Rules seek to emulate private-sector planning

New budgeting guidelines issued by the Office of Management and Budget this month demand that agencies treat their information technology acquisitions more as private companies do - as investments that contribute to the bottom line.

Revisions to OMB Circular A-11, Part 3, "Planning, Budgeting and Acquisition of Fixed Assets," require agencies, starting with their fiscal 1998 budget requests, to track the costs, schedules and performance of systems. In addition, the circular reinforces an earlier policy that agencies request all the funding for these projects up front.

These changes offer agencies a framework in which to apply new planning and budgeting practices that OMB and Congress have encouraged over the past three years. They stem from new procurement and IT management laws enacted in the Government Performance and Results Act (GPRA), the Federal Acquisition Streamlining Act (FASA) and the Information Technology Management Reform Act (ITMRA) that demand federal agencies set and meet performance goals.

Both OMB and the General Accounting Office have issued "best practices" guides and other materials designed to help agencies adopt these new budgeting procedures so the requirements of the circular are not a surprise. Nevertheless, not all agencies are expected to be able to comply with the rules right away.

"It's a bell-shaped curve," said John Koskinen, OMB's deputy director for management. "Some agencies do it very well, others are really at ground zero, and the bulk of them are in the middle," in terms of their ability to supply all the required information.

"One of the problems the federal government has had is it has always taken a short-term view," said Hank Steininger, a consultant with Grant Thornton LLP who chairs the Information Technology Association of America's federal systems integration committee.

Joe Thompson, chief information officer with the General Services Administration and leader of an unofficial chief information officers' working group, said the circular "is an excellent document to begin the capital planning process," but agencies will need more detailed guidance.

The working group, in a report circulating throughout the government, agreed with an earlier Industry Advisory Council report that agency CIOs should have a central role in managing IT assets. The report says agencies must give CIOs "fiscal and organizational authority over IT investments," base capital planning procedures on their strategic visions and business plans and have a senior-level executive board to review IT investments.

The report also recommends that CIO duties not be combined with those of the agency chief financial officer because it would dilute attention to IT.

Searching for Standards

Agencies have struggled recently to define performance measures for their programs and to determine how IT contributes to meeting such goals. Government and industry management experts note that it is much easier for the private sector, with its focus on profit, to set measurable goals than it is for public agencies that may have political objectives.

Information resources management officials participating in the CIO working group have agreed to launch nine pilot proj-ects to demonstrate how to manage technology strategically, Thompson said.

Koskinen said a major goal of the new circular is to enable agencies to report all at once the information required under GPRA, FASA and ITMRA. He said a more detailed guide to capital planning practices, which OMB is writing in cooperation with GAO, would be ready early next year.

Generally, government and industry observers expect that managers will use the information they collect under A-11 to cancel or postpone projects that have marginal benefits. The circular cautions agencies, however, to pay close attention to "lumpiness" in funding so they do not forsake projects that are expensive but have great long-term benefits.

A-11 Rules

Request money needed to complete each distinct phase of a project at its start, rather than asking for money year by year.

Describe how the project helps to fulfill strategic goals over its life cycle.

Identify contracting and management strategies for each program.

Outline how they will monitor program costs and schedules, report whether such targets are being met and detail how they will put errant projects back on track.