In fiscal year 2011, the 26 key federal agencies that report to OMB on their IT investments reported spending approximately $79 billion on a wide variety of IT systems. Of this amount, agencies reported spending $54 billion on O&M for existing steady state investments; they plan on spending about $53 billion in fiscal year 2012. As shown in figure 1, these amounts represent a significant majority (i.e., 69 and 71 percent) of the overall reported IT spending in 2011 ($79 billion) and that planned for 2012 ($75 billion), respectively. Although O&M spending governmentwide is about 70 percent of total IT spending, the amount spent by each agency varies from a high of 98 percent to a low of 45 percent (as shown in the table below). The National Aeronautics and Space Administration (NASA) reported spending approximately 90 percent of its total IT spending on O&M with the remaining 10 percent going to new investments. The reason for this mix of spending, according to NASA officials, is due to NASA’s mission (i.e., the space shuttle mission) which relies heavily on legacy systems. By contrast, the Department of Transportation reported spending approximately 45 percent of its total IT costs on O&M with the other 55 percent going to new investments. According to department officials, this mix of spending is largely due to the fact that the department has a number of IT development investments underway that involve large financial commitments relative to O&M investments. To assist agencies in managing their 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 Further, the act places responsibility for result of these investments.managing investments with the heads of agencies and establishes chief information officers to advise and assist agency heads in carrying out this responsibility. In carrying out its responsibilities, OMB uses several data collection mechanisms to oversee federal IT spending during the annual budget formulation process. Specifically, OMB requires 26 key federal departments and agencies to provide information to it related to their IT investments (called exhibit 53s) and capital asset plans and business cases (called exhibit 300s). Exhibit 53. The purpose of the exhibit 53 is to identify all IT investments— both major and nonmajor organization. Information included on agency exhibit 53s is designed, in part, to help OMB better understand what agencies are spending on IT investments. The information also supports cost analyses prescribed by the Clinger-Cohen Act. As part of the annual budget, OMB publishes a report on IT spending for the federal government representing a compilation of exhibit 53 data submitted by the 26 agencies. —and their associated costs within a federal Exhibit 300. The purpose of the exhibit 300 is to provide a business case for each major IT investment and to allow OMB to monitor IT investments once they are funded. Agencies are required to provide information on each major investment’s cost, schedule, and performance. According to OMB guidance, a major investment is a system or acquisition requiring special management attention because of its importance to the mission or function of the agency, a component of the agency, or another organization; is for financial management and obligates more than $500,000 annually; has significant program or policy implications; has high executive visibility; has high development, operating, or maintenance costs; is funded through other than direct appropriations; or is defined as major by the agency’s capital planning and investment control process. 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. Since the Dashboard has been implemented, we have reported and made recommendations to improve the data accuracy and reliability. In 2010 and 2011, we reported on the progress of the Dashboard and made recommendations to further improve how it rates investments relative to current performance. Capital Programming Guide, Supplement to OMB Circular A-11, Part 7 (July 2012); OMB Memorandum M-10-27 (June 2010), requires agencies to establish a policy for performing OAs on steady state investments as a part of managing and monitoring investment baselines. a comparison of current performance with a pre-established cost areas for innovation in the areas of customer satisfaction, strategic and business results, and financial performance; indication if the agency revisited alternative methods for achieving the same mission needs and strategic goals; consideration of issues, such as greater utilization of technology or consolidation of investments to better meet organizational goals; an ongoing review of the status of the risks identified in the investment’s planning and acquisition phases; identification of whether there is a need to redesign, modify, or terminate the investment; an analysis on the need for improved methodology (i.e., better ways for the investment to meet cost and performance goals); lessons learned; cost or schedule variances; recommendations to redesign or modify an asset in advance of potential problems; and overlap with other investments. With regard to overseeing the agencies’ development of policies and annual performance, OMB officials responsible for governmentwide OA policy stated that they expect agencies to perform all the steps specified in the guidance and to be prepared to show documentation as evidence of compliance with the guidance should OMB decide to check. Although OMB guidance calls for agencies to develop an OA policy and perform such analyses annually, the extent to which the five federal agencies we reviewed carried out these tasks varied significantly. Specifically, DHS and HHS developed a policy and conducted OAs, but in doing so, they excluded key investments and assessment factors. DOD, Treasury, and VA did not develop a policy or conduct OAs. The following table shows the total number of steady state investments for each agency, and provides the number and budgeted amount for those investments that underwent an assessment and those that did not. Until agencies more completely address their policy and performance shortcomings, there is increased risk that existing multibillion dollar investments will continue to be funded although it is not fully known whether they meet their intended objectives. DHS and HHS had developed policies, which contained all performance factors identified in OMB’s guidance. Specifically, In 2008, DHS issued its policy called “Operational Analysis Guidance.” The guidance states that OAs should be performed on an annual basis to evaluate the operational results of agency steady state investments. In addition, the guidance provides a report template which includes sections that should be contained and reported on in it. DHS’s policy addressed all of the key factors in the OMB guidance, including, for example, assessing current costs against life-cycle costs and a detailed schedule assessment. In 2008, HHS issued its policy called “Practices Guide: Annual Operational Analysis.” The guide states OAs are required to be performed on an annual basis. Further, the guide includes a template and a checklist for conducting them. In addition, agencies within the department have issued their own policy. For example, in 2011, The Centers for Disease Control and Prevention issued its “Operational Analysis Guide” and in 2010, the National Institutes of Health issued These policies contained all of the its framework, “A How-to Guide.”key factors identified in the OMB policy, such as measuring the effect the investment has on the performing organization itself and identifying any areas for innovation. Further, DHS and HHS performed OAs on some of their steady state investments, but not for all. Specifically, of their 52 total steady state investments, DHS and HHS conducted analyses on 23 with total budgets of $1.4 billion and did not conduct analyses on 29 investments with total budgets of $1.1 billion. More specifically, Of DHS’s 44 steady state investments, the department conducted OAs on16 of them, which have an annual budget of $1.2 billion; it did not perform analyses on the other 28, which have an annual budget of almost $1 billion. Of HHS’s 8 steady state investments, the department conducted analyses on 7 of them, which have an annual budget of $207 million; it did not perform an OA on the remaining investment, which has an annual budget of $77 million. Tables 3 and 4 show DHS’s and HHS’s steady state investments by component agency and whether OAs were performed on these investments in fiscal year 2011. (Details of our analysis of all the analyses and a brief description of the investments are included in app. II.) In addition, although DHS and HHS performed analyses, the agencies did not address all key factors in conducting them. Specifically, of DHS’s 16 OAs, which were to include a total 272 key factors, DHS: addressed 145 (or 53 percent), partially addressed 20 (or 7 percent), and did not address 107 (or 39 percent); and of HHS’s 7 OAs, which were to include a total of 119 key factors, HHS: addressed 66 (or 55 percent), partially addressed 6 (or 5 percent), and did not address 47 (or 39 percent) factors. The following provides key examples by component agency to illustrate how factors were fully addressed, partially addressed, or not addressed at all. In its operational analysis of its U.S. Coast Guard Business Intelligence investment, the U.S. Coast Guard fully addressed five key factors (see table 16 in app. II). For example, on the factor regarding whether the investment supports customer processes as designed and is delivering the goods and services it was designed to deliver, the component measured (via surveys) customer satisfaction, usage trends, system trends, and feedback, and used this information to implement system improvements. U.S. Coast Guard partially addressed three factors. For example, in assessing performance goals, the component identified two major goals of the investment, but did not include how or when these goals were to be achieved.