Information Technology: Continued Implementation of High-Risk Recommendations Is Needed to Better Manage Acquisitions Operations and Cybersecurity
Released: 2018-05-23T00:00:00

Letter

Background

According to the President’s budget, the federal government plans to invest more than $96 billion for IT in fiscal year 2018—the largest amount ever budgeted. Despite such large IT expenditures, we have previously reported that investments in federal IT too often result in failed projects that incur cost overruns and schedule slippages, while contributing little to the desired mission-related outcomes. For example:

The tri-agency National Polar-orbiting Operational Environmental Satellite System was disbanded in February 2010 by the White House’s Office of Science and Technology Policy after the program spent 16 years and almost $5 billion.

The Department of Homeland Security’s (DHS) Secure Border Initiative Network program was ended in January 2011, after the department obligated more than $1 billion for the program.

The Department of Veterans Affairs’ Financial and Logistics Integrated Technology Enterprise program was intended to be delivered by 2014 at a total estimated cost of $609 million, but was terminated in October 2011.

The Department of Defense’s Expeditionary Combat Support System was canceled in December 2012 after spending more than a billion dollars and failing to deploy within 5 years of initially obligating funds.

The United States Coast Guard (Coast Guard) decided to terminate its Integrated Health Information System project in 2015. As reported by the agency in August 2017, the Coast Guard spent approximately $60 million over 7 years on this project, which resulted in no equipment or software that could be used for future efforts.

Our past work has found that these and other failed IT projects often suffered from a lack of disciplined and effective management, such as project planning, requirements definition, and program oversight and governance. In many instances, agencies had not consistently applied best practices that are critical to successfully acquiring IT.

Such projects have also failed due to a lack of oversight and governance. Executive-level governance and oversight across the government has often been ineffective, specifically from CIOs. For example, we have reported that some CIOs’ roles were limited because they did not have the authority to review and approve the entire agency IT portfolio.

In addition to failures when acquiring IT, security deficiencies can threaten systems once they become operational. As we previously reported, in order to counter security threats, 23 civilian Chief Financial Officers Act agencies spent a combined total of approximately $4 billion on IT security-related activities in fiscal year 2016. Even so, our cybersecurity work at federal agencies continues to highlight information security deficiencies. The following examples describe the types of risks we have found at federal agencies.

In November 2017, we reported that the Department of Education’s Office of Federal Student Aid did not consistently analyze privacy risks for its electronic information systems, and policies and procedures for protecting information systems were not always up to date.

In August 2017, we reported that, since the 2015 data breaches, the Office of Personnel Management (OPM) had taken actions to prevent, mitigate, and respond to data breaches involving sensitive personal and background investigation information. However, we noted that the agency had not fully implemented recommendations made to OPM by DHS’s United States Computer Emergency Readiness Team to help the agency improve its overall security posture and improve its ability to protect its systems and information from security breaches.

In July 2017, we reported that IT security at the Internal Revenue Service had weaknesses that limited its effectiveness in protecting the confidentiality, integrity, and availability of financial and sensitive taxpayer data. An underlying reason for these weaknesses was that the Internal Revenue Service had not effectively implemented elements of its information security program.

In May 2016, we reported that the National Aeronautics and Space Administration, the Nuclear Regulatory Commission, OPM, and the Department of Veteran Affairs did not always control access to selected high-impact systems, patch known software vulnerabilities, and plan for contingencies. An underlying reason for these weaknesses was that the agencies had not fully implemented key elements of their information security programs.

In August 2016, we reported that the IT security of the Food and Drug Administration had significant weaknesses that jeopardized the confidentiality, integrity, and availability of its information systems and industry and public health data.

FITARA Increases CIO Authorities and Responsibilities

Congress and the President have enacted various key pieces of reform legislation to address IT management issues. These include the federal IT acquisition reform legislation commonly referred to as the Federal Information Technology Acquisition Reform Act (FITARA). This legislation was intended to improve covered agencies’ acquisitions of IT and enable Congress to monitor agencies’ progress and hold them accountable for reducing duplication and achieving cost savings. The law includes specific requirements related to seven areas:

Agency CIO authority enhancements. CIOs at covered agencies have the authority to, among other things, (1) approve the IT budget requests of their respective agencies and (2) review and approve IT contracts.

