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entitled 'Information Technology: Agencies Need to Strengthen 
Oversight of Multibillion Dollar Investments in Operations and 
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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

November 2013: 

Information Technology: 

Agencies Need to Strengthen Oversight of Multibillion Dollar 
Investments in Operations and Maintenance: 

GAO-14-66: 

GAO Highlights: 

Highlights of GAO-14-66, a report to congressional requesters. 

Why GAO Did This Study: 

Of the over $82 billion that federal agencies plan to spend on IT in 
fiscal year 2014, at least $59 billion is to be spent on O&M, which 
consists of legacy systems (i.e., steady state) and systems that are 
in both development and O&M (known as mixed life cycle). OMB calls for 
agencies to perform annual OAs, which are a key method for examining 
the performance of O&M investments. 

GAO was asked to review IT O&M investments and agency use of OAs. The 
objectives of this report were to among other things (1) identify the 
federal IT O&M investments with the largest budgets, including their 
responsible agencies and how each investment supports its agency’s 
mission; (2) determine the extent to which these investments have 
undergone OAs; and (3) assess whether the responsible agency’s major 
IT investments are in development, mixed life cycle, or steady state. 
To do so, GAO focused on the 10 IT investments with the largest 
budgets in O&M and their responsible eight agencies, and assessed 
whether OAs were conducted on the investments. In addition, GAO 
evaluated what agencies spent on mixed, development, and O&M 
investments and whether agencies were using O&M funds for development 
activities. 

What GAO Found: 

The 10 federal information technology (IT) operations and maintenance 
(O&M) investments with the largest budgets in fiscal year 2012-—and 
the eight agencies that operate them—-are identified by GAO in the 
table below. They support agencies by providing, for example, global 
telecommunications infrastructure and information transport services 
for the Department of Defense. 

Of the 10 investments, only the Department of Homeland Security (DHS) 
investment underwent an operational analysis (OA)—a key performance 
evaluation and oversight mechanism required by the Office of 
Management and Budget (OMB) to ensure O&M investments continue to meet 
agency needs. DHS’s OA addressed most factors that OMB calls for; it 
did not address three factors (e.g., comparing current cost and 
schedule against original estimates). DHS officials attributed these 
factors not being addressed to the department still being in the 
process of implementing its new OA policy. The remaining agencies did 
not assess their investments, which accounted for $7.4 billion in 
reported O&M spending. Agency officials cited several reasons for not 
doing so, including relying on budget submission and related 
management reviews that measure performance; however, OMB has noted 
that these are not a substitute for OAs. Until the agencies ensure 
their operational investments are assessed, there is a risk that they 
will not know whether these multibillion dollar investments fully meet 
intended objectives. 

Table: 

Department: Department of Defense; 
Investment: Defense Information System Network; 
O&M Budget fiscal year 2012[A]: $1.813 billion; 
OA? No. 

Department: Department of Defense; 
Investment: Next Generation Enterprise Network; 
O&M Budget fiscal year 2012[A]: $1.394 billion; 
OA? No. 

Department: Department of Energy; 
Investment: Consolidated Infrastructure, Office Automation, and 
Telecommunications Program; 
O&M Budget fiscal year 2012[A]: $909 million; 
OA? No. 

Department: Department of Health and Human Services; 
Investment: National Institutes of Health IT Infrastructure; 
O&M Budget fiscal year 2012[A]: $358 million; 
OA? No. 

Department: Department of Homeland Security; 
Investment: Customs and Border Protection Infrastructure; 
O&M Budget fiscal year 2012[A]: $529 million; 
OA? Yes. 

Department: Department of the Treasury; 
Investment: Main Frames and Servers Services and Support; 
O&M Budget fiscal year 2012[A]: $482 million; 
OA? No. 

Department: Department of Veterans Affairs; 
Investment: Medical IT Support; 
O&M Budget fiscal year 2012[A]: $1.053 billion; 
OA? No. 

Department: Department of Veterans Affairs; 
Investment: Enterprise IT Support; 
O&M Budget fiscal year 2012[A]: $665 million; 
OA? No. 

Department: National Aeronautics and Space Administration; 
Investment: IT Infrastructure; 
O&M Budget fiscal year 2012[A]: $458 million; 
OA? No. 

Department: Social Security Administration; 
Investment: Infrastructure Data Center; 
O&M Budget fiscal year 2012[A]: $272 million; 
OA? No. 

Source: GAO analysis of OMB and agency data. 

[A] GAO assessed whether an OA had been performed for fiscal year 2012 
because it was the last full year for completing OAs. 

[End of table] 

For the eight agencies in this review, the majority of their 401 major 
IT investments were mixed life cycle (i.e., having activities and 
systems that are in both development and O&M) with regard to total 
spending and number of investments. Specifically, 193 (48 percent) of 
the investments were mixed investments, accounting for about $18 
billion (61 percent) of planned spending. As such, successful 
oversight of such investments should involve a combination of 
conducting OAs to address operational portions of an investment and 
establishing IT governance and program management disciplines to 
manage those portions under development. GAO’s experience at the 
agencies and this report have identified agency inconsistencies in 
conducting OAs and establishing the capabilities that are key to 
effectively managing IT investments; accordingly, GAO has made prior 
recommendations to strengthen agency efforts in these areas. GAO 
assessed whether an OA had been performed for fiscal year 2012 because 
it was the last full year for completing OAs. 

What GAO Recommends: 

GAO is recommending that the seven agencies that did not perform OAs 
on their large IT O&M investments do so, and that DHS ensure that its 
OA is complete and addresses all OMB factors. Of the seven agencies, 
three agreed with GAO’s recommendations; two partially agreed; and two 
had no comments. DHS agreed with the GAO recommendation to it. 

View [hyperlink, http://www.gao.gov/products/GAO-14-66]. For more 
information, contact David A. Powner at (202) 512-9286 or 
pownerd@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

The 10 O&M IT Investments with the Largest Budgets Support Agencies in 
a Variety of Ways and Represent a Significant Part of Overall Federal 
IT O&M Funding: 

Most of the Largest O&M IT Investments Did Not Undergo Operational 
Analyses: 

Majority of Agencies' Investments Were Mixed Life Cycle and Use of O&M 
Funds for Development Activities Was Limited: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, Methodology: 

Appendix II: Comments from the Department of Homeland Security: 

Appendix III: Comments from the National Aeronautics and Space 
Administration: 

Appendix IV: Comments from the Social Security Administration: 

Appendix V: Comments from the Department of Veterans Affairs: 

Appendix VI: Comments from the Department of Defense: 

Appendix VII: Comments from the Department of Energy: 

Appendix VIII: Comments from the Department of the Treasury: 

Appendix IX: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Fiscal Year 2014 O&M Percentage of Total Planned IT Spending: 

Table 2: Fiscal Year 2014 Development Percentage of Total Planned IT 
Spending: 

Table 3: 10 Largest O&M Investments, Responsible Department and 
Agency, Amount Budgeted for O&M and Development for fiscal year 2012, 
Investment Type, and How Investment Supports Mission: 

Table 4: 10 Largest IT O&M Investments, Whether They Underwent an OA, 
and Their fiscal year 2012 O&M Cost (in millions): 

Table 5: Customs and Border Protection Infrastructure: Analysis of 
Extent to Which Investment's Fiscal Year 2012 OA Addressed OMB Factors: 

Table 6: Fiscal Year 2012 Selected Major IT Investments Reported 
Spending Summary (in millions): 

Table 7: Fiscal Year 2012 Selected Major IT Investments Summary: 

Figures: 

Figure 1: Percentages of Total Federal IT Spending for Fiscal Year 
2014: 

Figure 2: Major IT Investments for Fiscal Year 2012 by Reported 
Spending (billions): 

Figure 3: Major IT Investments for Fiscal Year 2012 by Total Number of 
Investments in Each Phase (Development, Steady State, or Mixed Life 
Cycle): 

Abbreviations: 

DOD: Department of Defense: 

DOE: Department of Energy: 

DHS: Department of Homeland Security: 

HHS: Department of Health and Human Services: 

IT: information technology: 

NASA: National Aeronautics and Space Administration: 

OA: operational analysis: 

O&M: operations and maintenance: 

OMB: Office of Management and Budget: 

SSA: Social Security Administration: 

Treasury: Department of the Treasury: 

VA: Department of Veterans Affairs: 

[End of section] 

GAO:
United States Government Accountability Office: 
441 G St. N.W. 
Washington, DC 20548: 

November 6, 2013: 

Congressional Requesters: 

Federal agencies plan to spend over $82 billion on information 
technology (IT) in fiscal year 2014. Of this amount, at least $59 
billion was reported by the agencies to be spent on operations and 
maintenance (O&M). O&M investments consist of existing legacy systems 
(i.e., steady state) and systems that are in both development and O&M 
(known as mixed life cycle). Given the size and magnitude of these 
investments, it is important that agencies effectively manage the 
operations and maintenance of existing investments to ensure they (1) 
continue to meet agency needs, (2) deliver value, and (3) do not 
unnecessarily duplicate or overlap with other investments. 

The Office of Management and Budget (OMB) directs agencies to 
periodically examine the performance of these investments against, 
among other things, established cost, schedule, and performance goals. 
Specifically, OMB calls for agencies to perform annual operational 
analyses (OA), which are a key method for examining the performance of 
such investments in O&M. 

The objectives of our current review were to: 

* identify the federal IT O&M investments with the largest budgets, 
including their responsible agencies and how each investment supports 
its agency's mission; 

* determine the extent to which these investments have undergone OAs; 
and: 

* assess whether the responsible agency's major IT investments are in 
development, mixed life cycle, or steady state and the extent to which 
funding for investments in O&M have been transferred and used to fund 
investments in development. 

To do so, our work focused on the 10 federal IT investments with the 
largest reported budgets in O&M and the eight responsible agencies--
namely, the Departments of Defense (DOD), Energy, Homeland Security 
(DHS), Health and Human Services (HHS), the Treasury, and Veterans 
Affairs (VA), and the National Aeronautics and Space Administration 
and Social Security Administration--that operate these investments. In 
addition, we determined how these 10 investments supported their 
agencies' mission by analyzing OMB and agency documentation and 
conducting interviews with agency officials responsible for these 
investments. We also addressed whether the agencies conducted OAs to 
manage these 10 investments in accordance with OMB guidance. More 
specifically, we assessed whether an analysis had been performed on 
each of the 10 investments during fiscal year 2012 (because it was the 
last full year for completing OAs) and if so, we compared it to the 
OMB guidance criteria to identify any gaps and their causes. Further, 
to assess whether each of the eight agency's major IT investments are 
in development, mixed life cycle, or steady state, we analyzed OMB 
budget documentation on the agencies' planned spending on each IT 
investment by phase (i.e., development, mixed, or steady state). 
Moreover, to assess the extent to which these agencies' had used their 
O&M funds on development activities, we compared what the agencies had 
planned to spend on development and O&M (in fiscal year 2012) with 
what was reported to have been spent in order to identify any 
variances that indicated O&M funds had been reprogrammed and used to 
fund development activities. We also conducted interviews with agency 
officials and reviewed agency documentation to verify whether any such 
reprogramming of funds had occurred, their causes, and the extent to 
which such changes were subject to management oversight. 

We conducted this performance audit from December 2012 to October 2013 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. Details on our 
objectives, scope, and methodology can be found in appendix I. 

