Data Center Consolidation: Reporting Can Be Improved to Reflect Substantial Planned Savings
Published: 2014-09-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 2010, as focal point for information technology management across the government, OMB's Federal Chief Information Officer launched the Federal Data Center Consolidation Initiative to consolidate the growing number of centers. As of May 2014, agencies reported a total of 9,658 data centers—approximately 6,500 more than reported by OMB in 2011.
GAO was asked to review federal agencies' continuing efforts to consolidate their data centers and achieve cost savings. The objectives were to (1) evaluate the extent to which agencies have achieved cost savings to date and identified future savings through their consolidation efforts, (2) identify agencies' notable consolidation successes and challenges in achieving cost savings, and (3) evaluate the extent to which data center optimization metrics have been established. GAO assessed agency-reported cost savings and avoidance documentation, interviewed agency officials, and assessed data center optimization metrics against prior OMB requirements and goals.
section_title: What GAO Found
paragraphs: Of the 24 agencies participating in the Federal Data Center Consolidation Initiative, 19 agencies collectively reported achieving an estimated $1.1 billion in cost savings and avoidances between fiscal years 2011 and 2013. Notably, the Departments of Defense, Homeland Security, and Treasury accounted for approximately $850 million (or 74 percent) of the total. In addition, 21 agencies collectively reported planning an additional $2.1 billion in cost savings and avoidances by the end of fiscal year 2015, for a total of approximately $3.3 billion—an amount that is about $300 million higher than the Office of Management and Budget's (OMB) original $3 billion goal. Between fiscal years 2011 and 2017, agencies reported planning a total of about $5.3 billion in cost savings and avoidances.
However, planned savings may be higher because six agencies that reported having closed as many as 67 data centers reported limited or no savings, in part because they encountered difficulties, such as calculating baseline data center costs. In addition, 11 of the 21 agencies with planned cost savings are 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. Until OMB assists agencies in reporting savings and agencies fully report their savings, the $5.3 billion in total savings will be understated.
Most agencies reported successes in achieving cost savings—notably, the benefits of key technologies, reduced power consumption and facility costs, and improvements in asset inventories. However, agencies also reported challenges, many of which were the same as GAO found in 2012. One of the most-reported challenges was related to obtaining power usage information as a means to determine cost savings. In light of how closely these successes and challenges relate to achieving cost savings, it is important for OMB to continue to provide leadership and guidance, including—as GAO previously recommended—using the Data Center Consolidation Task Force to monitor agencies' efforts.
Pursuant to OMB guidance, in May 2014 the Data Center Consolidation Task Force completed a set of 11 metrics to measure agency progress toward optimizing their data centers, such as power usage and facility utilization. In addition, related targets to be achieved by fiscal year 2015 have been developed for nearly all the metrics. However, the metrics do not address server utilization, even though OMB reported this to be as low as 5 percent in 2009, which is significantly below OMB's target of 60 to 70 percent. Without such a metric, OMB may not be getting important insight into agencies' progress on a key issue that was a driving factor in launching the consolidation initiative.
section_title: What GAO Recommends
paragraphs: GAO is recommending that OMB assist agencies in reporting cost savings and develop a metric for server utilization as part of any reevaluation of the metrics. GAO is also recommending, among other things, that 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 noting challenges. GAO continues to believe the recommendation remains valid as discussed in the report.

section_title: Letter
paragraphs: The federal government’s demand for information technology (IT) is ever  increasing. In recent years, as federal agencies have modernized their  operations, put more of their services online, and increased their  information security profiles, their need for computing power and data  storage resources has increased. Over time, this increasing demand led  to a dramatic rise in the number of 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.
During the past several years, we reported and testifiedcenter consolidation could potentially save the federal government billions  of dollars, weaknesses existed in the execution and oversight of the  initiative. Specifically, in July 2011 and July 2012, we reported that nearly   that, while data  all of the 24 departments and agencies (agencies) participating in FDCCIhad not yet completed a data center inventory or the consolidation plans  to implement their consolidation initiative. More recently, in April 2013, we  found that OMB’s oversight of the initiative had shortcomings, including  that the agency was not tracking and reporting cost savings. As a result,  we recommended that OMB require agencies to complete their missing  inventory and plan elements and improve the execution of important  oversight responsibilities, among other things. Subsequently, OMB and  agencies took actions to address these deficiencies, which are discussed  later in this report.
Given the importance of the consolidation initiative, you asked that we  review federal agencies’ continuing efforts to consolidate their data  centers and achieve cost savings. Specifically, our objectives were to (1)  evaluate the extent to which agencies have achieved cost savings to date  and identified future savings through their consolidation efforts, (2)  identify agencies’ notable consolidation successes and challenges in  achieving cost savings, and (3) evaluate the extent to which data center  optimization metrics have been established.
To address our first objective, we obtained and analyzed the 24 FDCCI  agencies’ cost savings and avoidance documentation, such as cost  models, budget and contract documentation, and quarterly status reports  to OMB. Then, we identified the total agency-reported savings achieved  from fiscal years 2011 to 2013 and planned from fiscal years 2014  through 2017. We also compared agency documentation to data center  consolidation cost savings and avoidance reporting requirements outlined  in a March 2013 OMB memorandum.we reviewed all 24 agencies’ documentation and interviewed agency  officials to determine what consolidation successes have been realized in  achieving cost savings and what challenges have been faced in achieving   To address our second objective,  cost savings. Finally, for our third objective, we compared the established  data center optimization metrics to the requirements for such metrics, as  documented in OMB’s March 2013 memorandum, and interviewed OMB,  General Services Administration (GSA), and Data Center Consolidation  Task Force (Task Force) officials to discuss the process by which the  metrics were established and to determine the extent to which related  targets for the metrics had been established. We also compared the  established metrics against areas identified by OMB in prior data center  consolidation-related memorandums and guidance as having importance  to data center optimization.
We conducted this performance audit from October 2013 to September  2014 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  further details about our objectives, scope, and methodology.
subsections: section_title: Background
paragraphs: The federal government’s increasing demand for IT 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 has been and continues to be a significant cost  to the federal government, including costs for hardware, software, real  estate, and cooling. For example, in 2007, the Environmental Protection  Agency (EPA) estimated that the electricity cost to operate federal  servers and data centers across the government was about $450 million  annually. According to the Department of Energy (Energy), data center  spaces can consume 100 to 200 times more electricity than a standard   that server utilization rates as low  office space. In 2009, OMB reportedas 5 percent across the federal government’s estimated 150,000 servers  were a driving factor in the need to establish a coordinated, government- wide effort to improve the efficiency, performance, and environmental  footprint of federal data center activities.
subsections: section_title: OMB and the Federal CIO Established the Federal Data Center Consolidation Initiative
paragraphs: 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 FDCCI 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 FDCCI, OMB required the 24 agencies to identify a data center  consolidation program manager to lead the 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  and was to be incorporated into the agency’s fiscal year 2012 budget.
In October 2010, OMB reported that all of the agencies had submitted an  inventory and plan. In addition, in a series of memorandums, OMB  described plans to monitor agencies’ consolidation activities on an  ongoing basis. Starting in fiscal year 2011, OMB required agencies to  provide an updated data center asset inventory at the end of every third  quarter and an updated consolidation plan (including any missing  elements) at the end of every fourth quarter. Further, starting in fiscal year  2012, OMB required agencies to provide a consolidation progress report  at the end of every quarter. This progress information has subsequently  been made available on the federal website dedicated to providing the  public with access to datasets developed by federal agencies,  http://data.gov.
