Information Technology: OMB Needs to Improve Its Guidance on IT Investments
Published: 2011-09-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The federal government invests heavily in information technology (IT). In recent years, the Office of Management and Budget (OMB) has made efforts to improve the transparency, oversight, and management of the federal government's IT investments. More recently, in June 2009, OMB deployed the IT Dashboard, a Web-based system that provides detailed performance information on federal IT investments. GAO was asked to (1) describe the current number and types of IT investments reported by federal agencies on the IT Dashboard, (2) evaluate the adequacy of OMB's guidance to federal agencies in reporting on IT investments, and (3) evaluate efforts to identify and address potentially duplicative investments. To address these objectives, GAO analyzed data from the IT Dashboard, analyzed 10 federal agencies' investment guidance and reports, and interviewed agency officials.
section_title: What GAO Found
paragraphs: According to data reported on OMB's IT Dashboard in July 2011, 26 federal agencies plan to spend almost $79 billion on 7,248 IT investments in fiscal year 2011. OMB often uses the $79 billion figure in referring to annual federal investments in IT; however, it is important to note that this figure does not reflect the spending of the entire federal government. It does not include IT investments by 58 independent executive branch agencies, including the Central Intelligence Agency, or by the legislative or judicial branches. A closer look at the $79 billion in investments for the 26 agencies reveals that (1) the expenditures are split almost evenly between major and nonmajor (in terms of cost, risk, and other factors) investments; (2) about two-thirds of the expenditures are for systems in an operational state, while about one-third of the expenditures provide for the development of new systems; and (3) there are hundreds of investments providing similar functions across the federal government. For example, agencies reported 1,536 information and technology management investments, 781 supply chain management investments, and 661 human resource management investments. OMB provides guidance to agencies on how to report on their IT investments, but this guidance does not ensure complete reporting or facilitate the identification of duplicative investments. Specifically, agencies differ on what investments they include as an IT investment; for example, 5 of the 10 agencies GAO reviewed consistently consider investments in research and development systems as IT, and 5 do not. As a result, the 26 federal agencies' annual IT investments are likely greater that the $79 billion reported in fiscal year 2011. In addition, OMB's guidance to federal agencies requires each investment to be mapped to a single functional category. This limits OMB's ability to identify duplicative investments both within and across agencies because similar investments may be organized into different categories. OMB and federal agencies have undertaken several initiatives to address potentially duplicative IT investments. For example, OMB has efforts under way to consolidate similar functions through its "line of business" initiatives and has reduced the scope of three duplicative systems identified during executive reviews of high-priority projects. In addition, most of the agencies GAO reviewed established guidance for ensuring new investments are not duplicative with existing systems. However, most of OMB's recent initiatives have not yet demonstrated results. Further, agencies do not routinely assess operational systems to determine if they are duplicative. Until agencies routinely assess their IT investment portfolios to identify and reduce duplicative systems, the government's current situation of having hundreds of similar IT investments will continue to exist.
section_title: What GAO Recommends
paragraphs: GAO is recommending that OMB clarify its reporting on IT investments and improve its guidance to agencies on identifying and categorizing IT investments. OMB did not agree that further efforts were needed to clarify reporting. Given the importance of continued improvement in OMB's reporting and guidance, GAO maintains its recommendations are warranted.

section_title: Letter
paragraphs: The Office of Management and Budget (OMB) has reported that the  federal government spends billions of dollars on information technology  (IT) investments each year, with such investments totaling almost $79  billion in fiscal year 2011. During the past several years, we have issued  several reports and testimonies and made numerous recommendations to  OMB to improve the transparency, oversight, and management of the  federal government’s IT investments. In June 2009, OMB deployed the  IT Dashboard, a Web-based system to improve the transparency and  oversight of IT spending. Currently, the Dashboard provides detailed  performance information for 828 major IT investments and access to less  detailed information on over 6,000 nonmajor IT investments.
To understand more about OMB’s oversight of IT investments, you asked  us to (1) describe the current number and types of IT investments  reported by federal agencies on the IT Dashboard, (2) evaluate the  adequacy of OMB’s guidance to federal agencies in reporting on IT  investments, and (3) evaluate efforts to identify and address potentially  duplicative investments. To do so, we analyzed IT investment data  downloaded from the Dashboard and OMB’s guidance to federal  agencies on IT investments, interviewed officials at the 10 federal  agencies with the largest IT spending in fiscal year 2010 to understand  how they implement OMB guidance, and analyzed reports and  interviewed officials on efforts to address duplicative investments.