Background: 

The President's fiscal year 2014 budget request included plans for the 
federal government to spend over $82 billion on IT. The stated goal of 
the President's IT budget request is to support making federal 
agencies more efficient and effective for the American people; it also 
states that the strategic use of IT is critical to success in 
achieving this goal. Of the $82 billion budgeted for IT, the budget 
provides that 26 key agencies[Footnote 1] plan to spend the bulk of 
it, approximately $76 billion.[Footnote 2] Further, of the $76 
billion, over $59 billion is to be spent on O&M investments with the 
remainder ($17 billion) being budgeted for development of new 
capabilities. As shown in figure 1, the $59 billion represents a 
significant majority (i.e., 77 percent) of total budgeted spending for 
these agencies ($76 billion). 

Figure 1: Percentages of Total Federal IT Spending for Fiscal Year 
2014: 

[Refer to PDF for image: pie-chart] 

Operations and maintenance: 77%; 
Development: 23%. 

Source: GAO analysis of OMB data. 

[End of figure] 

Although O&M spending by these agencies is about 77 percent of total 
IT spending, the amount spent by each agency varies from a high of 98 
percent to a low of 46 percent (as shown in the following table). 

Table 1: Fiscal Year 2014 O&M Percentage of Total Planned IT Spending: 

Agency: Department of Defense; 
Total IT spending: $34.591 billion; 
O&M spending: $25.194 billion; 
O&M percentage of total IT spending: 73%. 

Agency: Department of Health and Human Services; 
Total IT spending: $7.288 billion; 
O&M spending: $6.477 billion; 
O&M percentage of total IT spending: 89%. 

Agency: Department of Homeland Security; 
Total IT spending: $6.072 billion; 
O&M spending: $5.075 billion; 
O&M percentage of total IT spending: 84%. 

Agency: Department of Veterans Affairs; 
Total IT spending: $3.890 billion; 
O&M spending: $3.346 billion; 
O&M percentage of total IT spending: 86%. 

Agency: Department of the Treasury; 
Total IT spending: $3.746 billion; 
O&M spending: $2.860.0 billion; 
O&M percentage of total IT spending: 76%. 

Agency: Department of Transportation; 
Total IT spending: $3.128 billion; 
O&M spending: $1.442 billion; 
O&M percentage of total IT spending: 46%. 

Agency: Department of Justice; 
Total IT spending: $2.657 billion; 
O&M spending: $2.152 billion; 
O&M percentage of total IT spending: 81%. 

Agency: Department of Agriculture; 
Total IT spending: $2.510 billion; 
O&M spending: $2.204 billion; 
O&M percentage of total IT spending: 88%. 

Agency: Department of Commerce; 
Total IT spending: $2.507 billion; 
O&M spending: $1.578 billion; 
O&M percentage of total IT spending: 63%. 

Agency: Department of Energy; 
Total IT spending: $1.529 billion; 
O&M spending: $1.317 billion; 
O&M percentage of total IT spending: 86%. 

Agency: Social Security Administration; 
Total IT spending: $1.504 billion; 
O&M spending: $849.1 million; 
O&M percentage of total IT spending: 56%. 

Agency: National Aeronautics and Space Administration; 
Total IT spending: $1.436 billion; 
O&M spending: $1.410 billion; 
O&M percentage of total IT spending: 98%. 

Agency: Department of State; 
Total IT spending: $1.417 billion; 
O&M spending: $1.146 billion; 
O&M percentage of total IT spending: 81%. 

Agency: Department of the Interior; 
Total IT spending: $1,013 billion; 
O&M spending: $958.2 million; 
O&M percentage of total IT spending: 95%. 

Agency: Department of Education; 
Total IT spending: $620.8 million; 
O&M spending: $515.6 million; 
O&M percentage of total IT spending: 83%. 

Agency: Department of Labor; 
Total IT spending: $611.1 million; 
O&M spending: $517.3 million; 
O&M percentage of total IT spending: 85%. 

Agency: General Services Administration; 
Total IT spending: $485.9 million; 
O&M spending: $397.7 million; 
O&M percentage of total IT spending: 82%. 

Agency: Environmental Protection Agency; 
Total IT spending: $447.7 million; 
O&M spending: $381.0 million; 
O&M percentage of total IT spending: 85%. 

Agency: Department of Housing and Urban Development; 
Total IT spending: $293.6 million; 
O&M spending: $144.9 million; 
O&M percentage of total IT spending: 49%. 

Agency: Nuclear Regulatory Commission; 
Total IT spending: $152.4 million; 
O&M spending: $130.2 million; 
O&M percentage of total IT spending: 85%. 

Agency: U.S. Agency for International Development; 
Total IT spending: $125.8 million; 
O&M spending: $98.4 million; 
O&M percentage of total IT spending: 78%. 

Agency: Small Business Administration; 
Total IT spending: $115.2 million; 
O&M spending: $76.7 million; 
O&M percentage of total IT spending: 67%. 

Agency: National Archives and Records Administration; 
Total IT spending: $103.3 million; 
O&M spending: $94.3 million; 
O&M percentage of total IT spending: 91%. 

Agency: National Science Foundation; 
Total IT spending: $98.7 million; 
O&M spending: $84.8 million; 
O&M percentage of total IT spending: 86%. 

Agency: Office of Personnel Management; 
Total IT spending: $86.1 million; 
O&M spending: $65.4 million; 
O&M percentage of total IT spending: 76%. 

Agency: Smithsonian Institution; 
Total IT spending: $66.1 million; 
O&M spending: $63.9 million; 
O&M percentage of total IT spending: 97%. 

Agency: Grand total; 
Total IT spending: $76.496 billion; 
O&M spending: $58.578 billion; 
O&M percentage of total IT spending: 77%. 

Source: GAO analysis of OMB data. 

[End of table] 

Development spending, which is intended for the inclusion of new 
capabilities, accounts for approximately 23 percent of the total 
amount to be spent on IT in fiscal year 2014 by these agencies. 
However, the investments in development vary greatly, from 54 percent 
by the Department of Transportation to a low of 2 percent by the 
National Aeronautics and Space Administration. 

Table 2: Fiscal Year 2014 Development Percentage of Total Planned IT 
Spending: 

Agency: Department of Defense; 
Total IT spending: $$34.591 billion; 
Development spending: $$9.398 billion; 
Development percentage of total IT spending: $27%. 

Agency: Department of Health and Human Services; 
Total IT spending: $7.288 billion; 
Development spending: $810.7 million; 
Development percentage of total IT spending: $11%. 

Agency: Department of Homeland Security; 
Total IT spending: $6.072 billion; 
Development spending: $997.5 million; 
Development percentage of total IT spending: $16%. 

Agency: Department of Veterans Affairs; 
Total IT spending: $3.890 billion; 
Development spending: $543.8 million; 
Development percentage of total IT spending: $14%. 

Agency: Department of the Treasury; 
Total IT spending: $3.746 billion; 
Development spending: $886.0 million; 
Development percentage of total IT spending: $24%. 

Agency: Department of Transportation; 
Total IT spending: $3.128 billion; 
Development spending: $1.686 billion; 
Development percentage of total IT spending: $54%. 

Agency: Department of Justice; 
Total IT spending: $2.657 billion; 
Development spending: $505.8; 
Development percentage of total IT spending: $19%. 

Agency: Department of Agriculture; 
Total IT spending: $2.510 billion; 
Development spending: $306.4 million; 
Development percentage of total IT spending: $12%. 

Agency: Department of Commerce; 
Total IT spending: $2.507 billion; 
Development spending: $928.6 million; 
Development percentage of total IT spending: $37%. 

Agency: Department of Energy; 
Total IT spending: $1.529 billion; 
Development spending: $212.5 million; 
Development percentage of total IT spending: $14%. 

Agency: Social Security Administration; 
Total IT spending: $1.504 billion; 
Development spending: $654.9 million; 
Development percentage of total IT spending: $44%. 

Agency: National Aeronautics and Space Administration; 
Total IT spending: $1.436 billion; 
Development spending: $25.8 million; 
Development percentage of total IT spending: $2%. 

Agency: Department of State; 
Total IT spending: $1.417 billion; 
Development spending: $270.8 million; 
Development percentage of total IT spending: $19%. 

Agency: Department of the Interior; 
Total IT spending: $1.013 billion; 
Development spending: $54.7 million; 
Development percentage of total IT spending: $5%. 

Agency: Department of Education; 
Total IT spending: $620.8 million; 
Development spending: $105.2 million; 
Development percentage of total IT spending: 17%. 

Agency: Department of Labor; 
Total IT spending: $611.1 million; 
Development spending: $93.8 million; 
Development percentage of total IT spending: $15%. 

Agency: General Services Administration; 
Total IT spending: $485.9 million; 
Development spending: $88.2 million; 
Development percentage of total IT spending: $18%. 

Agency: Environmental Protection Agency; 
Total IT spending: $447.7 million; 
Development spending: $66.7 million; 
Development percentage of total IT spending: $15%. 

Agency: Department of Housing and Urban Development; 
Total IT spending: $293.6 million; 
Development spending: $148.7 million; 
Development percentage of total IT spending: $51%. 

Agency: Nuclear Regulatory Commission; 
Total IT spending: $152.4 million; 
Development spending: $22.2 million; 
Development percentage of total IT spending: 15%. 

Agency: U.S. Agency for International Development; 
Total IT spending: $125.8 million; 
Development spending: $27.4 million; 
Development percentage of total IT spending: $22%. 

Agency: Small Business Administration; 
Total IT spending: $115.2 million; 
Development spending: $38.4 million; 
Development percentage of total IT spending: 33%. 

Agency: National Archives and Records Administration; 
Total IT spending: $103.3 million; 
Development spending: $9.0 million; 
Development percentage of total IT spending: $9%. 

Agency: National Science Foundation; 
Total IT spending: $98.7 million; 
Development spending: $13.9 million; 
Development percentage of total IT spending: 14%. 

Agency: Office of Personnel Management; 
Total IT spending: $86.1 million; 
Development spending: $20.7 million; 
Development percentage of total IT spending: 24%. 

Agency: Smithsonian Institution; 
Total IT spending: $66.1; million 
Development spending: $2.1 million; 
Development percentage of total IT spending: 3%. 

Agency: Grand total; 
Total IT spending: $$76.496 billion; 
Development spending: $$17.918 billion; 
Development percentage of total IT spending: 23%. 

Source: GAO analysis of OMB data. 

[End of table] 

Further, in addition to including amounts to be spent on IT 
development and O&M, the budget also further specifies how the total 
$76 billion budgeted for IT is to be spent on agency IT investments by 
the following three categories: 

* those solely under development ($6 billion), 

* those involving activities and systems that are in both development 
and O&M--known as mixed life cycle ($40 billion), and: 

* those existing operational systems--commonly referred to by OMB as 
steady state investments--that are solely in O&M ($30 billion). 

OMB's Roles and Responsibilities for Overseeing IT Investments, 
Including Operations and Maintenance: 

To assist agencies in managing their investments, Congress enacted the 
Clinger-Cohen Act of 1996, which requires OMB to establish processes 
to analyze, track, and evaluate the risks and results of major capital 
investments in information systems made by federal agencies and report 
to Congress on the net program performance benefits achieved as a 
result of these investments.[Footnote 3] Further, the act places 
responsibility for managing investments with the heads of agencies and 
establishes chief information officers to advise and assist agency 
heads in carrying out this responsibility. 

