Information Technology: Additional OMB and Agency Actions Needed to Ensure Portfolio Savings Are Realized and Effectively Tracked
Published: 2015-04-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In March 2012, OMB launched an initiative, referred to as PortfolioStat, which requires agencies to conduct annual reviews of their IT investments and make decisions on eliminating duplication, among other things. In March 2013, OMB launched the second iteration of this initiative, with the goal of eliminating duplication and achieving savings through specific actions and time frames.
GAO was asked to review the implementation of the second iteration of PortfolioStat. GAO's specific objectives were to (1) assess agencies' plans for achieving PortfolioStat savings, (2) determine agencies' progress in achieving planned savings, (3) describe the extent to which selected agencies have reinvested PortfolioStat savings, and (4) describe action items resulting from the PortfolioStat process and determine the extent to which agencies have addressed them. To do so, GAO determined planned savings amounts for fiscal years 2013 through 2015, evaluated whether initiatives have yielded anticipated savings, analyzed data from three agencies based on expected savings for fiscal year 2013, and identified the status and time frames of action items.
section_title: What GAO Found
paragraphs: Agencies decreased their planned PortfolioStat savings by at least 68 percent from what they reported to GAO in 2013. Specifically, while agencies initially had planned to save at least $5.8 billion between fiscal years 2013 and 2015, these estimates were decreased to approximately $2 billion. The Departments of Defense and Homeland Security accounted for most of the difference (see fig. below). Further, although the Office of Management and Budget (OMB) made its data center consolidation initiative part of PortfolioStat in 2013, agencies have not consistently included planned savings from this initiative in their PortfolioStat reporting. As a result, the total amount that agencies expect to save through fiscal year 2015 is understated.
As of January 2015, agencies reported having achieved approximately $1.1 billion in PortfolioStat-related savings during fiscal years 2013 and 2014. However, only 9 of 26 agencies met or exceeded their revised planned savings goals. Further, inconsistencies in OMB and agencies' reporting make it difficult to reliably measure progress in achieving PortfolioStat savings: (1) OMB included fiscal year 2012 savings in reporting against the fiscal years 2013 to 2015 goal, and (2) agencies had additional cost-savings initiatives they reported to GAO but not to OMB, and vice versa.
Three selected agencies explained how they reinvested their PortfolioStat savings, but did not always provide supporting documentation. For example, the Department of Homeland Security reported reinvesting the $176 million from its data center consolidation and enterprise licensing agreements initiatives in multiple efforts, but did not provide supporting documentation.
Agencies completed 26 of 112 action items resulting from the 2013 PortfolioStat process, such as improve project delivery. However, almost 80 percent of the 86 incomplete items did not have associated time frames for completion. During our review, OMB stated they did not believe time frames were needed to monitor the status of the action items. However, establishing such time frames would increase agencies' accountability for completing the activities.
section_title: What GAO Recommends
paragraphs: GAO is making recommendations to OMB and Defense aimed at improving the reporting of achieved savings, documenting how savings are reinvested, and establishing time frames for PortfolioStat action items. OMB agreed and Defense partially agreed. GAO modified the recommendation to Defense based on its response.

section_title: Letter
paragraphs: Federal agencies spend over $80 billion annually to meet their increasing  demand for information technology (IT). Given the proliferation of  duplicative, wasteful, and low-value investments that both we and the  Office of Management and Budget (OMB) have highlighted over the  years, it is important that federal agencies avoid investing in these types  of investments whenever possible.
In March 2012, OMB launched an initiative, referred to as PortfolioStat,  which requires agencies to conduct annual reviews of their IT investments  and make decisions on eliminating duplication, among other things. In  March 2013, OMB launched the second iteration of its PortfolioStat  initiative with the goal of eliminating duplication and achieving savings  through specific actions and time frames. It included holding joint OMB- agency meetings by July 2013 and agreeing on next steps (referred to in  the guidance as “action items”) and associated time frames.
You asked us to review the implementation of the second iteration of  PortfolioStat. Our objectives were to (1) assess agencies’ plans for  achieving PortfolioStat savings, (2) determine agencies’ progress in  achieving planned savings, (3) describe the extent to which selected  agencies have reinvested PortfolioStat savings, and (4) describe action  items resulting from the PortfolioStat process and determine the extent to  which agencies have addressed them.
To address the first objective, we obtained the revised plans for the 26  agencies required to implement PortoflioStat and compared them to the  plans we reported in November 2013 to determine the extent of the  differences. We also determined whether agencies included Federal Data  Center Consolidation Initiative activities as part of their PortfolioStat  plans, consistent with OMB guidance. To determine agencies’ progress  in achieving planned savings, we compared fiscal year 2013 and 2014  actual savings data from the 26 agencies to the revised planned savings  identified in the first objective. For the third objective, we selected 3  federal agencies (the Departments of Agriculture, Homeland Security,  and Veterans Affairs) based on anticipated savings and savings to date  reported to Congress, analyzed documentation supporting the  reinvestment of savings from selected initiatives, and interviewed officials.  Finally, for each of the 26 agencies, we reviewed the memoranda  summarizing agreed-upon action items and other documentation and  followed up with agency officials as appropriate to identify and summarize  the action items, their reported status, and any associated time frames.
