Agencies Botch IT Savings Estimates by $3.8 Billion


Drastic revisions by the departments of Defense and Homeland Security accounted for most of the savings discrepancy.

Agencies now predict saving less than half of what they originally estimated from an Obama administration effort to better track federal information technology projects, according to a new watchdog report.

In 2013, agencies estimated saving at least $5.8 billion over the next two years as result of the PortfolioStat process, which involves line-by-line reviews of agency IT investments. However, a new report from the Government Accountability Office finds that estimate has now fallen to about $2 billion -- a 66 percent drop in planned savings.

Inconsistent reporting measures and those way-off-the-mark estimates also led the Office of Management to overstate by some $1 billion the total amount saved by the PortfolioStat process in a report to Congress last summer. 

Drastic revisions by the departments of Defense and Homeland Security accounted for most of the $3.8 billion savings discrepancy.

DOD’s estimated cost savings, alone, dropped from $3.2 billion in 2013 to just $560 million earlier this year, GAO said, in part because DOD officials stopped tracking potential savings.

DOD’s acting chief information officer told GAO the Pentagon’s systems are “not capable of easily generating the data needed to track savings” as required by PortfolioStat, and the “costs of attempting to collect some of the information far outweigh any potential benefits.”

DHS officials told auditors they “erroneously mislabeled” planned savings figures in their initial 2013 estimates, according to the report.

Overall, only nine of the 26 agencies required to review IT investments through the PortfolioStat process actually met or exceeded the initial savings estimates, GAO said.

However, that may stem from the fact that many agencies are still undercounting savings generated by closing and consolidating energy-guzzling data centers, GAO said.

“Inconsistencies in OMB and agencies’ reporting make it difficult to reliably measure progress in achieving PortfolioStat savings,” GAO auditors concluded in the report .

Those consistencies appear to have led OMB to overstate in a report to Congress the total savings generated by PortfolioStat during 2013 and 2014. By January 2015, agencies reported saving a total of about $1.1 billion during the previous two years.

However, in a report to Congress last summer, OMB said agencies had already saved more than $2 billion and were on track to reach $2.5 billion in savings by the end of 2015.

GAO recommended OMB direct federal CIO Tony Scott ensure its reports to Congress accurately reflect savings generated from all PortfolioStat initiatives, including data center consolidation.

GAO also called on DOD to do a better job tracking estimated cost savings under PortfolioStat.

DOD only partially agreed, saying it supported the PortfolioStat process in concept but that it “had been ineffective in generating savings” and that its “federated approach” to tracking cost savings doesn’t align with the PortfolioStat approach.

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