In carrying out its responsibilities, OMB uses several data collection 
mechanisms to oversee federal IT spending during the annual budget 
formulation process. Specifically, OMB requires federal departments 
and agencies to provide information to it related to their IT 
investments (called exhibit 53s) and capital asset plans and business 
cases (called exhibit 300s).[Footnote 4] 

* Exhibit 53. The purpose of the exhibit 53 is to identify all IT 
investments--both major and nonmajor[Footnote 5]--and their associated 
costs within a federal organization. Information included on agency 
exhibit 53s is designed, in part, to help OMB better understand what 
agencies are spending on IT investments. The information also supports 
cost analyses prescribed by the Clinger-Cohen Act. As part of the 
annual budget, OMB publishes a report on IT spending for the federal 
government representing a compilation of exhibit 53 data submitted by 
agencies. 

* Exhibit 300. The purpose of the exhibit 300 is to provide a business 
case for each major IT investment and to allow OMB to monitor IT 
investments once they are funded. Agencies are required to provide 
information on each major investment's cost, schedule, and performance. 

In addition, in June 2009, to further improve the transparency into 
and oversight of agencies' IT investments, OMB publicly deployed a 
website, known as the Federal IT Dashboard (Dashboard), which replaced 
its Management Watch List and High-Risk List. As part of this effort, 
OMB issued guidance directing federal agencies to report, via the 
Dashboard, the performance of their IT investments. Currently, the 
Dashboard publicly displays information on the cost, schedule, and 
performance of major federal IT investments at key federal agencies. 
In addition, the Dashboard allows users to download exhibit 53 data, 
which include information on both major and nonmajor investments. 
According to OMB, these data are intended to provide a near real-time 
perspective of the performance of these investments, as well as a 
historical perspective. Further, the public display of these data is 
intended to allow OMB, other oversight bodies, and the general public 
to hold the government agencies accountable for results and progress. 
Since the Dashboard has been implemented, we have reported and made 
recommendations to improve the data accuracy and reliability. In 2010, 
2011, and 2012, we reported on the progress of the Dashboard and made 
recommendations to further improve how it rates investments relative 
to current performance.[Footnote 6] OMB concurred with our 
recommendations and has actions planned and underway to address them. 

Further, OMB has developed guidance that calls for agencies to develop 
an OA policy for examining the ongoing performance of existing legacy 
IT investments to measure, among other things, that the investment is 
continuing to meet business and customer needs and is contributing to 
meeting the agency's strategic goals.[Footnote 7] This guidance calls 
for the policy to provide for an annual OA of each investment that 
addresses the following: cost, schedule, customer satisfaction, 
strategic and business results, financial goals, and innovation. To 
address these areas, the guidance specifies the following 17 key 
factors that are to be addressed: 

* assessment of current costs against life-cycle costs; 

* a structured schedule assessment (i.e., measuring the: 

* performance of the investment against its established schedule); 

* a structured assessment of performance goals (i.e., measuring the 
performance of the investment against established goals); 

* identification of whether the investment supports customer processes 
as designed and is delivering goods and services it was designed to 
deliver; 

* a measure of the effect the investment has on the performing 
organization itself; 

* a measure of how well the investment contributes to achieving the 
organization's business needs and strategic goals; 

* a comparison of current performance with a pre-established cost 
baseline and estimates; 

* areas for innovation in the areas of customer satisfaction, 
strategic and business results, and financial performance; 

* indication if the agency revisited alternative methods for achieving 
the same mission needs and strategic goals; 

* consideration of issues, such as greater utilization of technology 
or consolidation of investments to better meet organizational goals; 

* an ongoing review of the status of the risks identified in the 
investment's planning and acquisition phases; 

* identification of whether there is a need to redesign, modify, or 
terminate the investment; 

* an analysis on the need for improved methodology (i.e., better ways 
for the investment to meet cost and performance goals); 

* lessons learned; 

* cost or schedule variances; 

* recommendations to redesign or modify an asset in advance of 
potential problems; and: 

* overlap with other investments. 

With regard to overseeing the agencies' development of policies and 
annual performance, OMB officials responsible for governmentwide OA 
policy stated that they expect agencies to perform all the steps 
specified in the guidance and to be prepared to show documentation as 
evidence of compliance with the guidance. 

GAO Has Previously Reported on IT Investments in O&M: 

In October 2012 we reported on five agencies' use of OAs (during 
fiscal year 2011) and how they varied significantly.[Footnote 8] 
Specifically, of the five agencies, we found that three--namely, DOD, 
Treasury, and VA--did not perform analyses on their 23 major steady 
state investments with annual budgets totaling $2.1 billion. The other 
two agencies--DHS and HHS--performed analyses but did not do so for 
all investments. For example, DHS analyzed 16 of its 44 steady state 
investments, meaning 28 investments with annual budgets totaling $1 
billion were not analyzed; HHS analyzed 7 of its 8 steady state 
investments, thus omitting a single investment totaling $77 million 
from being assessed. We also found that of those OAs performed by 
these two agencies, none fully addressed all the key factors. 
Specifically, our analysis showed that only about half of the key 
factors were addressed in these assessments. 

Consequently, we recommended, among other things, that the agencies 
conduct annual OAs and in doing, ensure they are performed for all 
investments and that all factors are fully assessed. To ensure this is 
done and to provide transparency into the results of these analyses, 
we also recommended that OMB revise its guidance to include directing 
agencies to post the results on the Dashboard. OMB and the five 
agencies agreed with our recommendations and have efforts planned and 
underway to address them. In particular, OMB issued guidance (dated 
August 2012) to the agencies directing them to report OA results along 
with their fiscal year 2014 budget submission documentation (e.g., 
exhibit 300) to OMB. According to OMB officials, they are currently 
establishing a process on how agencies are to provide the information 
to OMB which they plan to have in place over the next 6 months. As 
part of this, OMB is defining a process for what they plan to do with 
the information once they receive it. 

Further, we recently reported[Footnote 9] that actions are needed 
within the federal government to reduce fragmentations, overlap, and 
duplication among federal programs and activities. These actions 
include improving the management oversight of federal IT investments 
in operations and maintenance. Specifically, to avoid wasteful or 
duplicative investments in operations and maintenance, we recommended 
that agencies analyze all information technology investments annually 
and report the results of their analyses to OMB. These actions could 
help agencies achieve cost savings by strengthening the oversight of 
their existing information technology investments in operations and 
maintenance, resulting in the potential for billions of dollars in 
savings. 

The 10 O&M IT Investments with the Largest Budgets Support Agencies in 
a Variety of Ways and Represent a Significant Part of Overall Federal 
IT O&M Funding: 

The 10 federal IT O&M investments with the largest budgets, identified 
during our review, support agencies in a variety of ways such as: 

* providing worldwide telecommunications infrastructure and 
information transport for DOD operations; 

* enabling HHS to conduct research, award grants, and disseminate 
biomedical research and health information to the public and National 
Institutes of Health stakeholders; and: 

* providing SSA the capability to maintain demographic, wage, and 
benefit information on all American citizens. Including ensuring the 
availability, changeability, stability, and security of SSA's IT 
operations for the entire agency. 

* These investments are operated by eight agencies, such as the 
Department of Energy (DOE), the National Aeronautics and Space 
Administration (NASA), and Social Security Administration (SSA). In 
total, the investments accounted for about $7.9 billion in O&M 
spending for fiscal year 2012, which was approximately 14 percent of 
all such spending for federal IT O&M. The following table identifies 
the 10 investments and describes the agency responsible for each 
investment, the amount budgeted for O&M and development for fiscal 
year 2012, investment type, and how each investment supports the 
organization's mission. 

Table 3: 10 Largest O&M Investments, Responsible Department and 
Agency, Amount Budgeted for O&M and Development for fiscal year 2012, 
Investment Type, and How Investment Supports Mission: 

Investment: Defense Information System Network; 
Responsible department/agency or office: DOD/Defense Information 
Systems Agency; 
Investment O&M FY12 budget: $1.813 billion; 
Investment development FY12 budget: $113 million; 
Investment type: Mixed; 
How investment supports mission: Is to enable the consolidated 
worldwide telecommunications infrastructure and information transport 
for DOD operations. 

Investment: Next Generation Enterprise Network; 
Responsible department/agency or office: DOD/Navy; 
Investment O&M FY12 budget: $1.394 billion; 
Investment development FY12 budget: $202 million; 
Investment type: Mixed; 
How investment supports mission: Is to provide secure net-centric data 
and services to Navy and Marine Corps personnel, and forms the 
foundation for the Navy's future Naval Network Environment. 

Investment: Consolidated Infrastructure, Office Automation, and 
Telecommunications Program; 
Responsible department/agency or office: DOE/Office of the Chief 
Information Officer; 
Investment O&M FY12 budget: $909 million; 
Investment development FY12 budget: $59 million; 
Investment type: Mixed; 
How investment supports mission: Is to allow access to modern, 
reliable, and secure IT infrastructure to support and enhance the 
DOE's business processes, strategic priorities, and IT vision. 

Investment: National Institutes of Health IT Infrastructure; 
Responsible department/agency or office: HHS/National Institutes of 
Health; 
Investment O&M FY12 budget: $358 million; 
Investment development FY12 budget: $13 million; 
Investment type: Mixed; 
How investment supports mission: Is to enable the department to 
conduct research, award grants, and disseminate biomedical research and 
health information to the public and National Institutes of Health 
stakeholders. 

Investment: Customs and Border Protection Infrastructure; 
Responsible department/agency or office: DHS/Customs and Border 
Protection; 
Investment O&M FY12 budget: $529 million; 
Investment development FY12 budget: $0; 
Investment type: Steady state; 
How investment supports mission: Is to provide the backbone support for 
all of Customs and Border Protection systems. 

Investment: Internal Revenue Service Main Frames and Servers Services 
and Support; 
Responsible department/agency or office: Treasury/Internal Revenue 
Service; 
Investment O&M FY12 budget: $482 million; 
Investment development FY12 budget: $0; 
Investment type: Steady state; 
How investment supports mission: Is to enable for the design, 
development, and deployment of server, middleware, and large systems 
and enterprise storage infrastructures. 

Investment: Medical IT Support; 
Responsible department/agency or office: VA; 
Investment O&M FY12 budget: $1.053 billion; 
Investment development FY12 budget: $0; 
Investment type: Steady state; 
How investment supports mission: Is to provide the critical IT 
infrastructure and systems necessary for the delivery of health care 
and services to veterans. 

Investment: Enterprise IT Support; 
Responsible department/agency or office: VA; 
Investment O&M FY12 budget: $665 million; 
Investment development FY12 budget: $3 million; 
Investment type: Mixed; 
How investment supports mission: Is to support the mission of 
the Department by integrating, managing, and sustaining critical IT 
infrastructure and systems necessary for the delivery of services. 

Investment: National Aeronautics and Space Administration IT 
Infrastructure; 
Responsible department/agency or office: NASA/Office of the Chief 
Information Officer; 
Investment O&M FY12 budget: $458 million; 
Investment development FY12 budget: $1 million; 
Investment type: Mixed; 
How investment supports mission: Is to allow institutional 
capabilities to conduct aeronautic and space activities, including 
ensuring vital assets are ready, available, and appropriately sized to 
conduct its missions. 

