Information Technology: OMB and Agencies Need to Focus Continued Attention on Eliminating Duplicative Investments
Published: 2013-06-11T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: With the federal government poised to reportedly spend at least $82 billion on IT in fiscal year 2014, the magnitude of these expenditures highlights the importance of avoiding duplicative investments to ensure the most efficient use of resources. In a series of reports over the last few years, GAO has identified federal programs or functional areas where unnecessary duplication, overlap, or fragmentation exists. In particular, GAO has identified opportunities to reduce duplication and the cost of government operations in critical areas, such as federal data centers and IT investment management.
To help address IT duplication, OMB launched the PortfolioStat initiative. As part of this initiative, agencies are required to conduct an annual review of their IT investments and make decisions on eliminating duplication, among other things.
GAO was asked to testify on the results and recommendations from its selected reports that focused on IT duplication. To prepare this statement, GAO relied on previously published work.
section_title: What GAO Found
paragraphs: GAO has identified a number of issues related to information technology (IT) duplication across the federal government. For example, GAO has previously reported that hundreds of investments provide similar functions. Specifically, agencies reported 1,536 information and technology management investments, 777 supply chain management investments, and 622 human resource management investments.
GAO further reported that while the Office of Management and Budget (OMB) and federal agencies have undertaken several initiatives to address potentially duplicative IT investments, such as consolidating similar functions through "line of business" initiatives, most of OMB's recent initiatives had not yet demonstrated results. Further, agencies were not routinely assessing operational systems to determine if they were duplicative. GAO recommended that OMB require federal agencies to report the steps they were taking to ensure that their IT investments were not duplicative as part of their annual budget and IT investment submissions. OMB agreed with the recommendation.
In addition, GAO reported on potentially duplicative investments at selected federal agencies. More specifically, although the Departments of Defense and Energy used various investment review processes to identify duplicative investments, GAO found that 37 of its sample of 810 investments were potentially duplicative. These investments accounted for about $1.2 billion in total IT spending for fiscal years 2007 through 2012. For example, GAO identified four Department of the Navy personnel assignment investments--one system for officers, one for enlisted personnel, one for reservists, and a general assignment system--each of which is responsible for managing similar functions. GAO recommended that the agencies report on the progress of efforts to identify and eliminate duplication, where appropriate; the agencies agreed with the recommendations.
In part to address duplicative IT investments, in March 2012 OMB launched PortfolioStat. Specifically, PortfolioStat is designed to assist agencies in assessing the current maturity of their IT portfolio management process, making decisions on eliminating duplication, and moving to shared solutions in order to maximize the return on IT investments across the portfolio. In March 2013, OMB reported that through this effort, agencies had identified and committed to nearly 100 opportunities to consolidate or eliminate commodity IT investments. OMB also believes that PortfolioStat may save the government $2.5 billion by 2015. GAO has ongoing work looking at PortfolioStat, including determining whether agencies are completing key actions.
section_title: What GAO Recommends
paragraphs: GAO has issued numerous recommendations to OMB and selected agencies to utilize existing transparency mechanisms and report the steps taken to avoid making duplicative investments.

section_title: Letter
paragraphs: I am pleased to be here today to discuss duplicative information  technology (IT) investments and the Office of Management and Budget’s  (OMB) PortfolioStat initiative. As reported to OMB, federal agencies plan  to spend at least $82 billion on IT in fiscal year 2014. Given the scale of  such planned outlays, it is important that federal agencies avoid  duplicative investments, whenever possible, to ensure the most efficient  use of resources.
Over the past few years, we have issued a series of reports that have  identified federal programs or functional areas where unnecessary  duplication, overlap, or fragmentation exists; the actions needed to  address such conditions; and the potential financial and other benefits of  doing so. In particular, we identified opportunities to reduce duplication  and the cost of government operations in several critical IT areas,  including avoiding investing in duplicative and unnecessary systems and  underutilized federal data centers.
To help address IT duplication, in March 2012 OMB launched  PortfolioStat, which requires agencies to conduct annual reviews of their  IT investments and make decisions on eliminating duplication, among  other things. According to OMB, PortfolioStat has the potential to save the  government $2.5 billion over the next 3 years.
