Desktop Outsourcing:

Positive Results Reported, but Analyses Could Be Strengthened

GAO-02-329: Published: Mar 29, 2002. Publicly Released: Apr 29, 2002.

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GAO reviewed federal agencies' use of "seat management"--an information technology (IT) outsourcing alternative for distributed computing services. Under "seat management," contractor-owned desktop and other computing hardware, software, and related services are bundled and provided on the basis of a fixed price per unit. No single overarching reason emerged for agencies adoption of seat management. The most common rationales were to improve IT management, improve user support and productivity, and upgrade agency IT. All six agencies GAO reviewed reported that their seat management approaches had yielded positive results, such as better IT management and desk-help support. However, GAO could not determine whether any of the agencies were achieving expected costs benefits because they did not perform sufficient up-front analyses of their baseline and projected costs and benefits or routinely monitor all actual seat management costs and benefits. Four of the six agencies identified risks associated with seat management, such as possible cost overruns, schedule delays, or contractor performance problems. However, none of the agencies prioritized their risks, and only one identified actions to mitigate risks before implementing seat management. Agencies and seat management contractors have identified the following lessons from their implementation experiences: (1) agency commitment is crucial, especially by top management; (2) thorough up-front preparation and planning activities must be completed; (3) solicitation and contract award activities should be carefully managed; (4) program and contract management activities, including monitoring contractor performance, are key; (5) partnerships between agencies and the seat management contractors, in which they have common goals, are critical; and (6) effective and continual communication within the agency, with the seat management contractor, and among contractors working on related activities, is important.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should implement, to the extent feasible, the lessons learned that were identified in GAO's report.

    Agency Affected: Peace Corps

    Status: Closed - Implemented

    Comments: Although CMS no longer has a seat management contract, it indicated that it has applied some lessons learned in its implementation of the replacement program. For example, CMS said that its solicitation and award of the contract for the replacement program were directly impacted by lessons learned from their prior seat management experience.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should perform an analysis of expected costs and benefits.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: DLA has decided not to make further seat management investments. DLA reported to GAO in July 2005 that seat management has not been expanded beyond Ft. Belvoir and that it is migrating most of those seat management services to a different approach, an enterprise solutions approach. However, metrics about seat management performance, such as customer satisfaction, are still reported monthly.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should perform an analysis of expected costs and benefits.

    Agency Affected: National Aeronautics and Space Administration

    Status: Closed - Not Implemented

    Comments: Shortly after GAO's report was issued, CMS stopped using its seat management contract. Instead, the agency implemented a new consolidated information technology infrastructure contract, which is much broader in scope. CMS did not perform a post-implementation review or other analysis related to the closeout of the seat management program. Consequently, it did not analyze expected costs and benefits.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should perform an analysis of expected costs and benefits.

    Agency Affected: Peace Corps

    Status: Closed - Implemented

    Comments: The Peace Corps made a new seat management investment in August 2006 when it awarded a new seat management contract. Prior to this investment, it hired an independent consultant with expertise in outsourcing to deliver a Total Cost of Ownership report in January 2006. This report identified the costs of the seat management program, such as network costs and help desk costs, as well as benefits, including customer satisfaction with a wide variety of seat management services. The report also gave the Peace Corps a basis for identifying expected future costs and benefits. For example it compared the Peace Corps' costs for seat management services with those of peer organizations and made recommendations on areas in which future costs might be reduced.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should perform an analysis of expected costs and benefits.