Investment: Infrastructure Data Center; 
Responsible department/agency or office: SSA/Office of the Chief 
Information Officer; 
Investment O&M FY12 budget: $272 million; 
Investment development FY12 budget: $153 million; 
Investment type: Mixed; 
How investment supports mission: Is to maintain demographic, wage, and 
benefit information on all American citizens; more specifically, the 
objective of the investment is to ensure the availability, 
changeability, stability, and security of SSA's IT operations for the 
entire agency. 

Investment: Total; 
Investment O&M FY12 budget: $7.9 billion; 
Investment development FY12 budget: $544 million. 

Source: GAO analysis of OMB data and agency documentation. 

[End of table] 

Most of the Largest O&M IT Investments Did Not Undergo Operational 
Analyses: 

Although required to do so, seven of the eight agencies did not 
conduct OAs on their largest O&M investments. Specifically, of the 10 
O&M IT investments (with the largest budgets) we reviewed, only one 
agency--DHS--conducted an analysis on its investment. In doing so, the 
department addressed most of the required OMB factors. However, the 
other seven agencies--DOD, DOE, HHS, Treasury, VA, NASA, and SSA--did 
not conduct OAs on their O&M investments, which have combined annual 
O&M budgets of $7.4 billion. 

The following table lists the 10 investments and whether an analysis 
was completed for fiscal year 2012. Further, it provides the total O&M 
amount for the investment that had an OA and for the investments that 
did not have one--$529 million and $7.4 billion, respectively. 

Table 4: 10 Largest IT O&M Investments, Whether They Underwent an OA, 
and Their fiscal year 2012 O&M Cost (in millions): 

Investment: Defense Information System Network; 
Completed OA for fiscal year 2012: No; 
Total O&M budget of investments with OA conducted: [Empty]; 
Total O&M budget of investments with OA not conducted: $1.813 billion. 

Investment: Next Generation Enterprise Network; 
Completed OA for fiscal year 2012: No; 
Total O&M budget of investments with OA conducted: [Empty]; 
Total O&M budget of investments with OA not conducted: $1.394 billion. 

Investment: Consolidated Infrastructure, Office Automation, and 
Telecommunications Program; 
Completed OA for fiscal year 2012: No; 
Total O&M budget of investments with OA conducted: [Empty]; 
Total O&M budget of investments with OA not conducted$ 909 million. 

Investment: National Institutes of Health IT Infrastructure; 
Completed OA for fiscal year 2012: No; 
Total O&M budget of investments with OA conducted: [Empty]; 
Total O&M budget of investments with OA not conducted: $358 million. 

Investment: Customs and Border Protection Infrastructure; 
Completed OA for fiscal year 2012: Yes; 
Total O&M budget of investments with OA conducted: $529 million; 
Total O&M budget of investments with OA not conducted: [Empty]. 

Investment: Internal Revenue Service Main Frames and Servers Services 
and Support; 
Completed OA for fiscal year 2012: No; 
Total O&M budget of investments with OA conducted: [Empty]; 
Total O&M budget of investments with OA not conducted: $482 million. 

Investment: Medical IT Support; 
Completed OA for fiscal year 2012: No; 
Total O&M budget of investments with OA conducted: [Empty]; 
Total O&M budget of investments with OA not conducted: $1.053 billion. 

Investment: Enterprise IT Support; 
Completed OA for fiscal year 2012: No; 
Total O&M budget of investments with OA conducted: [Empty]; 
Total O&M budget of investments with OA not conducted: $665 million. 

Investment: NASA IT Infrastructure; 
Completed OA for fiscal year 2012: No; 
Total O&M budget of investments with OA conducted: [Empty]; 
Total O&M budget of investments with OA not conducted: $458 million. 

Investment: Infrastructure Data Center; 
Completed OA for fiscal year 2012: No; 
Total O&M budget of investments with OA conducted: [Empty]; 
Total O&M budget of investments with OA not conducted: $272 million. 

Investment: Total; 
Total O&M budget of investments with OA conducted: $529 million; 
Total O&M budget of investments with OA not conducted: $7.4 billion. 

Source: GAO analysis of agency documentation. 

[End of table] 

With regard to the OA DHS performed on its investment (the Customs and 
Border Protection Infrastructure), the department addressed 14 of the 
17 OMB factors. For example, in addressing the factor on assessing 
performance goals, DHS made efforts to consolidate software licenses 
and maintenance in order to eliminate redundancy and reduce costs 
associated with software licenses and maintenance. Although DHS 
addressed these factors, it excluded 3 factors. Specifically, the 
department did not (1) assess current costs against life-cycle costs, 
(2) perform a structured schedule assessment, and (3) compare current 
performance against cost baseline and estimates developed when the 
investment was being planned. These factors are important because, 
among other things, they provide information to agency decision makers 
on whether an investment's actual annual O&M costs are as they were 
planned to be and whether there is a need to examine more cost 
effective approaches to meeting agency mission objectives. Table 5 
shows our analysis of DHS's assessment of its Customs and Border 
Protection Infrastructure investment. 

Table 5 Customs and Border Protection Infrastructure: Analysis of 
Extent to Which Investment's Fiscal Year 2012 OA Addressed OMB Factors: 

Key factor: 1. Assesses current costs against life-cycle cost; 
Yes or no: No. 

Key factor: 2. Includes a structured schedule assessment; 
Yes or no: No. 

Key factor: 3. Includes a structured assessment of performance goals; 
Yes or no: Yes. 

Key factor: 4. Identifies whether the investment supports customer 
processes as designed and is delivering the goods and services it was 
designed to deliver; 
Yes or no: Yes. 

Key factor: 5. Measures the effect the investment has on the performing 
organization itself; 
Yes or no: Yes. 

Key factor: 6. Includes a measure of how well the investment 
contributes to achieving the organization's business needs and 
strategic goals; 
Yes or no: Yes. 

Key factor: 7. Compares current performance with a pre-established cost 
baseline and estimates; 
Yes or no: No. 

Key factor: 8. Identifies any areas for innovation in the areas of 
customer satisfaction, strategic and business results, and financial 
performance; 
Yes or no: Yes. 

Key factor: 9. Identifies if the agency revisited alternative methods 
for achieving the same mission needs and strategic goals; 
Yes or no: Yes. 

Key factor: 10. Addresses issues such as greater utilization of 
technology or consolidation of investments to better meet 
organizational goals; 
Yes or no: Yes. 

Key factor: 11. Includes an ongoing review of the status of the risks 
identified in the investment's planning and acquisition phases; 
Yes or no: Yes. 

Key factor: 12. Identifies a need to redesign, modify, or terminate the 
investment; 
Yes or no: Yes. 

Key factor: 13. Includes an analysis on the need for improved 
methodology (i.e., better ways for the investment to meet cost and 
performance goals); 
Yes or no: Yes. 

Key factor: 14. Identifies any lessons learned; 
Yes or no: Yes. 

Key factor: 15. Identifies if the investment had a cost or schedule 
variance; 
Yes or no: Yes. 

Key factor: 16. Identifies recommendations to redesign or modify an 
asset before it becomes a problem; 
Yes or no: Yes. 

Key factor: 17. Includes information on the overlap of the investment 
with other systems; 
Yes or no: Yes. 

Key: Yes: fully addressed the factor; No: did not address the factor. 

Source: GAO analysis of DHS data. 

[End of table] 

With regard to why DHS's analyses did not address all OMB factors, 
officials from the DHS Office of the Chief Information Officer (who 
are responsible for overseeing the performance of OAs departmentwide) 
attributed this to the department still being in the process of 
updating their Management Directive 102-01 and its related guidance, 
which will provide additional instructions for completing OAs. As part 
of this update, department officials told us they plan to provide 
additional guidance on conducting OAs for programs once they have 
achieved full operational capability. The department expects the 
guidance to be completed in calendar year 2014. Further, according to 
DHS, once completed, this guidance will complement existing program 
review processes--referred to by DHS as program health assessments--
that requires all major IT investments, in support or mixed lifecycle 
phases, to complete an OA every 12 months. 

The other seven agencies attributed not performing OAs on these 
investments to several factors, including relying on other management 
and performance reviews--such as those used as part of developing 
their annual exhibit 300 submissions to OMB--although OMB has stated 
that these reviews are not to be a substitute for conducting annual 
analyses. The specific reasons cited by each agency are as follows: 

* DOD: Officials from DOD's Defense Information Systems Agency stated 
that they did not conduct an OA for the Defense Information Systems 
Network due to the fact that the investment undergoes constant 
oversight through weekly meetings to review issues such as the project 
status and accomplishments. Further, they said that the program 
manager exercises cost, schedule, and performance oversight using 
earned value management techniques. In addition, they stated that 
monthly reviews of actual versus planned spending are collected to 
flag any discrepancies from expected cost and schedule objectives. 
While these reviews are important steps to monitoring performance 
management, OMB states such ongoing efforts to manage investment 
performance are not a substitute for conducting an annual OA. 
According to the OMB guidance, OAs are to be conducted for all 
existing IT investments to ensure that, among other things, an 
investment is continuing to meet business and customer needs and is 
contributing to meeting the agency's strategic goals. 

With regard to the Next Generation Enterprise Network, officials from 
the Navy who manage and oversee this investment stated an OA was not 
performed due to it going through a transition from a mature fielded 
system to a new service delivery model, which will become operational 
in 2014. Nonetheless, OMB guidance calls for agencies to also conduct 
annual analyses on all existing IT investments as part of ensuring 
that such investments continue to deliver value and support mission 
needs. 

* DOE: Officials from the Office of the Chief Information Officer 
stated that an OA was not conducted on its Consolidated 
Infrastructure, Office Automation, and Telecommunications Program 
investment because in the summer of 2012 they began to separate it 
into smaller, more manageable pieces--referred to by these agency 
officials as deconsolidation--to better provide insight into the 
departmentwide infrastructure. In addition, to gain further insight 
into the infrastructure spending, the DOE Chief Information Officer 
led an in-depth analysis in collaboration with senior IT executives, 
which included a commodity IT TechStat review in the fall of 2011, and 
a commodity IT PortfolioStat review in the fall of 2012. While these 
latter reviews are helpful in monitoring performance, our analysis 
shows that they do not fully address all 17 OMB factors. Specifically, 
the reviews do not address, among other things, factors in the areas 
of customer satisfaction, strategic and business results, and 
financial performance. Addressing these factors is important because 
it provides information to agency decision makers on whether the 
investment supports customer processes and is delivering the goods and 
services it was designed to deliver. 

* HHS: According to officials from the department's National 
Institutes of Health, the National Institutes of Health IT 
Infrastructure investment, which had an annual budget of $371 million 
for fiscal year 2012, did not undergo an OA because this investment is 
an aggregation of all the components' infrastructure and not a 
particular system or set of systems suited for this kind of macro 
analysis. In addition, they noted that National Institutes of Health 
does monitor the operational performance of its IT infrastructure and 
conducts a more strategic analysis of services within its IT 
infrastructure to evaluate the operational effectiveness at a 
strategic level. While these types of performance monitoring efforts 
are important, OMB guidance nonetheless calls for agencies to also 
conduct annual analyses on all existing IT investments as part of 
ensuring that such investments continue to deliver value and support 
mission needs. 

