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Report to Congressional Requesters: 

January 2006: 

Information Technology: 

Agencies Need to Improve the Accuracy and Reliability of Investment 
Information: 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-250]: 

GAO Highlights: 

Highlights of GAO-06-250, a report to congressional requesters: 

Why GAO Did This Study: 

Each year, agencies submit to the Office of Management and Budget (OMB) 
a Capital Asset Plan and Business Case—the exhibit 300—to justify each 
request for a major information technology (IT) investment. The 
exhibit’s content should reflect controls that agencies have 
established to ensure good project management, as well as showing that 
they have defined cost, schedule, and performance goals. It is thus a 
tool to help OMB and agencies identify and correct poorly planned or 
performing investments. In its budget and oversight role, OMB relies on 
the accuracy and completeness of this information. GAO was asked to 
determine the extent to which selected agencies have underlying support 
for the information in their fiscal year 2006 exhibit 300s. From five 
major departments having over $1 billion in IT expenditures in that 
year, GAO chose for analysis 29 exhibits for projects that supported a 
cross section of federal activities. 

What GAO Found: 

Underlying support was often inadequate for information provided in the 
exhibit 300s reviewed. Three general types of weaknesses were evident: 

* All exhibit 300s had documentation weaknesses. Documentation either 
did not exist or did not fully agree with specific areas of the exhibit 
300. For example, both these problems occurred in relation to 
calculations of financial benefits for most investments. In addition, 
for 23 of the 29 investments, information on performance goals and 
measures was not supported by explanations of how agencies had 
initially measured their baseline levels of performance (from which 
they determine progress) or how they determined the actual progress 
reported in the exhibit 300. 
* Agencies did not always demonstrate that they complied with federal 
or departmental requirements or policies with regard to management and 
reporting processes. For example, 21 investments were required to use a 
specific management system as the basis for the cost, schedule, and 
performance information in the exhibit 300, but only 6 did so following 
OMB-required standards. Also, none had cost analyses that fully 
complied with OMB requirements for cost-benefit and cost-effectiveness 
analyses. In contrast, most investments did demonstrate compliance with 
information security planning and training requirements. 
* In sections that required actual cost data, these data were 
unreliable because they were not derived from cost-accounting systems 
with adequate controls. In the absence of such systems, agencies 
generally derived cost information from ad hoc processes. 

Officials from the five agencies (the Departments of Agriculture, 
Commerce, Energy, Transportation, and the Treasury) attributed these 
shortcomings in support to lack of understanding of a requirement or 
how to respond to it. Agency officials mentioned in particular 
insufficient guidance or training, as well as lack of familiarity with 
particular requirements. 

The weaknesses in the 29 exhibit 300s raise questions regarding the 
sufficiency of the business cases for these major investments and the 
quality of the projects’ management. Without adequate support in key 
areas, OMB and agency executives may be depending on unreliable 
information to make critical decisions on IT projects, thus putting at 
risk millions of dollars. 

Further, although the 29 examples cannot be directly projected to the 
over one thousand business cases developed each year across the federal 
government, the results suggest that the underlying causes for the 
weaknesses identified need attention. These weaknesses and their causes 
are also consistent with problems in project and investment management 
that are pervasive governmentwide, including at such agencies as the 
Departments of Defense, Health and Human Services, and Homeland 
Security, as documented in reports by GAO and others. 

What GAO Recommends: 

To improve the accuracy and value of exhibit 300s, GAO is making 
recommendations aimed at improving guidance and training in exhibit 300 
requirements and at ensuring limitations on reliability are disclosed 
and mitigated. In response to a draft of this report, the agencies 
agreed with the findings or had no comment. OMB accepted the findings 
but stated that ultimate responsibility for the accuracy and 
reliability of this information lies with the agencies. 

www.gao.gov/cgi-bin/getrpt?GAO-06-250. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Dave Powner at (202) 512-
9286 or pownerd@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Exhibit 300s Were Generally Not Based on Adequate Support: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Objective, Scope, and Methodology: 

Appendix II: Comments from the Office of Management and Budget: 

Appendix III: Descriptions of Investments Reviewed: 

Department of Agriculture: 

Department of Commerce: 

Department of Energy: 

Department of Transportation: 

Department of the Treasury: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Description of Key Sections in the Exhibit 300 and General 
Documentation Typically Used as Support: 

Table 2: Financial Funding Data for ePermits: 

Table 3: Financial Funding Data for CFMS: 

Table 4: Financial Funding Data for IAS: 

Table 5: Financial Funding Data for PCIT: 

Table 6: Financial Funding Data for PCIMS: 

Table 7: Financial Funding Data for STARS II: 

Table 8: Financial Funding Data for AWIPS: 

Table 9: Financial Funding Data for CLASS: 

Table 10: Financial Funding Data for ECON: 

Table 11: Financial Funding Data for AES: 

Table 12: Financial Funding Data for NWSTG: 

Table 13: Financial Funding Data for SOCC/CDA: 

Table 14: Financial Funding Data for ESnet: 

Table 15: Financial Funding Data for eCMS: 

Table 16: Financial Funding Data for IPABS-IS: 

Table 17: Financial Funding Data for LSN: 

Table 18: Financial Funding Data for LANL ERP: 

Table 19: Financial Funding Data for ASCM: 

Table 20: Financial Funding Data for DOT Financial System 
Consolidation: 

Table 21: Financial Funding Data for NTD: 

Table 22: Financial Funding Data for NEXCOM: 

Table 23: Financial Funding Data for SASO: 

Table 24: Financial Funding Data for WAAS: 

Table 25: Financial Funding Data for CADE: 

Table 26: Financial Funding Data for DMAS: 

Table 27: Financial Funding Data for EMS: 

Table 28: Financial Funding Data for GWA: 

Table 29: Financial Funding Data for SCRIPS: 

Table 30: Financial Funding Data for SPS: 

Figure: 

Figure 1: Breakdown by Civilian Agencies of Planned $35 Billion in 
Fiscal Year 2006 IT Investments: 

Abbreviations: 

CIO: Chief Information Officer: 

BRM: Business Reference Model: 

DHS: Department of Homeland Security: 

DOD: Department of Defense: 

EVM: earned value management: 

FISMA: Federal Information Security Management Act: 

HHS: Department of Health and Human Services: 

IT: information technology: 

ITIM: information technology investment management: 

NIST: National Institute of Standards and Technology: 

OMB: Office of Management and Budget: 

Letter January 12, 2006: 

The Honorable Tom Davis: 
Chairman: 
Committee on Government Reform: 
House of Representatives: 

The Honorable Adam H. Putnam: 
House of Representatives: 

Each year, the Office of Management and Budget (OMB) plays a central 
role in determining how much the government plans to spend for 
information technology (IT) and how these funds are allocated. The IT 
budget is not insignificant: federal agencies requested over $65 
billion in fiscal year 2006. While these investments are critical to 
achieving the goals of the federal government, for the past 3 years OMB 
has highlighted in the President's Budget tens of billions of dollars 
of IT investments that are at risk. In the most recent budget, for 
fiscal year 2006, nearly 25 percent of the funds requested, totaling 
about $15 billion, were considered by OMB to be at risk. 

A key component of OMB's management and oversight of the IT budget 
process is the exhibit 300, also known as the Capital Asset Plan and 
Business Case, which is developed by agencies and reviewed by both 
agencies and OMB. OMB sets forth requirements for the exhibit 300 in 
its circular A-11.[Footnote 1] According to this guidance, agencies are 
required to perform analyses and provide documentation to support 
decisions on proposed major IT investments. The exhibit 300 is the 
means to accomplish this task: it is a reporting mechanism intended to 
enable an agency to demonstrate to its own management, as well as OMB, 
that it has employed the disciplines of good project management; 
developed a strong business case for the investment; and met other 
Administration priorities in defining the cost,schedule, and 
performance goals proposed for the investment. The exhibit 300 
comprises eight key sections, which cover spending, performance goals 
and measures, analysis of alternatives,[Footnote 2] risk inventory and 
assessment, acquisition strategy, project (investment) and funding 
plan, enterprise architecture, and security and privacy. When 
considering IT investments to recommend for funding, OMB relies on the 
accuracy and completeness of the information reported in the exhibit 
300s. 

This report responds to your request that we determine the extent to 
which selected agencies have underlying support for the information in 
their fiscal year 2006 exhibit 300s. To accomplish this objective, we 
reviewed exhibit 300s from the fiscal year 2006 budget submission, as 
well as supporting documentation, for 29 major IT investments at five 
departments.[Footnote 3] We compared information in each exhibit 300 
with the supporting documentation on the corresponding investment. 
Further details on our objective, scope, and methodology are provided 
in appendix I. Our work was conducted between March and November 2005 
in accordance with generally accepted government auditing standards. 

Results in Brief: 

Underlying support for the information provided in the exhibit 300 was 
often inadequate. Examination of the exhibit 300s and the supporting 
materials revealed three types of weaknesses. 

* All exhibit 300s had documentation weaknesses. Either documentation 
did not exist for specific areas of the exhibit 300, or it did not 
fully agree with the exhibit 300. For 23 of the 29 investments, for 
example, information in the performance goals and measures section was 
not supported by explanations of how agencies had initially measured 
their baseline levels of performance (from which they determine 
progress) or how they determined the actual progress that was reported 
in the exhibit 300. In the case of risk assessment, supporting 
documentation for about 75 percent of the investments did not address 
OMB's required risk categories. Additionally, the analysis of 
alternatives for most investments either lacked supporting 
documentation to justify the calculations of financial benefits in the 
exhibit 300, or the documentation did not agree with what was reported. 

* Agencies did not always demonstrate that they complied with federal 
or departmental requirements or policies with regard to management and 
reporting processes. For example, 21 investments were required to use 
an earned value management (EVM) system[Footnote 4] as the basis for 
the cost, schedule, and performance information provided in the exhibit 
300, but only 6 investments used an EVM process that followed OMB- 
required standards. In addition, none of the investments under review 
had cost analyses that fully complied with OMB requirements for 
completing cost-benefit and cost-effectiveness analyses. An exception 
was the information security section, for which most investments had 
security plans and indications that security awareness training had 
been conducted. 

* For those sections that required actual cost data, including the 
summary of spending and project and funding plan sections, the data 
were unreliable because they were not derived from cost-accounting 
systems with adequate controls. In the absence of adequate cost- 
accounting systems, agencies generally derived cost information from ad 
hoc processes used by project managers. 

Agency officials attributed the shortcomings in support to lack of 
understanding of a requirement or how to respond to it. Agency 
officials mentioned in particular insufficient guidance or training, as 
well as lack of familiarity with particular requirements, such as the 
EVM process. If underlying support is inadequate in key areas, OMB and 
agency executives are depending on unreliable information to monitor 
the management of major IT projects and to make critical decisions on 
their funding, thus putting at risk millions of dollars in investments. 
These weaknesses and their causes are also consistent with problems in 
project and investment management that are pervasive governmentwide, 
including at such agencies as the Departments of Defense (DOD), Health 
and Human Services (HHS), and Homeland Security (DHS), as documented in 
reports by GAO and others. 

We are making recommendations to OMB aimed at improving guidance and 
training in exhibit 300 requirements and at ensuring that limitations 
on the reliability of information in exhibit 300s are disclosed and 
mitigated. 

