Information Technology: Additional OMB and Agency Actions Are Needed to Achieve Portfolio Savings
Published: 2013-11-06T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Federal agencies plan to spend at least $82 billion on IT in fiscal year 2014, and GAO has previously reported on challenges in identifying and reducing duplicative IT investments. In 2012, OMB launched its PortfolioStat initiativea process where agencies gather information on their IT investments and develop plans for consolidation and increased use of shared-service delivery models.GAO was asked to review the implementation of PortfolioStat. GAOs objectives were to (1) determine whether agencies completed key required PortfolioStat actions, (2) evaluate selected agencies plans for making portfolio improvements and achieving associated cost savings, and (3) evaluate OMBs plans to improve the PortfolioStat process. To do this, GAO analyzed plans, status reports, and other documentation from agencies and interviewed agency and OMB officials. GAO also interviewed officials and reviewed documentation from five agencies selected based on their IT expenditures and management structures.
section_title: What GAO Found
paragraphs: The 26 major federal agencies that were required to participate in the PortfolioStat initiative fully addressed four of seven key requirements established by the Office of Management and Budget (OMB). However, only 1 of the 26 agencies addressed all the requirements. For example, agencies did not develop action plans that addressed all elements, such as criteria for identifying wasteful, low-value or duplicative information technology (IT) investments, or migrate two commodity IT areassuch as enterprise IT systems and IT infrastructureto a shared service by the end of 2012.
Further, OMBs estimate of about 100 consolidation opportunities and a potential $2.5 billion in savings from the PortfolioStat initiative is understated because, among other things, it did not include estimates from the Departments of Defense and Justice. GAOs analysis, which includes these estimates, shows that, collectively, the 26 agencies are reporting about 200 opportunities and at least $5.8 billion in potential savings through fiscal year 2015.
Five selected agenciesthe Departments of Agriculture, Defense, the Interior, the Treasury, and Veterans Affairsidentified 52 consolidation initiatives, along with other IT management improvements, and estimated at least $3.7 billion in potential cost savings through fiscal year 2015. However, four agencies did not always provide sufficient support for all of their estimates, and they varied in their use of processessuch as an enterprise architecture and a method for assessing the value of investmentsrecommended by OMB to identify consolidation opportunities. More consistently using these tools may reveal further opportunities for consolidation, and better support for estimated savings may increase the chances that they will be achieved.
OMBs fiscal year 2013 PortfolioStat guidance identifies a number of planned improvements but does not fully address certain weaknesses in the implementation of the initiative, such as limitations in CIOs authority, weaknesses in agencies commodity IT baselines, accountability for migrating selected commodity IT areas, or the information on agencies progress that OMB intends to make public.
section_title: What GAO Recommends
paragraphs: GAO is recommending, among other things, that OMB require agencies to fully disclose limitations in CIOs ability to exercise their authority and that 24 agencies take steps to improve their PortfolioStat implementation. OMB agreed with some of the recommendations and disagreed with others; and responses from the 21 agencies commenting on the report varied. GAO continues to believe that the majority of the recommendations are valid, but has removed two, and modified one, as discussed in the report.

section_title: Letter
paragraphs: Federal agencies expect to spend about $82 billion in fiscal year 2014 to  meet their increasing demand for information technology (IT). Given the  proliferation of duplicative, wasteful, low-value investments that both we  and the Office of Management and Budget (OMB) have highlighted over  the years, it is important that federal agencies avoid investing in these  types of investments whenever possible. Avoiding such investments will  be particularly important to ensure the most efficient use of resources as  agencies continue to be faced with budget restrictions.
Over the past few years, we have issued a series of reports that have  identified federal programs or functional areas where potentially  unnecessary duplication, overlap, or fragmentation exists, the actions  needed to address such conditions, and the potential financial and other  benefits of doing so. In March 2012, OMB launched an initiative, referred  to as PortfolioStat, which requires agencies to conduct annual reviews of  their IT investments and make decisions on eliminating duplication,  among other things. According to OMB, PortfolioStat has the potential to  save the government $2.5 billion over the next 3 years. Given the  potential for achieving such savings and improving IT investment  management, you asked us to review the implementation of PortfolioStat.  Our specific objectives were to (1) determine the status of efforts to  implement key required PortfolioStat actions, (2) evaluate selected  agencies’ plans for making portfolio improvements and achieving  associated cost savings, and (3) evaluate OMB’s plans to improve the  PortfolioStat process.
To address our first objective, we obtained documentation from the 26  agencies that were required to comply with OMB’s memo for  implementing the PortfolioStat initiative and compared it to the memo’s  requirements and supporting guidance. To address our second objective,  we selected 5 agencies based on criteria including total IT expenditures  for fiscal year 2012, investment management maturity level, and IT and  Chief Information Officer organizational structures. These agencies are  the Departments of Agriculture, Defense, the Interior, the Treasury, and  Veterans Affairs. We analyzed these agencies’ documentation and  interviewed relevant officials to identify their plans for reducing potentially  duplicative, low-value, and wasteful commodity IT investments and  determine the extent to which they were based on the use of an  enterprise architecture (EA) and an IT valuation model, as  recommended by OMB, and the extent to which support for estimated  cost savings was documented. To address our third objective, we  reviewed OMB’s guidance for the 2013 PortfolioStat and interviewed  OMB’s PortfolioStat Lead regarding plans for improving the PortfolioStat  process. In addition, we analyzed the information obtained from our  sources and the results of our analyses for our first two objectives to  determine whether OMB’s plans for improving PortfolioStat addressed the  issues we identified.
We conducted this performance audit from October 2012 to November  2013 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives. Appendix I contains  additional details on our objectives, scope, and methodology.
subsections: section_title: Background
paragraphs: Information technology should enable government to better serve the  American people. However, OMB stated in 2010 that the federal  government had achieved little of the productivity improvements that  private industry had realized from IT, despite spending more than $600  billion on IT over the past decade. Too often, federal IT projects run over  budget, behind schedule, or fail to deliver promised functionality.
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. Federal agencies are responsible for managing their IT  investment portfolio, including the risks from their major information  system initiatives, in order to maximize the value of these investments to  the agency. 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. For fiscal year 2014,  federal agencies plan to spend about $82 billion.
subsections: section_title: GAO Has Previously Reported on Opportunities to Reduce Duplication and Achieve Cost Savings in Critical IT-Related Areas
paragraphs: We have previously reported on the challenges associated with agencies’  efforts to identify duplicative IT investments. For example, in September  2011 we reported that there were hundreds of investments providing  similar functions across the federal government, including 1,536  information and technology management investments, 781 supply chain  management investments, and 661 human resource management  investments. Further, we found that OMB guidance to agencies on how  to report their IT investments did not ensure complete reporting or  facilitate the identification of duplicative investments. Specifically,  agencies differed on what investments they included as an IT investment,  and OMB’s guidance requires each investment to be mapped to a single  functional category. As a result, agencies’ annual IT investments were  likely greater that the $79 billion reported in fiscal year 2011 and OMB’s  ability to identify duplicative investments was limited. Further, we found  that several agencies did not routinely assess operational systems to  determine if they were duplicative. We recommended, among other  things, that OMB clarify its guidance to help agencies better identify and  categorize their IT investments and require agencies to report the steps  they take to ensure that their IT investments are not duplicative. OMB  agreed with these recommendations.
More recently, we reported on efforts at the Departments of Defense,  Energy, and Homeland Security to identify duplicative IT investments.  More specifically, we noted that although Defense, Energy, and  Homeland Security use various investment review processes to identify  duplicative investments, 37 of our sample of 810 investments were  potentially duplicative at Defense and Energy. These investments  accounted for about $1.2 billion in spending for fiscal years 2007 through  2012. We also noted that investments were, in certain cases,  misclassified by function, further complicating agencies’ ability to identify  and eliminate duplicative investments. We recommended that Defense  and Energy utilize transparency mechanisms, such as the IT Dashboard  to report on the results of their efforts to identify and eliminate potentially  duplicative investments. The agencies generally agreed with this  recommendation.
We have also reported on the value of portfolio management in helping to  identify duplication and overlap and opportunities to leverage shared  services. For example, we have reported extensively on various agencies’  IT investment management capabilities by using GAO’s IT Investment  Management Framework, in which stage 3 identifies best practices for  portfolio management, including (1) creating a portfolio which involves,  among other things, grouping investments and proposals into predefined  logical categories so they can be compared to one another within and  across the portfolio categories, and the best overall portfolio can then be  selected for funding, and (2) evaluating the portfolio by monitoring and  controlling it to ensure it provides the maximum benefits at a desired cost  and an acceptable level of risk.
section_title: OMB Established PortfolioStat to Help Agencies Reduce Duplication and Achieve Cost Savings
paragraphs: Recognizing the proliferation of duplicative and low-priority IT investments  within the federal government and the need to drive efficiency, OMB  launched the PortfolioStat initiative in March 2012, which requires 26  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.  Toward this end, OMB defined 13 types of commodity IT investments in  three broad categories:   (1) Enterprise IT systems, which include e-mail; identity and access  management; IT security; web hosting, infrastructure, and content; and  collaboration tools.   (2) IT infrastructure, which includes desktop systems, mainframes and  servers, mobile devices, and telecommunications.  (3) Business systems, which include financial management, grants- related federal financial assistance, grants-related transfer to state and  local governments, and human resources management systems.
PortfolioStat is designed to assist agencies in assessing the current  maturity of their IT investment management process, making decisions on  eliminating duplicative investments, and moving to shared solutions (such  as cloud computing) in order to maximize the return on IT investments  across the portfolio. It is also intended to assist agencies in meeting the  targets and requirements under other OMB initiatives aimed at eliminating  waste and duplication and promoting shared services, such as the  Federal Data Center Consolidation Initiative, the Cloud Computing  Initiative, and the IT Shared Services Strategy.
PortfolioStat is structured around five phases: (1) baseline data gathering  in which agencies are required to complete a high-level survey of their IT  portfolio status and establish a commodity IT baseline; (2) analysis and  proposed action plan in which agencies are to use the data gathered in  phase 1 and other available agency data to develop a proposed action  plan for consolidating commodity IT; (3) PortfolioStat session in which  agencies are required to hold a face-to-face, evidence-based review of  their IT portfolio with the Federal Chief Information Officer (CIO) and key  stakeholders from the agency to discuss the agency’s portfolio data and  proposed action plan, and agree on concrete next steps to rationalize the  agency’s IT portfolio that would result in a final plan; (4) final action plan  implementation, in which agencies are to, among other things, migrate at  least two commodity IT investments; and (5) lessons learned, in which  agencies are required to document lessons learned, successes, and  challenges. Each of these phases is associated with more specific  requirements and deadlines.
OMB has reported that the PortfolioStat effort has the potential to save  the government $2.5 billion through fiscal year 2015 by consolidating and  eliminating duplicative systems.
section_title: Agencies Addressed PortfolioStat Requirements, but Baselines and Consolidation Plans Were Not All Complete
paragraphs: In its memo on implementing PortfolioStat, OMB established several key  requirements for agencies: (1) designating a lead official with  responsibility for implementing the process; (2) completing a high-level  survey of their IT portfolio; (3) developing a baseline of the number, types,  and costs of their commodity IT investments; (4) holding a face-to-face  PortfolioStat session with key stakeholders to agree on actions to address  duplication and inefficiencies in their commodity IT investments; (5)  developing final action plans to document these actions; (6) migrating two  commodity IT areas to shared services; and (7) documenting lessons  learned. In addition, in guidance supporting the memo, agencies were  asked to report estimated savings and cost avoidance associated with  their consolidation and shared service initiatives through fiscal year 2015.
