IT can enrich people’s lives and improve organizational performance. However, as we have described in numerous reports and testimonies, federal IT projects too frequently incur cost overruns and schedule slippages while contributing little to mission-related outcomes. Further, while IT should enable government to better serve the American people, the federal government has not achieved expected productivity improvements—despite spending more than $600 billion on IT over the past decade. Over the last two decades, Congress has enacted several laws to assist agencies and the federal government in managing IT investments. Key laws include the Paperwork Reduction Act of 1995, the Clinger-Cohen Act of 1996, and the E-Government Act of 2002. Also, the GPRA (Government Performance and Results Act) Modernization Act of 2010 includes IT management as a priority goal for improving the federal government.OMB and agencies regarding information technology and its management. Each of these laws delineates roles and responsibilities for As set out in these laws, OMB is to play a key role in helping federal agencies manage their investments by working with them to better plan, justify, and determine how much they need to spend on projects and how to manage approved projects. Within OMB, the Office of E-government and Information Technology, headed by the Federal CIO, directs the policy and strategic planning of federal IT investments and is responsible for oversight of federal technology spending. Agency CIOs are also expected to have a key role in IT management. Federal law, specifically the Clinger-Cohen Act, has defined the role of the CIO as the focal point for IT management, requiring agency heads to designate CIOs to lead reforms that would help control system development risks; better manage technology spending; and achieve real, measurable improvements in agency performance. In addition, the CIO Council—comprised of CIOs and Deputy CIOs of 28 agencies and chaired by OMB’s Deputy Director for Management—is the principal interagency forum for improving agency practices related to the design, acquisition, development, modernization, use, sharing, and performance of federal information resources. The CIO Council is responsible for developing recommendations for overall federal IT management policy; sharing best practices; including the development of performance measures; and identifying opportunities and sponsoring cooperation in using information resources. After assessing the most persistent challenges in acquiring, managing, and operating IT systems, in December 2010 the Federal CIO established a 25-point IT Reform Plan designed to address challenges in IT acquisition, improve operational efficiencies, and deliver more IT value to the American taxpayer. The actions were planned to be completed in three different time frames: (1) within 6 months (by June 2011), (2) between 6 and 12 months (by December 2011), and (3) between 12 and 18 months (by June 2012). Several different organizations were assigned ownership of the key action items, including the Federal CIO, the CIO Council, GSA, the Office of Personnel Management, the Office of Federal Procurement Policy, the Small Business Administration, and other federal agencies. Table 1 contains detailed information on selected action items in the IT Reform Plan. Given the challenges that federal agencies have experienced in acquiring and managing IT investments, we have issued a series of reports aimed at improving federal IT management over the last decade. Our reports cover a variety of topics, including data center consolidation, cloud computing, CIO responsibilities, system acquisition challenges, and modular development. Key reports that address topics covered in the IT Reform Plan include reports on data center consolidation, cloud computing, best practices in IT acquisition, IT spending authority, investment review and oversight, and agency CIO responsibilities. For example, in July 2011, we reported that only one of the agencies submitted a complete data center inventory and no agency submitted a complete data center consolidation plan. We concluded that until these inventories and plans are complete, agencies might not be able to implement their consolidation activities and realize expected cost savings. We recommended that agencies complete the missing elements in their plans and inventories. In response to our recommendations, in October and November 2011, the agencies updated their inventories and plans. We have ongoing work assessing the agencies’ revised plans, and in February 2012, we reported that our preliminary assessment of the updated plans showed that not all agency plans were updated to include all required information. We discuss each of the topics in more detail in the report being publicly released today. As discussed in our report, OMB and key federal agencies have made progress on selected action items identified in the IT Reform Plan, but there are several areas where more remains to be done. Of the 10 key action items we reviewed, 3 were completed and the other 7 were partially completed by December 2011. The action items that are behind schedule share a common reason for the delays: the complexity of the initiatives. In all seven of the cases, OMB and the federal agencies are still working on the initiatives. However, OMB and federal agencies have established time frames for completing only two of these initiatives. In a December 2011 progress report on its IT Reform Plan, OMB reported that it made greater progress than we determined. The agency reported that of the 10 action items, 7 were completed and 3 were partially completed. OMB officials from the Office of E-government and Information Technology explained that the reason for the difference in assessments is that they believe that the IT Reform Plan has served its purpose in acting as a catalyst for a set of broader initiatives. They noted that work will continue on all of the initiatives even after OMB declares the related action items to be completed under the IT Reform Plan. We disagree with this approach. In prematurely declaring the action items to be completed, OMB risks losing momentum on the progress it has made to date. Table 2 provides both OMB’s and our assessments of the status of the key action items, with action items rated as “completed” if all of the required activities identified in the reform plan were completed, and “partially completed” if some, but not all, of the required activities were completed. Until OMB and the agencies complete the action items called for in the IT Reform Plan, the benefits of the reform initiatives—including increased operational