We conducted this performance audit from February 2011 to September  2011 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. See appendix I for a  complete description of our objectives, scope, and methodology.
subsections: section_title: Background
paragraphs: OMB plays a key role in overseeing how federal agencies manage their  investments by working with them to plan, justify, and determine how to  best manage their IT projects. 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.
subsections: section_title: OMB’s Roles and Responsibilities for Overseeing IT Investments
paragraphs: Over the last two decades, Congress has enacted several laws to assist  agencies and the federal government in managing IT investments. Three  key laws are the Paperwork Reduction Act of 1995, the Clinger-Cohen  Act of 1996, and the E-Government Act of 2002:    The Paperwork Reduction Act of 1995—The act specifies OMB and  agency responsibilities for managing information resources, including  the management of information technology. Among its provisions, this  law establishes agency responsibility for maximizing the value and  assessing and managing the risks of major information systems  initiatives. It also requires that OMB develop and oversee policies,  principles, standards, and guidelines for federal agency information  technology functions, including periodic evaluations of major  information systems.   The Clinger-Cohen Act of 1996—The act places responsibility for  managing investments with the heads of agencies and establishes  chief information officers (CIO) to advise and assist agency heads in  carrying out this responsibility. Additionally, this law requires OMB to  establish processes to analyze, track, and evaluate the risks and  results of major capital investments in information systems made by  federal agencies and report to Congress on the net program  performance benefits achieved as a result of these investments.   The E-Government Act of 2002—The act establishes a federal e- government initiative, which encourages the use of Web-based  Internet applications to enhance the access to and delivery of  government information and service to citizens, to business partners,  to employees, and among agencies at all levels of government. The  act also requires OMB to report annually to Congress on the status of  e-government initiatives. In these reports, OMB is to describe the  administration’s use of e-government principles to improve  government performance and the delivery of information and services  to the public.
OMB subsequently began several initiatives to help fulfill these  responsibilities:  In February 2002, OMB established the Federal Enterprise  Architecture (FEA) program. According to OMB, the FEA is intended  to facilitate governmentwide improvement through cross-agency  analysis and identification of duplicative investments, gaps, and  opportunities for collaboration, interoperability, and integration within  and across agency programs. The FEA is composed of five “reference  models” describing the federal government’s (1) business (or mission)  processes and functions, independent of the agencies that perform  them; (2) performance goals and outcome measures; (3) means of  service delivery; (4) information and data definitions; and (5)  technology standards. The reference models are intended to inform  agency efforts to develop their agency-specific enterprise  architectures and enable agencies to ensure that their proposed  investments are not duplicative with those of other agencies and to  pursue, where appropriate, joint projects.
In April 2003, OMB established the Office of E-Government to  promote better use of the Internet and other information technologies  to improve government services for citizens, internal government  operations, and opportunities for citizen participation in government.  In recent years, OMB e-government initiatives have fostered the  establishment of centralized systems across the government. Key  efforts target electronically filing annual tax returns, providing a one- stop portal for emergency response information, developing a  governmentwide electronic travel system, and consolidating the  number of payroll systems to a small number of providers.
In March 2004, OMB established multiple “Line of Business” (LOB)  initiatives to consolidate redundant IT investments and business  processes across the federal government in areas including case  management, grants management, human resources management,  federal health architecture, information systems security, budget  formulation and execution, geospatial information, financial  management, and IT infrastructure. Each LOB initiative is led by an  individual agency and supported by other relevant agencies. One of  the initiatives’ goals is to reduce costs governmentwide through  consolidation and standardization, and OMB reports to Congress  each year on the costs and benefits of these initiatives. OMB officials  explained that the current administration continues to support these  LOB initiatives.
section_title: OMB’s IT Oversight Mechanisms
paragraphs: OMB uses several data collection mechanisms to oversee federal IT  spending during the annual budget formulation process. Specifically,  OMB requires 26 key federal departments and agencies (agencies) to  provide information related to their IT investments, including agency IT  investment portfolios (called exhibit 53s) and capital asset plans and  business cases (called exhibit 300s). The 26 federal agencies are listed in  table 1 and the exhibits are described below.    Exhibit 53. The purpose of the exhibit 53 is to identify all IT  investments—both major and nonmajor—and their associated costs  within a federal organization. Information included on agency exhibit  53s is designed, in part, to help OMB better understand what  agencies are spending on IT investments. The information also  supports cost analyses prescribed by the Clinger-Cohen Act. As part  of the annual budget, OMB publishes a report on IT spending for the  federal government representing a compilation of exhibit 53 data  submitted by the 26 agencies.   Exhibit 300. The purpose of the exhibit 300s is to provide a business  case for each major IT investment and to allow OMB to monitor IT   investments once they are funded. Agencies are required to provide  information on each major investment’s cost, schedule, and  performance.
To help carry out its oversight role and assist the agencies in carrying out  their responsibilities as assigned by the Clinger-Cohen Act, OMB  developed a Management Watch List in 2003. This list included mission- critical projects that needed improvements in performance measures,  project management, IT security, or their overall justification. Further, in  August 2005, OMB established a High-Risk List, which consisted of  projects identified by federal agencies, with the assistance of OMB, as  requiring special attention from oversight authorities and the highest  levels of agency management.
More recently, in June 2009, to further improve the transparency into and  oversight of agencies’ IT investments, OMB publicly deployed a website,  known as the IT Dashboard, which replaced its Management Watch List  and High-Risk List. The Dashboard displays information on the cost,  schedule, and performance of 828 major federal IT investments at 26  federal agencies. In addition, the Dashboard allows users to download  exhibit 53 data, which includes information on both major and nonmajor  investments. According to OMB, these data are intended to provide a  near real-time perspective of the performance of these investments, as  well as a historical perspective. Further, the public display of these data  are intended to allow OMB, other oversight bodies, and the general public  to hold the government agencies accountable for results and progress.