All 26 agencies that were required to implement the PortfolioStat process  took actions to address OMB’s requirements. However, there were  shortcomings in their implementation of selected requirements, such as  addressing all required elements of the final action plan and migrating two  commodity areas to a shared service by the end of 2012. Table 1  summarizes the agencies’ implementation of the requirements in the  memo, which are discussed in more detail below.
In the memo for implementing the PortfolioStat initiative, OMB required  each agency’s chief operating officer (COO) to designate and  communicate within 10 days of the issuance of the memo an individual  with direct reporting authority to the COO to lead the agency’s  PortfolioStat implementation efforts. Consistent with a recent OMB memo  requiring chief information officers (CIO) to take responsibility for  commodity IT, 19 of the 26 agencies designated the CIO or chief  technology officer to lead their PortfolioStat efforts. The remaining 7  agencies designated the Assistant Attorney General for Administration  (Department of Justice), the deputy CIO (Department of Transportation),  the Assistant Secretary for Management (Department of the Treasury),  the Office of Information and Technology Chief Financial Officer  (Department of Veterans Affairs), the Director, Office of Information  Resources Management, Chief Human Capital Officer (National Science  Foundation), the Senior Advisor to the Deputy Commissioner/Chief  Operating Officer (Social Security Administration), and the Senior Deputy  Assistant Administrator (U.S. Agency for International Development).
subsections: section_title: Portfolio Survey Provided Status of CIO Authority and Other Issues
paragraphs: As part of the baseline data-gathering phase, OMB required agencies to  complete a high-level survey of the status of their IT portfolio. The survey  asked agencies to provide information related to implementing OMB  guidance, including information on the CIO’s explicit authority to review  and approve the entire IT portfolio, the percentage of IT investments  that are reflected in the agency’s EA (required in OMB Circular A-130),  and the percentage of agency IT investments (major and non-major) that  have gone through the TechStat process, both agency-led and OMB-led  (required in OMB M-11-29).
While all 26 agencies completed the survey, the survey responses  highlighted that agencies varied in the maturity of their IT portfolio  management practices. In particular, 6 agencies reported varying levels  of CIO authority, 5 agencies reported that less than 100 percent of  investments were reflected in the agency’s EA, and most agencies noted  that less than 50 percent of their major and non-major investments had  gone through the TechStat process.
Following are highlights of their responses:  CIO authority: Twenty of the 26 agencies stated that they either had a  formal memorandum or policy in place explicitly noting the CIO’s authority  to review and approve the entire agency IT portfolio or that the CIO  collaborated with others (such as members of an investment review  board) to exercise this authority. However, the remaining 6 agencies  either reported that the CIO did not have this authority or there were  limitations to the CIO’s authority:
The Department of Energy reported that while its CIO worked with IT  governance groups, by law, the department CIO has no direct  authority over IT investments in two semi-autonomous agencies (the  National Nuclear Security Administration and the Energy Information  Administration).
Although the Department of Health and Human Services reported  having a formal memo in place outlining the CIO’s authority and ability  to review the entire IT portfolio, it also noted that the CIO had limited  influence and ability to recommend changes to it.
The Department of State reported that its CIO currently has authority  over just 40 percent of IT investments within the department.
The National Aeronautics and Space Administration reported that its  CIO does not have authority to review and approve the entire agency  IT portfolio.
The Office of Personnel Management reported that the CIO advises  the Director, who approves the IT portfolio, but this role is not explicitly  defined.
The U.S. Agency for International Development reported that the  CIO’s authority is limited to the portfolio that is executed within the  office of the CIO.
It is important to note that OMB’s survey did not specifically require  agencies to disclose limitations their CIOs might have in their ability to  exercise the authorities and responsibilities provided by law and OMB  guidance. Thus it is not clear whether all those who have such limitations  reported them or whether those who reported limitations disclosed all of  them.
We recently reported that while federal law provides CIOs with adequate  authority to manage IT for their agencies, limitations exist that impede  their ability to exercise this authority. We noted that OMB’s memo on  CIO authorities was a positive step in reaffirming the importance of the  role of CIOs in improving agency IT management, but did not require  them to measure and report the progress of CIOs in carrying out these  responsibilities. Consequently, we recommended that the Director of  OMB establish deadlines and metrics that require agencies to  demonstrate the extent to which their CIOs are exercising the authorities  and responsibilities provided by law and OMB’s guidance. In response,  OMB stated that it would ask agencies to report on the implementation of  the memo.
The high-level survey responses regarding CIO authority at agencies  indicate that several CIOs still do not exercise the authority needed to  review and approve the entire IT portfolio, consistent with OMB guidance.  Although OMB has issued guidance and required agencies to report on  actions taken to implement it, this has not been sufficient to ensure that  agency COOs address the issue of CIO authority at their respective  agencies. As a result, agencies are hindered in addressing certain  responsibilities set out in the Clinger-Cohen Act of 1996, which  established the position of CIO to advise and assist agency heads in  managing IT investments. Until the Director of OMB and the Federal CIO  require agencies to fully disclose limitations their CIOs may have in  exercising the authorities and responsibilities provided by law and OMB’s  guidance, OMB may lack crucial information needed to understand and  address the factors that could prevent agencies’ from successfully  implementing the PortfolioStat initiative.
Investments reflected in agencies’ enterprise architecture: Twenty  one of the 26 agencies reported that 100 percent of their IT investments  are reflected in their agency’s EA, while the remaining 5 agencies  reported less than 100 percent: Commerce (90 percent), Justice (97  percent), State (40 percent), National Aeronautics and Space  Administration (17 percent), and U.S. Agency for International  Development (75 percent). According to OMB guidance, agencies must  support an architecture with a complete inventory of agency information  resources, including stakeholders and customers, equipment, systems,  services, and funds devoted to information resources management and  IT, at an appropriate level of detail. Until these agencies’ enterprise  architectures reflect 100 percent of their IT investments, they will be  limited in their ability to use this tool as a mechanism to identify low-value,  duplicative, or wasteful investments.
TechStat process: Twenty-one of the 26 agencies reported that less  than 50 percent of major and non-major investments had gone through  the TechStat process and 1 reported that more than 50 percent of its  investments had gone through the process. As we have previously  reported, TechStat accountability sessions have the value of focusing  management attention on troubled projects and establishing clear action  items to turn the projects around or terminate them. In addition, the  TechStat model is consistent with government and industry best practices  for overseeing IT investments, including our own guidance on IT  investment management processes. Consistent with these survey  responses, in June 2013 we reported that the number of TechStat  sessions held to date was relatively small compared to the current  number of medium- and high-risk IT investments at federal agencies.  Accordingly, we recommended that OMB require agencies to conduct  TechStat sessions on certain IT investments, depending on their risk  level. Holding TechStat sessions will help strengthen overall IT  governance and oversight and will help agencies to better manage their  IT portfolio and reduce waste. OMB generally concurred with our  recommendation and stated that it was taking steps to address it.
section_title: Commodity IT Baselines Were Not All Complete
paragraphs: As part of the baseline data-gathering phase, each of the 26 agencies  was also required to develop a comprehensive commodity IT baseline  including information on each of the 13 types of commodity IT. Among  other things, they were to include the fiscal year 2011 obligations incurred  for commodity IT services and the number of systems providing these  services.
The 26 agencies reported that they obligated approximately $13.5 billion  in fiscal year 2011 for commodity IT, with the majority of these obligations  (about $8.1 billion) for investments related to IT Infrastructure. Agencies  also classified approximately 71.2 percent of the commodity IT systems  identified (about 1,937 of the 2,721 reported) as enterprise IT systems.  Further, as illustrated in figure 1, of the total systems reported, most were  related to IT security, whereas the fewest systems were related to grants- related transfer to state and local governments.
When collecting data, it is important to have assurance that the data are  accurate. We have previously reported on the need for agencies, when  providing information to OMB, to explain the procedures used to verify  their data. Specifically, agencies should ensure that reported data are  sufficiently complete, accurate, and consistent, and also identify any  significant data limitations. Explaining the limitations of information can  provide a context for understanding and assessing the challenges  agencies face in gathering, processing, and analyzing needed data. We  have also reiterated the importance of providing OMB with complete and  accurate data and the possible negative impact of that data being missing  or incomplete.
While all 26 agencies developed commodity IT baselines, these baselines  were not all complete. Specifically, 12 agencies (the Departments of  Agriculture, Commerce, Defense, Housing and Urban Development,  Labor, and the Interior; the Environmental Protection Agency, Nuclear  Regulatory Commission, Office of Personnel Management, Small  Business Administration, Social Security Administration, and U.S. Agency  for International Development) could not ensure the completeness of their  commodity IT baseline, either because they did not identify a process for  this or faced challenges in collecting complete information. These  agencies reported they were unable to ensure the completeness of their  information for a range of reasons, including that they do not typically  capture the required data at the level of detail required by OMB, that they  used service contracts which do not allow visibility into specifics on the  commodity IT inventory, that they lacked visibility into bureaus’  commodity IT information, and that OMB’s time frames did not allow for  verification of information collected from lower-level units of the  organization. Until agencies develop a complete commodity IT baseline,  they may not have sufficient information to identify further consolidation  opportunities.
While it is important that reported data are sufficiently complete, accurate,  and consistent, OMB did not require agencies to verify their data or  disclose any limitations on the data provided and does not plan to collect  this information as agencies provide updated information in quarterly  reporting. Until OMB requires agencies to verify their data and disclose  any limitations in integrated data collection quarterly reporting, it may lack  information it needs to more effectively oversee agencies’ investment in  commodity IT and identify Portfolio cost savings.
section_title: Key Stakeholders Generally Attended PortfolioStat Sessions
paragraphs: All 26 agencies held a PortfolioStat session in 2012, consistent with  OMB’s requirement. In addition, the agencies noted that the agency CIO,  Chief Administrative Officer, Chief Financial Officer, and COO—the key  stakeholders identified in OMB memorandum 12-10—in many instances  attended this session. In the instances where key stakeholders did not  attend, authorized representatives of those stakeholders generally  attended in their place, according to agency officials. Involvement from  key stakeholders in agencies’ PortfolioStat sessions is critical to ensuring  agencies are maximizing their efforts to successfully implement  PortfolioStat.
section_title: Agencies’ Action Plans Did Not Always Address All Required Elements
paragraphs: Agencies were required by OMB to complete a final action plan that  addressed eight specific elements: (1) describe plans to consolidate  authority over commodity IT spending under the agency CIO; (2)  establish specific targets and deadlines for commodity IT spending  reductions; (3) outline plans to migrate at least two commodity IT areas to  shared services by December 31, 2012; (4) target duplicative systems or  contracts that support common business functions for consolidation; (5)  illustrate how investments within the IT portfolio align with the agency’s  mission and business functions; (6) establish criteria for identifying  wasteful, “low-value,” or duplicative investments; (7) establish a process  to identify these potential investments and a schedule for eliminating  them from the portfolio; and (8) improve governance and program  management using best practices and, where possible, benchmarks.
All 26 agencies completed an action plan as required by OMB, but the  extent to which they addressed the required items varied. Specifically, 18  agencies fully addressed at least six of the eight required elements—with  Commerce, Education, General Services Administration, and Social  Security Administration addressing all of them—and the remaining 8  agencies fully addressed five requirements or fewer and either partially  addressed or did not address others. The consolidation of commodity IT  spending under the agency CIO and establishment of criteria for  identifying low-value, wasteful, and duplicative investments were the  elements that were addressed the least (12 and 9 agencies respectively);  and the alignment of investments to the agency’s mission and  improvement of governance and program management were addressed  by all agencies. Table 2 shows the extent to which the 26 agencies  addressed the required elements in their action plan.
Until agencies address the items that were required in the PortfolioStat  action plan in future OMB reporting, they will not be in a position to fully  realize the intended benefits of the PortfolioStat initiative.
