OMB plan to streamline IT purchasing wins praise but faces headwinds

Coming changes to the way the government buys $80 billion worth of hardware and software annually have the potential during the next six months to expedite what has traditionally been a costly approach, according to former federal officials and industry groups. But part of the plan to create spending flexibility in buying information technology faces pushback from House Republicans and the bureaucratic appropriations process, say some IT budget experts.

Jeffrey Zients, chief performance officer at the Office of Management and Budget, unveiled the initiative on Friday during remarks before the Northern Virginia Technology Council.

The strategy includes steps to synchronize the technology refresh cycle with the federal funding cycle; fortify program management; promote interaction between agency managers and the IT community; convene in-person meetings between senior executives and program managers to review projects; and move to the cloud -- or remotely accessible equipment and applications that are hosted online and available on a subscription basis.

The announcement capped a four-month effort to resolve problems that for decades have busted million-dollar budgets, stalled upgrades and delivered technologies that did not function as planned. OMB started in June by freezing work on all financial accounting systems -- with budgets of about $20 billion -- to pare back the projects, or to cancel them outright.

Then, OMB, in consultation with agencies, produced a list of high-risk deployments that are facing cost overruns, delays or potential performance issues -- yet are mission critical. Chief information officers have been monitoring these projects to find room for consolidations, reductions and cancellations in the fiscal 2012 budget.

The agenda's hallmark is a proposal to match technology rollout timelines with the congressional budget schedule by appealing to Congress for lump-sum IT appropriations. With general purpose funding, agencies quickly could pay for smaller projects without committing to specified complex, multiyear modernizations that often fail. In return for such leeway, agency officials would frequently update lawmakers on the progress of individual systems.

Currently, lawmakers typically grant funds only for specific agency divisions that have produced detailed IT plans, and sometimes only for specific projects. "You could have money for patent automation and be trying to push through additional monies -- but you couldn't use money even from the trademark office, or excess monies from the Census Bureau," said Alan Balutis, the first CIO at the Commerce Department and co-founder of the federal Chief Information Officers Council, whereas under the Obama administration's proposal, "the CIO in conjunction with others in the C-suite would have more flexibility to allocate those monies and spend them on projects with the biggest return."

But officials could have a hard time persuading the legislative branch to follow their playbook. "The Congress' power of the purse is really at the heart of their legislative authority," said Balutis, who now serves as a director at Cisco. "Traditionally, they've been very unwilling to give additional leeway and flexibility to the executive branch. . . . I think they have their work cut out for them to do this."

Complicating the maneuvering is the fact that no single committee controls IT spending, and the White House will have to negotiate with about 10 appropriations subcommittees. Observers say Rep. Darrell Issa, R-Calif., presumptive incoming chairman of the House Oversight and Government Reform Committee, grasps the acquisition process and could champion such reforms, as did former Rep. Tom Davis, R-Va., the last Republican to head the committee. But that committee has no legislative authority.

"I wouldn't say that it's easy because, if it was, someone before this group would have done it," said Tim Young, who was deputy administrator in the Office of E-government and IT during the George W. Bush administration. "But I would say there are [other] flexible options. . . . I think it would have to be addressed on a case-by-case basis."

Young said greater latitude with IT accounts would allow agencies to maintain and replace modern technology without having to predict the hardware and software they'll need when their budgets kick in two to three years out.

Phil Bond, president of industry association TechAmerica, is optimistic about this piece of the strategy. "We have bipartisan leadership that gets this stuff, understands it and wants to act on it. Darrell Issa over in the House really understands procurement, understands technology, wants to be active in this arena," he said. "Over on the Senate side, [Thomas Carper, D-Del., chairman of the Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management], has been there a long time and he understands it. It seems like we have this rare wonderful alignment."

TechAmerica recently shared with OMB its own suggested strategy for overhauling the way the government shops for IT, which included building a workforce of professional program managers; launching systems in phases; and improving cooperation between IT managers and users, as well as private sector partners. After being briefed on the administration's strategy, Bond said: "We're absolutely, positively pleased. It fits hand in glove with the recommendations we made. In our view, freezing work was never a strategy. There will be more details to come, which we'll need to be apprised of."

A thorough companion plan is slated for release during the second week of December.

OMB officials on Friday said they have completed reviews of 20 of the 30 financial systems they had halted. Half of the 20 were determined to be on track. The other 10 were undergoing overhauls that should save about $1.6 billion, according to OMB. For example, officials killed plans for modernizations at the Veterans Affairs Department and the Small Business Administration, and reduced system requirements for upgrades at the Homeland Security, Justice, and Health and Human Services departments.

There will almost definitely be immediate, positive benefits from carving out a career path for program managers, according to many in the IT community. Balutis has long argued that a lack of skilled program managers has hurt project development governmentwide. The administration is expected to provide $158 million in fiscal 2011 for training and hiring in the discipline and eventually require that project management teams be a branch on every agency's organizational tree.

Balutis says the job will be attractive to young hires: If "you're going to be the person staffed at the Secure Border Initiative, or helping the FBI with modernizing its information sharing . . .it really gets you into the heart of making the government perform better." He anticipates the program managers one day having the same cache and influence as other senior executive positions.

Bond said, "The single most important ingredient for success is building the project management staff."

Contractors were especially supportive of the initiative's aim to counter the misperception that agency officials are not allowed to fraternize with vendors during the design stage of acquisitions. OMB characterizes this component as a "myth busters" campaign to remove communication barriers that are interfering with productivity.

"We see an incredible range of misunderstanding about what authority or ability the agencies have to engage with the private sector," Bond said. Within agencies, "the advice is, to be safe you should just avoid contact -- which works against the taxpayer," when suppliers cannot help federal managers refine a project's scope.

On Friday, OMB officials also announced a goal of shrinking the size of its 2,000 data centers 40 percent by 2015, partly through shifting to the cloud. Going forward, agencies must first consider Web-based IT as the default option for new acquisitions rather than in-house tech -- if the cloud services offer the same level of security.

Young, now a senior manager at Deloitte Consulting, said OMB's overall agenda sounds feasible and effective. "I think and hope they will receive support from the industry, as well as agencies and Congress," he added. "I think these reforms are politically agnostic. They recognize the fiscal constraints that the civilian and defense agencies have and they leverage several leading practice in the commercial world."