According to OMB officials, the agency’s analysts use the IT Dashboard  to identify IT investments that are experiencing performance problems  and to select them for a TechStat session—a review of selected IT  investments between OMB and agency leadership that is led by the  Federal CIO. As of December 2010, OMB had held 58 of these sessions.  Further, OMB officials told us that, in mid-2011, TechStat reviews began  to occur at the agency level, and as of September 2011, each of the  agencies that participated in the IT Dashboard held agency-level  TechStat meetings. According to OMB, these sessions have enabled the  government to improve or terminate IT investments that are experiencing  performance problems.
section_title: GAO Has Previously Reported on Needed Improvements to the Reliability of the Exhibit 300s and the IT Dashboard
paragraphs: Over the last 5 years, we have issued several reports recommending  improvements to the reliability of both the exhibit 300s and the IT  Dashboard. In January 2006, we issued a report on the accuracy and  reliability of agencies’ exhibit 300s. We found that underlying support for  the information in the exhibit 300 was often inadequate. Specifically, we  reported that the exhibit 300s had three types of weaknesses: (1)  underlying documentation either did not exist or disagreed with the exhibit  300, (2) agencies did not always demonstrate that they complied with  federal or departmental requirements or policies with regard to  management and reporting processes, and (3) cost data were generally  unreliable. We recommended that OMB direct agencies to identify and  disclose weaknesses in data accuracy and reliability. We also  recommended that OMB develop more explicit guidance for the exhibit  300s and provide training to agency personnel for completing exhibit  300s. In response, OMB issued guidance directing agencies to ensure  that they are complying with OMB guidance on information quality,  modified exhibit 300 guidance to make it more explicit in certain sections,  and provided training to agencies on how to complete their exhibit 300s.
More recently, we issued two reports on the IT Dashboard. In July 2010  we reported that the Dashboard had increased the transparency and  oversight of federal IT investments; however, the cost and schedule  ratings on the Dashboard were not always accurate for selected  investments. Specifically, of the eight investments selected for review,  we found that four had notable discrepancies on either their cost or  schedule ratings. We noted that a primary reason for the data  inaccuracies was that while the Dashboard was intended to represent  near real-time performance information, the cost and schedule ratings did  not take into consideration current performance. As a result, the ratings  were based on outdated information. Another issue with the ratings was  the wide variation in the number of milestones agencies reported, which  was partly because OMB’s guidance to agencies was too general. We  recommended that OMB report on its planned changes to the Dashboard  to improve the accuracy of performance information and provide guidance  to agencies that standardizes milestone reporting. OMB agreed with our  recommendations and initiated work to address them.
Subsequently, in March 2011, we reported that OMB had initiated several  efforts to increase the Dashboard’s value as an oversight tool, and had  used the Dashboard’s data to improve federal IT management. These  efforts include streamlining key OMB investment reporting tools,  eliminating manual monthly submissions, coordinating with agencies to  improve data, and improving the Dashboard’s user interface. However,  we also noted that while the efforts contributed to data quality  improvements, performance data inaccuracies remained. The ratings of  selected IT investments on the Dashboard did not always accurately  reflect current performance, which is counter to the website’s purpose of  reporting near real-time performance. Specifically, we found that cost  ratings were inaccurate for 6 of the 10 investments that we reviewed, and  schedule ratings were inaccurate for 9. These inaccuracies can be  attributed to weaknesses in how agencies report data to the Dashboard,  such as providing erroneous data submissions, as well as limitations in  how OMB calculates the ratings. Accordingly, we recommended that  heads of each of the five selected agencies with inaccurate ratings take  steps to improve the accuracy and reliability of Dashboard information  and OMB improve how it rates investments relative to current  performance and schedule variance. In response, four of the selected  agencies agreed with our recommendation, and one agreed to consider it.  OMB agreed with our recommendation to update the schedule  calculation, and stated that the agency has long-term plans to update the  Dashboard’s calculations.
section_title: Key Federal Agencies Plan to Spend Almost $79 Billion on 7,248 IT Investments in Fiscal Year 2011
paragraphs: As of July 2011, the 26 federal agencies that submit information to the IT  Dashboard planned to spend about $78.8 billion on 7,248 IT investments  in fiscal year 2011. DOD reported the most planned spending in IT  investments (at $37.1 billion for 2,414 investments), followed by HHS (at  $7 billion for 706 investments), and DHS (at almost $6 billion for 402  investments). Figure 1 shows the planned spending, in millions, on IT  investments by federal agency. Appendix II provides more information on  selected agencies’ IT investments.