    Agency Affected: Department of the Treasury: Bureau of Alcohol, Tobacco, and Firearms

    Status: Closed - Implemented

    Comments: Treasury made a new seat management investment in October 2005 when it made an annual renewal of its seat management contract. Treasury had an independent consultant perform a study of Treasury's seat management program in February 2005, prior to the contract renewal. The study helped Treasury to establish expectations for the program by identifying current costs and benefits and by providing recommendations on how to reduce costs and to maintain or improve benefits, such as customer satisfaction with seat management services.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should baseline the current costs of the service being outsourced, including the cost of internal agency operations.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: DLA has decided not to make further seat management investments. DLA reported to GAO in July 2005 that seat management has not been expanded beyond Ft. Belvoir and that it is migrating most of those seat management services to a different approach, an enterprise solutions approach. However, metrics about seat management performance, such as customer satisfaction, are still reported monthly.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should baseline the current costs of the service being outsourced, including the cost of internal agency operations.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: ATF had an independent contractor perform a Total Cost of Ownership (TCO) study in September 2003. The TCO provided useful information to support the ATF's award of a new seat management contract on December 22, 2003. The TCO provided information about ATF's current costs, including the cost of internal agency operations, which it uses as a baseline, and it also provided recommendations regarding future seat management investments. ATF also hired a consultant to help assure that the new seat management contract included incentives intended to reduce costs and improve performance.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should baseline the current costs of the service being outsourced, including the cost of internal agency operations.

    Agency Affected: Peace Corps

    Status: Closed - Implemented

    Comments: NASA established a baseline of the actual costs of its seat management program. This includes the costs of its internal operations, such as program and contract management costs. Identifying these costs provides NASA with the information needed to help it evaluate the actual results of its seat management program and to make investment decisions on it, such as whether to continue the program after the current contract expires.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should baseline the current costs of the service being outsourced, including the cost of internal agency operations.

    Agency Affected: Department of the Treasury: Bureau of Alcohol, Tobacco, and Firearms

    Status: Closed - Not Implemented

    Comments: Shortly after GAO's report was issued, CMS stopped using its seat management contract. Instead, the agency implemented a new consolidated information technology infrastructure contract, which is much broader in scope. CMS did not perform a post-implementation review or other evaluation related to the closeout of the seat management program. Consequently, it did not baseline seat management costs.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should baseline the current costs of the service being outsourced, including the cost of internal agency operations.

    Agency Affected: National Aeronautics and Space Administration

    Status: Closed - Implemented

    Comments: The Peace Corps had an independent consultant perform a Total Cost of Ownership (TCO) report on its seat management program and the results were delivered in May 2003. The Peace Corps made a new seat management investment in February 2004 when it renegotiated its seat management contract and extended the term to September 2006. The TCO report provided the Peace Corps with a baseline of its current seat management costs. Specifically, the report identified all current seat management costs, including the internal (agency) costs as well as the external (contractor) costs. It also provided information on how the Peace Corps' seat management costs compare with the average costs for government and private sector peers.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should baseline the current costs of the service being outsourced, including the cost of internal agency operations.

    Agency Affected: National Aeronautics and Space Administration

    Status: Closed - Implemented

    Comments: Treasury had a consultant prepare a Total Cost of Ownership (TCO) report in September 2002. As Treasury notes, the TCO established a cost baseline in that it identified Treasury's external (contractor) costs and internal (agency) costs and compared them to the average costs for government and industry peers. Treasury's action to identify its current costs help it better manage the seat management program by providing a baseline from which to evaluate actual investment results and make decisions on further seat management investments.

    Recommendation: To determine to what extent their current seat management programs have achieved positive results, the Secretary of the Treasury; Administrators for the National Aeronautics and Space Administration (NASA) and Centers for Medicare and Medicaid Services (CMS); and Directors of the Peace Corps, Bureau of Alcohol, Tobacco and Firearms (ATF), and Defense Logistics Agency (DLA) should each routinely monitor all actual seat management costs and benefits.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: The Peace Corps had an independent consultant perform a total cost of ownership (TCO) study of its seat management program and the results were delivered in May 2003. The TCO identified all seat management costs, including the internal (agency) costs for the seat management program, as well as the external (contractor) costs. The TCO provided information that allowed the Peace Corps to determine how well the seat management program was achieving expected benefits, i.e., improving customer satisfaction and reducing costs. For example, it measured customer satisfaction with 7 key services and compared this to customer satisfaction levels at peer organizations and identified opportunities for making improvements. Furthermore, to help it monitor costs and benefits, the Peace Corps reports that TCOs or benchmark studies are scheduled to occur every 2 years.