In written comments, OMB accepted the findings of the draft report, 
while expressing concern that, by directing our recommendations to OMB 
rather than to the agencies, we were suggesting that OMB rather than 
the agencies is responsible for data accuracy and employee training. We 
do not intend to make this suggestion; we place significant 
responsibility on agencies, as reflected in our recommendation that OMB 
instruct agencies to determine the extent to which the information 
contained in each exhibit 300 is accurate and reliable, to disclose 
weaknesses, and to describe their approach to mitigating these 
weaknesses. This recommendation clearly places responsibility on the 
agencies for assessing the quality of their budget information and the 
processes that produced this information. Our recommendations are 
directed to OMB because of its responsibility for providing 
governmentwide leadership in information resources management, pursuant 
to the Clinger-Cohen Act, and because they address findings relating to 
OMB-required budget documents. 

In addition, OMB expressed concern that the recommendations do not 
focus on how well agencies fulfill their underlying information 
resources management responsibilities. Our view is that our 
recommendation on disclosing and mitigating weaknesses does address 
these underlying responsibilities. The report specifically addresses 
the reliability of exhibit 300s as support for agency and OMB decision 
making and clearly states that the lack of documentation and inadequate 
support may indicate underlying management weaknesses. Requiring 
agencies to disclose and mitigate associated weaknesses will 
necessitate that agencies examine and address their approach to 
fulfilling information resources management responsibilities. 

Technical comments from the Departments of Energy and Transportation 
were incorporated as appropriate. The Departments of Agriculture, 
Commerce, Transportation, and the Treasury provided no comments on a 
draft of this report. 

We address these comments more fully in the Agency Comments and Our 
Evaluation section of this report. We have reproduced the written 
comments in appendix II. 

Background: 

The President's Budget for Fiscal Year 2006 included 1,087 IT projects, 
totaling about $65 billion. The planned expenditures at the civilian 
agencies comprised about $35 billion of that total cost. In particular, 
the five departments in our review made up about one-third of the 
civilian planned expenditures (see fig. 1). 

Figure 1: Breakdown by Civilian Agencies of Planned $35 Billion in 
Fiscal Year 2006 IT Investments: 

[See PDF for image] 

[End of figure] 

OMB plays a key role in overseeing these IT investments and how they 
are managed, stemming from its predominant mission: to assist the 
President in overseeing the preparation of the federal budget and to 
supervise budget administration in executive branch agencies. In 
helping to formulate the President's spending plans, OMB is responsible 
for evaluating the effectiveness of agency programs, policies, and 
procedures; assessing competing funding demands among agencies; and 
setting funding priorities. To carry out these responsibilities, OMB 
depends on agencies to collect and report accurate and complete 
information; these activities depend in turn on agencies having 
effective IT management practices. 

Improvements in IT Management Are Goals of Laws and Guidance: 

To drive improvement in the implementation and management of IT 
projects, the Congress enacted the Clinger-Cohen Act in 1996, which 
expanded the responsibilities of OMB and the agencies that had been set 
under the Paperwork Reduction Act.[Footnote 5] The Clinger-Cohen Act 
requires that agencies engage in capital planning and performance-and 
results-based management.[Footnote 6] The act also requires OMB to 
establish processes to analyze, track, and evaluate the risks and 
results of major capital investments in information systems made by 
executive agencies. OMB is also required to report to the Congress on 
the net program performance benefits achieved as a result of major 
capital investments in information systems that are made by executive 
agencies.[Footnote 7] 

With regard to OMB's responsibilities in this area, we recently issued 
a report[Footnote 8] that provided recommendations to improve OMB's 
processes for monitoring high-risk IT investments. Since that report 
was released, OMB has issued additional guidance outlining steps that 
agencies must take for all high-risk projects to better ensure improved 
execution and performance as well as promote more effective 
oversight.[Footnote 9] 

In response to the Clinger-Cohen Act and other statutes, OMB developed 
policy for planning, budgeting, acquisition, and management of federal 
capital assets. This policy is set forth in OMB Circular A-11 (section 
300) and in OMB's Capital Programming Guide (supplement to Part 7 of 
Circular A-11), which directs agencies to develop, implement, and use a 
capital programming process to build their capital asset portfolios. 
Among other things, OMB's Capital Programming Guide directs agencies 
to: 

* evaluate and select capital asset investments that will support core 
mission functions that must be performed by the federal government and 
demonstrate projected returns on investment that are clearly equal to 
or better than alternative uses of available public resources; 

* institute performance measures and management processes that monitor 
actual performance and compare to planned results; and: 

* establish oversight mechanisms that require periodic review of 
operational capital assets to determine how mission requirements might 
have changed and whether the asset continues to fulfill mission 
requirements and deliver intended benefits to the agency and customers. 

Among OMB's goals in requiring the use of a capital programming process 
is to assist agencies in complying with a number of results-oriented 
requirements. Key requirements include those set by: 

* the Federal Acquisition Streamlining Act of 1994,[Footnote 10] which 
(1) requires agencies to establish cost, schedule, and measurable 
performance goals for all major acquisition programs and (2) 
establishes that agencies should achieve on average 90 percent of those 
goals; 

* the Government Performance and Results Act of 1993,[Footnote 11] 
which establishes the foundation for budget decision making to achieve 
strategic goals in order to meet agency mission objectives; and: 

* the Federal Information Security Management Act of 2002,[Footnote 12] 
which requires agencies to integrate IT security into their strategic 
and operational planning processes, such as the capital planning and 
enterprise architecture processes at the agency. 

OMB is aided in its responsibilities by the Chief Information Officers 
(CIO) Council as described by the E-Government Act of 2002.[Footnote 
13] The council is designated the principal interagency forum for 
improving agency practices related to the design, acquisition, 
development, modernization, use, operation, sharing, and performance of 
federal government information resources. Among the specific functions 
of the CIO Council are the development of recommendations for the 
Director of OMB on government information resources management policies 
and requirements and the sharing of experiences, ideas, best practices, 
and innovative approaches related to information resources management. 
The CIO Council has issued several guides on capital planning and 
investment management over the past several years.[Footnote 14] 

To further support the implementation of IT capital planning practices, 
we have developed an IT investment management (ITIM) framework[Footnote 
15] that agencies can use in developing a stable and effective capital 
planning process, as required by statute and directed in OMB's Capital 
Programming Guide. Consistent with the statutory focus on 
selecting,[Footnote 16] controlling,[Footnote 17] and 
evaluating[Footnote 18] investments, this framework focuses on these 
processes in relation to IT investments specifically. It is a tool that 
can be used to determine both the status of an agency's current IT 
investment management capabilities and the additional steps that are 
needed to establish more effective processes. Mature and effective 
management of IT investments can vastly improve government performance 
and accountability. Without good management, such investments can 
result in wasteful spending and lost opportunities for improving 
delivery of services to the public. 

The ITIM framework lays out a coherent collection of key practices 
that, when implemented in a coordinated manner, can lead an agency 
through a robust set of analyses and decision points that support 
effective IT investment management. The framework explicitly calls for 
consideration of cost, schedule, benefit, and risk objectives, 
including the development of analyses such as return on investment and 
a risk management plan. The framework also describes the criticality of 
tracking progress using valid and complete data. The guidance laid out 
in the ITIM framework is consistent with the requirements of OMB's 
Circular A-11 and matches it in many instances. For example, among the 
requirements on the exhibit 300 is that agencies indicate that the 
investment has been reviewed and approved by the responsible oversight 
entity. The agency investment review board is a critical element of the 
ITIM framework, and the expectation for the board to select and oversee 
IT investments is explicit. 

In previous work using our IT investment management framework, we 
reported that the use of IT investment management practices by agencies 
was mixed. For example, a few agencies that have followed the ITIM 
framework in implementing capital planning processes have made 
significant improvements.[Footnote 19] In contrast, however, we and 
others have continued to identify weaknesses at agencies in many areas, 
including immature management processes to support both the selection 
and oversight of major IT investments and the measurement of actual 
versus expected performance in meeting established IT performance 
measures.[Footnote 20] For example: 

* We recently reported that the HHS senior investment board does not 
regularly review component agencies' IT investments, leaving close to 
90 percent of its discretionary investments without an appropriate 
level of executive oversight.[Footnote 21] To remedy this weakness, we 
recommended that the department (1) establish a process for the 
investment board to regularly review and track the performance of a 
defined set of component agency IT systems against expectations and (2) 
take corrective actions when these expectations are not being met. 

* At DHS, we determined that the department's draft information 
resources management strategic plan did not include fully defined goals 
and performance measures.[Footnote 22] To address this weakness, we 
recommended that the department establish IT goals and performance 
measures that, at a minimum, address how information and technology 
management contributes to program productivity, the efficiency and 
effectiveness of agency operations, and service to the public. 

* A recent review by the DOD Inspector General[Footnote 23] determined 
that over 90 percent of the business cases submitted to OMB in support 
of the DOD fiscal year 2006 budget request did not completely respond 
to one or more data elements addressing security funding, certification 
and accreditation, training and security plans, and enterprise 
architecture. The DOD Inspector General concluded that, as a result, 
these submissions continued to have limited value and did not 
demonstrate that the department was effectively managing its proposed 
IT investments for fiscal year 2006. 

Exhibit 300 Supports OMB and Agency Oversight of IT Management: 

Besides providing policy for planning, budgeting, acquisition, and 
management of federal capital assets, section 300 of OMB's Circular A- 
11 instructs agencies on budget justification and reporting 
requirements for major IT investments.[Footnote 24] Section 300 defines 
the budget exhibit 300, also called the Capital Asset Plan and Business 
Case, as a document that agencies submit to OMB to justify resource 
requests for major IT investments. According to OMB, only priority 
capital asset investments that comply with the policies for good 
capital programming, as described in the Capital Programming Guide, 
will be recommended for funding in the President's Budget. 

The exhibit 300 was established as a source of information on which to 
base both quantitative decisions about budgetary resources consistent 
with the Administration's program priorities and qualitative 
assessments about whether the agency's planning, acquisition, 
management, and use of capital assets (investments) are consistent with 
OMB policy and guidance. The types of information included in the 
exhibit 300 are intended, among other things, to help OMB and the 
agencies identify and correct poorly planned or performing investments 
(i.e., investments that are behind schedule, over budget, or not 
delivering expected results) and real or potential systemic weaknesses 
in federal information resource management (such as a shortage of 
sufficiently qualified project managers). 

According to Circular A-11, the information in the exhibit 300 allows 
the agency and OMB to review and evaluate each agency's IT spending and 
to compare IT spending across the federal government. Further, the 
information helps the agency and OMB to provide a full and accurate 
accounting of IT investments for the agency, as required by the 
Paperwork Reduction Act and the Clinger-Cohen Act. 

The exhibit 300 is required for all assets, though certain sections 
apply only to information technology. Table 1 provides a description of 
the key sections of the exhibit 300, as well as examples of the types 
of documentation that provide support for the data summarized in the 
exhibit 300 (although the supporting documentation may take other 
forms). This support may be derived from a variety of sources, 
including financial management systems and management processes that 
agencies carry out to comply with federal requirements and guidelines 
(such as the Federal Information Security Management Act of 2002 and 
the Federal Enterprise Architecture),[Footnote 25] as well as from 
analyses carried out specifically in support of the management of the 
investment. 

