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Cuts to E-Gov fund could slow federal cloud transition

Current funding levels for electronic government initiatives in the House and Senate Appropriations committees could cripple the government's ability to modernize federal information technology and thereby save money in the long run, a General Services Administration official told lawmakers Wednesday.

That includes new security and certification projects aimed at helping agencies transition their data storage to more nimble cloud computing, a governmentwide initiative that officials expect to save $5 billion annually, GSA Associate Administrator Dave McClure said.

The White House requested $34 million in fiscal 2012 appropriations for the E-Government fund, which pays for a hodgepodge of initiatives ranging from the GSA's FedRAMP, a governmentwide security certification for cloud vendors, to numerous open government initiatives developed at the Office of Management and Budget.

House appropriators have committed about $15.8 million to the fund and the Senate has committed about $7.4 million, McClure said. Precise funding figures are somewhat hazy because both houses rolled E-Gov funding into a larger pot titled the Information and Engagement for Citizens fund.

The 2011 E-Gov appropriation was cut from $34 million to $8 million in last-minute bargaining to avoid a government shutdown in April.

"When anyone gets less money than they requested, something's got to give," McClure told members of a House panel on Technology and Innovation. "Our challenge is trying to use this fund to fuel innovation and to do crossagency, governmentwide work . . . If we reduce funding down to those levels, what you'll have, essentially, is [operations and maintenance] work going on for existing projects rather than fueling new, creative ways to save money for the government."

OMB officials have said E-Gov funding cuts might prevent it from meeting congressional mandates for some government transparency initiatives, including the agency performance-tracking website

McClure was speaking at a hearing on the future of cloud computing in government and the private sector sparked by the industry group TechAmerica's Cloud Squared report. Among other things, that report recommends establishing an international standard for security in cloud computing, raising criminal penalties for data breaches, and increasing government and private sector investments in cyber research.

Computer clouds essentially are large banks of servers that can operate much closer to full capacity than standard servers by rapidly repacking data as one customer surges in usage and another one dips. Data storage in the cloud is operated like electricity grids or other utilities, with customers paying only for the resources they use.

Critics have said cloud storage limits federal agencies' ability to safeguard their own data, but boosters have said the cloud's capacity to shoot data to another location when its original location is endangered will make agencies better able to withstand a cyberattack.

Budget cuts and the rapid pace of technological advancement mean the federal government is unlikely to be a leader in future cloud computing innovations, Nick Combs, chief technology officer of EMC Corp. and a former longtime federal information technology executive, testified.

The government's role as a major cloud customer, though, likely will lead companies to compete more vigorously to make shared, public clouds secure enough for sensitive government data. Once government agencies are comfortable storing sensitive information in public clouds, companies will be more willing to share storage space with competitors, which will lead to new efficiencies, he said.

Cloud development is likely to be both good and bad for competition in the IT world, testified Michael Capellas, chief executive of Virtual Computing Environment Co. and a co-chairman of the Cloud Squared Commission.

On one hand, cloud storage infrastructure is costly enough that it is likely to become concentrated in the hands of a few major players. On the other hand, cloud storage significantly reduces the amount of money that small companies and entrepreneurs must spend on hardware --typically about 70 percent of an IT shop's costs, he said -- which means smaller players can be more competitive in the software and applications markets.

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