We conducted this performance audit from March 2014 to April 2015 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. Appendix I contains additional  details on our objectives, scope, and methodology.
subsections: section_title: Background
paragraphs: Federal agencies spend over $80 billion annually on IT investments. As  both we and OMB have reported, duplicative, wasteful, and low-value  investments have proliferated over the years, highlighting the need for  agencies to avoid such investments whenever possible. To address this  issue, in March 2012, OMB launched the PortfolioStat initiative, which  requires 26 agencies to conduct an annual review of their commodity IT  portfolio to, among other things, achieve savings by identifying  opportunities to consolidate investments or move to shared services.  OMB reported that the PortfolioStat effort has the potential to save the  government $2.5 billion from fiscal year 2013 to fiscal year 2015 by  consolidating and eliminating duplicative systems.
For PortfolioStat, OMB defined 13 types of commodity IT investments in  three broad categories:  1.  Enterprise IT systems, which include e-mail; identity and access  management; IT security; web hosting, infrastructure, and content;  and collaboration tools.  2.  IT infrastructure, which includes desktop systems, mainframes and  servers, mobile devices, and telecommunications.  3.  Business systems, which include financial management, grants- related federal financial assistance, grants-related transfer to state  and local governments, and human resources management systems.
PortfolioStat is also intended to assist agencies in meeting the targets  and requirements under other OMB initiatives aimed at eliminating waste  and duplication and promoting shared services, such as the Cloud  Computing Initiative, the IT Shared Services Strategy, and the Federal  Data Center Consolidation Initiative. As we have previously reported,  such initiatives have the potential to save billions of dollars, and, to date,  have led to substantial cost savings and avoidance across the federal  government.
Recognizing the importance of PortfolioStat, Congress recently enacted  legislation that contains requirements reflecting the initiative, including  annual reviews of agencies’ IT portfolios by agency chief information  officers (CIO), chief operating officers or deputy secretaries (or  equivalent), and the OMB Administrator of the Office of Electronic  Government.
The law specifies that the portfolio review is to, among other things,  identify or develop opportunities to consolidate the acquisition and  management of information technology services; increase the use of  shared service delivery models; develop a multi-year strategy to identify  and reduce duplication and waste within the portfolio, including  component-level investments; and identify potential cost savings and  avoidances. The law also includes provisions that enhance CIOs’  authority. For example, it requires agencies to ensure that CIOs have a  significant role in programming and budgeting decisions, as well as in  management, governance, and oversight processes related to IT.
The PortfolioStat process consists of three key phases: (1) preparation, in  which agencies provide information to OMB, including draft information  resources management strategic plans and enterprise roadmaps; (2)  PortfolioStat session, in which agencies are required to hold a face-to- face, evidence-based review of their IT portfolio with the Federal CIO and  key stakeholders from the agency to discuss the agency’s portfolio data  and agree on concrete next steps; and (3) post-session, in which  agencies work with OMB to establish follow-up discussion to track their  progress in addressing agreed upon next steps.
In March 2013, OMB initiated the second round of PortfolioStat. In  addition to establishing guidance for conducting PortfolioStat sessions  during fiscal year 2013, the associated memorandum  highlighted  lessons learned from the initial round, integrated PortfolioStat and other  IT reform efforts like the Federal Data Center Consolidation Initiative, and  streamlined agency reporting requirements (including those for other  OMB initiatives) into three primary collection channels—an enterprise  roadmap, and information resources management strategic plan, and an  integrated data collection channel. The memorandum also stated that,  based on the PortfolioStat session, OMB and agencies would identify and  agree upon actionable next steps and specific time frames for the actions  to be taken and would formalize them in a memorandum. Deviations from  the committed schedule for completing the action items shall trigger a  requirement for follow-up briefings by the agency to the Federal CIO no  less frequently than quarterly, until corrective actions have been  implemented or the action item is back on schedule.
In May 2014, OMB issued a memo providing guidance for the conduct of   The memorandum continues  PortfolioStat sessions for fiscal year 2014.the focus on driving cost savings and efficiencies, assessing progress,  maximizing return on investment, driving innovation, and protecting  systems and data (through what are known as “deliver, innovate, and  protect” key process indicators). The memo also calls for measuring the  effectiveness of IT delivery through the selection and review of  investments that merit additional support and oversight by OMB and/or  agency leadership due to their high impact.
subsections: section_title: GAO Has Reported on OMB’s PortfolioStat Initiative and Related Federal Data Center Consolidation Initiative
paragraphs: In November 2013, we reported that additional OMB and agency actions  were needed to achieve portfolio savings. Specifically, we determined  that the 26 major federal agencies that were required to participate in the  PortfolioStat initiative fully addressed four of seven key requirements  established by OMB. However, only 1 of the 26 agencies addressed all  the requirements. For example, agencies did not develop action plans  that addressed all elements, such as criteria for identifying wasteful, low- value, or duplicative investments, or migrate two commodity IT areas— such as enterprise IT systems and infrastructure—to a shared service by  the end of 2012.
