Information Technology: Implementation of Recommendations Is Needed to Strengthen Acquisitions, Operations, and Cybersecurity

The federal government planned to invest more than $96 billion in IT in fiscal year 2018. However, IT investments have often failed or contributed little to mission-related outcomes. Further, increasingly sophisticated threats and frequent cyber incidents underscore the need for effective information security. As a result, GAO added two areas to its high-risk list: cybersecurity in 1997 and the management of IT acquisitions and operations in 2015.

This statement summarizes federal agencies' progress in improving the management, and ensuring the security, of federal IT. It is primarily based on GAO's reports issued between February 1997 and August 2018 (and an ongoing review) on (1) CIO responsibilities, (2) agency CIOs' involvement in approving IT contracts, (3) data center consolidation efforts, (4) the management of software licenses, and (5) compliance with cybersecurity requirements.

The Office of Management and Budget (OMB) and federal agencies have taken steps to improve the management of information technology (IT) acquisitions and operations and ensure federal cybersecurity through a series of initiatives. As of November 2018, agencies had fully implemented about 59 percent of the 1,242 IT management-related recommendations that GAO has made since fiscal year 2010. Likewise, agencies had implemented about 73 percent of the approximately 3,000 security-related recommendations that GAO has made since 2010. Even with this progress, significant actions remain to be completed.

Chief Information Officer (CIO) responsibilities . Laws such as the Federal Information Technology Acquisition Reform Act (FITARA) and related guidance assigned 35 key IT management responsibilities to CIOs to help address longstanding challenges. However, in August 2018, GAO reported that none of the 24 selected agencies had policies that fully addressed the role of their CIO, as called for by laws and guidance. GAO recommended that OMB and each of the 24 agencies take actions to improve the effectiveness of CIOs' implementation of their responsibilities. As of November 2018, none of the 27 recommendations had been implemented.

IT contract approval . According to FITARA, covered agencies' CIOs are required to review and approve IT contracts. Nevertheless, in January 2018, GAO reported that most of the CIOs at 22 covered agencies were not adequately involved in reviewing billions of dollars of IT acquisitions. Consequently, GAO made 39 recommendations to improve CIO oversight over these acquisitions. As of November 2018, 27 of the recommendations had not been addressed.

Consolidating data centers . OMB launched an initiative in 2010 to reduce data centers. According to agencies, data center consolidation and optimization efforts have resulted in approximately $4.5 billion in cost savings through 2018. Even so, additional work remains. GAO has made 160 recommendations to OMB and agencies to improve the reporting of related cost savings and to achieve optimization targets. However, as of November 2018, 47 of the recommendations had not been fully addressed.

Managing software licenses . Effective management of software licenses can help avoid purchasing too many licenses that result in unused software. In May 2014, GAO reported that better management of licenses was needed to achieve savings, and made 135 recommendations to improve such management. As of December 2018, 27 of the recommendations had not been implemented.

Improving the security of federal IT systems . While the government has acted to protect federal information systems, agencies need to improve security programs, cyber capabilities, and the protection of personally identifiable information. The approximately 3,000 recommendations that GAO has made to agencies since 2010 were aimed at improving the security of federal systems and information. Specifically, these recommendations identified actions for agencies to take to strengthen their information security programs and technical controls over their computer networks and systems. As of November 2018, 688 of the security-related recommendations had not been implemented.

Since fiscal year 2010, GAO has made 1,242 recommendations to OMB and agencies to address shortcomings in IT acquisitions and operations. Since fiscal year 2010, GAO also has made over 3,000 recommendations to federal agencies to improve the security of federal systems. These recommendations include those to improve the implementation of CIO responsibilities, the oversight of the data center consolidation initiative, software license management efforts, and the strength of security programs and technical controls. Most agencies agreed with the recommendations, and GAO will continue to monitor their implementation.

I am pleased to be here today to provide an update on federal agencies’  efforts to address our high-risk areas on improving the management of  information technology (IT) acquisitions and operations, as well as  ensuring the security of federal information and IT. The federal  government has spent billions of dollars on failed and poorly performing  IT investments, which often suffered from ineffective management.  Consequently, we added improving the management of IT acquisitions  and operations to our high-risk areas for the federal government in  February 2015. In February 2017, we noted that, while progress had  been made in addressing the high-risk area of IT acquisitions and  operations, significant work remained to be completed.

