Information Technology: VA Has Taken Important Steps to Centralize Control of Its Resources, but Effectiveness Depends on Additional Planned Actions
Published: 2008-02-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The use of information technology (IT) is crucial to the Department of Veterans Affairs' (VA) mission to promote the health, welfare, and dignity of all veterans in recognition of their service to the nation. In this regard, the department's fiscal year 2009 budget proposal includes about $2.4 billion to support IT development, operations, and maintenance. VA has, however, experienced challenges in managing its IT projects and initiatives, including cost overruns, schedule slippages, and performance problems. In an effort to confront these challenges, the department is undertaking a realignment to centralize its IT management structure. This testimony summarizes the department's actions to realign its management structure to provide greater authority and accountability over its IT budget and resources and the impact of these actions to date. In developing this testimony, GAO reviewed previous work on the department's realignment and related budget issues, analyzed pertinent documentation, and interviewed VA officials to determine the current status and impact of the department's efforts to centralize the management of its IT budget and operations.
section_title: What GAO Found
paragraphs: As part of its IT realignment, VA has taken important steps toward a more disciplined approach to ensuring oversight of and accountability for the department's IT budget and resources. For example, the department's chief information officer (CIO) now has responsibility for ensuring that there are controls over the budget and for overseeing all capital planning and execution, and has designated leadership to assist in overseeing functions such as portfolio management and IT operations. In addition, the department has established and activated three governance boards to facilitate budget oversight and management of its investments. Further, VA has approved an IT strategic plan that aligns with priorities identified in the department's strategic plan and has provided multi-year budget guidance to achieve a more disciplined approach for future budget formulation and execution. While these steps are critical to establishing control of the department's IT, it remains too early to assess their overall impact because most of the actions taken have only recently become operational or have not been fully implemented. Thus, their effectiveness in ensuring accountability for the resources and budget has not yet been clearly established. For example, according to Office of Information and Technology officials, the governance boards' first involvement in budget oversight only recently began (in May 2007) with activities to date focused primarily on formulation of the fiscal year 2009 budget and on execution of the fiscal year 2008 budget. Thus, none of the boards has yet been involved in all aspects of the budget formulation and execution processes and, as a result, their ability to help ensure overall accountability for the department's IT appropriations has not yet been fully established. In addition, because the multi-year programming guidance is applicable to future budgets (for fiscal years 2010 through 2012), it is too early to determine VA's effectiveness in implementing this guidance. Further, VA is in the initial stages of developing management processes that are critical to centralizing its control over the budget. However, while the department had originally stated that the processes would be implemented by July 2008, it now indicates that implementation across the department will not be completed until at least 2011. Until VA fully institutes its oversight measures and management processes, it risks not realizing their contributions to, and impact on, improved IT oversight and accountability within the department.

section_title: Letter
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Mr. Chairman and Members of the Subcommittee:   Thank you for inviting me to participate in today’s hearing on the  Department of Veterans Affairs’ (VA) fiscal year 2009 information  technology (IT) budget. As you know, the use of IT is crucial to  helping VA effectively serve our nation’s veterans, with the  department’s just-released budget proposal including approximately  $2.4 billion to support IT development, operations, and  maintenance. However, as we have previously reported, VA has  experienced challenges in managing its IT projects and initiatives,  including cost overruns, schedule slippages, and performance  problems. To address these challenges, in October 2005, the  department initiated a realignment of its IT program to provide  greater authority and accountability over its resources. In  undertaking this realignment, the department’s goals were to  centralize IT management under the department-level chief  information officer (CIO) and to standardize budgets, operations,  and the development of systems through the use of new  management processes based on industry best practices.
At your request, my testimony today summarizes VA’s actions as  part of the realignment and the impact of those actions to date in  providing greater authority and accountability over the department’s  IT resources and budget. In developing this testimony, we reviewed  our previous work on the department’s realignment and related  budget issues. We also obtained and analyzed pertinent  documentation and supplemented our analysis with interviews of  responsible VA officials to determine the current status and impact  of the department’s efforts to centralize the management of its IT  budget and operations. We conducted our work in support of this  testimony from January 2008 to February 2008 in the Washington,  D.C., area.  All work on which this testimony is based was  conducted in accordance with generally accepted government  auditing standards.
subsections: section_title: Background
paragraphs: VA’s mission is to promote the health, welfare, and dignity of all  veterans in recognition of their service to the nation by ensuring that  they receive medical care, benefits, social support, and lasting  memorials. Over time, the use of IT has become increasingly crucial  to the department’s efforts to provide such benefits and services.  For example, the department relies on its systems for medical  information and records for veterans, as well as for processing  benefit claims, including compensation and pension and education  benefits.