When providing IT investment information to OMB, federal agencies  designate investments as major or nonmajor IT investments and identify  whether expenditures are for new development or for ongoing operation  and maintenance (O&M). Of the planned fiscal year 2011 expenditures  listed on the IT Dashboard, major IT investments account for about $40.2  billion and nonmajor investments account for about $38.4 billion. Looked  at another way, federal agencies plan to spend approximately $24.7  billion on development activities and about $54 billion on O&M. Figure 2  provides a visual summary of the relative cost of investments that are  major and nonmajor investments, and that are in development and O&M.
subsections: section_title: The IT Dashboard Does Not Include All Federal IT Investments
paragraphs: OMB often refers to the federal government’s approximately $79 billion  annual investment in IT; however, the Dashboard does not provide data  for all federal agencies. While the IT Dashboard provides IT investment  information for 26 federal agencies, it does not include any information  about 61 other agencies’ investments. Specifically, the Dashboard  presents information from 15 federal departments, 10 independent  agencies, and 1 other agency. It does not include information from 58  independent executive branch agencies (such as the Securities and  Exchange Commission, the Central Intelligence Agency, and the Federal  Communications Commission) and 3 other agencies (such as the Legal  Services Corporation). It also does not include information from the  legislative or judicial branch agencies. Table 2 summarizes the executive  branch agencies that are included and excluded from the Dashboard.
According to OMB, the agencies on the Dashboard are those that have  historically been involved in the annual capital planning process. While  OMB encourages smaller agencies to use the Dashboard, most of these  agencies choose not to. Accordingly, estimates of these agencies’ IT  investments are not included in the $79 billion spending figure.
section_title: Agencies Categorize Their Investments by Primary Function
paragraphs: When agencies develop their annual exhibit 53s, they are required to  categorize each investment according to a primary function identified in  the FEA reference models. For the fiscal year 2010 submissions,  agencies were asked to select a primary function from categories within  the FEA business or service reference models—several of which have  similar titles. The primary functions identified in both of these models  are listed in table 3.
In their fiscal year 2011 submissions, agencies reported the greatest  number of IT investments in the information and technology management  category (1,536 investments), followed by supply chain management (781  investments), human resources management (661 investments), and  financial management (580 investments). Similarly, planned expenditures  on investments were greatest in the information and technology  management category, at about $35.5 billion. Figure 3 depicts the total  number of investments governmentwide by agency-identified primary  function.
This information can also be analyzed to determine the number of  investments for each agency in each category. For example, within the  information and technology management category, DOD has the greatest  number of investments, at 487. Following are the Departments of Energy,  with 172 investments, and Justice, with 135 investments. Figure 4  provides a visual representation of the number and cost of investments in  the information and technology management category.
Figure 5 shows the number of investments developed by federal agencies  (excluding DOD) in the information and technology management  category. Appendix III provides similar charts for three other functional  areas: supply chain management, human resources management, and  financial management.
section_title: OMB’s Guidance on Reporting IT Investments Does Not Ensure Complete Reporting or Facilitate Identifying Duplicative Investments
paragraphs: The guidance that OMB provides to agencies on how to report on their IT  investments does not ensure complete reporting or fully facilitate the  identification of duplicative investments. Specifically, OMB’s definition of  an IT investment is broad, and agencies interpret it in different ways. The  10 agencies we evaluated differed on what systems they include as IT  investments. For example, 5 agencies reported that they include all  research and development systems, and 5 do not. As a result, not all IT  investments are included in the federal government’s estimate of annual  IT spending. In addition, OMB’s guidance to federal agencies on how to  categorize their investments requires them to map each investment to a  single primary function. This limits OMB’s ability to identify potentially  duplicative investments both within and across agencies because similar  investments may be organized under different functions.
subsections: section_title: OMB’s Guidance on Reporting IT Investments Does Not Ensure Consistent or Complete Reporting
paragraphs: In its annual request for agencies to report on their IT investments using  the exhibit 53, OMB uses the definition of IT from the Clinger-Cohen Act  of 1996. Both the act and OMB’s guidance define IT as any equipment  used in the automatic acquisition, storage, analysis, evaluation,  manipulation, management, movement, control, display, switching,  interchange, transmission, or reception of data or information. The exhibit  53 requires agencies to provide, among other things, a description, cost  information, and FEA function for each IT investment in the agency’s  portfolio. After agencies submit an initial draft of the exhibit 53, OMB  reviews the draft and then provides an evaluation, including any areas  requiring remediation. Through this process, agencies work with OMB to  determine which major and nonmajor investments will be reported in the  President’s budget.
However, OMB officials reported that they have given agencies the  flexibility to determine what to include as an IT investment, and agencies  have chosen to interpret the definition of IT in different ways. Specifically,  in implementing OMB’s guidance, 6 of the 10 agencies we evaluated  exclude systems that fit the definition of an IT investment. One case  involves space systems. Both NASA and Commerce include a  spacecraft’s ground systems (such as satellite command-and-control  systems and satellite data-processing systems) in their exhibit 53s.  However, neither agency includes the technology components on the  spacecraft itself—including instruments, computers, and transponders— even though these components acquire, manage, and transmit data. As a  result, these investments are not included in the annual exhibit 53  submissions. For example, in its fiscal year 2011 exhibit 53 submission,  Commerce’s National Oceanic and Atmospheric Administration (NOAA)  included only $215.75 million of the $690.6 million budgeted for its  Geostationary Operational Environmental Satellite-R series and only  $181 million of the $382.3 million budgeted for its Joint Polar Satellite  System. Thus, at least $676 million in IT-related development was not  included on the IT Dashboard for those two systems. Further, NASA’s  reported $1.8 billion in IT investments comprises a very small portion of  its over $68 billion portfolio of major space-related projects.
