Cutting Waste by Reforming IT

Cross-posted from the OMB blog.

As I’ve written before, one source of ineffective and inefficient government is the technology gap between the public and private sectors.

While a productivity boom has transformed private sector performance over the past two decades, the federal government has almost entirely missed this transformation and now lags far behind on efficiency and service quality.  We are wasting billions of dollars a year, and more importantly are missing out on the huge productively improvements other sectors have benefited from.

Quite simply, we can’t significantly improve the efficiency and effectiveness of the federal government without fixing IT.

That’s why today, in our ongoing effort to make sure that taxpayers’ dollars are spent on projects that work, we are taking three specific actions to advance IT reform.

First, I am directing all executive departments and agencies to stop issuing new task orders or procurements for all financial system modernization projects – an area of persistent problems – pending review and approval by OMB of new, more streamlined project plans.  Financial system modernizations projects in the federal government have become too large and complex.  By setting the scope of projects too broadly rather than focusing on essential business needs, federal agencies are incurring substantial cost overruns and lengthy delays in planned deployments.  Compounding this problem, projects persistently fall short of planned results once deployed. For instance, the Department of Veterans Affairs (VA) has invested over $300 million in two financial system projects over the past 10 years. The first project ended in failure and no operational capability has been realized with the second.
 
Across the government, there are approximately 30 financial systems projects that are affected by this policy. The total cost expended on these projects is anticipated to be $20 billion over the life of these projects, with an approximate annual spend of $3 billion. OMB expects this new process to result in a significant reduction in these amounts.

Second, the Federal Chief Information Officer Vivek Kundra will undertake detailed reviews of the highest risk IT projects across the federal government.  Agencies will be required to present improvement plans to the CIO for projects that are behind schedule or over budget.  Where serious problems continue to exist, there will be adjustments to Fiscal Year 2012 agency budgets.

Third, OMB’s Deputy Director for Management Jeff Zients will develop recommendations, within 120 days, for improving the federal government’s overall IT procurement and management practices.  These recommendations will address the root-causes of problems plaguing federal IT projects and focus on proven best practices from inside and outside the federal government.  They will include higher standards for project management practices and personnel, additional mechanisms for holding managers accountable for project results, and more rigorous review processes.
 
Together, these three steps will provide a strong start to our reforming of federal IT, which is essential to improving the effectiveness and efficiency of the Federal Government and giving taxpayers more value for their tax dollars.

Peter R. Orszag is Director of the Office of Management and Budget

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