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POGO Provides Statement for House Hearing on IT Acquisition Reform

Statement for the Record

by the Project On Government Oversight, June 16, 2015,

for the House Committee on Oversight and Government Reform

Subcommittee on Information Technology and

Subcommittee on Government Operations Hearing on

“The Federal Information Technology Reform Act’s Role in Reducing IT Acquisition Risk”

The federal government spends $80 billion on information technology investments and products every year.[1] Congress recently passed the bipartisan Federal Information Technology Acquisition Reform Act (FITARA) as part of the FY 2015 National Defense Authorization Act to comprehensively reform and improve federal IT spending. The Act is meant to strengthen the role of each agency’s Chief Information Officer (CIO), an executive responsible for all IT systems in the agency, as well as to increase transparency on how IT funds are spent. FITARA was designed to apply to all agencies, yet the Energy Department’s National Laboratories are seeking an official exemption from the requirements.[2] POGO supports the goals of FITARA and opposes exempting the Department of Energy’s National Laboratories.

Industry experts estimate that 25 percent, or $20 billion, of the $80 billion spent on IT annually is misused or wasted on duplicative projects and could be eliminated by “reducing IT overhead, consolidating data centers, eliminating redundant networks, and standardizing applications.”[3] For example, agency managers have estimated that approximately 47 percent of IT budgets are used to maintain archaic platforms.[4]

The FY 2016 Senate Energy and Water Development Appropriations Bill includes a provision that would exempt the Energy Department’s 17 national laboratories from key requirements of FITARA and that bill’s predecessor, the Clinger Cohen Act of 1996.[5] We believe that the national laboratories and the super-computing industry have lobbied for this provision to try to circumvent key oversight reforms at the expense of taxpayers.

The Energy Department initially fought for a blanket exemption from FITARA requirements, and an amendment to that effect was added to the FY 2016 Energy and Water Development Appropriations Bill by Senator Lamar Alexander (R-TN). Oak Ridge National Laboratory is located in Senator Alexander’s home state of Tennessee. It was Senator Tom Udall (D-NM) who requested the language be changed in committee to exempt only the national labs. Senator Udall’s home state of New Mexico is also the home of two of the biggest national labs: Los Alamos National Laboratory and Sandia National Laboratory. Federal Computer Week recently reported that “the hope in Udall's office is that something will be worked out administratively that is satisfactory to OMB, congressional backers of FITARA and the labs, without the need for legislation.”

For over a decade POGO has worked on investigating waste, fraud, and abuse at the Department of Energy’s national labs, highlighting how the Department’s weak contractor oversight has led to hundreds of thousands of wasted taxpayer dollars, as well as dangerous security vulnerabilities.[6] POGO believes that the exemption to completely exclude these labs from FITARA is unnecessary, particularly given exemptions already available to national security programs. The Energy Department’s labs claim that their work on many national security missions, such as maintaining the nuclear deterrent and developing models to simulate nuclear reactor cores, is beyond the scope of the CIO’s expertise. It is worth noting that the Department’s programs that are classified as national security systems are already exempted from FITARA, making the claim meaningless. The Office of Management and Budget’s guidelines for the law’s implementation further clarify that direct involvement by the CIO is not necessarily required and that “each agency should establish appropriate processes that work in its environment.”[7]

One of the main intents of FITARA is to ensure that the agency CIO position has the authority and prestige to attract applicants with the required subject-matter expertise. In this case, the Department’s current CIO, Michael Johnson, has over 25 years of management experience, including working on national security systems as a senior scientist at Sandia National Laboratory.[8] Exempting the national labs from the law would only serve to make the Energy Department’s CIO position unattractive to talented individuals—the exact opposite of one of the intended goals of the law.

But the CIO’s increased involvement is not the Energy Department’s only concern. The Department’s labs widely distributed talking points pushing for the exemption, stating that “there is already an extensive review and approval process” for purchasing IT systems. This statement is almost laughable considering the Department’s long and well-documented history of over-paying for IT systems.

The Energy Department’s Inspector General (IG) has been concerned about the agency’s IT acquisition since 2006: an audit in that year found that the Department unnecessarily spent over $4 million “by underutilizing existing software agreements or purchasing software at higher prices, and acquiring unneeded licenses.”[9] In 2007, the IG found additional overspending on IT and recommended a Department-wide approach to IT hardware acquisition and management.[10] Seven years later, the Department was still wasting millions of dollars on unnecessary IT equipment; a series of Energy Department Inspector General reports from 2014 found even more examples of waste and mismanagement:

  • The Department was failing to follow guidelines established by the Office of Management and Budget for major IT investments.[11]
  • A review of ten Energy Department locations found that the Department “spent over $325,000 to support mobile devices that were not used the entire time they were activated in FY 2012.”[12]
  • Another report found that the Department paid widely different prices for software licenses, in several instances hundreds of dollars more than established government-wide acquisition prices.[13]

At the end of 2014 the IG released a report detailing the findings of a review of the IT spending at eight Energy Department sites, several of them national laboratories. The IG determined that the Department spent almost $2 million more than necessary in FY 2012 at those eight sites alone. Several of the laboratories were responsible for this overspending:

  • Lawrence Berkley National Laboratory unnecessarily paid over $261,000 for nonstandard desktops and laptops in 2012.
  • Lawrence Livermore National Laboratory spent nearly $1.3 million on non-standard purchases in 2012.
  • Oak Ridge National Laboratory deviated from standard IT prices 80 percent of the time.
  • In addition to varying prices between different Energy Department sites, the IG found that Lawrence Livermore National Laboratory paid three different prices for the same desktop throughout 2012 and could have saved over $26,000 with proper management.[14]