Federal data center consolidation initiative (FDCCI). Agencies covered by FITARA are required, among other things, to provide a strategy for consolidating and optimizing their data centers and issue quarterly updates on the progress made.

Enhanced transparency and improved risk management. The Office of Management and Budget (OMB) and covered agencies are to make detailed information on federal IT investments publicly available, and agency CIOs are to categorize their investments by level of risk.

Portfolio review. Covered agencies are to annually review IT investment portfolios in order to, among other things, increase efficiency and effectiveness and identify potential waste and duplication.

Expansion of training and use of IT acquisition cadres. Covered agencies are to update their acquisition human capital plans to support timely and effective IT acquisitions. In doing so, the law calls for agencies to consider, among other things, establishing IT acquisition cadres (i.e., multi-functional groups of professionals to acquire and manage complex programs), or developing agreements with other agencies that have such cadres.

Government-wide software purchasing program. The General Services Administration is to develop a strategic sourcing initiative to enhance government-wide acquisition and management of software. In doing so, the law requires that, to the maximum extent practicable, the General Services Administration should allow for the purchase of a software license agreement that is available for use by all executive branch agencies as a single user.

Maximizing the benefit of the Federal Strategic Sourcing Initiative. Federal agencies are required to compare their purchases of services and supplies to what is offered under the Federal Strategic Sourcing Initiative.

In June 2015, OMB released guidance describing how agencies are to implement FITARA. This guidance is intended to, among other things: assist agencies in aligning their IT resources with statutory establish government-wide IT management controls to meet the law’s requirements, while providing agencies with flexibility to adapt to unique agency processes and requirements; strengthen the relationship between agency CIOs and bureau CIOs; strengthen CIO accountability for IT costs, schedules, performance, and security.

The guidance identifies a number of actions that agencies are to take to establish a basic set of roles and responsibilities (referred to as the common baseline) for CIOs and other senior agency officials; and thus, to implement the authorities described in the law. For example, agencies are to conduct a self-assessment and submit a plan describing the changes they intend to make to ensure that common baseline responsibilities are implemented.

In addition, in August 2016, OMB released guidance intended to, among other things, define a framework for achieving the data center consolidation and optimization requirements of FITARA. The guidance directs agencies to develop a data center consolidation and optimization strategic plan that defines the agency’s data center strategy for fiscal years 2016, 2017, and 2018. This strategy is to include, among other things, a statement from the agency CIO indicating whether the agency has complied with all data center reporting requirements in FITARA. Further, the guidance indicates that OMB is to maintain a public dashboard to display consolidation-related costs savings and optimization performance information for the agencies.

Congress Has Undertaken Efforts to Continue Selected FITARA Provisions and Modernize Federal IT

Congress has recognized the importance of agencies’ continued implementation of FITARA provisions, and has taken legislative action to extend selected provisions beyond their original dates of expiration. Specifically, Congress and the President enacted laws to: remove the expiration date for enhanced transparency and improved risk management provisions, which were set to expire in 2019; remove the expiration date for portfolio review, which was set to expire in 2019; and extend the expiration date for FDCCI from 2018 to 2020.

In addition, Congress and the President enacted a law to authorize the availability of funding mechanisms to help further agencies’ efforts to modernize IT. The law, known as the Modernizing Government Technology (MGT) Act, authorizes agencies to establish working capital funds for use in transitioning from legacy IT systems, as well as for addressing evolving threats to information security. The law also creates the Technology Modernization Fund, within the Department of the Treasury, from which agencies can “borrow” money to retire and replace legacy systems, as well as acquire or develop systems.

Further, in February 2018, OMB issued guidance for agencies to implement the MGT Act. The guidance was intended to provide agencies additional information regarding the Technology Modernization Fund, and the administration and funding of the related IT working capital funds. Specifically, the guidance allowed agencies to begin submitting initial project proposals for modernization on February 27, 2018. In addition, in accordance with the MGT Act, the guidance provides details regarding a Technology Modernization Board, which is to consist of (1) the Federal CIO; (2) a senior official from the General Services Administration; (3) a member of DHS’s National Protection and Program Directorate; and (4) four federal employees with technical expertise in IT development, financial management, cybersecurity and privacy, and acquisition, appointed by the Director of OMB.

