IT Projects At Risk: Is It Too Late To Save $12 Billion?
September 7, 2006
In fiscal year 2007, the federal government will spend $64 billion on more than 850 information technology (IT) projects ranging from e-payroll and human resources to weather satellites and defense systems. The Office of Management and Budget is responsible for overseeing the use of IT throughout the government, and keeps close track of the most at-risk projects through its High Risk List and Management Watch List. The Government Accountability Office (GAO) has determined that, between projects on both lists, more than $12 billion is in serious risk of being wasted due to performance or planning problems. The hearing focused on why $12 billion in potentially wasteful projects is being funded and what OMB is doing to make sure this money is not wasted.
More than a year ago, GAO recommended that OMB compile the information on all Management Watch List projects and release them to Congress and the public. So far, OMB has declined to do so, preventing Congress from knowing basic information about the most risk projects it funds. The hearing examineed why OMB has not released this information.
Hearing Title: IT Projects At Risk: Is It Too Late To Save $12 Billion
Date: Thursday, September 7, 2006
Time: 9:30 a.m.
Location: 342 Dirksen Senate Office Building
Witnesses:
The Honorable Karen Evans
Administrator, E-Government and Information Technology
Office of Management and Budget
Mr. David Powner
Director, Information Technology Management Issues
Government Accountability Office
In FY2007, the federal government will spend $64 billion on information technology (IT), of which $7-12 billion may be wasted through cost overruns, schedule delays and poor management.
The Office of Management and Budget (OMB) monitors questionable and high-risk IT projects through two lists it created: the High-Risk List and the Management Watch List. The High-Risk List monitors projects that may perform poorly, while the Management Watch List monitors programs that OMB has decided are “not well planned,” yet funds anyway. The President’s FY2007 budget submission included 226 projects worth $6.4 billion on the High-Risk List and 263 projects worth $9.9 billion on the Management Watch List.
These lists rely on unstandardized agency reports and may not be accurate or complete, meaning many billions of dollars more in projects may be at risk than are reported by OMB. The Government Accountability Office (GAO) has uncovered numerous risky projects worth billions not tracked on either list.
Agencies are required to provide “business cases” for each IT investment to ensure proper planning has been done. Despite that, the federal government still funds $9.9 billion worth of investments that had inadequate business cases.
OMB has not yet provided Congress or GAO with the Management Watch List, preventing them from being able to conduct thorough oversight.
OMB has no effective way to ensure the information it receives from agencies regarding which projects are high risk and which are not is reliable. This is a significant reason why projects deemed “not well planned” are funded in the first place.
The number of IT projects with “performance shortfalls” has risen from 58 to 79 over the six-month period from September 2005 to March 2005. That represents a 36% increase in failing projects over that time.
Impact on Taxpayers:
Nearly one in five tax dollars that the federal government spends out of a $64 billion IT investments budget is subject to an unnecessary level of risk. Without proper management, billions of dollars may be wasted each year on poorly planned or poorly performing IT projects.
If projects with “performance shortfalls” continue to increase at the current pace, there will be more than 107 projects with performance problems this fall worth more than $3 billion.
Failing IT projects means that the public gets worse customer service from the government as computer systems are outdated, inefficient, flawed or absent.
These Findings Demand a Response:
Federal agencies should respond to an inquiry by the Subcommittee requesting information on the IT projects they are funding, as well as any cost overruns associated with each of those projects.
OMB must release the Management Watch List to Congress and post the business cases on the internet. This will ensure greater public accountability through transparency.
OMB should provide a more solid rationale for why it is funding projects on the Management Watch List that are considered “not well planned” or stop funding them.