Memorandum 12-10 required the 26 agencies to complete the migration  of the two commodity IT areas mentioned in their action plan to shared  services by December 31, 2012 (see app. II for the list of migration efforts  by agency). However, 13 of the 26 agencies (the Departments of Housing  and Urban Development, the Interior, Labor, State, Transportation and  Veterans Affairs; the Environmental Protection Agency, General Services  Administration, National Aeronautics and Space Administration, Office of  Personnel Management, Social Security Administration, U.S. Agency for  International Development, and the U.S. Army Corps of Engineers)  reported that they still had not completed the migration of these areas as  of August 2013. These agencies reported several reasons for this,  including delays in establishing contracts with vendors due to the current  budget situation, and delays due to technical challenges.
While OMB has stated that this initial requirement to migrate two systems  was to initiate consolidation activities at the agencies, and not necessarily  an action which it was intending to track for compliance, tracking the  progress of such efforts would help to ensure accountability for agencies’  results and the continued progress of PortfolioStat. OMB’s 2013  PortfolioStat memo includes a requirement for agencies to report  quarterly on the status of consolidation efforts and the actual and planned  cost savings and/or avoidances achieved or expected, but the guidance  does not specify that agencies should report on the status of the two  migration efforts initiated in 2012. Until agencies report on the progress in  consolidating the two commodity IT areas to shared services and OMB  requires them to report on the status of these two efforts in the integrated  data collection quarterly reporting, agencies will be held less accountable  for the results of all their PortfolioStat efforts.
section_title: Lessons Learned Highlight Importance of CIO Authority and Value Engineering
paragraphs: Memorandum 12-10 required agencies to document and catalogue  successes, challenges, and lessons learned from the PortfolioStat  process into a document which was to be submitted to OMB by February  1, 2013. Of the 26 agencies required to implement the PortfolioStat  process, 23 agencies submitted lessons learned documentation. The 3  agencies that did not submit lessons learned in the format requested by  OMB indicated that they did not submit this documentation because  lessons learned had already been included in their final action plans.
Several agencies identified lessons learned related to the CIO’s authority  and the use of an IT valuation model (12 and 15, respectively). More  specifically, 8 agencies noted that OMB’s requirements for a plan to  consolidate commodity IT spending under the agency CIO and to identify  the extent to which the CIO possesses explicit agency authority to review  and approve the entire agency IT portfolio had enabled their agencies to  improve the management of their commodity IT and portfolio. Further, 4  agencies stated that the requirements regarding CIO authority would help  them identify opportunities to achieve efficiencies and reduce duplication  or migrate areas to a shared service. In addition, 1 agency encouraged  OMB to continue to provide guidance and issue directives related to CIO  authority and empowerment. With respect to the agencies’ use of an IT  valuation model, 8 agencies generally recognized the value of using such  a model; however, they identified challenges in determining the  appropriate model and the need to continue to refine processes and  analyze the supporting cost data. Two agencies also stated that OMB  should assist in facilitating and sharing IT valuation model best practices  and other benchmarks among federal agencies. More specifically, 1  agency stated that OMB should assist in the development of a federal IT  valuation model, and another agency suggested that best practices  regarding IT valuation models should include those from private sector  institutions.
As part of the 2013 OMB memorandum on PortfolioStat, OMB generally  identified the same broad themes from the lessons learned documents  that agencies reported. OMB has also established a page related to the  2013 PortfolioStat implementation.
section_title: Opportunities and Estimated Cost Savings Are Underreported
paragraphs: In separate guidance supporting the PortfolioStat initiative, OMB asked  agencies to report planned cost savings and avoidance associated with  their consolidation and shared service initiatives through fiscal year 2015.  While agencies included consolidation efforts for which they had cost  savings numbers, six agencies also reported planned migration or  consolidation efforts for which they had incomplete information on cost  savings and avoidance.
According to OMB, agencies reported a total of 98 consolidation  opportunities and $2.53 billion in planned cost savings and avoidance for  fiscal years 2013 through 2015. However, OMB’s overall estimate of the  number of opportunities and cost savings is underreported. Among other  things, it does not include the Departments of Defense and Justice  because these agencies did not report their plans in the template OMB  was using to compile its overall estimate. While OMB acknowledged that  the $2.53 billion in planned cost savings and avoidance was  underreported when it issued the estimate, it did not qualify the figure  quoted. Identifying any limitations or qualifications to reported figures is  important in order to provide a more complete understanding of the  information presented. Until OMB discloses any limitations or  qualifications to the data it reports on the agency’s consolidation efforts  and associated savings and avoidance, the public and other stakeholders  may lack crucial information needed to understand the current status of  PortfolioStat and agency progress in meeting the goals of the initiative.
Our analysis of data collected from the 26 agencies shows that they are  reporting 204 opportunities and at least $5.8 billion in savings through  fiscal year 2015, at least $3.3 billion more than the number initially  reported by OMB. See table 3 for an overview of the number of  opportunities and reported cost savings and avoidance by agency. See  appendix III for a detailed list of opportunities and associated savings by  agency.
section_title: Selected Departments’ Plans Identified Billions in Potential Cost Savings Using Various Processes, but Support for These Savings Is Uneven
paragraphs: In their portfolio improvement plans, the five agencies selected for our  review—the Departments of Agriculture, Defense, the Interior, the  Treasury, and Veterans Affairs—identified a total of 52 initiatives  expected to achieve at least $3.7 billion in potential cost savings or  avoidance through fiscal year 2015, as well as several improvements of  processes for managing their IT portfolios. To identify these opportunities,  the agencies used several processes and tools, including, to varying  degrees, their EA and valuation model, as recommended by OMB in its  PortfolioStat guidance. More consistently using the processes  recommended by OMB could assist agencies in identifying further  opportunities for consolidation and shared services. In addition, four  agencies did not always provide support for their estimated savings or  show how it linked to the estimates. Better support for the estimated  savings would increase the likelihood that these savings will be achieved.
subsections: section_title: Department of Agriculture
paragraphs: The Department of Agriculture (Agriculture) identified two contract  consolidations—the Cellular Phone Contract Consolidation and the  Enterprise Contracts for Standardized Security Products and Services— as the commodity IT investments it planned to consolidate by December  2012. In addition to these two efforts, the department identified three  efforts that it reported to OMB would yield cost savings or avoidance  between fiscal years 2013 and 2015 (IT Infrastructure  Consolidation/Enterprise Data Center Consolidation, Enterprise IT  Systems: Tier 1 Helpdesk Consolidation, and Enterprise IT Systems:  Geospatial Consolidation Initiative). In addition, Agriculture identified  several other opportunities for which it had yet to identify associated cost  savings or avoidance. According to officials from the Office of the CIO,  several of the consolidation opportunities were identified prior to the  PortfolioStat initiative being launched, as part of the Secretary’s initiative  to streamline administrative processes. The department also identified  several process improvement efforts which, while not all specific to  commodity IT, would help better manage these types of investments.
Examples of the process improvement efforts include (1) recommitting to  internal TechStats as a tool for evaluating all IT investments, (2) acquiring  a portfolio management tool, and (3) implementing a department-wide  portfolio management program that reviews major and non-major  investments on a continual basis.
Agriculture officials stated that they used their EA process to identify  consolidation and shared service opportunities, and that the department  checks for architectural compliance throughout its governance process.  For example, Agriculture’s Executive IT Investment Review Board is to  ensure that the department integrates information systems investment  decisions with its EA and that the department’s decisions comply with EA.  In addition, Agriculture’s Information Priorities and Investment Council is  responsible for reviews of architectural compliance and for using the EA  as a framework for investment decision making. These officials also  stated that while the department determines the value of its IT  investments through evaluation, analyses, prioritization, and scoring, it  does not have a formal, documented valuation model for doing so. Having  such a model would enhance the department’s ability to identify additional  opportunities to consolidate or eliminate low-value, duplicative, or  wasteful investments.
The department also uses other processes to help manage its IT  investments. For example, Agriculture has an Executive IT Investment  Review Board which is to use a scoring process in ensuring the alignment  of investments with strategic goals and objectives. Further, the  department noted the establishment of several governance boards, and  processes, such as the EA, IT acquisition approval request, and capital  planning and investment control, to ensure such alignment.
Agriculture anticipates that its efforts will generate about $221 million in  cost savings or avoidance for fiscal years 2012 through 2015 and  provided varying degrees of support for these estimates. Specifically, for  two of the four initiatives for which we requested support (Cellular  Phone Contract Consolidation and the IT Infrastructure  Consolidation/Enterprise Data Center Consolidation), it provided support  for calculations for cost savings and avoidance estimates. However,  these estimates did not match those provided to OMB for the 2012  PortfolioStat process. For the third initiative, Geospatial Consolidation,  Agriculture did not provide support for the estimate reported to OMB as  part of the 2012 PortfolioStat process; however, it noted that this current  estimate is $58.76 million less than originally reported to OMB. For the  fourth, a department official from the office of the Chief Information Officer  said no savings were being anticipated. Documentation received from the  department noted that this effort was not a cost savings initiative but a  way to meet several programmatic needs: to streamline the work required  for agencies procuring security services, to improve the quality and  repeatability of the security products across the agencies, and to  establish a process flow that ensured the department security were  included in any delivered products. An Agriculture official noted  challenges with calculating cost savings or avoidance but did not identify  any plans to improve its cost estimating processes. A lack of support for  its current estimates may make it difficult for Agriculture to realize these  savings and for OMB and other stakeholders to accurately gauge its  performance.
section_title: Department of Defense
paragraphs: The Department of Defense (Defense) identified its Unclassified  Information Sharing Service/All Partner Network and the General Fund  Enterprise Business System as the two commodity opportunities that  would be consolidated by December 2012. In addition to these 2 efforts,  Defense identified 24 other efforts that would be undertaken from 2012 to  2015 to consolidate commodity IT services. These consolidation efforts  were mostly in the areas of Enterprise IT and IT infrastructure, though the  department also identified a significant effort to move its major  components to enterprise-wide business systems. In addition, Defense  also identified several process improvements, including restructuring its  IT governance boards, establishing a department IT Commodity Council,  and optimizing IT services purchasing. Defense began its effort to  consolidate and improve IT services in 2010 at the request of the  Secretary, prior to the launch of PortfolioStat. The Defense CIO  developed a 10-Point Plan for IT Modernization focused on consolidating  infrastructure and streamlining processes in several commodity IT areas,  including consolidating enterprise networks, delivering a department  cloud environment, standardizing IT platforms, and taking an enterprise  approach for procurement of common IT hardware and software. Each of  the component CIOs, in coordination with the Defense CIO, was tasked  with developing plans to achieve these efforts within their own  component.
As part of this process, Defense utilized its EA and valuation model to  determine the list of IT improvements because, according to officials from  the Office of the CIO, these processes were incorporated into its existing  requirements, acquisition, and planning, programming, budget, and  execution processes. In particular, Defense has taken a federated  approach for developing and managing its EA that is based on enterprise- level guidance, capability areas, and component architectures and is  currently in the process of drafting a new EA program management plan  for improvement effectiveness and interoperability across missions and  infrastructure. In addition, according to a Defense official, the department  has done extensive work related to implementing a valuation model, and  its value engineering process for IT investments has been integrated into  the department’s acquisition process. Defense also has a department  website devoted to providing guidance on its valuation model. Using the  EA and valuation model increases the likelihood that the department will  identify a comprehensive list of opportunities for consolidation.