    Recommendation: To determine to what extent their current seat management programs have achieved positive results, the Secretary of the Treasury; Administrators for the National Aeronautics and Space Administration (NASA) and Centers for Medicare and Medicaid Services (CMS); and Directors of the Peace Corps, Bureau of Alcohol, Tobacco and Firearms (ATF), and Defense Logistics Agency (DLA) should each routinely monitor all actual seat management costs and benefits.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: Shortly after GAO's report was issued, CMS stopped using its seat management contract. Instead, the agency implemented a new consolidated information technology infrastructure contract, which is much broader in scope. Although requested supporting documentation was not provided, CMS reported that it used GAO's recommendation when developing its management strategy for the program that replaced seat management. Specifically, CMS reported that it has the contractor periodically report hardware, software, labor and maintenance costs and CMS conducts a review of them on a quarterly basis.

    Recommendation: To determine to what extent their current seat management programs have achieved positive results, the Secretary of the Treasury; Administrators for the National Aeronautics and Space Administration (NASA) and Centers for Medicare and Medicaid Services (CMS); and Directors of the Peace Corps, Bureau of Alcohol, Tobacco and Firearms (ATF), and Defense Logistics Agency (DLA) should each routinely monitor all actual seat management costs and benefits.

    Agency Affected: Department of Defense: Defense Logistics Agency

    Status: Closed - Implemented

    Comments: Treasury contracted for a total cost of ownership (TCO) study of its seat management program, and the results were delivered in September of 2002. The study addressed seat management direct (contractor) costs and indirect (agency internal) costs. The TCO also measured benefits, such as those related to the quality of support for deskside and phone support and identified strategies for improving the seat management program. Treasury plans to have follow-on TCO studies performed at 18-month intervals, as recommended by the consultant that performed the original study, in order to validate the initial baseline and the seat management services being performed.

    Recommendation: To determine to what extent their current seat management programs have achieved positive results, the Secretary of the Treasury; Administrators for the National Aeronautics and Space Administration (NASA) and Centers for Medicare and Medicaid Services (CMS); and Directors of the Peace Corps, Bureau of Alcohol, Tobacco and Firearms (ATF), and Defense Logistics Agency (DLA) should each routinely monitor all actual seat management costs and benefits.

    Agency Affected: Department of the Treasury: Bureau of Alcohol, Tobacco, and Firearms

    Status: Closed - Implemented

    Comments: DLA is now monitoring the actual costs, including internal and external costs, as well as the benefits of its seat management program and presenting this information in monthly briefings to the DLA's Chief Information Officer and quarterly briefings to the DLA Director. Examples of benefits that are being tracked include customer satisfaction, percentage of calls to the help desk that are resolved on the first call, and cost. Furthermore, in June 2004, DLA had an independent consultant provide a detailed report on customer satisfaction, which identifies how DLA might further improve customer satisfaction.

    Recommendation: To determine to what extent their current seat management programs have achieved positive results, the Secretary of the Treasury; Administrators for the National Aeronautics and Space Administration (NASA) and Centers for Medicare and Medicaid Services (CMS); and Directors of the Peace Corps, Bureau of Alcohol, Tobacco and Firearms (ATF), and Defense Logistics Agency (DLA) should each routinely monitor all actual seat management costs and benefits.

    Agency Affected: National Aeronautics and Space Administration

    Status: Closed - Implemented

    Comments: ATF had an independent consultant perform a Total Cost of Ownership (TCO) study of its seat management program in September 2003. The study identified all of the costs of the seat management program including the internal (agency) costs as well as the external (contractor) costs. Regarding benefits, the report also reported information on customer satisfaction with the seat management program. For example, it measured customer satisfaction with 19 key services and compared this to customer satisfaction levels at peer organizations. The report also provided the ATF with information on opportunities for making further improvements in its seat management program.

