NASA’s Jet Propulsion Lab. When the Mars Space Lab, 

also known as the Curiosity, successfully landed last year, public 

cloud computing infrastructure from AWS was utilized in support 

of various aspects of the mission, including the public outreach 

around the landing itself, so that everyone in the United States 

and the world could enjoy that landing, as well as the data and 

image pipeline—the pipeline management dealing with all the new 

data streaming that was actually coming down from Mars. Tom 

Soderstrom, the CTO of NASA JPL, described it this way: JPL has 

leveraged cloud services to dramatically reduce IT costs, and in the 

process increasing their agility and decreased the time to science 

while enabling JPL to have complete flexibility when using those 

computing resources. In fact, we worked with them in a very short 

period of time to get that set that up. It did not take much for 

them to procure and set that up. 

The U.S. Department of the Navy CIOs office recently initiated 

a pilot project to move unclassified data to the commercial cloud 

environment. The Secretary of the Navy’s public-facing information 

portal is now on AWS, and they also have an initiative to work on 

a strategy to migrate all public-facing sites. And he’s already said 

that—CIO Terry Halvorsen stated that the Department has 

achieved a 50 percent reduction in cost to operate this portal. 

Let’s imagine for a moment, if that level of cost savings could be 

applied to all Federal IT spending, how much money could that actually be? And I believe it’ a lot more than those $3 billion that 

were initially brought up. 

The reality is that cost savings is only part of the picture and 

that what we think is a fundamental and clearly a need to transition to cloud computing and this will be a big part of the optimization for the data center consolidation. There are many companies 

out there that have already taken full advantage of that in a commercial site like Netflix to move their entire infrastructure to the 

cloud. 

We think there is exciting opportunities out there to actually do 

a lot more with cloud services. We support what you’ve done already in both FITARA and FDCCI, and we appreciate having the 

opportunity today to speak to you and are prepared to answer any 

questions. Thank you again. 

Mr. MICA. Well, thank you also. 

[Prepared statement of Ms. Carlson follows:] 

58 


Insert offset folio 34 here 81280.034

Testimony of 

Teresa Carlson, Vice President, World Wide Public Sector 

Amazon Web Services 

At the Field Hearing 

"Data Centers on the Cloud: Is the Government Optimizing 

New Information Technologies Opportunities to Save 

Taxpayer Money?" 

Before the Subcommittee on Government Operations, Committee on 

Oversight and Government Reform 

United States House of Representatives 

May 14, 2013 

Good afternoon, Chairman Mica and Ranking Member Connolly, my name is Teresa Carlson, and I am Amazon 

Web Services' Vice President for World Wide Public Sector. On behalf of Amazon and our customers, thank you 

very much for inviting me to testify today on federal data center optimization and the transition to cloud 

computing, and to discuss how U.s. federal agencies can do more with less to save taxpayer money. It's a 

subject that I know this Subcommittee and the Oversight and Government Reform Committee are focused on, 

and we at Amazon are also quite passionate about helping our customers save money and innovate for less. 

Amazon Web Services 

As you may know, Amazon.com opened for business on the World Wide Web in July 1995 and today offers 

Earth's Biggest Selection. Amazon seeks to be Earth's most customer-centric company, where customers can find 

and discover anything they might want to buy online, and endeavors to offer our customers the lowest possible 

prices and the best possible services. Technology innovation has always driven Amazon's growth. As we 

expanded our offerings for retail customers, we also expanded customer segments. 

After over a decade of building and running the highly scalable set of web applications and databases known as 

Amazon.com, the company realized that we had developed a core competency in operating massive scale 

technology infrastructure and datacenters. So, we embarked on a much broader mission of serving a new 

customer segment - including government agencies - with a platform of web services through our cloud 

computing business called Amazon Web Services (AWS). 

In 2006, AWS began offering developer customers access to in-the-cloud infrastructure services based on 

Amazon's own back-end technology platform. Previously, businesses and government agencies only had an 

option of either making massive capital investments to build their own infrastructure or of contracting with a 

vendor for a fixed amount of datacenter capacity that they might or might not use. This choice meant either 

paying for wasted capacity or worrying about shortages, i.e., that the capacity they forecasted was insufficient to 

keep pace with their growth. Businesses and government agencies spent a lot of time and money managing their 

own datacenters and co-location facilities, which meant time not spent on their core organizational missions of 
59 


Insert offset folio 35 here 81280.035

providing products and services for their customers and citizens. In large part, these inefficiencies continue 

today, and as you are well aware, the U.S. federal government has struggled with this challenge for some time. 

With AWS, government no longer needs to make massive, risky infrastructure investments in order to develop, 

launch, and run flexible, reliable, and scalable IT systems. AWS provides a highly reliable, scalable, secure, and 

low-cost infrastructure platform in the cloud that powers hundreds of thousands of enterprise, government, 

education, and startup organizations. 

Companies that leverage AWS in the commercial sector range from large enterprises such as Bristol-Myers 

Squibb, Shell, and Nasdaq, to innovative start-ups like Pinterest and Dropbox. Throughout the U.S. federal 

government, agencies and departments are adopting AWS for a wide range of technology infrastructure services 

and applications including at the U.S. National Institutes of Health, NASA's Jet Propulsion Laboratory, the U.S. 

Department of the Navy, and the u.s. Securities and Exchange Commission. AWS also offers its dedicated 

GovCloud to U.S. government agencies and system integrator partners, allowing them to move more sensitive 

workloads into the cloud by addressing their specific compliance requirements, such as the International Traffic 

in Arms Regulations (ITAR). 

Notably, Amazon.com, as the largest online retailer in the world, has itself adopted cloud computing services 

provided by AWS to enable rapid innovation and growth, to transform how we deliver our services to 

customers, and to lower our IT costs substantially. That is, Amazon's core retail business relies on cloud 

services provided by AWS. 

AWS is passionately committed to sharing the benefits we can achieve as a cloud provider to federal government 

agencies, and our economies of scale have resulted in the rapid innovation of public cloud services and the 

lowering of pricing for our customers. Specifically, we have lowered our cloud service prices 31 times since 2006. 

Let me repeat that: AWS has lowered its prices 31 times since 2006. 

Given the proven, secure, and game-changing efficiencies of cloud computing, we believe that the Federal 

Data Center Consolidation Initiative (FDCCI) should be directly linked to the Office of Management and 

Budget's "Cloud First" policy in order to be truly successful with data center optimization. While there is no 

doubt some Federal government workloads can and should continue to operate in government-owned 

datacenters, a large number of workloads are much more suitably and efficiently hosted in large-scale, 

commercial cloud platforms. Therefore, the adoption of cloud computing services should be a central part of 

the federal strategy to achieve greater cost reductions, more efficiency, and to spur more innovation 

throughout the federal government. 

Cloud Computing 

One way to think about cloud computing is that instead of buying, owning, and maintaining their own 

datacenters or servers, federa! agencies can acquire technology resources such as compute power and storage 

on an as-needed basis, and dispose of it when it no longer is needed. Many industry experts refer to this as a 

"utility" model of obtaining and using IT capability, analogous how the government obtains access to water, 

gas, or electrical power. Users only pay for what they use - by the compute-hour or storage-gigabyte - and 

they are not locked into long-term contracts. Let me repeat that too: using this model, federal agencies are not 

locked in to long-term contracts. If a program is funded one year and then unfunded the next, or a pilot project 

or test program does not achieve its expected results, agencies no longer need to be tied to large, capital IT 

expenditures that cost tens of millions or even hundreds of millions of dollars. 

There are a number of federal contract vehicles that are being structured to enable this approach and I'll 

highlight one that was announced recently: the U.S. Department of Interior Foundation Cloud Hosting Services 
60 


Insert offset folio 36 here 81280.036

contract was competitively awarded by the Department's National Business Centre and the Acquisition Services 

Directorate to multiple vendors. The contract is uniquely structured to facilitate the evaluation and adoption of 

usage-based cloud computing services. 

There are many examples of federal agencies that have begun to embrace the cloud and this new IT model. I'll 

highlight two in my testimony today. First, NASA's Jet Propulsion Laboratory (JPL) decided several years ago to 

use AWS's Infrastructure-as-a-Service (laaS) offerings in support of the Mars Rover-related programs and had 

considerable success in doing so; AWS enabled the Rover program to run more efficiently. When the next 

major Mars mission, the Mars Space Lab (also known as Curiosity) successfully landed last year, public cloud 

computing infrastructure from AWS was utilized in support of various aspects of that mission, including public 

outreach around the landing itself as well as the data and image management pipeline dealing with all the new 

data streaming down from Mars. As Tom Soderstrom, the CTO of NASA JPL, has described, JPL has leveraged 

cloud services to dramatically reduce IT costs and, in the process, increased their agility and decreased the 

"time to science," while enabling JPL to have complete flexibility when using those computing resources. 

Second, the U.S. Department of the Navy's CIO office recently initiated a pilot project to move unclassified data 

to a commercial hosting environment. The Secretary of the Navy's public-facing information portal js now 

hosted in the AWS cloud. As a result, in a recent blog post, the Navy CIO, Terry Halvorsen, stated that the 

Department "has achieved a 50 percent reduction in cost to operate the portal" because it was less expensive 

to use commercial cloud services than host the site in a government data center. 

Let's imagine, for a moment, if that level of cost savings could be applied to all federal IT spending in the next 

decade? 

Chairman Mica and Ranking Member Connolly, the benefits of cloud computing have been described before to 

the Subcommittee and Committee. Please allow me to summarize briefly those benefits to users for the 

purposes of to day's field hearing: 

First, with cloud, IT users can trade capital expenditures for variable expenses. That is, users can pay 

only for what IT they actually consume, and only when they consume it. 

Second, with cloud, those variable expenses are lower than they would be if the user selfprovided the IT service. With inherent economies of scale, the large-scale commercial cloud is 

simply more efficient than anything a particular user could build and operate for itself. 

Third, users don't need to guess their capacity needs. Before cloud, users risked the waste of 

buying too much IT capacity if demand were lower than guessed, or they risked dissatisfaction of 

their customers or citizens with shortages, if the users bought insufficient IT capacity to meet 

demand. 

Fourth, the speed and agility of user innovation is dramatically increased with cloud. Instead of 

waiting many weeks to obtain IT infrastructure, virtually unlimited capacity is available to users 

within minutes. 