Pursuant to requirements of the Government Performance and Results  Act Modernization Act of 2010 (GPRAMA), in February 2012, OMB  designated data center consolidation as 1 of its 14 priority goals (now  known as cross-agency priority goals) because of its importance to  improving management across the federal government. These goals are  designed to cover areas where increased cross-agency collaboration is  needed to improve progress towards the achievement of goals shared by  multiple contributing agencies. In March 2014, OMB announced the  creation of a new set of goals in its submission of the President’s fiscal  year 2015 budget, which did not include data center consolidation.  According to OMB, although the updated set of goals did not include the  data center consolidation goal because it had reached the end of its goal  cycle time frame under GPRAMA, the effort will remain an administration  priority.
While OMB is primarily responsible for FDCCI, the agency designated the  Federal CIO Council—the principal interagency forum to improve IT- related practices across the federal government—to lead the effort. In  addition, OMB originally identified two additional organizations to assist in  managing and overseeing the initiative:
The GSA FDCCI Program Management Office to support OMB in  planning, execution, management, and communications.
The 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 agencies, including  identifying and disseminating key information, solutions, and  processes that will help agencies in their consolidation efforts.
However, in December 2013, GSA and Task Force officials stated that  the GSA’s Program Management Office would no longer be supporting  FDCCI and its responsibilities were being transitioned to OMB and the  Task Force.
section_title: With an Expanded Definition, OMB’s Inventory of Federal Data Centers Has Grown
paragraphs: “…a data center is…a closet, room, floor or building for the storage, management, and  dissemination of data and information and  computer systems and  associated components, such as database, application, and storage systems and data  stores [excluding facilities exclusively devoted to communications and network equipment  (e.g., telephone exchanges and telecommunications rooms)]. A data center generally  includes redundant or backup power supplies, redundant data communications  connections, environmental controls…and special security devices housed in leased,  owned, collocated, or stand-alone facilities.”
Under the first definition, OMB identified 2,094 data centers in July 2010.  Using the new definition from October 2011, OMB estimated that there  were a total of 3,133 federal data centers in December 2011, and its goal  was to consolidate approximately 40 percent, or 1,253 data centers, for a  savings of approximately $3 billion by the end of 2015.
OMB, Implementation Guidance for the Federal Data Center Consolidation Initiative  (Washington, D.C.: Mar. 19, 2012).
Since 2011, the number of federal data centers reported by agencies has  continued to grow. In July 2013, we testified that 22 of the 24 FDCCI  agencies had collectively reported 6,836 data centers in their  inventories—an increase of about 3,700 compared to OMB’s previous  estimate from December 2011. According to the Federal CIO, the  increase in data centers was primarily due to the expanded definition of a  data center and improved inventory reporting by the agencies.
More recently, our analysis of agencies’ May 2014 data center inventories  indicated that agencies collectively reported a total of 9,658 data centers.  Of the total reported data centers, 242 were reported by agencies as  “core” data centers—meaning that they are primary consolidation points  for agency enterprise IT services and not planned for closure, while the  remaining 9,416 were reported as “non-core.”memorandum states that the goal is for agencies to close 40 percent of  the total non-core data centers, or 3,766 data centers based on the May  2014 inventory data, by the end of fiscal year 2015.
OMB’s March 2013  Since 2011, agencies have reported their data center closures and  planned closures on http://data.gov. As of May 2014, agencies  collectively reported that they had closed a total of 976 data centers, and  were planning to close an additional 2,689 data centers—for a total of  3,655—by the end of September 2015. See figure 1 for a summary of the  total number of the federal data centers reported in agencies’ inventories  and closures as reported by agencies on http://data.gov over time, and  table 1 for a depiction of the total number of data centers (including a  breakdown of core and non-core centers) reported in agencies’ May 2014  inventory submissions, and reported and planned closures.
section_title: OMB Integrated FDCCI with Its PortfolioStat Initiative
paragraphs: In March 2012, OMB launched the PortfolioStat initiative, which requires  agencies to conduct an annual agency-wide IT portfolio review to, among  other things, reduce commodity IT spending and demonstrate how its IT  investments align with the agency’s mission and business functions.  PortfolioStat is designed to assist agencies in assessing the current  maturity of their IT portfolio management process, make decisions on  eliminating duplication, and move to shared solutions in order to  maximize the return on IT investments across the portfolio.
In September 2012, the Federal CIO wrote in an e-mail to agencies that  OMB was planning to integrate FDCCI with the PortfolioStat initiative to  allow agencies to focus on an enterprise-wide approach to address all  commodity IT, including data centers, in an integrated, comprehensive  plan and that agencies should continue to focus on optimizing those data  centers that are essential to delivering taxpayer services, while continuing  to close those that are duplicative. In addition, the e-mail directed  agencies to delay submitting their October 1, 2012 submissions of  updated consolidation plans until further guidance could be provided.  However, agencies were still to report quarterly updates on their data  center closures.
In March 2013, OMB issued a memorandum documenting the integration  of FDCCI with PortfolioStat. Among other things, the memorandum  discussed OMB’s efforts to further the PortfolioStat initiative by  incorporating several changes, such as consolidating previously collected  IT-related plans, reports, and data submissions. The guidance also stated  that, to more effectively measure the efficiency of an agency’s data center  assets, agencies would also be measured by the extent to which their  data centers are optimized for total cost of ownership by incorporating  metrics for data center energy, facility, labor, and storage, among other  things. OMB indicated in its memorandum that these metrics would be  developed by the Task Force.
This March 2013 memorandum also established new agency reporting  requirements and related time frames. Specifically, agencies were no  longer required to submit the data center consolidation plans previously  required under FDCCI. Rather, agencies were 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. In addition, agencies were still required to update  their data center inventories yearly and report quarterly on http://data.gov regarding their consolidation progress.
More recently, in May 2014, OMB issued a memorandum updating its  PortfolioStat guidance for fiscal year 2014. As in past PortfolioStat  guidance, the memorandum discussed the importance of PortfolioStat  sessions—data-driven reviews of agency portfolio management between  the Federal CIO, Agency Deputy Secretary, and other senior agency  officials—as a means to continue to drive cost savings. OMB’s guidance  also reinforced the need for agencies to continue to consolidate their non- core data centers while optimizing their core data centers using metrics  established by the Task Force, and documented in OMB’s memorandum.  These metrics are discussed in more detail later in this report.
section_title: GAO Has Reported and Testified on Issues Related to Consolidating Data Centers
paragraphs: We have previously reported on OMB’s efforts to consolidate federal data  centers. In March 2011, we identified data center consolidation as one of  the 81 areas within the federal government with opportunities to reduce  potential duplication, overlap, and fragmentation. In this regard, we  reported on the status of FDCCI and noted that data center consolidation  made sense economically and was a way to achieve more efficient IT  operations, but that challenges existed. For example, agencies reported  facing challenges in ensuring the accuracy of their inventories and plans,  providing upfront funding for the consolidation effort before any cost  savings accrue, and overcoming cultural resistance to such major  organizational changes, among other things.