With regard to cybersecurity, the increasingly sophisticated threats and  frequent cyber incidents underscore the continuing and urgent need for  effective information security. We first identified federal information  security as a government-wide high-risk area in 1997. Subsequently, in  2003, we expanded this area to include computerized systems  supporting the nation’s critical infrastructure and, in 2015, we further  expanded this area to include protecting the privacy of personally  identifiable information. We continued to identify federal information  security as a government-wide high-risk area in our February 2017 high- risk update report.

My statement today provides an update on agencies’ progress in  improving the management of IT acquisitions and operations and the  security of federal IT. The statement is based on our prior reports issued  between February 1997 and August 2018 that discuss federal agencies’  (1) implementation of Chief Information Officer (CIO) responsibilities, (2)  fulfillment of CIO IT acquisition review requirements, (3) data center  consolidation efforts, (4) management of software licenses, and (5)  compliance with federal cybersecurity requirements. A more detailed  discussion of the objectives, scope, and methodology for this work is  included in each of the reports that are cited throughout this statement.

In addition, we have included preliminary results from our ongoing work  reviewing the progress being made by federal agencies on data center  optimization. The draft report related to this work is currently being  reviewed by the agencies and we expect to issue it in early 2019.

We conducted the work upon which this statement is based in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

According to the President’s budget, the federal government planned to  invest more than $96 billion for IT in fiscal year 2018—the largest amount  ever budgeted. Despite such large IT expenditures, we have previously  reported that investments in federal IT too often resulted in failed projects  that incurred cost overruns and schedule slippages, while contributing  little to the desired mission-related outcomes. For example:

The tri-agency National Polar-orbiting Operational Environmental  Satellite System was disbanded in February 2010 at the direction of the White House’s Office of Science and Technology Policy after the  program spent 16 years and almost $5 billion.

The Department of Homeland Security’s (DHS) Secure Border Initiative  Network program was ended in January 2011, after the department  obligated more than $1 billion for the program.

The Department of Veterans Affairs’ Financial and Logistics Integrated  Technology Enterprise program was intended to be delivered by 2014 at  a total estimated cost of $609 million, but was terminated in October  2011.

The Department of Defense’s Expeditionary Combat Support System  was canceled in December 2012 after spending more than a billion  dollars and failing to deploy within 5 years of initially obligating funds.

The United States Coast Guard (Coast Guard) decided to terminate its  Integrated Health Information System project in 2015. As reported by the  agency in August 2017, the Coast Guard spent approximately $60 million  over 7 years on this project, which resulted in no equipment or software  that could be used for future efforts.

Our past work has found that these and other failed IT projects often  suffered from a lack of disciplined and effective management, such as  project planning, requirements definition, and program oversight and  governance. In many instances, agencies had not consistently applied  best practices that are critical to successfully acquiring IT.

Such projects have also failed due to a lack of oversight and governance.  Executive-level governance and oversight across the government has  often been ineffective, specifically from CIOs. For example, we have  reported that some CIOs’ roles were limited because they did not have  the authority to review and approve the entire agency IT portfolio.

In addition to failures when acquiring IT, security deficiencies can  threaten systems. As we previously reported, in order to counter security  threats, the 23 civilian Chief Financial Officers (CFO) Act agencies spent  a combined total of approximately $4 billion on IT security-related  activities in fiscal year 2016. Even so, our cybersecurity work at federal  agencies continues to highlight information security deficiencies. The  following examples describe the types of risks we have found at federal  agencies.

In September 2018, we reported that the Department of Education’s  Office of Federal Student Aid exercises minimal oversight of lenders’  protection of student data and lacks assurance that appropriate risk- based safeguards are being effectively implemented, tested, and  monitored.

In August 2017, we reported that, since the 2015 data breaches, the  Office of Personnel Management (OPM) had taken actions to prevent,  mitigate, and respond to data breaches involving sensitive personal and  background investigation information. However, we noted that the  agency had not fully implemented recommendations made to OPM by  DHS’s United States Computer Emergency Readiness Team to help the  agency improve its overall security posture and improve its ability to  protect its systems and information from security breaches.

In July 2017, we reported that information security at the Internal  Revenue Service had weaknesses that limited its effectiveness in  protecting the confidentiality, integrity, and availability of financial and  sensitive taxpayer data. An underlying reason for these weaknesses was  that the Internal Revenue Service had not effectively implemented  elements of its information security program.

In May 2016, we reported that the National Aeronautics and Space  Administration, the Nuclear Regulatory Commission, OPM, and the  Department of Veteran Affairs did not always control access to selected  high-impact systems, patch known software vulnerabilities, and plan for  contingencies. An underlying reason for these weaknesses was that the  agencies had not fully implemented key elements of their information  security programs.