efficiencies and more effective management of large-scale IT programs—may be delayed. With the last of the action items in the IT Reform Plan due to be completed by June 2012, it will be important for OMB and the agencies to ensure that the action items due at earlier milestones are completed as soon as possible. The importance of performance measures for gauging the progress of programs and projects is well recognized. In the past, OMB has directed agencies to define and select meaningful outcome-based performance measures that track the intended results of carrying out a program or activity. Additionally, as we have previously reported, aligning performance measures with goals can help to measure progress toward those goals, emphasizing the quality of the services an agency provides or the resulting benefits to users. Furthermore, industry experts describe performance measures as necessary for managing, planning, and monitoring the performance of a project against plans and stakeholders’ needs. According to government and industry best practices, performance measures should be measurable, outcome-oriented, and actively tracked and managed. Recognizing the importance of performance measurement, OMB and GSA have established measures for 4 of the 10 action items we reviewed: data center consolidation, shifting to cloud computing, using contract vehicles to obtain Infrastructure-as-a-Service, and reforming investment review boards. Moreover, OMB reported on three of these measures in the analytical perspectives associated with the President’s fiscal year 2013 budget. Specifically, regarding data center consolidation, OMB reported that agencies were on track to close 525 centers by the end of 2012 and expected to save $3 billion by 2015. On the topic of cloud computing, OMB reported that agencies had migrated 40 services to cloud computing environments in 2011 and expect to migrate an additional 39 services in 2012. Regarding investment review boards, OMB reported that agency CIOs held 294 TechStat reviews and had achieved more than $900 million in cost savings, life cycle cost avoidance, or reallocation of funding. However, OMB has not established performance measures for 6 of the 10 action items we reviewed. For example, OMB has not established measures related to the best practices collaboration platform, such as number of users, number of hits per query, and customer satisfaction. Further, while OMB has designed the guidance and curriculum for developing a cadre of IT acquisition professionals, it has not established measures for tracking agencies’ development of such a cadre. Table 3 details what performance measures and goals, if any, are associated with the action item. Until OMB establishes and tracks measureable, outcome-oriented performance measures for each of the action items in the IT Reform Plan, the agency will be limited in its ability to evaluate progress that has been made and whether or not the initiative is achieving its goals. In our report being released today, we are making several recommendations to help ensure the completion of key IT reform initiatives and that the results of these initiatives are measured. Specifically, we are recommending that the Departments of Homeland Security, Justice, and Veterans Affairs complete elements missing from the agencies’ plans for migrating services to a cloud computing environment, and identify and report on the commodity services proposed for migration to shared services. All three agencies agreed with our recommendations and identified steps that they are undertaking to address them. In addition, we are recommending that the Federal CIO ensure that the action items called for in the IT Reform Plan are completed by the responsible parties prior to the completion of the IT Reform Plan’s 18 month deadline of June 2012 and that the agency provide clear time frames for addressing the shortfalls associated with the IT Reform Plan action items. The Federal CIO agreed with both of these recommendations and stated that OMB intends to complete the action items by the deadline. We are also recommending that the Federal CIO accurately characterize the status of the IT Reform Plan action items in an upcoming progress report in order to keep momentum going on action items that are not yet completed. The Federal CIO disagreed with this recommendation and stated that OMB has accurately characterized the completeness of the action items, and therefore, the recommendation does not apply. We do not agree with OMB’s characterization of four action items. Specifically, OMB considers the action items associated with data center consolidation, cloud-first policy, best practices collaboration portal, and redefining roles of agency CIOs and the CIO Council to be completed. While we agree that OMB has made progress in each of these areas, we found activities specified in the IT Reform Plan that have not yet been completed. For example, in the area of data center consolidation, we found that selected agency plans are still incomplete. In addition, in the move to cloud computing, selected agency migration plans lack key elements. Thus, we believe that the recommendation is warranted. To address our concerns regarding performance measures, we are recommending that the Federal CIO establish outcome-oriented measures for each applicable action item in the IT Reform Plan. The Federal CIO disagreed with our recommendation and noted that OMB measured the completeness of the IT Reform Plan action items and not the performance measures associated with broader initiatives. We continue to believe that our recommendation is appropriate because there are multiple action items in the IT Reform Plan that are not aligned with broader initiatives and for which there are no measures. Examples include the best practices portal, developing a cadre of specialized IT acquisition professionals, and establishing budget models that align with modular development. Given that the purpose of the IT Reform Plan is to achieve operational efficiencies and improve the management of large- scale IT programs, we maintain that it is appropriate to establish performance measures to monitor the IT Reform Plan’s results. In summary, OMB and selected agencies have made strides in implementing the IT Reform Plan, including pushing agencies to consolidate data centers, migrating federal services to cloud computing, improving the skills of IT acquisition professionals, and strengthening the roles and accountability of CIOs. However, several key reform items remain behind schedule despite OMB stating that these items have been completed. In addition, OMB has not established performance measures for