In another case, five agencies—the Departments of Transportation,  Commerce, Health and Human Services, Agriculture, and Homeland  Security—stated that they do not always include systems that are in  research and development as IT investments. For example, the Federal  Railroad Administration (within the Department of Transportation)  includes three research and development systems in its exhibit 53, but  does not include others, such as the Positive Train Control system. This  system is meant to integrate command, control, communications, and  information systems for controlling train movements at a cost of about  $27 million (as of 2008).
Because agencies choose to exclude certain systems or categories of  systems when they report to OMB on their IT investments, key costs are  not included in OMB’s estimate of annual spending on federal IT  investments. OMB officials acknowledge that agencies are able to  interpret the definition of IT in different ways, but stated that they want to  provide agencies some flexibility in deciding what they report on. Until  OMB clarifies and enforces its requirement that agencies should be  reporting on all IT investments, selected IT investments will not be  subjected to the enhanced oversight, and OMB’s estimates of federal IT  investments will be significantly understated.
section_title: OMB’s Guidance on Categorizing IT Investments Limits Efforts to Identify Duplication
paragraphs: OMB’s guidance to federal agencies on how to categorize IT investments  allows for analysis of investments with similar functions; however, it does  not go far enough to allow identification of potentially duplicative  investments. According to OMB guidance, each investment needs to be  mapped to a single functional category within the FEA. This feature  allows the identification and analysis of potentially duplicative investments  across agencies.
However, IT investments could fit into more than one category. For  example, an agency could identify an inventory system as a financial  management system or a supply chain management system. Thus, if an  organization planned to develop an inventory system and searched for  potentially duplicative investments in a group labeled as financial  management systems, it would miss seeing potentially duplicative  systems categorized as supply chain management systems. We recently  reported on a DOD financial management system that was identified in a  different functional category—supply chain management. We noted that  because DOD had categorized the system as supply chain management,  the cost of this system was not included in OMB’s estimate for financial  management systems. Thus, we recommended that OMB take actions to  facilitate accurate reporting of spending on financial management  systems.
As another example, an agency seeking to develop a wildfire  management system would likely assess whether there is a similar  system listed in the category of disaster preparedness; however, the  agency would miss seeing an investment by the Department of Interior for  a wildfire management system because it was grouped in the information  management and technology category.
OMB officials acknowledged that there may be limitations in allowing  agencies to choose only one descriptive category but noted that agencies  can provide additional information on other applicable functions in their  supplementary descriptions. However, searching through supplementary  material is more labor-intensive than simply searching on primary and  secondary functions. Until OMB requires agencies to identify additional  functions, where applicable, it will be more difficult to identify similar and  potentially duplicative investments within and across government  agencies.
section_title: OMB and Federal Agencies Have Taken Steps to Address Potentially Duplicative Investments, but Results to Date Are Mixed and More Remains to Be Done
paragraphs: OMB and federal agencies have undertaken several initiatives to address  potentially duplicative IT investments. For example, OMB has efforts  under way to consolidate similar functions through its LOB and FEA  initiatives and has eliminated duplicative systems identified during its  TechStat sessions. In addition, several of the agencies we evaluated  have established guidance for ensuring new investments are not  duplicative with existing systems. However, most of OMB’s recent  initiatives have not yet demonstrated results. Further, several agencies do  not routinely assess legacy systems to determine if they are duplicative.  Until agencies routinely assess their entire IT portfolios to identify and  remove or consolidate duplicative systems, such duplication will continue  to exist.
subsections: section_title: OMB Has Efforts Under Way to Address Duplicative Investments, but the Results of These Initiatives Are Mixed
paragraphs: OMB has multiple initiatives under way that are to identify, eliminate, or  avoid duplicative IT investments. These include its E-government, LOB,  and FEA initiatives, as well as targeted IT modernizations and TechStat  reviews. However, the results of these initiatives are mixed. A discussion  of each follows:    E-government initiatives. OMB and agency officials have reported that  several of the e-government initiatives were successful at reducing  duplication across the government. According to OMB, the E-payroll  initiative consolidated 26 separate payroll systems down to 4 e-payroll  providers. Similarly, 21 agencies now use the E-gov travel service and  have seen a reduction in costs. For example, according to OMB, the  Department of Housing and Urban Development decreased travel  voucher costs from $75 per voucher to about $13.75. According to  OMB officials, their shared services initiative—still in its planning  stages—is a continuation of these e-government initiatives.   LOB initiatives. OMB currently has nine LOB initiatives to consolidate  redundant IT investments and business processes across the federal  government in the areas of case management, grants management,  human resources management, federal health architecture,  information systems security, budget formulation and execution,  geospatial information, financial management, and IT infrastructure.  