In August 2016, we reported that the information security of the Food and  Drug Administration had significant weaknesses that jeopardized the  confidentiality, integrity, and availability of its information systems and  industry and public health data.

FITARA Increases CIO Authorities and Responsibilities for Managing IT

Congress and the President have enacted various key pieces of reform  legislation to address IT management issues. These include the federal  IT acquisition reform legislation commonly referred to as the Federal  Information Technology Acquisition Reform Act (FITARA). This  legislation was intended to improve covered agencies’ acquisitions of IT  and enable Congress to monitor agencies’ progress and hold them  accountable for reducing duplication and achieving cost savings. The  law includes specific requirements related to seven areas:

Agency CIO authority enhancements. CIOs at covered agencies have  the authority to, among other things, (1) approve the IT budget requests  of their respective agencies and (2) review and approve IT contracts.

Federal data center consolidation initiative (FDCCI). Agencies  covered by FITARA are required, among other things, to provide a  strategy for consolidating and optimizing their data centers and issue  quarterly updates on the progress made.

Enhanced transparency and improved risk management. The Office  of Management and Budget (OMB) and covered agencies are to make  detailed information on federal IT investments publicly available, and  agency CIOs are to categorize their investments by level of risk.

Portfolio review. Covered agencies are to annually review IT investment  portfolios in order to, among other things, increase efficiency and  effectiveness and identify potential waste and duplication.

Expansion of training and use of IT acquisition cadres. Covered  agencies are to update their acquisition human capital plans to support  timely and effective IT acquisitions. In doing so, the law calls for agencies  to consider, among other things, establishing IT acquisition cadres (i.e.,  multi-functional groups of professionals to acquire and manage complex programs), or developing agreements with other agencies that have such  cadres.

Government-wide software purchasing program. The General  Services Administration is to develop a strategic sourcing initiative to  enhance government-wide acquisition and management of software. In  doing so, the law requires that, to the maximum extent practicable, the  General Services Administration should allow for the purchase of a  software license agreement that is available for use by all executive  branch agencies as a single user.

Maximizing the benefit of the Federal Strategic Sourcing Initiative.

Federal agencies are required to compare their purchases of services  and supplies to what is offered under the Federal Strategic Sourcing  Initiative.

In June 2015, OMB released guidance describing how agencies are to  implement FITARA. This guidance is intended to, among other things: assist agencies in aligning their IT resources with statutory requirements; establish government-wide IT management controls to meet the law’s  requirements, while providing agencies with flexibility to adapt to unique  agency processes and requirements;  strengthen the relationship between agency CIOs and bureau CIOs; and  strengthen CIO accountability for IT costs, schedules, performance, and  security.

The guidance identifies a number of actions that agencies are to take to  establish a basic set of roles and responsibilities (referred to as the  common baseline) for CIOs and other senior agency officials and, thus, to  implement the authorities described in the law. For example, agencies are  to conduct a self-assessment and submit a plan describing the changes  they intend to make to ensure that common baseline responsibilities are  implemented.

In addition, in August 2016, OMB released guidance intended to, among  other things, define a framework for achieving the data center  consolidation and optimization requirements of FITARA. The guidance  directed agencies to develop a data center consolidation and optimization  strategic plan that defined the agency’s data center strategy for fiscal  years 2016, 2017, and 2018. This strategy was to include, among other  things, a statement from the agency CIO indicating whether the agency  had complied with all data center reporting requirements in FITARA.  Further, the guidance states that OMB is to maintain a public dashboard  to display consolidation-related costs savings and optimization  performance information for the agencies.

Congress Has Undertaken Efforts to Continue Selected FITARA Provisions and Modernize Federal IT

Congress has recognized the importance of agencies’ continued  implementation of FITARA provisions, and has taken legislative action to  extend selected provisions beyond their original dates of expiration.  Specifically, Congress and the President enacted laws to:  remove the expiration dates for the enhanced transparency and improved  risk management provisions, which were set to expire in 2019;  remove the expiration date for portfolio review, which was set to expire in  2019; and extend the expiration date for FDCCI from 2018 to 2020.

In addition, Congress and the President enacted a law to authorize the  availability of funding mechanisms to help further agencies’ efforts to  modernize IT. The law, known as the Modernizing Government  Technology (MGT) Act, authorizes agencies to establish working capital  funds for use in transitioning from legacy IT systems, as well as for  addressing evolving threats to information security. The law also creates  the Technology Modernization Fund, within the Department of the  Treasury, from which agencies can “borrow” money to retire and replace  legacy systems, as well as acquire or develop systems.