In addition, some of the 26 agencies had weaknesses in selected areas:
6 agencies reported limitations in their CIO’s authority to review and  approve the entire portfolio;
5 agencies did not include all their investments in their enterprise  architecture (i.e., an organizational blueprint), limiting their ability to  identify investments to be consolidated or eliminated; and
12 agencies reported challenges in ensuring the completeness of their  commodity IT baseline data or did not identify a process to ensure  their completeness.
Further, we reported that OMB’s estimates of about 100 consolidation  opportunities and a potential $2.5 billion in savings from the PortfolioStat  initiative were understated because, among other things, they did not  include estimates from the Departments of Defense and Justice. Our  analysis, which included these estimates, showed that, collectively, the 26  agencies were reporting 204 consolidation opportunities and at least $5.8  billion in potential savings through fiscal year 2015.
Finally, our report noted that OMB’s fiscal year 2013 PortfolioStat  guidance identified a number of planned improvements to agencies’  portfolio management practices, but did not fully address weaknesses in  how agencies had begun implementing OMB’s guidance, such as  ongoing limitations in CIOs’ exercise of authority, weaknesses in  agencies’ commodity IT baselines, accountability for migrating selected  commodity IT areas, or the information on agencies’ progress that OMB  intends to make public.
To address these shortcomings, we made a total of 64 recommendations,  including, among other things, that OMB require agencies to fully disclose  limitations in CIOs’ ability to exercise their authority and that 24 agencies  take steps to improve their PortfolioStat implementation. OMB agreed  with 3 of the 6 recommendations directed to them and disagreed with the  remaining three. Of the 24 other agencies we made recommendations to,  12 agreed with our recommendations, and 5 disagreed or partially  disagreed with our recommendations.
We have also reported on OMB’s and agencies’ progress on the related  Federal Data Center Consolidation Initiative. For example, we reported in  September 2014 that, among other things, 19 of 24 participating agencies  collectively reported achieving an estimated $1.1 billion in cost savings  between fiscal years 2011 and 2013, and that by 2017, that figure was  estimated to rise to a total of about $5.3 billion. However, we also  reported that planned savings may be higher because six agencies that  reported closing as many as 67 data centers reported limited or no  savings. In addition, 11 of the 21 agencies with planned cost savings  were underreporting their fiscal years 2012 through 2015 figures to OMB  by approximately $2.2 billion. While several agencies noted  communication issues as the reason for this, others did not provide a  reason. We concluded that until OMB assists agencies in reporting  savings and agencies fully report their savings, the $5.3 billion in total  savings will continue to be understated. Accordingly, we recommended  that OMB assist agencies in reporting cost savings and develop a metric  for server utilization as part of any reevaluation of the metrics. We also  recommended that, among other things, agencies fully report their  consolidation cost savings. OMB and 12 agencies agreed, 1 did not state  whether it agreed or disagreed, 1 had no comments, and 1 partially  agreed.
section_title: Agencies’ Planned PortfolioStat Savings Have Significantly Decreased, but the Reported Estimates Are Understated
paragraphs: Agencies decreased their planned PortfolioStat savings by approximately  66 percent from what they reported to us in 2013. Specifically, while  agencies initially planned to save at least $5.8 billion between fiscal years  2013 and 2015, they decreased their estimates to approximately $2 billion  as of January 2015. However, because agencies have not consistently  included estimated Federal Data Center Consolidation Initiative (FDCCI)  savings in their plans as directed by OMB, that amount is understated.
subsections: section_title: Agencies’ Planned Savings Have Decreased Significantly
paragraphs: In 2013, we reported that, as part of PortfolioStat, agencies identified 204  cost savings initiatives that were expected to collectively save at least  $5.8 billion from fiscal year 2013 to fiscal year 2015. Since then, agencies  have collectively increased the number of planned PortfolioStat initiatives  by 75 (the new total is 279) while reducing their corresponding savings  estimates by at least $3.8 billion—to approximately $2 billion—a decrease  of about 66 percent.
As shown in table 1, some agencies increased the number of cost- savings initiatives from 2013 to 2014, while others canceled, eliminated,  or consolidated initiatives. Five agencies—the Department of the Interior,  the National Archives and Records Administration, National Science  Foundation, the Social Security Administration, and the U.S. Army Corps  of Engineers—maintained or increased their initial planned savings goals;  conversely, the Nuclear Regulatory Commission reduced its planned  savings to zero. Table 1 identifies the changes in the number of cost- savings initiatives, and table 2 compares each agency’s planned savings,  as reported to us in 2013 and 2014.