Table 1: Description of Key Sections in the Exhibit 300 and General 
Documentation Typically Used as Support: 

Section name: Summary of Spending table; 
Description: Provides an overview of the costs for planning, 
acquisition, maintenance, and full- time employees for the previous, 
current, and budget fiscal years; it also includes a summary of these 
costs for earlier years and estimated costs for future years; 
Examples of supporting documentation: Financial reports. 

Section name: Performance Measures and Goals; 
Description: Describes the link between the agency's annual goals and 
mission and how the investment will meet those goals. This section 
illustrates the performance measures and results of the investments; 
Examples of supporting documentation: Annual performance plan and/or 
annual performance budget; IT strategic plan. 

Section name: Analysis of Alternatives; 
Description: Provides a summary of the comparison of viable alternative 
solutions that includes a general rationale and analysis of the 
monetized benefits for each alternative presented; 
Examples of supporting documentation: Cost- benefit analysis or cost-
effectiveness analysis. 

Section name: Risk Inventory and Assessment; 
Description: Provides a summary of the investment's risk assessment, 
showing the active management of 19 risk elements that OMB requires to 
be considered; 
Examples of supporting documentation: Risk management plan, risk 
reports. 

Section name: Acquisition Strategy; 
Description: Provides a description of the acquisition strategy used 
and mitigation efforts to ensure minimal risk to the government; 
Examples of supporting documentation: Acquisition plan. 

Section name: Project (Investment) and Funding Plan; 
Description: Provides a summary of the investment's status in 
accomplishing baseline cost and schedule goals through the use of an 
earned value management (EVM) system or operational analysis, depending 
on the life-cycle stage; 
Examples of supporting documentation: Cost performance reports, 
integrated baseline review, time-phased performance measurement 
baseline, work breakdown structure, and operational analysis. 

Section name: Enterprise Architecture; 
Description: Demonstrates that the investment is included in the 
agency's enterprise architecture and capital planning investment 
control process. Illustrates the agency's capability to align the 
investment to the Federal Enterprise Architecture; 
Examples of supporting documentation: Investment- specific artifacts, 
including as-is and to-be architectures, migration plan, documented 
approval by an enterprise architecture review committee. 

Section name: Security and Privacy; 
Description: Provides a description of an investment's security and 
privacy issues. It summarizes the agency's ability to manage security 
at the system or application level. Additionally, it demonstrates 
compliance with the certification and accreditation process, as well as 
the mitigation of IT security weaknesses; 
Examples of supporting documentation: Certification and accreditation 
packages, security plans, security training log, and system-level 
incident handling procedures. 

Source: GAO analysis based on OMB data. 

[End of table] 

According to OMB guidance, the life-cycle stage of the asset affects 
what is reported on the exhibit 300: 

* New investments (i.e., proposed for budget year or later, or in 
development) must be justified based on the need to fill a gap in the 
agency's ability to meet strategic goals and objectives with the lowest 
life-cycle costs of all possible alternatives and provide risk-adjusted 
cost and schedule goals and measurable performance benefits. 

* Mixed life-cycle investments (i.e., investments that are operational 
but include some developmental effort, such as a technology refresh) 
must demonstrate satisfactory progress toward achieving baseline cost, 
schedule, and performance goals using an EVM system.[Footnote 26] 

* Operational investments (i.e., steady state) must demonstrate, among 
other things, how close actual annual operating and maintenance costs 
are to the original life-cycle cost estimates; whether the technical 
merits of the investment continue to meet the needs of the agency and 
customers; and that an analysis of alternatives was performed with a 
future focus. 

OMB requires agencies to transmit exhibit 300s electronically, using a 
predefined format. To meet this requirement and facilitate the 
aggregation of elements of the exhibits from various sources throughout 
the organization, many agencies use software applications to compile 
their exhibits 300s. Besides aggregating portions of the exhibit 300, 
these tools are designed to also perform certain calculations, such as 
return on investment and those required for earned value analysis. 

Exhibit 300s Were Generally Not Based on Adequate Support: 

Although the agencies reported that all 29 exhibit 300s had been 
approved by their investment review boards (as required), in many 
instances, support for the information provided was not adequate. 
(Details on the 29 investment projects described in the exhibit 300s 
that we reviewed are provided in app. III.) Three types of problems 
were evident. 

* First, all exhibit 300s had documentation weaknesses. For example, 
each investment lacked documentary support for one or more of the 
following: Analysis of Alternatives, Risk Inventory and Assessment, and 
Performance Measures and Goals. In other cases, the supporting material 
that was provided to us did not match the information in the exhibit 
300. 

* Second, agencies did not always demonstrate (for example, in the 
Security and Privacy and the Project and Funding Plan sections) that 
they complied with federal requirements or policies with regard to 
management and reporting processes. 

* Finally, information in some sections (such as the Summary of 
Spending table and the Project and Funding Plan) could not be relied 
upon because the numbers were not derived using repeatable processes or 
reliable systems. 

Agency officials attributed the absence of adequate support for their 
exhibit 300s to lack of understanding of the requirements or of how to 
respond to them. Agency officials mentioned in particular insufficient 
guidance or training, as well as lack of familiarity with particular 
requirements, such as the EVM process. If underlying support is 
inadequate in key areas, OMB and agency executives are depending on 
unreliable information to monitor the management of major IT projects 
and to make critical decisions on their funding, thus putting at risk 
millions of dollars in investments. 

Underlying Documentation Was Lacking or Did Not Support the Exhibit 
300: 

OMB Circular A-11 states that agencies must justify funding requests 
for major acquisitions by demonstrating, among other things, measurable 
performance benefits, comprehensive risk mitigation and management 
planning, and positive return on investment for the planned investment. 
Agencies are instructed to establish performance metrics (including 
baselines from which progress can be measured) to ensure that project 
managers are accountable in meeting expected performance goals and that 
projects are aligned with the agencies' strategic goals. Agencies are 
also expected to manage investment risk through a robust risk 
management program; according to OMB's guidance, agencies need to 
actively manage risks from initial concept throughout the life cycle of 
each investment. To demonstrate a positive return on investment for the 
selected alternative and identify a project's total lifetime cost, OMB 
requires agencies to compare alternatives and report summary cost 
information for investments (including calculations for payback period 
and net present value). Documents produced in the performance of these 
activities provide evidence that they were carried out as required. 

* Performance measures. The investments did not usually demonstrate the 
basis for the performance measure information provided in the exhibit 
300. Only 6 of the 29 investments had documentation to support how 
agencies initially measured their baseline levels of performance, from 
which they measured progress toward the agency's strategic goals. In 
most cases, the investments lacked documentation describing the levels 
of performance that had been achieved or how these results actually 
helped meet agency strategic needs. The absence of documentation in 
these cases could indicate a systemic weakness in agency performance 
management practices, since well-developed practices should provide the 
expected support. This finding is consistent with our prior work where 
we determined that agencies were generally not measuring actual versus 
expected performance in meeting IT performance goals.[Footnote 27] Weak 
performance management practices reduce the ability of agency 
executives to track investment performance in meeting performance 
objectives and raise the risk that investments will not be well aligned 
with agency strategic objectives. 

* Risk management. About 75 percent of the investments were unable to 
demonstrate that they were actively addressing the risk elements that 
OMB specifies in Circular A-11, or how they had determined that any of 
those risks were not applicable. In addition, documentation of risk 
management that was provided had significant weaknesses. In one case, a 
risk management plan was approximately 9 years old and had not been 
updated, and for three investments, the risk documentation addressed 
only the project development phase, even though the systems had exited 
that phase and were in full operation. 

* Analysis of alternatives. All 29 investments reported cost 
information in the analysis of alternatives section of the exhibit 300. 
However, in about 72 percent of the exhibit 300s reviewed, either 
supporting documentation was missing for this cost information, or 
information in the documentation did not agree with that in the exhibit 
300. 

In cases where investments lacked documentation to support information 
reported in the performance and risk areas, project officials 
frequently told us that they had filled out these sections of the 
exhibit 300 to satisfy the reporting requirement, relying on their own 
knowledge of the investment rather than any project documentation. 
However, such an approach is not consistent with the requirement for 
providing accurate information in compliance with OMB capital 
programming and capital planning and investment control policies. In 
addition, several project officials told us that they believed some of 
the 19 risk management areas required in the exhibit 300 were not 
applicable to their investment, but they reported on those categories 
nonetheless to fulfill the requirement. Although the guidance instructs 
agencies to indicate whether the risk category was not applicable, 
officials stated that their impression is that "not applicable" 
responses might lower the evaluation of their investments and reduce or 
eliminate their funding. 

Further, agency officials generally responded that the training they 
received for preparing the exhibit 300 was not sufficient. For example, 
one agency commented that agencies would benefit from targeted OMB 
training that would address agency-specific questions. Several agencies 
stressed that OMB training should occur earlier in the budget cycle. In 
addition, one agency said that it needed OMB training on preparing each 
section of the exhibit 300. 

Overall, the lack of documentation supporting the exhibit 300s raises 
questions regarding the sufficiency of the business case for the 
investment and the quality of the projects' management. 

Agencies Did Not Always Comply or Provide Evidence of Compliance with 
Federal Requirements and Policies: 

Compliance with OMB and other federal guidance and related federal laws 
helps ensure that agency investments are managed in a manner consistent 
with the intent of the Congress and that key information is available 
to OMB and agency managers on which they can base informed decisions. 

* The security section of the exhibit 300 requires that agencies 
demonstrate that they have developed information security plans in 
accordance with the Federal Information Security Management Act of 2002 
(FISMA); according to FISMA, these plans must include rules of behavior 
for system use, technical security controls, and procedures for 
incident handling--that is, how to respond to system security breaches. 
In addition, agencies ensure that employees and contractors receive 
security awareness training.[Footnote 28] Guidance from the National 
Institute of Standards and Technology (NIST) supports FISMA by 
outlining the necessary components of key security documentation, 
including security plans, certification and accreditation packages, and 
security controls testing. 

* For the analysis of alternatives section, OMB's instructions for the 
exhibit 300 cite the Clinger-Cohen Act, which requires agencies to 
complete a cost-benefit analysis for new IT investments, and OMB 
Circular A-94, which outlines requirements for completing cost-benefit 
and cost-effectiveness analyses, including the comparison of at least 
three alternatives, a discussion of assumptions for each alternative, 
and an analysis of uncertainty (a sensitivity assessment to raise 
awareness of the potential for unforeseen impacts on the investment). 

* For the project and funding plan section, OMB Circular A-11 provides 
guidance that requires an agency to have in place a process for 
monitoring the investment's status in accomplishing baseline cost and 
schedule goals. 

For the 29 investments, agency compliance with the FISMA and NIST 
requirements described above was mixed. For example, about 86 percent 
of all investments could demonstrate, based on documentation, that 
security awareness training had been conducted for employees and 
contractors and that a mechanism for tracking completion of security 
awareness training had been established. In addition, 21 of the 22 
operational investments (for which information security plans are 
required) had security plans that addressed areas such as the rules of 
behavior for system use and technical security controls. In contrast, 
about 77 percent of these 22 investments did not provide support 
describing how incident handling activities would be performed at a 
system level, such as detecting, reporting, and mitigating risks 
associated with security incidents. 

While the compliance of security documentation with federal 
requirements was mixed, the documented support for the analysis of 
alternatives and the project and funding plan areas of the exhibit 300 
provided little assurance that investments complied with applicable 
guidance and laws. None of the investments had cost analysis 
documentation that fully complied with Circulars A-94 and A-11 criteria 
(lacking, for example, a comparison of at least three alternatives, a 
discussion of assumptions for each alternative, or an analysis of 
uncertainty). 

