Congress wants to see the savings on e-gov

OMB memo on cost-savings

The Bush administration needs to show Congress that its e-government and lines-of-business initiatives are saving money, but agencies may be hard-pressed to make that case.

Although the initiatives are creating greater efficiency and improving services to citizens, cost savings are not as easy to show.

“I’d be surprised if we are saving money,” said Darrell West, a professor of political science at Brown University and author of “Digital Government: Technology and Public Sector Performance.”

E-government is another means for citizens and government to interact, beyond face-to-face meetings, mail exchanges and phone conversations, West said. Congress is unlikely to cut funding for those more traditional methods to make room for e-government.

Indeed, Congress has repeatedly funded e-government projects at much lower levels than the administration has requested.

An Aug. 8 memo from the Office of Management and Budget asks agencies to help the administration make its case for expanding e-government and adding new line-of-business initiatives.

“This is part of a much deeper way of thinking of how organizations work,” said Jane Fountain, a professor of political science and public policy at the University of Massachusetts at Amherst and director of the school’s National Center for Digital Government.

That new thinking transcends the Bush administration, said Fountain, who has tracked such changes since the 1980s. Similar trends are happening in large corporations and organizations worldwide, she added.

Karen Evans, OMB’s administrator for e-government and information technology, wrote in the recent memo that improving efficiency and saving money are two important goals of the initiatives.

“We are currently realizing the goals of improved citizen services and increased efficiency and effectiveness,” Evans wrote. “We must now concentrate on identifying and realizing the cost savings these initiatives are providing on a governmentwide basis.”

In the memo, Evans asked agencies to measure savings generated by retiring stand-alone systems after migrating to shared systems. OMB officials are interested in how such migrations will affect IT spending. By Sept. 30, OMB wants agencies to make baseline cost estimates of their spending on IT systems affected by e-government and lines-of-business initiatives.

Such cost tracking is good project management and is politically necessary, Fountain said. Measurements allow the government to show small wins in a lengthy project, she added. But taxpayer savings are usually the last benefit of e-government, according to recent digital government studies.

“If you measure in the early stages as agencies are climbing a learning curve…you might actually capture inefficiencies that are part of the implementation process,” Fountain said.

Nevertheless, the administration needs to make a return-on-investment argument to Congress, West said. It needs to tell appropriators that the savings will increase as use rises, he added.

Congress remains skeptical of the promised savings from OMB’s initiatives. The Senate Appropriations Committee’s report on the fiscal 2007 Science, State, Justice, Commerce and Related Agencies Appropriations Act states that the administration cannot quantify the benefits of cross-agency initiatives or show specific savings to a particular agency.

“Therefore, the committee has no confidence that the amounts being assessed have any relationship to the benefits anticipated to be returned,” committee members wrote in that report.

The report describes the benefits of the administration’s e-government initiatives as vague and any savings as uncertain. For future funding requests related to e-government initiatives, Senate appropriators may ask each agency to show the committee a cost/benefit analysis, the business metrics the agency uses to measure e-government success and a projection of all savings the agency achieves through its contributions to those initiatives. Finally, the agency’s inspector general must validate the analyses.

“Many observers have criticized OMB in the past saying there’s a lot of ‘B’ — emphasis on the budget — and not so much on ‘M’ — emphasis on management,” Fountain said. However, during the last decade, OMB has played a central role in evaluating how agencies must modernize to do their work, she said.

OMB asks agencies to measure e-gov savings

The Office of Management and Budget sent a memo Aug. 8 that set deadlines for agencies to develop baseline estimates of their information technology spending related to OMB’s e-government and lines-of-business initiatives. OMB also asked agencies to begin tracking savings from those efforts by Sept. 30.

The memo instructed agencies to take the following steps:

Identify affected systems.

Identify IT systems that must be modified, retired or replaced as part of an e-government or line-of-business initiative. For example, the e-Payroll and e-Travel initiatives would enable agencies to retire their own payroll and travel systems.

Develop baseline cost estimates.

Develop a comprehensive baseline cost estimate for each affected system using OMB’s IT Investment Cost Measurement Framework as a guideline. By Sept. 30, submit the cost estimates to OMB using OMB’s Baseline Cost Reporting template.

Measure actual costs.

Measure the actual costs of those systems on an ongoing basis beginning Sept. 30. Measure new projects using an earned value management system compliant with ANSI/EIA STD-748 and measure completed systems using operational analyses. In November, OMB will ask agencies for information on actual savings and cost avoidance to include in its “Report to Congress on the Benefits of the President’s E-Government Initiatives.”

Source: Office of Management and Budget

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