* Treasury: Officials from the department's IT Capital Planning and 
Investment Control branch (within the office of Treasury's Chief 
Information Officer) noted that its Internal Revenue Service Main 
Frames and Servers Services and Support investment, which had a budget 
of $482 million for fiscal year 2012, was deconsolidated in fiscal 
year 2011 to allow for greater visibility into the infrastructure and 
that it is currently undergoing an OA but were not able to provide 
documentation at the time of our work. 

* VA: Officials from VA's Office of Information and Technology said an 
OA was not conducted on its Medical IT Support or Enterprise IT 
Support investments because performance is currently being reported 
monthly via the Federal IT Dashboard and internally through monthly 
performance reviews. The officials added that the department plans to 
develop a policy and begin conducting OAs on investments. However, VA 
has not yet determined when these analyses will be completed. 

* NASA: Officials from NASA's Office of the Chief Information Officer 
stated while they did not conduct a formal OA on the NASA IT 
Infrastructure investment, they did review the performance of the 
investment using monthly performance status reviews and bimonthly 
service delivery transition status updates. The officials noted that 
these reviews address financial performance, schedule, transformation 
initiatives, risks, customer satisfaction, performance metrics, and 
business results. According to officials, the investment underwent a 
service delivery transition status update and a performance status 
review in May 2012. While these NASA reviews are essential IT 
management tools, they do not incorporate all 17 OMB factors. For 
example, the reviews do not address, among other things, innovation 
and whether the investment overlapped with other systems. Fully 
addressing the OMB factors is essential to ensuring investments 
continue to deliver value and do not unnecessarily duplicate or 
overlap with other investments. 

* SSA: According to officials from SSA's Office of the Chief 
Information Officer, SSA's Infrastructure Data Center investment did 
not undergo an analysis because it has significant development content 
and therefore an earned value analysis was conducted, which is called 
for by SSA guidance for mixed life-cycle investments. Officials stated 
they generally perform either an earned value analysis or OA, as 
applicable to the investment. While earned value management analyses 
are important to evaluating investment performance, OMB guidance 
nonetheless calls for agencies to also conduct annual OAs on all 
existing IT investments as part of ensuring that such investments 
continue to deliver value and support mission needs. 

Until the agencies address these shortcomings and ensure all their O&M 
investments are fully assessed, there is increased risk that these 
agencies will not know whether these multibillion dollar investments 
fully meet intended objectives, including whether there are more 
efficient ways to deliver their intended purpose, therefore increasing 
the potential for waste and duplication. 

Majority of Agencies' Investments Were Mixed Life Cycle and Use of O&M 
Funds for Development Activities Was Limited: 

For the eight selected agencies, the majority of their 401 major IT 
investments--totaling $29 billion--were in the mixed life-cycle phase 
in both spending and number of investments. Specifically, of the $29 
billion, our analysis, as shown in figure 2, found that: 

* mixed life-cycle investments accounted for approximately $18 
billion, or 61 percent; 

* steady state investments accounted for approximately $8 billion, or 
27 percent; and: 

* development investments accounted for approximately $3 billion, or 
12 percent. 

Figure 2: Major IT Investments for Fiscal Year 2012 by Reported 
Spending (billions): 

[Refer to PDF for image: pie-chart] 

Development: $3 billion; 12%; 
Steady state: $8 billion; 27%; 
Mixed: $18 billion; 61%. 

Source: GAO analysis of OMB and agency data. 

[End of figure] 

With regard to the number of investments by phase, our analysis, as 
shown in figure 3, found that of the total 401 investments: 

* 193, or 48 percent, were in the mixed life-cycle phase, 

* 139, or 35 percent, were in the steady state phase, and: 

* 69 or 17 percent, were in the development phase. 

Figure 3: Major IT Investments for Fiscal Year 2012 by Total Number of 
Investments in Each Phase (Development, Steady State, or Mixed Life 
Cycle): 

[Refer to PDF for image: pie-chart] 

Development: 69; 17%; 
Steady state: 139; 35%; 
Mixed: 193; 48%. 

Source: GAO analysis of OMB and agency data. 

[End of figure] 

On an individual agency basis, table 6 provides the total amount each 
agency reportedly spent on IT. It also shows of how each agency 
allocates this total by development, mixed life cycle, or steady state 
investments. Further for the mixed investments, it shows the amounts 
for O&M and development. 

Table 6: Fiscal Year 2012 Selected Major IT Investments Reported 
Spending Summary (in millions): 

Agency: DOD; 
Total IT spending: $12.712 billion; 
Development only: Development spending only: $2.355 billion (19%); 
Mixed life cycle: Mixed spending: $9.772 billion (77%); 
Mixed breakdown: 
Development: $4.222 billion; 
O&M: $5.550 billion; 
Steady state: Steady state spending: $585 million (5%). 

Agency: DHS; 
Total IT spending: $4.391 billion; 
Development only: Development spending only: $345 million (8%); 
Mixed life cycle: Mixed spending: $1.520 billion (35%); 
Mixed breakdown: 
Development: $699 million; 
O&M: $821 million; 
Steady state: Steady state spending: $2.526 billion (58%). 

Agency: HHS; 
Total IT spending: $3.004 billion; 
Development only: Development spending only: $230 million (8%); 
Mixed life cycle: Mixed spending: $1.552 billion (52%); 
Mixed breakdown: 
Development: $438 million; 
O&M: $1.113 billion; 
Steady state: Steady state spending: $1.222 billion (41%). 

Agency: VA; 
Total IT spending: $2.889 billion; 
Development only: Development spending only: $31 million (1%); 
Mixed life cycle: Mixed spending: $1.467 billion (51%); 
Mixed breakdown: 
Development: $593 million; 
O&M: $874 million; 
Steady state: Steady state spending: $1.391 billion (48%). 

Agency: Treasury; 
Total IT spending: $2.426 billion; 
Development only: Development spending only: $247 million (10%); 
Mixed life cycle: Mixed spending: $953 million (39%); 
Mixed breakdown: 
Development: $320 million; 
O&M: $633 million; 
Steady state: Steady state spending: $1.226 billion (51%). 

Agency: SSA; 
Total IT spending: $1.127 billion; 
Development only: Development spending only: $118 million (10%); 
Mixed life cycle: Mixed spending: $993 million (88%); 
Mixed breakdown: 
Development: $349 million; 
O&M: $644 million; 
Steady state: Steady state spending: $16 (1%). 

Agency: NASA; 
Total IT spending: $962 million; 
Development only: Development spending only: [Empty]; 
Mixed life cycle: Mixed spending: $459 million (48%); 
Mixed breakdown: 
Development: $1 million; 
O&M: $458 million; 
Steady state: Steady state spending: $503 (52%). 

Agency: DOE; 
Total IT spending: $1.510 billion; 
Development only: Development spending only: $120 million (8%); 
Mixed life cycle: Mixed spending: $1.0 billion (66%); 
Mixed breakdown: 
Development: $65 million; 
O&M: $935 million; 
Steady state: Steady state spending: $390 (26%). 

Agency: Total; 
Total IT spending: $29.021 billion; 
Development only: Development spending only: $3.446 billion (12%); 
Mixed life cycle: Mixed spending: $17.715 billion (61%); 
Mixed breakdown: 
Development: $6.687 billion; 
O&M: $11.028 billion; 
Steady state: Steady state spending: $7.859 billion (27%). 

Source: GAO analysis of OMB and agency data. 

Note: Due to rounding, numbers may not add up to total numbers. 

[End of table] 

Further, the following table provides for each of the eight agencies, 
their total number of investments and of that total, the number of 
investments in development, mixed life cycle, and steady state. 

Table 7: Fiscal Year 2012 Selected Major IT Investments Summary: 

Agency: DOD; 
Total Number of: investments: 93; 
Development phase: Number of investments: in development: 21 (23%); 
O&M phase: 
Mixed: Number of investments in mixed life cycle: 59 (63%); 
Steady state: Number of investments in steady state: 13 (14%). 

Agency: DHS; 
Total Number of: investments: 91; 
Development phase: Number of investments: in development: 14 (15%); 
O&M phase: 
Mixed: Number of investments in mixed life cycle: 28 (31%); 
Steady state: Number of investments in steady state: 49 (54%). 

Agency: HHS; 
Total Number of: investments: 92; 
Development phase: Number of investments: in development: 16 (17%); 
O&M phase: 
Mixed: Number of investments in mixed life cycle: 40 (43%); 
Steady state: Number of investments in steady state: 36 (39%). 

Agency: VA; 
Total Number of: investments: 25; 
Development phase: Number of investments: in development: 5 (20%); 
O&M phase: 
Mixed: Number of investments in mixed life cycle: 16 (64%); 
Steady state: Number of investments in steady state: 4 (16%). 

Agency: Treasury; 
Total Number of: investments: 53; 
Development phase: Number of investments: in development: 6 (11%); 
O&M phase: 
Mixed: Number of investments in mixed life cycle: 34 (64%); 
Steady state: Number of investments in steady state: 13 (25%). 

Agency: SSA; 
Total Number of: investments: 16; 
Development phase: Number of investments: in development: 4 (25%); 
O&M phase: 
Mixed: Number of investments in mixed life cycle: 11 (69%); 
Steady state: Number of investments in steady state: 1 (6%). 

Agency: NASA; 
Total Number of: investments: 11; 
Development phase: Number of investments: in development: [Empty]; 
O&M phase: 
Mixed: Number of investments in mixed life cycle: 1 (9%); 
Steady state: Number of investments in steady state: 10 (91%). 

Agency: DOE; 
Total Number of: investments: 20; 
Development phase: Number of investments: in development: 3 (15%); 
O&M phase: 
Mixed: Number of investments in mixed life cycle: 4 (20%); 
Steady state: Number of investments in steady state: 13 (65%). 

Agency: Total; 
Total Number of: investments: 401; 
Development phase: Number of investments: in development: 69 (17%); 
O&M phase: 
Mixed: Number of investments in mixed life cycle: 193 (48%); 
Steady state: Number of investments in steady state: 139 (35%). 

Source: GAO analysis of OMB and agency data. 

Note: Due to rounding, numbers may not add up to total numbers. 

[End of table] 

The implications of the above analyses--especially the results in 
table 6 that show mixed investments having significant amounts of 
funding for both development and O&M activities--are noteworthy, 
particularly as it relates to the oversight of such investments. More 
specifically, overseeing these investments will involve a set of IT 
management capabilities for those portions of the investment that are 
operational and a different set of IT management capabilities for 
those portions that are still under development. In the case of those 
portions that are operational, this will include agencies having the 
capability to perform thorough OAs, the importance of which is 
discussed earlier in this report. 

For those portions still under development, OMB guidance[Footnote 10] 
and our best practices research and experience at federal agencies 
[Footnote 11] show such effective oversight will involve agencies 
having structures and processes--commonly referred to as IT governance 
and program management disciplines--that include: 

* instituting an investment review board to define and establish the 
management structure and processes for selecting, controlling, and 
evaluating IT investments; 

* ensuring that a well-defined and disciplined process is used to 
select new IT proposals; and: 

* overseeing the progress of IT investments--using predefined criteria 
and checkpoints--in meeting cost, schedule, risk, and benefit 
expectations and to take corrective action when these expectations are 
not being met. 

Having these disciplines are important because they help agencies, 
among other things, ensure such investments are supporting strategic 
mission needs and meeting cost, schedule, and performance expectations. 

