GAO: $10 billion worth of current federal IT contracts could fail

At least $10 billion in federal technology contracts are currently at risk of failing, according to a new review by the Government Accountability Office — and the number could be larger.

Chief information officers across federal agencies reported that 183 of 759 major IT investments were at medium to high risk of failing before completion, the congressional watchdog found. Other IT projects also may be at risk, but federal agencies appear to be underreporting potential problems or removing or reclassifying IT investments that once were part of a public scorecard.

The GAO’s IT management director, David A. Powner, outlined the findings last week at a hearing of the Senate subcommittee on efficiency and effectiveness of government programs. His report comes as the government continues to recover from the problem-plagued rollout of HealthCare.gov and other high-profile IT miscues.

“Information technology should enable government to better serve the American people. However, despite spending hundreds of billions on IT since 2000, the federal government has experienced failed IT projects and has achieved little of the productivity improvements that private industry has realized from IT,” Powner said in written testimony.

The government’s handling of federal IT programs is closely watched in the Washington area because so many contractors are based here. The GAO report did not identify specific programs or contracts at risk.

Although federal agencies are required to publicly update the progress of their technology programs, Powner described what he called a “troubling trend toward decreased transparency” in federal IT reporting.

For instance, when reporting to the Office of Management and Budget’s IT Dashboard — a public online listing of federal IT investments and contracts and their progress — the Energy Department reclassified several of its supercomputer investments as “facilities” instead of “IT,” according to the GAO. The GAO also found that the Commerce Department reclassified its satellite ground system investments.

The watchdog noted that prior to December 2013, the administration provided no updates to that official scorecard in 15 of the 24 months leading up to the release of the president’s proposed budget.

Neither the Energy nor Commerce departments responded to requests for comment. An OMB spokesman referred to comments that agencies submitted after a draft of the report was circulated in November.

In those, the Energy Department maintained that supercomputer investments did not have to be reported on the IT Dashboard, but agreed to partner with OMB to develop an alternate mechanism for tracking those investments. The Commerce Department disagreed that its satellite investments needed to be classified as IT, arguing that the projects were still subject to OMB oversight even if they aren’t part of the IT Dashboard. U.S. Chief Information Officer Steve VanRoekel wrote that OMB would explore updating the dashboard during the federal budget development period, although it previously has waited until after budgets are submitted.

Another problem was agencies reporting that IT projects were going well even as crises were escalating, Powner said in an interview.

For instance, the Department of Health and Human Services was rating major IT projects, including a pre-launch HealthCare.gov, as low-risk until March 2013, when the assessments were suddenly bumped up to“moderately high risk” or “high risk” closer to the site’s launch, he said.

Any rating is a subjective measurement and “really depends on how actively engaged some of those CIOs are” with IT projects; some chief information officers may not understand how likely the projects are to fail, Powner said. Still, he estimated, the value of contracts at risk of failure is probably more than the reported $10 billion.

The GAO said the government has taken several steps to improve the management of IT programs and noted that the government has moved to eliminate duplicative programs, an effort that has the potential of saving $5.8 billion through fiscal 2015.

Agencies could lower the risk of failure of ongoing programs by breaking big jobs into smaller tasks, what’s called an incremental development approach, Powner said. Despite OMB efforts to encourage agencies to split contracts into six- or 12-month cycles and asking contractors to demonstrate success after each one, 75 percent of investments did not request early results within six-month cycles, and less than half asked for results within yearly cycles.

Still, Powner said, sites such as the IT Dashboard make the federal government more transparent than in the past.

“Even sometimes when the transparency isn’t completely accurate, that’s still [more] helpful [than not],” because it builds a culture in which agencies share information about projects, he said.

Amrita Jayakumar contributed to this report.

Mohana Ravindranath covers IT and small business for the Washington Post and its weekly Capital Business publication.
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