Fifth, cloud computing allows a user's scarce technical talent to focus on its core mission, not on 

maintaining basic compute and storage infrastructure to support it. With the budget challenges 

that agencies face today, that focus is valuable now more than ever to government users. 
61 


Insert offset folio 37 here 81280.037

4 

Federal Data Center Optimization 

Those benefits of cloud computing should be applied to the objective of reducing the number of data centers as 

intended under the FDCCI. Reducing the number of data centers in use by the federal government is a worthy 

and important goal. The cost savings that could come along with the closure of federal data centers could be 

substantial over time, whether it can indeed be $3 Billion by the end of 2015 as is the previously stated goal 

noted in the most recent U,S. Government Accountability Office (GAO) report, But regardless of the total 

amount to be saved by data center reductions under FDCCI, shuttering underutilized data centers to save money 

is only part of the equation, The IT models that are used for the remaining federal agencies' data centers 

whether it is 2,000, 1,000 or fewer - will ultimately determine the magnitude of overall cost savings and benefit 

to the federal government, 

Even if in the next several years, the number of federal data centers is reduced to less than 2,000, if the IT 

models utilized for those data centers are still to invest tens of millions or even hundreds of millions in IT 

infrastructure, services and capital investments, then how much of possible cost savings will be left on the table? 

What other benefits will be sacrificed or unrealized? 

The reality is that cost savings is only part of the picture and that is why we think that it's fundamental to clearly 

link the transition to cloud computing with federal data center consolidation in order to achieve the maximum 

benefits of federal data center optimization, Doing more with less has become a key public policy goal in 

Congress and it's one that we strongly agree with, That is what we have been committed to at AWS since the 

beginning, But, it's also about innovating for less. And that is where cloud computing excels more than any 

other IT model. That's why some businesses are now shifting their entire IT infrastructure to the cloud, Even 

enterprises that invested a lot previously in their IT infrastructure and became really good at it, decided that they 

could not achieve the same efficiencies and benefits - including the ability to innovate faster at a substantially 

reduced cost - as they could if they shifted to the cloud. That same approach needs to be applied to the federal 

government. 

The bottom line is that there are some IT missions that federal agencies should no longer pursue on-premise or 

by using the old model of capital expenditures to build out IT infrastructure and have lots of people manage it, 

This brings me back to the Navy Department example that I referenced earlier. What Mr. Halverson, the Navy 

ClO decided, was that instead of being satisfied with the old model, he was going to innovate and use a new 

model, one that was more efficient, more flexible, more scalable, and every bit as secure if not more secure --

than the old one, In his words: "The decision to host the data on a public Web server resulted from an analysis 

of several factors, including the type of data stored in the portal, the ease of access due to significantly faster 

response times, security, and cost." 

Consider also the mission and business needs that were factors in NASA JPL's decision to utilize public cloud 

infrastructure, It wasn't just about cost savings, it was also about flexibility, scalability, security - and landing a 

rover on Mars is a pretty obvious example of tfmission critical." The cloud has also enabled a new !evel of secure 

data sharing and collaboration with other research centers in the u.s, and around the globe, The cloud actually 

enables much tighter control over data access than sending data sets on hard disks or allowing arbitrary data 

downloads from around the globe, Finally, leveraging cloud computing also provided NASA JPL the option to use 

the infrastructure when they actually needed it, and to turn it off when they did not. 

There are many other examples highlighting the benefits and opportunities of leveraging cloud computing to 

achieve significant and lasting "data center optimization" results for the federal government, But as exciting as 

the opportunities are, there continue to be obstacles in the way as well. And that is where I think that the 

Committee is playing a critical role, Without additional oversight and updates to federal IT acquisition processes, 

budget models, and IT procurement policy, it will be a struggle to achieve lasting results, That is why we 
62 


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support the advancement of the Federal IT Acquisition Reform Act (FITARA), including the federal data center 

optimization and cloud computing provisions in the bill. 

Federal IT Acquisition and FITARA 

Chairman Mica and Ranking Member Connolly, as you have both pointed out on various occasions, the way 

government defines its requirements and acquires IT can be considered antiquated, Given the many benefits of 

adopting new IT models that I have described today, Amazon believes that a principal aim of federal IT 

acquisition reform legislation should be to facilitate federal government acquisition of cloud computing services. 

Title I of the FITARA bill would give federal agency CIOs more authority and budget flexibility. Amazon supports 

this idea and we believe that it would lead to the adoption of more efficient solutions, including cloud 

computing, to the challenges faced by federal agencies. The TechAmerica Cloud Commission, which I was a 

member of, reached the same conclusion in 2011, recommending that "agencies should demonstrate flexibility in 

adapting procurement models to acquire cloud services and solutions. Congress and OMS should demonstrate 

flexibility in changing budget models to help agencies acquire cloud services and solutions." (Cloud First, Cloud 

Fast: Recommendations for Innovation, Leadership and lob Creation, TechAmerica Foundation, 2011.) 

One area where ClOs should be given more authority and flexibility is with respect to spending models, 

specifically capital expenditures (CAPEX) versus operating expenditures (OPEX). 

Given that much IT hardware and software has only a three-year lifecycle, we believe that agencies should be 

allowed to place capital funds into "Working Capital Funds" that preserve the funding for the agency to pay in 

multiple years for cloud computing services based on what they actually use. The current "use or lose" approach 

is a disincentive to saving money. Agencies should shift to paying only for what they use in OPEX, versus 

spending to stockpile servers, software, etc., because their budgets expire at the end of a fiscal year, in CAPEX. As 

the Software & Information Industry Association stated in its 2012 White Paper: "Cloud computing drives 

agencies away from purchasing IT in a way that requires capital expenditures and overhead, and toward an 'on 

demand' IT model that purchases IT services as it consumes them. Capital planning guidance must keep pace 

with this changing dynamic." (Beyond the 25 Point Plan: A Roadmap to Implementing Cloud Computing and 

Reforming Federal IT, Software & Information Industry AssOCiation, 2012.) 

We agree and believe that FITARA could accelerate this change. We applaud the Committee for reporting a 

FITARA bill that includes language in Title III that establishes cloud service Working Capital Funds that "may 

preserve funding for cloud service transitions for a period not to exceed 5 years per appropriation.!! 

Title II of the bill, on data center optimization, is also a crucial part of the legislation. In Section 203, we 

recommend including a direct link between the required plan for implementation of the Federal Data Center 

Optimization Initiative and OMB's Cloud First policy. As I described earlier in my testimony, data center 

optimization should not merely aim to reduce the number offederal data centers via the FDCC!. FITARA should 

clarify that using commercial cloud services is an equally valid way to comply with the data center consolidation 

mandates, because commercial service providers can make available more compute power and storage for a 

fraction of the cost based on what agencies actually use. Put another way, data center consolidation is a good 

start, but cloud computing fundamentally changes both the process and the output, thereby optimizing how 

government operates IT. 

Thank you again for inviting me to testify today. I look forward to your questions. 

******* 
63 

Mr. MICA. And we’ll turn now to our final witness on this panel, 

Mr. Kenyon Wells, vice president of U.S. Federal, CGI Federal. 

Welcome, and you are recognized. 

STATEMENT OF KENYON WELLS 

Mr. WELLS. Thank you. Thank you. Thank you, Chairman Mica, 

Congressman Connolly. Thank you very much for the opportunity 

to appear before you today. My name is Kenyon Wells, and I’m vice 

president at CGI Federal Incorporated, a global information technology and business process services firm. I’m honored to provide 

some thoughts today about ongoing efforts for Federal agencies to 

optimize their use of their data centers and move to greater use of 

cloud computing technology. 

CGI applauds the subcommittee not only for its continued efforts 

to eliminate wasteful IT spending, but also for its recognition that 

continued investments in IT will save money, improve efficiency, 

and provide better services to U.S. citizens and businesses. In particular, CGI thanks the leadership of this subcommittee, as well as 

Chairman Issa, Ranking Member Cummings, and the full Oversight and Government Reform Committee for bringing many important issues to light with the introduction of H.R. 1232, the Federal 

Information Technology Acquisition Reform Act, and for the open 

and transparent manner in which that legislation was drafted. 

In February of this year, CGI became just the second company 

to be granted a FedRAMP cloud security provisional authority to 

operate. CGI is now delivering more than $100 million in secure 

cloud solutions to dozens of Federal programs, in addition to many 

other cloud implementations for State government and commercial 

clients. Based on these projects and discussions with other Federal 

agencies, CGI offers the following observations. 

First, there is significant progress, but more can be done. There 

are two major drivers that lead to immediate cost savings for agencies in adopting cloud computing. One of these is the speed with 

which new systems can transition to go live in the cloud. For example, CGI worked with GSA to bring 30 systems live in less than 90 

days. As a result, that agency program reduced their overall server 

footprint by 50 to 70 percent. 

The other immediate cost-savings driver is that agencies only 

pay for the capacity they need. So instead of running data centers 

that continuously provide peak capacity that is always underutilized, CGI’s cloud clients have significantly lowered day-to-day 

costs and pay only for added capacity when it’s needed. These immediate savings are a great achievement, but longer term the consolidation of data centers and migration to the cloud are but a step 

in the journey towards Federal IT modernization and consolidation. 

These more holistic efforts will eventually deliver savings that 

dwarf the numbers we are talking about for FDCCI today. 

Second observation. Cost savings are often difficult to quantify. 

A lot of what we are talking about here today, we have seen some 

of the reality as to why agencies struggle with it. And as the GAO 

report indicates, many agencies do struggle to determine just how 

much they save under consolidation initiatives. The challenges here 

are exacerbated by the lack of baseline IT costs on an agency-byagency basis. Additionally, there are some initial costs associated 

64 

with moving the cloud computing or closing down data centers 

which can delay the initial cost savings even though an agency will 

save significantly in the long run. 

Third, significant acquisition challenges exist. In discussions 

with numerous agencies on this topic, CGI has seen many that 

have struggled to modify their procurement methods when purchasing cloud services. Cloud computing not only represents a fundamental change in how IT services are delivered, but also how 

they are procured. A focus on using readily available contract vehicles could significantly accelerate cloud migration. Additionally, 

Congress and the administration could provide agencies with more 

freedom to enter into innovative agreements with industry to allow 

government to significantly reduce its upfront costs on the publicprivate partnership we’re talking about. 

Many of CGI’s commercial and State government clients have entered into an agreement where CGI assumes the initial transition 

costs so those clients can start saving on day one. If the Federal 

Government wants to do more with less, then it should embrace 

new methods of contracting that shift that risk and upfront costs 

to industry partners. 

Finally, strong leadership and interdepartmental cooperation increase the results from cloud. CGI commends DOD, DHS, and GSA 

for their collaboration as members of the Joint Authorization Board 

overseeing the FedRAMP program, which represents a significant 

and necessary step forward as the Federal Government looks to implement the cloud. FedRAMP’s common-risk framework for all 

agencies is a critical piece of the puzzle that eliminates the needs 

for highly customized solutions that often hold no real extra benefit 

and severely increase cost. 

