Homeland Security
OMB's Temporary Cessation of Information Technology Funding for New Investments Gao ID: GAO-03-186T October 1, 2002This testimony discusses the temporary cessation of funding for new information technology (IT) infrastructure and business system investments related to the proposed Department of Homeland Security. Integrating the diverse communication and information systems of the myriad of organizations that would be part of the proposed Department of Homeland Security would be an enormous undertaking. Among the near-term challenges that would have to be addressed to successfully tackle this task is developing an enterprise architecture. Managed properly, enterprise architectures can clarify and help optimize the interdependencies and interrelationships among related enterprise operations and the underlying IT infrastructure and applications that support them. Another long-term challenge is establishing and enforcing a disciplined IT investment management process. Well managed IT investments that are carefully selected and focused on meeting mission needs can propel an organization forward, dramatically improving performance while reducing costs. To help tackle these challenges, in July the Office of Management and Budget (OMB) issued two memoranda to selected agencies telling them to "cease temporarily" and report on new IT infrastructure an business systems investments above $500,000, which are to be reviewed by IT infrastructure and business system investments to OMB, which are currently being evaluated by OMB and the investment review groups. In addition, as of September 26, three agencies had submitted emergency requests for expedited review, which were subsequently approved. However, because the non-emergency agency submissions are still being evaluated, at this time it is too early to assess the effects of OMB's action.
GAO-03-186T, Homeland Security: OMB's Temporary Cessation of Information Technology Funding for New Investments
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Testimony:
Before the Subcommittee on Technology and Procurement Policy, Committee
on Government Reform, House of Representatives:
United States General Accounting Office:
GAO:
For Release on Delivery Expected at 10 a.m. EDT Tuesday
October 1, 2002:
Homeland Security:
OMB‘s Temporary Cessation of Information Technology Funding for New
Investments:
Statement of Joel C. Willemssen
Managing Director, Information Technology Issues:
GAO-03-186T:
Mr. Chairman and Members of the Subcommittee:
Thank you for inviting us to participate in today‘s hearing on the
temporary cessation of funding for new information technology (IT)
infrastructure and business system investments related to the proposed
Department of Homeland Security. This action was taken by the Office of
Management and Budget (OMB) in an attempt to identify redundant
investments or achieve more efficiencies in these investments by
organizations expected to be part of the proposed department.
Since the events of September 11, the President and the Congress have
responded with important actions to protect the nation--creating the
Office of Homeland Security, establishing a new agency to improve
transportation security, and working in collaboration with federal,
state, and local governments and private sector entities to prevent
future terrorist acts. In addition, as you know Mr. Chairman, on June
18, the President transmitted draft legislation to the Congress for the
creation of a new Department of Homeland Security whose mission would
be preventing terrorist attacks within the United States, reducing
America‘s vulnerability to terrorism, and minimizing the damage and
recovering from attacks that do occur.[Footnote 1]
After some brief background describing the Administration‘s Department
of Homeland Security proposal, I will discuss, at your request,
* information management and technology challenges facing the proposed
department and:
* OMB‘s policy that selected agencies temporarily cease funding of new
IT infrastructure and business system investments.
Results in Brief:
Integrating the diverse communication and information systems of the
myriad of organizations that would be part of the proposed Department
of Homeland Security would be an enormous undertaking. Among the near-
term challenges that would have to be addressed to successfully tackle
this task is developing an enterprise architecture. Managed properly,
enterprise architectures can clarify and help optimize the
interdependencies and interrelationships among related enterprise
operations and the underlying IT infrastructure and applications that
support them. Another near-term challenge is establishing and enforcing
a disciplined IT investment management process. Well managed IT
investments that are carefully selected and focused on meeting mission
needs can propel an organization forward, dramatically improving
performance while reducing costs.
To help tackle these challenges, in July OMB issued two memoranda to
selected agencies telling them to ’cease temporarily“ and report on new
IT infrastructure and business system investments above $500,000, which
are to be reviewed by IT investment review groups.[Footnote 2] Several
agencies reported new IT infrastructure and business system investments
to OMB, which are currently being evaluated by OMB and the investment
review groups. In addition, as of September 26, three agencies had
submitted emergency requests for expedited review, which were
subsequently approved. However, because the non-emergency agency
submissions are still being evaluated, at this time it is too early to
assess the effect of OMB‘s action.