You asked us to testify on the results and recommendations from our  selected reports that focused on IT duplication.testimony specifically discusses our past work reporting on duplication,   Accordingly, my  overlap, and fragmentation across the federal government and OMB’s  efforts to identify and address potentially duplicative IT investments  through PortfolioStat. All work on which this testimony is based was  performed in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Information technology should enable government to better serve the  American people. However, according to OMB, despite spending more  than $600 billion on IT over the past decade, the federal government has  achieved little of the productivity improvements that private industry has  realized from IT.Too often, federal IT projects run over budget, behind  schedule, or fail to deliver promised functionality. In combating this  problem, proper oversight is critical. Both OMB and federal agencies have  key roles and responsibilities for overseeing IT investment management.  OMB is responsible for working with agencies to ensure investments are  appropriately planned and justified. Additionally, each year, OMB and  federal agencies work together to determine how much the government  plans to spend on IT projects and how these funds are to be allocated. As  reported to OMB, federal agencies plan to spend more than $82 billion on  IT investments in fiscal year 2014, which is the total expenditure for not  only acquiring such investments, but also to operate and maintain them.
subsections: section_title: Opportunities to Reduce Duplication and Achieve Cost Savings Exist in Critical IT-related Areas
paragraphs: Over the past several years, we have reported that overlap and  fragmentation among government programs or activities could be  harbingers of unnecessary duplication.of duplication, overlap, or fragmentation could potentially save billions of  tax dollars annually and help agencies provide more efficient and  effective services. Many of the government programs or activities with  opportunities to reduce duplication and the cost of government operations  are related to critical IT areas, including the following:   Thus, the reduction or elimination  IT Dashboard. Given the importance of transparency, oversight, and  management of the government’s IT investments, in June 2009 OMB  established a public web site, referred to as the IT Dashboard, that  provides detailed information on approximately 700 major IT  investments at 27 federal agencies, including ratings of their  performance against cost and schedule targets. The public  dissemination of this information is intended to allow OMB; other  oversight bodies, including Congress; and the general public to hold  agencies accountable for results and performance. As of August  2012, 190 of the federal government’s approximately 700 major IT  investments—totaling almost $12.5 billion—were in need of  management attention.
Federal data centers. As federal agencies have modernized their  operations, put more of their services online, and increased their  information security profiles, they have demanded more computing  power and data storage resources. According to OMB, the number of  federal data centers grew from 432 in 1998 to more than 2,000 in  2010. The growth in the number of federal data centers, many offering  similar services and resources, has resulted in overlap and duplication  among the centers. In addition, according to OMB, in August 2009 the  average utilization rate for servers ranged from 5 percent to 15  percent.
IT investment management. OMB and agencies need to address  potentially duplicative IT investments to avoid investing in  unnecessary systems. In fiscal year 2011, there were approximately  7,200 reported investments (includes major and nonmajor  investments) totaling at least $79 billion. The Department of Defense  (Defense) reported the largest number of IT investments (2,383  investments at $37 billion), followed by the Department of Energy  (Energy) (876 investments and $2 billion).
Geospatial investments. The federal government collects, maintains,  and uses geospatial information—information linked to specific  geographic locations—to help in decision making and to support  many functions, including national security, law enforcement, health  care, and environmental protection. Many activities, such as  maintaining roads and responding to natural disasters—floods,  hurricanes, and fires—can depend on critical analysis of geospatial  information. Multiple federal agencies may provide services at the  same geographic locations and may independently collect similar  geospatial information about those locations. In August 2012, the  Department of the Interior estimated that the federal government  invests billions of dollars in geospatial data annually and reported that  duplication among investments is common. Better coordination  among these agencies could help reduce duplication of geospatial  investments and provide the opportunity for potential savings of  millions of dollars.
Cloud computing. As an emerging approach to delivering IT services,  cloud computing provides on-demand access to a shared pool of  scalable computing resources. According to OMB, cloud computing  has the potential to address IT inefficiencies by providing services  both more quickly and at a lower cost. OMB further noted that IT  services costing billions of dollars annually could potentially be  migrated to cloud computing. Accordingly, agencies have reported  saving millions of dollars from implementing cloud-based solutions. In  particular, the Department of Homeland Security (DHS) reported that  its implementation of enterprise content delivery services avoids an  estimated $5 million in costs annually.
