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Tight budgets prompt IT cutbacks

Aug. 14, 2011 - 06:00AM   |  
Former federal CIO Vivek Kundra has said agencies should restructure or cancel projects that fail to deliver expected capabilities within six months.
Former federal CIO Vivek Kundra has said agencies should restructure or cancel projects that fail to deliver expected capabilities within six months. (Chris Maddaloni / Staff file photo)

Anticipated budget cuts are prompting agencies to cancel or defer planned information technology projects, share and outsource more IT functions, and make more trade-offs in plotting their IT investments.

Among the hits:

The Social Security Administration (SSA) will delay or cancel some of its planned IT projects.

Navy and Marine Corps IT budgets will be cut by 25 percent.

And the U.S. Agency for International Development (USAID) is shifting dollars away from hiring contractor help and toward hiring and training federal employees in hopes that will reduce costs to field new technology services.

Vivek Kundra, who stepped down this month as federal chief information officer, has said agencies should restructure or cancel projects that fail to deliver expected capabilities within six months.

"All budget line items will be under pressure, including the IT budget line item, but we're going to make sure that we aren't penny wise and pound foolish," federal Chief Performance Officer Jeffrey Zients said this month during an interview about IT management and the fiscal 2012 budget.

"The difficult budget environment ... actually helps our efforts to push agencies to be more efficient and more effective," he added.

It isn't clear how proposed and future cuts under the debt ceiling plan will affect federal IT. Most of those cuts will come in 2013 and later years, said former Virginia congressman Tom Davis, now director of federal government affairs at Deloitte & Touche LLP.

"The good news is that they [agencies] will be able to reinvent themselves," Davis said.

But some cuts are under way.

Navy orders IT cuts

One of the biggest contractions in federal IT spending is happening at the Navy and Marine Corps, which are under orders to cut IT budgets by 25 percent over the next five years. The services require high-level approval for most IT purchases.

The services also will consolidate data centers, increase their use of cloud computing and require purchases of commercially available software.

In a July blog post, Navy Chief Information Officer Terry Halvorsen said the Navy must realize savings by 2013.

"We will not hit that target by doing the same things we do today more efficiently," Halvorsen said.

By Aug. 15, the services were to appoint a so-called Information Technology Expenditure Approval Authority to approve any IT software, hardware or service with a projected life-cycle cost of $1 million, according to a July memo published on the Navy CIO website last week. This includes resource planning, programming and budgeting.

Vice Adm. Kendall Card, deputy chief of naval operations for information dominance, has been tapped as the authority responsible for approving all IT purchases for the Navy. Brig. Gen. Kevin Nally, director of command, control, communications and computers for the Marine Corps, is his counterpart.

"Duplicative capabilities and projects that are not aligned with [Navy] IT goals and objectives are not only inefficient uses of our dwindling resources. They render us less operationally effective by hampering interoperability, information sharing and security," Halvorsen said.

James Craft, deputy director of the Marine Corps' Command, Control, Communications and Computers directorate, said the service is "already a lean force."

The Marine Corps is working with the Navy CIO and was focused on efficiencies before the proposed 25 percent cut, Craft said at an industry event last week. The ratio of civilian IT professionals to military personnel is 1-to-95, drastically lower than the other services, he said.

Other agencies' measures

USAID is outsourcing many software applications, such as email, to Google's cloud; renting servers and storage space rather than purchasing them; and spending less for services upfront so the agency will "be able to live a little easier when the cuts come," said Jerry Horton, the agency's CIO.

"We have to be able to cut the costs upfront again rather than having the budget reductions drive our service levels," he said.

At the Export-Import Bank, CIO Fernanda Young has proposed insourcing some contracting jobs and delaying IT upgrades that would enable better use of social media. But the agency has tightened its belt by sharing services with other small agencies and moving more services online.

The Social Security Administration expects to take a harder hit. The agency is deciding which IT projects can be funded with a reduced budget, but "we are going to have to cut some things," SSA CIO Frank Baitman said in a May interview.

That may mean scuttling entire projects rather than scaling back projects across the board to achieve only marginal outcomes. Kelly Croft, who will assume CIO duties once Baitman steps down this week, declined to comment on the agency's IT management.

CIOs must ensure they can support programs that will continue, and shut down or scale back other programs, said Anne Reed, CEO at ASI Government Inc. and a former Agriculture Department CIO. Reed said she anticipates greater use of shared services both in and out of government to cut costs.

Fewer contract opportunities

Contractors also will feel the pinch, and there will likely be fewer contract opportunities for industry, Reed said. For contractors that support federal data centers, there are going to be far fewer.

But companies that can save the government money will have opportunities, said Roger Waldron, president of the industry group Coalition for Government Procurement. Contractors must understand how agencies' buying habits are going to change and be able to strategically target them, Waldron said.

"From a procurement perspective, it could reduce unnecessary contracts," he added.

That will require agencies to focus more on contractors' performance.

The Marine Corps' Craft told contractors that "we need things that are lighter, more energy efficient, more capable and cheaper.

"This is going to be a new world for us all," he said.

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