Moving forward, FedRAMP’s continuing monitoring process is 

more frequent and more detailed than those already in place at 

most Federal agencies, which will create more confidence in security around commercial providers who receive their P–ATO. This 

will be followed on by the new DHS-led efforts around continuous 

monitoring which will only help push this effort forward so that 

agencies and Congress know both what IT assets an agency has 

and how they’re secured. 

Thank you once again for the opportunity to participate in this 

important hearing. Since I’m a few seconds under, I’ll add two additional things. One, thank you very much for holding this hearing 

here in my alma mater, though this campus looks very different 

than when I was here a couple of decades ago. And finally, since 

it is a few days from Mother’s Day, I want to thank my mother and 

brother who surprised me by attending today, and thank her for 

making me come to this school and therefore be here. So I would 

look forward to any questions. 

[Prepared statement of Mr. Wells follows:] 

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Insert offset folio 39 here 81280.039

Written Testimony of Kenyon Wells 

Vice President 

CGI Federal Inc. (CGII 

Prepared for 

The House Committee on Oversight and Government Reform 

Subcommittee on Government Operations 

Field Hearing 

May 14,2013 
66 


Insert offset folio 40 here 81280.040

Chairman Mica, Congressman Connolly, Members of the Subcommittee, thank you very much for the 

opportunity to appear before you today. My name is Kenyon Wells and I am a Vice President at CGI 

Federal Inc. (CGI), a global information technology and business process services firm. On behalf of my 

69,000 colleagues at CGI, I am honored to provide some thoughts today about ongoing efforts of federal 

agencies to optimize use of their data centers and move to greater use of cloud computing technology. 

CGI has partnered with its commercial and federal, state, and local government clients for more than 37 

years on a wide array of technology projects. As a company, CGI has worked with more than 100 federal 

organizations, so like the members of this Subcommittee, CGI has observed patterns across government 

that aren't always visible within a specific agency given its focus on a single core mission. CGI takes very 

seriously its responsibility, not only to its individual clients, but also to the entire federal government 

and, as a result, CGI welcomes this opportunity to share its observations. 

In February 2013, CGI became just the second company to be granted a Federal Risk and Authorization 

Management Program (FedRAMpsM ) cloud security Provisional Authority to Operate (P-ATO). In 

addition, an independent, accredited third party assessment organization audited the implementation 

to ensure that security controls were in place and CGI's cloud would continue to meet the Federal 

Government's stringent security requirements. 

CGI also is one of only three companies awarded positions on two key General Services Administration 

(GSA) government-wide cloud blanket purchase agreements (BPAs) for Infrastructure-as-a-Service (laaS) 

and Email-as-a-Service.lnaddition.CGI.s cloud clients include numerous state government and 

commercial entities. As a result, CGI has an ability to look across the Federal landscape as well as other 

markets to see how rapidly-evolving technology is transforming how enterprises and entire industries 

meet their mission. CGI is now delivering more than $100 million in secure cloud solutions to agencies 

ranging from the Department of Homeland Security (DHS) to the Nuclear Regulatory Commission. 

CGI applauds this Subcommittee not only for its continued efforts to eliminate wasteful IT spending, but 

also for its recognition that continued investment in IT will save money, improve efficiency, increase 

transparency, encourage innovation, and provide better service to U.S. citizens and businesses. In 

particular, CGI thanks the leadership of this Subcommittee as well as Chairman Issa and the full 

Oversight and Government Reform Committee for bringing many important issues to light with the 

introduction of H.R. 1232, the Federal Information Technology Acquisition Reform Act, and for the open 

and transparent manner in which the legislation was drafted. 

In my testimony today, I will discuss some of CGI's specific experiences as a service provider of cloud 

computing, describe some of the barriers that stand in the way of faster adoption of new technologies 

and broader optimization efforts, and offer some recommendations for how government and industry 

can move beyond the cloud to collaborate on solutions that allow us to "do both more and better, but 

with less." 
67 


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Cloud Computing Experience: Successes and Barriers 

In October 2010, CGI was honored to be one ofthe 12 companies selected by the GSA to provide cloud 

services on the government-wide laaS contract vehicle. Over the 10 months that followed, CGI's cloud 

computing environment underwent a rigorous evaluation process that resulted in receipt of a 

permanent "Authority to Operate" (ATO), allowing CGI to begin providing certified-secure cloud services 

to government agencies. In addition to meeting the technical and management requirements outlined 

in the contract, the ATO's Assessment and Accreditation process ensured that CGI met all of the 

necessary federal security requirements, including the Federal Information Security Management Act 

(FISMA). In September 2011, CGI was awarded the first competitively-bid task order under the laaS 

vehicle by DHS to move all of the Department's public websites to the cloud. Since then, CGI has won a 

number of additional task orders under the same vehicle, including projects for the GSA's Office of 

Citizen Services and the National Archives and Records Administration (NARA). In each of these 

situations, CGI's clients were able to compete their task orders quickly under the laaS vehicle and move 

forward with a contract award. 

In June of 2012, CGI began moving through the FedRAMP process. Based on its FedRAMP experience as 

well as its cloud computing projects and discussions with numerous other federal agencies, CGI offers 

the following observations for consideration: 

Cloud helps deliver real cost savings in the short-term. There are two major drivers that lead to 

cost savings. The first cost savings driver is the speed at which new systems can transition and 

go live in the cloud. Traditionally, it would take at least six (6) months to launch a website or 

system, but with the cloud, that timeframe is dramatically reduced. For instance, CGI worked 

with the GSA to bring 30 systems live in less than 90 days. As a result, the GSA has reduced its 

server footprint by 50-70 percent. At DHS, the RestoretheGulf.gov and 

StudyintheStates.dhs.gov websites were deployed in CGl's secure public cloud just six (6) weeks 

after project kickoff. The second cost savings driver is that agencies only pay for the capacity 

that they need. So, instead of running data centers that continuously provide peak capacity, 

CGI's cloud clients have significantly lower day-to-day costs and pay only for added capacity 

when needed. For example, CGI stood ready to add more capacity to Ready.Gov as Hurricane 

Sandy moved up the coast. CGI actively monitored the situation and its cloud was able to 

handle this unprecedented increase in traffic with no performance issues or without any change 

or disruption to the user or citizen experience. With cloud, clients also have more control over 

costs. Under its contract with DHS, CGI notifies the Department when 80 percent of a monthly 

not-to-exceed dollar limit is reached and does not bill any costs beyond an approved threshold 

unless the contract is modified. 

When migrating to the cloud, agencies can have confidence in strong security. The number 

one cloud question federal agencies ask CGI is: "Is the cloud secure?" Having taken many 

agencies live in the cloud, CGI can answer, "yes," because its cloud is designed to meet federal 
68 


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security requirements, Specifically, CGI's federal cloud was built to ensure that agencies have 

automated security management, greater redundancy, improved disaster recovery, and 

simplified security auditing, In addition, CGI has found that shifting public data to an external 

cloud has reduced agencies' risk of exposing internal data, As a result, considerable opportunity 

remains to increase government savings from the cloud while maintaining strong system 

security, CGI's federal cloud provides FISMA compliance for low and moderate impact systems, 

which represent 88 percent of federal agency systems, 

Strong leadership and inter-departmental cooperation increase the results from cloud. CGI 

commends the Department of Defense (000), the DHS, and the GSA for their collaboration as 

members of the Joint Authorization Board (JAB) overseeing the Fed RAMP program, which 

represents a significant and necessary step forward as the federal government looks to 

implement the cloud, FedRAMP's common risk framework for all agencies is a critical piece of 

the puzzle, Without this consistency, agencies would look for highly-customized solutions that 

often hold no real extra benefit and severely limit potential cost savings, In CGI's experience, 

FedRAMP security requirements to achieve a P-ATO are at least as strong as those under the 

laaS contract vehicle or individual agency ATOs, Additionally, FedRAMP's continuous monitoring 

process is more frequent and detailed than those in place at most individual agencies, which 

should create more confidence in the security around commercial providers receiving their PATO, Finally, FedRAMP allows agencies to achieve additional savings through the elimination of 

redundant security assessments, The GSA estimates a savings of $200,000 per authorization, 

Significant acquisition challenges exist. In discussions with dozens of agencies on this topic, CGI 

has seen a wide variety of approaches to transitioning to the cloud. Although some agencies 

have moved into the cloud and used existing contract vehicles, many others have struggled to 

modify their procurement methods when purchasing cloud services. Cloud computing not only 

represents a fundamental change to how IT services are delivered, but how they are procured, 

The notion of paying for IT services in a more "elastic" fashion is very different from the 

traditional "firm fixed price" and "time-and-materials" contracts familiar to most government 

acquisition professionals, Additionally, many agencies could pursue lengthy procurement 

processes rather than using readily-available contract vehicles that could significantly accelerate 

cloud migration. In some cases, these agencies may actually look to build their own cloud 

computing environments "from scratch" instead of utilizing a certified commercial cloud 

solution, These efforts would significantly undercut the ability of federal agencies to achieve 

cost savings since this approach requires large investments in new infrastructure rather than 

leveraging similar investments already made by commercial providers. 

Cost savings are often difficult to quantify. As the GAO report indicates, many agencies 

struggle to determine just how much they save due to certain modernization and consolidation 

initiatives. The challenges here are exacerbated by the lack of baseline IT costs on an agency by 

agency basis, Additionally, there are some initial costs associated with moving to cloud 
69 


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computing or closing down data centers, which can significantly reduce and sometimes 

completely eliminate short run cost savings without sacrificing significant savings in the long run. 

Finally, for many departments and agencies, a FedRAMP cloud solution provides stronger 

security and additional services than the baseline application or service, so even if current 

baseline costs are known they often don't meet today's compliance and security requirements. 

Agency Chief Information Officers (CIOs) lack the necessary authority to implement broad 

changes. Many of the federal cloud implementations to date have been focused on migrating 

public facing content and email. However, the real savings will be achieved only when agencies 

more aggressively push their applications to the cloud. This shift will help accelerate the data 

center optimization effort and drive associated cost savings. From CGI's vantage point, many 

agency ClOs appear ready to push for more aggressive cloud efforts, but seem unable to 

override objections from individual program offices. Although CGI recognizes that there are 

often valid concerns associated with such cloud efforts, many of these concerns can and should 

be resolved so that agencies can take advantage of new technology. 