In reporting on VA’s IT management over the past several years, we  have highlighted challenges that the department has faced in  achieving its “One VA” vision, including that information systems  and services were highly decentralized and that its administrations  controlled a majority of the IT budget. For example, we noted that,  according to an October 2005 memorandum from the former CIO to  the Secretary of Veterans Affairs, the CIO had direct control over  only 3 percent of the department’s IT budget and 6 percent of the  department’s IT personnel. In addition, in the department’s fiscal  year 2006 IT budget request, the Veterans Health Administration was  identified to receive 88 percent of the requested funding, while the  department was identified to receive only 4 percent. We have  previously pointed out that, given the department’s large IT funding  and decentralized management structure, it was crucial for the CIO  to ensure that well-established and integrated processes for leading,  managing, and controlling investments were followed throughout  the department.
Further, a contractor’s assessment of VA’s IT organizational  alignment, issued in February 2005, noted the lack of control for  how and when money is spent. The assessment found that project  managers within the administrations were able to shift money as  they wanted to build and operate individual projects. In addition,  according to the assessment, the focus of department-level  management was only on reporting expenditures to the Office of  Management and Budget and Congress, rather than on managing  these expenditures within the department.
subsections: section_title: VA Establishes Centralized Management Structure to Improve IT Accountability
paragraphs: The department officially began its initiative to provide the CIO with  greater authority over the department’s IT in October 2005. At that  time, the Secretary of Veterans Affairs issued an executive decision  memorandum that granted approval for the development of a new  centralized management structure for the department. According to  VA, its goals in moving to centralized management included having  better overall fiscal discipline over the budget.
In February 2007, the Secretary approved the department’s new  management structure. In this new structure, the Assistant Secretary  for Information and Technology serves as VA’s CIO and is supported  by a principal deputy assistant secretary and five deputy assistant  secretaries—senior leadership positions created to assist the CIO in  overseeing functions such as cyber security, IT portfolio  management, and systems development and operations. In April  2007, the Secretary approved a governance plan that is intended to  enable the Office of Information and Technology, under the  leadership of the CIO, to centralize its decision making. The plan  describes the relationship between IT and departmental governance  and the approach the department intends to take to enhance  governance and realize more cost-effective use of IT resources and  assets. The department also made permanent the transfer of its  entire IT workforce under the CIO, consisting of approximately  6,000 personnel from the administrations.
In June 2007, we reported on the department’s plans for realigning  the management of its IT program and establishing centralized  control of its IT budget within the Office of Information and  Technology. We pointed out that the department’s realignment plans  included elements of several factors that we identified as critical to  a successful transition, but that additional actions could increase  assurance that the realignment would be completed successfully.  Specifically, we reported that the department had ensured  commitment from its top leadership and that, among other critical  actions, it was establishing a governance structure to manage  resources. However, at that time, VA had not updated its strategic  plan to reflect the new organization. In addition, we noted that the  department had planned to take action by July 2008 to create the  necessary management processes to realize a centralized IT  management structure. In testimony before the House Veterans’  Affairs Committee last September, however, we pointed out that the  department had not kept pace with its schedule for implementing  the new management processes.
section_title: Important Steps Taken to Centralize Control of IT Resources but Their Effectiveness Will Depend on Additional Planned Actions
paragraphs: As part of its IT realignment, VA has taken important steps toward a  more disciplined approach to ensuring oversight of and  accountability for the department’s IT budget and resources. Within  the new centralized management structure, the CIO is responsible  for ensuring that there are adequate controls over the department’s  IT budget and for overseeing capital planning and execution. These  responsibilities are consistent with the Clinger-Cohen Act of 1996,  which requires federal agencies to develop processes for the  selection, control, and evaluation of major systems initiatives. In  this regard, the department has (1) designated organizations with  specific roles and responsibilities for controlling the budget to  report directly to the CIO; (2) implemented an IT governance  structure that assigns budget oversight responsibilities to specific  governance boards; (3) finalized an IT strategic plan to guide,  manage, and implement its operations and investments; (4)  completed multi-year budget guidance to improve management of  its IT; and (5) initiated the implementation of critical management  processes. However, while VA has taken these important steps  toward establishing control of the department’s IT, it remains too  early to assess their overall impact because most of the actions  taken have only recently become operational or have not yet been  fully implemented. Thus, their effectiveness in ensuring  accountability for the resources and budget has not yet been clearly  established.