Nineteen agencies reported decreased savings, including 9 agencies that  reported decreases of at least 50 percent from the planned savings they  reported a year ago. The decreases were the largest at the Department of  Defense (DOD) and the Department of Homeland Security (DHS).  Specifically:
DOD accounts for at least $2.6 billion of the decrease in planned  savings (or about 65 percent). In 2013, DOD stated that it was  pursuing 26 PortfolioStat initiatives that were to contribute at least  $3.2 billion in savings. However, as of January 2015, DOD only  reported planned savings for its ongoing data center consolidation  initiative, which it estimated at approximately $560 million between  fiscal years 2013 and 2015. Though the department appears to be  pursuing the other 25 initiatives it identified in 2013, its Office of the  Chief Information Officer stated that it no longer considers them to be  part of PortfolioStat. This is because, in its view, the initiatives are not  well aligned with the commodity IT categories defined by OMB due to  their scope, scale, and complexity. In addition, the Acting Chief  Information Officer stated that DOD’s systems are not capable of  easily generating the data needed to track savings as required under  PortfolioStat and that the costs of attempting to collect some of the  information far outweigh any potential benefits. However, OMB’s  commodity IT definition does not depend on the scope, scale, or  complexity of initiatives, and would apply to any initiative that involved  the consolidation or elimination of commodity IT such as e-mail,  servers and mainframes, and mobile devices. We therefore disagree  with DOD’s position that the 25 initiatives should not be considered to  be part of PortfolioStat. We also disagree with the Acting CIO’s view  that the cost of attempting to collect savings information outweighs the  benefits, particularly since our extensive experience at federal  agencies and recent reports have shown that the reporting of current  and accurate information about the status of the PortfolioStat and  other key reform initiatives, including financial savings, is a critical  component to ensuring OMB’s effective management and oversight of  these initiatives. Until DOD commits to tracking the 25 initiatives  under the PortfolioStat umbrella and reporting the savings to OMB, as  required by PortfolioStat guidance, potentially billions of dollars in  savings will go unaccounted.
DHS accounts for approximately $925 million of the overall decrease  in planned savings (about 23 percent). Officials stated that they  erroneously mislabeled planned savings figures reported to GAO in  2013. Specifically, DHS stated that planned savings they reported for  fiscal years 2013, 2014, and 2015 actually represented cumulative  savings from fiscal year 2011 through those years. For example, the  $73.39 million reported as planned savings for the Workplace as a  Service initiative for fiscal year 2013 actually represented planned  savings for fiscal years 2011 to 2013, and the $153.80 million  reported as planned savings for fiscal year 2014 actually represented  cumulative planned savings for fiscal years 2011 to 2014. As a result  of the error, the fiscal years 2013 through 2015 planned savings we  reported were significantly overstated. DHS officials stated that they  subsequently informed OMB of their error.
Figure 1 underscores how significant the changes in planned savings  made by DOD and DHS are relative to the total overall change for all  other agencies participating in PortfolioStat.
The remaining agencies provided various reasons why their number of  cost savings initiatives or planned savings changed in the past year,  including the termination, consolidation, or addition of new savings  initiatives, and revised strategies for implementing planned or ongoing  initiatives. For example, we reported in 2013 that the Department of  Education had identified 18 initiatives that were planned to achieve  approximately $5.3 million in savings. As of October 2014, Education  reported that, upon further review, it had determined that many of the  previously identified initiatives could be combined into a single, larger  initiative, and as a result the department’s number of initiatives was  reduced to 3. In addition, Education officials stated that, after receiving  additional guidance from OMB about how to calculate PortfolioStat cost  savings, they also needed to revise their planned savings totals.  Consequently, Education’s revised total is $4.63 million, a reduction of  about 13 percent from what it reported a year ago. The Nuclear  Regulatory Commission stated that the previously reported estimate for  some of its initiatives had been zeroed out due to funding changes.  Specifically, that agency stated that the original estimate was part of a  “cut and reinvestment” exercise performed in fiscal year 2012 which was  superseded by the actual budget from Congress.
section_title: Estimates for Revised Planned Savings Are Understated
paragraphs: While agencies reported revised savings plans, the new estimates of the  total amount they expect to save are understated—likely by hundreds of  millions of dollars—because agencies have not consistently included  planned savings for their data center consolidation initiatives as directed  by OMB. OMB’s March 2013 memo called for the integration of FDCCI  with the PortfolioStat initiative and, for the quarterly reporting, among  other things, of actual and planned FDCCI cost savings and avoidance  information. This was to encourage agencies to take an enterprise-wide  approach to address all commodity-IT, including data centers, in an  integrated, comprehensive plan.
Nevertheless, agencies have not consistently included their FDCCI efforts  as required in the planned PortfolioStat savings they reported to us.  Specifically, the $1.7 billion in planned PortfolioStat savings for fiscal  years 2013 through 2015 identified by agencies does not include all the  planned savings resulting from agencies’ FDCCI efforts. Eight agencies— EPA, GSA, HHS, NASA, NRC, OPM, Treasury, and USAID—did not  report their planned savings to us even though they reported data  center consolidation efforts (and in most cases, related planned savings)  to GAO as part of the review of agencies’ implementation of FDCCI.  HHS stated it did not report the initiative because it was not expected to  result in a positive cost avoidance until fiscal year 2016—beyond the time  frame we were considering—and the Nuclear Regulatory Commission  stated it had not been able to reliably estimate planned data consolidation  savings for the fiscal year 2013-2015 time frame either. USAID did not  provide any reason for not reporting planned FDCCI savings. The  remaining agencies—EPA, GSA, NASA, OPM, and Treasury— provided  a variety of reasons why they did not report their data center  consolidation efforts as part of PortfolioStat, including oversights and  errors in how they reported savings data to OMB and GAO, and a lack of  understanding of what information was to be reported to OMB.