In July 2011, we issued a report on the status of FDCCI and found that  only 1 of the 24 agencies had submitted a complete inventory and no  agency had submitted complete plans. agencies to document the steps they had taken, if any, to verify the  inventory data. We concluded that until these inventories and plans were  complete, agencies would not be able to implement their consolidation  activities and realize expected cost savings. Moreover, without an  understanding of the validity of agencies’ consolidation data, OMB could  not be assured that agencies were providing a sound baseline for  estimating consolidation savings and measuring progress against those  goals. Accordingly, we made several recommendations to OMB, including  that the Federal CIO require that agencies, when updating their data  center inventory, state what actions were taken to verify the information in  the inventory and to identify any associated limitations on the data, and to  complete the missing elements in their inventories and consolidation  plans.
Further, OMB had not required  OMB generally agreed with our report and has since taken actions to  address our recommendations. For example, in July 2011, OMB required  agency CIOs to submit a letter that identified steps taken to verify their  data center inventory information and attest to the completeness of their  consolidation plan. In addition, in March 2012, OMB required that all  agencies complete all elements missing from their consolidation plans by  the end of the fourth quarter of every fiscal year.
GAO-11-565.
Additionally, in July 2012, we updated our review of FDCCI’s status and  found that, while agencies’ 2011 inventories and plans had improved as  compared to their 2010 submissions, only 3 agencies had submitted a  complete inventory and only 1 agency had submitted a complete  consolidation plan. In addition, we noted that 3 agencies had submitted  their inventory using an outdated format, in part, because OMB had not  publicly posted its revised guidance. Notwithstanding these weaknesses,  we noted that 19 agencies reported anticipating about $2.4 billion in cost  savings between 2011 and 2015.
We also reported that none of five selected agencies had a master  program schedule or cost-benefit analysis that was fully consistent with  best practices. To assist agencies with their data center consolidation  efforts, OMB had sponsored the development of a FDCCI total cost of  ownership estimated costs for consolidation; however, agencies were not required to  use the cost model as part of their cost estimating efforts. Accordingly, we  reiterated our prior recommendation that agencies complete missing plan  and inventory elements and made new recommendations to OMB to  publically post guidance updates on the FDCCI website and to require  agencies to use its cost model.   model that was intended to help agencies refine their  OMB generally agreed with our recommendations and has since taken  steps to address them. More specifically, OMB posted its 2012 guidance  for updating data center inventories and plans, as well as guidance for  reporting consolidation progress, to the FDCCI public website. Further,  the website has been updated to provide prior guidance documents and  OMB memorandums. In addition, OMB’s 2012 consolidation plan  guidance required agencies to use the cost model as they developed their  2014 budget request.
OMB refers to total cost of ownership as all associated data center-related activities and  costs without regard to ownership, project association, or funding line. had not measured agencies’ progress against key performance  measures, including its cost savings goal, or ensured that other key  oversight responsibilities, such as approving agencies consolidation plans  on the basis of their completeness, were being fully executed. We  reported that OMB had not determined agencies’ progress against its cost  savings goal because, according to OMB staff, the agency had not  determined a consistent and repeatable method for tracking cost savings  and that the weaknesses in oversight were due, in part, to OMB not  ensuring that assigned responsibilities were being executed. Accordingly,  we recommended that OMB track and report on key performance  measures, including cost savings, and improve the execution of important  oversight responsibilities. OMB generally agreed with our  recommendations and has since taken some initial actions to implement  them, including tracking and reporting on data center consolidation cost  savings on a quarterly basis.
Finally, between May 2013 and June 2014, we testified on the status of  FDCCI. Notably, in July 2013, we testified that, while agencies continued  to make progress by closing an additional 64 data centers compared to  the total number reported through the end of December 2012, the number  of federal data centers had grown significantly since OMB’s December  2011 estimate of approximately 3,133 data centers. Specifically, 22 of the  24 FDCCI agencies had collectively reported 6,836 data centers in their  inventories—an increase of about 3,700 as compared to OMB’s previous   We concluded that it would be important  estimate from December 2011.for OMB to be transparent on agencies’ progress against its performance  metrics going forward.
section_title: Agencies Have Planned Substantial Consolidation Savings, but Reporting Can Be Improved
paragraphs: For FDCCI, OMB originally established a goal of achieving $3 billion in  cost savings by the end of 2015. Pursuant to this goal, agencies have  reported achieving more than a billion dollars in savings and avoidances  through fiscal year 2013 and are planning a total of about $3.3 billion in  savings and avoidances by the end of fiscal year 2015—an amount that is  approximately $300 million higher than OMB’s goal. Between fiscal years  2011 and 2017, agencies reported planning approximately $5.3 billion in  total savings and avoidances. However, planned cost savings may be  higher because six agencies with as many as 67 data center closures  each have been limited in their abilities to fully report their savings. In  addition, slightly more than half of agencies with planned cost savings are  underreporting their fiscal years 2012 through 2015 figures to OMB by  approximately $2.2 billion. While several agencies noted internal agency  communication issues as the reasons for not reporting savings to OMB,  other agencies were unable to provide a reason. Until agencies fully  report their savings, the total planned cost savings and avoidances of  $5.3 billion will be understated.
subsections: section_title: Agencies’ Reported Savings Exceed More than a Billion Dollars through Fiscal Year 2013; Significant Additional Savings Planned through Fiscal Year 2017
paragraphs: Since launching FDCCI in 2010, achieving cost savings has been a  primary goal of the initiative. As previously discussed, one of the original  high-level objectives was to reduce the costs of data center hardware,  software, and operations. OMB subsequently expanded on this goal and,  in February 2012, stated that data center consolidation had the potential  to achieve $3 billion dollars in savings by the end of 2015. Pursuant to  these goals, OMB required agencies to describe year-by-year  investments and cost savings in their 2010 and 2011 consolidation plans  and, beginning in August 2013, has required agencies to identify and  report all cost savings and avoidances related to data center  consolidation, among other areas, to OMB as part of a quarterly data  collection process known as the integrated data collection.
Most of the 24 agencies are achieving cost savings or avoidances from  their data center consolidation efforts. Specifically, between fiscal years  2011 and 2013, 19 agencies collectively reported achieving an estimated  $1.1 billion in cost savings and avoidances. Notably, Defense, the  Department of Homeland Security (DHS), and the Department of the  Treasury (Treasury) account for approximately $850 million (or 74  percent) of the reported estimated savings through fiscal year 2013. The  remaining 5 agencies that did not report savings between fiscal years  2011 and 2013 cited varied reasons for not being able to do so, which  included difficulties in determining baseline data center costs, upfront  costs that have exceeded savings to date, and a lack of electrical  metering to determine power usage savings.
The methodologies used to calculate savings varied across the 19  agencies that reported estimated or actual savings and avoidances  through fiscal year 2013; however, most of these agencies estimated their  figures. Specifically, 3 agencies—the Department of Education  (Education), EPA, and the National Science Foundation (NSF)—reported  actual cost savings and avoidances, which they determined by calculating  differences in executed budget or contract amounts over time. The  remaining 16 agencies estimated their cost savings and avoidances. As  examples, GSA estimated its savings using the department’s total cost of  ownership model; the Department of the Interior (Interior) used post- consolidation forms collected from its component bureaus and offices to  estimate cost savings related to areas such as rent, utilities, and  personnel after a consolidation activity was completed; and Treasury  estimated savings resulting from reductions in the percentage of IT  infrastructure investment spending as compared to total IT spending over  time. Officials at these agencies stated that they were limited to reporting  estimating savings because of challenges in determining actual savings,  including the lack of electrical metering to calculate power usage savings,  budget and accounting systems that are not structured to account for the  costs of individual data centers, and difficulties in determining costs and  savings when data centers are located in multipurpose facilities. These  issues are discussed in more detail later in this report.