Further, in February 2018, OMB issued guidance for agencies on  implementing the MGT Act. The guidance was intended to provide  agencies additional information regarding the Technology Modernization  Fund, and the administration and funding of the related IT working capital  funds. Specifically, the guidance encouraged agencies to begin  submitting initial project proposals for modernization on February 27,  2018. In addition, in accordance with the MGT Act, the guidance provides  details regarding a Technology Modernization Board, which is to consist  of (1) the Federal CIO; (2) a senior IT official from the General Services  Administration; (3) a member of DHS’s National Protection and Program  Directorate; and (4) four federal employees with technical expertise in IT  development, financial management, cybersecurity and privacy, and  acquisition, appointed by the Director of OMB.

FISMA Establishes Responsibilities for Agencies to Address Federal Cybersecurity

Congress and the President enacted the Federal Information Security  Modernization Act of 2014 (FISMA) to improve federal cybersecurity and  clarify government-wide responsibilities. The act addresses the  increasing sophistication of cybersecurity attacks, promotes the use of  automated security tools with the ability to continuously monitor and  diagnose the security posture of federal agencies, and provides for  improved oversight of federal agencies’ information security programs.  Toward this end, the act clarifies and assigns specific responsibilities to  entities such as OMB, DHS, and the federal agencies. Table 1 describes  a selection of the OMB, DHS, and agency responsibilities.

The Administration Has Undertaken Efforts to Improve, Modernize, and Strengthen the Security of Federal IT

Beyond the implementation of FITARA, FISMA, and related actions, the  administration has also initiated other efforts intended to improve federal  IT. Specifically, in March 2017, the administration established the Office  of American Innovation, which has a mission to, among other things,  make recommendations to the President on policies and plans aimed at  improving federal government operations and services. In doing so, the  office is to consult with both OMB and the Office of Science and  Technology Policy on policies and plans intended to improve government  operations and services, improve the quality of life for Americans, and  spur job creation.

In May 2017, the Administration also established the American  Technology Council, which has a goal of helping to transform and  modernize federal agency IT and how the federal government uses and  delivers digital services. The President is the chairman of this council,  and the Federal CIO and the United States Digital Service Administrator  are among the members.

In addition, on May 11, 2017, the President signed Executive Order  13800, Strengthening the Cybersecurity of Federal Networks and Critical  Infrastructure. This executive order outlined actions to enhance  cybersecurity across federal agencies and critical infrastructure to  improve the nation’s cyber posture and capabilities against cybersecurity  threats. Among other things, the order tasked the Director of the  American Technology Council to coordinate a report to the President  from the Secretary of DHS, the Director of OMB, and the Administrator of  the General Services Administration, in consultation with the Secretary of  Commerce, regarding the modernization of federal IT.

As a result, the Report to the President on Federal IT Modernization was  issued on December 13, 2017, and outlined the current and envisioned  state of federal IT. The report focused on modernization efforts to improve  the security posture of federal IT and recognized that agencies have  attempted to modernize systems but have been stymied by a variety of  factors, including resource prioritization, ability to procure services  quickly, and technical issues. The report provided multiple  recommendations intended to address these issues through the  modernization and consolidation of networks and the use of shared  services to enable future network architectures.

Further, in March 2018, the Administration issued the President’s  Management Agenda, which lays out a long-term vision for modernizing  the federal government. The agenda identifies three related drivers of  transformation—IT modernization; data, accountability, and transparency;  and the workforce of the future—that are intended to push change across  the federal government.

The Administration also established 14 related Cross-Agency Priority  goals, many of which have elements that involve IT. In particular, the  Cross-Agency Priority goal on IT modernization states that modern IT  must function as the backbone of how government serves the public in  the digital age. This goal establishes three priorities that are to guide the  Administration’s efforts to modernize federal IT: (1) enhancing mission  effectiveness by improving the quality and efficiency of critical services,  including the increased utilization of cloud-based solutions; (2) reducing  cybersecurity risks to the federal mission by leveraging current  commercial capabilities and implementing cutting edge cybersecurity  capabilities; and (3) building a modern IT workforce by recruiting,  reskilling, and retaining professionals able to help drive modernization  with up-to-date technology.

More recently, on May 15, 2018, the President signed Executive Order  13833, Enhancing the Effectiveness of Agency Chief Information Officers.  Among other things, this executive order is intended to better position  agencies to modernize their IT systems, execute IT programs more  efficiently, and reduce cybersecurity risks. The order pertains to 22 of  the 24 CFO Act agencies: the Department of Defense and the Nuclear  Regulatory Commission are exempt.