In our September 2014 report on FDCCI, we also noted that four of the  agencies which did not report their FDCCI planned savings and cost  avoidance to us (EPA, NASA, OPM, and Treasury) were among several  agencies that had not reported savings and cost avoidance information to  OMB and we recommended that they do so in accordance with OMB  guidance. Until the inconsistencies in reporting we identified are  addressed, it will be difficult to (1) determine the true extent of savings  that agencies plan to achieve under PortfolioStat, (2) hold agencies  accountable for making progress in achieving those savings, and (3)  determine whether PortfolioStat as a whole is on target to succeed in  eliminating waste and duplication in IT spending across the federal  government.
section_title: Most Agencies Reported Lower Achieved PortfolioStat Savings than Planned, but Actual Results Are Difficult to Determine Due to Inconsistent Reporting
paragraphs: As of January 2015, agencies reported having achieved approximately  $1.1 billion in PortfolioStat-related savings during fiscal years 2013 and  2014. However, only 9 of 26 agencies met or exceeded their revised  planned savings goals. The remaining agencies fell short of their revised  plans, and of these, 3 agencies did not achieve any savings at all. Table 3  identifies each agency’s achieved PortfolioStat savings in 2013 and 2014  compared with their revised plans.
Although agencies reported to us that they saved $1.1 billion in fiscal  years 2013 and 2014, inconsistencies in how these savings have been  reported make it difficult to determine actual progress.
While its $2.5 billion savings target for the PortfolioStat initiative was for  fiscal years 2013 to 2015, OMB has included savings from fiscal year  2012 in quarterly reports to Congress on progress in achieving IT reform  savings, including PortfolioStat savings. For example, in its August 2014  report to Congress,approximately $2.08 billion in cost savings through June 2014 (a  difference of nearly $1 billion from the number reported to us) and,  further, that PortfolioStat was positioned to meet OMB’s target of  achieving $2.5 billion by 2015. In reviewing the report, however, we  determined that about $600 million in reported savings OMB included in  its totals were produced during fiscal year 2012, accounting for roughly  half the difference between the $2.08 billion OMB reported to Congress  and the number reported to us by individual agencies.
OMB stated that PortfolioStat had produced  OMB’s PortfolioStat lead analyst acknowledged that the reported  progress against the $2.5 billion target set for fiscal years 2013 to 2015  included fiscal year 2012 savings and likely included initiatives that were  not part of that target. He stated, however, that their goal had been to set  an initial target for agencies to meet and they were less concerned with  what initiatives were used to actually reach that target. In addition, OMB  staff members stated that they do not track agencies’ progress against  their planned savings because agencies keep changing their plans,  making it difficult to track against them. While we agree with OMB on the  value of setting a target, it is also important to have a baseline to hold  agencies accountable for implementing their planned initiatives and also  to ensure there are no missed opportunities for achieving additional  savings.
In further comparing the list of PortfolioStat initiatives in OMB’s August  2014 report to what agencies reported to us for this review, we identified  dozens of examples of cost-savings initiatives that were reported to OMB  but not to us, or initiatives that agencies reported to us but not to OMB.  There are several reasons for these inconsistencies.
As previously noted, multiple agencies did not include their planned  savings for the Federal Data Center Consolidation Initiative as part of  their PortfolioStat savings estimates. Similarly, those same agencies  did not include actual savings as part of PortfolioStat either.
Several agencies told us that they had reported information about  their PortfolioStat savings to OMB, but that OMB did not include this  information in its report to Congress. The OMB PortfolioStat lead  analyst stated that staff from the E-Government Office review  information submitted by agencies in their integrated data collection  reports and follow up with them as appropriate when clarification is  needed. They ultimately only include “what makes sense” in the  reports to Congress.
In other cases, agencies did not always follow instructions about what  information to report, or when to report it, and consequently the  information provided to us or to Congress was incorrect or out of date.
Several other agencies, including the National Science Foundation,  Social Security Administration, and Department of the Treasury, did  not provide an explanation.
Until these inconsistencies are addressed, the validity of the achieved  savings reported by agencies and OMB will remain questionable, making  it difficult to determine the extent to which the PortfolioStat initiative is  meeting its goals.
section_title: Selected Agencies Explained How PortfolioStat Savings Were Reinvested but Were Not Always Able to Provide Supporting Documentation
paragraphs: One of the goals for PortfolioStat articulated by OMB in its fiscal year  2013 guidance is the reinvestment of savings achieved through  eliminating unnecessary and lower-value investments, and reducing   Consistent with this goal, the three selected agencies  operating costs.we reviewed—DHS, the Department of Agriculture, and the Department  of Veterans Affairs (VA)—explained how they reinvested the PortfolioStat  savings for their two initiatives that were expected to yield the highest  savings in fiscal year 2013. However, these agencies were not always  able to provide support for how such savings were used. Specifically:
DHS reported achieving approximately $176 million in savings from its  Data Center Consolidation and Enterprise Licensing Agreements  initiatives. Officials from the department’s Enterprise Business  Management Office told us that the reinvestment of funds is handled  at the component level and thus is not tracked at the department  level. Officials from DHS’s component agencies provided information  about reinvesting PortfolioStat savings as follows:
Customs and Border Protection and Immigration and Customs  Enforcement stated that their savings were used to mitigate  budget reductions. However, they did not provide documentation  to support this.