Defense’s CIO estimates that the consolidation efforts will save between  $3.2 billion and $5.2 billion through fiscal year 2015, and result in  efficiencies between $1.3 billion and $2.2 billion per year beginning in  fiscal year 2016. Defense provided its most recent estimates for the four  initiatives for which we requested support (Unclassified Information  Sharing Service/All Partner Access Network, data center consolidation,  enterprise software purchasing, and General Fund Enterprise Business  System) but was unable to show how these estimates were calculated.  For the first initiative, the issue paper showing the calculations of  estimated savings was reportedly classified and we therefore decided not  to obtain a copy. For the other three initiatives, an official from the Office  of the CIO stated that there was not support available at the department  level. Each component reportedly used its existing planning,  programming, budget and execution process, and associated systems to  determine a overall budget and then identified estimated cost savings or  avoidance related to the commodity initiatives, which were then  aggregated by the department. The official also reported that, because  the department’s accounting systems do not collect information at the  level of granularity required for reporting on the PortfolioStat initiative  (e.g., by commodity IT type), it is difficult to show how numbers were  calculated or how they changed over time. In addition, because  component-level systems do not collect commodity IT data, it had  generally been a challenge for the department to determine cost savings  for commodity IT as OMB required. While we recognize the challenges  the department faces in obtaining the support for consolidation  opportunities identified by its components, obtaining it is critical to  ensuring that planned savings and cost avoidance are realized. This is  important considering the size of Defense’s projected savings.
section_title: Department of the Interior
paragraphs: The Department of the Interior (Interior) identified two commodity IT  investments in its action plan and other supporting documentation—  Financial and Business Management System (Deployments 7&8) and  Enterprise Forms System—that it planned to consolidate by December  2012. For fiscal years 2013 to 2015, Interior identified four additional  consolidation opportunities—cloud e-mail and collaboration services,  enterprise eArchive system, circuit consolidation, and the Networx  telecommunications contract. Interior also identified its “IT  Transformation” initiative as a source of additional savings beyond 2015.  This initiative is one of the management priorities which, according to  officials, Interior has been focusing on to drive efficiency, reduce costs,  and improve services. It is intended to streamline processes within the  department, to include a single e-mail system for the department,  telecommunications, hosting services, and an enterprise service desk  (help desk).
Interior has also identified efforts to improve processes for managing its  portfolio. Specifically, it is working to fully implement its EA and to align  the IT portfolio more closely with the department’s business priorities and  performance goals. In addition, in fiscal year 2010, Interior centralized  authority for the agency’s IT—which had previously been delegated to its  offices and bureaus—under the CIO. This consolidation gave the CIO  responsibilities for improving the operating efficiencies of the  organizational sub-components and Interior as a whole. Interior is also  establishing several new IT Investment governance boards to make  recommendations to the CIO for review and approval.
To identify its consolidation opportunities, Interior officials from the Office  of the CIO stated they used their EA. Specifically, the department  established an EA team and a performance-driven prioritization  framework to measure its IT Transformation efforts. The EA team takes a  “ruthless prioritization” approach to align the department’s priorities with  the IT Transformation goals. The priorities are evaluated by IT  Transformation goals and expected outcomes, and supported by  successive versions of architectures, plans, and solutions. In addition to  using the EA, officials from the Office of the CIO stated that the  department leveraged a set of investment processes to identify wasteful,  duplicative, and low-value investments, which includes the use of road  maps it has developed for different functional areas. Collectively, these  processes are integrated into the department’s capital planning and  investment control process in order to ensure that the portfolio of IT  investments delivers the desired value to the organization.
Interior officials from the Office of the CIO also reported using its IT  investment valuation process which it has been maturing while also  balancing changes to its IT governance process. More specifically, the  department uses the Value Measuring Methodology, recommended by  the federal CIO Council, to score its bureaus’ budget requests. Based on  these assessments, a risk-adjusted value score is assigned to each major  investment. These scores are used to identify funding levels across  Interior’s IT portfolio, with risk being viewed from the standpoint of the  “probability of success” for the investment. By making use of the EA and  investment valuation process as recommended by OMB, Interior has  enhanced its ability to identify opportunities to consolidate or eliminate  duplicative, low-value, and wasteful investments.
Interior anticipates its PortfolioStat efforts will generate approximately  $61.9 million in savings and cost avoidance through fiscal year 2015 and  provided adequate support for these estimates. Specifically, for the  Financial and Business Management System, Interior provided  calculations for the savings for each year from fiscal year 2012 to fiscal  year 2016. For the other three initiatives—Electronic Forms System,  Networx Telecommunications, and Cloud E-mail and Collaboration  Services—Interior provided estimated savings for fiscal year 2013, the  first year in which savings are anticipated, which were based on the  difference between the fiscal year 2012 baseline and lower costs that had  been achieved through the department’s strategic sourcing initiative, and  explained that these savings were expected to be realized each year  after—through fiscal year 2015. Having well-supported estimates  increases the likelihood that Interior will realize its planned savings and  provides OMB and other stakeholders with greater visibility into the  department’s performance.
section_title: Department of the Treasury
paragraphs: The Department of the Treasury (Treasury) identified two new shared  service opportunities—the Invoice Processing Platform and the DoNotPay  Business Center—as the two commodity IT investments it planned to  consolidate by December 2012; Treasury also reported to OMB that  these efforts would yield cost savings and avoidance for fiscal years 2013  through 2015. In addition, Treasury identified six consolidation  opportunities it anticipated would generate savings between fiscal years  2012 and 2014, and two others which did not have associated cost  savings. These consolidation opportunities include those classified as  Business Systems, IT Infrastructure, and Enterprise IT. Treasury also  described several process improvement efforts which, while not specific  to commodity IT, will help better manage these types of investments.  Examples of the process improvement efforts include establishing criteria  for robust reviews of investments, refining the department’s valuation and  risk models and incorporating these models into the business case  template at Treasury’s departmental offices, and launching an IT cost  model working group to refine Treasury’s IT cost model. Treasury has  also proposed additional steps in its Departmental Offices’ IT governance  process and investment life cycle to evaluate the alignment of  investments with its strategic goals and objectives. With respect to EA, in  July 2013, Treasury established a Treasury Departmental Technical  Advisory Working Group. According to its charter, the working group will  be responsible for, among other things, ensuring the alignment of  programs and projects with Treasury’s existing technologies or EA. More  specifically, all new and existing investments are expected to be reviewed  and approved by the working group to ensure such compliance.
Treasury officials from the Office of the CIO stated they had not used the  EA or a valuation model to identify their consolidation opportunities. In  addition, Treasury has yet to develop a valuation model for assessing the  value of its IT investments. According to officials, Treasury’s efforts to  develop a valuation model are 30 to 40 percent complete. Further, while it  has efforts underway within its Departmental Offices to develop models  for assessing value, cost, and risk, Treasury has not documented its  value engineering process and associated models. According to the  officials, the department’s consolidation opportunities were identified  through innovative ideas from the bureaus that were driven by current  budget constraints. While the identification of these opportunities is not  centrally managed or controlled, Treasury reported that it is currently  developing a systematic process for promoting innovative ideas from its  bureaus.
According to Treasury, it uses other processes to help manage IT  investments, including a process for evaluating the alignment of  investments with its strategic goals and objectives via its investment  review boards at both the department-wide and departmental office  levels. Further, Treasury has noted that investments’ alignment with the  mission is considered during the annual planning cycle (for existing and  new investments), and during individual investment/project reviews (for  every major investment). While Treasury identified consolidation and  shared service opportunities through innovative ideas from its bureaus,  utilizing the EA and valuation model could assist Treasury in identifying  additional opportunities for cost savings.
Treasury anticipates it will generate $56.49 million in savings from fiscal  years 2012 through 2014 and provided varying degrees of support for  these estimates. Specifically, for two of the three initiatives that we  reviewed supporting documentation for, one initiative (DoNotPay  Business Center) had supporting assumptions and calculations; however,  these calculations support earlier estimates Treasury reported for this  initiative, and not its more recent estimates. Treasury did not provide  documentation to support the cost estimates for the two remaining efforts  (Fiscal IT Data Center Consolidation and Business Process Management  Status). Without support for its estimates, Treasury may be challenged in  realizing planned savings, and OMB and other stakeholders will be  hindered in evaluating its progress.
section_title: Department of Veterans Affairs
paragraphs: The Department of Veterans Affairs (VA) identified its VA Server  Virtualization and Elimination of Dedicated Fax Servers as the two  commodity IT investments it planned to consolidate by December 2012.  In its PortfolioStat submission to OMB, VA identified five additional  consolidation opportunities it anticipated would generate savings between  fiscal years 2013 and 2015 (enterprise license agreement,  standardization of spend planning and consolidation of contract, voice  over internet protocol, vista data feeds, and one CPU policy). VA also  described several process improvement efforts in its action plan that,  while not specific to commodity IT, are intended to help better manage  these types of investments. These improvement efforts include updating  its EA process and establishing a Project Management Accountability  System that supports project planning and management control and  responsibilities for IT investments.
VA officials from the Office of the CIO stated that they did not use their  EA (which the department is still maturing) or their valuation model to  identify their consolidation opportunities. Instead, they stated that VA  uses its Ruthless Reduction Taskforce as the main mechanism for  identifying IT commodity consolidation opportunities. The task force’s  function is to ensure redundant functionality is reduced or eliminated and  to recommend the reallocation of funds from low-value projects to higher  priorities. Through its operational analysis process, it looks for excessive  expenditures to determine whether there are redundancies and therefore  opportunities to consolidate into a larger contract or service.
While the task force is the main mechanism used to identify consolidation  opportunities, VA officials from the Office of the CIO stated that the  department uses other OMB-recommended processes to help it identify  and prioritize other IT investments. For example, VA has documented  processes for evaluating the alignment of investments with its strategic  goals and objectives via its multiyear planning process and its senior  investment review boards. Specifically, the department’s multiyear  planning process provides a framework for identifying near- and long-term  priorities and opportunities for divestiture, reduction, re-investments, and  expansion of IT priorities and capabilities and timetables. To support this  and other planning processes, VA has established several IT Investment  governance boards that are intended to provide a framework for  investment decision making and accountability to ensure IT initiatives  meet the department’s strategic and business objectives in an effective  manner. While VA has identified many opportunities to consolidate  commodity IT investments and move to shared services through its  Ruthless Reduction Task Force and other processes, making use of its  EA and valuation model could help identify additional opportunities.
VA estimates that the consolidation opportunities it reported to OMB will  generate about $196 million in savings from fiscal years 2013 through  2015. However, we could not verify the support for some of the estimates.  In particular, for two of the four initiatives for which we requested support  (Server Virtualization and Eliminate Dedicated Fax Servers  Consolidation), VA provided support for calculations for cost savings and  avoidance estimates. However, these estimates did not match those  provided to OMB for the 2012 PortfolioStat process. For the third  initiative, Renegotiate Microsoft Enterprise License Agreement, VA did  not provide detailed support but instead provided a written explanation for  an overall cost avoidance figure of $161 million that was agreed to by  VA’s Deputy Chief Information Officer for Architecture, Strategy and  Design and VA’s Deputy Assistant Secretary for Information Technology  Management and Chief Financial Officer for the Office of Information  Technology. For the fourth initiative (one CPU policy), VA stated that the  initiative was no longer a stand-alone project but had been subsumed by  the Field Office Mobile Workers and Telework Support Agreement and  that the economic justification for this consolidation effort had not yet  been completed.