Enterprise architecture. An enterprise architecture is a modernization  blueprint that is used by organizations to describe their current state  and a desired future state and to leverage IT to transform business  and mission operations. In light of the importance of developing well- defined enterprise architectures, we issued a seven-stage enterprise  architecture management maturity framework that defines actions  needed to effectively manage an architecture program.alternative, as our work has shown, is the perpetuation of the kinds of  operational environments that burden most agencies today, where a  lack of integration among business operations and the IT resources  supporting them leads to systems that are duplicative, poorly  integrated, and unnecessarily costly to maintain.
section_title: OMB Initiated Recent Major Initiatives for Reducing Duplication and Achieving Cost Savings
paragraphs: OMB has implemented a series of initiatives to manage IT more  effectively, reduce duplication, and achieve cost savings. These efforts  include the following:
TechStat reviews. In January 2010, the Federal Chief Information  Officer (CIO) began leading reviews—known as “TechStat”  sessions—of selected IT investments involving OMB and agency  leadership to increase accountability and transparency and improve  performance. Subsequently, OMB empowered agency CIOs to hold  their own TechStat sessions within their respective agencies. As of  April 2013, OMB reported that it had led 79 sessions that resulted in  improvements to or termination of IT investments with performance  problems. According to the former Federal CIO, the efforts of OMB  and federal agencies to improve management and oversight of IT  investments have resulted in almost $4 billion in savings.
Federal Data Center Consolidation Initiative. In February 2010, the  Federal CIO established the Federal Data Center Consolidation  Initiative to address the growing number of federal data centers. 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. OMB believes that this initiative has the potential to  provide about $3 billion in savings by the end of 2015.
PortfolioStat reviews. 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 their IT investments align with the  agency’s mission and business functions. PortfolioStat is designed  to assist agencies in assessing the current maturity of their IT  investment management process, making decisions on eliminating  duplicative investments (such as geospatial information), and moving  to shared solutions (such as cloud computing) in order to maximize  the return on IT investments across the portfolio. While OMB’s  TechStat reviews are intended to examine IT performance at the  specific project or investment-level, PortfolioStat reviews are intended  to examine the portfolio as a whole and draw on the agency's  enterprise architecture to help identify and eliminate areas of  duplication and waste. OMB believes that the PortfolioStat effort has  the potential to save the government $2.5 billion over the next 3 years  by, for example, consolidating duplicative systems.
section_title: GAO Has Previously Reported on IT Investment Management at Selected Agencies
paragraphs: During the past few years, we have reported on IT investment  management—an important mechanism for identifying and analyzing  duplicative investments—at key agencies. For example, in July 2011, we  reported that the Internal Revenue Service (IRS) had established most  of the foundational practices needed to manage its IT investments, but  that additional improvements were needed. Specifically, the agency had  executed 30 of the 38 key practices identified by GAO’s Information  Technology Investment Management frameworksuccessful IT investment management, including all the practices needed  to provide investment oversight and capture investment information. For   as foundational for  instance, IRS had defined and implemented a tiered governance structure  to oversee its projects and had several mechanisms for the boards to  regularly review IT investments’ performance. However, we reported that,  despite these strengths, IRS could improve its investment management  process in two key areas. First, IRS did not have an enterprisewide IT  investment board with sufficient representation from IT and business units  that was responsible for the entire investment management process, and  as a result may not have been optimizing its decision-making process.  Second, IRS did not have a process, including defined criteria, for  reselecting (i.e., deciding whether to continue funding) ongoing projects.  We concluded that, given the size of its IT budget, IRS could be spending  millions of dollars with no assurance that the funds are being used wisely.  Accordingly, we made recommendations to IRS to, among other things,  assign responsibilities for implementing the investment management  process to optimize decision making, and define and implement a  process for deciding whether to continue funding ongoing projects; the  agency concurred with our recommendations.