Recommendations for Moving Forward 

Several provisions in H.R. 1232 will help agencies move forward more aggressively. Expanded authority 

and accountability for agency ClOs will enable agencies to migrate IT infrastructure and applications 

more rapidly. An agency ClO with greater authority would have the opportunity to not only achieve 

some quick wins, but to think more broadly about how the entire agency can use cloud to improve 

efficiency, enhance security, and drive down costs. Ratherthan attempting to address individual pieces 

such as data center optimization, an agency CIO could look across the enterprise and drive savings 

through the entire IT portfolio. 

Allowing for agency re-investment of data center optimization savings creates a powerful new incentive 

that will spur quicker and broader modernization efforts. Requiring agencies to conduct and maintain 

an inventory of all IT assets will not only enable better "baseline" data around IT spending to measure 

savings, but allow for better information security. Strengthening the acquisition workforce also will help 

to eliminate scenarios where traditional acquisition models are used when buying cloud services. 

CGI respectfully submits that another piece of the puzzle is to encourage innovative contracting models 

that can help deliver more with less. Congress and the Administration should provide agencies with 

more freedom to enter into agreements with industry to allow government to significantly reduce its 

initial costs. Many of CGl's commercial and state government clients have entered into such 

agreements where CGI assumes the initial transition costs so that the client starts experiencing savings 

on Day One. However, since the 2009 sunset ofthe "Share in Savings" provision of the E-Government 

Act of 2002, federal agencies rarely have the ability to enter into this type of innovative agreement. If 

the federal government wants to do more with less, then it should embrace new methods of contracting 

that shift risk and initial costs to industry partners. Otherwise, given the tight federal budget 
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environment, there will continue to be a challenge around significant, short-term investments justified 

by long-term returns. 

In closing, this fundamental shift in technology can enable a more effective, efficient, and transparent 

federal government. Movement to the cloud will result in lower IT costs and the ability to share 

software and services more widely across the federal enterprise. 

Thank you once again for the opportunity to participate in this important hearing. I would be happy to 

answer any questions that the Committee may have. 
71 

Mr. MICA. Well, we have a lot of mothers to be thankful for. But 

it’s nice to have some of your family with you, and a successful 

alumni return and be a witness today. 

Interesting perspective from the private sector. Mr. O’Keeffe, 

your first—or your five-point recommendation seemed to differ a 

little bit from what I got out of Mr. Powner. I asked about the compatibility of what was going on with PortfolioStat, and it was interesting. I guess under PortfolioStat agencies are no longer required 

to submit the previously required consolidation plan and the 

memorandum does not identify a cost-savings goal. And you, of 

course, in your first recommendation said that’s not the way to go. 

So I guess you differ a little bit with the testimony we had from 

GAO. 

Mr. O’KEEFFE. I think it’s very important to be consistent. If we said we were going to save—if we said we were going to save $3 

billion, or $5 billion, or however many billion dollars it is—— 

Mr. MICA. Don’t try to count. 

Mr. O’KEEFFE. —don’t keep changing the rules. So I think we 

just need to be consistent in terms of what we’re doing. And I’m, 

again, also very interested to see this TCO model which Mr. Mazer 

talked about. 

Mr. MICA. The secret TCO model. 

Mr. O’KEEFFE. Right. I don’t see why that wouldn’t—this is an 

era of open government. Why can’t we see the way the agencies are 

measuring or OMB is measuring efficiency? 

Mr. MICA. We would have liked to ask that question to OMB 

today, but we will ask it at a future hearing. 

Mr. CONNOLLY. In the spirit of open government they’re not here. 

Mr. MICA. Oh, and I have to—first of all, I have to compliment 

this panel, Mr. Connolly. My experience has been that it’s been like 

pulling teeth to get anybody from the private sector to come before 

any of our investigative or oversight hearings. I mean, they run 

like scalded dogs from us because they’re so afraid of the agencies 

coming down on them for some reason or participating with us. So 

I thank you. I think you are providing a very valuable public service and insight, and I think it’s important that we hear from people 

who are dealing with government on a day-to-day basis, see how 

things work and don’t work, and then make recommendations to 

us. Again, I thought, Mr. O’Keeffe, excellent points here. 

Now, the other problem we have is, I think you highlighted in 

one of your recommendations—and GSA owns most of the facilities. 

I guess they pay the power bills and things like that. So there is 

not the accountability. There is no incentive. How do you change 

that now? And then we have pending legislation. I asked the question of the other panelists, do we need to do more to beef up the 

pending legislation? 

So first I will ask that, then I have another question. Have you 

read any of the proposed legislation? I think some of you actually 

participated. It’s a fairly open process. Will it resolve some of these 

issues? I don’t think it’s going to resolve that one. 

Mr. O’KEEFFE. If I might, I mean, I think that the language of 

FITARA was great. But the message in terms of empowering the 

CIO, which is critical in terms of the success of the program, runs 

contrary to what we have seen from an experience standpoint. I 

72 

mentioned the experience with Richard Spires who recently was 

put on leave at Department of Homeland Security, and then resigned, very recently, and it just doesn’t seem as though that there 

is real support for the CIOs to stand up against the components 

and the mission owners. And if that’s the case, then, you know, 

given the experience with Richard Spires, I’m not sure other Federal CIOs are going to rush to stand up, because the support hasn’t 

been there. So the language, I think, of FITARA is good, but I 

think we have to show that support. 

Mr. MICA. Should we beef up the language and empower the CIO 

more or—— 

Mr. O’KEEFFE. I think we absolutely should empower the CIO 

more. But again, language is one thing, you know, it’s actions 

which are going to be more important. 

Mr. MICA. It’s interesting, because actually some of my first work 

many years ago was looking at government organizations and restructuring governments, primarily local governments, and after 

some years of doing that, you know, we could write the best charter 

of government and guidelines and everything, and then you get 

lousy people, they couldn’t implement. And sometimes you would 

have lacking legislative authority, or a charter, and you get people 

who are creative and innovative, and they could succeed. 

So sometimes it’s hard to craft that. But we want to make certain that we give them the tools to be able to do the job. So there 

is a disconnect between the facilities, the energy, things of that 

sort, so maybe there could be some change there. That’s a tougher 

one, Mr. Connolly. I kind of think of things again that would empower a CIO to move forward. 

The thing that drives you nuts with government, you’ve seen it, 

is people are making a decision, or then the lack with this 

FedRAMP and the certification of—well, for cloud participation. We 

are up to two, you say? 

Ms. CARLSON. Yes, two. 

Mr. MICA. And how long has that taken? 

Mr. O’KEEFFE. Almost a year. 

Mr. MICA. A year. 

Ms. CARLSON. We’ve been going through the FedRAMP process. 

We are very close, but it’s a very long process, and I do really appreciate what, you know, the FedRAMP office is doing, because security is obviously very important. 

The one thing is, once it’s there, they need to be able to utilize 

it, because as you begin to set more and more controls, every agency can stack and put more controls on top of the FedRAMP process, 

and you really don’t have a FedRAMP process. You just have a 

FedRAMP process plus, plus, plus. 

Mr. MICA. And it goes on and on. 

Ms. CARLSON. And it goes on and on, and it never, you know, 

comes to fruition. And then I think the second thing is the ‘‘Cloud 

First’’ policy. In order for this to really make sense, I do think they 

need measurements, respect to what Steve was saying, they need 

measurements in there to say, here is the real process we’ve made 

toward ‘‘Cloud First,’’ you know, around the application, consolidation effort as well, because you’re only going to truly get there 

when you begin to take a look at what are those applications that 

73 

you’ve done? How are you looking at the total picture as actually 

the consolidation effort? 

Mr. MICA. Does anybody know how many cloud certification requests are pending? 

Mr. WELLS. There are over 80. 

Mr. MICA. Over 80? 

Mr. WELLS. Yes, and many of those were just in the last couple 

of months. 

Mr. MICA. Okay. 

Mr. WELLS. There were about 40 the beginning of December. 

Mr. MICA. Okay, so a huge number. So we need to get, first of 

all, some stability in the certification process, and people certified, 

then some motivation, and some empowerment of those charged 

with this responsibility to move forward, and again, some accountability in the system. 

Mr. WELLS. Yes. 

Mr. MICA. I’m going down O’Keeffe’s recommendations here. I 

thought it was a good summarization of some of the things that we 

needed. But do you not need 600 HR systems? That got me, because we started looking at Office of Personnel Management, and 

I think they have blown either a third of a billion or a half a billion 

dollars. And finally I was told—were any of you involved in that? 

No? Then they finally settled on a smaller contract after blowing 

lots of money and attempts, smaller contract, and then they discarded that. 

Now I understand they are going back to almost hand processing. 

That’s the Office of Personnel Management for the Federal Government. And then we’ve 600 HR systems on top of that. So I can’t 

even begin to imagine how much we spend in sort of a mundane 

process, not that there aren’t variations for background checks and 

all kinds of information to be combined. 

The other thing is on retirement systems. That whole area, 

again, is just unbelievable money that’s been spent, and I guess my 

comments were actually the hand processing for retirees is what 

they have gone back to, very costly. They just hired more and more 

personnel and abandoned IT as a solution. Is that—— 

Ms. CARLSON. The opportunity there, especially with cloud computing, is the ability to not have to spend millions of dollars to test 

out systems. So with the cloud computing model you can set up and 

design something in a very small way without spending a lot of 

money. And the minute that works you move it into the test adaptive environment, and then right from there you can move it into 

production and then scale it. So you don’t have to build a system 

for complete scale and then try to deploy it. 

So again, that’s another opportunity because your cost, if you 

fail, you can fail fast, use those failures as understandings, and 

then recover, and you don’t even have to throw away all that code. 

It actually can be utilized for the success that you need. 

Mr. WELLS. And then taking that one step further, that makes 

sense, complete sense for custom application. But getting back to 

the retirement systems and the HR systems and all the other common systems that every agency has to use, moving toward software 

as a service, where you actually have a handful of applications that 

have been precertified and FedRAMP certified, that then agencies 

74 

don’t have to start from scratch, they don’t have to reinvent the 

wheel. They’ll have a handful of those, so hopefully more than that, 

enough to make it a competitive market space, but something they 

know works so that at least we can streamline it. 

Mr. MICA. A final question, and actually motivated by Ms. Carlson, is she had cited those that she felt were getting it right, and 

she talked about Jet Propulsion Lab, NASA, Navy. Are there good 

examples? I think it’s always good to see who is doing things well 

and what steps they’ve taken, how they got to that success and— 

go ahead. 

Mr. WELLS. I can add an additional one: Department of Homeland Security. 

Mr. MICA. Which is stunning to me, because I think it’s one of 

the loose cannons of Federal Government, but that’s another matter. 

