OMB assists the President in overseeing the preparation of the federal budget submission and supervising budget administration in executive branch agencies. In helping to formulate the President’s spending plans, OMB is responsible for evaluating the effectiveness of agency programs, policies, and procedures; assessing competing funding demands among agencies; and setting funding priorities. Further, the agency ensures that the budget submission is consistent with relevant statutes and presidential objectives. 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. As reported to OMB, federal agencies plan to spend more than $74 billion on IT investments in fiscal year 2013, which is the total expended for not only acquiring such investments, but also the funding to operate and maintain them. Of the reported amount, agencies plan to spend about $20 billion on development and acquisition, and $54 billion on O&M. Figure 1 shows the percentages of total planned spending for 2013. However, this $74 billion does not reflect the spending of the entire federal government. We have previously reported that OMB’s figure understates the total amount spent in IT investments. Specifically, it does not include IT investments by 58 independent executive branch agencies, including the Central Intelligence Agency, or by the legislative or judicial branches. Further, agencies differed on what they considered an IT investment; for example, some have considered research and development systems as IT investments, while others have not. As a result, not all IT investments are included in the federal government’s estimate of annual IT spending. OMB provided guidance to agencies on how to report on their IT investments, but this guidance did not ensure complete reporting or facilitate the identification of duplicative investments. Consequently, we recommended, among other things, that OMB improve its guidance to agencies on identifying and categorizing IT investments. To assist agencies in managing their IT investments, Congress enacted the Clinger-Cohen Act of 1996, which requires OMB to establish processes to analyze, track, and evaluate the risks and results of major capital investments in information systems made by federal agencies and report to Congress on the net program performance benefits achieved as a result of these investments. Further, the act places responsibility for managing investments with the heads of agencies and establishes chief information officers (CIO) to advise and assist agency heads in carrying out this responsibility. Many of these investments are critical to our nation. For example, they include systems to process tax returns, secure our nation, and control aircraft. However, the federal government has spent billions of dollars on poorly performing IT investments, as the following examples illustrate: In July 2010, OMB directed the National Archives and Records Administration (NARA) to halt development of its Electronic Records Archive system at the end of fiscal year 2011 (1 year earlier than planned). OMB cited concerns about the system’s cost, schedule, and performance and directed NARA to better define system functionality and improve strategic planning. Through fiscal year 2010, NARA had spent about $375 million on the system. We issued several reports and made recommendations to improve this system. These findings and recommendations contributed to the decision to halt the system. In January 2011, the Secretary of Homeland Security ended the Secure Border Initiative Network program after obligating more than $1 billion to the program because it did not meet cost-effectiveness and viability standards. Since 2007, we have identified a range of issues and made several recommendations to improve this program. For example, in May 2010 we reported that the final acceptance of the first two deployments had slipped from November 2009 and March 2010 to September 2010 and November 2010, respectively, and that the cost-effectiveness of the system had not been justified. We concluded that the Department of Homeland Security (DHS) had not demonstrated that the considerable time and money being invested to acquire and deploy the program was a wise and prudent use of limited resources. As a result, we recommended that the department (1) limit near-term investment in the first incremental block of the program, (2) economically justify any longer- term investment in it, and (3) improve key program management disciplines. This work contributed to the department’s decision to cancel the program. In February 2011, the Office of Personnel Management canceled its Retirement Systems Modernization program after several years of trying to improve the implementation of this investment. According to the Office of Personnel Management, it spent approximately $231 million on this investment. We issued a series of reports on the agency’s efforts to modernize its retirement system and found that the Office of Personnel Management was hindered by weaknesses in several important management disciplines that are essential to successful IT modernization efforts.recommendations in areas such as project management, organizational change management, testing, cost estimating, and earned value management. In May 2008, an Office of Personnel Management official cited the issues that we identified as justification for issuing