Project officials attributed deficiencies in the analysis of 
alternatives to, among other things, a lack of understanding of what 
was expected for reporting in the exhibit 300. In a few instances, 
officials noted that they believed that their investments were excluded 
from meeting the federal requirements because the investments were near 
the end of their operational or, in some cases, useful life cycles. OMB 
guidance on analysis of alternatives does not differentiate between 
operational and developmental investments; nonetheless, one agency's 
internal guidance explicitly states that no analysis of alternatives is 
necessary for investments in the steady state (that is, operational). 
However, a forward-looking analysis of alternatives for operational 
investments can help agencies recognize when an alternative solution 
may be more efficient or effective than the current investment, thereby 
freeing scarce resources to be reallocated. 

The agencies' lack of compliance with OMB guidelines for analysis of 
alternatives, including the cost-benefit analysis, leaves senior 
executive managers at risk of making poor investment management 
decisions on incomplete and sometimes inaccurate information. 

For the project and funding plan section of the exhibit 300, OMB 
Circular A-11 provides guidance on the information to be provided, 
which depends upon the state of the investment (i.e., new, mixed life 
cycle, or steady state). According to this guidance, information 
presented in the project and funding plan is to be derived from one of 
two types of analysis: for steady state investments, an operational 
analysis, and for new and mixed life-cycle investments, an analysis 
based on an EVM process that is compliant with ANSI/EIA-748-A.[Footnote 
29] Operational analysis is a method for assessing the technical merits 
of an existing investment in meeting user needs, while EVM is a method 
for assessing the value of work performed compared to its actual cost 
during development of an investment. 

Of the eight steady state investments we reviewed, only two had 
conducted an operational analysis. Furthermore, only one of those had 
documented procedures that were in accordance with OMB's Capital 
Programming Guide criteria, such as addressing user needs and technical 
performance. In most cases for which no operational analyses were in 
place, agency officials commented that OMB guidance describing how to 
perform an operational analysis was at such a high level of generality 
that they found it difficult to follow. Instead of attempting to devise 
and perform an operational analysis, therefore, they implemented 
variations on an EVM process. However, these implementations of EVM did 
not address topics required for the operational analysis, such as user 
needs and technical performance. Unless they address these topics, 
agencies may not have the information they need to determine, among 
other things, whether investments are performing as intended and 
meeting user needs. 

Similarly, of the 21 new and mixed life-cycle investments required to 
use EVM, only 6 used an EVM process that generally followed the ANSI 
standard.[Footnote 30] Since fiscal year 2002, OMB has required the use 
of EVM as a project management tool. The ANSI standard is intended to 
ensure that data produced by an EVM process are reliable so as to allow 
objective reports of project status, produce early warning signs of 
impending schedule delays and cost overruns, and ultimately provide 
unbiased estimates of anticipated costs at completion. If agencies do 
not implement EVM processes that follow the ANSI standard, they have 
reduced assurance that the information used for tracking the cost, 
schedule, and performance of the investment is reliable. 

For the remaining 15 investments that did not have EVM processes 
following the required standard, project officials commented that EVM 
was relatively new to them and that they did not understand how to 
implement an ANSI-compliant process at the time of the fiscal year 2006 
submission. At the time of our review, all five departments stated that 
they were working toward implementing compliant processes. 

To OMB's credit, it recognized the need for improvement in the 
execution of agencies' IT projects and has issued clarifying guidance 
on the implementation of EVM.[Footnote 31] This guidance, issued in 
August 2005, could be expected to have an impact on the exhibit 300s 
prepared for fiscal year 2008. Under this guidance, agencies are 
instructed, among other things, to: 

* develop comprehensive agency policies for using EVM to plan and 
manage development activities for major IT investments no later than 
December 31, 2005; 

* include a provision and clause in major acquisition contracts or 
agency in-house project charters directing the use of an EVM system 
compliant with the required standard; and: 

* provide documentation demonstrating that the contractor's or agency's 
in-house EVM system complies with the required standard and conduct 
periodic surveillance reviews. 

Additionally, the Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council published in the Federal Register a 
proposed amendment[Footnote 32] to the Federal Acquisition Regulation 
(FAR Case 2004-019) to standardize EVM contract policy across the 
government. 

In previous work,[Footnote 33] we have reported that EVM can have a 
significant impact on the success of an IT acquisition because it 
heightens visibility into whether a program is on target with respect 
to cost, schedule, and technical performance. Therefore, it is 
important that the process is implemented properly to maximize its 
value as a project management tool. If it is not implemented 
effectively, agency executives and OMB risk making poor investment 
decisions based on inaccurate and potentially misleading EVM 
information. 

Cost Data Supporting Business Cases Were Unreliable: 

Accurate and timely cost management information is critical for federal 
managers to understand the progress of major projects and vital in 
developing meaningful links among budget, accounting, and performance. 
The Federal Financial Management Improvement Act of 1996 [Hyperlink, 
http://frwebgate.access.gpo.gov/cgi-
bin/getdoc.cgi?dbname=104_cong_public_laws&docid=f:publ208.104.pdf] 
emphasizes the need for agencies to have systems that are able to 
generate reliable, useful, and timely information for decision-making 
purposes and to ensure accountability on an ongoing basis.[Footnote 34] 
In previous work, we have reported on the lack of adherence to federal 
accounting standards throughout the federal government and have made 
recommendations that agencies improve cost-accounting systems.[Footnote 
35] 

At every agency, cost information reported in the 29 exhibit 300s was 
derived from ad hoc processes rather than from cost-accounting systems 
with adequate controls to ensure accountability. This condition had 
impact in two particular areas of the exhibit 300--the summary of 
spending table and the project and funding plan section: 

* Figures for dollars expended for the prior year (in this case, fiscal 
year 2004) were not reliable. In all cases, documentation provided to 
support prior year cost figures in the summary of spending table showed 
that the information was derived from ad hoc sources, such as 
spreadsheet estimates, handwritten figures, or e-mails. Therefore, the 
cost data reported in the exhibit 300 are not verifiable. 

* Information in the project and funding plans was also unreliable for 
the 21 new and mixed life-cycle investments required to use EVM. As 
discussed earlier, 15 of these investments reported cost figures based 
on EVM processes that did not follow the ANSI standard; because the 
standard was not followed, these processes did not have the controls 
necessary to ensure that the data they produced were reliable. The 
other 6 investments had ANSI-compliant EVM processes in place for the 
contractor component of the investment costs, but the government 
component of the investment costs was derived from ad hoc systems (such 
as tracking government costs in spreadsheets based on project managers' 
own records); thus, that portion of the data was not reliable, lending 
a degree of unreliability to the overall EVM reports. 

The lack of accurate cost figures limits decision makers' ability to 
determine the actual resources expended on an investment, and therefore 
inhibits their ability to make fully informed decisions on whether to 
proceed. Without reliable systems that meet federal standards, 
government agencies cannot produce reliable cost-based performance 
information. 

Conclusions: 

The usefulness of the exhibit 300 business case as a mechanism to 
support the selection and oversight of federal IT investments is 
undercut by the kinds of weaknesses displayed in the 29 business cases 
that we reviewed. Although we cannot directly project these examples to 
the more than one thousand business cases developed each year across 
the federal government, our results suggest that the issues raised need 
attention. The shortcomings in guidance and training are likely to be 
widespread, and so the weaknesses may extend beyond the specific 
examples identified here. The kinds of weaknesses displayed and the 
causes behind them are consistent with the pervasive problems with 
project and investment management that we have documented in numerous 
prior reports. 

The absence of documentary support in the cases reviewed raises 
questions regarding the sufficiency of the justification provided for 
the investment and undermines the management decisions being made based 
on it. More troubling, it may indicate an underlying weakness in the 
management of the investment, particularly since several sections of 
the exhibit are specifically designed to capture information from 
systems used in project management, such as those that support EVM and 
financial management. In many cases, inadequate support raises 
questions regarding the adequacy of an agency's management processes 
and internal controls, which strongly affect the reliability of the 
information presented to decision makers. Further, in view of the 
inaccuracies in the cases reviewed, it is evident that agencies are not 
taking sufficient actions to ensure the accuracy of the information in 
the exhibit 300s. To make reasonable decisions, management needs to be 
aware of limitations in the data on which they rely and thus be able to 
take steps to mitigate the risks involved. 

Collectively, our findings raise questions on whether fundamental 
project management processes are in place, whether project managers are 
adequately trained in these processes, and whether they receive 
sufficient guidance on these processes and on preparing all areas of 
the exhibit 300. At a minimum, this situation undermines the usefulness 
of the exhibit 300 as a mechanism to communicate to OMB and agency 
executives that the project team has employed the disciplines of good 
project management. By reporting information that is not supported by 
documentation, the exhibit 300 can create the misleading appearance 
that investments are being managed properly, when in fact they are not. 
In addition, OMB has relied on these exhibits to identify and oversee 
high-risk projects; thus, our finding that the data being presented to 
OMB may not be reliable or accurate further complicates its oversight. 

While OMB is applying more rigor to its oversight processes through 
such processes as its tracking of high-risk investments, these advances 
may be undermined by inaccurate or unreliable data used in decision 
making. Unless these weaknesses are addressed, OMB, agency executives, 
and Congress will not have assurance that key decisions to pursue and 
oversee the $65 billion in IT investments are being made based on 
accurate and reliable information. 

Recommendations for Executive Action: 

To improve the accuracy and validity of exhibit 300s for major IT 
investments and to increase the value of using the information they 
provide in selection, oversight, and resource allocation decisions, we 
are making three recommendations. 

1. Because decision makers should be aware of any weaknesses in the 
processes used to develop the information in the exhibit 300s, we are 
recommending that the Director of OMB direct agencies to determine the 
extent to which the information contained in each exhibit 300 is 
accurate and reliable. Where weaknesses in accuracy and reliability are 
identified, the agency should be required to disclose them and explain 
the agency's approach to mitigating them. 

In addition, to help ensure that agency personnel completing exhibit 
300s better understand their responsibilities, we recommend that the 
Director of OMB take the following additional actions: 

2. In advance of OMB's next issuance of the Circular A-11 update, 
develop and promulgate clearer and more explicit guidance for sections 
of the exhibit 300 business case that cause confusion, including 
addressing weaknesses identified in this report (as indicated below) 
and consulting with agency personnel having responsibility for 
completing exhibit 300s across government to identify other areas of 
confusion. At a minimum, the guidance should do the following: 

* Provide a more detailed description of the requirements for 
completing an operational analysis, as referred to in the supplement to 
Part 7 of Circular A-11, the Capital Programming Guide. 

* Address or clarify possible flexibilities and alternative approaches 
available to agencies in completing their exhibit 300s: for example, 
whether the analysis of alternatives section of the exhibit 300 needs 
to be updated every year for steady state investments and whether all 
risk areas are relevant for all investments. 

3. Provide for training of agency personnel responsible for completing 
exhibit 300s. This training should go beyond a description of changes 
from prior years' guidance and include working through examples for a 
variety of investments. In developing the training, OMB should consult 
with agencies to identify deficiencies that the training should 
address. 

In implementing these recommendations, OMB should work with the CIO 
Council to develop the necessary guidance and implement an effective 
training program to ensure governmentwide acceptance of these changes. 