FISMA Establishes Responsibilities for Agencies to Address Federal Cybersecurity

Congress and the President enacted the Federal Information Security Modernization Act of 2014 (FISMA) to improve federal cybersecurity and clarify government-wide responsibilities. The act addresses the increasing sophistication of cybersecurity attacks, promotes the use of automated security tools with the ability to continuously monitor and diagnose the security posture of federal agencies, and provides for improved oversight of federal agencies’ information security programs.

Specifically, the act clarifies and assigns additional responsibilities to entities such as OMB, DHS, and the federal agencies. Table 1 describes a selection of OMB, DHS, and agency responsibilities.

The Current Administration Has Undertaken Efforts to Improve, Modernize, and Strengthen the Security of Federal IT

Beyond the implementation of FITARA, FISMA, and related actions, the current administration has also initiated other efforts intended to improve federal IT. Specifically, in March 2017, the administration established the Office of American Innovation, which has a mission to, among other things, make recommendations to the President on policies and plans aimed at improving federal government operations and services. In doing so, the office is to consult with both OMB and the Office of Science and Technology Policy on policies and plans intended to improve government operations and services, improve the quality of life for Americans, and spur job creation.

In May 2017, the Administration also established the American Technology Council, which has a goal of helping to transform and modernize federal agency IT and how the federal government uses and delivers digital services. The President is the chairman of this council, and the Federal CIO and the United States Digital Service Administrator are among the members.

In addition, on May 11, 2017, the President signed Executive Order 13800, Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure. This executive order outlined actions to enhance cybersecurity across federal agencies and critical infrastructure to improve the nation’s cyber posture and capabilities against cyber security threats. Among other things, the order tasked the Director of the American Technology Council to coordinate a report to the President from the Secretary of DHS, the Director of OMB, and the Administrator of the General Services Administration, in consultation with the Secretary of Commerce, regarding the modernization of federal IT. As a result, the Report to the President on Federal IT Modernization was issued on December 13, 2017, and outlined the current and envisioned state of federal IT. The report focused on modernization efforts to improve the security posture of federal IT and recognized that agencies have attempted to modernize systems but have been stymied by a variety of factors, including resource prioritization, ability to procure services quickly, and technical issues. The report provided multiple recommendations intended to address these issues through the modernization and consolidation of networks and the use of shared services to enable future network architectures.

Further, in March 2018, the Administration issued the President’s Management Agenda, which lays out a long-term vision for modernizing the federal government. The agenda identifies three related drivers of transformation—IT modernization; data, accountability, and transparency; and the workforce of the future—that are intended to push change across the federal government.

The Administration also established 14 related Cross-Agency Priority goals, many of which have elements that involve IT. In particular, the Cross-Agency Priority goal on IT modernization states that modern IT must function as the backbone of how government serves the public in the digital age and provides three priorities that are to guide the Administration’s efforts to modernize federal IT: (1) enhancing mission effectiveness by improving the quality and efficiency of critical services, including the increased utilization of cloud-based solutions; (2) reducing cybersecurity risks to the federal mission by leveraging current commercial capabilities and implementing cutting edge cybersecurity capabilities; and (3) building a modern IT workforce by recruiting, reskilling, and retaining professionals able to help drive modernization with up-to-date technology.

Most recently, on May 15, 2018, the President signed Executive Order 13833, Enhancing the Effectiveness of Agency Chief Information Officers. Among other things, this executive order is intended to better position agencies to modernize their IT systems, execute IT programs more efficiently, and reduce cybersecurity risks. The order pertains to 22 of the 24 Chief Financial Officer Act agencies: the Department of Defense and the Nuclear Regulatory Commission are exempt.

For the covered agencies, the executive order strengthens the role of agency CIOs by, among other things, requiring to report directly to their agency head; to serve as their agency head’s primary IT strategic advisor; and to have a significant role in all management, governance, and oversight processes related to IT. In addition, one of the cybersecurity requirements directs agencies to ensure that the CIO works closely with an integrated team of senior executives, including those with expertise in IT, security, and privacy, to implement appropriate risk management measures.

