OMB vows to end out of control IT projects

The Obama administration wants to reverse decades of failed technology projects that cost billions and didn’t deliver what they promised.

Unlike past administrations with high risk lists or project kill lists, the Office of Management and Budget isn’t just applying more strict oversight to these projects. The White House is telling agencies that it will review the programs that are in the most trouble and terminate them if neccessary.

“Too often we allow projects to have long period of time 2-3-4 years before they have any deliverables,” says Jeff Zients, OMB’s deputy director for management and chief performance officer. “We’re going to be insisting on deliverables in a much more frequent time table.”

OMB laid out these new expectations and oversight plans in two memos released Monday.

The first memo focuses on IT projects more generally and details three specific steps OMB and agencies will take over the next four months.

The second memo is the final version of the changes to how agencies procure and implement financial management systems. Federal News Radio first reported June 10 that OMB was considering halting all new financial management systems and those expecting to issue new task orders in the coming months so OMB could review plans and milestones.

“We are wasting billions of dollars a year, and more importantly are missing out on the huge productively improvements other sectors have benefited from,” writes OMB director Peter Orszag on his blog. “Quite simply, we can’t significantly improve the efficiency and effectiveness of the federal government without fixing IT.”

Past administrations have tried to fix these IT projects before. The Bush administration started with an IT project “Kill list” that evolved to a high-risk list, which turned into two lists, a high-risk list and a management watch list.

OMB applied more strenuous oversight to these projects, but rarely ended one that was significantly over budget or off schedule.

Zients and other senior OMB officials are expecting to shut down failed projects over the next six months. OMB earlier this month issued fiscal 2012 budget guidance requiring agencies to cut 5 percent of their budgets by eliminating poor performing programs, those that do not meet it their mission or are duplicative.

“The overall effort here is to make sure the $80 billion or so we spend each year on IT is spent in a way that has much higher returns, returns in terms of both the efficiency of operations and service quality,” he says during a press conference call Monday. “I want to emphasize that overall in the $80 billion is not about cost reduction, but better return on taxpayer dollars.”

OMB’s actions received a positive response from at least one lawmaker.

Sen. Tom Carper (D-Del.) says the administration’s plans incorporates many of the same provisions in the Information Technology Investment Oversight Enhancement and Waste Prevention Act of 2009 (S.920). Carper and Sen. Susan Collins (R-Maine) co-authored the bill that passed the Senate in May and awaits a vote in the House.

“Today’s announcement is a great first step, but our legislation is still needed,” says Carper in a release. “At a time when our country is facing record deficits it is simply unacceptable that federal agencies continue to waste billions of dollars by mismanaging information technology investments. The administration clearly recognizes this issue and I am pleased to have them as an ally in this battle to curb wasteful government spending.”

Zients does expect to save a significant chunk of the $3 billion agencies spend a year on new or updating existing financial management systems.

“We do think as we rescope these projects and terminate any projects that don’t make any sense or are ineffective, that $3 billion run rate will come down,” he says.

OMB laid out a schedule to review agency financial systems starting July 9 with the departments of Energy, Homeland Security and Veterans Affairs. Each week thereafter OMB will review as many as four other agency financial systems through Aug. 27.

Danny Werfel, OMB’s controller, adds that those financial systems operating in steady state will not be affected by these new oversight requirements.

Werfel says agencies must come in with a new plan to reduce risk and show how they will mange cost and schedule in an improved way.

Aside from financial systems, OMB’s will focus on all troubled IT projects. Federal chief information officer Vivek Kundra will issue guidance by the end of July detailing how the administration will determine which projects are in the most risk of failure.

Kundra says the goal is to fix, halt or terminate the programs. He says there are $27 billion worth of projects in trouble and at least $10 billion of them are in significant trouble.

Then by October, Zients will issue new guidance to improve the government’s IT procurement and management processes. This effort follows on the White House’s modernizing IT forum held in January with chief executive officers of the 50 large firms.

“The reason for the 120 reviews is to make sure we’re taking on some of these structure issues that are not limited to just personnel, but also procurement,” Kundra says. “Looking at what’s going on in terms of how we procure and what are some of the processes. It also has to do with how we deploy technology, do we use agile methodology? Do we scope them into much smaller chunks so we can succeed faster and failure faster if necessary?”

He adds that during this 120 period OMB will work with contractors, agencies and other experts from academia and think tanks, to ensure they are bringing best practices to bear in the government.

Kundra says the 120 review will try to answer four questions:

• How do we strengthen existing policies and procedures where appropriate?
• How do we make sure we are eliminating some of these outdated and cumbersome rules?
• How do we make sure we are focusing on proven best practices from inside and outside the government?
• And making sure we are looking whether hiring reform or contracting practices, how do we make sure we work closely with Congress to make the appropriate changes necessary is legislation is required?

The memo also says the guidance will include higher standards for project management practices and personnel, additional mechanisms for holding managers accountable for project results and more rigorous review processes.

Zients admits the private sector isn’t much better than the public sector in terms of implementing technology successfully-about 1-in-3 projects are terminated in the first six months. He says the difference is companies stop projects before spending many years and hundreds of millions of dollars. The government doesn’t do that nearly enough.

“There are many best practices within the four walls of government and outside the four walls of government that we will be looking at across these 120 days,” he says. “We absolutely will have an inclusive process and look for best practices wherever they exist.”

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