Officials reported that in general the lack of a strong cost estimation  process is the main challenge the department faced in estimating cost  savings, even though VA’s Ruthless Reduction Task Force does have a  process in place for performing cost estimates for the initiatives that the  task force reviews. VA officials stated that they plan to address improving  their IT cost estimation process issue with VA’s executive leadership  team, but did not provide a time frame for doing so. For the near term, VA  recently hired an operations research analyst to assist IT staff who lack  experience with cost and savings estimation activities and plans to hire  two more analysts. Without support for its estimates, VA will have less  assurance that it can realize planned cost savings and avoidance, and  OMB and stakeholders will be hindered in evaluating its progress.
section_title: OMB’s Plans Outline PortfolioStat Improvements but Do Not Address All Issues with Agencies’ Efforts
paragraphs: OMB has outlined several planned improvements to the PortfolioStat  process in a memo issued in March 2013 that should help strengthen  federal IT portfolio management and address key issues we have  identified with agencies’ efforts to implement the initiative. In particular,  OMB has changed its reporting requirements, requiring agencies to report  on progress made on a quarterly basis. In addition, agencies will also be  held accountable for their portfolio management as part of annual  PortfolioStat sessions. However, selective OMB efforts could be  strengthened to improve the PortfolioStat process and ensure agencies  achieve identified cost savings, including addressing issues related to  existing CIO authority at federal agencies, and publically reporting on  agency-provided data.
OMB’s plans identify a number of improvements that should help  strengthen IT portfolio management and address key issues we have  identified:  Agency reporting on PortfolioStat progress: OMB’s memorandum has  consolidated previously collected IT plans, reports, and data calls into  three primary collection channels—an information resources  management strategic plan, an enterprise road map, and an integrated  data collection channel. As part of this reporting requirement, agencies  will be required to provide updates on their progress in meeting key OMB  requirements related to portfolio management best practices, which  address issues identified in this report.
Agencies must describe how their investment review boards  coordinate between investment decisions, portfolio management, EA,  procurement, and software development methodologies to ensure that  IT solutions meet business requirements, as well as identify areas of  waste and duplication wherever consolidation is possible.
Agencies are to describe the valuation methodology used in their  governance process to comparatively evaluate investments, including  what criteria and areas are assessed, to ensure greater consistency  and rigor in the process of selecting, controlling, and evaluating  investments an agency decides to fund, de-fund, or terminate.
Agencies must report their actual and planned cost savings and  avoidances, as well as other metrics, achieved or expected through  the implementation of efforts such as agency migration to shared  services and cloud solutions, the consolidation of commodity IT, and  savings achieved through data center consolidation. In addition,  agencies are to describe their plans to re-invest savings resulting from  consolidations of commodity IT resources (including data centers).
In addition, agencies will now be required to report the status of their  progress in implementing PortfolioStat on a quarterly basis. Agency  integrated data collections were first required to be submitted in May  2013 and will be updated quarterly beginning in August 2013, with  subsequent updates on the last day of November, and February of each  fiscal year. Requiring agencies to provide consolidated reports on their  progress in meeting key initiatives should help OMB to better manage  these initiatives.
Holding agencies accountable for portfolio management in  PortfolioStat sessions: Moving forward, the PortfolioStat sessions held  with agency stakeholders and OMB officials are intended to involve  discussions of agency efforts related to several ongoing initiatives and  their plans to implement key OMB guidance, such as guidance on CIO  authorities, in order to help agencies mature their management of IT  resources. Specifically, OMB plans to use the documentation and data  submitted by the agencies in May 2013 to determine the state of each  agency’s IT portfolio management, such as the use of an EA and  valuation methodology, and develop areas OMB identifies as the most  appropriate opportunities for agencies to innovate, optimize, and protect  systems and data. Based on the session, OMB and the agency are  expected to identify and agree on actionable next steps and specific time  frames for the actions to be taken, which OMB intends to formalize and  transmit in a memorandum to the agency within 2 weeks of the completed  session, and no later than August 31, 2013. Upon receipt of the action  item memorandum, agency PortfolioStat leads are to work with OMB to  establish follow-up discussions as appropriate to track progress against  action items identified. Deviation from the committed schedule will trigger  a requirement for follow-up briefings by the agency to the Federal CIO no  less frequently than quarterly, until corrective actions have been  implemented or the action item is back on schedule.
OMB’s efforts to follow up with agencies on a regular basis are critical to  ensuring the success of these efforts. We have previously reported that  OMB-led TechStat sessions have enabled the government to improve or  terminate IT investments that are experiencing performance problems by  focusing management attention on troubled projects and establishing  clear action items to turn the projects around or terminate them. By  having similar sessions focusing on agency IT portfolios, OMB can hold  agencies accountable for their ongoing initiatives to consolidate or  eliminate duplicative investments and achieve significant cost savings.
Improving analytical capabilities: OMB expects to collect information  from agencies as part of PortfolioStat and use a variety of analytical  resources to evaluate the data provided, track agency progress each  quarter, and determine whether there are any areas for improvement to  the process. In addition, OMB plans to provide this information to  Congress as part of the quarterly report it is required to submit to the  Senate and House Appropriations Committees on savings achieved by  OMB’s government-wide IT reform efforts. Analyzing and reporting data  on agencies’ efforts to implement the PortfolioStat initiative will help OMB  to provide more oversight of these efforts and hold agencies accountable  for information reported in the quarterly reports.
Although OMB’s planned improvements should help strengthen the  PortfolioStat initiative going forward, they do not address some of the  shortcomings with efforts to implement the initiative identified in this  report:  Addressing issues with CIO authority: While OMB’s memorandum has  indicated that agencies must now report on how their policies,  procedures, and CIO authorities are consistent with OMB Memorandum  11-29, “Chief Information Officer Authorities,” as noted earlier, OMB’s  prior guidance and reporting requirements have not been sufficient to  address the implementation of CIO authority at all agencies. In addition,  OMB’s 2013 PortfolioStat guidance does not establish deadlines or  metrics for agencies to demonstrate the extent to which CIOs are  exercising the authorities and responsibilities provided by the Clinger- Cohen Act and OMB guidance, which, as we have previously  recommended, are needed to ensure accountability for acting on this  issue, nor does it require them to disclose any limitations CIOs might  have in their ability to exercise their authority. Until CIOs are able to  exercise their full authority, they will be limited in their ability to implement  PortfolioStat and other initiatives to improve IT management.
Reporting on action plan items that were not addressed: In OMB’s  2013 memorandum, agencies are no longer required to submit separate  commodity IT consolidation plans as in 2012 but are to identify the  progress made in implementing portfolio improvements as part of the  broader agency reporting requirement mentioned above. While OMB’s  shift to requiring agencies to report on progress now is reasonable given  the goals of PortfolioStat, it was based on the assumption that agencies  would develop robust action plans as a foundation last year. However, as  noted earlier, the submitted agency final action plans were incomplete in  that they did not always address all the required elements. Going forward,  it will be important for agencies to address the plan items required. In  addition, until OMB requires agencies to report on the status of these  items, it may not have assurance that these agencies’ plans for making  portfolio improvements fully realize the benefits of the PortfolioStat  initiative.
Ensuring agencies’ commodity IT baselines are complete, and  reporting on the status of 2012 migration efforts: OMB’s 2013  guidance does not require agencies to document how they verified their  commodity IT baseline data or disclose any limitations of these data or to  report on the completion of their two 2012 migration efforts. Without such  requirements, it will be more difficult for OMB to hold agencies  accountable for identifying and achieving potential cost savings.
Publically reporting agency PortfolioStat data: Finally, we have  previously reported that the public display of agencies’ data allows OMB,  other oversight bodies, and the general public to hold the agencies  accountable for results and progress. While OMB officials have stated  that they intend to make agency-reported data and the best practices  identified for the PortfolioStat effort publicly available, they have not yet  decided specifically which information they will report. Until OMB publicly  reports data agencies submit on their commodity IT consolidation efforts,  including planned and actual cost savings, it will be more difficult for  stakeholders, including Congress and the public, to monitor agencies’  progress and hold them accountable for reducing duplication and  achieving cost savings.
section_title: Conclusions
paragraphs: OMB’s PortfolioStat initiative offers opportunities to save billions of dollars  and improve the way in which agencies manage their portfolios. While  agencies implemented key PortfolioStat requirements, including  establishing a commodity IT baseline and documenting a final action plan  to consolidate commodity IT, shortcomings in their implementation of  these requirements could undermine the savings the PortfolioStat effort is  expected to achieve. First, reported limitations in CIOs exercising  authority over the IT portfolios at six of the agencies suggests that more  needs to be done to empower CIOs to improve management and  oversight of agency IT resources. Second, not including all IT investments  in their EA or developing complete commodity IT baselines limits  agencies’ ability to identify further opportunities for reducing wasteful,  duplicative, or low-value investments. Third, not addressing key elements  in action plans for implementing the PortfolioStat initiative increases the  likelihood that agencies will not achieve all the intended benefits. Finally,  following through on commitments to migrate or consolidate investments  is critical to ensuring accountability for results. Regarding estimated  savings and cost avoidance, the significant understatement—by at least  $2.8 billion—of OMB’s reported figures highlights the importance of  ensuring the accuracy of data and disclosing any limitations or  qualifications on reported savings.
The identification by five agencies—the Departments of Agriculture,  Defense, the Interior, the Treasury, and Veterans Affairs—of 52 initiatives  and more than $3.7 billion in potential cost savings or avoidance through  fiscal year 2015 demonstrates the significant potential of portfolio  improvements to yield ongoing benefits. Making greater use of their EA  and valuation model to identify consolidation opportunities, as  recommended by OMB, could assist agencies in identifying additional  opportunities. In addition, better support for the estimates of cost savings  associated with the opportunities identified would increase the likelihood  that these savings will be achieved.
OMB’s planned improvements to the PortfolioStat process outlined in its  March 2013 guidance—such as streamlining agency reporting on  progress in implementing the process and holding agencies accountable  for these efforts in PortfolioStat sessions—should help the office provide  better oversight and management of government-wide efforts to  consolidate commodity IT. However, OMB’s plans do not address key  issues identified in this report, which could strengthen the PortfolioStat  process. In particular, addressing issues of CIO authority by working  directly with agency leadership to establish time lines and metrics for  implementing existing guidance, requiring agencies to report on the  reliability of their commodity baseline data and the progress of all their  consolidation efforts, and making data on agencies’ progress in  consolidating commodity IT and achieving cost savings publicly available  will be essential to PortfolioStat’s success in reducing duplication and  maximizing the return on investment in federal IT.
section_title: Recommendations for Executive Action
paragraphs: To help ensure the success of PortfolioStat, we are making six  recommendations to OMB. We recommend that the Director of the Office  of Management and Budget and the Federal Chief Information Officer  require agencies to fully disclose limitations their CIOs might have in  exercising the authorities and responsibilities provided by law and OMB’s  guidance. Particular attention should be paid to the Departments of  Health and Human Services, and State; the National Aeronautics and  Space Administration; the Office of Personnel Management; and the U.S.  Agency for International Development, which reported specific limitations  with the CIO’s authority.
In addition, we recommend that the Director of the Office of Management  and Budget direct the Federal Chief Information Officer to  require that agencies (1) state what actions have been taken to  ensure the completeness of their commodity IT baseline information  and (2) identify any limitation with this information as part of integrated  data collection quarterly reporting; require agencies to report on the progress of their two consolidation  efforts that were to be completed by December 2012 as part of the  integrated data collection quarterly reporting; disclose the limitations of any data reported (or disclose the  parameters and assumptions of these data) on the agencies’  consolidation efforts and associated savings and cost avoidance; require that agencies report on efforts to address action plan items as  part of future PortfolioStat reporting; and Improve transparency of and accountability for PortfolioStat by  publicly disclosing planned and actual data consolidation efforts and  related cost savings by agency.
We are also making 58 recommendations to 24 of the 26 departments  and agencies in our review to improve their implementation of  PortfolioStat requirements. Appendix IV contains these  recommendations.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to OMB and the 26 executive agencies  in our review for comment and received responses from all 27. Of the 27,  12 agreed with our recommendations directed to them, 5 disagreed or  partially disagreed with our recommendations directed to them, 4  provided additional clarifying information, and 6 (the Departments of  Education, Labor, Transportation, and Treasury; the Small Business  Administration; and the U.S. Agency for International Development)  stated that they had no comments. Several agencies also provided  technical comments, which we incorporated as appropriate. The  agencies’ comments and our responses are summarized below.