See table 2 for a listing of agencies’ data center closures, cost savings  and cost avoidances between fiscal years 2011 and 2013, and whether  the agency savings are estimated.
As prescribed by OMB’s initial guidance on data center consolidation, the  19 agencies that reported achieving cost savings and avoidances did so  using a variety of approaches. While these approaches can be grouped  into four key areas—decommissioning, consolidation, cloud computing,  and virtualization—agencies generally employed, and achieved cost  savings and avoidances using, multiple approaches at the same time. For  example, NSF officials stated that in order to reduce the agency’s  dependence on onsite infrastructure, the agency has been focused on  increasing virtualization and consolidation of servers and storage, while  continuing to adopt cloud computing technologies. See table 3 for a  description of the four approaches and key examples of agency-reported  savings or avoidances in each.
In addition to savings through fiscal year 2013, our analysis of estimated  future savings shows that, collectively, agencies are reporting that they  expect to exceed OMB’s cost savings goal by the end of fiscal year 2015  and continue to achieve significant savings in future years. Specifically,  21 agencies collectively reported planning a total of about $3.3 billion in  savings and avoidances by the end of 2015—an amount that is  approximately $300 million higher than OMB’s original $3 billion goal.  Further, through fiscal year 2017, these agencies collectively reported  planning an additional $2.1 billion in cost savings and avoidances, for a  total of approximately $5.3 billion. Five agencies—the Department of  Agriculture (Agriculture), Defense, DHS, the Department of  Transportation (Transportation), and Treasury—account for about $4.9  billion (or approximately 91 percent) of the total savings reported. See  table 4 for a listing of agencies’ total cost savings and cost avoidances  between fiscal years 2011 and 2017.
The extent of cost savings and avoidances being reported by agencies  beyond fiscal year 2015 highlights the importance of OMB continuing to  track and report on such savings beyond the time frame of its initial goal.  Further, with many agencies having not yet reported on their planned  savings, the savings beyond fiscal year 2015 may be higher than  previously discussed. In this regard, we have previously recommended  that OMB extend the horizon for realizing cost savings from FDCCI, as  doing so could provide OMB and FDCCI stakeholders with input and information on the benefits of consolidation beyond OMB’s initial goal.OMB neither agreed nor disagreed with our recommendation but stated  that, as the FDCCI and PortfolioStat initiatives proceed and continue to  generate savings, OMB would consider whether updates to the current  time frame are appropriate.
section_title: Savings May Be Higher than Current Amounts Due to Underreporting of Planned Savings by Many Agencies
paragraphs: As previously mentioned, OMB’s March 2013 memorandum identified  the requirements for reporting cost savings from data center  consolidation. Specifically, the memorandum stated that agencies are  required to report their data center consolidation cost savings and  avoidances, among other areas, to OMB as part of a quarterly integrated  data collection process. OMB’s May 2014 memorandumrequirements for integrated data collection submissions. Agencies can  currently input cost savings and avoidances for fiscal years 2012 through  2015 into the web-based portal used to submit their integrated data  collection submissions. Finally, standards for internal control emphasize  the need for federal agencies to establish plans to help ensure goals and   reiterated the  objectives can be met, including compliance with applicable laws and  regulations.
Although agencies are already collectively reporting approximately $5.3  billion in planned cost savings and avoidances from their consolidation  efforts, these savings may be higher because 6 of the 24 agencies,  claiming between 11 and 67 data center closures each, have been limited  in their abilities to report savings. For example, although Interior reported  closing 65 data centers as of May 2014, the agency cited significant  challenges in obtaining costs and related savings information from its  component agencies. In addition, the National Aeronautics and Space  Administration (NASA) reported that, as of May 2014, it had closed 25  data centers; however, while the agency has been able to report $1.3  million in savings through fiscal year 2013, agency officials stated that  NASA has been otherwise limited in its ability to identify cost savings and  avoidances because of the agency’s complex organizational structure,  which includes multiple centers with multiple missions and multiple IT  contractors utilizing data centers within multipurpose facilities. Similar  challenges were also identified by other agencies, as discussed later in  this report. Table 5 shows the agencies with limited or no savings relative  to their consolidation efforts and their reasons for not being able to fully  report savings.
Considering that cost savings is one of OMB’s original high-level goals of  FDCCI and reporting such savings is currently required on a quarterly  basis, OMB has a responsibility for ensuring that agencies are identifying  the full extent of cost savings from their consolidation efforts. Further, as  previously mentioned, OMB’s PortfolioStat guidance requires yearly  review sessions of agency portfolio management (including data center  consolidation) with the Federal CIO and senior agency officials and notes  that these reviews are critical to driving cost savings. We previously  found that all agencies held PortfolioStat sessions with OMB in fiscal  year 2012. In addition, agencies were required to hold sessions again in  2013. However, after 2 years of PortfolioStat sessions, the six agencies  identified in the table have been limited in their ability to report savings  from their data center consolidation efforts.
In addition, slightly more than half of the agencies with cost savings and  avoidances did not fully report them to OMB—a requirement of OMB’s  quarterly integrated data collection process. Specifically, of the 21  agencies with actual and estimated fiscal years 2012 through 2015 cost  savings and avoidances, 10 agencies fully reported their savings and  avoidances to OMB through the integrated data collection process, 8  agencies partially reported this information, and 3 agencies did not report  it. As a result, agencies collectively reported savings for fiscal years 2012 through 2015 of approximately $3.1 billion to us, as compared to  only about $876 million that agencies reported to OMB, meaning that the  savings have been underreported to OMB by approximately $2.2 billion.  See table 6 for a listing of agencies and a comparison of their data center  consolidation savings as reported to GAO and through OMB’s integrated  data collection process.
While several agencies noted internal agency communication issues as a  reason that their savings and avoidances were not fully reported, other  agencies were not able to provide a reason. These shortcomings in  agency reporting have resulted in OMB not being able to fully report  agencies’ data center consolidation cost savings and avoidances in its  quarterly reports to Congress on the status of federal IT reform efforts, in  accordance with its responsibilities as set forth in law. For example,  OMB’s May 2014 report to Congress noted total fiscal years 2012 and  2013 data center consolidation cost savings and avoidances of slightly  less than $329 million, as compared to the approximately $951 million  that agencies reported to us that they achieved over that same time  period—a difference of approximately $622 million.
Until OMB assists those agencies with limited or no cost savings  reported, agencies may not be able to identify the full extent of savings  from their consolidation efforts and the total planned cost savings and  avoidances of approximately $5.3 billion will be understated. Further, until  agencies fully report their cost savings and avoidances to OMB,  Congress may be limited in its ability to oversee agencies’ progress  against key initiative goals.
section_title: Agencies Reported Successes and Challenges in Achieving Cost Savings
subsections: section_title: Agencies Reported That Efforts to Achieve Consolidation Cost Savings Face Challenges Similar to Those Previously Reported
paragraphs: In 2011 and 2012, we reported on the broad challenges that agencies  were facing during data center consolidations. These included FDCCI- related, cultural, funding-related, operational, and technical challenges. In  2014, agencies reported that many of the same challenges still exist and  impacted their ability to achieve cost savings through consolidation  efforts. In addition, agencies identified many new challenges that were  specific to achieving cost savings. As we found previously, some  challenges are more common than others, with the most-reported  challenge being faced by a total of eight agencies. One agency—HUD— did not report any challenges. Table 8 details the reported challenges and  the numbers of agencies experiencing that challenge. The table is  followed by a discussion of the most prevalent challenges.