Background:
Under the President‘s proposal,[Footnote 3] 22 existing major
components and about 170,000 people would be integrated into the new
department in order to strengthen the country‘s defenses against
terrorism. Table 1 lists the major components the Administration
proposes to move to the new department.
Table 1: Major Components the Administration Proposes to Move to the
Department of Homeland Security (by parent department/agency)A:
Parent department/agency: Department of Agriculture; Components(s)
proposed to be moved: Animal and Plant Health Inspection Service; Plum
Island Animal Disease Center.
Parent department/agency: Department of Commerce; Components(s)
proposed to be moved: Critical Infrastructure Assurance Office;
National Institute of Standards and Technology‘s; Computer Security
Division.
Parent department/agency: Department of Defense; Components(s)
proposed to be moved: National Communications System.
Parent department/agency: Department of Energy; Components(s) proposed
to be moved: Lawrence Livermore National Laboratory; National
Infrastructure Simulation and Analysis; Center; Nuclear Incident
Response.
Parent department/agency: Federal Emergency; Management Agency;
Components(s) proposed to be moved: All.
Parent department/agency: General Services Administration;
Components(s) proposed to be moved: Federal Computer Incident Response
Center; Federal Protective Service.
Parent department/agency: Department of Health and; Human Services;
Components(s) proposed to be moved: Civilian Biodefense Research
Program; Chemical, Biological, Radiological and Nuclear; Response
Assets.
Parent department/agency: Department of Justice; Components(s)
proposed to be moved: Immigration and Naturalization Service; National
Domestic Preparedness Office; National Infrastructure Protection
Center; Office of Domestic Preparedness.
Parent department/agency: Department of Transportation; Components(s)
proposed to be moved: Transportation Security Administration; Coast
Guard.
Parent department/agency: Department of Treasury; Components(s)
proposed to be moved: Secret Service; Customs Service.
[A] Other organizations also proposed to be part of a new Department of
Homeland Security are the Domestic Emergency Support Team, which is an
interagency group currently mobilized by the Attorney General in
response to major incidents, and a newly created National Bio-Weapons
Defense Analysis Center.
Source: The President‘s proposal entitled The Department of Homeland
Security, President George W. Bush, June 2002. The National Institute
of Standards and Technology‘s Computer Security Division was not
included in the President‘s original proposal but was incorporated in
the President‘s draft legislation to the Congress.
[End of table]
As we previously testified, the creation of the Department of Homeland
Security will be one of the largest reorganizations ever
undertaken.[Footnote 4] Performing a successful transition of this
scale will take considerable time and money and, as a result, thorough
planning will be critical to the successful creation of the proposed
department. We have previously recommended that careful attention to
fundamental public sector management practices and principles, such as
strong financial, technology, and human capital management, are
critical to the successful implementation of government
reorganizations. [Footnote 5]
Proposed Department Faces Significant
IT Management Challenges:
As we have previously testified,[Footnote 6] information management and
technology are among the critical success factors that the proposed new
department should emphasize in its initial implementation
phase.[Footnote 7] As all of the programs and agencies are brought
together in the proposed department, it will be an enormous undertaking
to integrate their diverse communication and information systems. Some
of the challenges that the proposed department will have to face and
overcome include:
* establishing an effective IT management organization,
* implementing appropriate security controls,
* instituting mature systems acquisition, development, and operational
practices,
* addressing human capital issues,
* constructing and enforcing an enterprise architecture, and:
* establishing and enforcing a disciplined IT investment management
process.
Let me now turn to the latter two challenges in more detail, given
their near-term importance and relationship to OMB‘s recent actions
regarding the proposed department.
Enterprise Architectures: A Hallmark of Successful Organizations:
Our experience with federal agencies has shown that attempts to
modernize IT environments without blueprints--models simplifying the
complexities of how agencies operate today, how they want to operate in
the future, and how they will get there--often result in unconstrained
investment and systems that are duplicative and ineffective.[Footnote
8] Enterprise architectures offer such blueprints. Managed properly,
architectures can clarify and help optimize the interdependencies and
interrelationships among related enterprise operations and the
underlying IT infrastructure and applications that support them. The
development, implementation, and maintenance of architectures are
recognized hallmarks of successful public and private organizations.