Mr. WELLS. As was discussed earlier, has certain challenges, 

both based on the size and the politics involved, but there is some 

very good work being done there. And a couple of years ago they 

purposely went down their own data center consolidation into two 

large DC1, DC2 data centers, and more recently when they decided 

to embrace cloud, they decided to go two different routes. One, 

build a private cloud on site in government infrastructure, since so 

much of their stuff is so sensitive; and second, to conduct a procurement to select a government community cloud, an external provider who has all the appropriate certifications. We were lucky 

enough to win that contract. 

Mr. MICA. Well, I’ll have to go back and look at that, because I 

think almost all of our terrorist incidents, even the Boston, we still 

can’t connect the dots. Maybe Homeland is doing a good job, but 

they haven’t connected to State, and—I mean, other agencies. And 

it’s very sensitive information. I don’t know, but you’re just talking 

about the practical implementation standpoint. 

Mr. WELLS. Right. So, for example, they started with a couple of 

very small Web sites. They got comfortable with it, started adding 

more. Now all of DHS’ public sector—— 

Mr. MICA. And it is a newer agency, so... 

Mr. WELLS. Correct. 

Mr. MICA. Mr. O’Keeffe, any—— 

Mr. O’KEEFFE. NOAA has also done a very good job, the weather 

guys. 

Mr. MICA. NOAA. 

Mr. O’KEEFFE. Have put forth, you know, excellent progress in 

terms of modernization 

Mr. MICA. Just their IT. We still have a lot of people. 

Mr. O’KEEFFE. They’ve consolidated a lot of their data centers. 

They’ve built a $2.4 billion data center out in Martinsburg, West 

Virginia, and they are operating at tremendous levels in terms of 

energy efficiency and such. 

Mr. MICA. Well, I could go on. I have a whole bunch of questions 

I would like to get. Let me let Mr. Connolly have a shot here. I 

went well over my time. 

Mr. CONNOLLY. Thank you, Mr. Chairman. It was actually a very 

interesting line of questioning. 

75 

Ms. Carlson, in your prepared testimony, I would like to cite 

something you said, because, Mr. Chairman, I think it sort of encapsulates the whole challenge of cloud for the Federal Government. And you say, ‘‘One way to think about cloud computing is 

that instead of buying, owning, and maintaining their own data 

centers and servers, Federal agencies can acquire technology resources such as computing power and storage on an as-needed 

basis and dispose of it when it no longer is needed. Many industry 

experts refer to this as a utility model of obtaining and using IT 

capability analogous to how the government obtains access to 

water, gas or electrical power. Users to only pay for what they 

use.’’ 

That’s a pretty commonsense model. What’s your understanding 

of how the government looks at that? And, for example, the task 

force, to the extent you’re aware of their process, are they also looking at junk the whole thing and go private sector using this model? 

Ms. CARLSON. I think it’s a very good question. I think some are 

really evaluating that, as they begin to look at this different heavy 

lifting that they’re trying to do when they can have what I call 

more mission for the money. You know, why not utilize your dollars 

for the true mission and not worry about building out infrastructure and these tools? And it’s a very common model that you use 

now, and, you know, hundreds of thousands of customers and 190 

countries, that for government, it is still an ‘‘ah ha’’ moment when 

we actually show them that they can provision virtual machines 

like that on a portal. They just can’t believe it. 

And as Mr. Wells was saying, when that’s configured in 

FedRAMP all they have to do is go provision it. They don’t have 

to wait 6 months for the supply chain management. It’s there and 

available. And it’s very, I mean from a mission perspective, it’s 

really a game changer for the U.S. Federal Government. 

Mr. CONNOLLY. And I want to acknowledge that it may not always be appropriate, but it is an option that needs to be on the 

table. 

Ms. CARLSON. That’s correct. And we don’t suggest that they just 

jump in. We suggest they take the opportunity to learn, because it 

is a big culture shift and we understand that. And the agencies 

that are getting there, it has taken them a little bit of time, but 

they’re gradually moving more and more, and their really smart architects and engineers and research scientists now, are really— 

they enjoy the fact that they have capacity on demand as they need 

it and then they can shut it down. And they can see how much it 

costs. They can look at a portal and know immediately how much 

they’re spending and the servers that aren’t being utilized, and 

they can be turned off. And we help them with that. And that’s 

really the key. We want them to be able to reduce costs so they can 

do more and to have all of the other components around security. 

Mr. CONNOLLY. And I’m going to come back to that. Mr. Wells, 

you look like you wanted to talk to that point as well. 

Mr. WELLS. We’re in absolute agreement with this. And if you 

think about the overall Federal portfolio, what could go to the 

cloud, what can’t, you know, under FISMA they have to categorize 

all of their applications low, moderate, or high. Low basically is, obviously, a system that, you know, doesn’t have quite the same level 

76 

of barriers as the others. FISMA moderate means normally there 

is Privacy Act data in it. PII, the kind of stuff we’re worried about 

for identity theft, HIPAA data, confidential but unclassified, confidential business information, regulatory data, stuff that you really don’t want to get out. And there are a number of controls put 

in place, defined by NIST, to do that. Low and moderate together 

is 88 percent of the entire Federal portfolio; 12 percent is classified 

FISMA high. That 12 percent is normally national security or critical infrastructure protection, the stuff that—— 

Mr. CONNOLLY. I want to make sure we all understand what you 

just said. So what you’re saying is that in data evaluation, 88 percent of the Federal market, in this market, would lend itself to private sector cloud computing. 

Mr. WELLS. Correct. And that’s for FISMA moderate. A 

FedRAMP FISMA moderate is a higher bar than a normal FISMA 

moderate. A normal FISMA moderate certification, as defined by 

NIST, has 252 controls. When the FedRAMP program sat down 

with all the different agencies to try to come up with what they 

would all accept, they ended up with 298 controls. And so it’s a 

much higher bar, and they tried to get every agency to say, all 

right, what’s the unique thing that you absolutely have to have. 

Fine, we’ll incorporate that under the standard. But still many of 

those agencies will take that FedRAMP-certified infrastructure, or 

application, and they’ll still want to do their own security checks 

on it again. That, I think, will be unnecessary as we go forward. 

Now, the FedRAMP process is still in the early stages. 

Mr. CONNOLLY. Excuse me, but if they want to do that, for example, your services allow for that. 

Mr. WELLS. Oh, absolutely, absolutely. That’s a requirement. 

Ms. CARLSON. In fact, we create a package and we make it very 

easy. And we sit down and they go through each and every control. 

And I actually might say that there’s a lot of commercial companies 

that work and utilize that FISMA and FedRAMP process. We have 

many that say they go through the controls of the commercial company, because they think it is a Good Housekeeping seal of approval for security. 

Mr. WELLS. It is the one area that I can say the Federal Government is probably ahead of the commercial sector from IT, and if the 

controls are followed and applied, it may not always be done in the 

most efficient method possible, but it is much more secure. 

Mr. CONNOLLY. You mentioned, Ms. Carlson, JPL, and you said 

they achieved significant savings, dramatically saved IT costs, I 

think were your actual words. 

Ms. CARLSON. Yes. 

Mr. CONNOLLY. Could you just elaborate a little bit on that, because I think that’s one of the things we’re looking for—and I’m 

going to go back to Mr. O’Keeffe, if I may, Mr. Chairman—to talk 

about cost savings. But we need models. 

Ms. CARLSON. Yes. 

Mr. CONNOLLY. Where you can look at the reluctant players and 

say, don’t be so afraid. It works. And you will be the better off for 

it. Tell us a little bit about JPL, your experience with JPL. 

Ms. CARLSON. Yes. So one quick thing about JPL is they were 

seeing a trend where their engineers and researchers were trying 

77 

to build their own OSs, their own operating systems, and it was 

highly inefficient. They were concerned about security. They knew 

that they were trying—they needed capacity when they needed it. 

So they started looking toward a cloud computing model to fulfill 

that. And then as a result, they gained a lot of knowledge over the 

last few years. But this one particular program that I talked about, 

and they can tell you the exact dollars better, but they said they 

paid 10 percent of the original cost by using a cloud computing 

model. 

They also have talked about another major Mars program that 

they ran. The program manager told me, if it hadn’t been for the 

utilization of cloud computing, they would have had to shut the 

program down, because the original Mars Curiosity kept going, but 

they didn’t think that the little buggy would go very long, like 2 

months, and it was still running around taking pictures after 6 

months, 7 months. And all of that amazing data being streamed 

from Mars, they wanted the ability to take advantage of that for 

educators, researchers, but they couldn’t store it, they couldn’t 

manage it, it was very costly. So as a result, that was another reason they looked to cloud. 

And I wanted to point out where we’ve seen the real push in 

cloud in the Federal Government is more on the program side, because the programs begin to say, I don’t have enough money, like, 

I don’t have enough money. So they look for options to keep their 

programs going, and then they begin to find that there are new realities out there of how they could deliver IT and really transform 

it. They think NASA JPL is a great example. 

And another one is Health and Human Services that’s doing 

across the board, and many of their agencies are utilizing cloud 

now, especially for open and transparent programs like the 1000 

Genomes, the oxygen database, BioSense. They’re starting to look 

for ways that they can provide citizen services that are effective, 

that again reduce cost, and be able to scale when they need to scale 

things. 

Mr. CONNOLLY. And, Mr. Wells, you actually have, you are one 

of the two companies certified so far for—— 

Mr. WELLS. Correct. 

Mr. CONNOLLY. —this activity. Presumably in your experience 

with Federal clients, you have also been able to identify significant 

cost savings for the client. 

Mr. WELLS. Correct, and I think a lot of it comes back to what 

Teresa was just describing as far as the elasticity and that sort of 

thing. For example, I was mentioning the DHS Web sites earlier. 

One of those is FEMA.gov, and Ready.gov, which is their disaster 

preparedness site. And moving that into the cloud, out of one of 

their data centers, used to be that they had to build the infrastructure in their data center to the peak capacity they would ever think 

they would need. But when it’s not hurricane season or when there 

is not a major disaster, they need less than a tenth of the power 

for those Web sites that they do need when there is a disaster. 

So when Superstorm Sandy was coming ashore, the President 

held a press conference, and he said, go to Ready.gov, there is disaster preparedness information there, take a look at that. And that 

was up and running in our cloud and we instantly saw a huge 

78 

spike, nearly a hundredfold increase in the amount of activity on 

that. And the elasticity of the cloud allowed us to spin up those 

services and spin them back down a few days later when they 

weren’t necessary. 

Mr. CONNOLLY. That’s a great example. I would think particularly applicable to you, Mr. Mica, coming from Florida, in terms of 

the spiking in hurricane season and then coming down. 