In e-mail comments from the Federal Chief Information Officer, OMB  generally agreed with three of our recommendations and disagreed  with three. Specifically, OMB agreed with the recommendation to  require agencies to disclose limitations their CIOs might have in  exercising the authorities and responsibilities provided by law and  OMB guidance but stated that it had already addressed this issue as  part of its fiscal year 2013 PortfolioStat process. Specifically,  according to OMB, its fiscal year 2013 PortfolioStat guidance  required agencies to describe how their policies, procedures, and  authorities implement CIO authorities, consistent with OMB  Memorandum 11-29, as part of either the information resources  management plan or enterprise roadmap they were instructed to  submit. OMB stated that it reviewed and analyzed agencies’  responses and discussed limitations to CIOs’ authorities directly with  agencies during the PortfolioStat sessions in cases where it  determined that such limitations existed. However, OMB did not  provide documentation supporting its reviews or discussions with  agencies. In addition, as we note in our report, requiring agencies to  fully disclose limitations their CIOs may have in exercising the  authorities and responsibilities provided by law and OMB guidance  should provide OMB information crucial to understanding and  addressing the factors that could prevent agencies from successfully  implementing the PortfolioStat initiative. For these reasons, we are  maintaining our recommendation.
OMB stated that it agreed with our recommendation to require that  agencies (1) state what actions have been taken to ensure the  completeness of their commodity IT baseline information and (2)  identify any limitations with this information as part of the integrated  data collection quarterly reporting. It acknowledged the value in  ensuring the completeness and in understanding the limitations of  agency-produced artifacts and stated it would continue to dedicate  resources to validating agency savings associated with federal IT  reform efforts prior to presenting these savings to Congress. OMB  also stated that it would modify its analytical process to cite these  limitations when producing PortfolioStat reports in the future.
OMB generally agreed with the recommendation to require agencies  to report on the progress of the two consolidation efforts they were to  complete by December 2012 and stated that, to the extent feasible, it  would dedicate resources to analyzing this information.
OMB disagreed with our recommendation to disclose the limitations of  any data reported on the agencies’ consolidation efforts and  associated cost savings and avoidance, stating that it had disclosed  limitations on data reported and citing three instances of these efforts.  While we acknowledge that OMB reported limitations of data  regarding consolidation efforts in these cases, the information  reported did not provide stakeholders and the public with a complete  understanding of the information presented. For example, OMB did  not disclose that information from the departments of Defense and  Justice was not included in the consolidation estimates reported,  which, considering the scope of Defense’s efforts in this area (at least  $3.2 billion), is a major gap. As noted in our report, OMB’s disclosure  of limitations of or qualifications to the data it reports would provide  the public and other stakeholders with crucial information needed to  understand the status of PortfolioStat and agency progress in meeting  the goals of the initiative. Therefore, we stand by our  recommendation.
OMB also disagreed with our recommendation to require agencies to  report on efforts to address action plan elements as part of future  OMB reporting, stating that it had found that 24 of 26 agencies had  completed their plans. OMB further stated that it continuously follows  up on the consolidation efforts identified in the plans and, where  savings have been identified, reports this progress to Congress on a  quarterly basis. However, our review of the 26 agency action plans  found 26 instances where a required element (e.g., consolidation of  commodity IT spending under the CIO) was not addressed and 26  instances where a required element was only partially addressed--an  assessment with which agencies agreed. As noted in our report,  addressing all the required elements would better position agencies to  fully realize the intended benefits of the PortfolioStat initiative, and  they should therefore be held accountable for reporting on them as  required in OMB memo M-12-10. Accordingly, we stand by our  recommendation.
Finally, OMB disagreed with our recommendation to improve  transparency and accountability for PortfolioStat by disclosing  consolidation efforts and related cost savings by agency. Specifically,  OMB stated that this recommendation does not adequately account  for the work it currently performs to ensure accountability for and  transparency of the process through its quarterly reporting of identified  savings to Congress. It further stated that some details are  deliberative or procurement sensitive and it would therefore not be  appropriate to disclose them. However, while OMB currently reports  realized savings by agency on a quarterly basis, these savings are not  measured against planned savings. Doing this would greatly enhance  Congress’s insight into agencies’ progress and hold them accountable  for reducing duplication and achieving planned cost savings and  would not require reporting deliberative or procurement-sensitive  information. Therefore, we stand by our recommendation.
In written comments, the U.S. Department of Agriculture concurred  with the content of our report. The department’s comments are  reprinted in appendix V.
In written comments, the Department of Commerce concurred with  our recommendations but disagreed with our statement that the CIO  only has explicit authority over major IT investments. Commerce cited  a June 21, 2012, departmental memo on IT portfolio management that  it believes provides the CIO with explicit authority to review any IT  investment, whether major or non-major. Our statement regarding the  limitations on the CIO’s authority was based on information reported  by the department to OMB in May 2012 and confirmed with officials  from the Commerce Office of the CIO during the course of our review.  However, we agree that the June 2012 memo provides the CIO with  explicit authority to review all IT investments. Accordingly, we have  removed the original statement noting limitations from the report and  also removed Commerce from the list of departments OMB should  require to disclose CIO limitations. The Department of Commerce’s  comments are reprinted in appendix VI.
In its written response, the Department of Defense provided  comments for both the department and the Army Corps of Engineers.  It concurred with one of the three recommendations made to Defense,  partially concurred with another and disagreed with the third.  Specifically, the department concurred with our recommendation to  obtain support from the relevant component agencies for the  estimated savings for fiscal years 2013 to 2015 for the data center  consolidation, enterprise software purchasing, and General Fund  Enterprise Business System initiatives. It partially concurred with our  recommendation to develop a complete commodity baseline, stating  that the department has efforts under way to further refine the  baseline. Since these efforts have not yet been completed, we are  maintaining our recommendation. The department did not concur with  our recommendation to fully describe the consolidation of commodity  IT spending under the CIO in future OMB reporting. The department  stated that it did not intend to follow OMB’s guidance to consolidate  commodity IT spending under the CIO because this approach would  not work within the department’s federated management process.  However, our recommendation was not to implement OMB’s  guidance, but rather to address the element in the plan as required by  either describing the steps it will take to implement it or explaining why  it will not or cannot implement it. DOD did neither of these and instead  was silent on the subject. We therefore stand by our recommendation.  The department concurred with both of the recommendations we  made to the Army Corps of Engineers. The department’s comments  are reprinted in appendix VII.
In written comments, the Department of Energy concurred with our  recommendation to fully describe PortfolioStat action plan elements in  future OMB reporting and stated that the department was committed  to increasing the CIO’s oversight and authority for federal commodity  IT investments. The department also noted that our statement that the  “department has no direct authority over IT investments in two semi- autonomous agencies (the National Nuclear Security Administration  and the Energy Information Administration)” should be clarified to say  that it is the department CIO who does not have this authority. We  found support for this clarification in documentation we had already  received and therefore made it as requested. The department’s  comments are reprinted in appendix VIII.
In written comments, the Environmental Protection Agency generally  agreed with two of the three recommendations we made and  generally disagreed with the third. Specifically, the Environmental  Protection Agency generally agreed with our recommendations to (1)  fully describe three PortfolioStat action plan elements and (2) report  on the agency’s progress in consolidating the managed print services  and strategic sourcing of end user computing to shared services as  part of the OMB integrated data collection quarterly reporting until  completed. The agency disagreed with our recommendation to  develop a complete commodity IT baseline, stating that it had  provided a complete baseline to OMB on August 31, 2012, and had  also reported to us during our review that the information was current  and complete at the time of submission. During our review, we found  that the Environmental Protection Agency did not have a process in  place to ensure the completeness of the information in the baseline.  Without appropriate controls and processes in place to confirm this,  the Environmental Protection Agency cannot be assured that its data  are complete. We therefore stand by our recommendation. The  Environmental Protection Agency’s comments are reprinted in  appendix IX.
In written comments, the General Services Administration agreed with  our findings and recommendations and stated it would take action as  appropriate. The agency’s comments are reprinted in appendix X.
In written comments, the Department of Homeland Security disagreed  with our recommendation to fully describe its efforts related to  consolidating commodity IT spending under the CIO in future OMB  reporting, stating that the department had already addressed this  recommendation. Specifically, the department stated that it had  included updated information on this topic in its fiscal year 2013  Information Resources Management Plan that was submitted to OMB  in May 2013. We reviewed the Information Resources Management  Plan and agree that it addresses our recommendation. We therefore  removed the recommendation from the report. The department’s  comments are reprinted in appendix XI.
In written comments, the Department of Housing and Urban  Development concurred with our recommendations and stated it  would provide more definitive information with timelines once the final  report had been issued. The department’s comments are reprinted in  appendix XII.
In e-mail comments, the Department of the Interior’s GAO Audit  Liaison stated that the department generally concurred with our  findings and recommendations. However, the department  recommended revising the criteria we used to assess whether  agencies met the requirement to develop a commodity IT baseline  (depicted in table 1) to reflect whether or not an agency had  developed a baseline instead of whether that baseline was complete.  The department stated that a validation was not being performed on  how all agencies responded to the question and agencies that  answered truthfully were being penalized for responding honestly. We  recognize that agencies were not required to report on the  completeness of the commodity IT baseline information they  submitted to OMB; for this reason, we have recommended that OMB  require agencies to state what actions have been taken to ensure the  completeness of their commodity IT baseline information and identify  any limitations with this information as part of the integrated data  collection quarterly reporting.
In e-mail comments, an official from the Department of Justice’s Audit  Liaison Group stated that all references to the department were  factually correct.
In written comments, the National Aeronautics and Space  Administration concurred with our recommendations and noted the  agency will take actions to address them. The agency’s comments are  reprinted in appendix XIII.
In written comments, the National Archives and Records  Administration concurred with our recommendation and stated that it  would include updated or new descriptions of the elements of the  PortfolioStat action plan in future OMB reporting. The agency’s  comments are reprinted in appendix XIV.
In written comments, the National Science Foundation stated that it  generally agreed with our characterization of the agency’s  PortfolioStat status and would update its PortfolioStat action plan as  appropriate to more fully describe the two elements that we noted  were not fully addressed. Regarding our recommendation to complete  the consolidation of e-mail services to shared services, the agency  stated that this effort was completed in August 2013. After reviewing  additional documentation provided, we agree that the agency has met  the requirement. We modified the report as appropriate, and removed  the recommendation. The National Science Foundation’s comments  are reprinted in appendix XV.
In e-mail comments, the U.S. Nuclear Regulatory Commission’s GAO  Audit Liaison stated that the agency was generally in agreement with  our report.
In written comments, the Office of Personnel Management concurred  with our recommendations and noted that the agency will provide  updated information on efforts to address them to OMB on November  30, 2013. The agency’s comments are reprinted in appendix XVI.
In written comments, the Social Security Administration agreed with  one recommendation and disagreed with the other. The agency  disagreed with our recommendation to develop a complete commodity  IT baseline, stating that it believed its commodity baseline data to be  complete and accurate. However, our review found that the Social  Security Administration did not have a process in place to ensure the  completeness of the information in the baseline. Without appropriate  controls and processes in place to confirm the completeness of data,  the Social Security Administration cannot be assured that its data are  complete. The agency also acknowledged that it needed to document  a process for demonstrating the completeness of its baseline data.  Consequently, we stand by our recommendation. The Social Security  Administration’s comments are reprinted in appendix XVII.