Agencies reported that the most significant operational challenges  included difficulty in obtaining information (such as data center inventory  and cost savings data) from component organizations and determining  costs and realizing savings when data centers were located in shared,  multipurpose facilities. Specifically, 6 agencies reported that obtaining  consolidation-related data from component organizations as a challenge  to achieving cost savings which is similar to, but not as prevalent as, the  10 agencies we found having difficulty providing good quality asset  inventories in 2012. For example, Defense’s Data Center Consolidation  Lead noted that getting component organizations to report all of their data  centers remains a challenge in achieving cost savings, particularly in the  case of smaller, single-server data centers (e.g., research stations or  computers that are only used by a few individuals and are often not  reported until replacement or enhancement is needed). Additionally,  Agriculture’s Associate CIO for Data Center Operations stated that it was  often difficult to determine actual cost savings because the department’s  32 component agencies did not track their total cost of IT, as portions are  funded from many different sources versus being under the control of the  component agency or office CIO (e.g., building rent and utilities, salaries,  construction, etc.).
In addition, whereas we found in 2012 that one agency had difficulty with  identifying and quantifying actual costs associated with data center  facilities, we found that five agencies reported that it was difficult to  determine costs and realized savings when data centers were located in  shared, multipurpose facilities. For example, Energy reported that  because several of its data centers were located in shared-use facilities, it  was difficult for the department to determine the centers’ total operating  costs without an additional investment in advanced electricity metering.  Energy also noted that it is difficult to determine the total cost savings and  avoidances associated with the closure of these data centers until they  are decommissioned and the vacated floor space is repurposed. EPA  also reported that its data centers and server rooms were housed within  mixed-use facilities, which generally cannot be discarded. Further, EPA  expects that most former data center spaces will continue to provide local  telecommunications and building access support services, which reduces  potential substantive building operational cost reductions due to room  decommissioning.
subsections: section_title: Technical Challenges
paragraphs: Agencies reported that the most significant technical challenges included  a lack of electricity metering to determine power usage information and  increased telecommunication costs after relocating small data centers or  applications. The lack of electricity metering is similar to the difficulty we  previously found for 15 agencies in 2012 with obtaining power usage  information. Our current work found that 8 agencies reported that a lack  of electricity metering to determine power usage was a challenge. For  example, the Department of Labor (Labor) reported that a lack of  electricity metering at many data centers prevented the department from  accurately reporting energy savings attributed to the consolidation effort.  Labor officials added that it was difficult to perform power usage efficiency  calculations because the data to feed the calculations were not available.
As other examples, Transportation reported that its smaller data centers  were operated in GSA-owned buildings which did not have electricity  metering for the data center spaces. Transportation also noted that many  of these spaces also contain telecommunications equipment which would  remain after the data center equipment is relocated or decommissioned,  which would mean the closures are not expected to produce significant  savings. Further, NASA reported that it had encountered difficulties in  metering its older, less-efficient facilities and that the modifications  needed to make the facilities more efficient would require a significant  amount of resources and yield a low return on investment. In addition,  those modifications would adversely impact current operations due to the  requisite power outages to install metering equipment. Commerce,  Defense, Interior, NSF, and the Social Security Administration (SSA) also  reported a lack of electricity metering as a challenge.
Regarding increased telecommunication costs, Interior and  Transportation both reported this area as a challenge. Interior noted that  the higher telecommunication premiums realized from its effort often  offset the savings from consolidating a large number of small and closet- sized data centers. Transportation officials also stated that that the  relocation of locally run applications to a consolidated data center may  lead to increased telecommunications costs.
section_title: Financial Challenges
paragraphs: Agencies reported two financial challenges related to obtaining the  funding required within their agency for consolidation efforts, as well as  budget and accounting system issues that impacted their ability to  achieve cost savings. In 2012, we found that nine agencies considered  obtaining the funding required for consolidation and migration efforts to be  a challenge. In 2014, eight agencies identified this challenge. For  example, VA reported that the investment funding for all phases of its  consolidation plan has not been available from the department as initially  scheduled and, as a result has had to evolve its plan to address the risk  of continued investment funding shortfalls so that it can continue to make  progress towards its consolidation goals. In addition, SBA officials stated  that a lack of funding allocated to implementing its data center  consolidation strategy has been the primary challenge in achieving data  center consolidation cost savings. Officials added that, in light of this  challenge, the agency continues to examine federal cloud and GSA e- mail-as-a-service offerings, and initiated a request to the SBA investment  governance process and a fiscal year 2015 request to pilot and migrate  agency e-mail to a GSA vendor-managed cloud provider.
In addition, six agencies reported having budget and accounting systems  that were not structured to account for individual data centers. For  example, Energy officials stated that data centers have generally  operated from separate facility and IT operations budgets and specific  facility cost elements have not been tracked. In addition, officials added  that different budgets are used to support different data centers, resulting  in a lack of a consolidated budget for data centers, and has made  documenting costs and related savings difficult. In addition, VA officials  stated that IT costs often encompass multiple data centers and user  facilities, making it challenging to parse the costs to the individual data  centers and determine related savings.
section_title: Cultural Challenges
paragraphs: Agencies reported that the most significant cultural challenges included  having a decentralized organizational structure that was not geared  toward consolidation and accepting the cultural changes that were part of  consolidation. In 2012, we found that two agencies encountered cultural  challenges related to having a decentralized organization structure and  five agencies had difficulty accepting cultural change as part of the  consolidation effort. Our current work showed six agencies encountered  cultural challenges related to having a decentralized organization  structure. For example, GSA reported that its foremost challenge was that  its data center costs and expenses were distributed across a federated  organization. The agency indicated that the costs for rents; leases;  personnel; and equipment repair, replacement, and service contracts  were distributed across 11 regions, six components, and their subordinate  organizations. Further, the Department of Justice (Justice) reported that  its federated organizational structure had made it especially challenging  to implement enterprise-wide initiatives such as data center consolidation.  Officials noted that this was due, in part, to the need to build consensus  for, plan, and then implement the consolidation changes, which does not  happen quickly in a decentralized environment.
In addition, three agencies stated that accepting the cultural changes  required to implement their consolidation efforts impacted their ability to  achieve cost savings. For example, Justice also noted that its federated  environment made it difficult for people to accept the cultural changes that  are part of consolidation. Further, officials from Agriculture reported the  challenge of accepting culture change as it encountered resistance to  consolidation-related changes, including the use of cloud computing, from  component agency personnel.