Mr. WELLS. And one other cautionary aspect of that tale which 

I will throw out there is that at the same time we saw all of this 

incredible spike and people flooding to the site, the spike in the 

number of attacks on those sites—denial of services attacks, attempts at hacking, et cetera—spiked as well. And the people in our 

security operation centers were watching it and were having to do 

some things to make sure that there was no interruption in service. 

But coming back to even a public-facing Web site that most of the 

year may not seem so critical, for a brief period is absolutely mission critical. And it’s a sad testament, but it’s the world we live in, 

that as soon as people started paying attention to it, people started 

attacking it, but that is the case. 

Mr. CONNOLLY. Sure. Yeah. Well, that’s another hearing for us, 

cybersecurity, because it’s an incredible problem. 

Mr. O’Keeffe, I was really struck by your presentation, thank 

you. And I thought the point you made with Chairman Mica was 

an excellent one. It isn’t, while hopefully we do have it right, I 

mean, the idea that we have 250-plus CIOs in 26 agencies tells you 

what you need to know in terms of accountability. 

Mr. O’KEEFFE. Right. 

Mr. CONNOLLY. And decision making. We have to change that. 

But that alone, and maybe hopefully legislatively we’ve got that 

right. Enumerating the authorities of powers of that designated 

CIO, even that doesn’t necessarily solve the problem, because what 

you’re getting at is a culture, and changing a culture is always difficult. What are the attributes, if we were to have a successful cultural change, in the CIO you would look for, given private sector 

experience in the Federal Government. 

Mr. O’KEEFFE. Well, I think metrics are very, very important. 

The CIO is not an IT person. They are not putting together wires. 

They are not provisioning systems. This is a business professional. 

And so what we need to do is establish some real metrics. 

I think that everybody is afraid of accountability, and so what we 

see is that people run away from coming up with any metrics at 

all. No metrics at all is better than any kind of metrics whatsoever 

because you are going to be held accountable for them. So I think 

we have to—let’s look at the private sector. When we look at data 

center consolidation, whether it’s NASDAQ, or Dow or whoever it 

may be, private sector organizations, they’ve done data center consolidations. And, you know, it’s not a one-time operation. It’s an ongoing operation. How long does it take to consolidate data centers 

or optimize data centers? How much does it cost? How much money 

do we have to put into the process in order to get something out 

of the process? Looking at things like PUE, it’s another acronym, 

but it’s a metric which shows the power efficiency of data centers. 

I think what we need to have is a practical framework in order 

to move the ball forward. And we need to make sure that when we 

79 

commitments that we measure ourselves against those commitments. And sometimes we’re going to fail, but let’s be open about 

what’s actually transpiring. So I think, you know, as far as the CIO 

role across agencies go, they need to have authority, and with authority, was it Spiderman said, with great power comes great responsibility. 

Mr. CONNOLLY. Well, and one of the things I have heard from 

Mr. Spires and others who were CIOs, or are CIOs, from the private sector in the Federal Government, we need more flexibility 

and authority to award contracts, to make decisions about this system, not that system, close that, open that, you know, not dictatorial powers, but everything by committee means the path of least 

resistance, the least risky, but also the lowest payoff kind of outcome. And again, briefly, you might want to comment on that as 

well, in terms of the powers that we want to infuse CIOs with. 

Mr. O’KEEFFE. I think you’re exactly right. You know, a camel 

is a horse built by committee. And so in many circumstances what 

we see is a lot of different camels running around the Beltway. And 

so we need to be prepared to take, you know, to take some chances 

on new approaches, whether that’s, you know, cloud computing or 

what you will. I think that the cholesterol that we see in programs 

like FedRAMP, the cure can be worse than the disease. So if we 

don’t simplify what’s going on, then we’re never going to see any 

real progress. 

Mr. CONNOLLY. And that’s my final question, actually, about 

FedRAMP. By the way, I would say to you, Mr. Mica, that sometimes we’re the problem. I mean, if you want to understand why 

we have a risk-averse culture in the Federal Government, Congress 

has to bear some responsibility here. The minute somebody makes 

a mistake, if somebody thinks there’s political advantage in exploiting that mistake, we have a hearing and we haul you before Congress and we threaten you with subpoenas. Well, who the hell 

wants to take a risk and face all of that? And we know in the private sector, I spent 20 years in the IT world of the private sector, 

some things work and some things don’t. And a lot of what is considered highly successful today started out failing. And it took a lot 

of, you know—and if private sector entities had not—if they had 

the tolerance for failure we’ve in the Federal Government, a lot of 

this would not have happened, I submit. 

But final question. FedRAMP. The idea that there are 80 pending applications—and my guess is, by the way, there could have 

been more, people got discouraged. 

Mr. O’KEEFFE. That’s right. 

Mr. CONNOLLY. Who wants to wait that long? And only two have 

been approved? What’s your sense of the problem? What’s the nature of the problem and what should we do to try to accelerate the 

certification process? 

Mr. O’KEEFFE. I think perfection is the enemy of the good, and 

so we’re trying to solve for every scenario, and that’s just not practical. So we need to simplify the process. That’s really it. 

Ms. CARLSON. Yeah, I agree. I agree with that. I think it can 

evolve. I don’t think it has to be perfect out of the gate. But I believe it’s already, by the way, a very, very solid process. And they 

need to be confident in what they’ve developed already and get it 

80 

out there and try it. It doesn’t mean that you can’t come back 

around and hold the companies accountable once they’ve gotten the 

FedRAMP. They need to be able, which we do, we have to show 

that we’re patching and doing everything appropriately. 

But I believe they need to be confident in what they develop, and 

also the agencies probably need to get more involved because the 

FedRAMP office themselves is not going to be able to do everything, so the agencies are going to have to work with the FedRAMP 

office and the vendor to certify in an appropriate way, along with 

the three PAOs. 

Mr. WELLS. I think the process is slowly getting better, just to 

say something positive out there. But it is important to remember 

that the FedRAMP requirement was in the end the result of something of a political process, again. The JAB wanted to make sure 

that this standard would be acceptable to all of the various agencies out there, so whenever someone would throw in a new barrier, 

they would add it to the list. So the bar is high. And the bar should 

be high. But if they had a little bit more authority, or there was 

agreement on, you know, amongst all the agencies that let’s bring 

this down a couple of notches, it would streamline the process a 

great deal. But let’s also recognize this is a brand new process with 

a brand new program that is, you know, trying to do something 

really groundbreaking across the entire Federal market space. So 

while I’d love for it to go better, I do want to give them some recognition that they’re trying something very ambitious. 

Mr. CONNOLLY. Very helpful. I want to join the chairman in 

thanking our panel. I think it’s very thoughtful, very insightful. 

I will add, though, and I know Mr. Mica shares this, there is no 

way Congress is going to continue to allow this process to go forward without cost saving being a major criterion. The idea that it’s 

sort of incidental to the process and sometimes not even impacted 

at all is a stunning thing to learn in the current environment, and 

by the way, takes an efficiency off the table. 

You know, you cited in your testimony, Ms. Carlson, that in some 

cases there could be 50 percent effectuated savings. Well, you 

know, in an $80 billion IT budget, let’s just project and extrapolate 

that out: 50 percent saving across the board means we’ve taken $80 

billion, not changed the appropriation one bit, but it’s worth $120 

billion, I mean, in terms of its buying power and so forth. 

But we’re actually shrinking budgets, and so we’ve got to look for 

efficiencies, and I think the private sector is going to help us figure 

that out, because I don’t know that left to our own devices we’re 

going to do it. 

Mr. O’KEEFFE. Just one point. As far as appropriations go, one 

of the challenges is exactly on the Hill, inasmuch as if you look to 

close data centers and they’re closed in specific people’s districts, 

that’s not real popular. So that’s, you know, that’s definitely a factor in this equation, right? If you try to close—you know, the whole 

point in closing data centers is you have to shut them. And if that 

data center is in a specific district, that can be a problem, so it can 

be somewhat of a circular discussion. 

Mr. CONNOLLY. Mr. Chairman, I thank you so much for your indulgence, and thank you so much for holding this hearing. 

81 

Mr. MICA. Well, it is interesting, very educational for me. A couple of final points. I can’t remember, I read several of these reports 

in some other background information, I guess one of the problems 

that was identified someplace, and maybe it was—I thought it was 

in GSA, they said that the quality of the people who are involved 

in evaluating some of these systems in all is not the level that they 

need, because some of these people, you know, they’re buying paper 

clips and office supplies and stuff. And I know this is kind of 

touchy. Isn’t GSA the one that’s doing the certification, or responsible for it? Have you seen some of that or is that—anybody want 

to comment on it? 

Ms. CARLSON. I mean, the individuals we have worked with, I 

don’t agree with that. I think the individuals we’ve been working 

with in the FedRAMP process—— 

Mr. MICA. They get it? 

Ms. CARLSON. Yeah, they are very good. And they have the three 

PAOs and they have been—I mean, they have been very professional. And like Mr. Wells says, this is a really important process, 

and they haven’t put anyone in there that I don’t feel has been 

competent. 

Mr. MICA. The other thing too, Gerry, is we are asking people to 

dismantle sort of the standard operating safe procedure, buy a couple more hard drives, hire a few more people, as opposed to dismantling a lot of what they’ve got. And then of course Mr. O’Keeffe 

just said the politics of—I’ve tried FAA, I’ve tried some of the consolidation of the centers, like one in Florida, is like the, you know, 

every card in the world is pulled out to keep some things that are 

unnecessary in today’s IT world, and computer and technology 

world. But it’s very tough, so we end up being the problem. 

Well, again, I think we’ve gotten some good testimony. Just fascinated hearing—I guess if Amazon could get a little bit more experience under their belt, maybe they could get certified. For a momand-pops startup, I understand the difficulty you’re incurring. But 

we should look a little bit more at that if we could get—yeah, and 

if 88 percent, you know, we could probably take it down a few more 

notches. We’re not risking the national treasury or secrets. We 

could have a little bit more efficiency in this process. 

Well, again, I think it’s most informative. I’m still disappointed 

we didn’t have a couple of the key players here. We will convene 

another hearing, and we will talk to our leaders. If we have to 

bring them here voluntarily, we will; if we have to bring them involuntarily, we will. But we will have a follow-up hearing. I think 

it’s very important. 

Mr. CONNOLLY. Mr. Chairman, I also want to thank your staff. 

They have been very, very helpful and cooperative. We really appreciate it. 

Mr. MICA. The beatings will not continue? 

Mr. CONNOLLY. No more beatings. 

Mr. MICA. The sequestration will be eliminated. 