Agencies Have Not Fully Addressed the IT Acquisitions and Operations High-Risk Area

In the February 2017 update to our high-risk series, we reported that agencies still needed to complete significant work related to the management of IT acquisitions and operations We stressed that OMB and federal agencies should continue to expeditiously implement FITARA and OMB’s related guidance, which include enhancing CIO authority, consolidating data centers, and acquiring and managing software licenses.

Our update to this high-risk area also stressed that OMB and agencies needed to continue to implement our prior recommendations in order to improve their ability to effectively and efficiently invest in IT. Specifically, from fiscal years 2010 through 2015, we made 803 recommendations to OMB and federal agencies to address shortcomings in IT acquisitions and operations. In addition, in fiscal year 2016, we made 202 new recommendations, thus, further reinforcing the need for OMB and agencies to address the shortcomings in IT acquisitions and operations.

As stated in the update, OMB and agencies should demonstrate government-wide progress in the management of IT investments by, among other things, implementing at least 80 percent of our recommendations related to managing IT acquisitions and operations within 4 years. As of May 2018, OMB and agencies had fully implemented 489 (or about 61 percent) of the 803 recommendations. Figure 1 summarizes the progress that OMB and agencies have made in addressing our recommendations as compared to the 80 percent target.

Overall, federal agencies would be better positioned to realize billions in cost savings and additional management improvements if they address these recommendations, including those aimed at implementing CIO responsibilities, review of IT acquisitions; improving data center consolidation; and managing software licenses.

Agencies Need to Address Shortcomings and Challenges in Implementing CIO Responsibilities

In all, the various laws, such as FITARA, and related guidance assign 35 IT management responsibilities to CIOs in six key areas. These areas are: leadership and accountability, budgeting, information security, investment management, workforce, and strategic planning.

In a draft report on CIO responsibilities that we have provided to the agencies for comment and plan to issue in June 2018, our preliminary results suggest that none of the 24 agencies we reviewed had policies that fully addressed the role of their CIO, as called for by federal laws and guidance. In this regard, a majority of the agencies fully or substantially addressed the role of their CIOs for the area of leadership and accountability. In addition, a majority of the agencies substantially or partially addressed the role of their CIOs for two areas: information security and IT budgeting. However, most agencies partially or minimally addressed the role of their CIOs for two areas: investment management and strategic planning. These preliminary results are shown in figure 2.

Despite these shortfalls, most agency officials stated that their CIOs are implementing the responsibilities even if the agencies do not have policies requiring implementation.

Nevertheless, the CIOs of the 24 selected agencies acknowledged in responses to a survey that we administered for our draft report that they were not always very effective in implementing the six IT management areas. Specifically, our preliminary results show that at least 10 of the CIOs indicated that they were less than very effective for each of the six areas of responsibility. We believe that until agencies fully address the role of CIOs in their policies, agencies will be limited in addressing longstanding IT management challenges.

Figure 3 depicts that extent to which the CIOs reported their effectiveness in implementing the six areas of responsibility.

Beyond the actions of the agencies, however, our preliminary results indicate that shortcomings in agencies’ policies also are partially attributable to two weaknesses in OMB’s FITARA implementation guidance. First, the guidance does not comprehensively address all CIO responsibilities, such as those related to assessing the extent to which personnel meet IT management knowledge and skill requirements, and ensuring that personnel are held accountable for complying with the information security program. Correspondingly, the majority of the agencies’ policies did not fully address nearly all of the responsibilities that were not included in OMB’s guidance.

Second, OMB’s guidance does not ensure that CIOs have a significant role in (1) IT planning, programming, and budgeting decisions and (2) execution decisions and the management, governance, and oversight processes related to IT, as required by federal law and guidance. In the absence of comprehensive guidance, CIOs will not be positioned to effectively acquire, maintain, and secure their IT systems.