Further, OMB Circular A-130, which implements the Clinger-Cohen Act of
1996,[Footnote 9] requires executive branch agencies to use them.
In our February report on the use of enterprise architectures in the
federal government, we provided an initial version of an enterprise
architecture maturity framework to serve as a standard for measuring
the status and progress of agencies‘ architecture efforts.[Footnote 10]
Figure 1 provides a simplified depiction of this framework.
Figure 1: GAO‘s Five Stages of Enterprise Architecture Maturity
(version 1.0):
[See PDF for image]
Source: GAO.
[End of figure]
Our February report found that agencies‘ use of enterprise
architectures was a work in progress, with much to be accomplished.
This is demonstrated by table 2, which lists the maturity stage (1
representing the lowest maturity and 5 representing the highest) of the
parent organization and, if available, the entity within this
organization that is proposed to be moved to a new Department of
Homeland Security.
Table 2: Maturity Stage of Parent Organizations and, Where Available,
the Entity Proposed to be Moved to a New Department of Homeland
Security:
Department/agency: Department of Agriculture; * Animal and Plant Health
Inspection Service; Enterprise architecture maturity stage: 1; 1.
Department/agency: Department of Commerce; Enterprise architecture
maturity stage: 3.
Department/agency: Department of Defense; Enterprise architecture
maturity stage: 3.
Department/agency: Department of Energy; Enterprise architecture
maturity stage: 2.
Department/agency: Federal Emergency Management Agency; Enterprise
architecture maturity stage: 2.
Department/agency: General Services Administration; Enterprise
architecture maturity stage: 2.
Department/agency: Department of Health and Human Services; Enterprise
architecture maturity stage: 1.
Department/agency: Department of Justice; * Immigration and
Naturalization Service; Enterprise architecture maturity stage: 3; 1.
Department/agency: Department of Transportation; * Coast Guard;
Enterprise architecture maturity stage: 2; 2.
Department/agency: Department of the Treasury; * Secret Service; *
Customs Service; Enterprise architecture maturity stage: 1; 2; 5.
Note: Only those component entities for which we have enterprise
architecture data are listed.
Source: GAO.
[End of table]
To its credit, OMB recognizes the importance of an enterprise
architecture and has reported that it is in the process of defining a
framework for creating a national enterprise architecture for homeland
security.
IT Investment Management: A Process
to Improve Performance and Reduce Costs:
Investments in IT can have a dramatic impact on an organization‘s
performance. Well managed IT investments that are carefully selected
and focused on meeting mission needs can propel an organization
forward, dramatically improving performance while reducing costs.
Likewise, poor investments, those that are inadequately justified or
whose costs, risks, and benefits are poorly managed, can hinder and
even restrict an organization‘s performance. Recognizing this, in 1996
the Congress passed the Clinger-Cohen Act, which requires agencies to
implement IT investment and capital planning processes.
In support of the Clinger-Cohen Act, in May 2000, we issued the
Information Technology Investment Management (ITIM) maturity
framework,[Footnote 11] which identifies critical processes for
successful IT investment management and organizes these processes into
an assessment framework comprising five stages of maturity. Each stage
builds upon the lower stages and enhances the organization‘s ability to
manage its IT investments. Figure 2 shows the five ITIM stages and
provides a brief description of each stage.
Figure 2: The five stages of Maturity Within ITIM:
[See PDF for image]
Source: GAO.
[End of figure]
Using this model, our evaluations of selected agencies, including the
Coast Guard and the Immigration and Naturalization Service, found that
while some processes have been put in place to help them effectively
manage their planned and ongoing IT investments, more work
remains.[Footnote 12]
For the proposed new department, OMB has reported that it is defining a
framework for an IT capital planning process, which is an important
step in developing strong IT management at the outset. The ITIM
framework can provide a useful roadmap for new organizations--like the
proposed Department of Homeland Security--for implementing a
fundamentally sound IT capital planning and investment management
process, because it identifies the key practices for creating and
maintaining such a process.