gauging the success of most of its reform initiatives. For example, while OMB is tracking the number of services that agencies move to a cloud computing environment and the number of data center closures, it is not tracking the usefulness of its efforts to develop a best practices collaboration portal or a cadre of IT acquisition professionals. Overstating progress and not implementing appropriate performance measures do not position the federal IT community to leverage and build on the progress made to date. Moving forward, it will be important for OMB to continue to provide guidance, goals, and oversight to ensure that critical IT reform efforts extend well beyond the original 18-month time frame. It will also be important for agencies to aggressively pursue the completion of IT reform initiatives. Chairman Carper, Ranking Member Brown, and Members of the Subcommittee, this concludes my statement. I would be happy to answer any questions at this time. If you or your staffs have any questions about this testimony, please contact me at (202) 512-9286 or at pownerd@gao.gov. Individuals who made key contributions to this testimony are Colleen Phillips (Assistant Director), Cortland Bradford, Rebecca Eyler, Kathleen S. Lovett, and Jessica Waselkow. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

Summary: This testimony discusses the progress the Office of Management and Budget (OMB) and key federal agencies have made on selected action items associated with information technology (IT) reform. While investments in IT have the potential to improve lives and organizations, some federally funded IT projects canand havebecome risky, costly, unproductive mistakes. With at least $79 billion spent in fiscal year 2011 by the U.S. government on IT investments, it is important to ensure the most efficient and effective use of resources. In December 2010, the Federal Chief Information Officer (CIO) released a 25-point plan for reforming federal IT management. This document established an ambitious plan for achieving operational efficiencies and effectively managing large-scale IT programs. It also clearly identified actions to be completed in three different time frames: (1) within 6 months (by June 2011), (2) between 6 and 12 months (by December 2011), and (3) between 12 and 18 months (by June 2012). Congress asked us to testify on our report being released today that describes the progress OMB and key federal agencies have made on selected action items in the IT Reform Plan and the extent to which sound measures are in place to evaluate the success of the initiative. In this regard, the testimony specifically covers the progress made on 10 selected IT Reform Plan action items by OMB; the General Services Administration (GSA); and the Departments of Homeland Security, Justice, and Veterans Affairs. In preparing this testimony, we relied on our report being released at todays hearing. In that report, we evaluated progress by selecting 10 action items from the IT Reform Plan, focusing on action items that (1) were expected to be completed by December 2011, (2) covered multiple different topic areas, and (3) were considered by internal and OMB subject matter experts to be the more important items. We also selected three federal agencies (the Departments of Homeland Security, Justice, and Veterans Affairs) based on several factors, including high levels of IT spending and large numbers of investments in fiscal year 2011. As discussed in our report, OMB and key federal agencies have made progress on selected action items identified in the IT Reform Plan, but there are several areas where more remains to be done. Of the 10 key action items we reviewed, 3 were completed and the other 7 were partially completed by December 2011. The action items that are behind schedule share a common reason for the delays: the complexity of the initiatives. In all seven of the cases, OMB and the federal agencies are still working on the initiatives. However, OMB and federal agencies have established time frames for completing only two of these initiatives. In a December 2011 progress report on its IT Reform Plan, OMB reported that it made greater progress than we determined. The agency reported that of the 10 action items, 7 were completed and 3 were partially completed. OMB officials from the Office of E-government and Information Technology explained that the reason for the difference in assessments is that they believe that the IT Reform Plan has served its purpose in acting as a catalyst for a set of broader initiatives. They noted that work will continue on all of the initiatives even after OMB declares the related action items to be completed under the IT Reform Plan. We disagree with this approach. In prematurely declaring the action items to be completed, OMB risks losing momentum on the progress it has made to date. The importance of performance measures for gauging the progress of programs and projects is well recognized. In the past, OMB has directed agencies to define and select meaningful outcome-based performance measures that track the intended results of carrying out a program or activity. Additionally, as we have previously reported, aligning performance measures with goals can help to measure progress toward those goals, emphasizing the quality of the services an agency provides or the resulting benefits to users. Furthermore, industry experts describe performance measures as necessary for managing, planning, and monitoring the performance of a project against plans and stakeholders needs. Recognizing the importance of performance measurement, OMB and GSA have established measures for 4 of the 10 action items we reviewed: data center consolidation, shifting to cloud computing, using contract vehicles to obtain Infrastructure-as-a-Service, and reforming investment review boards. Moreover, OMB reported on three of these measures in the analytical perspectives associated with the Presidents fiscal year 2013 budget. Specifically, regarding data center consolidation, OMB reported that agencies were on track to close 525 centers by the end of 2012 and expected to save $3 billion by 2015. On the topic of cloud computing, OMB reported that agencies had migrated 40 services to cloud computing environments in 2011 and expect to migrate an additional 39 services in 2012. Regarding investment review boards, OMB reported that agency CIOs held 294 TechStat reviews and had achieved more than $900 million in cost savings, life cycle cost avoidance, or reallocation of funding. According to government and industry best practices, performance measures should be measurable, outcome-oriented, and actively tracked and managed.