Editor’s Note: The following story is taken from a book-length work authored by a senior Federal IT official currently working in government. This is one part of an extensive, firsthand account of how IT decisions are made, the obstacles standing in the way of real change in government technology management, and what one career Federal IT employee really thinks about the way government does IT.
Because the author is a current government employee and is concerned about the impact this may have on their career, we’ve agreed to publish this series of weekly excerpts under the author’s chosen pseudonym—Demosthenes.
MeriTalk has agreed not to make substantive changes to any of the chapters.
— Dan Verton, Executive Editor
Budgeting for IT
When the Clinger-Cohen Act passed in 1996 it forced OMB to prescribe the manner by which agencies should budget for IT. The director at the time was Franklin Raines and he signed M-97-02 which would later be known as the “Raines Rules.” It required investments to:
|1. Support core/priority mission functions that need to be performed by the Federal government;
2. Be undertaken by the requesting agency because no alternative private sector or governmental source can efficiently support the function;
3. Support work processes that have been simplified or otherwise redesigned to reduce costs, improve effectiveness, and make maximum use of commercial, off-the-shelf technology;
4. Demonstrate a projected return on the investment that is clearly equal to or better than alternative uses of available public resources. Return may include: improved mission performance in accordance with GPRA measures; reduced cost; increased quality, speed, or flexibility; and increased customer and employee satisfaction. Return should be adjusted for such risk factors as the project’s technical complexity, the agency’s management capacity, the likelihood of cost overruns, and the consequences of under- or non-performance
5. Be consistent with Federal, agency, and bureau information architectures which: integrate agency work processes and information flows with technology to achieve the agency’s strategic goals; reflect the agency’s technology vision and year 2000 compliance plan; and specify standards that enable information exchange and resource sharing, while retaining flexibility in the choice of suppliers and in the design of local work processes;
6. Reduce risk by: avoiding or isolating custom-designed components to minimize the potential adverse consequences on the overall project; using fully tested pilots, simulations, or prototype implementations before going to production; establishing clear measures and accountability for project progress; and securing substantial involvement and buy-in throughout the project from the program officials who will use the system;
7. Be implemented in phased, successive chunks as narrow in scope and brief in duration as practicable, each of which solves a specific part of an overall mission problem and delivers a measurable net benefit independent of future chunks; and,
8. Employ an acquisition strategy that appropriately allocates risk between government and contractor, effectively uses competition, ties contract payments to accomplishments, and takes maximum advantage of commercial technology. 1
These were good rules and they served us well. I would say they have served us for too long. We are essentially still budgeting for IT in the exact same manner we were in 1996. One would think that in the intervening 20 years, we might have learned a thing or two about what works and what doesn’t. But only marginal changes have been made.
Agencies make IT investments. Some of those investments are “major” and the rest are non-major. Major investments have a lot more information about why we are pursuing the investment, how much we are budgeting, whether the people managing it are qualified and its performance. Non-major investments have a short description and a budget and that is it.
This approach was fine in the 1900s. That sounds so funny to say now, like it was a century ago. It even served us well in the early 2000s. But when the Great Recession hit and budgets were constrained and IT was forced to get lean, the flaw in our budgeting was exposed. Prior to M-11-29, the CIO Authorities memo, we didn’t care that much about the performance of individual commodity investments within a single agency. In fact, the guidance from OMB in A-130 had 2 classes of investments, major applications and General Support Systems. But after M-11-29, OMB seemed to have a laser focus on the performance of commodity investments including, “IT infrastructure (data centers, networks, desktop computers, and mobile devices); enterprise IT systems (email, collaboration tools, identity and access management, security, and Web infrastructure); and business systems (finance, human resources, and other administrative functions).” 2