The Government Accountability Office (GAO) has also raised concerns about the Energy Department’s IT acquisition process. In 2012, the GAO found six potentially duplicative IT systems at the Department, totaling $8 million, as well as four miscategorized IT investments, three of which were at national laboratories. According to the report, the Energy Department acknowledged that one of the reasons for duplicative IT purchases was “a lack of control over contractor facilities.”[15]

A year later the GAO released another report on federal IT spending, this time criticizing several agencies, including the Energy Department, for their lack of transparency. Specifically, the Department chose to reclassify investments in supercomputers as non-IT spending, despite the fact that supercomputers indisputably fall into the definition of IT established by the Clinger Cohen Act of 1996. These investments, many of them at the Department’s national laboratories, were then removed from the IT Dashboard, a website maintained by the Office of Management and Budget to increase transparency and public oversight of major federal IT spending. The Energy Department’s spending on supercomputers accounts for almost 25 percent, or $368 million, of the Department’s total 2012 IT spending.[16]

With such a long history of rampant waste in the Energy Department’s IT acquisition process the very last thing the labs should receive is a premature exemption from additional oversight of this process. Such an exemption would be particularly troubling because the Energy Department is already failing to follow guidelines established by the Office of Management and Budget.

POGO believes that granting the national labs an exemption from this law would institutionalize Energy Department noncompliance with Clinger Cohen and FITARA, while setting a dangerous precedent for other agencies. The Office of Management and Budget has stated that to carve out the Energy Department’s national labs from the requirements of FITARA would be “highly problematic.”[17] Furthermore, the Government Accountability Office, which has long been concerned with Department of Energy contract management and the agency's lack of compliance with the Clinger Cohen Act, also strongly opposes the broad carve-out sought by the national labs and super-computing industry.[18] Granting the labs an exemption from FITARA completely undermines the intent of the law—government-wide IT acquisition reform that strengthens management, oversight, and transparency into IT investment performance.

[1] House Committee on Oversight and Government Reform, House Report to Accompany H.R. 1232 Federal Information Technology Acquisition Reform Act. (Downloaded June 15, 2015) (Hereinafter House Report to Accompany H.R. 1232)

[2] Lydia Dennett, “Energy Dept. Labs Seek Exemption from IT Oversight,” Project On Government Oversight, May 27, 2015.

[3] House Report to Accompany H.R. 1232; Technology CEO Council, One Trillion Reasons: How Commercial Best Practices to Maximize Productivity Can Save Taxpayer Money and Enhance Government Services, p. 4. (Downloaded June 15, 2015)

[4] Michael Hardy, “House passes FITARA,” Federal Times, February 25, 2014. (Downloaded June 15, 2015)

[5] 114th U.S. Congress, “Energy and Water Development and Related Agencies Appropriations Act, 2016” (H.R. 2028), Introduced April 24, 2015, by Representative Michael Simpson, p. 119. (Downloaded June 15, 2015)

[6] Lydia Dennett, “DOE Contracting Mismanagement Cost Taxpayers Over $450,000,” Project On Government Oversight, June 21, 2013. Peter Stockton and Lydia Dennett, “Where's the Oversight at Nuclear Labs? Hands-Off Approach Is Recipe for Disaster,” The Huffington Post, August 10, 2012. (Downloaded June 15, 2015)

[7] Office of Management and Budget, “Management and Oversight of Federal Information Technology,” (Downloaded June 15, 2015)

[8] Department of Energy, “Michael M. Johnson—Chief Information Officer,” (Downloaded June 15, 2015)

[9] Department of Energy, Office of Inspector General, Audit Report: Management of the Department's Desktop Computer Software Enterprise License Agreements, January 2006, p. 5. (Downloaded June 15, 2015)

[10] Department of Energy, Office of Inspector General, Facility Contractor Acquisition and Management of Information Technology Hardware, June 2007. (Downloaded June 15, 2015)

[11] Department of Energy, Office of Inspector General, Special Report: Office of Energy Efficiency and Renewable Energy's Integrated Resource and Information System, April 2014. (Downloaded June 15, 2015)

[12] Department of Energy, Office of Inspector General, Audit Report: The Department of Energy's Management and Use of Mobile Computing Devices and Services, April 2014, p. 1. (Downloaded June 15, 2015)

[13] Department of Energy, Office of Inspector General, Audit Report: Follow-up on the Department of Energy's Acquisition and Maintenance of Software Licenses, September 2014. (Downloaded June 15, 2015)

[14] Department of Energy, Office of Inspector General, Audit Report: Follow-up on the Department of Energy's Management of Information Technology Hardware, October 2014. (Downloaded June 15, 2015)

[15] Government Accountability Office, Information Technology: Departments of Defense and Energy Need to Address Potentially Duplicative Investments, February 2012, p. 18. (Downloaded June 15, 2015)

[16] Government Accountability Office, IT Dashboard: Agencies Are Managing Investment Risk, but Related Ratings Need to Be More Accurate and Available, December 2013. (Downloaded June 15, 2015)

[17] Letter from Shaun Donovan, Director of the Office of Management and Budget, to the Honorable Thad Cochran, Chairman of the Senate Committee on Appropriations, about the FY16 Energy and Water Development Appropriations Bill, June 2, 2015. (Downloaded June 15, 2015)

[18] “061015 - FITARA’s Role in Reducing IT Acquisition Risk,” June 10, 2015, video clip, accessed June 15, 2015, YouTube. (Downloaded June 15, 2015)