    Recommendation: To determine to what extent their current seat management programs have achieved positive results, the Secretary of the Treasury; Administrators for the National Aeronautics and Space Administration (NASA) and Centers for Medicare and Medicaid Services (CMS); and Directors of the Peace Corps, Bureau of Alcohol, Tobacco and Firearms (ATF), and Defense Logistics Agency (DLA) should each routinely monitor all actual seat management costs and benefits.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: NASA is monitoring all of the actual costs of the seat management contract. Specifically, annual reports are prepared for NASA executives on the internal, NASA support costs, as well as the external procurement (contractor) costs. NASA has also developed metrics for evaluating whether some expected benefits are being achieved, and is monitoring results.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should perform an analysis of expected costs and benefits.

    Agency Affected: Department of Defense: Defense Logistics Agency

    Status: Closed - Implemented

    Comments: NASA made a new seat management investment in February 2004 when it renewed its seat management contract for a 3-year period. Consistent with GAO's recommendation to identify expected costs, NASA identified its current costs and compared them to the cost of seat management services being provided at six other federal agencies. It used this information to establish costs for the new contract. NASA also identified expected benefits for its new seat management investment. For example, NASA expected that seat management services would be available when needed and that customers would be satisfied with services provided. NASA therefore established specific measurable goals for availability and for customer satisfaction.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should perform an analysis of expected costs and benefits.

    Agency Affected: Department of the Treasury: Bureau of Alcohol, Tobacco, and Firearms

    Status: Closed - Implemented

    Comments: ATF made a new seat management investment in December 2003 when it awarded a new seat management contract. ATF had an independent contractor with expertise in outsourcing perform a Total Cost of Ownership study prior to contract award. It used information from the study to establish expectations that the new contract would enable it to reduce costs while meeting customer service level goals. ATF also had the contractor perform a second study in February 2006, which identified actual costs and benefits under the new contract.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should perform an analysis of risks, including developing plans to mitigate risks identified.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: ATF made a future investment in the seat management program in December 2003, when it awarded a new seat management contract. In response to GAO's recommendation, ATF had an independent contractor prepare a risk assessment that was delivered in June 2003. The analysis identified specific potential risks and a mitigation strategy. For example, it identified a risk that the hardware and software provided by the contractor may become obsolete, and the planned mitigation strategy was to require technology refreshment on a 3-year interval.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should implement, to the extent feasible, the lessons learned that were identified in GAO's report.

    Agency Affected: National Aeronautics and Space Administration

    Status: Closed - Implemented

    Comments: NASA applied the lesson learned that the commitment of executive leadership is critical to the success of a seat management program. Specifically, NASA's chief information officer had NASA centers evaluate the seat management program in 2003, determined that it was still the best approach to meeting agency objectives with some appropriate changes to be made to future delivery orders, and then obtained the concurrence and commitment of NASA's executive management. Another lesson learned that NASA applied is that strong program and contract management is a key to success. In response, NASA added a person to monitor contract performance and another to coordinate implementation of new technology.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should implement, to the extent feasible, the lessons learned that were identified in GAO's report.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: The Peace Corps implemented changes to strengthen its program and contract management, which, as noted in GAO's report, are critical to the success of a seat management program. For example, the Peace Corps established a Contract Management Committee to ensure that the contract meets Peace Corps requirements by focusing efforts on balanced scorecard objectives, clarifying the scope and terms of the contract, and resolving contract disputes in a collaborative manner. In addition, the Peace Corps established an Executive Council which includes executives from the Peace Corps and the contractor, and whose role is to provide a strategic view of requirements and objectives, and an executive view of performance on the contract and the health of the relationship.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should implement, to the extent feasible, the lessons learned that were identified in GAO's report.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: One lesson learned identified in GAO's report was that establishing effective communication among the seat management contractor, agency program office and users is critical to the success of seat management. Treasury acted on this recommendation by establishing a seat management Customer Service Board in March 2005. The Board's monthly meetings allow agency seat management program officials and the contractor to receive feedback on service directly from agency users/customers and allow Treasury seat management officials to keep its customers engaged and informed regarding any new developments or issues pertaining to service delivery and support. Another lesson learned is that executive leadership commitment can help agencies more effectively implement seat management. The commitment of Treasury executive leadership is demonstrated in that the Customer Service Board is co-chaired by two Treasury executives, the Deputy Assistant Secretary for Headquarters Operations, and the Associate CIO for Telecommunications Management.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should implement, to the extent feasible, the lessons learned that were identified in GAO's report.

