Closing the loop(holes)

Poorly conceived investments have fewer places to hide. This is the message transmitted by three recent Office of Management and Budget actions.

Both President Bush and Mitchell Daniels Jr., director of OMB, are giving management improvement serious and sustained attention. The President's Management Agenda reflects an understanding of the time scales and the complexity of changing government. So, too, do OMB's actions, which set in place long-term processes.

The first OMB action is an "at-risk list" of information technology investments that are only provisionally approved by OMB in the 2003 budget. Amounting to $11 billion of the $52 billion IT request, these projects have not yet made a satisfactory business case. Those that fail to make the case by Oct. 1 will be subject to strict spending controls in 2003.

The second action also includes a hit list, this time public and specific. OMB Memorandum 02-08 (www.whitehouse.gov/omb/memoranda/m02-08.pdf) is the first view of a multipronged attack on agency stovepipes under the e-government initiative.

The memorandum names agency systems that are subject to "consolidation." OMB officials and government chief information officers explored this strategy at a recent CIO Council off-site meeting, and OMB program examiners are questioning their agency budget counterparts about systems relevant to the other 23 e-government programs. This action will be followed by a requirement that agencies submit "joint" business cases where systems should be working together.

Third, OMB officials have eliminated a budgeting technicality that has limited the agency's effectiveness in the past. No longer is it asking only about investment dollars that come directly from congressional appropriations, so-called budget authority. Instead, the scope of examination for capital projects now reaches to all budgetary resources, including working capital funds, user fees, revolving funds, etc. This closes a longtime gap.

Agency officials have mixed feelings. The framework is sound, but the instability in reporting requirements, the shortage of resources to respond and the perceived presumption that all duplication is redundant are bothersome. Over time, however, as the reporting systems become systematized and accepted, they will help managers at all levels ask the right questions about how taxpayer dollars are being spent to improve mission performance.

Smart program managers will sharpen their pencils and make a business case tied to mission performance to create long-term support. They will also look across agencies to see who is performing a similar function and reach out in partnership to those officials. Industry players can help their government colleagues understand and quantify the returns on investment. They can also proactively create integrated offerings that lead the market.

McConnell, former chief of information policy and technology at the Office of Management and Budget, is president of McConnell International LLC (www.mcconnellinternational.com).

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