Lawmaker suggests cutting losses on mismanaged IT projects

Number of projects on OMB management watch list has decreased, but watchdog agency says figures may be understated.

Some poorly performing and overly expensive technology projects should be scrapped, even if that means the government incurs a major financial loss, the chairman of a Senate panel investigating the cost of federal IT systems said Thursday.

Every year, the federal government spends more than $60 billion on new and continuing information systems, but billions have been wasted due to poor planning and mismanagement, said Sen. Thomas Carper, D-Del.

At a hearing of the Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security, Carper laid down the gauntlet for chief information officers throughout government, including the five testifying before the panel.

"Some of these projects can be extremely difficult to manage, and mistakes may be made along the way," Carper said. "But there are times when maybe we should accept our losses and end a failing project before we waste even more hard-earned taxpayer dollars."

The Office and Management and Budget tracks IT investment business plans that suffer from major planning weaknesses on its Management Watch List. That list currently includes 136 projects, representing about $8.6 billion in projected IT investments for fiscal 2008. The figure is down from February's total of 346 projects worth about $9.7 billion.

A congressional watchdog, however, said the figures may be understated, noting that agency documents are often not supported and contain unreliable cost estimates.

The Government Accountability Office found 227 IT projects, totaling an estimated $10.4 billion in fiscal 2008 expenditures, to be poorly planned, inadequately performing or both. The dominant reasons for the performance shortfalls were cost overruns and major scheduling delays, said David Powner, GAO's director of information technology issues.

Among the projects cited as inadequately planned or performed were the Treasury Department's Electronic Fraud Detection System and the Social Security Administration's Disability Service Improvement Project.

Carper and others reserved their most stinging criticism for 33 projects that fell into both categories, including the Secure Border Initiative Network (SBInet), the Homeland Security Department's much touted anti-immigration vehicle.

"Until OMB makes further improvements in the identification and oversight of poorly planned and poorly performing IT projects, potentially billions in taxpayer dollars are at risk of being wasted," Powner said.

DHS has 20 projects on OMB's Management Watch List. Only the Veterans Affairs Department, with 37, and NASA, with 24, have more on the list. Scott Charbo, DHS' chief information officer, testified that the agency is seeing rapid improvement, noting that 67 projects were removed from the list in just the first six months of the year.

"We are managing or remediating issues from these 20, including a range of issues relating from cost/schedule, privacy statements to IT security," Charbo said.

A second OMB list, tracking expensive IT projects that require special attention from top management due to their complexity or potential risk, has gone in the opposite direction. The High Risk List has 553 projects, up from the 477 projects in February.

Those figures can be misleading because not all projects on the High Risk List are technically "at risk," said Karen Evans, OMB's administrator for electronic government and information technology.

"A successfully performing project may still be classified as high-risk due to exceptionally high costs and or complexity," Evans said. "For example, all e-government initiatives have been determined to be 'high risk' and therefore are reported on agency quarterly reports."

Carper acknowledged that OMB's increased management oversight is likely responsible for the uptick of projects on the High Risk List.

The agency has also made strides in transparency. Following a similar subcommittee hearing last September, OMB publicly released an aggregate version of its Management Watch List and required agencies to post relevant documents on their Web sites. OMB updates its list quarterly.

Powner argued that OMB can do more to better identify and track the causes for performance failure. He recommended the agency publish the specific reasons why a project landed on either list, so that GAO and Congress can spot trends, track progress and recommend corrective action.

Evans seemed receptive to the idea, agreeing that when OMB releases its final budget early next year, she will consider releasing added information about why specific projects are on the lists.

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