OMB Proposes Federal IT Procurement Makeover

The U.S. government has largely failed to achieve the same productivity gains that private sector firms have experienced from utilizing IT — despite spending US$600 billion on information technology over the last decade or so. As a result, the federal Office of Management and Budget has initiated a new program to improve the way federal agencies acquire and manage IT resources.

OMB rolled out the plan last week at a forum attended by government agency chief information officers and representatives from private sector IT firms. The plan is an outgrowth of an aggressive review of troubled federal IT projects launched by OMB in mid-2009, shortly after President Barack Obama appointed Vivek Kundra as the federal CIO at the White House in March 2009. Obama said he was directing Kundra “to ensure that we are using the spirit of American innovation and the power of technology to improve performance and lower the cost of government operations.”

Since June 2009, OMB has been conducting in-depth reviews of IT projects that were over budget, behind schedule, and underperforming — or all three. These reviews led to the conclusion that there were systemic problems in the federal management of IT that needed urgent attention. More than 50 troubled IT projects have been reviewed through OMB’s rigorous “TechStats” program, with the result that the government has saved more than $3 billion in life cycle costs.

“Think about some of the IT projects we’ve talked about with deliverables that are five or 10 years out — with nothing delivered,” Kundra said at the forum. “In a lot of cases, what we’ve seen is that seven years or so into the project, what the government got was nothing more than an architectural document.”

Over the next 18 months, various components of the federal acquisition apparatus — including Kundra’s office, which operates out of OMB; the Office of Federal Procurement Policy; and the General Services Administration — will be changing the landscape for IT procurement.

“We now know we can improve IT on a project-by-project basis,” Jeffrey Zients, deputy director for management at OMB, told attendees at the forum. “But just as importantly, we’re using these reviews to identify the structural changes required to drive sustainable improvements across all of government IT,” he said.

External and Internal Reforms

The OMB program consists of a mixed bag of reforms — some dealing with internal management improvements, and others that involve external issues related to IT procurement. While the program consists of a formidable array of 25 specific actions, both Kundra and Zients stressed several overall themes at the rollout forum:

A procurement bias to light technology and shared systems: IT systems with heavy front-end and fixed cost elements should be eliminated wherever possible, OMB stressed. Instead, agencies should take advantage of less costly off-site or shared-site capabilities, such as those offered by cloud computing.

“Too often, agencies build large stand-alone systems, segregated from other systems, which often duplicate capacity and waste taxpayer dollars,” Kundra observes in the OMB reform proposal.

“Cloud technologies and infrastructure as a service (IaaS) enable IT services to efficiently share demand across infrastructure assets,” he notes. “The massive scale of the federal government allows for great potential to leverage these efficiencies.”

In the future, OMB will require that agencies default to cloud-based solutions whenever a secure, reliable, cost-effective cloud option exists. Agencies will be required to present candidate projects for migrating some of their current IT systems to the cloud and to move at least three programs to a cloud-based platform within 18 months.

Closer cooperation between government and business: A major theme of the OMB initiative is to improve engagement between the government and the vendor community. OMB recognizes that many government managers are wary of getting too close to vendors, especially during the RFP contracting phase, in order to protect the integrity of the process. However, current regulations are flexible enough to allow for closer communication with the private sector, OMB says, especially for learning about the range of technology developments and options.

“The fact is that the statutory and regulatory framework for communication between industry and government allows for significantly greater engagement than current practices,” Kundra said. As part of the reform process, the OFPP will be developing a “myth busters” campaign to clarify ethical issues related to federal IT contracting for use by agencies. The government also will develop mechanisms for sharing best practices and solutions between agencies and the IT community on a regular basis.

Synchronizing budget cycles and technology innovation: Often, federal agencies formulate their budgets two or more years in advance, and agency managers base their IT acquisition decisions on currently available technologies. In addition, implementation can stretch out over more years. With the pace of technology changing quickly, the end result is that agencies often wind up with systems that are nearly obsolete when they are finally implemented. OMB wants to change all that, by utilizing more flexible budget and appropriation procedures. OMB aims to work with Congress to identify a dozen pilot projects for better synchronization of budgeting and technology development cycles.

Improvements in federal procurement practices: While OMB did not propose any specific changes in existing procurement regulations or procedures, it clearly favors a more nimble approach to procurement.

One idea is that simplified procurement leads naturally from simplified requirements. Instead of proposing massive and comprehensive IT projects, agencies should gear procurement to step-by-step “modular” installations. To encourage modular procurement, the OFPP will develop contracting “templates” designed to facilitate step-by-step projects. In addition, agencies will be encouraged to achieve implementation of project components on a faster time frame, by aiming for installation of the components every several months, rather than over several years.

Management and Accountability

Other parts of the program will have a less direct impact on IT procurement, but are still important to OMB.

One is program management. The government is underpowered in terms of employing enough truly professional IT managers. OMB plans to introduce measures to develop “career tracks” and better professional development resources for employees. As an incentive to federal agencies to improve their staffs, OMB will only approve IT projects that are managed with competent personnel that are “hardwired” into an agency’s organizational structure.

OMB also feels that current internal controls are deficient, and the government’s existing IT Investment Review Boards often provide only superficial attention to major investments. OMB essentially plans to trash the review boards and replace them with IT project reviews based on OMB’s own “TechStats” process that the agency used to “drill down” to examine the details of financing and the functional performance of the 50 troubled projects. Reviews will involve senior management to ensure accountability.

The vendor community was generally positive in assessing the OMB proposals.

“Given the fact that the U.S. government plans, acquires, implements and operates more IT than any other organization globally, but hasn’t yet fully realized the benefits of innovation through technology, a government-wide strategy of this nature is both prudent and timely,” Tim Young, senior manager at Deloitte Consulting, told the E-Commerce Times. Young formerly served as deputy OMB administrator for information technology and e-government.

The OMB proposals are similar to a set of recommendations issued by TechAmerica last July, just after OMB indicated that it was formulating an IT management program. TechAmerica, with 1,200 members, represents a broad spectrum of IT companies.

“We are very supportive of the OMB proposals, and they closely track our recommendations,” Trey Hodgkins, senior vice president at TechAmerica, told the E-Commerce Times. “There’s a very broad consensus among the private sector and the government that these issues need to be addressed.”