As one important step, two deputy assistant secretaries under the  CIO have been assigned responsibility for managing and controlling  different aspects of the IT budget. Specifically, the Deputy Assistant  Secretary for Information Technology Enterprise Strategy, Policy,  Plans, and Programs is responsible for development of the budget  and the Deputy Assistant Secretary for Information Technology  Resource Management is responsible for overseeing budget  execution, which includes tracking actual expenditures against the  budget. Initially, the deputy assistant secretaries have served as a  conduit for information to be used by the governance boards.
As a second step, the department has established and activated  three governance boards to facilitate budget oversight and  management of its investments. The Business Needs and Investment  Board; the Planning, Architecture, Technology and Services  Board; and the Information Technology Leadership Board have  begun providing oversight to ensure that investments align with the  department’s strategic plan and that business and budget  requirements for ongoing and new initiatives meet user demands.  One of the main functions of the boards is to designate funding  according to the needs and requirements of the administrations and  staff offices. Each board meets monthly, and sometimes more  frequently, as the need arises during the budget development phase.
The first involvement of the boards in VA’s budget process began  with their participation in formulating the fiscal year 2009 budget.  As part of the budget formulation process, in May 2007 the Business  Needs and Investment Board conducted its first meeting in which it  evaluated the list of business projects being proposed in the budget  using the department’s Exhibit 300s for fiscal year 2009, and made  departmentwide allocation recommendations. Then in June, these  recommendations were passed on to the Planning, Architecture,  Technology, and Services Board, which proposed a new structure  for the fiscal year 2009 budget request. The recommended structure  was to provide visibility to important initiatives and enable better  communication of performance results and outcomes. In late June,  based on input from the aforementioned boards, the Information  Technology Leadership Board made recommendations to  department decision makers for funding the major categories of IT  projects. In July 2007, following its work on the fiscal year 2009  budget formulation, the boards then began monitoring fiscal year  2008 budget execution.
However, according to Office of Information and Technology  officials, with the governance boards’ first involvement in budget  oversight having only recently begun (in May 2007), and with their  activities to date being primarily focused on formulation of the fiscal  year 2009 budget and execution of the fiscal year 2008 budget, none  of the boards has yet been involved in all stages of the budget  formulation and execution processes. Thus, they have not yet fully  established their effectiveness in helping to ensure overall  accountability for the department’s IT appropriations. In addition,  the Office of Information and Technology has not yet standardized  the criteria that the boards are to use in reviewing, selecting, and  assessing investments. The criteria is planned to be completed by  the end of fiscal year 2008 and to be used as part of the fiscal year  2010 budget discussions.
Office of Information and Technology officials stated that, in  response to operational experience with the 2009 budget  formulation and 2008 budget execution, the department plans to  further enhance the governance structure. For example, the Office  of Information and Technology found that the boards’  responsibilities needed to be more clearly defined in the IT  governance plan to avoid confusion in roles. That is, one board (the  Business Needs and Investment Board) was involved in the budget  formulation for fiscal year 2009, but budget formulation is also the  responsibility of the Deputy Assistant Secretary for Information  Technology Resource Management, who is not a member of this  board. According to the Principal Deputy Assistant Secretary for  Information and Technology, the department is planning to update  its governance plan by September 2008 to include more specificity  on the role of the governance boards in the department’s budget  formulation process. Such an update could further improve the  structure's effectiveness. In addition, as part of improving the  governance strategy, the department has set targets by which the  Planning, Architecture, Technology, and Services Board is to review  and make departmentwide recommendations for VA’s portfolio of  investments. These targets call for the board to review major IT  projects included in the fiscal year budgets.  For example, the board  is expected to review 10 percent for fiscal year 2008, 50 percent for  fiscal year 2009, and 100 percent for fiscal year 2011.