Agencies Told to Temporarily Cease Funding for New IT Infrastructure
and Business System
Investments, but It Is Too Early to Assess Effect:
In July, OMB issued two memoranda[Footnote 13] to selected agencies
telling them to (1) cease temporarily new IT infrastructure and
business system (i.e., financial management, procurement, and human
resources systems) investments above $500,000 pending a review of the
investment plans of all proposed Department of Homeland Security
component agencies, (2) identify and submit to OMB information on any
current or planned spending on these types of initiatives, and (3)
participate in applicable IT investment review groups[Footnote 14] co-
chaired by OMB and the Office of Homeland Security. According to OMB,
its goal in issuing these memoranda is to seek opportunities for
improved effectiveness and economy (including millions in anticipated
savings). In addition, according to officials from OMB‘s Office of
Information and Regulatory Affairs, another purpose was to obtain an
inventory of current and planned IT infrastructure and business system
investments for organizations that would be moved to the proposed
Department of Homeland Security. This information is expected to help
in the Administration‘s transition planning for the proposed
department.
Table 3 summarizes the funding for new IT infrastructure and business
system investments for fiscal years 2002 and 2003 that the affected
agencies submitted to OMB in response to the July memoranda. Table 3
may not include all investments being reviewed by OMB and the
investment review groups. In particular, we did not include operations
and maintenance funding because OMB reported that its July memoranda
did not affect ’steady state“ spending needed to continue operations.
Table 3: Agencies‘ Reported Funding for New IT Infrastructure and
Business System Investments for fiscal years 2002 and 2003 (in
thousands)A:
Department/agency: Department of Agriculture; * Animal and Plant Health
Inspection Service; IT Infrastructure: Fiscal year 2002: 3,100; IT
Infrastructure: Fiscal year 2003: 3,200; Business Systems:
Fiscal year 2002: Not applicable[B]; Business Systems: Fiscal year
2003: Not applicable.
Department/agency: Department of Commerce; IT Infrastructure: Fiscal
year 2002: Not applicable; IT Infrastructure: Fiscal year 2003: Not
applicable; Business Systems: Fiscal year 2002: Not
applicable; Business Systems: Fiscal year 2003: Not applicable.
Department/agency: Department of Defense; IT Infrastructure: Fiscal
year 2002: Not applicable; IT Infrastructure: Fiscal year 2003: Not
applicable; Business Systems: Fiscal year 2002: No submission
requested by OMB[C]; Business Systems: Fiscal year 2003: No submission
requested by OMB.
Department/agency: Federal Emergency Management Agency; IT
Infrastructure: Fiscal year 2002: 7,500; IT Infrastructure: Fiscal year
2003: 4,000; Business Systems: Fiscal year 2002: 1,700;
Business Systems: Fiscal year 2003: 700.
Department/agency: Department of Justice; * Immigration and
Naturalization Service[D]; IT Infrastructure: Fiscal year 2002:
40,155; IT Infrastructure: Fiscal year 2003: 83,900;
Business Systems: Fiscal year 2002: 0; Business Systems: Fiscal year
2003: 0.
Department/agency: Department of Transportation; * Transportation
Security Administration; * Coast Guard; IT Infrastructure: Fiscal year
2002: 40,300; No written response submitted to OMB[E]; IT
Infrastructure: Fiscal year 2003: 0; No written response submitted
to OMB; Business Systems: Fiscal year 2002: Not applicable;
; No written response submitted to OMB; Business Systems: Fiscal year
2003: Not applicable; No written response submitted to OMB.
Department/agency: Department of the Treasury; * Secret Service[F]; *
Customs Service[G]; IT Infrastructure: Fiscal year 2002: 0; 200; IT
Infrastructure: Fiscal year 2003: 0; 4,000; Business
Systems: Fiscal year 2002: 0; 3,790; Business Systems: Fiscal year
2003: 0; 4,210.
[A] OMB sent the July memoranda to those agencies that had the larger
organizations that would be part of the proposed Department of Homeland
Security and did not send them to the Departments of Energy and Health
and Human Services and the General Services Administration, which also
have components that would be moved under to the proposed department.
[B] Not applicable means that the agency reported that it did not have
any system investments meeting OMB‘s criteria.
[C] OMB did not request that the Department of Defense provide
information on business system investments.
[D] The Immigration and Naturalization Service also reported an
additional $2.85 million and $3.05 million in fiscal years 2002 and
2003, respectively for internet and intranet projects, but did not
specify whether these funds were new funds or for operations and
maintenance.