a stop work order to the system contractor, and the agency subsequently terminated the contract. In March 2011, we reported that while the Department of Defense’s (DOD) Navy Next Generation Enterprise Network investment’s first increment was estimated to cost $50 billion, the program was not well- positioned to meet its cost and schedule estimates. Accordingly, we recommended DOD limit further investment until it conducts an interim review to reconsider the selected acquisition approach and addresses its investment management issues. DOD stated that it did not concur with the recommendation to reconsider its acquisition approach, but we maintained that without doing so, DOD could not be sure it was pursuing the most cost-effective approach. In December 2012, DOD canceled the Air Force’s Expeditionary Combat Support System after having spent more than a billion dollars and missing multiple milestones. We issued several reports on this system and found that, among other things, the program was not fully following best practices for developing reliable schedules and cost estimates. In addition to these poorly performing investments, the IT Dashboard identifies other at-risk investments. Specifically, as of August 2012, according to the IT Dashboard, 190 of the federal government’s approximately 700 major IT investments—totaling almost $12.5 billion— were in need of management attention (rated “yellow” to indicate the need for attention or “red” to indicate significant concerns). (See fig. 2.) As previously mentioned, in June 2009, to further improve the transparency into and oversight of agencies’ IT investments, OMB publicly deployed the IT Dashboard. As part of this effort, OMB issued guidance directing federal agencies to report, via the Dashboard, the performance of their IT investments. Currently, the Dashboard publicly displays information on the cost, schedule, and performance of over 700 major federal IT investments at 26 federal agencies. Further, the public display of these data is intended to allow OMB, other oversight bodies, and the general public to hold the government agencies accountable for results and progress. In December 2010 OMB released its 25-point plan to reform federal IT. Among other things, the plan noted the goal of turning around or terminating at least one-third of underperforming projects by June 2012. To its credit, OMB’s IT Reform Plan provided specific actions to agencies so they could (1) more effectively manage IT acquisitions and (2) achieve operational efficiencies. To effectively manage IT acquisitions, the plan identified key actions such as improving accountability and governance and aligning acquisition processes with the technology cycle. To achieve operational efficiencies, the plan outlined actions required to adopt cloud solutions and leverage shared services. One of these actions was the consolidation of data centers as described in OMB’s FDCCI, which was announced in February 2010 and included a high-level goal to reduce the cost of data center hardware, software, and operations. Another action that was identified was related to cloud computing. OMB developed a “Cloud First” policy that required each agency CIO to fully migrate three services to a cloud solution by June 2012, and implement cloud-based solutions whenever a secure, reliable, and cost-effective cloud option exists. As part of the IT Reform Plan, in 2011 the Federal CIO Council launched an initial Best Practices platform on http://www.CIO.gov to provide agency case studies that demonstrate best practices in managing federal IT systems. According to OMB, agencies have been encouraged to develop practices that focus on early, frequent, and constructive communication during the acquisition process so that the government clearly understands the marketplace and can obtain an effective solution at a reasonable price. Further, since June 2010, OMB has required agencies to develop and carry out an operational analysis (OA) policy for examining the ongoing performance of existing operational IT investments to measure, among other things, whether the investment is continuing to meet business and customer needs and is contributing to meeting the agency’s strategic goals. OMB’s guidance calls for the policy to provide for an annual OA of each investment that addresses the following: cost, schedule, customer satisfaction, strategic and business results, financial goals, and innovation. More recently, the Federal CIO initiated the PortfolioStat effort for commodity IT in March 2012. OMB requires agency Deputy Secretaries or Chief Operating Officers to lead PortfolioStats—IT portfolio reviews— working in coordination with CIOs, Chief Financial Officers, and Chief Acquisition Officers. Such an effort, as planned, is appropriate given the numerous investments performing the same function, as we reported in February 2012. For example, 27 major federal agencies planned to spend $2.7 billion on 580 financial management systems in 2011. See figure 3 for the total number of investments within the 27 federal agencies, by function. OMB believes that the PortfolioStat effort has the potential to save the government $2.5 billion over the next 3 years by, for example, consolidating duplicative systems. We previously reported and testified on the issue of duplicative IT investments at DOD and the Department of Energy.