In written comments, the Department of State stated that it concurred  with our report and would develop specific responses to each of the  three recommendations we made once the report is published.  However, related to our recommendation to complete the  consolidation of the Foreign Affairs Network and content publishing  and delivery services, the department stated that it has already  consolidated more than two commodity IT areas per OMB  Memorandum M-11-29. While we acknowledge that it has made  efforts in this area, during our review the department changed what it  considered the two commodity areas to be consolidated by December  2012 several times before stating that the two efforts were the Foreign  Affairs Network and content publishing and delivery services. Based  on this determination, we assessed the status of these two efforts and  confirmed that neither had been completed as of August 2013. In  addition, the department did not provide any documentation to support  that it had consolidated more than two commodity IT areas. We  therefore stand by our recommendation. The Department of State’s  comments are reprinted in appendix XVIII.
In written comments, the Department of Veterans Affairs concurred  with our four recommendations, stating the department is taking steps  to manage its investment portfolio more effectively and has developed  an action plan to address each recommendation. The department’s  comments are reprinted in appendix XIX.
We are sending copies of this report to interested congressional  committees, the Director of the Office of Management and Budget, the  secretaries and agency heads of the departments and agencies  addressed in this report, and other interested parties. In addition, the  report will be available at no charge on GAO’s website at  http://www.gao.gov.
If you or your staffs have any questions on the matters discussed in this  report, please contact me at (202) 512-9286 or pownerd@gao.gov.  Contact points for our Offices of Congressional Relations and Public  Affairs may be found on the last page of this report. GAO staff who made  major contributions to this report are listed in appendix XX.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to (1) determine the status of efforts to implement  key required PortfolioStat actions, (2) evaluate selected agencies’ plans  for making portfolio improvements and achieving associated cost savings,  and (3) evaluate Office of Management and Budget’s (OMB) plans to  improve the PortfolioStat process.
To determine the status of agency efforts to implement key PortfolioStat  actions, we obtained and analyzed policies, action plans, PortfolioStat  briefing slides, status reports, agency communications to OMB, and other  documentation relative to the key requirements of the Portfolio initiative  outlined in OMB’s 2012 memorandum from each of the 26 federal  agencies in our review. These requirements included (1) designating a  lead for the initiative; (2) completing a high-level IT portfolio survey; (3)  establishing a commodity IT baseline; (4) holding a PortfolioStat session;  (5) submitting a final plan to consolidate commodity IT; (6) migrating at  least two duplicative commodity IT services by December 31, 2012; (7)  and documenting lessons learned. For the final plan to consolidate  commodity IT, we reviewed agency plans to determine whether each  element required in the plan was fully addressed. A “partially” rating was  given if the plan addressed a portion but not all of the information required  in the element. In addition, we obtained a briefing book which OMB  provided to the agencies that, among other things, summarized the  agencies’ commodity IT baseline data. We assessed the reliability of  OMB’s reporting of these data through interviews with OMB officials  regarding their processes for compiling the briefing books and used the  briefing books to describe the federal investment in commodity IT at the  time of the 2012 PortfolioStat. We also assessed the reliability of  agencies’ commodity IT baseline data by reviewing the processes  agencies described they had in place to ensure that all investments were  captured in the baseline. We identified issues with the reliability of the  agencies’ commodity IT baseline data and have highlighted these issues  throughout this report, as appropriate.
For objective two, we selected five agencies with (1) high fiscal year IT  expenditure levels (based on information reported on the OMB’s IT  dashboard); (2) a mix of varying IT and CIO organizational structures  (centralized vs. decentralized); and (3) a range of investment  management maturity levels based on knowledge gathered from prior  work and reported results of PortfolioStat sessions. In addition, to the  extent possible, we avoided selecting projects that were the subject of  another engagement underway. The agencies selected are the  Departments of Agriculture, Defense, the Interior, the Treasury, and  Veterans Affairs. To evaluate the selected agencies’ plans for making  portfolio improvements and achieving associated cost savings, we  obtained and analyzed agencies’ action plans to consolidate commodity  IT, and other relevant documentation, and interviewed relevant agency  officials to compile a list of planned portfolio improvements and determine  the processes agencies used to identify these portfolio improvements. We  determined the extent to which these processes included using (1) the  agency enterprise architecture and (2) a valuation model, which OMB  recommended in its guidance to assist in analyzing portfolio information  and developing action plans. In addition, we assessed the reliability of the  cost savings and avoidance estimates by obtaining and analyzing the  support for the estimates for the two efforts that were to be migrated by  December 2012 and the two efforts with the highest anticipated savings  between fiscal years 2013 and 2015. Based on the results of our analysis,  we found the data to be sufficiently reliable given the way they are  reported herein.
To evaluate OMB’s plans for making PortfolioStat improvements, we  reviewed PortfolioStat guidance for fiscal year 2013 and interviewed  OMB officials to compile a list of planned improvements. In addition, we  analyzed the information obtained from our sources and the results of our  analyses for our first two objectives to determine whether OMB’s plans for  improving PortfolioStat addressed the issues we identified.
We conducted this performance audit from October 2012 to November  2013 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: Agencies’ Commodity IT Migration Efforts
paragraphs: The table below lists the commodity IT efforts for migration to shared  services agencies identified in their action plan.
Moving website and census data to shared service provider  Moving e-mail to shared services  Electronic Capital Planning and Investment Control (eCPIC)  Portfolio Management tool (FESCOM Program Participant)
Electronic Capital Planning and Investment Control (eCPIC)
section_title: Appendix III: Agencies’ Portfolio Initiatives
paragraphs: The table below lists the commodity IT initiatives that agencies identified  in the cost target templates provided to OMB in September 2012.
Total  estimated  savings or  cost  avoidance  Dollars in millions (rounded)
Geo Spatial Consolidation  Total reported savings and cost avoidance  Commerce  Desktop/Laptop Management  Several Data Center Consolidation Activities  Reduce total number of computers, use Commerce PC purchase  contract to get discount.
National Oceanic and Atmospheric Administration National Service  Desk  Enterprise-Wide IT Security Assessment and Authorization  National Institute of Standards and Technology Cloud Initiatives  Voice over Internet Protocol  Total reported savings and cost avoidance  Defense  Branch Services Consolidation of Commodity IT Components and  Applications  n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d.
Multi-level Security Domain Thin Client Solutions  n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d.
Consolidation Procurement of Commodity IT Hardware Purchases  n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d.
Unclassified Information Sharing Service / All Partner Access Network  n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d.
Implement Cross Domain Solution as Enterprise Service  n.d. n.d. n.d. n.d.
Fiscal year  2013  estimated  savings or  cost  avoidance  n.d.
Fiscal year  2014  estimated  savings or  cost  avoidance   n.d.
Fiscal year  2015  estimated  savings or  cost  avoidance  n.d.
Total  estimated  savings or  cost  avoidance  n.d.
Video Over Internet Protocol Enterprise Service  n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d.
Defense Red Switch Network Rationalization  n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d.
Computing Infrastructure and Services Optimization  n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d.
Enterprise Messaging and Collaboration Services  n.d. n.d. n.d. n.d.
Identify and Access Management Services  n.d. n.d. n.d. n.d.
Enterprises Services – Identify and Access Management  n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d.
Defense Interoperability with Mission Partners  n.d. n.d. n.d. n.d.
General Fund Enterprise Business System  n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d.
subsections: section_title: Total reported savings and cost avoidance
section_title: Asia Pacific Economic Cooperation Websites
paragraphs: Initiative  Office of the Chief Financial Officer Grants Information Award  Database Internet Site  Education Web  Total reported savings and cost avoidance  Energy  Commodity IT Contract Consolidation  Enhanced Connectivity for Telework and Travel  Public Key Infrastructure Migration to Shared Service Provider  Collaboration Tools Consolidation (Microsoft SharePoint)
Migration on-premise Exchange Services into Cloud 365 offering  Rocky Mountain Oilfield Testing Center - Commodity IT Full Time  Equivalent Reduction   eCPIC Migration to General Services Administration Cloud  Environment  Implement CISCO Unified Communication & Collaboration  ITSM Replacement of Office of the Chief Information Officer Remedy  systems with ServiceNow  Total reported savings and cost avoidance  Environmental Protection Agency  Email (Software as a Service)
Collaboration Tools (Software as a Service)
Identity Credentials and Access Management   (.16)
section_title: Total reported savings and cost avoidance
paragraphs: Initiative  Enterprise eArchive System part of eMail Enterprise Records and  Document Management System  Financial and Business Management System deployment 7&8   Enterprise Forms System  Total reported savings and cost avoidance  Justice  Consolidation of Classified Processing Services  n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d.
Web Time and Attendance Cloud Solution  n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d.
Justice Management Division Mobility-Virtual Private Network  n.d. n.d. n.d. n.d.
Consolidation of Justice Land Mobile Radio Systems  n.d. n.d. n.d. n.d.
Monitoring at two security operations centers  n.d. n.d. n.d. n.d. n.d. n.d. n.d. n.d.
Bureau of Alcohol, Tobacco, Firearms and Explosives Unified  Communications  n.d. n.d. n.d. n.d.
Strategic sourcing (contract escalations) n.d. n.d. n.d. n.d.
Network Delivery Order for CISCO services  Total reported savings and cost avoidance  Labor  DOLNet Network Infrastructure consolidation  n.d. n.d. n.d.
Learning Management System aka Integrated Talent Management  System = LMS (Learning Management System) + PM (Performance  Management) $265k  WFA aka Workforce Analytics or Workforce Planning $535k  eCPIC Portfolio Management Tool (FESCOM Program Participant)
Telecommunications and Computer Operations Center  Total reported savings and cost avoidance  U.S. Army Corps of Engineers  eCPIC  Total reported savings and cost avoidance  Veterans Affairs  Server Virtualization  Eliminate Dedicated Fax Servers Consolidation  Standardize Spend Planning and Consolidation Contracts  Total reported savings and cost avoidance  Total reported savings and cost avoidance (all agencies) n.d.—no data.
Numbers may not add up due to rounding.
section_title: Appendix IV: Recommendations to Departments and Agencies
subsections: section_title: Agriculture
paragraphs: To improve the department’s implementation of PortfolioStat, we  recommend that the Secretary of Agriculture direct the CIO to take the  following four actions:
Develop a complete commodity IT baseline.
In future reporting to OMB, fully describe the following PortfolioStat  Action plan elements: (1) consolidate commodity IT spending under  the agency CIO and (2) establish criteria for wasteful, low-value, or  duplicative investments.
As the department finalizes and matures its valuation methodology,  utilize this process to identify whether there are additional  opportunities to reduce duplicative, low-value, or wasteful  investments.
Develop support for the estimated savings for fiscal years 2013  through 2015 for the Cellular Phone Contract Consolidation, IT  Infrastructure Consolidation/Enterprise Data Center Consolidation,  and Geospatial Consolidation initiatives.
section_title: Commerce
paragraphs: To improve the department’s implementation of PortfolioStat, we  recommend that the Secretary of Commerce direct the CIO to take the  following two actions:
Reflect 100 percent of information technology investments in the  department’s enterprise architecture.
Develop a complete commodity IT baseline.
section_title: Defense
paragraphs: To improve the department’s implementation of PortfolioStat, we  recommend that the Secretary of Defense direct the CIO to take the  following three actions:
Develop a complete commodity IT baseline.
In future reporting to OMB, fully describe the following PortfolioStat  action plan element: consolidate commodity IT spending under the  agency CIO.
Obtain support from the relevant component agencies for the  estimated savings for fiscal years 2013 to 2015 for the data center  consolidation, enterprise software purchasing, and General Fund  Enterprise Business System initiatives.
In addition, to improve the U.S. Army Corps of Engineers’ implementation  of PortfolioStat, we recommend that the Secretary of Defense direct the  Secretary of the Army to take the following two actions:  In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) consolidate commodity IT spending under  the agency CIO; (2) target duplicative systems or contracts that  support common business functions for consolidation; (3) establish  criteria for identifying wasteful, low-value, or duplicative investments;  and (4) establish a process to identify these potential investments and  a schedule for eliminating them from the portfolio..