In any significant IT initiative, it is important that both successes and  challenges be highlighted. In the case of FDCCI, a success highlights  approaches and strategies that have helped agencies to achieve cost  savings and fulfill the intent of the initiative. Conversely, a challenge  identifies an area that was impacting an agency’s ability to achieve cost  savings and meet the intent of this government-wide effort. In light of how  closely the successes and challenges reported by agencies relate to  achieving cost savings—a key OMB goal for FDCCI—it will be important  for OMB to continue to provide leadership and guidance to the initiative.  This includes, as we have previously recommended, utilizing the Task  Force—the primary organization responsible for supporting collaboration  and knowledge transfer across the FDCCI agencies—to monitor and  assist with agencies’ consolidation efforts.
section_title: Data Center Optimization Metrics and Related Targets Are Largely Established, but Key Area Not Addressed
paragraphs: Leading practices have established 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 (i.e., identify targets for improving performance), and  actively tracked and reported. In accordance with these principles, OMB’s  March 2013 memorandumcenter metrics for energy, facility, labor, storage, virtualization and cost  per operating system to enable the measurement of the extent to which  federal agency core data centers are optimized for total cost of  ownership.   directed the Task Force to develop data  In May 2014, OMB released a set of 11 data center consolidation  optimization metrics established by the Task Force. These metrics  address all of the categories defined in the March 2013 memorandum. In  addition, related targets to be achieved by the end of fiscal year 2015  have been established for all the metrics except for the cost-per- operating-system metric, which provides for measuring progress on  optimizing data center costs. According to a Task Force official, current  data center inventory data (already required to be submitted by agencies  on at least a yearly basis) will be used to calculate agencies’ progress  using the metrics and related targets. See table 9 for a list of the metrics,  including the related category, a brief description, and the established  target for each metric.
According to OMB staff from the Office of E-Government and Information  Technology, there have been challenges in reaching consensus on the  cost-per-operating-system target. Specifically, the staff stated that the  Task Force has had difficulty with developing a baseline for cloud  computing costs that could be used to establish an appropriate target  because private sector cloud providers are continually cutting the prices  for their services. Development of the cost-per-operating-system target is  expected to continue and OMB staff stated that the Task Force expects to  finalize the target in the fall of 2014.
In addition, although low server utilization rates were a driving force cited  by OMB in launching FDCCI, the new data center optimization metrics do  not address this key issue. As previously mentioned, in 2009, OMB  reported that server utilization rates were as low as 5 percent across the  federal government’s servers. OMB subsequently required agencies to  report on server utilization percentage as part of their 2011 and 2012  consolidation plans and included a suggested target of 60 to 70 percent  server utilization in its 2011 and 2012 FDCCI consolidation plan  guidance. OMB later eliminated the requirement for agencies to continue  to update their consolidation plans, but indicated in its March 2013  memorandum that it would continue tracking agencies’ progress through  other means, including the data center optimization metrics.
However, a metric for server utilization was not included in the final  metrics established by the Task Force. According to an official from the  GSA FDCCI Program Management Office that led initial efforts to  establish the metrics, server utilization was not included as a metric for a  variety of reasons, including that agencies have not traditionally collected  the necessary data to be able to calculate server utilization, agencies do  not have the server monitoring capabilities required to collect such data,  and improvements in other areas of the metrics (such as virtualization)  would likely result in higher server utilization. However, as previously  mentioned, with server utilization a driving factor for FDCCI and  measuring as low as 5 percent as recently as 2009, determining progress  against this metric is critical to improving the efficiency, performance, and  environmental footprint of federal data center activities.
Without an established target for one of its key cost metrics, the cost per  operating system, OMB may not be getting complete information about  agencies’ progress in their data center optimization efforts and, therefore,  may be lacking important insight that limits its ability to take corrective  actions as needed. In addition, without a specific metric for server  utilization, OMB may not be fully aware of agencies’ progress on a key  metric that was a driving force in launching FDCCI.
section_title: Conclusions
paragraphs: After slightly more than 4 years into FDCCI, agencies have begun to  report significant savings from their consolidation efforts—most notably,  Defense, DHS, and Treasury, which account for 74 percent of the  reported savings to date. Furthermore, with approximately $3.3 billion in  total planned savings being reported by agencies through fiscal year  2015, meeting OMB’s savings goal is increasingly more likely and, if  executed as planned, would represent a significant accomplishment for  OMB and the FDCCI agencies. However, limited or no savings achieved  at agencies with major consolidation efforts underway suggests that  additional actions are necessary. OMB’s and these agencies’ continued  efforts to address challenges and identify cost savings opportunities,  through the use of such existing mechanisms as PortfolioStat sessions,  will result in even more savings. Additionally, agencies’ continued  underreporting of consolidation savings will limit OMB’s ability to  accurately track agencies’ progress and report to Congress, a point  highlighted by the significant understatement of agency-reported  savings—by approximately $622 million through fiscal year 2013—in  OMB’s recent congressional submission, and—by over $2.2 billion  through fiscal year 2015—in agency data submissions to OMB.
As the federal consolidation effort has matured over the past few years,  agencies have reported noteworthy successes in achieving cost  savings—particularly in leveraging virtualization and cloud computing as a  means to achieve such savings. These constructive experiences, which  stem from OMB’s recommended consolidation strategies, indicate that  FDCCI is moving in the right direction. However, as agencies work toward  achieving their cost savings goals, many continue to report challenges  related to gathering the necessary technical information from which to  calculate savings and funding the consolidation itself. While these  challenges are consistent with those reported in the past, others, such as  determining savings when data centers are located in multipurpose  facilities, have become more prominent. Such a dynamic environment  reinforces the need for agencies to remain in communication with OMB in  order to facilitate knowledge sharing and transfer and for OMB to  continue to provide leadership and guidance, as we have previously  recommended.
OMB’s May 2014 publication of the data center optimization metrics is a  considerable step forward in helping OMB provide better oversight of  agencies’ efforts to optimize their core data centers. Furthermore, targets  established for nearly all the metrics will provide agencies with clear and  transparent goals to guide their data center optimization efforts. However,  the continued absence of a metric for server utilization, despite OMB’s  previously-reported concerns about low average utilization rates,  represents a missed opportunity to track agencies’ progress on this  metric. In the absence of such a metric, OMB will be challenged in  demonstrating agencies’ improvement in an area that was a driving force  in starting FDCCI and which is critical to improving the efficiency,  performance, and environmental footprint of federal data center activities.
section_title: Recommendations for Executive Action
paragraphs: To better ensure that FDCCI improves governmental efficiency and  achieves cost savings, we are making two recommendations to OMB. We  recommend that the Director of OMB direct the Federal CIO to: utilize the existing PortfolioStat review sessions to assist HHS,  Interior, Justice, Labor, GSA, and NASA in identifying data center  consolidation cost savings opportunities; and as part of any future evaluation of the data center optimization  metrics, develop and implement a metric for server utilization.
We also recommend that the Secretaries of HHS, the Interior, Justice,  and Labor, and the Administrators of GSA and NASA complete action  plans for addressing their challenges in reporting cost savings, as  discussed in this report.
Finally, we recommend that the Secretaries of Agriculture, Commerce,  Defense, Energy, the Interior, Transportation, the Treasury, and VA; the  Administrators of EPA and NASA; and the Director of the Office of  Personnel Management direct responsible officials to report all data  center consolidation cost savings and avoidances to OMB in accordance  with established guidance.
section_title: Agency Comments and Our Evaluation
paragraphs: We received comments on a draft of our report from OMB, the 15  agencies to which we made recommendations, and the other 9 agencies  mentioned in the report. Specifically, OMB and 12 agencies agreed with  our recommendations, 1 agency did not state whether it agreed or  disagreed, 1 agency had no comments, and 1 agency—NASA—agreed  with one of our recommendations but partially agreed with the other. The  other 9 agencies had no specific comments on our recommendations.
