Back-Office Blueprints

By Daniel Pulliam and David Perera

March 15, 2007

OMB's plan to consolidate IT infrastructure gets little fanfare in fiscal 2008 budget.

Conspicuously absent from President Bush's fiscal 2008 budget proposal is a new Office of Management and Budget-led initiative to consolidate agency information technology systems. For three years running, OMB had used the budget to target the IT systems underpinning government administrative functions, so-called lines of business, for potential consolidation.

In the first year, OMB selected five lines of business for consolidation, most notably financial management and human resources management IT systems. Those functions would be managed by a handful of federal or private service centers that, according to OMB's plan, would provide IT support at lower costs. One such service center is the Interior Department's National Business Center, and CGI Federal of Fairfax, Va., recently won a contract as the Environmental Protection Agency's financial management shared service provider.

Each year OMB added another few lines of business, ranging from cybersecurity to geospatial data and services. Agencies, "when relieved of the burden of managing these noncore functions, can concentrate more on mission priorities," according to OMB's Web site on the IT infrastructure line of business.

But no new line of business appeared this year. Agencies "took a big sigh of relief," Karen Evans, administrator of e-government and information technology at OMB, said at a Feb. 7 budget briefing in Washington. Though they are loath to admit it, agency officials generally like using their own systems.

Still, that's never stopped OMB in the past. But this year, OMB officials say they already have plenty of irons in the fire. "We got all the big hits," says a federal official, speaking on condition of anonymity. And there aren't many budgets left to go before President Bush ends his term of office. "This is the end. There is nothing more that is going to come out of the pot," says another federal official.

Also, congressional resistance likely has weakened what was supposed to be a giant wave of IT system consolidation to a trickle. House and Senate appropriations committees have criticized effort. "Consolidation, when taken too far as an objective, can become an excuse to usurp decision-making from agencies," said a report by the Senate Appropriations Committee, which approved a Commerce, Justice, Science and Related Agencies Subcommittee fiscal 2007 appropriations bill.

Backlash against lines of business initiatives comes after OMB launched only a year ago what appeared to be its most ambitious one yet. In the fiscal 2007 budget, OMB announced a consolidation effort centered on IT infrastructure, which consumes about a third of the federal IT budget.

As in other lines of business efforts, many expected IT infrastructure consolidation to begin with a task force that would recommend designating a handful of agencies as providers of varying degrees of back-office support (ranging from simple remote hosting to management assistance). Then other agencies would compare costs and consider using these service centers and shutting down their internal systems. And the private sector could compete against service centers for agency work.

But rather than focusing on service centers, OMB ended up endorsing a different approach in the fiscal 2008 budget. It will create governmentwide price and performance measures-centered specifically on desktop management and support, data centers and telecommunication networks. OMB says these standards will allow agencies to collectively force down the cost of infrastructure. Without common measurements, agencies cannot know when or if they're getting a good price on commodity infrastructure items and services, officials say.

OMB is letting agencies write their own implementation plans this time, says a federal official. Such an approach doesn't rule out service centers down the road, it just doesn't require them from the start, the official emphasizes. In fact, the official says, service centers likely will emerge as some agencies perform the work more efficiently than others.

A standards-based approach is definitely a less ambitious solution than governmentwide service centers, but it is not a bad idea, some government and private sector observers say. It's just not groundbreaking in the way that other lines of business have been, or likely to reap any savings in the short term and maybe not much in the long term, they say.

If history is anything to go by, agencies might not leap at the opportunity to standardize technology. Even within a single organization, knocking heads over basic IT can be painful. Bureaus, divisions and branches, much less Cabinet-level departments, are quick to spot their differences and slow to focus on their similarities. Federal officials often repeat that when common needs are stripped away, unique agency needs account for only 10 percent of existing requirements. In most cases, standardization can reach as far as the agency level but not beyond, say some procurement experts.

IT infrastructure consolidation could be complicated by yet another factor. The General Services Administration is OMB's designated agency leader on the initiative. Beset by controversy about its administrator, Lurita Alexis Doan, GSA is not seen as the best home for large IT projects right now. "Lurita Doan and the state of GSA do not speak to the viability of the project," says a federal IT contractor. But it's hard to discern when the right time for IT infrastructure consolidation under the Bush administration might be.


By Daniel Pulliam and David Perera

March 15, 2007

http://www.govexec.com/magazine/magazine-news-and-analysis/2007/03/back-office-blueprints/23954/