    Agency Affected: Department of the Treasury: Bureau of Alcohol, Tobacco, and Firearms

    Status: Closed - Implemented

    Comments: DLA has decided not to make further seat management investments. DLA reported to GAO in July 2005 that seat management has not been expanded beyond Ft. Belvoir and that it is migrating most of those seat management services to a different approach, an enterprise solutions approach. However, metrics about seat management performance, such as customer satisfaction, are still reported monthly. This helps address one of the lessons learned identified in the seat management report, i.e., that strong program management is key to the success of seat management.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should implement, to the extent feasible, the lessons learned that were identified in GAO's report.

    Agency Affected: Peace Corps

    Status: Closed - Implemented

    Comments: ATF had an independent consultant perform a TCO study in September 2003. It provided information on ATF's seat management environment, including customer satisfaction ratings and an assessment of ATF's use of best practices in managing the program, as well as information on the current costs of ATF's seat management program. In addition, the TCO provided other information useful to the new IT investment ATF made in December 2003, when it awarded a new seat management contract. The useful information included identifying opportunities for improved service level agreements, and for reducing shared costs with the partnering vendor.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should monitor actual costs and benefits as a basis for results accountability.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: The ATF made a future seat management investment in December 2003 when it awarded a new seat management contract. Consistent with our recommendation to monitor costs and benefits, the ATF had an independent consultant with expertise in outsourcing perform a Total Cost of Ownership study in February 2006. The study identified the overall costs of the seat management program and the costs of key components, such as desktop computer costs and network costs. The study also helped the ATF monitor benefits being received. For example, it reported the levels of customer satisfaction with help desk services and the level of availability of seat management services such as network and e-mail services.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should monitor actual costs and benefits as a basis for results accountability.

    Agency Affected: National Aeronautics and Space Administration

    Status: Closed - Implemented

    Comments: The Peace Corps made a new seat management investment in August 2006 when it awarded a new seat management contract. Prior to this investment, it hired an independent consultant with expertise in outsourcing to deliver a Total Cost of Ownership report in January 2006. This report identified the costs of the seat management program, such as network costs and help desk costs, as well as benefits, including customer satisfaction with a wide variety of seat management services. The report provides the Peace Corps with a benchmark of seat management costs and benefits, which provides them with a basis to compare future performance under the new contract.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should monitor actual costs and benefits as a basis for results accountability.

    Agency Affected: Department of Defense: Defense Logistics Agency

    Status: Closed - Implemented

    Comments: Treasury made a new seat management investment in October 2004 when it made an annual renewal of its seat management contract; and it will be making another renewal decision in October 2005 when the current contract expires. Treasury had an independent consultant perform a study in February 2005 to identify opportunities to reduce seat management costs and to assess benefits, such as customer satisfaction with seat management services.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should monitor actual costs and benefits as a basis for results accountability.

    Agency Affected: Department of the Treasury: Bureau of Alcohol, Tobacco, and Firearms

    Status: Closed - Implemented

    Comments: DLA reported to GAO in July 2005 that seat management has not been expanded beyond Ft. Belvoir and that it is migrating most of those seat management services to a different approach, an enterprise solutions approach. However, metrics about seat management performance, such as customer satisfaction, are still reported monthly.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should monitor actual costs and benefits as a basis for results accountability.