Report on the agency’s progress in consolidating eCPIC to a shared  service as part of the OMB integrated data collection quarterly  reporting until completed.
section_title: Energy
paragraphs: To improve the department’s implementation of PortfolioStat, we  recommend that the Secretary of Energy direct the CIO to take the  following action:  In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) consolidate commodity IT spending under  the agency CIO and (2) establish criteria for identifying wasteful, low- value, or duplicative investments.
section_title: Environmental Protection Agency
paragraphs: To improve the agency’s implementation of PortfolioStat, we recommend  that the Administrator of the Environmental Protection Agency direct the  CIO to take the following three actions:
Develop a complete commodity IT baseline.
In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) consolidate commodity IT spending under  the agency CIO; (2) establish targets for commodity IT spending  reductions and deadlines for meeting those targets; and (3) establish  criteria for identifying wasteful, low-value, or duplicative investments.
Report on the agency’s progress in consolidating the managed print  services and strategic sourcing of end user computing to shared  services as part of the OMB integrated data collection quarterly  reporting until completed.
section_title: General Services Administration
paragraphs: To improve the agency’s implementation of PortfolioStat, we recommend  that the Administrator of the General Services Administration direct the  CIO to take the following action:
Report on the agency’s progress in consolidating the contract writing  module to a shared service as part of the OMB integrated data  collection quarterly reporting until completed.
section_title: Health and Human Services
paragraphs: To improve the department’s implementation of PortfolioStat, we  recommend that the Secretary of Health and Human Services direct the  CIO to take the following action:  In future OMB reporting, fully describe the following PortfolioStat  action plan element: consolidate commodity IT spending under the  agency CIO.
section_title: Housing and Urban Development
paragraphs: To improve the department’s implementation of PortfolioStat, we  recommend that the Secretary of Housing and Urban Development direct  the CIO to take the following three actions:
Develop a complete commodity IT baseline.
In future reporting to OMB, fully describe the following PortfolioStat  action plan element: establish criteria for identifying wasteful, low- value, or duplicative investments.
Report on the department’s progress in consolidating the HR End-to- End Performance Management Module to a shared service as part of  the OMB integrated data collection quarterly reporting until completed.
section_title: Interior
paragraphs: To improve the department’s implementation of PortfolioStat, we  recommend that the Secretary of the Interior direct the CIO to take the  following three actions:
Develop a complete commodity IT baseline.
In future reporting to OMB, fully describe the following PortfolioStat  action plan element: establish criteria for identifying wasteful, low- value, or duplicative investments.
Report on the department’s progress in consolidating the Electronic  Forms System component of the eMail Enterprise Records &  Document Management System deployment 8 to a shared service as  part of the OMB integrated data collection quarterly reporting until  completed.
section_title: Justice
paragraphs: To improve the department’s implementation of PortfolioStat, we  recommend that the Attorney General direct the CIO to take the following  two actions:
Reflect 100 percent of information technology investments in the  department’s enterprise architecture.
In future reporting to OMB, fully describe the following PortfolioStat  action plan element: establish targets for commodity IT spending  reductions and deadlines for meeting those targets.
section_title: Labor
paragraphs: To improve the department’s implementation of PortfolioStat, we  recommend that the Secretary of Labor direct the CIO to take the  following three actions:
Develop a complete commodity IT baseline.
In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) consolidate commodity IT spending under  the agency CIO and (2) establish targets for commodity IT spending  reductions and deadlines for meeting those targets.
Report on the department’s progress in consolidating the cloud e-mail  services to a shared service as part of the OMB integrated data  collection quarterly reporting until completed.
section_title: National Aeronautics and Space Administration
paragraphs: To improve the agency’s implementation of PortfolioStat, we recommend  that the Administrator of the National Aeronautics and Space  Administration direct the CIO to take the following three actions:
Reflect 100 percent of information technology investments in the  agency’s enterprise architecture.
In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) consolidate commodity IT spending under  the agency CIO; (2) target duplicative systems or contracts that  support common business functions for consolidation; (3) establish  criteria for identifying wasteful, low-value, or duplicative investments;  and (4) establish a process to identify these potential investments and  a schedule for eliminating them from the portfolio.
Report on the agency’s progress in consolidating the NASA Integrated  Communications Services Consolidated Configuration Management  System to a shared service as part of the OMB integrated data  collection quarterly reporting until completed.
section_title: National Archives and Records Administration
paragraphs: To improve the agency’s implementation of PortfolioStat, we recommend  that the Archivist of the United States direct the CIO to take the following  action:  In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) consolidate commodity IT spending under  the agency CIO; (2) target duplicative systems or contracts that  support common business functions for consolidation; (3) establish  criteria for identifying wasteful, low-value, or duplicative investments;  and (4) establish a process to identify these potential investments and  a schedule for eliminating them from the portfolio.
section_title: National Science Foundation
paragraphs: To improve the agency’s implementation of PortfolioStat, we recommend  that the Director of the National Science Foundation direct the CIO to take  the following action:  In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) consolidate commodity IT spending under  the agency CIO and (2) establish criteria for identifying wasteful, low- value, or duplicative investments.
section_title: Nuclear Regulatory Commission
paragraphs: To improve the agency’s implementation of PortfolioStat, we recommend  that the Chairman of the U.S. Nuclear Regulatory Commission direct the  CIO to take the following two actions:
Develop a complete commodity IT baseline.
In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) consolidate commodity IT spending under  the agency CIO; (2) establish targets for commodity IT spending  reductions and deadlines for meeting those targets; (3) target  duplicative systems or contracts that support common business  functions for consolidation; and (4) establish a process to identify  these potential investments and a schedule for eliminating them from  the portfolio.
section_title: Office of Personnel Management
paragraphs: To improve the agency’s implementation of PortfolioStat, we recommend  that the Director of the Office of Personnel Management direct the CIO to  take the following three actions:
Develop a complete commodity IT baseline.
In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) move at least two commodity IT areas to  shared services and (2) target duplicative systems or contracts that  support common business functions for consolidation.
Report on the agency’s progress in consolidating the help desk  consolidation and IT asset inventory to shared services as part of the  OMB integrated data collection quarterly reporting until completed.
section_title: Small Business Administration
paragraphs: To improve the agency’s implementation of PortfolioStat, we recommend  that the Administrator of the Small Business Administration direct the CIO  to take the following two actions:
Develop a complete commodity IT baseline.
In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) consolidate commodity IT spending under  the agency CIO; (2) establish targets for commodity IT spending  reductions and deadlines for meeting those targets; (3) target  duplicative systems or contracts that support common business  functions for consolidation; and (4) establish a process to identify  those potential investments and a schedule for eliminating them from  the portfolio.
section_title: Social Security Administration
paragraphs: To improve the agency’s implementation of PortfolioStat, we recommend  that the Commissioner of the Social Security Administration direct the  CIO to take the following two actions:
Develop a complete commodity IT baseline.
Report on the agency’s progress in consolidating the geospatial  architecture to a shared service as part of the OMB integrated data  collection quarterly reporting until completed.
section_title: State
paragraphs: To improve the department’s implementation of PortfolioStat, we  recommend that the Secretary of State direct the CIO to take the  following three actions:
Reflect 100 percent of information technology investments in the  department’s enterprise architecture.
In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) consolidate commodity IT spending under  the agency CIO; (2) establish targets for commodity IT spending  reductions and deadlines for meeting those targets; (3) move at least  two commodity IT areas to shared services; (4) target duplicative  systems or contracts that support common business functions for  consolidation; and (5) establish a process to identify those potential  investments and a schedule for eliminating them from the portfolio.
Report on the department’s progress in consolidating the Foreign  Affairs Network and content publishing and delivery services to  shared services as part of the OMB integrated data collection  quarterly reporting until completed.
section_title: Transportation
paragraphs: To improve the department’s implementation of PortfolioStat, we  recommend that the Secretary of Transportation direct the CIO to take the  following two actions:  In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) consolidate commodity IT spending under  the agency CIO; (2) establish targets for commodity IT spending  reductions and deadlines for meeting those targets; (3) target  duplicative systems or contracts that support common business  functions for consolidation; and (4) establish a process to identify  those potential investments and a schedule for eliminating them from  the portfolio.
Report on the department’s progress in consolidating the Enterprise  Messaging to shared services as part of the OMB integrated data  collection quarterly reporting until completed.
section_title: Treasury
paragraphs: To improve the department’s implementation of PortfolioStat, we  recommend that the Secretary of the Treasury direct the CIO to take the  following three actions:  In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) consolidate commodity IT spending under  the agency CIO and (2) establish criteria for identifying wasteful, low- value, or duplicative investments.
As the department finalizes and matures its enterprise architecture  and valuation methodology, utilize these processes to identify whether  there are additional opportunities to reduce duplicative, low-value, or  wasteful investments.
Develop support for the estimated savings for fiscal years 2013 to  2015 for the DoNotPay Business Center, Fiscal IT Data Center  Consolidation and Business Process Management Status initiatives.
section_title: U.S. Agency for International Development
paragraphs: To improve the agency’s implementation of PortfolioStat, we recommend  that the Administrator of the U.S. Agency for International Development  direct the CIO to take the following four actions:
Reflect 100 percent of information technology investments in the  agency’s enterprise architecture.
Develop a complete commodity IT baseline.
In future reporting to OMB, fully describe the following PortfolioStat  action plan elements: (1) target duplicative systems or contracts that  support common business functions for consolidation and (2)  establish a process to identify those potential investments and a  schedule for eliminating them from the portfolio.
Report on the agency’s progress in consolidating the e-mail and  Telecommunication and Operations Center to shared services as part  of the OMB integrated data collection quarterly reporting until  completed.
section_title: Veterans Affairs
paragraphs: To improve the department’s implementation of PortfolioStat, we  recommend that the Secretary of Veterans Affairs direct the CIO to take  the following four actions:  In future reporting to OMB, fully describe the following PortfolioStat  action plan element: target duplicative systems or contracts that  support common business functions for consolidation.
Report on the department’s progress in consolidating the dedicated  fax servers to a shared service as part of the OMB integrated data  collection quarterly reporting until completed.
As the department matures its enterprise architecture process, make  use of it, as well as the valuation model, to identify whether there are  additional opportunities to reduce duplicative, low-value, or wasteful  investments.
Develop detailed support for the estimated savings for fiscal years  2013 to 2015 for the Server Virtualization, Eliminate Dedicated Fax  Servers Consolidation, Renegotiate Microsoft Enterprise License  Agreement, and one CPU policy initiatives.
section_title: Appendix V: Comments from the U.S. Department of Agriculture
section_title: Appendix VI: Comments from the Department of Commerce
section_title: Appendix VII: Comments from the Department of Defense
section_title: Appendix VIII: Comments from the Department of Energy
section_title: Appendix IX: Comments from the Environmental Protection Agency
section_title: Appendix X: Comments from the General Services Administration
section_title: Appendix XI: Comments from the Department of Homeland Security
section_title: Appendix XII: Comments from the Department of Housing and Urban Development
section_title: Appendix XIII: Comments from the National Aeronautics and Space Administration
section_title: Appendix XIV: Comments from the National Archives and Records Administration
section_title: Appendix XV: Comments from the National Science Foundation
section_title: Appendix XVI: Comments from the Office of Personnel Management
section_title: Appendix XVII: Comments from the Social Security Administration
section_title: Appendix XIII: Comments from the Department of State
section_title: Appendix XIX: Comments from the Department of Veterans Affairs
section_title: Appendix XX: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, individuals making contributions  to this report included Sabine Paul (Assistant Director), Valerie Hopkins,  Lee McCracken, Tomas Ramirez, and Bradley Roach.