Because we have outstanding recommendations aimed at enhancing OMB's 
audit guidance related to federal cost-accounting systems,[Footnote 36] 
we are not making any new recommendations in this report regarding 
federal cost accounting. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to OMB and the five agencies whose 
exhibit 300s we reviewed. 

In written comments received on December 23, 2005, the Administrator of 
OMB's Office for E-Government and Information Technology accepted the 
findings of the draft report. OMB described two of our three 
recommendations and expressed three concerns: first, that our report 
does not address the need for agencies to ensure the accuracy of their 
IT investment requests; second, that the report focuses on the way 
agency employees fill out OMB's exhibit 300s and not on the underlying 
management responsibilities; and third, that by directing our 
recommendations to OMB rather than to the agencies, we could be seen as 
suggesting that OMB and not the agencies are responsible for data 
accuracy and employee training. 

OMB's concern regarding data accuracy is addressed by our first 
recommendation: that the Director of OMB instruct agencies to determine 
the extent to which the information contained in each exhibit 300 is 
accurate and reliable, to disclose weaknesses, and to describe the 
agency's approach to mitigating these weaknesses. This recommendation 
clearly places responsibility on the agencies for assessing the quality 
of their budget information and the processes that produced this 
information. 

With respect to OMB's concern that the recommendations do not focus on 
how well agencies fulfill their underlying information resources 
management responsibilities, our view is that our recommendation on 
disclosing and mitigating weaknesses does address these underlying 
responsibilities. The report specifically addresses the exhibit 300s 
and the reliability of these documents when used as support in the 
agencies' and OMB's decision-making processes. As our report clearly 
states, the lack of documentation may indicate an underlying weakness 
in the management of the investment. In many cases inadequate support 
raises questions about the investments' program management and internal 
controls. Requiring agencies to disclose and mitigate associated 
weaknesses presupposes that agencies examine and address their approach 
to fulfilling information resources management responsibilities. 

Regarding OMB's third concern, we do not intend to suggest that 
agencies are not responsible and accountable for the weaknesses we 
describe. We place significant responsibility on agencies to manage 
their information assets effectively, as reflected in our first 
recommendation and in the large number of evaluations that we have 
previously conducted at individual agencies and the recommendations 
resulting, some of which are still outstanding. In this report, 
however, our recommendations are directed to OMB because they address 
findings relating to OMB-required budget documents, and OMB has 
statutory responsibility for providing information resources management 
guidance governmentwide. 

Regarding OMB's comment that agencies be held responsible for employee 
training in information resources management, we agree that agencies 
are responsible for such training. However, as agencies indicated 
during the review, additional training by OMB would be helpful, 
especially in the understanding of OMB's requirements for the exhibit 
300. This is also consistent with OMB's responsibility under the E- 
Government Act of 2002[Footnote 37] to identify where current training 
does not satisfy the personnel needs related to information technology 
and information resource management. 

The Deputy Associate Chief Information Officer for Information 
Technology Reform of the Department of Energy provided largely 
technical comments, which we incorporated as appropriate. The Director 
of Audit Relations of the Department of Transportation also provided 
technical comments that were incorporated as appropriate. The 
Departments of Agriculture, Commerce, Transportation, and the Treasury 
provided no comments. 

The written comments from OMB are reproduced in appendix II. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to the Secretaries of the Departments of Agriculture, Commerce, Energy, 
Transportation, and the Treasury and the Director of Office of 
Management and Budget. We will also make copies available to others 
upon request. In addition, this report will be available at no charge 
on the GAO Web site at [Hyperlink, http://www.gao.gov]. 

If you have any questions on matters discussed in this report, please 
contact me at (202) 512-9286. I can also be reached by e-mail at 
[Hyperlink, pownerd@gao.gov]. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. Other contacts and key contributors to this report 
are listed in appendix IV. 

Signed by: 

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

[End of section] 

Appendixes: 

Appendix I: Objective, Scope, and Methodology: 

Our objective was to ascertain the extent to which selected agencies 
have underlying support for the information described in their fiscal 
year 2006 exhibit 300s as submitted to the Office of Management and 
Budget (OMB) in September 2004. To address our objective, we reviewed 
the supporting documentation for 29 exhibit 300s from agencies and 
components from the Departments of Agriculture, Commerce, Energy, 
Transportation, and the Treasury.[Footnote 38] 

We selected the five departments for our review on the basis of two 
criteria. First, to ensure that we examined significant investments, we 
selected departments that expected to spend $1 billion or more on 
information technology (IT) investments in fiscal year 2006. Second, of 
those agencies with significant investments, we further narrowed our 
selection of agencies to those with the first and second largest number 
of IT investments in each of three categories of the federal 
government's Business Reference Model (BRM): Services for 
Citizens,[Footnote 39] Support Delivery of Services,[Footnote 40] and 
Management of Government Resources.[Footnote 41] We did this to ensure 
that the agencies under review reflect the primary business operations 
performed by the federal government. We excluded the Mode of Delivery 
Business Area because we found investments in this area to be largely 
from one agency, the Department of Defense (DOD). (In general, Mode of 
Delivery describes the mechanisms the government uses to achieve its 
purposes: Services for Citizens.) (We excluded DOD and the Department 
of Homeland Security (DHS) from our selection, because the Defense 
Inspector General recently performed an extensive review of exhibit 
300s,[Footnote 42] and we have both completed and ongoing work on 
several major IT investments at DHS).[Footnote 43] This process 
resulted in the selection of the five departments mentioned above. 

To make our selection of IT investments from the five departments, we 
used OMB capital planning and budget documentation to identify a mix of 
investments. Specifically, we chose IT investments that (1) supported 
government operations across each of the three BRM business areas 
identified above and (2) reflected different stages of investment 
(e.g., new, mixed life cycle, and steady state). Initially, we selected 
a total of 30 investments (i.e., 6 investments from each department). 
However, one IT investment was dropped from our total of 30 selected 
investments because we determined during our review that OMB and the 
agency had cancelled its funding. 

To determine the extent of each investment's underlying support, we 
developed a set of questions regarding the types of analysis and 
documentation that were associated with the information provided in 
each of the major sections of OMB's exhibit 300.[Footnote 44] Using our 
set of questions, we met with agency officials for each selected 
investment to collect and analyze investment documentation associated 
with each exhibit 300 area in our evaluation. We further compared the 
documentation against the exhibit 300 to ascertain whether the 
documentation agreed with what the investment reported in the exhibit 
300. Where federal requirements, laws, and other guidelines were cited 
in Circular A-11, we also used these to assess the extent to which 
agencies and components had complied with specific documentation 
requirements as prescribed in these sources (including National 
Institute of Standards and Technology (NIST) guidance, OMB circulars, 
and OMB memorandums). 

In areas where federal directives were cited in the exhibit 300, we 
conducted limited reliability testing; these areas included security, 
analysis of alternatives, and the project and funding plan. In our 
evaluation of security documentation, we used criteria set forth in 
NIST guidance to assess whether the major components were present in 
key documents, which included the security plan and system-level 
incident handling procedures. For security awareness training, we 
identified whether training was conducted and tracked but did not 
assess its content. In our evaluation of the analysis of alternatives, 
we used criteria from OMB Circular A-94 to assess whether the major 
components were present in the cost-benefit or cost-effectiveness 
analysis. In cases where investment managers told us that their earned 
value management (EVM) processes were in conformance with ANSI/EIA-748- 
A (for our evaluation of the project and funding plan sections), we 
used criteria from ANSI/EIA-748-A to assess whether key EVM processes 
were in place. We did not test the quality of the documentation in 
these areas of evaluation. 

Regarding the reliability of cost data, we did not test the adequacy of 
agency or contractor cost-accounting systems. Our evaluation was based 
on what we were told by the agencies and the information they could 
provide (to the extent to which they had information). 

We performed our work at the agencies' offices in the Washington, D.C., 
metropolitan area. We conducted our review between March and November 
2005 in accordance with generally accepted government auditing 
standards. 

[End of section] 

Appendix II: Comments from the Office of Management and Budget: 

EXECUTIVE OFFICE OF THE PRESIDENT: 
OFFICE OF MANAGEMENT AND BUDGET: 
WASHINGTON, D. C. 20503: 

Mr. David A. Powner: 
Director: 
IT Management Issues: 
Government Accountability Office: 
441 G Street, SW: 
Washington, DC 20548: 

Dear Mr. Powner: 

Thank you for the opportunity to comment on the Government 
Accountability Office's (GAO) draft report titled, "Information 
Technology: Agencies Need to Improve the Accuracy and Reliability of 
Investment Management" (GAO-06-250). 

We appreciate GAO's effort to determine the extent to which selected 
agencies have underlying support for their justifications for 
investments in information technology (Exhibit 300s). In the draft 
report, GAO made two recommendations to the Office of Management and 
Budget (OMB). 

First, the report recommends in its next update of Circular A-11, OMB 
provide clearer and more explicit guidance for those areas of the 
Exhibit 300s some agency officials found confusing. Specifically, the 
report suggests a more detailed description of the requirements for 
completing an operational analysis and address possible flexibilities 
and alternative approaches available to the agencies in completing 
their Exhibit 300s including whether certain sections must be updated 
every year. 

Second, the report recommends OMB provide training of agency personnel 
responsible for completing Exhibit 300s and work with the CIO Council 
to do so. This recommendation suggests the training go beyond a 
description of changes from prior year's guidance. 

We accept the findings in the draft report, but have significant 
concerns with the focus of the resulting recommendations. We are also 
concerned the draft report does not address the primary way agencies 
can ensure the accuracy and appropriateness of their IT investment 
requests, i.e., through reviews by internal investment review boards or 
other similar reviews by senior agency personnel. 

With respect to the draft report's recommendations, we believe they are 
inconsistent with the report's findings because they focus on improving 
the way agency employees prepare a form (i.e., the Exhibit 300) and not 
how well agencies fulfill their underlying Information Resources 
Management (IRM) responsibilities found in law and policy. 

Moreover, by directing the recommendations solely to OMB, the draft 
report can be viewed as suggesting OMB and not the agencies are 
responsible and accountable for data accuracy and employee training. In 
fact, it could encourage agencies to wait to address any deficiencies 
in agency programs until OMB takes some specific action in response to 
the recommendations. We assume this is not the intent of the report as 
employee IRM training is prominently featured as an agency 
responsibility in GAO's Executive Guide for Information Technology 
Investment Management as well as in both the Clinger-Cohen Act of 1996 
and the Paperwork Reduction Act of 1995. 

Therefore, to the extent certain agency employees are uncertain of 
their IRM responsibilities and how to perform them (and thus are unable 
to properly complete the Exhibit 300 form), each agency must take the 
appropriate action including ensuring agency employees take advantage 
of the many training opportunities available such as those identified 
on the CIO Council's website and participate in the CIO IT Workforce 
Committee. Past activities of the Committee include the development of 
an IT Workforce Capability Guidance, issuance of IT training guidance, 
development of an IT Roadmap, the hosting of IT quarterly forums, and 
the IT Exchange Program. 

Finally on this point, we suggest the draft report be clarified to 
place greater emphasis on agency responsibilities to train their 
employees and include associated recommendations to the agencies. 