So think you so much for joining us today and providing us with 

your testimony. Mr. Connolly, no further business? No further business before the Subcommittee on Government Operations. This 

hearing is adjourned. 

[Whereupon, at 4:46 p.m., the subcommittee was adjourned.] 

82 


Insert offset folio 47 here 81280.047

TESTIMONY FOR THE RECORD 

SUBMITTED BY FACEBOOK, INC. 

U.S. HOUSE COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

SUBCOMMITTEE ON GOVERNMENT OPERATIONS 

HEARING ENTITLED "DATA CENTERS AND THE CLOUD: IS THE 

GOVERNMENT OPTIMIZING NEW INFORMATION TECHNOLOGIES 

TO SAVE TAXPAYERS MONEY?" 

MAY 14, 2013 

Facebook, Inc. (UFacebookH

) appreciates the opportunity to submit testimony for the 

record in connection with the U.S. House Committee on Oversight and Government 

Reform's Subcommittee on Government Operations hearing entitled "Data Centers 

and the Cloud: Is the Government Optimizing New Information Technologies to Save 

Taxpayers Money?" 

Founded in 2004, Facebook's mission is to give people the power to share and make 

the world more open and connected. People use Facebook to stay connected with 

friends and family, to discover what's going on in the world, and to share and 

express what matters to them. As of March 2013, Facebook had a total of 1.11 billion 

monthly active users with 751 million of those users active on mobile. There are 

over 150 billion friend connections on Facebook. On average, users upload over 350 

million photos per day. More than 240 billion photos have been shared on 

Facebook. 

All of this data sharing takes a lot of server power, space, and capital. That is why 

Facebook took the initiative to build and create the most cost and energy efficient 

data centers possible. And to keep costs down, share best practices, and drive 

further innovation, we also open sourced our server hardware deSigns and 

established the Open Compute Foundation so that the industry as a whole can be 

more efficient. And, finally, we post efficiencies publicly to drive others to do the 

same. 

Data Center Efficiencies 

For organizations such as Facebook, data center efficiency - both for the data center 

building and for the IT equipment inside it - is a key issue. Over the last several 

years, we have worked hard to reduce the energy consumption of our data center 

and servers. In the process, we have reduced our energy consumption by 

approximately 38%, which in turn reduces operating expenses associated with 

energy and also reduces the environmental impact. We believe that many other 

organizations can achieve similar gains. 
83 


Insert offset folio 48 here 81280.048

The impact of the above savings can be substantial. For a facility that can support 

10 MW of IT equipment, the savings amount to several million dollars annually and 

tens of millions of dollars over the life of the facility. The reduction in greenhouse 

gas emissions is also substantial. Assuming average grid carbon intensity, 

greenhouse gas emissions from a 10 MW facility would be reduced by 

approximately 40% or 20,000 metric tons per year. 

Until a few years ago, Facebook was using commodity servers in colocation facilities 

built and operated by other companies. Over the last few years, we have moved to a 

model where we design, build, and operate our own data centers, and use servers 

that are manufactured to our specifications. Other large companies in our sector are 

following a similar approach. 

There are a few key principles underlying our designs that have allowed us to 

achieve high levels of efficiency. One of the most important is to separate the "hot 

aisles" from the "cold aisles" in the data center, ensuring that the hot air leaving the 

servers does not mix with cold air from the cooling system. This allows us to raise 

the operating temperature, which in turn allows us to rely almost exclusively on 

evaporative cooling instead of energy-intensive mechanical chlllers. Together, all of 

these result in a much more efficient cooling system. 

It is important to reduce the number of power conversion steps required to take 

medium-voltage AC power from the utility and convert it to the low-voltage DC 

power required by the electronic components inside the servers. It is also 

important to make the individual power conversion steps as efficient as possible. 

We use in-row battery cabinets distributed throughout the data center to avoid the 

double conversion required by typical backup power systems. 

We have designed our servers to include only the hardware and features that are 

truly needed, eliminating a number of components that are included in most 

commodity servers. This includes "vanity" components such as the front bezel found 

on most servers that advertises the manufacturer, but serves no functional purpose 

(and in practice impedes air flow, causing fans to work harder to move air to cool 

the server, and thus wasting energy). 

Running a small number of large data centers, instead of many smaller ones, can 

also help drive efficiency. Large facilities afford economies of scale, making it easier 

to achieve good PUE (power usage effectiveness) and WUE (water usage 

effectiveness), and also making it easier to manage the equipment in the facility. 

Virtualization technology can be helpful in consolidating diverse workloads from 

heterogeneous hardware silos onto homogeneous servers managed as a unit. 

Finally, clean energy is an important part of our approach to making our data 

centers sustainable. Our data center in Lulea, Sweden, is powered by 100% clean 

hydropower. We also just announced a new site in Altoona, Iowa, where we are 

exploring the use of wind energy to power the facility. And we are working with our 
84 


Insert offset folio 49 here 81280.049

server utilities at other locations to evaluate options for getting more clean energy 

into our power mix. 

Spurring Progress 

To drive industry, we open sourced our data center and server hardware designs, 

and established the Open Compute Foundation (w\\w.npencompute.org) to provide 

a venue for the industry to collaborate on cost- and energy-efficient systems. Over 

the two years since Open Compute was started, dozens of organizations have joined 

and have been working together to develop and improve designs for servers, 

storage systems, and most recently networking equipment. 

The Open Compute ecosystem now includes a variety of "solutions providers" -- i.e., 

companies that can work with customers interested in using open compute designs 

to achieve the same kinds of efficiencies that pacebook has. Current solutions 

providers include Hyve, Avnet, Penguin Computing, and ZT Systems. Recent 

customers include Rackspace and Riot Games. 

It is important to measure how well we are doing. We also recognize that by 

voluntarily reporting our effectiveness, it may spur others to do so as well. To that 

end, we track a number of different metrics that pertain to data center and server 

efficiency. Two of the key metrics are PUE and WUE, both of which were 

developed by The Green Grid, an organization dedicated to improving the resource 

efficiency of data centers and business computing ecosystems. 

PUE is the ratio of the total energy consumed by a data center to the energy 

consumed by the IT equipment inside the data center. It highlights the overhead 

imposed by the data center to provide cooling and backup power to the equipment 

inside it. A PUE of 1.0 means the data center imposes no overhead at all; a PUE of 

2.0 means the data center imposes 100% overhead (for every kWh consumed by the 

IT equipment, the data center consumes an additional kWh). Surveys by the EPA 

and others indicate that most data centers operate with a PUE in the range of 1.5 to 

3.0, with 2.0 being typical. 

WUE measures the amount of water consumed by the facility as a function of the 

energy consumed by the IT equipment. It is difficult to assess the industry average 

for WUE, as only one company has reported WUE publicly. 

In April of this year, we launched public real-time dashboards for PUE and WUE for 

our Prineville, OR, and Forest City, NC, data centers. These dashboards show PUE, 

WUE, and outside temperature and humidity every minute for the past day, and 

also provide a historical view over the past year. Reporting these metrics publicly 

makes it easy to compare across facilities, and also drives accountability. Our 

public dashboards can be found at these links: 

• https:llwww.facebook.com/prinevilleDataCenter lapp 399244020173259 

• https:l!www.facebookcom/ForestCi1;yDataCenter/app 288655784601722 
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We plan to open source the code for these dashboards to make it easy for others to 

report publicly in the same way - and also to allow others to collaborate with us to 

improve the dashboards over time. 

On both metrics, Facebook's data centers perform well. Our data centers have 

achieved a PUE of 1.09 over the last year, meaning that for every kWh going into our 

servers, we expend only another 0.09 kWh to provide cooling and backup power -

much less than most data centers. In terms ofWUE, our Prineville data center has 

achieved a WUE of 0.52 liters/kWh. 

We are confident that as technology evolves and the industry continues to share 

best practices through the Open Compute project, Facebook will continue to drive 

the industry to create more efficient, cost-effective, and green data centers. 

Again, Facebook appreciates this opportunity to submit testimony for the record. 

Should the Subcommittee have any questions or if Facebook can otherwise be of 

assistance, please do not hesitate to contact Greg Maurer at (202) 370-5133 or 

gregmaurer@fb.com. 
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-

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The Federal Data Center Consolidation 

Initiative a effort 

to reduce the complexity and costs 

associated with data 

centers. 

With the consolidation of data 

"'rI",nl"j",,,, can save money and boost 

. So where are with 

FOCCI efforts? Are we on track to close 

1.200 data centers bv 2015? Will our efforts 

on behalf of . 

Federal IT professionals to check the of 

Federal data center consolidation efforts. 

This study provides a midterm report on 

successes to and 

identifies barriers still holdina 8Qencies back. 

Insert offset folio 53 here 81280.053

centers 

to 

However, only of agencies report quantifiable cost savings 
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Data Center 

UD!'1aiE~S to 

33 

40% or 

484 as of Dec. 2012) 

Additional 371 

571 

Additional 200 

1055 

198 

billion 
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Statement for the Record of 

Thomas A. Schatz 

President, Citizens Against Government Waste 

Before the House Committee on Oversight and Government Reforn1 

Subcommittee on Government Operations 

"Data Centers and the Cloud: Is the Government Optimizing Nev, Information Technologies to 

Save Taxpayer i\loney"" 

May 14,2013 

My name is Thomas A. Schatz, and I am president of Citizens Against Government 

Waste (CAGW). CAGW was founded in 1984 by the late industrialist J. Peter Grace and 

nationally-syndicated colul11l1ist Jack Anderson to build support for implementation of President 

Ronald Reagan's Grace Commission recommendations and other waste-cutting proposals. Since 

its inception, CAGW has been at the forefront of the fight for efficiency, economy, and 

accountability in government. C AGW has more than one million members and supporters 

nationwide, and, over the past 28 years, it has helped save taxpayers S 1.2 trillion through the 

implementation of Grace Commission findings and other recommendations. 

CAGW does not accept government funds. Eighty-fiv'e percent ofthc organization's 

funding comes from individual contributors around the nation. Corporate and foundation gifts 

account for the remaining 15 percent. 

CAGW's mission rellects the interests of taxpayers. All citizens benefit when 

government programs work cost-effectively, when deficit spending is eliminated. and when 

government is held accountable. Not only will representative government benefit from the 

pursuit of these interests, but the country will prosper economically because government 

mismanagement, fiscal profligacy, and chronic deficits soak up private savings and crowd out 

the private investment necessary for long-term growth. 
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CAGW appreciates the committee's ongoing efforts to oversee IT expenditures, such as 

today's hearing, as well as your legislative initiatives. 