Based on our preliminary results, 24 agency CIOs also identified a number of factors that enabled and challenged their ability to effectively manage IT. As shown in figure 4, five factors were identified by at least half of the 24 CIOs as major enablers and three factors were identified by at least half of the CIOs as major challenges. Specifically, most agency CIOs cited five factors as being enablers to effectively carry out their responsibilities: (1) NIST guidance, (2) the CIO’s position in the agency hierarchy, (3) OMB guidance, (4) coordination with the Chief Acquisition Officer (CAO), and (5) legal authority. Further, three factors were cited by CIOs as major factors that have challenged their ability to effectively carry out responsibilities: (1) processes for hiring, recruiting, and retaining IT personnel; (2) financial resources; and (3) the availability of personnel/staff resources.

As our draft report states, although OMB has issued guidance aimed at addressing the three factors that were identified by at least half of the CIOs as major challenges, the guidance does not fully address those challenges. Further, regarding the financial resources challenge, OMB recently required agencies to provide data on CIO authority over IT spending; however, its guidance does not provide a complete definition of the authority. We believe that in the absence of such guidance, agencies have created varying definitions of CIO authority. Further, until OMB updates its guidance to include a complete definition of the authority that CIOs are to have over IT spending, it will be difficult for OMB to identify any deficiencies in this area and to help agencies make any needed improvements.

In order to address challenges in implementing CIO responsibilities, we intend to include in our draft report recommendations to OMB and each of the selected 24 federal agencies to improve the effectiveness of CIOs’ implementation of their responsibilities for each of the six IT management areas.

Agencies Need to Ensure That IT Acquisitions Are Reviewed and Approved by CIOs

FITARA includes a provision to enhance covered agency CIOs’ authority through, among other things, requiring agency heads to ensure that CIOs review and approve IT contracts. OMB’s FITARA implementation guidance expanded upon this aspect of the legislation in a number of ways. Specifically, according to the guidance:

CIOs may review and approve IT acquisition strategies and plans, rather than individual IT contracts;

CIOs can designate other agency officials to act as their representatives, but the CIOs must retain accountability;

CAOs are responsible for ensuring that all IT contract actions are consistent with CIO-approved acquisition strategies and plans; and

CAOs are to indicate to the CIOs when planned acquisition strategies and acquisition plans include IT.

In January 2018, we reported that most of the CIOs at 22 selected agencies were not adequately involved in reviewing billions of dollars of IT acquisitions. For instance, most of the 22 agencies did not identify all of their IT contracts. In this regard, the agencies identified 78,249 IT- related contracts, to which they obligated $14.7 billion in fiscal year 2016. However, we identified 31,493 additional contracts with $4.5 billion obligated, raising the total amount obligated by these agencies to IT contracts in fiscal year 2016 to at least $19.2 billion. Figure 5 reflects the obligations that the 22 selected agencies reported to us relative to the obligations we identified.

The percentage of additional IT contract obligations we identified varied among the selected agencies. For example, the Department of State did not identify 1 percent of its IT contract obligations. Conversely, 8 agencies did not identify over 40 percent of their IT contract obligations.

Many of the selected agencies that did not identify these IT contract obligations did not follow OMB guidance. Specifically, 14 of the 22 agencies did not involve the acquisition office in their process to identify IT acquisitions for CIO review, as required by OMB. In addition, 7 agencies did not establish guidance to aid officials in recognizing IT. We concluded that until these agencies involve the acquisitions office in their IT acquisition identification processes and establish supporting guidance, they cannot ensure that they will identify all IT acquisitions. Without proper identification of IT acquisitions, these agencies and CIOs cannot effectively provide oversight of these acquisitions.

In addition to not identifying all IT contracts, 14 of the 22 selected agencies did not fully satisfy OMB’s requirement that the CIO review and approve IT acquisition plans or strategies. Further, only 11 of 96 randomly selected IT contracts at 10 agencies that we evaluated were CIO-reviewed and approved as required by OMB’s guidance. The 85 IT contracts not reviewed had a total possible value of approximately $23.8 billion.

We believe that until agencies ensure that CIOs are able to review and approve all IT acquisitions, CIOs will continue to have limited visibility and input into their agencies’ planned IT expenditures and will not be able to use the increased authority that FITARA’s contract approval provision is intended to provide. Further, agencies will likely miss an opportunity to strengthen CIOs’ authority and the oversight of IT acquisitions. As a result, agencies may award IT contracts that are duplicative, wasteful, or poorly conceived.