[E] The Coast Guard stated that it did not provide OMB with a list of
system investments, noting that it addressed most of its investment
issues with the investment review groups.
[F] The Secret Service reported no new funding for current and planned
IT infrastructure and business system investments. However, its
submission indicated that it intended to conduct various planned
upgrades, such as an upgrade to its Enterprise Financial Management
System, and the implementation of a search engine using operations and
maintenance funding.
[G] In addition to the new funding for IT infrastructure and business
system investments included in the table, the Customs Service‘s
submission stated that it had ’planned upgrades for standard growth“
for several initiatives in which it planned to use operations and
maintenance funding.
Source: Applicable agencies. We did not validate this information. The
July memoranda also stated that, if an agency had a critical need or
emergency, it could submit information for an expedited review. As of
September 26, agencies had requested three emergency requests for
expedited review. Specifically, according to OMB, the following
emergency requests have been approved, (1) a Coast Guard request to
proceed with a licensing agreement with Microsoft, (2) a Transportation
Security Administration request to proceed with a task order for a
managed services contract, and (3) a Secret Service request to go
forward with a search engine that would conduct database searches
across the agency.
[End of table]
Mr. Chairman, you asked us to identify the process being used in
reviewing the projects submitted under OMB‘s memoranda, the criteria
being used in determining which projects would go forward, and the
length of time that the memoranda are expected to be in effect. First,
OMB has not yet finalized its process for reviewing the IT
infrastructure and business system investments reported by the
agencies. However, officials from OMB‘s Office of Information and
Regulatory Affairs told us that OMB expects to use the same basic
process that it used in addressing the emergency requests. Namely, (1)
agencies will submit information on their new IT infrastructure or
business system investments to OMB, (2) OMB and the applicable IT
investment review group will review the agency submission, and (3) the
applicable review group will make a recommendation. Once a
recommendation is made, according to these officials, the normal budget
execution process will be implemented, which may require additional
action by OMB or the applicable agency head.
Second, regarding the criteria for evaluating current and planned IT
investments of affected agencies, officials from OMB‘s Office of
Information and Regulatory Affairs stated that they will use the
principles contained in section 300 of OMB Circular A-11 and section
8(b) of OMB Circular A-130. These circulars instruct agencies to
develop, implement, and use capital programming processes that, for
example: (1) evaluate and select capital assets investments that will
support core mission functions and demonstrate projected returns on
investments that are clearly equal to or better than alternative uses
of public resources, (2) ensure that improvements to existing
information systems and planned information systems do not
unnecessarily duplicate IT capabilities within the same agency, and (3)
institute performance measures and management processes that monitor
and compare actual performance to planned results.
Finally, OMB Office of Information and Regulatory Affairs officials did
not know how long the memoranda would remain in effect, stating that
they will remain in effect until their goals are met. Specifically,
these officials stated that whether and how long the investment review
groups established by the memoranda continue to operate will in large
part depend on if or when legislation establishing the Department of
Homeland Security is enacted.
Impact of OMB‘s Action Too Early to Assess:
Mr. Chairman, you also asked us to address the impact of the OMB
memoranda on the affected agencies. Although OMB directed selected
agencies to temporarily cease these investments, it does not
necessarily mean that work is to be stopped on all IT infrastructure
and business system projects at the applicable agencies. First, the
memoranda only pertain to funding for new development efforts and not
to existing systems in a ’steady state“ using operations and
maintenance funding. Second, the cessation does not apply if funds
pertaining to a development or acquisition contract have already been
obligated. Third, as I previously noted, agencies can request an
expedited review to obtain the approval to proceed if they have an
emergency or critical need. The following are examples of how OMB‘s
direction to cease temporarily would apply in certain circumstances.
* If an agency had an existing procurement system in a ’steady state“
in which no major modifications or modernization efforts were planned,
there would be no effect on the funding of this system.
* If an agency had an ongoing contract with available obligations for
the development of a financial management system, there would be no
effect on this contract, but new obligations for development or
modernization efforts would be required to be approved by the Business
Systems IT Review Group.
* If an agency wanted to award a contract for a new or modernized IT
infrastructure item, such as a local-area-network, over $500,000, it
would be required to obtain approval from the Homeland Security IT
Investment Review Group before proceeding.