According to OMB’s annual reports on e-government and LOB  initiatives as of fiscal year 2010, since 2006, federal agencies have  reported spending about $445 million on LOB initiatives. However, the  benefits of these initiatives are mixed. In its 2011 annual report, OMB  stated that agencies had made progress in developing guidance and  obtaining buy-in from multiple agencies. For example, OMB reported  that the federal health architecture LOB allowed federal agencies to  coordinate with each other and with tribal, state, local, and private  sectors to begin developing standards for health information  exchanges. Similarly, OMB reported that the budget formulation and  execution LOB allowed the federal budget community to begin to  develop common tools and best practices. However, the 2011 annual  report described demonstrated cost savings for only three LOBs, of  which only two provided the estimated amount of savings.  Specifically, OMB reported that the geospatial and the information  systems security LOBs resulted in cost avoidance or savings of about  $9 million and $7.6 million, respectively, by allowing for blanket  purchase agreements. OMB also reported that the grants  management LOB allowed agencies and other organizations to  reduce the number of systems, but it did not provide a number or  specify which systems were eliminated.   FEA. When originally developed in 1999, the FEA was intended to  provide federal agencies with a common construct for their  architectures and thereby facilitate the coordination of common  business processes, technology insertion, information flows, and  system investments among federal agencies. As part of the fiscal year  2004 budget cycle, OMB required agencies to align proposed IT  investments to the FEA reference models; this information was then  used to develop the initial LOB initiatives. Since that time, agencies  have established individual enterprise architectures and used them to  characterize their IT investments and to guide plans for the future. In  2004, we reported that the FEA was a work in progress and was still  evolving. To this point, the Federal Chief Enterprise Architect  recently began planning changes to the FEA framework—such as  updating existing reference models and adding reference models for  software applications, infrastructure, and security—to further assist  agencies in reducing duplication and improving mission performance.  OMB’s Chief Architect reported that comprehensive changes to the  FEA are planned for fiscal year 2012.    Targeted IT initiatives. OMB officials reported that ongoing IT  initiatives, including efforts to consolidate federal data centers and to  develop trusted Internet connections, could help reduce duplication  across government. Specifically, in February 2010, OMB began an  initiative meant to consolidate federal data centers and hardware and  software assets through virtualization, cloud computing, and  consolidation. In July 2011, OMB reported that the federal  government had already closed 81 centers and was on track to close  137 centers by December 2011 and 800 by 2015. However, in July  2011, we reported that federal agencies’ data center inventories and  consolidation plans were incomplete and recommended that agencies  complete their data center consolidation inventories and plans, and  that OMB’s data center task force oversee these efforts. Separately,  in November 2007, OMB announced its trusted Internet connection  initiative to improve security by reducing and consolidating external  network connections. However, we reported in March 2010 that none  of the 23 participating agencies had yet met all of the initiative’s  requirements and recommended steps to improve communication and  performance measures. In addition, we recently reported on other  governmentwide initiatives and found that the FedRAMP project,  which is to provide, among other functions, continuous security  monitoring of cloud computing systems for multiagency use, is  currently behind schedule, and has not yet defined all performance  metrics. Similarly, the FedSpace project, which is to provide federal  employees and contractors collaboration tools for cross-agency  knowledge sharing, is also behind schedule and has not defined all of  its performance metrics. We recommended establishing metrics so  that the benefits of these initiatives can be effectively measured.   TechStat reviews. OMB works with federal agencies to identify IT  projects that need increased visibility in the agency; high-risk projects  are then selected for a TechStat session. This program enables the  government to improve or terminate IT investments that are  experiencing performance problems. According to OMB officials,  based on the TechStat reviews held as of March 2011, OMB reduced  the scope of three investments that agencies identified as  duplicative. While promising, only a small fraction of the over 7,000  investments that were identified by agencies for fiscal year 2011 have  undergone TechStat reviews.
section_title: Selected Federal Agencies Evaluate New Investments to Ensure They Are Not Duplicative, but Do Not Routinely Assess Legacy Systems
paragraphs: Highly performing organizations manage investments in a portfolio  approach, selecting and evaluating investments by how well they support  the agency mission and “de-selecting” obsolete, high-risk, and low-value  IT investments. Our prior work has shown that major federal agencies  have guidance for the selection and oversight of IT investments. This  guidance generally calls for establishing a department-level investment  review board to select the projects to be included in the agency’s IT  investment portfolio. In this way, selection decisions can be made in the  context of all other investments, thus minimizing duplication across  investments.
Officials from several of the federal agencies we reviewed stated that they  routinely evaluate new investments to ensure that they are not duplicative  with existing systems. For example, investment review guidance at  NASA, Justice, and Agriculture requires officials to assess whether an  investment is duplicative before it is approved. Further, Commerce  officials explained that finding duplication is a challenge, but they attempt  to identify duplication through their investment selection process and  through their Commerce IT review board.
