OMB puts brakes on financial systems modernization

Effort is intended to increase success

The Obama administration announced today that it will overhaul the federal financial management system and prohibit agencies from placing task orders or contracts for modernization efforts.

“Financial system modernizations projects in the federal government have become too large and complex,” Office of Management and Budget Director Peter Orszag blogged this morning. “By setting the scope of projects too broadly rather than focusing on essential business needs, federal agencies are incurring substantial cost overruns and lengthy delays in planned deployments."

The federal government has roughly 30 financial systems projects that will be affected by this policy, according to Orszag. The total cost expended on these projects is anticipated to be $20 billion over the life of the projects, with an addition $3 billion spent annually to maintain them. Jeffrey Zients, deputy director for management and federal chief performance officer, said these changes—which may include ending some projects—will decrease that annual spending.

The underlying issue is getting the government to spend its money wisely. Zients said the overall effort should set the course for higher returns for the roughly $80 billion the government spends on information technology.


Related stories

Orszag: Closing IT gap leads to responsible government

Transcript of OMB director's remarks to the Center for American Progress

Senate aims to tighten reins on government IT spending


“This effort is about dramatically increasing our success rate and achieving a much higher return on our taxpayer dollars,” Orszag said. Overall, the administration wants to reduce costs, especially regarding over-spending the planned budget, while getting more from each dollar spent, he added.

Financial systems that are not undergoing modernization won’t be affected by the new directive; OMB instead wants to review any modernization projects to financial systems. As a result, officials decided to halt any projects pending OMB’s approval. Those projects are an area of persistent problems for the government, according to a memo Orszag issued today.

Along with the financial management systems reviews, Vivek Kundra, federal chief information officer, will review high-risk IT projects throughout the agencies. Officials will have to develop plans for improving the projects or risk potential changes to the fiscal 2012 budget proposal, according to a memo Orszag issued today. Kundra will issue guidance on the review process in late July.

Administration officials will attempt to root out the core problems plaguing IT projects. Kundra said the administration will strengthen existing policies and get rid of outdated or cumbersome rules. Officials also want to apply best practices to IT projects and consider other options for improving them. For instance, officials will raise the bar for project managers and employees, as well as institute additional ways to hold managers accountable for results with more rigorous reviews of their projects, according to officials and to Orszag’s memo.

One of the main issues facing government IT is the productivity gap between the private sector and the government, according to Zients, who came to the administration from the private sector. The private sector has improved its productivity by applying new technologies to their operations, but the government hasn’t gotten those gains.

“A root-cause reason for that is IT,” he said. IT has been at the center of those productivity gains but too often the government doesn’t get high enough returns on its IT investments, he said.

“There are too many situations where our IT budgets run over-budget, behind schedule, and, oftentimes, fail to deliver their promised results,” Zients said.

 

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Featured

  • Cybersecurity

    DHS floats 'collective defense' model for cybersecurity

    Homeland Security Secretary Kirstjen Nielsen wants her department to have a more direct role in defending the private sector and critical infrastructure entities from cyberthreats.

  • Defense
    Defense Secretary James Mattis testifies at an April 12 hearing of the House Armed Services Committee.

    Mattis: Cloud deal not tailored for Amazon

    On Capitol Hill, Defense Secretary Jim Mattis sought to quell "rumors" that the Pentagon's planned single-award cloud acquisition was designed with Amazon Web Services in mind.

  • Census
    shutterstock image

    2020 Census to include citizenship question

    The Department of Commerce is breaking with recent practice and restoring a question about respondent citizenship last used in 1950, despite being urged not to by former Census directors and outside experts.

Stay Connected

FCW Update

Sign up for our newsletter.

I agree to this site's Privacy Policy.