At this time it is not possible to assess the full effect of the July
memoranda on the selected agencies. Except for emergency requests,
according to officials from OMB‘s Office of Information and Regulatory
Affairs, the investment review groups have not taken any action on the
agencies‘ submissions in response to the July memoranda because neither
they nor OMB have completed their reviews of these documents. In
addition, OMB officials stated that OMB is not tracking whether, or to
what extent, agencies have halted spending or altered system plans as a
result of the July memoranda. Although it may be too early to evaluate
the results of the July memoranda at this time, OMB has stated that the
investment review groups would track any savings resulting from its
actions, which should provide some information to help assess the
outcome of the temporary cessation in the future.
At least one agency has put planned initiatives on hold pending the
establishment of the Department of Homeland Security. Specifically, in
its submission to OMB in response to the July memoranda, the Federal
Emergency Management Agency reported that it had put all initiatives
related to two projects, including its Personnel Resources Information
Systems Mart, on hold pending the creation of the Department of
Homeland Security.
Mr. Chairman, this concludes my statement. I would be pleased to answer
any questions that you or other members of the subcommittee may have at
this time.
Contact:
If you should have any questions about this testimony, please contact
me at (202) 512-6240 or via e-mail at willemssenj@gao.gov.
FOOTNOTES
[1] The House of Representatives has passed (H.R. 5005), and the Senate
is considering
(S. 2452) legislation to create a Department of Homeland Security.
Although the bills are different, they share the goal of establishing a
statutory Department of Homeland Security.
[2] Two review groups were established, the (1) Homeland Security IT
Investment Review Group, which is to review IT infrastructure
investments and (2) Business Systems IT Review Group, which is to
review business system investments.
[3] The President‘s proposal entitled The Department of Homeland
Security, President George W. Bush, June 2002.
[4] U.S. General Accounting Office, Homeland Security: Critical Design
and Implementation Issues, GAO-02-957T (Washington, D.C.: July 17,
2002).
[5] U.S. General Accounting Office, Government Reorganization: Issues
and Principles, GAO/T-GGD/AIMD-95-166 (Washington, D.C.: May 17, 1995).
[6] U.S. General Accounting Office, Proposal for Cabinet Agency Has
Merit, But Implementation Will be Pivotal to Success, GAO-02-886T
(Washington, D.C.: June 25, 2002).
[7] Other critical success factors include strategic planning,
organization alignment, communication, building partnerships,
performance management, human capital strategy, knowledge management,
financial management, acquisition management, and risk management.
[8] For example, U.S. General Accounting Office, Air Traffic Control:
Complete and Enforced Architecture Needed for FAA Systems
Modernization, GAO/AIMD-97-30 (Washington, D.C.: Feb. 3, 1997) and Tax
System Modernization: Blueprint Is a Good Start but Not Yet
Sufficiently Complete to Build or Acquire Systems, GAO/AIMD/GGD-98-54
(Washington, D.C.: Feb. 24, 1998).
[9] Clinger-Cohen Act of 1996, P.L. 104-106, section 5125, 110 Stat.
684 (1996).
[10] U.S. General Accounting Office, Information Technology: Enterprise
Architecture Use across the Federal Government Can Be Improved,
GAO-02-6 (Washington, D.C.: Feb. 19, 2002).
[11] U.S. General Accounting Office, Information Technology Investment
Management: A Framework for Assessing and Improving Process Maturity,
Exposure Draft, GAO/AIMD-10-1.23 (Washington, D.C.: May 2000).
[12] For example, see U.S. General Accounting Office, Information
Technology: INS Needs to Strengthen Its Investment Management
Capability, GAO-01-146, Dec. 29, 2000) and Information Technology
Management: Coast Guard Practices Can Be Improved, GAO-01-190
(Washington, D.C.: Dec. 12, 2000).
[13] Office of Management and Budget, Reducing Redundant IT
Infrastructure Related to Homeland Security, M-02-12 (July 19, 2002)
and Review and Consolidation of Business Management Systems for the
Proposed Department of Homeland Security, M-02-13 (July 30, 2002).
[14] Two review groups were established, the (1) Homeland Security IT
Investment Review Group, which is to review IT infrastructure
investments, such as local area networks and desktop services and (2)
Business Systems IT Review Group, which is to review business system
investments, including those related to financial management, human
resources, and procurement systems.