Four DHS component agencies (the Domestic Nuclear Detection  Office, Departmental Management and Operations, the Office of  Health Affairs, and the Transportation Security Administration)  identified a variety of purposes for which their savings were  reinvested, such as fixing critical system issues, investment in  engineering support contracts, investment in an innovation project,  and additional monitoring and remediation of real-time technical  operational activities and incidents. However, these components  did not provide supporting documentation to illustrate the  reinvestment of such savings.
The Science and Technology Directorate reported that it used its  achieved savings for general management purposes.
Agriculture reported achieving approximately $72 million in  savings from its Data Center Consolidation and Geospatial  Consolidation initiatives. Officials provided a general explanation  that savings from the Data Center Consolidation initiative enabled  elements within Agriculture to transition to an “infrastructure as  service” project sponsored by the Office of the Chief Information  Officer and/or purchase additional hosting capacity to meet  increased processing workload and data storage needs. However,  Agriculture officials provided neither an accounting nor  documentation for how it reinvested these savings. Further,  officials did not provide any explanation or documentation for how  the department reinvested savings from its Geospatial  Consolidation initiative.
VA reported achieving approximately $38 million from its Microsoft  Enterprise Licensing Agreement and Vista Data Feeds initiatives.  While officials stated the funds had been reinvested in “unfunded  requirements,” they could not identify specifically which of these  requirements were funded by PortfolioStat savings. According to  officials, VA systems track the status of spending on funded  projects, and periodically throughout the year will release unspent  funds (such as the savings achieved from the Microsoft Enterprise  Licensing Agreement initiative) for use on the highest-priority  unfunded projects. Officials stated that once unspent funds were  released for other projects, VA’s systems no longer tracked  specifically where the money ended up being spent. However,  officials said that the types of projects that savings from the  Microsoft Enterprise Licensing Agreement initiative might have  funded included the Enterprise Testing Services, Renew Oracle  Enterprise Agreement, or VA Time and Attendance Systems.
The lack of documentation to support agencies’ reinvestment of funds  may be in part because there is no requirement to develop such  documentation. While OMB requires agencies to describe how they plan  to reinvest savings resulting from PortfolioStat initiatives, there is no  requirement for agencies to report whether they actually reinvested the  funds as planned. This requirement would increase agencies’  accountability and confirm whether PortfolioStat initiatives are yielding  their expected value. Without it, questions can be raised about whether  reinvestments actually occurred.
section_title: Agencies Have Identified a Wide Range of Action Items Resulting from the PortfolioStat Process, but Most of the Incomplete Action Items Did Not Have Associated Time Frames
paragraphs: OMB and agencies identified a wide range of action items during the  2013 PortfolioStat process. Specifically, they established a combined total   Generally, action items  of 112 action items, 26 of which they completed.reflect the major areas of IT management OMB highlighted in its 2013  PortfolioStat memorandum or were specific to an agency’s functional  mission. For example, multiple agencies agreed to steps addressing  cybersecurity management by identifying improving access control as one  of their action items. Other examples include considering a policy for  enhanced CIO authority, accelerating or completing the implementation of  Internet Protocol version 6, improving mobile contract management, and  increasing the use of government-wide mobile applications. The following  are specific examples of action items assigned to agencies.
Improve access control: OMB requested that DHS accelerate and  complete an initiative to strengthen access controls across the  department in accordance with its related directive.
CIO authorities: OMB recommended that the Department of the Interior  consider policies and procedures that (1) require the CIO to review and  concur, prior to contract award, all IT commodity acquisitions; and (2)  consolidate IT commodity acquisitions within the acquisition directorate.  This was in response to the finding that the department was duplicating IT  acquisition activities and not leveraging economies of scale and volume  discounts.
Accelerate and complete Internet Protocol version 6  implementation: OMB recommended that the Department of Housing  and Urban Development accelerate its implementation of Internet  Protocol version 6 and achieve 100 percent compliance no later than  January 2015.
Improve mobile contract management: The Department of Energy  agreed with OMB to review its mobile acquisitions and achieve  performance that is equal to or better than the rates identified by the  General Services Administration.
Increase participation in government-wide mobile application  gallery: OMB noted that the Department of Transportation should  increase its participation in the government-wide mobile application  gallery (apps.usa.gov) by centralizing its mobile application inventory  across the department, continuing to develop mobile capabilities centered  on customers, and registering all existing mobile applications on  apps.usa.gov.
Of the 86 incomplete action items, about 78 percent do not have any  associated time frames or due dates for completion. Further, OMB did not  establish time frames for any action items for six agencies (Defense,  Education, General Services Administration, Homeland Security, Labor,  and the U.S. Army Corps of Engineers), and only one agency  (Department of Transportation) had time frames associated with all of its  action items. Appendix II provides a list of the 112 agency action items  resulting from the 2013 PortfolioStat process, their status (completed or  not), and whether incomplete action items have established time frames.