As a result of these findings, we made 39 recommendations in our January 2018 report. The recommendations included that agencies ensure that their acquisition offices are involved in identifying IT acquisitions and issuing related guidance, and that IT acquisitions are reviewed in accordance with OMB guidance. OMB and the majority of the agencies generally agreed with or did not comment on the recommendations.

Agencies Have Made Progress in Consolidating Data Centers, but Need to Take Action to Achieve Planned Cost Savings

In our February 2017 high-risk update, we stated that OMB and agencies needed to demonstrate additional progress on achieving data center consolidation savings in order to improve the management of IT acquisitions and operations. Further, data center consolidation efforts are key to implementing FITARA. Specifically, OMB established the FDCCI in February 2010 to improve the efficiency, performance, and environmental footprint of federal data center activities. The enactment of FITARA in 2014 codified and expanded the initiative.

In a series of reports that we issued from July 2011 through August 2017, we noted that, while data center consolidation could potentially save the federal government billions of dollars, weaknesses existed in several areas, including agencies’ data center consolidation plans, data center optimization, and OMB’s tracking and reporting on related cost savings. In these reports, we made a total of 160 recommendations to OMB and 24 agencies to improve the execution and oversight of the initiative. Most agencies and OMB agreed with our recommendations or had no comments. As of May 2018, 80 of these 160 recommendations remained unimplemented.

Further, we recently reported in May 2018 that the 24 agencies participating in OMB’s Data Center Optimization Initiative (DCOI) had communicated mixed progress toward achieving OMB’s goals for closing data centers by September 2018. Over half of the agencies reported that they had either already met, or planned to meet, all of their OMB- assigned goals by the deadline. This would result in the closure of 7,221 of the 12,062 centers that agencies reported in August 2017. However, 4 agencies reported that they do not have plans to meet all of their assigned goals and 2 agencies are working with OMB to establish revised targets. With regard to agencies’ progress in achieving cost savings, 24 agencies reported $3.9 billion in cost savings through 2018.

The 24 agencies also reported limited progress against OMB’s five data center optimization targets for server utilization and automated monitoring, energy metering, power usage effectiveness, facility utilization, and virtualization. As of August 2017, 1 agency reported that it had met four targets, 1 agency reported that it had met three targets, 6 agencies reported having met either one or two targets, and 14 agencies reported meeting none of the targets.

Further, as of August 2017, most agencies were not planning to meet OMB’s fiscal year 2018 optimization targets. Specifically, 4 agencies reported plans to meet all of their applicable targets by the end of fiscal year 2018; 14 agencies reported plans to meet some of the targets; and 4 reported that they did not plan to meet any targets. Figure 6 summarizes agency-reported plans to meet or exceed the OMB’s data center optimization targets, as of August 2017.

In 2016 and 2017, we made 81 recommendations to OMB and the 24 DCOI agencies to help improve the reporting of data center-related cost savings and to achieve optimization targets. As of May 2018, 71 of these 81 recommendations have not been fully addressed.

Agencies Need to Better Manage Software Licenses to Achieve Savings

In our 2015 high-risk report’s discussion of IT acquisitions and operations, we identified the management of software licenses as an area of concern, in part because of the potential for cost savings. Federal agencies engage in thousands of software licensing agreements annually. The objective of software license management is to manage, control, and protect an organization’s software assets. Effective management of these licenses can help avoid purchasing too many licenses, which can result in unused software, as well as too few licenses, which can result in noncompliance with license terms and cause the imposition of additional fees.

As part of its PortfolioStat initiative, OMB has developed policy that addresses software licenses. This policy requires agencies to conduct an annual, agency-wide IT portfolio review to, among other things, reduce commodity IT spending. Such areas of spending could include software licenses.

In May 2014, we reported on federal agencies’ management of software licenses and determined that better management was needed to achieve significant savings government-wide. Of the 24 selected agencies we reviewed, only 2 had comprehensive policies that included the establishment of clear roles and central oversight authority for managing enterprise software license agreements, among other things. Of the remaining 22 agencies, 18 had policies that were not comprehensive, and 4 had not developed any policies.