Multiple agencies also provided technical comments, which we  incorporated as appropriate. Each of the agency’s comments are  discussed in more detail below.
In comments provided by e-mail on July 30, 2014, a policy analyst  from OMB’s Office of E-Government and Information Technology  stated that OMB agreed with the findings and recommendations of the  report. OMB also provided technical comments, which we have  incorporated as appropriate.
In comments provided by e-mail, a liaison officer from Agriculture’s  Office of the CIO stated that the department agreed with the report’s  recommendation and noted steps planned to address the  recommendation, including engaging with Agriculture agencies to  collect actual cost savings and avoidance information realized through  their internal consolidation efforts. In addition, the department noted  that the Office of the CIO is drafting a Cloud Computing Departmental  Directive that, in addition to other requirements, is expected to  standardize the process by which IT investments are evaluated for  cloud services, including projected and actual cost savings and  avoidances.
In written comments, Commerce’s Deputy Secretary stated that the  department concurred with the general findings of the report as they  applied to Commerce. The department did not state whether it agreed  or disagreed with our recommendation, but noted that department  would ensure that all savings and avoidances identified by its  component bureaus are reported through OMB’s integrated data  collection. Commerce’s written comments are provided in appendix II.
Our draft report provided to Defense for comment included a  recommendation that the department complete an action plan for  addressing their challenges in reporting cost savings. This was based  on the department withdrawing its original savings figures—totaling  approximately $4.7 billion between fiscal years 2011 through 2017— reported earlier in our review, and submitting revised figures using a  new methodology that did not result in planned cost savings estimates  beyond fiscal year 2014. Subsequently, Defense provided additional  documentation of its planned savings between fiscal years 2015 and  2017, which resulted in an updated total planned cost savings figure  of approximately $2.6 billion between fiscal years 2011 and 2017. As  a result of Defense’s action, we have removed this recommendation  from our report. We have also made changes to the report to reflect  these newly-reported numbers. However, in reviewing the additional  cost savings information provided by the department, we found that  Defense had not fully reported its fiscal years 2012 through 2015 cost  savings to OMB, consistent with OMB guidance. As a result, we have  added a recommendation for Defense to report all data center  consolidation cost savings and avoidances to OMB in accordance  with established guidance.
In written comments, Defense’s Acting Principal Deputy CIO stated  that the department agreed with the amended report and  recommendation. Defense’s written comments are provided in  appendix III.
In written comments, Energy’s CIO stated that the department  concurred with the report’s recommendation and noted steps being  taken by the department to address the discrepancies in its reporting  of estimated cost savings and avoidances. For example, the CIO  stated that, in order to improve the accuracy and completeness of the  data center cost savings and avoidance data, the Energy will clarify its  guidance for the integrated data collection data call to better ensure  that the department’s organizations report on all data center  optimization and consolidation activities. Energy’s written comments  are provided in appendix IV.
In comments provided by e-mail on August 25, 2014, an official from  HHS’s Division for Oversight and Investigations, Assistant Secretary  for Legislation, stated that the department concurred with the report’s  recommendation.
In comments provided by e-mail on August 11, 2014, an Interior  OIG/GAO Audit Liaison stated that the department concurred with the  report’s findings and recommendations.
In comments provided by e-mail on August 20, 2014, a Justice audit  liaison stated that the department concurred with the report’s  recommendation.
In written comments, Labor’s Assistant Secretary for Administration  and Management and CIO stated that the department concurred with  the report’s recommendations. The department also provided  technical comments, including stating that Labor’s data center  inventory figures in our draft report were incorrect. Specifically, the  department asserted that its total number of data centers was lower  than the number cited in our report and that its number of closed data  centers was higher. However, the department did not provide  supporting documentation for these changes. We have incorporated  Labor’s other technical comment related to its challenges in achieving  cost reductions. Labor’s written comments are provided in appendix  V.
In written comments, Transportation’s Assistant Secretary for  Administration stated that the department agreed with the  recommendation related to reporting all of its data center  consolidation cost savings and avoidances to OMB, but asserted that  the department’s current reporting of this information satisfied our  recommendation. While we acknowledge in our report that  Transportation has reported a portion of its cost savings and  avoidances to OMB, we identified discrepancies between that  information and the cost savings and avoidance information that the  department reported to us. As a result, we determined that  Transportation’s savings and avoidances were not being fully reported  to OMB. Therefore, we continue to believe that our recommendation  remains valid. Transportation’s written comments are provided in  appendix VI.
In written comments, Treasury’s Acting Deputy Assistant Secretary for  Information Systems and CIO stated that Treasury had no comments  on the report. Treasury’s written comments are provided in appendix  VII.
In written comments, VA’s Chief of Staff stated that the department  concurred with our recommendation to report all data center  consolidation cost savings and avoidances to OMB, stating that it  plans to begin reporting this information by the end of 2014, but  strongly disagreed with our recommendation that OMB include server  utilization in the FDCCI metrics. In our report, we acknowledge the  reasons that the server utilization metric was not included when OMB  issued the data center optimization metrics in May 2014, such as lack  of agency data to calculate utilization and lack of utilization monitoring  capabilities. However, because low server utilization rates were a  driving force in launching FDCCI, we believe that tracking this metric  can provide useful information in assessing agencies’ progress in  optimizing their data centers. As previously mentioned, OMB agreed  with our findings and recommendations related to this area.  Accordingly, we continue to believe our recommendation remains  valid. VA’s written comments are provided in appendix VIII.
In written comments, EPA’s Acting Assistant Administrator and CIO  stated that the agency agreed with our findings, conclusions, and  recommendation, and noted processes in place to address the  recommendation. EPA’s written comments are provided in appendix  IX.
In written comments, GSA’s Administrator stated that the agency  agreed with the report’s findings and recommendation and would take  appropriate actions to address the recommendation. GSA’s written  comments are provided in appendix X.
In written comments, NASA’s CIO stated that the agency concurred  with one of two of our recommendations and partially concurred with  the other. Specifically, NASA agreed with our recommendation related  to reporting all of its data center consolidation cost savings and  avoidances to OMB, stating that it would issue a directive by October  2014. The agency partially concurred with our recommendation to  complete an action plan for addressing challenges in reporting cost  savings. Specifically, NASA stated that, while it plans to develop and  finalize revisions of existing action plans by December 2014,  execution of those plans remains a challenge due to difficulties in  power metering, particularly in older multipurpose buildings, and  measuring facility savings. While we acknowledge the challenges  described by NASA in our report, we believe that completing an action  plan to address these challenges, as we recommended, could serve  as a valuable tool in defining a road map toward overcoming these  issues. We therefore continue to believe our recommendation remains  valid. NASA’s written comments are provided in appendix XI.
In written comments, OPM’s CIO stated that the agency concurred  with our recommendation and described planned actions to address  our recommendation. For example, the CIO stated that OPM is  preparing its data center consolidation plan to include consideration  for shared services and cloud technologies and that any related cost  savings will be reported once the consolidation plan is implemented.  OPM’s written comments are provided in appendix XII.
In comments provided via e-mail on August 5, 2014, a policy analyst  from Education’s Office of the Secretary/Executive Secretariat stated  that the department had no comments on the report.