As your draft report suggests, OMB will continue to work with the 
agencies and the CIO Council to help improve agency employee 
understanding of their IRM responsibilities including planning for 
information technology projects. Clearly, those employees who 
understand their responsibilities are far better equipped to accurately 
complete Exhibit 300 investment justification forms. As we do each year 
in preparing OMB Circular A-11, we will work with the agencies and the 
CIO Council to identify the extent to which additional guidance is 
necessary and the appropriate form of such guidance. I would like to 
note however, at the request of agency CIOs, for the past two years OMB 
did not make significant changes to those portions of Circular A-11 
addressing IT investments. The CIOs expressed their understanding of 
the guidance and suggested to us stability would promote improved data 
quality. 

Thank you for the opportunity to review and comment on your draft 
report on this important issue. 

Sincerely, 

Signed by: 

Karen S. Evans: 
Administrator for E-Government And Information Technology: 
Office of Management and Budget: 

[End of section] 

Appendix III: Descriptions of Investments Reviewed: 

The following provides additional detail on the agencies and 
investments that we reviewed as part of this audit. We reviewed a total 
of 29 investments at five departments: Agriculture, Commerce, Energy, 
Transportation, and the Treasury.[Footnote 45] The selected departments 
account for the first and second largest number of IT investments in 
each of three categories of the federal government's Business Reference 
Model: Services for Citizens,[Footnote 46] Support Delivery of 
Services,[Footnote 47] and Management of Government Resources.[Footnote 
48] 

According to OMB guidance, the life-cycle stage of the asset affects 
what is reported on the exhibit 300: 

* New investments (i.e., proposed for budget year or later, or in 
development) must be justified based on the need to fill a gap in the 
agency's ability to meet strategic goals and objectives with the lowest 
life-cycle costs of all possible alternatives and must provide risk- 
adjusted cost and schedule goals and measurable performance benefits. 

* Mixed life-cycle investments (i.e., investments that are operational 
but include some developmental effort, such as a technology refresh) 
must demonstrate satisfactory progress toward achieving baseline cost, 
schedule, and performance goals using an EVM system.[Footnote 49] 

* Operational investments (i.e., steady state) must demonstrate, among 
other things, how close actual annual operating and maintenance costs 
are to the original life-cycle cost estimates, whether the technical 
merits of the investment continue to meet the needs of the agency and 
customers, and that an analysis of alternatives was performed with a 
future focus. 

Department of Agriculture: 

System: Comprehensive Electronic Permit System (ePermits): 

Brief description: This system is expected to automate processes to 
allow the Department of Agriculture to issue, track, and rapidly verify 
the validity of a federal permit allowing the importation of plants and 
animals. It is also expected to assist the public by allowing 
applicants to apply for permits, check the status of permit 
applications, and receive permits online. 

Investment stage: New: 

Business Reference Model category: Services for Citizens: 

Table 2: Financial Funding Data for ePermits: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $4.8; 
Development: $4.8; 
Steady state: $0.0. 

Fiscal year: FY 05; 
Total: $3.3; 
Development: $3.3; 
Steady state: $0.0. 

Fiscal year: FY 06; 
Total: $2.2; 
Development: $2.2; 
Steady state: $0.0. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Corporate Financial Management Systems (CFMS): 

Brief description: This investment is designed to represent the entire 
portfolio of current corporate financial management and administrative 
payment systems for the department. It is a corporatewide solution for 
financial management reform and systems integration that provides tools 
for program and financial managers to manage and evaluate federal 
programs. 

Investment stage: Steady state: 

Business Reference Model category: Management of Government Resources: 

Table 3: Financial Funding Data for CFMS: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $64.6; 
Development: $0.0; 
Steady state: $64.6. 

Fiscal year: FY 05; 
Total: $62.0; 
Development: $0.0; 
Steady state: $62.0. 

Fiscal year: FY 06; 
Total: $61.7; 
Development: $0.0; 
Steady state: $61.7. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Integrated Acquisition System (IAS): 

Brief description: This system is intended to be a single 
enterprisewide acquisition management system to support a strategic and 
more standardized acquisition management process for Agriculture. It is 
expected to provide a real-time interface to the department's core 
financial system, reliable data, and a shortened time for acquiring 
goods and services. 

Investment stage: Mixed life cycle: 

Business Reference Model category: Management of Government Resources: 

Table 4: Financial Funding Data for IAS: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $35.9; 
Development: $20.5; 
Steady state: $15.4. 

Fiscal year: FY 05; 
Total: $27.1; 
Development: $11.6; 
Steady state: $15.5. 

Fiscal year: FY 06; 
Total: $30.6; 
Development: $14.5; 
Steady state: $16.1. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Phytosanitary Certificate Issuance and Tracking System (PCIT): 

Brief description: This system is expected to establish a new process 
to collect and track phytosanitary certificates issued by the 
department, which attest to compliance with import regulations of 
importing countries. It is also intended to provide better service to 
users by reducing the need for repetitive data entry from applicants 
and enabling certifying officials to deliver certificates in a timelier 
manner. 

Investment stage: New: 

Business Reference Model category: Services for Citizens: 

Table 5: Financial Funding Data for PCIT: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $0.9; 
Development: $0.9; 
Steady state: $0.0. 

Fiscal year: FY 05; 
Total: $3.6; 
Development: $3.6; 
Steady state: $0.0. 

Fiscal year: FY 06; 
Total: $2.5; 
Development: $2.5; 
Steady state: $0.0. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Processed Commodity Inventory Management System (PCIMS): 

Brief description: This system is designed to support the annual 
acquisition, tracking, and distribution of commodities acquired by 
Agriculture for domestic and foreign food assistance programs by 
providing financial and program management, reporting, and control to 
track commodity requests against purchases and distributions from 
inventory. 

Investment stage: Steady state: 

Business Reference Model category: Management of Government Resources: 

Table 6: Financial Funding Data for PCIMS: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $12.9; 
Development: $4.3; 
Steady state: $8.6. 

Fiscal year: FY 05; 
Total: $12.2; 
Development: $3.7; 
Steady state: $8.6. 

Fiscal year: FY 06; 
Total: $12.7; 
Development: $2.8; 
Steady state: $9.9. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Store Tracking and Redemption System Redesign (STARS II): 

Brief description: This system is intended to support the department's 
Food-Stamp program mission by tracking and monitoring food 
coupon/electronic benefit redemption activities and regulatory 
violations by businesses and associated administrative actions related 
to enforcement of penalties, among other things. This initiative is 
expected to replace the current legacy system, which has been in place 
since 1993. 

Investment stage: New: 

Business Reference Model category: Support Delivery of Services: 

Table 7: Financial Funding Data for STARS II: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $12.7; 
Development: $12.4; 
Steady state: $0.3. 

Fiscal year: FY 05; 
Total: $7.0; 
Development: $5.2; 
Steady state: $1.8. 

Fiscal year: FY 06; 
Total: $6.4; 
Development: $0.0; 
Steady state: $6.4. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

Department of Commerce: 

System: Advanced Weather Interactive Processing System (AWIPS): 

Brief description: This system is designed to be an interactive 
computer system that integrates all meteorological and hydrological 
data and all satellite and radar data to enable the forecaster to 
prepare and issue more accurate and timely forecasts and warnings. 

Investment stage: Mixed life cycle: 

Business Reference Model category: Services for Citizens: 

Table 8: Financial Funding Data for AWIPS: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $49.2; 
Development: $14.0; 
Steady state: $35.2. 

Fiscal year: FY 05; 
Total: $49.5; 
Development: $12.7; 
Steady state: $36.8. 

Fiscal year: FY 06; 
Total: $52.2; 
Development: $14.1; 
Steady state: $38.1. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Comprehensive Large Array-Data Stewardship System (CLASS): 

Brief description: This system is expected to provide an integrated 
solution to weather and water data archive and access, including an 
access portal with search, browse, and geospatial capabilities for 
users to obtain environmental data, contributing to improvements in 
prediction capabilities. 

Investment stage: New: 

Business Reference Model category: Services for Citizens: 

Table 9: Financial Funding Data for CLASS: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $3.2; 
Development: $3.2; 
Steady state: $0.0. 

Fiscal year: FY 05; 
Total: $9.6; 
Development: $9.6; 
Steady state: $0.0. 

Fiscal year: FY 06; 
Total: $7.6; 
Development: $7.6; 
Steady state: $0.0. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Economic Census and Surveys (ECON): 

Brief description: This investment is designed to provide statistical 
programs that count and profile U.S. businesses and government 
organizations through the gathering of surveys and principal economic 
indicators in order to conduct research and technical studies. 

Investment stage: Steady state: 

Business Reference Model category: Support Delivery of Services: 

Table 10: Financial Funding Data for ECON: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $53.6; 
Development: $0.0; 
Steady state: $53.6. 

Fiscal year: FY 05; 
Total: $34.0; 
Development: $0.0; 
Steady state: $34.0. 

Fiscal year: FY 06; 
Total: $51.4; 
Development: $0.0; 
Steady state: $51.4. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Improve the Automated Export System (AES): 

Brief description: The current system is designed to expedite monthly 
statistics on international trade, remedy shortcomings in export 
statistics, and help to control the export of weapons or other 
hazardous items that could be a threat to U.S. national security or 
public welfare. The proposed initiative is designed to improve the 
current system to handle electronic filing of all export transactions, 
incorporate an electronic manifest system, and provide for verification 
of export information reported on export transactions. 

Investment stage: Mixed life cycle: 

Business Reference Model category: Support Delivery of Services: 

Table 11: Financial Funding Data for AES: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $0.0; 
Development: $0.0; 
Steady state: $0.0. 

Fiscal year: FY 05; 
Total: $0.0; 
Development: $0.0; 
Steady state: $0.0. 

Fiscal year: FY 06; 
Total: $6.6; 
Development: $6.6; 
Steady state: $0.0. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: National Weather Service Telecommunication Gateway (NWSTG) 
System: 

Brief description: The current system is designed to collect and 
distribute raw and processed hydrometeorological data and products, 
disseminating weather observations and guidance to a national and 
international community of customers. Improvements to current system 
are expected to provide sufficient performance, capacity, and 
catastrophic backup capability to meet current and future demands for 
data. 

Investment stage: Mixed life cycle: 

Business Reference Model category: Support Delivery of Services: 

Table 12: Financial Funding Data for NWSTG: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $13.2; 
Development: $5.5; 
Steady state: $7.7. 

Fiscal year: FY 05; 
Total: $13.0; 
Development: $5.0; 
Steady state: $8.0. 

Fiscal year: FY 06; 
Total: $11.1; 
Development: $0.8; 
Steady state: $10.3. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Satellite Operations Control Center Command and Data 
Acquisition (SOCC/CDA): 

Brief description: This system is designed to command and control 
Commerce's operational environmental satellites and to acquire and 
manage the weather and water data the satellites collect, in order to 
provide support functions that are not available commercially, such as 
real-time hurricane support. 

Investment stage: Mixed life cycle: 

Business Reference Model category: Services for Citizens: 

Table 13: Financial Funding Data for SOCC/CDA: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $11.7; 
Development: $11.7; 
Steady state: $0.0. 

Fiscal year: FY 05; 
Total: $10.5; 
Development: $6.1; 
Steady state: $4.4. 

Fiscal year: FY 06; 
Total: $12.6; 
Development: $7.7; 
Steady state: $5.0. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

Department of Energy: 

System: Energy Sciences Network (ESnet): 

Brief description: This project is designed to support scientific 
research by providing an interoperable, effective, and reliable 
communications infrastructure and network services to the Department of 
Energy research facilities. 

