Agencies Saved Billions by Cutting Low-Priority IT Projects. But What Did They Do With the Savings?

Federal agencies have saved more some $3 billion in IT reform efforts over the past several years, but many aren’t properly tracking how they’re using the cost savings to fund innovative new projects, according to a new assessment from the Government Accountability Office.

The Obama administration first began pushing agencies toward IT reforms -- such as adopting cloud computing and shuttering data centers -- in 2010. A few years later, the administration directed agencies to cut spending on duplicative, underperforming or lower-priority projects and to reinvest at least 50 percent of the savings into new IT projects that would “demonstrably improve citizen services or administrative efficiencies,” according to GAO.

All told, agencies reported saving $3.6 billion under the “cut and reinvest” initiative between 2011 and 2014, according to auditors. Slightly more than half the reported savings came from closing or consolidating energy-guzzling data centers. (Two agencies did not report any IT cost savings: NASA and interestingly, the Office of Personnel Management.)

But it’s the second part of the strategy -- “reinvest” -- that appears to have tripped up many agencies.

Most agencies did not follow rules from the Office of Management and Budget to submit reinvestment plans -- specifying how they planned to re-use cost savings netted from cutting back lower-priority projects -- as part of their fiscal 2014 budget submissions.

That led OMB to overestimate total savings from the effort by more than half. White House budget officials expected agencies to cut $7.6 billion and repurpose at least half that amount. Instead, agencies collectively proposed $3 billion in savings and planned to reinvest about $2.1 billion.

Similarly, not all agencies have been tracking their progress in actually reinvesting the new-found savings into worthier projects.

“Until agencies complete their ongoing reinvestment plans, they will be challenged to ensure that their considerable savings are being used in the most efficient and effective manner possible,” auditors concluded.

GAO partly blamed a hands-off approach by OMB.

Auditors recommended the federal chief information officer ensure that agencies complete reinvestment plans and require them to track where reinvested dollars are going.

However, an OMB official responding to the report, said there are no plans to require agencies to resubmit reinvestment plans. 

"Changing the rules at this point to have better transparency into the reinvestment decisions would likely outweigh the value of having that detail,” according to OMB’s response, in part because “agencies would invest an inordinate amount of effort for the benefit.”

(Image via Nomad_Soul/ Shutterstock.com)