However, our experience at federal agencies has shown that agencies 
have not yet fully established effective governance and program 
management capabilities essential to managing IT investments. For 
example, we reported in April 2011 that many agencies did not have the 
mechanisms in place for investment review boards to effectively 
control their investments.[Footnote 12] More specifically, we reported 
that while these agencies largely had established IT investment 
management boards, these boards did not have key policies and 
procedures in place for ensuring that projects are meeting cost, 
schedule, and performance expectations. 

In addition, our experience at federal agencies, along with the 
results from this audit, has found that agencies do not consistently 
conduct OAs. Specifically, as noted in the background, we reported in 
2012 on five agencies' use of them and how they varied significantly. 
[Footnote 13] Of the five agencies, we found that three--namely, DOD, 
Treasury, and VA--did not perform analyses on 23 major steady state 
investments with annual budgets totaling $2.1 billion. The other two 
agencies--DHS and HHS--performed them but did not do so for all 
investments. Accordingly, we have made recommendations to these 
agencies to improve their use of OAs and fully implement effective 
governance and program management capabilities. They have in large 
part agreed to our recommendations and have efforts underway and 
planned to implement them. 

Regarding the use of O&M funds for development efforts, the eight 
agencies we reviewed did not, in large part, reprogram or reallocate 
O&M funds for use on development activities during the period reviewed 
(fiscal year 2012). Specifically, six of the agencies reported they 
did not reprogram IT O&M funds to be used on development activities 
and we identified no evidence to the contrary; two agencies--Treasury 
and VA--reported they did so in two instances. With regard to 
Treasury, the department--on its CADE 2 investment which has a total 
O&M budget of $40 million--reallocated a total of $10,000 to fund 
development activities planned for the investment. According to 
Treasury documentation, the cost of the investment's operations and 
maintenance came in under budget by $10,000 so the department 
reallocated the funds to be used on new CADE 2 development efforts. 
Treasury reported this reallocation was discussed and approved by the 
Internal Revenue Service's investment review board (the Internal 
Revenue Service is responsible for overseeing CADE 2) during its 
monthly executive steering meetings held during fiscal year 2012. 

With regard to VA, it reprogrammed a total of $13.3 million from O&M 
to development on investments within an investment category which VA 
referred to as a portfolio. Specifically, during fiscal year 2012, the 
department reprogrammed $13.3 million from an O&M investment within 
its Medical Portfolio to investments under development within the 
portfolio requiring additional funding. This reprogramming of funds 
was approved by the Secretary of Veterans Affairs in June 2012. 

Conclusions: 

The 10 largest federal O&M IT investments represent a significant part 
of the federal government's multibillion dollar commitment to 
operating and maintaining its IT investments. Although OMB has 
established that agencies are to use OAs to evaluate the performance 
of such investments, their use by the agencies on these investments 
was very limited. DHS was the only agency to perform such an 
assessment and in doing so largely addressed the required OMB factors. 
While Treasury and VA had planned to perform analyses, they had not 
done so. Further, DOD, DOE, HHS, NASA, and SSA had not intended to 
perform these analyses on their large O&M investments. This limited 
use of OAs is due in part to a number of factors, including agencies 
relying on other types of performance oversight reviews that can be 
helpful but are not intended to be a substitute for these assessments. 
Until these agencies address these shortcomings and ensure all their 
large O&M investments are fully assessed, there is increased risk that 
these agencies will not know whether these multibillion dollar 
investments fully meet intended objectives, including whether there 
are more efficient ways to deliver their intended purpose. 

Recommendations for Executive Action: 

To ensure that the largest IT O&M investments are being adequately 
analyzed, we recommend that the: 

* Secretary of Defense direct appropriate officials to perform OAs on 
the two investments identified in this report, including ensuring the 
analyses include all OMB factors; 

* Secretary of Energy direct appropriate officials to perform an OA on 
the investment identified in this report, including ensuring the 
analysis includes all OMB factors; 

* Secretary of Health and Human Services direct appropriate officials 
to perform an OA on the investment identified in this report, 
including ensuring the analysis includes all OMB factors; 

* Secretary of Treasury direct appropriate officials to perform an OA 
on the investment identified in this report, including ensuring the 
analysis include all OMB factors; 

* Secretary of Veterans Affairs direct appropriate officials to 
perform OAs on the two investments identified in this report, 
including ensuring the analyses include all OMB factors; 

* NASA Administrator direct appropriate officials to perform an OA on 
the investment identified in this report, including ensuring the 
analysis includes all OMB factors; and: 

* Commissioner of Social Security direct appropriate officials to 
perform an OA on the investment identified in this report, including 
ensuring the analysis includes all OMB factors. 

In addition, we recommend that the Secretary of Homeland Security 
direct appropriate officials to ensure the department's OA for the 
Customs and Border Protection Infrastructure is complete and assesses 
missing OMB factors identified in this report. 

Agency Comments and Our Evaluation: 

In commenting on a draft of this report, four agencies--DHS, NASA, 
SSA, and VA--agreed with our recommendations; two agencies--DOD and 
DOE--partially agreed; and two agencies--HHS and Treasury--had no 
comments. The specific comments from the four agencies that agreed are 
as follows: 

* DHS in its written comments, which are reprinted in appendix II, 
stated that it concurred with our findings and recommendation. It also 
commented that DHS's Office of the Chief Information Officer and the 
Office of Information Technology within Customs and Border Protection 
(the DHS component agency responsible for the Customs and Border 
Protection Infrastructure investment) are to work closely to ensure 
future OAs conducted on the investment fully address the OMB 
assessment factors. 

* NASA, in its written comments--which are reprinted in appendix III--
stated it concurred with our recommendation. NASA also stated that it 
planned to conduct an OA on its NASA IT Infrastructure investment in 
April 2014 that is to include all OMB factors. 

* In its written comments, SSA stated it agreed with our 
recommendation. It also stated that since 2008, SSA has had a process 
to perform OAs on investments that were solely in O&M and that it 
recently expanded the process to include mixed life cycle IT 
investments that have significant systems in O&M. SSA further 
commented that it was in the process of performing OAs on the SSA 
mixed life cycle investment identified in our report and other similar 
agency investments, with the goal of completing these analyses by 
September 30, 2013. SSA's comments are reprinted in appendix IV. 

* VA, in its written comments, stated it agreed with our conclusions 
and concurred with our recommendation. It also said that it had 
scheduled OAs for the two investments identified in our report to 
begin in the second half of fiscal year 2014. VA's comments are 
reprinted in appendix V. 

The specific comments of the two agencies that partially agreed are as 
follows: 

* DOD, in its written comments, stated that it partially concurred 
with our recommendation. Specifically, DOD said it agreed with our 
recommendation that its OAs should address all OMB assessment factors 
and said it is establishing an OA policy in coordination with OMB. The 
department further agreed with our recommendation that it perform an 
OA on its Defense Information System Network investment. 

The department disagreed with our recommendation to perform an OA on 
its Next Generation Enterprise Network investment stating the 
investment is no longer in O&M and such investments, per OMB policy, 
do not require an OA. More specifically, as noted earlier in this 
report, DOD is transitioning the investment from a mature fielded 
system to a new service delivery model, which will become operational 
in 2014, and has moved the entire investment back into planning and 
acquisition. Nonetheless, consistent with our recommendation and as 
required by OMB policy, DOD plans to conduct an OA on this investment 
once the department begins to make it operational in 2014. DOD's 
comments are reprinted in appendix VI. 

* In its written comments--which are reprinted in appendix VII--DOE 
commented that it partially concurred with our recommendation. DOE 
stated it was not required to perform an OA on the Consolidated 
Infrastructure, Office Automation, and Telecommunications Program 
because the investment no longer exists. Specifically, DOE said it 
decided in 2012 to separate this large investment into smaller, more 
manageable pieces--referred to by DOE as deconsolidation--to better 
provide insight into its departmentwide infrastructure, and that since 
the investment no longer exists, there is no reason to perform an OA 
on it. 

Nonetheless, consistent with our recommendation, DOE added that it 
will ensure that OAs are conducted on the O&M components of all 
current major IT investments in DOE's IT portfolio. DOE stated that it 
had already performed OAs on applicable operational components that 
used to comprise the Consolidated Infrastructure, Office Automation, 
and Telecommunications Program. For example, DOE commented that one of 
the investments created during deconsolidation--called Consolidated 
Infrastructure--had already undergone an OA most recently in August 
2013. 

While DOE reported this progress in its comments to us, it did not 
provide us with documentation to support that this OA had been 
performed and whether it addressed all the OMB assessment factors. 
Consequently, we are revising our recommendation to DOE that it ensure 
OAs are performed on the applicable operational components that used 
to comprise the Consolidated Infrastructure, Office Automation, and 
Telecommunications Program, including the newly created Consolidated 
Infrastructure investment. 

With regard to HHS and Treasury, 

* HHS, in comments provided via e-mail from its GAO Intake Coordinator 
within the Office of the Assistant Secretary for Legislation, stated 
that it did not have any general comments on this report, and: 

* Treasury in its written response said it had no comments on our 
report; the department's comments are reprinted in appendix VIII. 

DHS and HHS also provided technical comments, which we incorporated as 
appropriate. 

We are sending copies of this report to interested congressional 
committees; the Secretaries of the Departments of Defense, Energy, 
Health and Human Services, Homeland Security, Treasury, and Veterans 
Affairs; the Administrator of the National Aeronautics and Space 
Administration; and the Commissioner of the Social Security 
Administration. This report will also be available at no charge on our 
website at '[hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions on matters discussed in this 
report, please contact me at (202) 512-9286 or pownerd@gao.gov. 
Contact points for our Offices of Congressional Relations and Public 
Affairs may be found on the last page of this report. GAO staff who 
made major contributions to this report are listed in appendix IX. 

Signed by: 

David A. Powner: 
Director: 
Information Technology Management Issues: 

List of Requesters: 

The Honorable Thomas R. Carper: 
Chairman: 
The Honorable Tom Coburn, M.D. 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Claire McCaskill: 
Chairman: 
Subcommittee on Financial and Contracting Oversight: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Susan M. Collins: 
United States Senate: 

[End of section] 

Appendix I: Objectives, Scope, Methodology: 

Our objectives were to (1) identify the federal IT O&M investments 
with the largest budgets, including their responsible agencies and how 
each investment supports its agency's mission; (2) determine the 
extent to which these investments have undergone OAs; and (3) assess 
whether the responsible agency's major IT investments are in 
development, mixed life cycle, or steady state, and the extent to 
which funding for investments in O&M have been used to finance 
investments in development. 

To identify those federal IT O&M investments with the largest budgets, 
we used data reported to the Office of Management and Budget (OMB) as 
part of the budget process, and focused on the 10 largest reported 
budgets in O&M and the responsible eight agencies (the Departments of 
Defense, Energy, Homeland Security, Health and Human Services, the 
Treasury, and Veteran Affairs; and the National Aeronautics and Space 
Administration and Social Security Administration) that operate these 
investments. In addition, to determine how these 10 investments 
support their agencies' missions, we reviewed OMB and agency 
documentation (e.g., exhibit 300s, exhibit 53s) and interviewed agency 
officials. 