As a third step in establishing oversight, in December 2007, VA  finalized an IT strategic plan to guide, manage, and implement its  operations and investments. This plan (for fiscal years 2006-2011)  aligns Office of Information and Technology goals, priorities, and  initiatives with the priorities of the Secretary of Veterans Affairs, as  identified in the VA strategic plan for fiscal years 2006-2011. In  addition, within the plan, the IT strategic goals are aligned with the  CIO’s IT priorities, as well as with specific initiatives and  performance measures. This alignment frames the outcomes that IT  executives and managers are expected to meet when delivering  services and solutions to veterans and their dependents. Further, the  plan includes a performance accountability matrix that highlights  the alignment of the goals, priorities, initiatives, and performance  measures, and an expanded version of the matrix designates  specific entities within the Office of Information and Technology  who are accountable for implementation of each initiative. The  matrix also establishes goals and time lines through fiscal year  2011, which should enable VA to track progress and suggest  midcourse corrections and sustain progress toward the realignment.  As we previously reported, it is essential to establish and track  implementation goals and establish a timeline to pinpoint  performance shortfalls and gaps and suggest midcourse  corrections.
As a fourth step, the department has completed multi-year budget  guidance to improve management of its IT portfolio. In December  2007, the CIO disseminated this guidance for the fiscal years 2010  through 2012 budgets. The purpose of the guidance is to provide  general direction for proposing comprehensive multi-year IT  planning proposals for centralized review and action. The process  called for project managers to submit standardized concept papers  and other review documentation in December 2007 for review in the  January to March 2008 time frame, to decide which projects will be  included in the fiscal year 2010 portfolio of IT projects. The new  process is to add rigor and uniformity to the department’s  investment approach and allow the investments to be consistently  evaluated for alignment with the department’s strategic planning  and priorities and the enterprise architecture. According to VA  officials, this planning approach is expected to allow for reviewing  proposals across the department and for identifying opportunities to  maximize investments in IT.
Nevertheless, although the multi-year programming guidance holds  promise for obtaining better information for portfolio management,  the guidance has not been fully implemented because it is applicable  to future budgets (for fiscal years 2010 through 2012). As a result, it  is too early to determine VA’s effectiveness in implementing this  guidance, and ultimately, its impact on the department’s IT portfolio  management.
Finally, the department has begun developing new management  processes to establish the CIO’s control over the IT budget. The  department’s December 2007 IT strategic plan identifies three  processes as high priorities for establishing the foundation of the  budget functions: project management, portfolio management, and  service level agreements.
However, while the department had originally stated that its new  management processes would be implemented by July 2008, the IT  strategic plan indicates that key elements of these processes are not  expected to be completed until at least fiscal year 2011. Specifically,  the plan states that the project and portfolio management processes  are to be completed by fiscal year 2011, and does not assign a  completion date for the service level agreement process. As our  previous report noted, it is crucial for the CIO to ensure that well- established and integrated processes are in place for leading,  managing, and controlling VA’s IT resources. The absence of such  processes increases the risk to the department’s ability to achieve a  solid and sustainable management structure that ensures effective  IT accountability and oversight.
Appendix I provides a timeline of the various actions that the  department has undertaken and planned for the realignment.
In summary, while the department has made progress with  implementing its centralized IT management approach, effective  completion of its realignment and implementation of its improved  processes is essential to ensuring that VA has a solid and sustainable  approach to managing its IT investments. Because most of the  actions taken by VA have only recently become operational, it is too  early to assess their overall impact. Until the department carries out  its plans to add rigor and uniformity to its investment approach and  establishes a comprehensive set of improved management  processes, the department may not achieve a sustainable and  effective approach to managing its IT investments.
Mr. Chairman and members of the Subcommittee, this concludes my  statement. I would be pleased to respond to any questions that you  may have at this time.
section_title: Contacts and Acknowledgments
paragraphs: For more information about this testimony, please contact Valerie C.  Melvin at (202) 512-6304 or by e-mail at melvinv@gao.gov. Key  contributors to this testimony were Barbara Oliver, Assistant  Director, Nancy Glover, David Hong, Scott Pettis, and J. Michael  Resser.