IT Contracts Worth Billions Lack Proper Oversight, GAO Reports

This month a Government Accountability Office (GAO) report revealed that federal agencies are not properly overseeing billions of dollars’ worth of information technology (IT) investments.

This is particularly concerning considering the problematic trend of federal agency IT projects notoriously exceeding cost expectations and failing to meet productivity goals. For example, in 2010 after 16 years of development and a cost of $5 billion the White House stopped a tri-agency environmental satellite system project because of ineffective management, cost hikes, and scheduling delays. In FY 2017 alone the IT budget for federal agencies was $89 billion; such large-scale spending means that mismanagement of this spending will have serious repercussions for taxpayers.

The Federal Information Technology Acquisition Reform Act (FITARA), passed by Congress in 2014, was meant to remedy this large-scale waste. The law requires the federal agencies identified in the Chief Financial Officers (CFO) Act of 1990 to properly classify IT contracts and to have qualifying contracts reviewed and approved of by the agency’s Chief Information Officer (CIO). Additionally, IT developments now have to happen in an incremental way instead of over long time frames and with broad scopes. These measures ensure someone is accountable for these IT contracts and increase the likelihood that potential problems will not go unnoticed or unaddressed.

For its report, GAO evaluated CIO involvement in IT acquisitions at 22 of the 24 CFO Act agencies, excluding the Department of Defense (DoD) because it is exempt from the relevant provision and the Department of Homeland Security (DHS) because GAO had just recently reviewed it.

The 22 agencies being evaluated were asked to identify all of their IT contracts while GAO created an independent list of the agencies’ IT contracts. The agency-provided total was 76,599 contracts worth $14 billion for FY 2016, while GAO found 108,092 worth $18.5 billion. That means 31,493 IT contracts worth $4.5 billion were not being flagged for the FITARA oversight process.

Eight of the reviewed agencies—the Departments of Health and Human Services (HHS), the Interior, Transportation, and the Treasury, as well as the National Science Foundation (NSF), the U.S. Agency for International Development (USAID), the General Services Administration (GSA), and the Office of Personnel Management (OPM)—were the worst offenders, failing to identify over 40 percent of their IT contracts.

Part of this discrepancy can be explained by disagreements over what contracts qualified as IT and what was required to be reported. For example, GSA did not think that products and services coded as maintenance-related and rebuilding-related should be categorized as IT. Additional discrepancies came from disparities in which types of contracts had to be identified. For example NSF, which was in compliance with OMB guidelines and CIO certification requirements, did not identify IT contracts worth less than $150,000, and at OPM a spokesperson explained “OPM only submitted information related to new IT contract and not contract modifications,” adding, “OPM overall percentage of identified contract obligations will be greater with the inclusion of information related to contract modifications." It is not clear, however, what other factors contributed the high number of unreported IT contracts. Four of the agencies—the Departments of the Interior, Transportation, and the Treasury, and USAID—did not respond to the Project On Government Oversight’s request for comment.

GAO also reviewed 96 randomly selected IT contracts, checking for CIO review and approval. The contracts came from the ten agencies that obligated the most funding to IT in FY 2016: the Departments of Agriculture, Commerce, HHS, Justice, State, Transportation, the Treasury, and Veterans Affairs, as well as the National Aeronautics and Space Administration and the Social Security Administration. Of the 96 contracts, only 11 had been CIO-reviewed and approved; the remaining 85 un-reviewed contracts were worth an estimated $23.8 billion in the long run.

The Office of Management and Budget (OMB) has issued guidelines that agencies should follow to properly comply with FITARA, including a requirement that agencies develop their own guidelines for assisting officials in identifying IT investments that require CIO review. According to the GAO report, however, 7 agencies have not established any guidelines and 14 haven’t established guidelines that fully satisfy OMB requirements. If there is no established methodology in place, the likelihood is high that the oversight of IT contracts will keep falling through the cracks.

FITARA was passed to codify better oversight and prevent massive government waste on expensive IT projects. A CIO is accountable for agency IT investments and is responsible for tracking IT performance, but how can a CIO oversee an IT investment without knowing it exists? Compliance with OMB guidelines could help remedy this break in communication and ensure better use of taxpayer dollars.