It is no secret that wasteful spending is present throughout the federal govetmnenl. 

Regardless of any particular department that one examines, there are billions of dollars worth of 

savings to be identified. 

The Graee Commission duly noted the technological challenges facing the federal 

government. At the time of the commission's report, the average age ofa government computer 

was 6.7 years; the average computer used by a U.S. business was thrce years old. Government 

computer systems were incompatible and required service technicians specifically trained to 

maintain the outdated equipment. The extra bodies added $1 billion to the federal payroll over a 

threc-year period. 

The commission reported that in 1976, the Federal Aviation Administration paid $4 

million for new data terminal technology that was never installed. Thc Department of 

Transportation contracted in 1982 for computer related services at a cost of $18 million, while its 

own computers were only being used at 20 percent of capacity. A study showed that updating 

the government's IT equipment could save $22.6 billion over three years. In fact at that time, a 

five-year plan was underway to cure the government's technology woes. 

By comparison. in the private sector, IBM's General Systems Division updated its 

computer technology, saving $360,000 in the first six months aftcr installation. And Boeing's 

new word processing system saved $483,000 over a nine-month period. 

While times have changed, there are still technological challenges, as well as new 

opportunities, facing the federal government. For example, a proactive federal IT initiative that 
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could produce billions of dollars in sa\'ings would be increasing the usage of cloud computing 

tools. Cloud computing enables organizations and individuals to access infonnation without 

concern about the server' s physical location: promising cheaper. faster. easier. more flexible. and 

more effective IT Most organizations already utilize some forn1 of cloud computing, whether 

their users are synchronizing web-enabled smm1phones through their email provider, or 

obtaining infonnation over the Internet. 

These cloud services include public, private and shared service models, ranging from 

Email-as-a-Service (EaaS) and cloud-based web hosting to large scale Infrastructure-as-a -

Service (IaaS). In (he fall of2011, Citizens Against Government Waste (CAGW) published 

issue briefs on cloud computing' and best practices for cloud procurement" to assist federal 

decision makers on cloud purchases, and in December 2012, published its 2012 Fcdcral Cloud 

Review3 

On December 1,2010. the General Services Administration (GSA) announced that it 

would become the first federal agency to deploy a cloud-based email system (EaaS). GSA 

anticipated saving up (0 $15 million over five years with the new sys(em.4 While GSA's Office 

of Inspector General has been unable to verify the expected savings due to inadequate cost 

analysis at the agency, it is the potential for savings such as these that has encouraged adoption 

of cloud computing strategies. 5 On December 9, 20 I 0, the Obama administration announced its 

1 Deborah Collier, "Cloud Computing 101: A Brief Introduction," Citizens Against Government Waste, September 

2011. 

2 Deborah Collier, "Cloud Computing 201: Guidelines for Successful Cloud Investments," Citizens Against 

Government Waste, November 2011, 

'Deborah Collier, "2012 Federal Cloud Review," Citizens Against Government Waste, December 2012. 

4 Steve Hoffman, "GSA Becomes First Federal Agency to Move Email to the Cloud Agencywide," U.S. General 

Services Administration, GSA #10694, December 1, 2010. 

S "Audit of GSA's Transition from Lotus Notes to the Cloud," Report Number A120131/0/F/F12004, Office of the 

Inspector General, U.s. General Services Administration, September 28,2012. 
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25 Point Implementation Plan to Ref 01111 Federal Information Technology Management (25 

Point Plan)/' encouraging federal agencies to qnickly adopt cloud computing tools and to 

consider "cloud-first'" when making new information technology (IT) purchases in order to 

manage infol111ation in a cost-effective manner. 

Federal spending on cloud computing alone is expected to total S 11.2 billion between 

2012 and 20177 While progress has been made in expanding cloud services. a July 11,2012. 

Govemmenl Accountability Office (GAO) report indicated there are several roadblocks 

remaining in the path to full implementation and adoption H Among these challenges are meeting 

federal security requirements, obtaining guidance on deployment, acquiring intemal cloud 

knowledge and expertise, certifying and accrediting vendors, ensuring data portability and 

interoperability. overcoming cultural barriers, and procuring sen'ices on a consumption or ondemand basis. Addressing these conccms is critical for successful cloud adoption by federal 

agencies. 

Part of the administration' s 25 Point Plan included data center consolidation. In March 

2011. the Government Accountability Office issued a report stating that the number of data 

centers had increased from 432 in 1998 to more than 2,000 in 20109 In February 2010, the 

Office of Management and Budget (OMB) and the federal Chieflnfol111ation Officer (CIO) 

announced the Federal Data Center Consolidation Initiative. which is supposed to lead to the 

consolidation of 1,200 data centers by the end of2015. 10 If successful, the consolidation effort 

6 "25 Point Implementation Plan to Reform Federal Information Technology Management," U.S. Office of 

Management and Budget, December 9, 2010. 

7 John K. Higgins, "Federal Cloud Adoption, Part 2: Raining Contracts," E-Commerce Times, May 16, 2012. 

8 "Information Technology Reform: Progress Made but Future Cloud Computing Efforts Should be Better Planned," 

U.S. Government Accountability Office, GAO-12-756, July 11, 2012. 

9 GAO-11-318SP, page 66. 

10 Federal Data Center Consolidation Initiative (FDCCI) Data Center Closings 2010-2013, November 19, 2012. 
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should not only improve efficiency, but also reduce the cost of data center hardware, software 

purchases, maintenance, and center operations. As agencies increase their use of cloud 

computing tools and rely upon third party vendors for their data storage needs, further data center 

consolidation eff0l1s may be possible, which would increase savings to taxpayers. 

In March 2012, OMB initiated PortfolioStat, which is supposed to provide an evidencebased review of agency IT portfolios. including data on commodity IT investments, potential IT 

duplication, investments that do not appear to be well aligned to agency missions or business 

functions, and other key considerations and data within agency IT portfolios. l1 On March 13, 

2013, Federal Computer Week reported that PortfolioS tat would be extended to the Federal Data 

Center Consolidation Initiative, as part of the administration's effort to curb waste and inefficient 

spending. 12 

In order for PortfolioStat to be effective in the data center consolidation process, agency 

reporting must be more accurate and transparent than it has been through the IT Dashboard, 

which has been tracking the overall success of federal IT programs. In October 2012, the GAO 

found that over time, about 47 percent of the dashboard investments reviewed were rated by their 

agencies at the same rating in every rating period. 13 In at least two agencies, the Department of 

Defense and the National Science Foundation, no IT investments were rated at high or moderate 

risk levels. Even though the DOD indicated that it did not have any projects at either high or 

moderate risk, in November 2012. the Air Force halted its $1 billion Expeditionary Combat 

Support System project, mostly due to the estimated additional $1 billion that would have been 

11 "Implementing PortfolioStat," Office of Management and Budget, OMB Directive M-12-10, March 30, 2012. 

12 Frank Konkel, "Data center initiative to become part of PortfolioStat," Federal Computer Week, March 13,2013, 

http://www.fcw.com!articles!2013/03/13/fdcci-portfoliostat.aspx. 

13 "Information Technology Dashboard: Opportunities Exist to Improve Transparency and Oversight of Investment 

Risk at Select Agencies," Government Accountability Office, GAO-13-98, October 16,2012. 
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required in order to make the system operational. 14 Ensuring that the data provided to tools such 

as the IT Dashboard and the PortfolioStat are current and accurate is critical to ensuring that 

taxpayer dollars are not being wasted on failing programs. 

The government can effectively reduce the cost of federal IT by increased adoption of 

cloud computing strategies and tools, which will enable further data center consolidation effOlts. 

However, a tight rein must be kept on the data reporting of the status of federal IT projects, 

including the data center consolidation effort through both the IT Dashboard and the 

PortfolioStat. Taxpaycrs should continue to keep a watchful eye on federal IT investments, 

particularly cloud computing and data center consolidation efforts. 

I appreciate the opportunity to provide comments on data center consolidation and how 

cloud computing can help with these efforts. CAGW looks forward to further participation in the 

Committee's IT reform endeavors. 

Thank you for the opportunity to provide this testimony. 

14 Randall Stross, "Billion-Dollar Flop: Air Force Stumbles on Software Plan," The New York Times, December 8, 

2012, http:Uwww.nytimes.com/2012/12/09/technology/air-force-stumbles-over-software-modernizationproject.html? r=O. 
97 

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Thomas A. Schatz 

Thomas A. Schatz is president of Citizens Against Government Waste (CAGW) and its lobbying 

a11iliate, the Council tor Citizens Against Government Waste (CCAGW). 

CAGW was founded by the late businessman .1. Peter Grace and late Pulitzer Prize-winning 

columnist .lack Anderson in 1984 following the completion of President Ronald Reagan's PriYate 

Scctor Survey on Cost Control (thc Grace Commission). A 501(c)(3) nonprofit, nonpaJiisan 

educational organization, CA.GW works to eliminate waste, fraud, abuse, and mismanagement in 

govcnnnent and has more than one million members and supporters nationwide. According to 

ofIicial Ot1icc of Managcmcnt and Budget and CAGW estimates, implementation of Grace 

Commission and other CAG\V waste-cutting recommendations has helped save taxpayers S1.08 

trillion. 

Mr. Schatz is a nationally-recognized spokesperson on government waste and has been 

interviewed on hundreds of radio talk shows from coast to coast. He is a regularly featured guest 

on national television news programs and local news broadcasts. His appearances include 

ABCs "Good Morning America:' CBS's "60 Minutes." FOX News Channel's "The O'Reilly 

Factor." NBC's "Nightly News." and PBS's "The News Hour:' He was a regularly featured 

guest on the "Pork Watch" segment of CNBCs "Squawk Box." His editorials on fiscal policy 

have appeared in publications nationwide, including The l\'ew York Times and The Wall Street 

Journal. 

Mr. Schatz has testified numerous times on government waste issues before committees of the 

Uuited States Senate and House of Representatives, as well as before state and local legislative 

and regulatory bodies. 

During his 25 years with CAGW. Mr. Schatz has helped make CAe,W a "leading government 

watchdog on fiscally conservative issues. like taxes and earmarks," according to National 

Journal. In his role as president of CCAGW. The Hill named him one of the "top 10 public 

interest lobbyists." 

Prior to joining CAGW in 1986, Mr. Schatz spent six years as legislative director for 

Congressman HaJ11ilton Fish Jr. and two years practicing law and lobbying. 

M1'. Schatz holds a law degree from George Washington University and graduated With Honors 

/i'om the State University of New York at Binghamton with a bachelor's degree in political 

science. He is married to Leslee Behar and has two daughters, Samantha and Alexandra.