Further, we found that only 2 of the 24 selected agencies had established comprehensive software license inventories, a leading practice that would help them to adequately manage their software licenses. The inadequate implementation of this and other leading practices in software license management was partially due to weaknesses in agencies’ policies. As a result, we concluded that agencies’ oversight of software license spending was limited or lacking, thus potentially leading to missed savings. However, the potential savings could be significant considering that, in fiscal year 2012, 1 major federal agency reported saving approximately $181 million by consolidating its enterprise license agreements, even when its oversight process was ad hoc.

Accordingly, we recommended that OMB issue a directive to help guide agencies in managing software licenses. We also made 135 recommendations to the 24 agencies to improve their policies and practices for managing licenses. Among other things, we recommended that the agencies regularly track and maintain a comprehensive inventory of software licenses and analyze the inventory to identify opportunities to reduce costs and better inform investment decision making.

Most agencies generally agreed with the recommendations or had no comments. As of May 2018, 78 of the 135 recommendations had not been implemented. Table 2 reflects the extent to which the 24 agencies implemented the recommendations in these two areas.

Agencies Need to Address Shortcomings in Information Security Area

Since information security was added to the high-risk list in 1997, we have consistently identified shortcomings in the federal government’s approach to cybersecurity. We have previously testified that, even though agencies have acted to improve the protections over federal and critical infrastructure information and information systems, the federal government needs to take the following actions to strengthen U.S. cybersecurity:

Effectively implement risk-based entity-wide information security programs consistently over time. Among other things, agencies need to (1) implement sustainable processes for securely configuring operating systems, applications, workstations, servers, and network devices; (2) patch vulnerable systems and replace unsupported software; (3) develop comprehensive security test and evaluation procedures and conduct examinations on a regular and recurring basis; and (4) strengthen oversight of contractors providing IT services. Improve its cyber incident detection, response, and mitigation capabilities. DHS needs to expand the capabilities and support wider adoption of its government-wide intrusion detection and prevention system. In addition, the federal government needs to improve cyber incident response practices, update guidance on reporting data breaches, and develop consistent responses to breaches of personally identifiable information.

Expand its cyber workforce planning and training efforts. The federal government needs to (1) enhance efforts for recruiting and retaining a qualified cybersecurity workforce and (2) improve cybersecurity workforce planning activities.

Expand efforts to strengthen cybersecurity of the nation’s critical infrastructures. The federal government needs to develop metrics to (1) assess the effectiveness of efforts promoting the National Institute of Standards and Technology’s (NIST) Framework for Improving Critical Infrastructure Cybersecurity and (2) measure and report on the effectiveness of cyber risk mitigation activities and the cybersecurity posture of critical infrastructure sectors.

Better oversee protection of personally identifiable information. The federal government needs to (1) protect the security and privacy of electronic health information, (2) ensure privacy when face recognition systems are used, and (3) protect the privacy of users’ data on state-based health insurance marketplaces.

As we have previously noted, in order to take the preceding actions and strengthen the federal government’s cybersecurity posture, agencies should implement the information security programs required by FISMA. In this regard, FISMA provides a framework for ensuring the effectiveness of information security controls for federal information resources. The law requires each agency to develop, document, and implement an agency- wide information security program. Such a program includes risk assessments; the development and implementation of policies and procedures to cost-effectively reduce risks; plans for providing adequate information security for networks, facilities, and systems; security awareness and specialized training; the testing and evaluation of the effectiveness of controls; the planning, implementation, evaluation, and documentation of remedial actions to address information security deficiencies; procedures for detecting, reporting, and responding to security incidents; and plans and procedures to ensure continuity of operations.

Since 2010, we have made 2,733 recommendations to agencies aimed at improving the security of federal systems and information. These recommendations have identified actions for agencies to take to strengthen technical security controls over their computer networks and systems. They also have included recommendations for agencies to fully implement aspects of their information security programs, as mandated by FISMA. Nevertheless, many agencies continue to be challenged in safeguarding their information systems and information, in part because many of these recommendations have not been implemented. As of May 2018, 793 of information security-related recommendations we have made have not been implemented.