However, several of the agencies do not routinely assess legacy systems  to determine if they are duplicative. Specifically, officials from several  agencies with billions of dollars in investments noted that they have  limited staff resources for performing all of the investment control  processes—including reviewing exhibit 300s and IT Dashboard data—for  the entire agency. However, given the sheer number of similar  investments identified earlier in this report, such as Energy’s 172  information and technology management investments, and DOD’s 657  supply chain management investments, and the large amount of funds  spent on these investments, it appears that thorough assessments are  justified. Until agencies routinely assess their entire IT portfolios  (including both developmental and operational systems) to identify and  reduce duplicative systems, such duplication will continue to exist.
section_title: Conclusions
paragraphs: Federal agencies spend tens of billions of dollars on IT investments each  year. However, because OMB does not enforce the definition of IT  provided in the Clinger-Cohen Act, agencies exclude key categories of IT  investments—such as space systems—in their annual reports on IT  investments. These excluded investments are not subjected to OMB’s IT  oversight process, and their associated costs are not included in OMB’s  annual estimate of IT investments. As a result, the nation’s actual annual  investment in IT is much higher than the $78.8 billion identified by  agencies. In addition, OMB’s guidance on identifying investments’ primary  functions has led to a situation in which similar systems could be in  different categories. With clearer categorizations, agencies and OMB  would be better positioned to identify and address duplication in their  system development efforts.
OMB and federal agencies have initiatives under way to help address  potentially duplicative systems. While selected initiatives have had  success in consolidating systems, most have not yet demonstrated  results. Further, the agencies we evaluated do not routinely evaluate  legacy systems to determine if they are duplicative and can be eliminated  or consolidated. Until OMB and federal agencies consistently target  potentially duplicative investments within and across agencies, federal  agencies may continue to spend taxpayer funds developing systems that  perform similar functions.
section_title: Recommendations for Executive Action
paragraphs: To ensure that IT investments are adequately identified and categorized,  we recommend that the Director of OMB take the following four actions:  specify which executive branch agencies are included when  discussing the annual federal IT investment portfolio; clarify guidance to federal agencies in reporting on their IT  investments by specifying whether certain types of systems, such as  those in research and development and space systems, should be  included; revise guidance to federal agencies on categorizing IT investments to  ensure that the categorizations are clear and allow agencies to  choose secondary categories, where applicable, which will aid in  identifying potentially duplicative investments; and require federal agencies to report the steps they take to ensure that  their IT investments are not duplicative as part of their annual budget  and IT investment submissions.
section_title: Agency Comments and Our Evaluation
paragraphs: We received oral comments on a draft of our report from OMB officials,  including the Federal Chief Enterprise Architect, a senior policy analyst,  and a representative from the office of the General Counsel. In those  comments, OMB generally disagreed with the first two recommendations  and agreed with the second two recommendations. Specifically, OMB  officials requested that GAO remove the first and second  recommendations because they believe that the agency has already  addressed them. Regarding our recommendation to clearly identify which  agencies are included when discussing the federal IT investment  portfolio, agency officials noted that both the A-11 guidance and the  “Frequently Asked Questions” section of the IT Dashboard clearly indicate  which agencies are included in the portfolio of IT investments. However,  we believe that the recommendation is warranted because on its website  and in presentations, OMB frequently refers to “the federal government’s  $80 billion annual investment in IT” without clarifying that this $80 billion  investment does not represent the entire federal government. Regarding  our recommendation to OMB to clarify its guidance to federal agencies on  reporting on IT investments, agency officials noted that existing guidance  (including OMB circular A-11 and OMB memo 11-29) already discusses  how to identify IT investments. We believe that the recommendation is  appropriate because the existing guidance does not address key  categories of IT investments (such as space systems and systems in  research and development) where we found inconsistencies among  agencies.
OMB officials stated that the agency is working to address the third and  fourth recommendations. Specifically, OMB plans to update the Federal  Enterprise Architecture reference models in fall 2011 to provide additional  clarity on how agencies should characterize investments in order to  enhance the identification of potentially duplicative investments. Also,  OMB’s IT Reform Plan includes several initiatives to reduce duplicative  investments, including efforts in data center consolidation, cloud  computing, and shared services. Officials noted that these initiatives will  continue to be pursued with agencies through the annual budget process  and related reporting requirements. While we acknowledge that these  initiatives offer promise in identifying and reducing duplicative  investments, we believe that OMB can do more to encourage agencies to  look internally for duplicative investments.
We also sought comments on a draft of our report from the 10 agencies in  our review. While none of the agencies agreed or disagreed with our  recommendations to OMB, several provided comments. Each agency’s  comments are discussed in more detail below.
In an e-mail, Agriculture’s Associate CIO for Technology Planning,  Architecture, and E-Government stated that the department had no  formal comments on the report.
In written comments, the Acting Secretary of Commerce noted that  the report thoroughly assessed OMB’s policy and guidance, and fairly  assessed Commerce’s IT information and data. Commerce’s written  comments are provided in appendix IV.
In comments provided via e-mail, an official from DOD’s CIO office  provided updated data for DOD’s IT investments. We did not make  these changes in our report because we used data as of July 2011  throughout the report for our analysis.
In written comments, HHS’s Assistant Secretary for Legislation  agreed with the broad findings of the report and pointed out a  distinction between OMB policies and guidance. The agency believes  that this distinction is an issue that needs to be addressed by OMB  and all federal agencies. We agree that it is appropriate for OMB and  federal agencies to work together to determine if there is to be a  meaningful distinction between OMB’s policies and its guidance to  agencies. However, this distinction does not detract from our  recommendation that OMB clarify its guidance to agencies on  reporting on their IT investments. HHS’s written comments are  provided in appendix V.