According to OMB’s PortfolioStat lead analyst, staff follow-up on the  status of action items as part of the follow-up discussions they have with  agencies and these discussions occur at least quarterly. He stated he did  not believe time frames were needed to follow up on the status of the  action items, particularly in cases when time frames established in policy  have already passed (such as for the implementation of the Internet  Protocol version 6). However, establishing time frames for action items  and following up on whether they are being met—consistent with OMB’s  own PortfolioStat guidance—would increase agencies’ accountability in  completing activities they agreed to and would help improve their portfolio  management posture.
section_title: Conclusions
paragraphs: In a little over a year, agencies reduced the amount of savings they plan  to achieve via PortfolioStat between fiscal years 2013 and 2015 by about  68 percent—from at least $5.8 billion to about $2 billion. The decision of  the Department of Defense, which represents the biggest decrease, to no  longer consider 25 of its 26 cost savings initiatives part of the PortfolioStat  effort and not to track associated savings suggests that the department  may not agree with the importance of reporting cost savings information  to OMB in accounting for and achieving the benefits of PortfolioStat.  Moreover, since agencies have not consistently included data center  consolidation initiatives in their planned PortfolioStat savings estimates as  OMB requires, those revised estimates are, at best, highly questionable  and as such cannot serve as an accurate indicator of the level of potential  savings that are achievable. Until OMB and agencies revisit these  planned savings estimates to consistently include data center  consolidation initiatives, opportunities for savings may be missed or  overlooked and the PortfolioStat initiative will likely not yield expected  benefits.
Similar to agencies’ revised plans, the reported savings of $1.1 billion is  questionable because many agencies omitted savings from their data  center consolidation efforts in reports to OMB and because of other  inconsistencies in reporting from both OMB and agencies. Without  ensuring the accurate and complete reporting of savings, OMB will have  difficulty holding agencies accountable for meeting the goals of the  PortfolioStat initiative and determining the true extent of the initiative’s  results.
Although selected agencies were able to provide explanations for how  they reinvested the savings from selected initiatives, they were not, in  some cases, able to provide supporting documentation, in part because  there is no requirement to develop such documentation. Having this  documentation would provide OMB and Congress with greater assurance  that agencies are effectively using savings generated through the  PortfolioStat process.
Finally, while agencies and OMB agreed on action items as a result of  agencies’ PortfolioStat sessions, most incomplete action items did not  have associated time frames consistent with OMB’s guidance. A lack of  time frames makes agencies less accountable for completing the action  items they have agreed to, and raises questions about OMB’s  commitment to tracking them.
section_title: Recommendations for Executive Action
paragraphs: To better ensure that the PortfolioStat initiative improves governmental  efficiency and achieves cost savings, the Director of OMB should direct  the Federal CIO to ensure that its reports to Congress about the results of IT reform  efforts accurately reflect savings generated from all PortfolioStat  initiatives, including those associated with FDCCI; track agencies’ planned savings and use them as a baseline for  measuring reported actual savings; require agencies to document specifically how the cost savings  achieved from PortfolioStat have been reinvested; and establish time frames for completing assigned PortfolioStat action  items and hold agencies accountable for meeting those time frames.
We also recommend that the Secretary of Defense direct the Chief  Information Officer to revisit the 25 cost initiatives we reported in  GAO-14-65 to identify those that have achieved savings and cost  avoidances and report those savings and avoidances to OMB.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to OMB and DOD for comment and  received responses from both agencies. OMB agreed with the four  recommendations directed to it, and DOD partially concurred with our  recommendation to it. OMB and DOD’s comments and our responses are  summarized below.
In an e-mail response from its Office of E-Government and Information  Technology, OMB agreed with our four recommendations and stated that  implementing them will assist in implementing the Federal Information  Technology Acquisition Reform Act and addressing the management of  IT acquisitions and operations area that we recently added to the GAO  High Risk List. In a written response to our draft report (reprinted in app.  III), DOD partially concurred with our recommendation to maintain the 25  cost savings initiatives that we identified in GAO-14-65 under the  PortfolioStat umbrella and report the associated savings to OMB.  Specifically, DOD stated that it supports the PortfolioStat process and  reporting savings to OMB.
However, DOD stated that its “federated approach” to tracking cost  savings does not align with the 25 cost savings initiatives reported to us in  2013, although it did not provide any further information to support this  assertion. On a related note, during our review, the department stated  that DOD’s systems are not capable of easily generating the data needed  to track savings as required under PortfolioStat and that the costs of  attempting to collect some of the information far outweigh any potential  benefits. As noted in the report, we disagreed that the costs of attempting  to collect savings information outweigh the benefits. Our extensive  experience at federal agencies has shown that the reporting of current  and accurate information about the status of the PortfolioStat and other  key reform initiatives, including financial savings, is a critical component  to ensuring OMB’s effective management and oversight of these  initiatives.