To determine the extent to which OAs were conducted to manage these 
investments in accordance with OMB guidance, we analyzed agency 
documentation and interviewed responsible agency officials to 
determine whether any operational analyses had been performed on these 
10 investments during fiscal year 2012 because it was the last full 
year for completing OAs. In those cases where an OA had been 
performed, we compared it against OMB guidance on conducting them, 
including the 17 factors that are to be addressed as part of such 
assessments, to identify any variances.[Footnote 14] Where there were 
variances, we reviewed agency documentation and interviewed agency 
officials responsible for the OA to identify the cause of their 
occurrence. In those instances where an analysis was not performed, we 
reviewed documentation and interviewed agency officials to identify 
why it was not done. 

To assess whether each of the eight agency's major IT investments are 
in development, mixed life cycle, or steady state, we analyzed 
agencies' reported spending data provided to OMB as part of the budget 
process to determine what phase the majority of the investments were 
in and where the majority of funds were invested (i.e., development, 
mixed, or steady state). To assess the reliability of the data we 
analyzed, we corroborated them by interviewing investment and other 
agency officials to determine whether the OMB information we used was 
consistent with that reported by the agencies; based on this 
assessment, we determined the data were reliable for the purposes of 
this report. Further, to assess the extent to which these and other 
agency IT O&M investments involve development activities, we analyzed 
agency data and evaluated whether the eight agencies were using their 
O&M funds for development activities (i.e., through the reprogramming 
or reallocation of funds). Specifically, we compared what agencies 
planned to spend on development and O&M with what was reported to have 
been spent to identify any variances that indicated O&M funds were 
reprogrammed and used for development activities. In addition, we 
reviewed agencies' documentation to determine if agencies had any 
processes in place to manage investments transitioning from 
development to O&M. Lastly, we reviewed agency documentation and 
interviewed agency IT budget and investment officials to verify 
whether any reprogramming occurred, its causes, and the extent of 
which any reprogramming was subject to management oversight. 

We conducted this performance audit from December 2012 to October 2013 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Comments from the Department of Homeland Security: 

U.S. Department of Homeland Security: 
Washington, DC 20528: 

October 22,2013: 

David A. Powner: 
Director, Information Technology Management Issues: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Re: Draft Report GAO-13-823, "Information Technology: Agencies Need to
Strengthen Oversight of Multibillion Dollar Investments in Operations 
and Maintenance" 

Dear Mr. Powner: 

Thank you for the opportunity to review and comment on this draft 
report. The U.S. Department of Homeland Security (DHS) appreciates the 
U.S. Government Accountability Office's (GAO's) work in planning and 
conducting its review and issuing this report. 

The Department is pleased to note GAO's positive recognition that, out 
of 10 federal Information Technology investments with the largest 
budgets in operations and maintenance (O&M) reviewed; only DHS 
conducted an operational analysis (OA) on its investment. In addition,
GAO found that even though DHS's OA policy was still under 
development, the OA for the U.S. Customs and Border Protection (CBP) 
lnfrastructure investment addressed 14 of 17 Office of Management and 
Budget (OMB)-required factors. 

The draft report contained one recommendation directed to DHS with 
which the Department concurs. Specifically, GAO recommended that the 
Secretary of Homeland Security: 

Recommendation: Direct the appropriate officials to ensure the 
Department's OA for the Customs and Border Protection Infrastructure 
is complete and assesses missing OMB factors identified in this report. 

Response: Concur. CBP's Office of Information Technology (OIT) agrees 
with GAO's findings and, in the case of table 5, key factors 1 & 7 
shown in the report, will work closely with DHS's Office of 
Information Technology (OCIO) during the next fiscal year (FY) to 
ensure the CBP Infrastructure OA is (1) in compliance with the DHS OA 
guidance/template, and (2) completed prior to the FY 2016 OMB Exhibit 
300 submission. 

The finalized structured schedule assessment guidance from DHS, per 
table 5, key factor 2, has not yet been issued. Once received, CBP OIT 
will follow DHS CIO guidance and establish a process to adequately 
collect, assess, track, and report the required data within the CBP
Infrastructure OA. Estimated Completion Date: September 30, 2014. 

Again, thank you for the opportunity to review and provide comments on 
this draft report. Technical comments were previously provided under 
separate cover. Please feel free to contact me if you have any 
questions. We look forward to working with you in the future. 

Sincerely, 

Signed by: 

Jim H. Crumpacker: 
Director: 
Departmental GAO-OIG Liaison Office: 

[End of section] 

Appendix III: Comments from the National Aeronautics and Space 
Administration: 

National Aeronautics and Space Administration: 
Headquarters: 
Washington, DC 20546-0001: 

September 27, 2013: 

Reply to Attn of: Office of the Chief Information Officer: 

Mr. David Powner: 
Director: 
Information Technology Management Issues: 
United States Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Powner: 

The National Aeronautics and Space Administration (NASA) appreciates the
opportunity to review and comment on the Government Accountability 
Office (GAO) draft report entitled, "Information Technology: Agencies 
Need to Strengthen Oversight of Multibillion Dollar Investments in 
Operations and Maintenance" (GAO-13-823). 

In the draft report, GAO addresses one recommendation to the NASA 
Administrator. To ensure that the largest IT O&M investments are being 
adequately analyzed, GAO recommends that the NASA Administrator direct 
the Chief Information Officer to take the following action: 

Recommendation 1: NASA Administrator direct appropriate officials to 
perform an OA on the investment identified in this report, including 
ensuring the assessment includes all OMB factors. 

Management's Response: Concur. An Operational Analysis will be 
conducted in April 2014 to include all of the OMB factors. 

Thank you for the opportunity to comment on this draft report. If you 
have any questions or require additional information, please contact 
Valarie Burks at (202) 358-3716. 

Signed by: 

Larry Sweet: 
Chief Information Officer: 

[End of section] 

Appendix IV: Comments from the Social Security Administration: 

Social Security: 
Office of the Commissioner: 
Social Security Administration: 
Baltimore, MD 21235-0001: 

September 30, 2013: 

Mr. David Powner: 
Director, Information Technology: 
Management Issues: 
United States Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Bertoni: 

Thank you for the opportunity to review the draft report, "Information 
Technology: Agencies Need to Strengthen Oversight of Multibillion 
Dollar Investments in Operations and Maintenance" (GAO-13-823). Please 
see our enclosed response. 

If you have any questions, please contact me at (410) 966-9014. Your 
staff may contact Gary Hatcher, Senior Advisor for Records Management 
and Audit Liaison Staff, at (410) 965-0680. 

Sincerely, 

Signed by: 

Katherine Thornton: 
Deputy Chief of Staff: 

Enclosure: 

Comments On The Government Accountability Office Draft Report, 
"Information Technology: Agencies Need To Strengthen Oversight Of 
Multibillion Dollar Investments In Operations And Maintenance" (GAO-13-
823): 

Recommendation 1: 

Perform an OA on the investment identified in this report, including 
ensuring the assessment includes all OMB factors. 

Response: 

We agree. We currently have the framework in place to perform an 
operational analysis (OA) on the operations and maintenance (O&M) 
portion of our major information technology (IT) investments. In 
fiscal year (FY) 2008, we incorporated an OA for our steady-state IT
investments. As part of our Presidential Budget submission, we conduct 
(or update) an OA on an annual basis or as appropriate. 

In 2013, we expanded the OA process to include mixed life cycle IT 
investments that have a significant O&M portion of the investment. We 
are updating our OA for our Financial Accounting System and our 
disability determination services automation investments. We are also 
completing an OA on the O&M portion of our infrastructure investments 
(i.e., Data Center, Office Automation, and Telecommunications) and 
Interactive Video Tele-training. We plan to complete all FY 2013 OAs 
by September 30, 2013. 

[End of section] 

Appendix V: Comments from the Department of Veterans Affairs: 

Department of Veterans Affairs: 
Washington DC 20420: 

September 25, 2013: 

Mr. David A. Powner: 
Director, Information Technology: 
Management Issues: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Powner: 

The Department of Veterans Affairs (VA) has reviewed the Government
Accountability Office's (GAO) draft report, "Information Technology; 
Agencies Need to Strengthen Oversight of Multibillion Dollar 
Investments in Operations and Maintenance" (GAO-13-823). VA generally 
agrees with GAO's conclusions and concurs with GAO's recommendation to 
the Department. 

The enclosure specifically addresses GAO's recommendation in the draft 
report. VA appreciates the opportunity to comment on your draft report. 

Sincerely, 

Signed by: 
Jose D. Riojas: 
Chief of Staff: 

Enclosure: 

Department of Veterans Affairs (VA) Response to Government 
Accountability Office (GAO) Draft Report: "Information Technology: 
Agencies Need to Strengthen Oversight of Multibillion Dollar 
Investments in Operations and Maintenance" (GAO-13-823): 

GAO Recommendation: To ensure that the largest IT O&M investments are 
being adequately analyzed, GAO recommends that the Secretary of 
Veterans Affairs direct appropriate officials to perform OAs on the 
two investments identified in this report, including ensuring the 
assessments include all OMB factors. 

VA Comment: Concur. The two investments referenced by GAO are sub-
accounts of VA's single Information Technology Appropriation. These 
two sub-accounts contain operations and maintenance funding for 
multiple operational legacy systems and some resources for 
enhancements to those systems. VA has scheduled the implementation of 
operational assessments at the system level starting in the second 
half of fiscal year 2014; to include the legacy systems funded by 
these two sub-accounts. 
[End of section] 

Appendix VI: Comments from the Department of Defense: 

Department of Defense: 
Chief Information Officer: 
6000 Defense Pentagon: 
Washington, DC 20301-6000: 

October 8, 2013: 

Mr. David A. Powner
Director, Information Technology Management: 
U.S. Government Accountability Office:
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Powner, 

On behalf of the Department of Defense (DoD), DoD CIO is forwarding 
the response to the GAO draft report Information Technology: Agencies 
Need to Strengthen Oversight of Multibillion Dollar Investments in 
Operations and Maintenance, dated September 2013 (GAO Engagement 
311283). The Department's comments on the draft report are enclosed.
My point of contact is Mr. Craig Garant at craig.r.garant.civ@mail.mil 
or (703) 697-1029. 

Sincerely, 

Signed by: 

Teresa M. Takai: 

Enclosure: As Stated: 

GAO Draft Report Dated August 30, 2013: 
GAO-13-823 (GAO Code 311283): 

“Information Technology: Agencies Need To Strengthen Oversight Of 
Multibillion Dollar Investments In Operations And Maintenance” 

Department Of Defense Comments To The GAO Recommendations: 

Recommendation: To ensure that the largest IT O&M investments are 
being adequately analyzed, GAO recommends that the Secretary of 
Defense direct appropriate officials to perform OAs (operational 
analysis) on the two investments identified in this report, including 
ensuring the assessments include all OMB factors. 

DoD Response: The Department of Defense (DoD) partially concurs with 
GAO’s recommendation. 

The DoD concurs with GAO’s recommendation to ensure OA’s include all 
Office of Management and Budget (OMB) factors. As noted in this 
report, GAO recommended that the Secretaries of Defense direct 
appropriate officials to develop an OA policy, annually perform OAs on 
all major investments in sustainment, and ensure OAs include all key 
factors.[Footnote 1] DOD concurred with that recommendation and is 
establishing an OA policy in coordination with OMB. 

The DoD concurs with GAO’s recommendation to perform OA on the Defense 
Information System Network investment identified in this report. 

DoD non-concurs with the recommendation to perform OA on the Next 
Generation Enterprise Network (NGEN) investment at this time. OMB 
policy requires OA be performed on investments in the management in 
use life cycle phase. The NGEN investment remains in the planning and 
acquisition stage. 