More recently, in July 2012, we reported that DHS was making progress  in developing and implementing a new IT governance process that  focused on portfolio management and eliminating duplication.  Specifically, we found that DHS had developed a new governance  framework and that the associated policies and procedures were  generally consistent with recent OMB guidance and with best practices  for managing projects and portfolios identified in GAO’s Information  Technology Investment Management framework. For example, DHS’s  new governance framework included the establishment of portfolio  governance boards to oversee functional portfolios with the goals of  eliminating duplication and leveraging services and programs across the  department. However, the agency had not yet finalized most policies and  procedures and was not fully using best practices for the implementation.  Accordingly, we made recommendations to DHS to, among other things,  strengthen its new governance process and related IT management  capabilities; the agency agreed to implement the recommendations.
section_title: OMB and Agencies Have Taken Steps to Reduce Duplicative IT Investments, but More Remains to Be Done
paragraphs: GAO, Data Center Consolidation: Strengthened Oversight Needed to Achieve Cost  Savings Goal, GAO-13-378 (Washington, D.C.: Apr. 23, 2013).
PortfolioStat and found that key performance metrics were not yet fully  defined. More specifically, OMB’s March 2013 memorandum stated  that, to more effectively measure the efficiency of an agency’s data center  assets, agencies would also be measured by the extent to which their  data centers are optimized for total cost of ownership by incorporating  metrics for data center energy, facility, labor, and storage, among other  things. However, we found that although OMB had indicated which  performance measures it planned to use going forward, it had not  documented the specific metrics for agencies to report against. OMB’s  March 2013 memorandum indicates that these would be developed by  the Data Center Consolidation Task Force, but did not provide a time  frame for when this will be completed.
Further, our report noted that OMB’s integration of the Federal Data  Center Consolidation Initiative with PortfolioStat also included a  modification to the previous data center consolidation goal of closing  approximately 40 percent of the total number of agency data centers.  Specifically, OMB stated an agency’s data center population will now be  placed into one of two categories—core and non-core data centers—but  for which the memorandum did not provide specific definitions. OMB  further stated that its new goal is to close 40 percent of non-core data  centers but, as noted, the definition of a core and non-core data center  was not provided. Therefore, the total number of data centers to be  closed under OMB’s revised goal could not be determined.
We also reported that, although OMB had previously stated that  PortfolioStat was expected to result in savings of approximately $2.5  billion through 2015, its March 2013 memorandum did not establish a  new cost savings goal that reflected the integration of the Federal Data  Center Consolidation Initiative. Instead, OMB stated that all cost savings  goals previously associated with the Federal Data Center Consolidation  Initiative would be integrated into broader agency efforts to reshape their  IT portfolios, but did not provide a revised savings estimate. We concluded that the lack of a new cost savings goal would limit OMB’s  ability to determine whether or not the new combined initiative is on  course toward achieving its planned objectives. As a result, we  recommended that OMB track and annually report on key data center  consolidation performance measures, such as the size of data centers  being closed and cost savings to date. OMB agreed with our  recommendation.
We have ongoing work looking at OMB’s PortfolioStat initiative, including  determining whether agencies completed key required PortfolioStat  actions, evaluating selected agencies' plans for making portfolio  improvements and achieving associated cost savings, and describing  OMB's plans to improve the PortfolioStat process.
In summary, while OMB and agencies have taken steps to improve their  ability to identify and categorize IT investments, duplicative IT  investments still exist at federal agencies. Because these investments  account for billions of dollars in spending, it will be important for OMB and  agencies to implement our prior recommendations to better ensure that  duplicative investments are identified and eliminated.
To help agencies better address duplicative IT investments, OMB  established PortfolioStat as a means of assisting agencies with the  assessment of the maturity of their IT investment management processes  and eliminating areas of duplication and waste. OMB recently released  additional guidance that expanded this important initiative’s scope and  reported that significant progress had been made to date, including more  than 100 opportunities to consolidate or eliminate commodity IT  investments. Moving forward, it will be important for OMB to be  transparent on agencies’ progress against key performance metrics, such  as cost savings, in order to ensure that the PortfolioStat initiative is  meeting its established objectives.
Chairman Carper, Ranking Member Coburn, and Members of the  Committee, this completes my prepared statement. I would be pleased to  respond to any questions that you may have at this time.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: If you or your staffs have any questions about this testimony, please  contact me at (202) 512-9286 or at pownerd@gao.gov. Individuals who  made key contributions to this testimony are Dave Hinchman (Assistant  Director), Justin Booth, Kate Feild, Rebecca Eyler, Valerie Hopkins,  Sabine Paul, Colleen Phillips, Bradley Roach, Jonathan Ticehurst and  Kevin Walsh.
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