Agencies’ Inspectors General Are to Identify Information Security Program Weaknesses

In order to determine the effectiveness of the agencies’ information security programs and practices, FISMA requires that federal agencies’ inspectors general conduct annual independent evaluations. The agencies are to report the results of these evaluations to OMB, and OMB is to summarize the results in annual reports to Congress.

In these evaluations, the inspectors general frame the scope of their analysis, identify key findings, and detail recommendations to address the findings. The evaluations also are to capture maturity model ratings for their respective agencies. Toward this end, in fiscal year 2017, the inspector general community, in partnership with OMB and DHS, finalized a 3-year effort to create a maturity model for FISMA metrics that align to the five function areas in the NIST Framework for Improving Critical Infrastructure Cybersecurity (Cybersecurity Framework): identify, protect, detect, respond, and recover. This alignment is intended to help promote consistent and comparable metrics and criteria and provides agencies with a meaningful independent assessment of their information security programs.

This maturity model is designed to summarize the status of agencies’ information security programs on a five-level capability maturity scale. The five maturity levels are defined as follows:

Level 1 Ad-hoc: Policies, procedures, and strategy are not formalized; activities are performed in an ad-hoc, reactive manner.

Level 2 Defined: Policies, procedures, and strategy are formalized and documented but not consistently implemented.

Level 3 Consistently Implemented: Policies, procedures, and strategy are consistently implemented, but quantitative and qualitative effectiveness measures are lacking.

Level 4 Managed and Measurable: Quantitative and qualitative measures on the effectiveness of policies, procedures, and strategy are collected across the organizations and used to assess them and make necessary changes.

Level 5 Optimized: Policies, procedures, and strategy are fully institutionalized, repeatable, self-generating, consistently implemented and regularly updated based on a changing threat and technology landscape and business/mission needs.

In March 2018, OMB issued its annual FISMA report to Congress, which showed the combined results of the inspectors general’s fiscal year 2017 evaluations. Based on data from 76 agency inspector general and independent auditor assessments, OMB determined that the government-wide median maturity model ratings across the five NIST Cybersecurity Framework areas did not exceed a level 3 (consistently implemented). Table 3 shows the inspectors general’s median ratings for each of the NIST Cybersecurity Framework areas.

OMB Requires Agencies to Meet Targets for Cybersecurity Metrics

In its efforts toward strengthening the federal government’s cybersecurity, OMB also requires agencies to submit related cybersecurity metrics as part of its Cross-Agency Priority goals. In particular, OMB developed the IT modernization goal so that federal agencies will be able to build and maintain more modern, secure, and resilient IT. A key part of this goal is to reduce cybersecurity risks to the federal mission through three strategies: manage asset security, protect networks and data, and limit personnel access. The key targets supporting each of these strategies correspond to areas within the FISMA metrics. Table 4 outlines the strategies and their associated targets.

In conclusion, FITARA and FISMA present opportunities for the federal government to address the high-risk areas on improving the management of IT acquisitions and operations, and ensuring the security of federal IT, thereby saving billions of dollars. Most agencies have taken steps to execute key IT management and cybersecurity initiatives, including implementing CIO responsibilities, requiring CIO review of IT acquisitions, realizing data center consolidation cost savings, managing software assets, and complying with FISMA requirements. The agencies have also continued to address the recommendations that we have made over the past several years. However, further efforts by OMB and federal agencies to implement our previous recommendations would better position them to improve the management and security of federal IT. To help ensure that these efforts succeed, we will continue to monitor agencies’ efforts toward implementing these recommendations.

Chairmen Meadows and Hurd, Ranking Members Connolly and Kelly, and Members of the Subcommittees, this completes my prepared statement. I would be pleased to respond to any questions that you may have at this time.

GAO Contacts and Staff Acknowledgments

If you or your staff have any questions about this testimony, please contact David A. Powner, Director, Information Technology, 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 statement. GAO staff who made key contributions to this testimony are Kevin Walsh (Assistant Director), Chris Businsky, Rebecca Eyler, Meredith Raymond, and Jessica Waselkow (Analyst in Charge).

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