Footnote: 

[1] GAO, Information Technology: Agencies Need to Strengthen Oversight 
of Billions of Dollars in Operations and Maintenance Investments, GAO-
13-87 (Oct 2012). 

[End of section] 

Appendix VII: Comments from the Department of Energy: 

Department of Energy: 
Washington, DC 20585: 

October 16, 2013: 

Mr. David A. Powner: 
Director, Information Technology Management Issues: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Powner: 

The Department of Energy's (DOE) Office or the Chief Information 
Officer (OCIO) appreciates the opportunity to provide comments to the 
General Accountability Office's (GAO) Draft Information Technology 
(IT) Report, Agencies Need to Strengthen Oversight of Multibillion 
Dollar Investments in Operations and Maintenance. (GAO-13-823). We 
understand this audit was conducted to review the Department's 
processes for overseeing and managing our major IT investments in 
operations and maintenance. The focus of the review at the Department 
was on the former investment entitled Consolidated Infrastructure, 
Office Automation, and Telecommunications. We offer the following 
specific comments for your consideration. 

Management Response to Audit Findings/Comments: 

As part of the Department's IT Capital Planning and Investment Control 
Program, the OCIO developed and issued an Operational Analysis (OA) 
guide for Program and Staff Offices (PSOs) to use when assessing their 
investments. According to the guidance, all major IT investments with 
operational components are required to conduct an operational
analysis on an annual basis and provide a summary report to the OCIO 
with their annual budget submission in August. The operational 
analysis process allows PSOs to evaluate the actual performance of 
their major steady-state investments and to identify funding
requirements, based on the actual performance of the investments. The 
operational analysis evaluates the financial performance, customer 
results, strategic and business results, and innovation aspects of the 
investment. 

At the time of this audit, the Consolidated Infrastructure, Office 
Automation, and Telecommunications Program no longer existed in DOE's 
IT portfolio as a major IT investment, and therefore, was not required 
to complete an operational analysis. The investment was reported to 
the Office of Management and Budget (OMB) for the last time in May 
2012, as part of the final Budget Year (BY) 2013 Exhibit 53 submission. 
The investment was deconsolidated into smaller infrastructure 
investments and reported to OMB in September 2012, prior to the start 
of this audit in December 2012. 

More than five years ago, OMB released guidance in Circular A-II, 
directing agencies to report a single, major IT investment for all 
infrastructure across the Department. 

However, in the BY 2012 Circular A-II budget guidance, OMB inserted 
the following language, allowing for the deconsolidation of the 
infrastructure investments at the bureau-level: 

"Each agency may submit multiple Exhibits 300 encompassing office 
automation, infrastructure, security, and telecommunications for the 
agency. These investments may be defined at the bureau level and/or by 
functional components of the infrastructure ... Agencies are 
encouraged to report these investments as they are managed. If IT 
infrastructure is managed at both the agency and bureau levels, 
agencies should report both agency and bureau-level infrastructure
investments." 

In addition to OMB's published guidance in Circular A-II, OMB provided 
further instruction for the level of granularity that the Department 
should report its IT investments via the BY 2014 Budget Passback 
process. Last year DOE received instructions to break-up the NNSA 
Consolidated Infrastructure investment to include aggregating the 
smaller investments into larger investments. For the latest budget
submission, NNSA followed OMB's instructions and further 
deconsolidated the annual $500 million investment to report 
approximately $250 million. 

As a result of this change in guidance, DOE deconsolidated the 
Consolidated Infrastructure, Office Automation and Telecommunications 
Program in accordance with OMB instructions. The Department believed 
it could achieve better insight into Department-wide infrastructure 
spending by deconsolidating the investments to the level where they 
were managed in the organization (Le., having individual business cases
reported and managed at the PSO level). As part of the BY 2014 budget 
(submitted to OMB in September 2012), the Consolidated Infrastructure, 
Office Automation, and Telecommunications investment was 
deconsolidated. In place of the single $957 million line item reported 
in the BY 2013 budget, DOE reported: 

* NNSA Consolidated Infrastructure: NNSA reported a new Exhibit 300 that
aggregated their smaller infrastructure investments. An operational 
analysis which we believe addressed all of the OMB factors for an 
operational analysis was conducted for this investment in August 2012 
and again most recently in August 2013, as required by DOE's IT 
Capital Planning and Investment Control Program. 

* Detailed Infrastructure Spending by PSO in Part 2 of Exhibit 53: 
PSOs provided a detailed break-out of smaller, non-major IT 
infrastructure initiatives. Since they did not meet the dollar 
threshold for a major investment, they were not required to conduct an 
operational analysis. Instead, PSOs maintained oversight and
accountability through other internal project management processes 
applied to smaller-dollar IT projects. 

Management Response to Energy Recommendation: 

Recommendation: Secretary of Energy direct appropriate officials to 
perform an OA on the investment identified in this report, including 
ensuring the assessment includes all OMB factors. 

The Department partially concurs with this recommendation. 

Instead of conducting an operational analysis on the former 
investment, the Department will ensure that operational analyses are 
conducted on the O&M components of all current major IT investments in 
the DOE IT portfolio on an annual basis. 

Since the Consolidated Infrastructure, Office Automation, and 
Telecommunications Program no longer exists as an investment in DOE's 
IT portfolio, it is not possible to conduct an operational analysis on 
the investment as defined in the report. The investment has not been 
reported to OMB for two budget cycles (September 2012 and 2013 Exhibit 
53 submissions). Therefore, the Department of Energy does not agree with
the action as currently stated. 

DOE has already implemented various investment review processes to 
manage the cost, schedule, and performance of O&M investments. The 
reviews include our annual IT portfolio analysis, quarterly Control 
Reviews, monthly IT Dashboard reporting, PortfolioStat process, and 
the Federal Data Center Consolidation Initiative (FDCCI). Through 
these reviews, the Department has identified opportunities for cost 
savings and efficiencies; however, we realize additional opportunities 
exist for improving the management of our IT investments. We will 
continue to analyze and oversee the performance of our steady-state 
investments through our operational analysis process. 

Thank you for the opportunity to review this report. If you have any 
questions related to this letter, please feel free to contact me at 
(202) 586-0166. 

Sincerely, 

Signed by: 

Robert F. Brese: 

[End of section] 

Appendix VIII: Comments from the Department of the Treasury: 

Department of The Treasury: 
Washington, D.C. 20220: 

September 25, 2013: 

Mr. David A. Powner: 
Director: 
Information Technology Management Issues: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Powner, 

Thank you for the opportunity to provide comments on GAO's Draft 
Report, "Information Technology: Agencies Need to Strengthen Oversight 
of Multibillion Dollar Investments in Operations and Maintenance (GAO-
13-823}." The Department of the Treasury has no comments on the Report 
and appreciates GAO's efforts in its development. 

Please contact me at 202-622-1200 if you need anything further. 

Sincerely, 

Signed by: 

Robyn East: 
Deputy Assistant Secretary for Information Systems and Chief 
Information Officer: 

[End of section] 

Appendix IX: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

David A. Powner, (202) 512-9286 or pownerd@gao.gov: 

Staff Acknowledgments: 

In addition to the contact name above, individuals making 
contributions to this report included Gary Mountjoy (Assistant 
Director), Gerard Aflague, Camille Chaires, Rebecca Eyler, and Lori 
Martinez. 

[End of section] 

Footnotes: 

[1] The 26 key agencies are the Departments of Agriculture, Commerce, 
Defense, Education, Energy, Health and Human Services, Homeland 
Security, Housing and Urban Development, Interior, Justice, Labor, 
State, Transportation, the Treasury, and Veterans Affairs; 
Environmental Protection Agency, General Services Administration, 
National Aeronautics and Space Administration, National Archives and 
Records Administration, National Science Foundation, Nuclear 
Regulatory Commission, Office of Personnel Management, Small Business 
Administration, Smithsonian Institution, Social Security 
Administration, and U.S. Agency for International Development. 

[2] According to the budget, the remaining $6 billion includes 
classified DOD IT investments. 

[3] 40 U.S.C. § 11302(c). 

[4] OMB Circular No. A-11, Preparation, Submission, and Execution of 
the Budget (August 2012). 

[5] According to OMB guidance, a major IT investment requires special 
management attention because of its importance to the mission or 
function to the government; significant program or policy 
implications; high executive visibility; high development, operating, 
or maintenance costs; unusual funding mechanism; or definition as 
major by the agency's capital planning and investment control process. 

[6] GAO, IT Dashboard: Opportunities Exist to Improve Transparency and 
Oversight of Investment Risk at Select Agencies, [hyperlink, 
http://www.gao.gov/products/GAO-13-98] (Washington, D.C.: Oct. 16, 
2012); IT Dashboard: Accuracy Has Improved and Additional Efforts Are 
Under Way to Better Inform Decision Making, [hyperlink, 
http://www.gao.gov/products/GAO-12-210] (Washington, D.C.: Nov. 7, 
2011); Information Technology: OMB Has Made Improvements to Its 
Dashboard, but Further Work Is Needed by Agencies and OMB to Ensure 
Data Accuracy, [hyperlink, http://www.gao.gov/products/GAO-11-262] 
(Washington, D.C.: Mar. 15, 2011); and Information Technology: OMB's 
Dashboard Has Increased Transparency and Oversight, but Improvements 
Needed, [hyperlink, http://www.gao.gov/products/GAO-10-701] 
(Washington, D.C.: July 16, 2010). 

[7] Capital Programming Guide, Supplement to OMB Circular A-11, Part 7 
(July 2012); OMB Memorandum M-10-27 (June 2010), requires agencies to 
establish a policy for performing OAs on steady state investments as a 
part of managing and monitoring investment baselines. 

[8] GAO, Information Technology: Agencies Need to Strengthen Oversight 
of Billions of Dollars in Operations and Maintenance Investments, 
[hyperlink, http://www.gao.gov/products/GAO-13-87] (Washington, D.C.: 
Oct. 16, 2012). 

[9] GAO, 2013 Annual Report: Actions Needed to Reduce Fragmentation, 
Overlap, and Duplication and Achieve Other Financial Benefits, 
[hyperlink, http://www.gao.gov/products/GAO-13-279SP] (Washington, 
D.C.: Apr. 9, 2013). 

[10] OMB, Evaluating Information Technology Investments, A Practical 
Guide (Washington, D.C.: November 1995). 

[11] See, for example, GAO, Information Technology Investment 
Management: A Framework for Assessing and Improving Process Maturity, 
[hyperlink, http://www.gao.gov/products/GAO-04-394G] (Washington, 
D.C.: March 2004) and GAO, Information Technology: DHS Needs to 
Further Define and Implement Its New Governance Process, [hyperlink, 
http://www.gao.gov/products/GAO-12-818] (Washington, D.C.: July 25, 
2012). 

[12] GAO, Information Technology: Continued Improvements in Investment 
Oversight and Management Can Yield Billions in Savings, [hyperlink, 
http://www.gao.gov/products/GAO-11-511T] (Washington, D.C.: Apr. 12, 
2011). 

[13] [hyperlink, http://www.gao.gov/products/GAO-13-87] 

[14] Capital Programming Guide, Supplement to OMB Circular A-11, Part 
7 (July 2012); OMB Memorandum M-10-27 (June 2010). 

[End of section] 

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