In written comments, DHS’s Director of the Departmental GAO/OIG  Liaison Office noted that the agency remains committed to continuing  its work with OMB and other relevant stakeholders to address  challenges related to identifying and eliminating potentially duplicative  systems. DHS’s written comments are provided in appendix VI.
In an e-mail, Justice’s Acting Assistant Director of the Audit Liaison  Group stated that the department did not have comments.
In comments provided via e-mail, Transportation’s Deputy Director of  Audit Relations stated that the Positive Train Control system should  not be included in the department’s exhibit 53 submission because  the system will be commercialized, owned, and implemented by an  industry. We used this system as an example of a system in research  and development that is not included in the federal portfolio of IT  investments. Because the agency is expending funds on this system  and it is meant to integrate command, control, communications, and  information systems, we believe that it should be reported as an IT  investment. This example reinforces our recommendation to OMB to  clarify its guidance to federal agencies to specify whether such  investments should be included.
In an e-mail, Treasury’s Audit Liaison stated that the department had  no comments on the report.
In an e-mail, an official from VA’s Office of Congressional and  Legislative Affairs reported that the agency had no comments on the  draft report.
In an e-mail, NASA’s GAO/OIG Audit Liaison stated that the agency  had no comments or technical corrections to add to the report.
OMB and several agencies also provided technical comments, which we  incorporated as appropriate.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the  appropriate Congressional committees, the Director of the Office of  Management and Budget, and other interested parties. In addition, this  report will be available on the GAO website at http://www.gao.gov.
If you or your staff members have any questions about this report, please  contact me at (202) 512-9286 or at 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 VII.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to (1) describe the current number and types of  information technology (IT) investments reported by federal agencies on  the IT Dashboard, (2) evaluate the adequacy of the Office of  Management and Budget’s (OMB) guidance to federal agencies in  reporting on IT investments, and (3) evaluate efforts to identify and  address potentially duplicative investments.
To describe the current number and types of IT investments, we analyzed  data from agencies’ fiscal year 2011 exhibit 53 submissions. We  downloaded this data from OMB’s IT Dashboard in March and July 2011.  To categorize the investments, we used the functional categories that  each agency identified for its own investments. We developed charts and  graphs depicting IT investments by investment type (major or nonmajor),  by life cycle phase (in development or in operations and maintenance), by  agency, and by functional category. We then discussed the results of our  analysis with OMB officials. To determine the reliability of the data on the  IT Dashboard, we reviewed recent GAO reports that identified issues with  the accuracy and reliability of agency data on the IT Dashboard. We  determined that the data were sufficiently reliable for the purpose of this  report, which is to depict the groupings and categories of information  drawn from the Dashboard.
To evaluate the adequacy of OMB’s guidance to federal agencies in  reporting on IT investments, we reviewed OMB’s guidance on agencies’  exhibit 53 and exhibit 300 submissions. In addition, we evaluated how 10  federal agencies implemented OMB’s guidance. We selected the 10  agencies with the largest IT spending as reported in OMB’s fiscal year  2010 exhibit 53 data: the Departments of Agriculture, Commerce,  Defense, Health and Human Services, Homeland Security, Justice,  Transportation, the Treasury, and Veterans Affairs, and the National  Aeronautics and Space Administration. We reviewed the guidance these  agencies provided to their program managers for reporting on IT  investments and identified types of investments that were excluded from  reporting. We also met with OMB and agency officials to discuss current  guidance on reporting on IT investments and any planned changes to this  guidance.
To evaluate efforts to identify and address potentially duplicative  investments, we met with OMB officials to understand their  responsibilities and processes related to identifying and addressing  duplication. Then we analyzed documentation related to those processes,  including the 2011 report to Congress on OMB’s e-government initiatives,  OMB’s 25-point plan to improve IT, and our previous work on   e-government initiatives, the Federal Enterprise Architecture, the Federal  Data Center Consolidation initiative, and the trusted Internet connection  initiative. We also analyzed documentation from the agencies in our  review, including capital planning and investment control guides,  investment selection criteria, and documentation from investment review  board meetings, and we interviewed officials.
We conducted this performance audit from February 2011 to September  2011 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: Selected Federal Agencies’ IT Investments
paragraphs: The figures in this appendix provide information on selected federal  agencies’ planned IT investments in fiscal year 2011. Unless otherwise  stated, these figures include both major and nonmajor IT investments.
section_title: Appendix III: Examples of Primary Functions of Federal IT Investments
paragraphs: The figures below show the number of investments that federal agencies  have categorized in three key primary functions. For each primary  function, the first figure shows a visual depiction of selected federal  agencies, including the Department of Defense (DOD). The second figure  provides more detail on the nondefense agencies. Unless otherwise  stated, these figures include both major and nonmajor IT investments.
section_title: Appendix IV: Comments from the Department of Commerce
section_title: Appendix V: Comments from the Department of Health and Human Services
section_title: Appendix VI: Comments from the Department of Homeland Security
section_title: Appendix VII: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: Dave Powner at (202) 512-9286 or pownerd@gao.gov.
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, the following staff also made  key contributions to the report: Colleen Phillips, Assistant Director; Kate  Agatone; Rebecca Eyler; Fatima Jahan; Lee McCracken; and Kevin  Walsh.