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GAO questions $4 billion in IT savings

Jun. 13, 2013 - 06:19PM   |  
By NICOLE BLAKE JOHNSON   |   Comments
The Office of Management and Budget claims that a new approach to reviewing troubled government information technology projects has saved the government $4 billion in 2010 and 2011.
The Office of Management and Budget claims that a new approach to reviewing troubled government information technology projects has saved the government $4 billion in 2010 and 2011. (File photo)

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The Office of Management and Budget claims that a new approach to reviewing troubled government information technology projects has saved the government $4 billion in 2010 and 2011.

But congressional auditors now question the validity of those savings and the program’s overall effectiveness.

Called TechStat, the OMB-driven program relies on in-depth high-level meetings that evaluate schedule, cost and performance of troubled IT projects and often results in projects being halted, restructured, canceled or accelerated in order to reduce costs.

In a report released Thursday, the Government Accountability Office said there is little evidence from OMB or agencies that would verify OMB’s $4 billion estimate of cost savings and cost avoidance that are attributable to the TechStat sessions.

Agencies are not required to report how they verify their reported outcomes and cost savings.

“Until OMB requires agencies to report on what they did to validate cost savings data and shares this information, neither Congress nor the public can be assured that TechStats are as effective as reported,” the report said.

This isn’t the first time cost savings from OMB initiatives have been called into question. At a Senate hearing this week, GAO’s David Powner raised concerns about OMB’s method for tracking an estimated $3 billion in cost savings from its federal data center consolidation initiative.

OMB reported that TechStat saved an additional $63.5 million in “cost implications” last year but said those savings should not be compared with previous years because it used a different formula to calculate savings. OMB said the new formula accounts only for near-term savings, not savings over the life of a program. However, GAO could only validate $22.2 million of those savings, which are included in quarterly reports to Congress.

In written response to the GAO report, OMB said it remained confident in its cost savings estimate and said “it was speculative to conclude that the reported cost savings data were not valid because we [GAO] could not actually assess these figures.”

Despite concerns about the savings achieved through TechStat, GAO said the program is valuable because it focuses “management attention on troubled projects and establish[es] clear action items to turn the projects around or terminate them.”

For example, GAO estimates the National Archives and Records Administration’s Electronic Records Archives investment would have been over budget by as much as $405 million had it not been for TechStat. NARA took several corrective actions, including halting fiscal 2012 development funding, pending the completion of a strategic plan.

But GAO said that a number of risky IT investments have not undergone TechStat reviews and should have. Of the 162 federal IT investments considered to be at-risk, only 30 of those projects — about 19 percent — have undergone TechStat reviews. GAO’s report focused on the agencies with the largest number of at-risk programs on the IT Dashboard website: the Agriculture, Commerce, Health and Humans Services, and Homeland Security departments. At HHS, only two of its 16 at-risk investments have undergone a TechStat review.

As of last month, several high-risk IT investments had not undergone TechStat reviews, including HHS’ Unified Financial Management System: Modernization Program, the Veterans Affairs Department’s Benefits Legacy program and DHS’ Federal Emergency Management Agency Infrastructure.

In a response to GAO, Agriculture’s chief information officer said the agency is conducting one TechStat review a month to ensure all major investments are reviewed. CIO Cheryl Cook, who partially agreed with GAO’s assessment, said the IT Dashboard alone isn’t a true indicator that a program is failing and that the department uses other key metrics, including program data.

The Commerce Department said it has fully complied with GAO’s recommendation to create a plan for reviewing at-risk programs.

GAO recommended that OMB require agencies to conduct TechStat reviews for at-risk programs and require them to validate outcomes.

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