In comments provided via e-mail on August 18, 2014, a program  analyst from DHS’s Departmental GAO-OIG Liaison Office stated that  the department had no technical comments on the report.
In written comments, HUD’s CIO stated that the agency had no  comments on the report. HUD’s written comments are provided in  appendix XIII.
In comments provided by e-mail on August 8, 2014, a senior  management analyst from State’s Bureau of the Comptroller and  Global Financial Services stated that the agency had no comments on  the report.
In written comments, NSF’s CIO stated that the agency had no  comments on the report. NSF’s written comments are provided in  appendix XIV.
In comments provided via e-mail on August 19, 2014, an executive  technical assistant from NRC’s Office of the Executive Director for  Operations stated that the agency had no comments on the report.
In comments provided via e-mail on August 12, 2014, the program  manager for SBA’s Office of Congressional and Legislative Affairs  stated that the agency had no comments on the report.
In written comments, the Deputy Chief of Staff from SSA’s Office of  the Commissioner stated that the agency had no comments on the  report. SSA’s written comments are provided in appendix XV.
In comments provided via e-mail on August 11, 2014, a systems  accountant from USAID’s Office of the Chief Financial Officer, Audit,  Performance and Compliance Division, stated that the agency had no  comments on the report.
We are sending copies of this report to interested congressional  committees, the Director of OMB, the secretaries and agency heads of  the departments and agencies addressed in this report, and other  interested parties. In addition, the report will be 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 XVI.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to (1) evaluate the extent to which agencies have  achieved cost savings to date and identified future savings through their  consolidation efforts, (2) identify agencies’ notable consolidation  successes and challenges in achieving cost savings, and (3) evaluate the  extent to which data center optimization metrics have been established.
To evaluate the extent to which agencies have achieved cost savings to  date and identified future savings through their consolidation efforts, we  obtained and analyzed cost savings and avoidance documentation,  relative to requirements of the Office of Management and Budget’s (OMB)  March 2013 memorandum, from the 24 departments and agencies  (agencies) in our review. This documentation included, but was not  limited to, agencies’ quarterly reports of cost savings and avoidances  submitted to OMB, total cost of ownership models, contract and budget  documentation, and internal agency status reports. To determine cost  savings achieved to date, we totaled agency reported savings and  avoidances from fiscal years 2011 through 2013, and to identify future  planned savings we totaled agency projected savings and avoidances  from fiscal years 2014 through 2017. We also compared agencies’ cost  savings and avoidance information to key requirements for identifying and  reporting data center consolidation cost savings and avoidances, as  outlined in OMB’s March 2013 memorandum.
To assess the reliability of agencies’ cost savings and avoidance data, we  reviewed related documentation provided by agency data center program  managers and other cognizant officials, such as agency total cost of  ownership models, agency-developed spreadsheets, agencies’ quarterly  data submissions to OMB, among other sources. We also compared the  cost savings and avoidances reported to us by agencies with cost savings  identified in OMB’s quarterly reports to Congress on the status of  information technology reform efforts. In addition, we reviewed agency  documentation for missing data or other errors (e.g., incorrect  calculations). Finally, we interviewed agency officials to obtain additional  supporting information regarding how their cost savings and avoidance  figures were determined, the processes and methods to recalculate the  figures, and the steps that the agency took to ensure the reliability of their  figures and validate their figures. We also discussed with agency officials  any discrepancies or potential errors identified during our review of their  supporting documentation to determine the cause or request additional  information. We determined that the data were sufficiently reliable to  report on agencies’ cost savings achieved to date and identified future  savings. However, as part of our reliability assessment, we identified  issues with the reliability of OMB’s quarterly reports to Congress,  including that agencies’ data center consolidation cost savings were not  being fully reflected in OMB’s report. We have highlighted this issue in our  report.
Lastly, we reviewed agencies’ data center facility reductions as reported  on  http://data.gov and compared the information to agencies’ cost savings  and avoidances achieved to date, taking into consideration the challenges  in achieving savings identified by agencies. To assess the reliability of  agencies’ data center reductions, we reviewed prior reporting of data  center closures to check for anomalies in the data, such as fewer  closures for agencies in more recent data sets than previously reported.  We also checked for missing data, outliers, and other obvious errors,  such as missing closure status information. Finally, we interviewed OMB  staff from the Office of E-Government and Information Technology  regarding actions taken to verify the data. We determined that the data  were sufficiently reliable to report on agencies’ consolidation progress.
To identify notable consolidation successes and challenges in achieving  cost savings, we reviewed agencies’ cost savings documentation,  including quarterly reports on cost savings and avoidances submitted to  OMB, total cost of ownership models, contract and budget  documentation, internal agency status reports, and other documentation,  and interviewed agency officials. To determine the types of successes  experienced, we identified areas reported in agencies’ documentation  with directly attributable cost savings or avoidances. We also interviewed  agency officials to identify additional successes in achieving cost savings,  including areas where the agency may not have been able to quantify the  savings. To determine challenges in achieving cost savings, we  interviewed agency officials to obtain information regarding challenges  faced, as well as to discuss any steps taken, or planned, to address the  challenges identified. We then determined which successes and  challenges were encountered most often. In some cases, agencies’ cost  savings and avoidance data were used to highlight the impact of a  particular success. As a result of the reliability assessment performed for  our first objective, we determined these data to be sufficiently reliable for  reporting on agencies’ cost savings and avoidances achieved to date and  planned.
To evaluate the extent to which data center optimization metrics have  been established, we analyzed OMB’s March 2013 memorandum to  determine OMB’s requirements for such metrics, including the  responsibilities for completing the metrics and the key areas or categories  that were to be addressed by the metrics. We then compared OMB’s  requirements for the metrics to the final metrics, as documented in a May  2014 OMB memorandum. We also reviewed previous data center  consolidation-related OMB memorandums and consolidation plan  guidance to identify metrics that had previously been identified by OMB  as indicators of data center optimization success and determined the  extent to which the metrics addressed these areas. Finally, we  interviewed relevant OMB, General Services Administration, and Data  Center Consolidation Task Force officials to discuss the process by which  the metrics were established and to determine the extent that related  targets, or goals, for the metrics had been established.
We conducted this performance audit from October 2013 to September  2014 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.
section_title: Appendix II: Comments from the Department of Commerce
section_title: Appendix III: Comments from the Department of Defense
section_title: Appendix IV: Comments from the Department of Energy
section_title: Appendix V: Comments from the Department of Labor
section_title: Appendix VI: Comments from the Department of Transportation
section_title: Appendix VII: Comments from the Department of the Treasury
section_title: Appendix VIII: Comments from the Department of Veterans Affairs
section_title: Appendix IX: Comments from the Environmental Protection Agency
section_title: Appendix X: Comments from the General Services Administration
section_title: Appendix XI: Comments from the National Aeronautics and Space Administration
section_title: Appendix XII: Comments from the Office of Personnel Management
section_title: Appendix XIII: Comments from the Department of Housing and Urban Development
section_title: Appendix XIV: Comments from the National Science Foundation
section_title: Appendix: XV: Comments from the Social Security Administration
section_title: Appendix XVI: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, individuals making contributions  to this report included Dave Hinchman (Assistant Director), Justin Booth,  Rebecca Eyler, Brandon Sanders, and Jonathan Ticehurst.