In its comments, the department also noted that a number of the 25  initiatives identified in 2013 had been ineffective in generating savings, or  had not been achievable. Because DOD did not specify which of its  initiatives had been ineffective or unachievable, we modified our  recommendation from “maintain the 25 cost initiatives under the  PortfolioStat umbrella” to “revisit the 25 cost initiatives” to identify those  that have achieved savings and cost avoidances, and to report those  savings and avoidances to OMB. This is consistent with OMB guidance  requiring quarterly reports of cost savings and/or avoidances achieved  through the implementation of the PortfolioStat initiative. It also supports  recently enacted legislation recognizing the importance of the  PortfolioStat initiative and its focus on identifying cost savings and  avoidance. Specifically, as stated earlier, the law requires agencies to,  among other things, identify or develop opportunities to consolidate the  acquisition and management of information technology services; reduce  duplication and waste within the portfolio; and identify potential cost  savings and avoidances.
Finally, DOD stated that it is in the process of developing more useful  performance indicators to more closely align with OMB’s intent, is seeking  continuous improvement in its enterprise-wide efforts to achieve cost  savings, and will report such savings to OMB. While the department did  not provide any specific information on what would be more useful  performance indicators, we recently reported that OMB and agency chief  information officers did not fully agree on the usefulness of reporting  requirements integral to the success of OMB’s reforms. We made  recommendations to OMB aimed at enhancing its collaboration with CIOs  and achieving a common understanding of the priority of current reporting  requirements and related IT reform initiatives.
We are sending copies of this report to interested congressional  committees, the Director of the Office of Management and Budget, the  secretaries and agency heads of the departments and agencies  addressed in this report, and other interested parties. In addition, the  report is available at no charge on GAO’s website at  http://www.gao.gov.
If you or your staffs have any questions on the matters discussed in this  report, please contact me at (202) 512-9286 or pownerd@gao.gov.  Contact points for our Offices of Congressional Relations and Public  Affairs may be found on the last page of this report. GAO staff who made  major contributions to this report are listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to (1) assess agencies’ plans for achieving  PortfolioStat savings; (2) determine agencies’ progress in achieving  planned savings; (3) describe the extent to which selected agencies have  reinvested PortfolioStat savings; and (4) describe action items resulting  from the PortfolioStat process and determine the extent to which  agencies have addressed them.
To assess agencies’ plans for achieving PortfolioStat savings, we asked  the 26 agencies required to implement PortfolioStat to (1) confirm the  planned initiatives and associated planned savings amounts for fiscal  years 2013 through 2015 that they had reported to us in 2013 and (2)  provide any changes to planned initiatives and savings along with  reasons for these changes. We compared the revised plans to those we  reported in 2013 to determine the extent of the differences and also  determined whether agencies included Federal Data Center  Consolidation Initiative activities as part of their PortfolioStat efforts,  consistent with Office of Management and Budget (OMB) guidance.
To determine agencies’ progress in achieving planned savings, we  requested actual savings or cost avoidance data for fiscal years 2013 and  2014 from each of the 26 agencies required to implement the  PortfolioStat initiative. We compared agencies’ achieved savings to their  revised savings plans for fiscal years 2013 to 2015. We also collected  and analyzed information from the agencies on challenges they faced in  achieving PortfolioStat savings and on their process for ensuring the  completeness of the achieved savings or cost avoidance numbers. We  also compared the initiatives and associated savings and cost avoidance  information reported to us to that reported by the Office of Management  and Budget for the same period. In doing our analyses, we identified data  reliability issues (including inconsistencies in data reported to us and  OMB) which we have highlighted in the report, as appropriate.
To describe the extent to which selected agencies had reinvested  PortfolioStat savings, we focused on the Departments of Homeland  Security, Agriculture, and Veterans Affairs because they reported that  they planned to achieve the most savings or cost avoidance for fiscal year  2013 in our previous PortfolioStat review. We then reviewed reports on  actual cost savings or avoidance for fiscal year 2013 and, for each one,  selected the two initiatives that reportedly yielded the most cost savings  for fiscal year 2013.
For these initiatives, we asked agency officials to describe how the  identified savings had been reinvested. Further, we asked that the  officials provide supporting documentation, such as budget artifacts  illustrating the reinvestment or transfer of funds (savings) and artifacts  illustrating management approval of the reinvestment or transfer.
To describe action items resulting from the PortfolioStat process and  determine the extent to which agencies had addressed them, we  reviewed agencies’ action item memoranda resulting from the  PortfolioStat sessions, and analyzed them to identify the action items,  their status (whether completed or not), and specific time frames that  each agency and OMB had agreed to as part of the PortfolioStat process.  Five agencies (HHS, NASA, NSF, OPM, and USAID) did not provide any  memoranda and we therefore did not include their action items in our  analysis. We also determined whether agencies were meeting projected  milestones and due dates for each of their action items.
We conducted this performance audit from March 2014 to April 2015 in  accordance with generally accepted government auditing standards.  Those standards required 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.
section_title: Appendix II: Agency Action Items from Fiscal Year 2013 PortfolioStat Sessions
paragraphs: Table 4 describes the action items agreed to by agencies and OMB  during the fiscal year 2013 PortfolioStat process, their status (completed  or not), and whether an associated time frame was established for  incomplete items.
section_title: Appendix III: Comments from the Department of Defense
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, the following staff made key  contributions to this report: Sabine Paul, Assistant Director; Chris  Businsky; Lynn Espedido; Mary Evans; Rebecca Eyler; Dan Gordon;  Andrea Harvey; Lee McCracken; and Bradley Roach.