OMB throws down review power over federal IT

Agencies shouldn't initiate new development spending on federal financial management systems worth more than $20 million until the Office of Management and Budget has reviewed spending plans, states a June 28 White House memo (.pdf).

Financial management projects should take no longer than 18 to 24 months, including planning, with interim deliverables rolling out every 90 to 120 days during the build phase, the memo states.

Approximately 30 financial systems projects worth $20 billion over their lifetime are affected by spending freeze order, according to OMB Director Peter Orszag. Agencies have 60 days to prepare the plans and OMB has 60 days thereafter to review the plans, the memo states.

Beginning in fiscal 2011, which starts Oct. 1, OMB will use its power of apportionment--under which OMB can control the timing of when agencies gain access to appropriations dollars--to enforce new new financial system execution guidance, the memo states.

Although apportionment cannot legally be used to impound money that Congress has appropriated for agency use, agencies generally nonetheless follow OMB guidance, said a former federal official with knowledge of the budget process.

The memo faults financial system modernizations for having become too large and complex. "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 memo states.

The memo also puts a stop to a previous OMB policy that agencies should use shared services for financial management systems, an effort known as the Financial Management Line of Business. But OMB, the Treasury Department, and the Chief Financial Officers Council will emphasize development of automated solutions for common processes such as vendor invoicing and intergovernmental transactions, the memo states.

In a related White House memo (.pdf) signed by Orszag and White House Chief of Staff Rahm Emmanuel, OMB also announced it will develop recommendations within the next 120 days for improvements to federal information technology procurement and management practices.

That memo also states that Vivek Kundra, the federal chief information officer, will review high risk projects and that agencies "will be required to present improvement plans to the CIO."

The memo admonishes agencies that should Kundra's review sessions identify serious problems that are not corrected, "further actions should be taken, including potential adjustments to Fiscal Year 2012 agency budgets." Of the about $80 billion the government spends on information technology (not including intelligence community spending, nor including IT spending made as part of weapons system development), $27 billion is spent on IT projects that go overbudget or are behind schedule, Kundra said during a June 28 press call with reporters. 

Kundra initiated in January an improvement review process of agency IT programs called "TechStat." Some former federal officials say that agency willingness to attend such sessions has fallen over the past few months. One former agency chief information officer who supported President Obama during the 2008 campaign expressed frustration with Kundra, stating that he has yet to earn high regard from agency officials, adding that tension between Kundra and Chief Technology Officer Aneesh Chopra has also impeded OMB effectiveness. Other former federal officials have echoed the former CIO's statements in interviews that, unsurprisingly, had to be conducted under assurances of anonymity.

For more:
- read the memo on federal financial systems management, and the related memo on reforming federal IT management
- go to OMB Director's blog post on the memos
- listen to audio of a June 28 press briefing OMB officials gave on the memos

Related Articles:
OMB wants review power over CFO Act agency financial system modernizations
Orszag says IT can close public sector productivity gap
Forman and Steinhoff: Cloud computing shows the way