Investment stage: Mixed life cycle: 

Business Reference Model category: Services for Citizens: 

Table 14: Financial Funding Data for ESnet: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $18.9; 
Development: $11.3; 
Steady state: $7.6. 

Fiscal year: FY 05; 
Total: $18.3; 
Development: $9.5; 
Steady state: $8.8. 

Fiscal year: FY 06; 
Total: $18.3; 
Development: $9.3; 
Steady state: $9.0. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: E-content Management System (eCMS): 

Brief description: This system is expected to be an enterprisewide, 
integrated document and records management system that will include 
portal accessibility and integration with knowledge management tools in 
order to improve decision and service delivery quality and serve as a 
resource for operations management. 

Investment stage: New: 

Business Reference Model category: Support Delivery of Services: 

Table 15: Financial Funding Data for eCMS: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $2.3; 
Development: $2.3; 
Steady state: $0.0. 

Fiscal year: FY 05; 
Total: $2.7; 
Development: $2.7; 
Steady state: $0.0. 

Fiscal year: FY 06; 
Total: $6.4; 
Development: $4.1; 
Steady state: $2.3. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Integrated Planning, Accountability, and Budgeting System 
Information System (IPABS-IS): 

Brief description: This system is designed to support the routine 
collection and reporting needs of Energy for life-cycle planning, 
budget formulation, and project and budget execution. 

Investment stage: Steady state: 

Business Reference Model category: Support Delivery of Services: 

Table 16: Financial Funding Data for IPABS-IS: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $3.1; 
Development: $0.0; 
Steady state: $3.1. 

Fiscal year: FY 05; 
Total: $2.9; 
Development: $0.0; 
Steady state: $2.9. 

Fiscal year: FY 06; 
Total: $2.8; 
Development: $0.0; 
Steady state: $2.8. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Licensing Support Network (LSN): 

Brief description: This is a Web-based system that is intended to make 
relevant documentary material supporting the Nuclear Regulatory License 
Application available to users, as part of the requirements of the 
Nuclear Waste Policy Act. 

Investment stage: Steady state: 

Business Reference Model category: Services for Citizens: 

Table 17: Financial Funding Data for LSN: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $39.6; 
Development: $39.6; 
Steady state: $0.0. 

Fiscal year: FY 05; 
Total: $13.6; 
Development: $0.0; 
Steady state: $13.6. 

Fiscal year: FY 06; 
Total: $9.6; 
Development: $0.0; 
Steady state: $9.6. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Los Alamos National Laboratory Enterprise Project (LANL ERP): 

Brief description: This investment is intended to identify, design, and 
implement the systems, processes, and controls related to financial 
management, human resources, supply chain management, facilities 
maintenance, information management, project management, and 
manufacturing in order to lower costs and provide more efficient 
operations and improved management. 

Investment stage: Mixed life cycle: 

Business Reference Model category: Management of Government Resources: 

Table 18: Financial Funding Data for LANL ERP: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $43.2; 
Development: $39.3; 
Steady state: $3.9. 

Fiscal year: FY 05; 
Total: $45.5; 
Development: $41.3; 
Steady state: $4.2. 

Fiscal year: FY 06; 
Total: $43.7; 
Development: $41.3; 
Steady state: $2.4. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

Department of Transportation: 

System: Asset Supply Chain Management (ASCM): 

Brief description: This investment is intended to provide the 
Department of Transportation (DOT) with asset management and supply 
chain management information systems to track and manage over $21 
billion in federal government assets. Reducing the number of 
information systems, optimizing supply chain operations, and 
streamlining business operations of employees are expected to result in 
reduced costs to the agency. 

Investment stage: Mixed life cycle: 

Business Reference Model category: Management of Government Resources: 

Table 19: Financial Funding Data for ASCM: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $5.0; 
Development: $5.0; 
Steady state: $0.0. 

Fiscal year: FY 05; 
Total: $6.0; 
Development: $6.0; 
Steady state: $0.0. 

Fiscal year: FY 06; 
Total: $13.2; 
Development: $13.2; 
Steady state: $0.0. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: DOT Financial System Consolidation: 

Brief description: This program is expected to consolidate several 
major and nonmajor DOT financial systems to interface or integrate all 
related systems in order to eliminate redundant data and processes. 

Investment stage: New: 

Business Reference Model category: Management of Government Resources: 

Table 20: Financial Funding Data for DOT Financial System 
Consolidation: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $51.0; 
Development: $6.2; 
Steady state: $44.8. 

Fiscal year: FY 05; 
Total: $64.5; 
Development: $11.1; 
Steady state: $53.3. 

Fiscal year: FY 06; 
Total: $44.1; 
Development: $0.2; 
Steady state: $44.0. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: National Transit Database (NTD): 

Brief description: This system is designed to collect performance data 
from over 640 local transit agencies for the purpose of reporting 
statistical data on the U.S. transit industry. 

Investment stage: Steady state: 

Business Reference Model category: Services for Citizens: 

Table 21: Financial Funding Data for NTD: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $2.2; 
Development: $0.0; 
Steady state: $2.2. 

FY 05; 
Total: $3.7; 
Development: $0.0; 
Steady state: $3.7. 

Fiscal year: FY 06; 
Total: $3.7; 
Development: $0.0; 
Steady state: $3.7. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Next Generation Air/Ground Communications (NEXCOM): 

Brief description: This system is intended to provide air 
pilot/controller voice and data communications by utilizing a digital-
based air/ground communication system. 

Investment stage: New: 

Business Reference Model category: Services for Citizens: 

Table 22: Financial Funding Data for NEXCOM: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $28.7; 
Development: $28.7; 
Steady state: $0.0. 

Fiscal year: FY 05; 
Total: $29.5; 
Development: $29.5; 
Steady state: $0.1. 

Fiscal year: FY 06; 
Total: $33.8; 
Development: $33.5; 
Steady state: $0.3. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: System Approach for Safety Oversight (SASO): 

Brief description: This system is expected to consolidate the agency's 
28 oversight systems on aviation regulatory compliance into 5 
integrated aviation safety risk management systems. Its intended 
purpose is to allow applicable government agencies and the aviation 
industry to use common system safety applications and databases for 
managing and overseeing flight safety. 

Investment stage: New: 

Business Reference Model category: Services for Citizens: 

Table 23: Financial Funding Data for SASO: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $7.2; 
Development: $7.2; 
Steady state: $0.0. 

Fiscal year: FY 05; 
Total: $7.3; 
Development: $7.3; 
Steady state: $0.0. 

Fiscal year: FY 06; 
Total: $10.7; 
Development: $10.7; 
Steady state: $0.0. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Wide-Area Augmentation System (WAAS): 

Brief description: This is a navigation system that is designed to 
provide navigation across the entire United States for all classes of 
aircraft in all flight operations, including en-route navigation, 
airport departures, and airport arrivals including precision landing 
approaches in all weather conditions. 

Investment stage: Mixed life cycle: 

Business Reference Model category: Services for Citizens: 

Table 24: Financial Funding Data for WAAS: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $105.6; 
Development: $99.4; 
Steady state: $6.2. 

Fiscal year: FY 05; 
Total: $122.6; 
Development: $99.2; 
Steady state: $23.4. 

Fiscal year: FY 06; 
Total: $124.4; 
Development: $100.0; 
Steady state: $24.4. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

Department of the Treasury: 

System: Customer Account Data Engine (CADE): 

Brief description: This system is part of a modernization program that 
is expected to provide the Department of the Treasury with the 
capability to manage its tax accounts utilizing new technology, 
applications, and databases. This system is designed to create 
applications for daily posting, settlement, maintenance, refund 
processing, and issue detection for taxpayer tax account and return 
data to improve customer service and compliance. 

Investment stage: Mixed life cycle: 

Business Reference Model category: Support Delivery of Services: 

Table 25: Financial Funding Data for CADE: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $100.6; 
Development: $100.6; 
Steady state: $0.0. 

Fiscal year: FY 05; 
Total: $109.9; 
Development: $109.9; 
Steady state: $0.0. 

Fiscal year: FY 06; 
Total: $109.9; 
Development: $109.9; 
Steady state: $0.0. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Debt Management Accounting System (DMAS): 

Brief description: This system is designed to be a financial accounting 
system for activities associated with Treasury's debt collection 
program to track funds recovered by the agency, post these funds to the 
proper account in an accurate and timely manner, and transfer moneys 
due to the appropriate government agencies. The system is also designed 
to record the general ledger activity and produce operational, 
management, and standard external reports. 

Investment stage: Mixed life cycle: 

Business Reference Model category: Support Delivery of Services: 

Table 26: Financial Funding Data for DMAS: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $4.4; 
Development: $2.3; 
Steady state: $2.1. 

Fiscal year: FY 05; 
Total: $4.1; 
Development: $1.8; 
Steady state: $2.3. 

Fiscal year: FY 06; 
Total: $4.2; 
Development: $1.9; 
Steady state: $2.4. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Electronic Management System (EMS): 

Brief description: This system is designed to be a front-end processing 
system that receives, validates, stores, forwards to mainframe 
electronic filing systems, and acknowledges electronic files containing 
tax documents. The system is intended to receive returns from third 
parties, acknowledge the receipt of information, format the information 
for mainframe processing, provide acknowledgements to the third 
parties, and send state return data to participating states. 

Investment stage: Steady state: 

Business Reference Model category: Management of Government Resources: 

Table 27: Financial Funding Data for EMS: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $11.8; 
Development: $3.1; 
Steady state: $8.8. 

Fiscal year: FY 05; 
Total: $9.1; 
Development: $2.0; 
Steady state: $7.1. 

Fiscal year: FY 06; 
Total: $10.3; 
Development: $2.0; 
Steady state: $8.2. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Governmentwide Accounting and Reporting Modernization (GWA): 

Brief description: This system is designed to produce accurate, 
accessible, and timely governmentwide financial information through the 
streamlining of reports and the reduction of the reconciliation burden 
on government agencies in order to minimize the amount of labor 
necessary to transfer financial information. 

Investment stage: Mixed life cycle: 

Business Reference Model category: Management of Government Resources: 

Table 28: Financial Funding Data for GWA: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $7.7; 
Development: $5.6; 
Steady state: $2.1. 

Fiscal year: FY 05; 
Total: $7.8; 
Development: $5.5; 
Steady state: $2.3. 

Fiscal year: FY 06; 
Total: $7.8; 
Development: $5.3; 
Steady state: $2.5. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Service Center Recognition/Images Processing System (SCRIPS): 

Brief description: This system is intended to be a data capture, 
management, and storage system used to process tax documents 
automatically in order to meet mandated timelines and processing 
requirements for various tax forms and the Federal Tax Deposits, which 
directly impacts revenue brought into the federal treasury. 

Investment stage: Steady state: 

Business Reference Model category: Support Delivery of Services: 

Table 29: Financial Funding Data for SCRIPS: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $13.0; 
Development: $0.0; 
Steady state: $13.0. 

Fiscal year: FY 05; 
Total: $13.7; 
Development: $0.0; 
Steady state: $13.7. 