    Agency Affected: Peace Corps

    Status: Closed - Implemented

    Comments: NASA made a new seat management investment in February 2004 when it renewed its seat management contract for a period of 3 years. Consistent with GAO's recommendation to monitor costs, NASA now collects information quarterly on the cost of the various types of seat management services provided to each of its centers. It is also monitoring the level of benefits received. For example, it monitors customer satisfaction with the services provided at each center, as well as the delivery and availability of services to users at each center.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should monitor actual costs and benefits as a basis for results accountability.

    Agency Affected: Department of Defense: Defense Logistics Agency

    Status: Closed - Implemented

    Comments: Shortly after GAO's report was issued, CMS stopped using its seat management contract. Instead, the agency implemented a new consolidated information technology infrastructure contract, which is much broader in scope. CMS reported that it used GAO's recommendation when developing their management strategy for the program that replaced seat management. Specifically, it has the contractor periodically report hardware, software, labor and maintenance costs and CMS conducts a review of them on a quarterly basis.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should perform an analysis of risks, including developing plans to mitigate risks identified.

    Agency Affected: Department of Defense: Defense Logistics Agency

    Status: Closed - Implemented

    Comments: DLA has decided not to make further seat management investments. DLA reported to GAO in July 2005 that seat management has not been expanded beyond Ft. Belvoir and that it is migrating most of those seat management services to a different approach, an enterprise solutions approach. However, one potential area of risk for seat management contracts is the risk of inadequate contractor performance. DLA addresses this by collecting performance metrics, such as customer satisfaction, and reporting them monthly.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should perform an analysis of risks, including developing plans to mitigate risks identified.

    Agency Affected: National Aeronautics and Space Administration

    Status: Closed - Not Implemented

    Comments: Shortly after GAO's report was issued, CMS stopped using its seat management contract. Instead, the agency implemented a new consolidated information technology infrastructure contract, which is much broader in scope. CMS did not perform a post-implementation review or other evaluation related to the closeout of the seat management program. Consequently, it did not perform an analysis of risks or plans to mitigate them.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should perform an analysis of risks, including developing plans to mitigate risks identified.

    Agency Affected: Peace Corps

    Status: Closed - Implemented

    Comments: Treasury analyzed the risks related to seat management and other IT-related contracts and determined security to be the most important risk. It decided that addressing security risks, such as the unauthorized disclosure of information, is important because of Treasury's responsibilities, including its responsibility regarding financial crimes related to terrorist activities or law enforcement investigations, as well as its responsibilities for addressing the increasing threat from cyber attacks by hackers or others. To mitigate the risks, Treasury in February 2005 developed a plan of action and milestones targeted to address the security concerns and assure compliance with FISMA. Treasury also set up a security operations group in May 2005 to monitor security.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should perform an analysis of risks, including developing plans to mitigate risks identified.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: NASA revised its Risk Management Plan for the seat management program on July 17, 2003. The revised plan is more complete in that it addresses 19 areas of risk rather than the 6 contained in the earlier plan. Furthermore, the revised plan identifies the level of risk (basic, medium, or high) for each area, the probability of occurrence, the strategy for mitigation, and the current status of the mitigation effort.

    Recommendation: To provide for adequate justification of any future seat management investments, the Secretary of the Treasury; Administrators for NASA and CMS; and Directors of the Peace Corps, ATF, and DLA should each ensure that existing federal policy and guidance for information technology investments be followed when considering investments in information-technology-service outsourcing. Specifically, for future seat management investments, the agencies should perform an analysis of risks, including developing plans to mitigate risks identified.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: The Peace Corps made a future investment in the seat management program in August 2006 when it awarded a new seat management contract. The Peace Corps had an independent consultant perform a Total Cost of Ownership study in January 2006 which helped it identify risks, such as a risk that it may pay unnecessarily high costs if contract terms for some seat management services were not revised. A Peace Corps official notes that they revised the terms accordingly.

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