Fiscal year: FY 06; 
Total: $15.0; 
Development: $0.0; 
Steady state: $15.0. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

System: Secure Payment System (SPS): 

Brief description: This system is designed to be a browser-based 
Internet version of the current Electronic Certification System, which 
will allow federal program agencies to submit certified requests for 
payment disbursement online. It is intended to provide a more secure 
payment process, increase the ability to protect sensitive financial 
and privacy data, and improve the financial performance of federal 
program agencies by providing program agencies a method of providing 
financial data to Treasury. 

Investment stage: Steady state: 

Business Reference Model category: Support Delivery of Services: 

Table 30: Financial Funding Data for SPS: 

Millions of dollars. 

Fiscal year: FY 04; 
Total: $4.3; 
Development: $0.0; 
Steady state: $4.3. 

Fiscal year: FY 05; 
Total: $3.1; 
Development: $0.0; 
Steady state: $3.1. 

Fiscal year: FY 06; 
Total: $3.1; 
Development: $0.0; 
Steady state: $3.1. 

Source: OMB FY2006 Exhibit 53. 

[End of table] 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

David A. Powner, (202) 512-9286, [Hyperlink, pownerd@gao.gov]. 

Acknowledgments: 

In addition to the contact named above, the following people made key 
contributions to this report: Carol Cha, Barbara Collier, Joseph Cruz, 
Lester Diamond, Valerie Hopkins, Sandra Kerr, Linda Lambert, Tammi 
Nguyen, Chris Owens, Mark Shaw, Kevin Walsh, and Martin Yeung. 

(310479): 

FOOTNOTES 

[1] OMB Circular No. A-11, Preparation, Submission, and Execution of 
the Budget, Part 7 (July 2004). 

[2] An analysis of alternatives compares viable alternative solutions 
and includes a general analysis of the benefits for each alternative 
presented. 

[3] The five departments were the Departments of Agriculture, Commerce, 
Energy, Transportation, and the Treasury. 

[4] EVM is a project management tool that integrates the investment 
scope of work with schedule and cost elements for investment planning 
and control. This method compares the value of work accomplished during 
a given period with that of the work expected in the period. 
Differences in expectations are measured in both cost and schedule 
variances. OMB requires agencies to use EVM as part of their 
performance-based management system for any investment under 
development or with system improvements under way. 

[5] 44 U.S.C. § 3504(a)(1)(B)(vi) (OMB); 44 U.S.C. § 3506(h)(5) 
(agencies). 

[6] 40 U.S.C. § 11312; 40 U.S.C. § 11313. 

[7] These requirements are specifically described in the Clinger-Cohen 
Act, 40 U.S.C. § 11302(c). 

[8] GAO, Information Technology: OMB Can Make More Effective Use of Its 
Investment Reviews, GAO-05-276 (Washington, D.C.: Apr. 15, 2005). 

[9] OMB Memorandum, M-05-23 (Aug. 4, 2005). 

[10] 41 U.S.C. § 263. 

[11] 5 U.S.C. § 306; 31 U.S.C. § 1115. 

[12] 44 U.S.C. § 3544 (a)(1)(C). 

[13] 44 U.S.C. § 3603. 

[14] Chief Information Officers Council, Smart Practices in Capital 
Planning (October 2000); A Summary of First Practices and Lessons 
Learned in Information Technology Portfolio Management (Washington, 
D.C.: March 2002); and Value Measuring Methodology (Washington, D.C.: 
October 2002). 

[15] GAO, Information Technology Investment Management: A Framework for 
Assessing and Improving Process Maturity, GAO-04-394G (Washington, 
D.C.: March 2004). 

[16] During the selection phase, the organization (1) identifies and 
analyzes each project's risks and returns before committing significant 
funds to any project and (2) selects those IT projects that will best 
support its mission needs. 

[17] During the control phase, the organization ensures that, as 
projects develop and investment expenditures continue, the project is 
continuing to meet mission needs at the expected levels of cost and 
risk. If the project is not meeting expectations or if problems have 
arisen, steps are quickly taken to address the deficiencies. 

[18] During the evaluation phase, actual versus expected results are 
compared once projects have been fully implemented. This is done to (1) 
assess the project's impact on mission performance, (2) identify any 
changes or modifications to the project that may be needed, and (3) 
revise the investment management process based on lessons learned. 

[19] These agencies include the Departments of Agriculture, Commerce, 
and the Interior. 

[20] For example, GAO, Information Technology: Centers for Medicare & 
Medicaid Services Needs to Establish Critical Investment Management 
Capabilities, GAO-06-12 (Washington, D.C.: Oct. 28, 2005); Information 
Technology Management: Governmentwide Strategic Planning, Performance 
Measurement, and Investment Management Can Be Further Improved, GAO-04- 
49 (Washington, D.C.: Jan. 12, 2004); Information Technology: 
Departmental Leadership Crucial to Success of Investment Reforms at 
Interior, GAO-03-1028 (Washington, D.C.: Sept. 12, 2003); and United 
States Postal Service: Opportunities to Strengthen IT Investment 
Management Capabilities, GAO-03-3 (Washington, D.C.: Oct. 15, 2002). 

[21] GAO, Information Technology: HHS Has Several Investment Management 
Capabilities in Place, but Needs to Address Key Weaknesses, GAO-06-11 
(Washington, D.C.: Oct. 28, 2005). 

[22] GAO, Department of Homeland Security: Formidable Information and 
Technology Management Challenge Requires Institutional Approach, GAO- 
04-702 (Washington, D.C.: Aug. 27, 2004). 

[23] Department of Defense Office of Inspector General, Information 
Technology Management: Reporting of Department of Defense Capital 
Investments for Information Technology in Support of the Fiscal Year 
2006 Budget Submission, D-2005-083 (Arlington, Va.: June 10, 2005). 

[24] OMB Circular A-11 defines a major IT investment as an investment 
that requires special management attention because of its importance to 
an agency's mission or because it is an integral part of the agency's 
enterprise architecture, has significant program or policy 
implications, has high executive visibility, or is defined as major by 
the agency's capital planning and investment control process. 

[25] The Federal Enterprise Architecture is a comprehensive business- 
driven blueprint of the entire federal government. It consists of a set 
of interrelated "reference models" designed to facilitate cross-agency 
analysis and the identification of duplicative investments, gaps, and 
opportunities for collaboration within and across agencies. The Federal 
Enterprise Architecture includes 39 lines of business that describe 
activities of the government, such as education, income security, and 
supply chain management. 

[26] Recent OMB guidance directed agencies to implement earned value 
management on major IT investments, in an effort to meet baseline cost, 
schedule, and performance goals. 

[27] GAO-04-49. 

[28] 44 U.S.C. § 3544 (6). 

[29] The ANSI/EIA-748-A standard is composed of 32 criteria that 
address five basic categories of project management practices: 
organization, planning and budgeting, accounting considerations, 
analysis and management reports, and revisions and data maintenance. 

[30] We reviewed the investments to determine whether the ANSI-required 
EVM processes were in place. We did not assess the quality of those 
processes. 

[31] OMB Memorandum, M-05-23 (Aug. 4, 2005). 

[32] Federal Register Vol. 70, No. 67 (Apr. 8, 2005). 

[33] GAO, Defense Acquisitions: Improved Management Practices Could 
Help Minimize Cost Growth in Navy Shipbuilding Programs, GAO-05-183 
(Washington, D.C.: Feb. 28, 2005); Polar-Orbiting Environmental 
Satellites: Information on Program Cost and Schedule Changes, GAO-04- 
1054 (Washington, D.C.: Sept. 30, 2004); and NASA: Lack of Disciplined 
Cost-Estimating Processes Hinders Effective Program Management, GAO- 04-
642 (Washington, D.C.: May 28, 2004). 

[34] 31 U.S.C. § 3512 note. 

[35] GAO, Financial Management: Achieving FFMIA Compliance Continues to 
Challenge Agencies, GAO-05-881 (Washington, D.C.: Sept. 20, 2005); 
Managerial Cost Accounting Practices: Leadership and Internal Controls 
Are Key to Successful Implementation, GAO-05-1013R (Washington, D.C.: 
Sept. 2, 2005); and Financial Management: Sustained Efforts Needed to 
Achieve FFMIA Accountability, GAO-03-1062 (Washington, D.C.: Sept. 30, 
2003). 

[36] GAO, Financial Management: FFMIA Implementation Critical for 
Federal Accountability, GAO-02-29 (Washington, D.C.: Oct. 1, 2001); 
Financial Management: FFMIA Implementation Necessary to Achieve 
Accountability, GAO-03-31 (Washington, D.C.: Oct. 1, 2002); Financial 
Management: Sustained Efforts Needed to Achieve FFMIA Accountability, 
GAO-03-1062 (Washington, D.C.: Sept. 30, 2003); and Financial 
Management: Improved Financial Systems Are Key to FFMIA Compliance, GAO-
05-20 (Washington, D.C.: Oct. 1, 2004). 

[37] Pub. L. 107-347, Title II, § (209)(b)(1)(B) (Dec. 17, 2002). 

[38] Results from nonprobability samples cannot be used to make 
inferences about a population because in a nonprobability sample, some 
elements of the population being studied have no chance or an unknown 
chance of being selected as part of the sample. 

[39] The Services for Citizens Business Area describes the mission and 
purpose of the U.S. government in terms of the services it provides 
both to and on behalf of the American citizen. It includes the delivery 
of citizen-focused, public, and collective goods and/or benefits as a 
service and/or obligation of the federal government to the benefit and 
protection of the nation's general population. 

[40] Support Delivery of Services provides the critical policy, 
programmatic, and managerial foundation to support federal government 
operations. 

[41] Management of Government Resources refers to the back office 
support activities that enable the government to operate effectively. 

[42] DOD OIG, Information Technology: Reporting of DoD Capital 
Investments for Information Technology, D-2004-081 (May 7, 2004). 

[43] These investments include the U.S. Visitor and Immigrant Status 
Indicator Technology (a program intended to strengthen management of 
the pre-entry, entry, status, and exit of foreign nationals who travel 
to the United States); the Automated Commercial Environment (a new 
trade processing system planned to support the movement of legitimate 
imports and exports and strengthen border security); Atlas (a program 
intended to modernize Immigration and Customs Enforcement's IT 
infrastructure); and Secure Flight (a new airline passenger screening 
system). 

[44] In addition to basic information about the investment, the exhibit 
300 has the following sections: a Summary of Spending table, 
Performance Measures and Goals, Analysis of Alternatives, Risk 
Inventory and Assessment, Acquisition Strategy, Project (Investment) 
and Funding Plan, Enterprise Architecture, and Security and Privacy. 

[45] The financial data on each investment was obtained from the FY2006 
Exhibit 53 which is available on the OMB Web site. System investment 
descriptions and stage information were gathered from the Exhibit 300s 
provided by the Office of the Chief Information Officer (CIO) at the 
respective agencies. 

[46] The Services for Citizens Business Area describes the mission and 
purpose of the U.S. government in terms of the services it provides 
both to and on behalf of the American citizen. It includes the delivery 
of citizen-focused, public, and collective goods and/or benefits as a 
service and/or obligation of the federal government to the benefit and 
protection of the nation's general population. 

[47] Support Delivery of Services provides the critical policy, 
programmatic, and managerial foundation to support federal government 
operations. 

[48] Management of Government Resources refers to the back office 
support activities that enable the government to operate effectively. 

[49] Recent OMB guidance directed agencies to implement EVM on major IT 
investments, in an effort to meet baseline cost, schedule, and 
performance goals. 

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