For the covered agencies, the executive order strengthens the role of  agency CIOs by, among other things, requiring them to report directly to  their agency head; serve as their agency head’s primary IT strategic  advisor; and have a significant role in all management, governance, and  oversight processes related to IT. In addition, one of the cybersecurity  requirements directs agencies to ensure that the CIO works closely with  an integrated team of senior executives, including those with expertise in  IT, security, and privacy, to implement appropriate risk management  measures.

Agencies Have Not Fully Addressed the IT Acquisitions and Operations High-Risk Area

In the February 2017 update to our high-risk series, we reported that  agencies still needed to complete significant work related to the  management of IT acquisitions and operations. We stressed that OMB  and federal agencies should continue to expeditiously implement FITARA  and OMB’s related guidance, which includes enhancing CIO authority,  consolidating data centers, and acquiring and managing software  licenses.

Our update to this high-risk area also stressed that OMB and agencies  needed to continue to implement our prior recommendations in order to  improve their ability to effectively and efficiently invest in IT. Specifically,  since fiscal year 2010, we have made 1,242 recommendations to OMB  and federal agencies to address shortcomings in IT acquisitions and  operations.

As stated in the update, OMB and agencies should demonstrate  government-wide progress in the management of IT investments by,  among other things, implementing at least 80 percent of our  recommendations related to managing IT acquisitions and operations. As  of November 2018, OMB and agencies had fully implemented 732 (or  about 59 percent) of the 1,242 recommendations. Figure 1 summarizes  the progress that OMB and agencies have made in addressing our  recommendations compared to the 80 percent target.

Overall, federal agencies would be better positioned to realize billions in  cost savings and additional management improvements if they address  these recommendations, including those aimed at implementing CIO  responsibilities, reviewing IT acquisitions; improving data center  consolidation; and managing software licenses.

Agencies Need to Address Shortcomings and Challenges in Implementing CIO Responsibilities

In all, the various laws, such as FITARA, and related guidance assign  35 IT management responsibilities to CIOs in six key areas. These areas  are: leadership and accountability, budgeting, information security,  investment management, workforce, and strategic planning.

In August 2018, we reported that none of the 24 agencies we reviewed  had policies that fully addressed the role of their CIO, as called for by  federal laws and guidance. In this regard, a majority of the agencies had  fully or substantially addressed the role of their CIOs for the area of  leadership and accountability. In addition, a majority of the agencies had  substantially or partially addressed the role of their CIOs for two areas:  information security and IT budgeting.

However, most agencies partially or minimally addressed the role of their  CIOs for two areas: investment management and strategic planning.  Further, the majority of the agencies minimally addressed or did not  address the role of their CIOs for the remaining area: IT workforce. Figure  2 depicts the extent to which the 24 agencies addressed the role of their  CIOs for the six areas.

Despite the shortfalls in agencies’ policies addressing the roles of their  CIOs, most agency officials stated that their CIOs are implementing the  responsibilities even if the agencies do not have policies requiring  implementation.

Nevertheless, the CIOs of the 24 selected agencies acknowledged in  responses to a survey that we administered that they were not always  very effective in implementing the six IT management areas. Specifically,  at least 10 of the CIOs indicated that they were less than very effective for  each of the six areas of responsibility. We believe that until agencies fully  address the role of CIOs in their policies, agencies will be limited in  addressing longstanding IT management challenges.

Figure 3 depicts the extent to which the CIOs reported their effectiveness  in implementing the six areas of responsibility.

Beyond the actions of the agencies, however, shortcomings in agencies’  policies also are partially attributable to two weaknesses in OMB’s  guidance. First, the guidance does not comprehensively address all CIO  responsibilities, such as those related to assessing the extent to which  personnel meet IT management knowledge and skill requirements, and  ensuring that personnel are held accountable for complying with the  information security program. Correspondingly, the majority of the  agencies’ policies did not fully address nearly all of the responsibilities  that were not included in OMB’s guidance.

Second, OMB’s guidance does not ensure that CIOs have a significant  role in (1) IT planning, programming, and budgeting decisions; and (2)  execution decisions and the management, governance, and oversight  processes related to IT, as required by federal law and guidance. In the  absence of comprehensive guidance, CIOs will not be positioned to  effectively acquire, maintain, and secure their IT systems.

In response to the survey conducted for our August 2018 report, the 24  agency CIOs also identified a number of factors that enabled and  challenged their ability to effectively manage IT. Specifically, most agency  CIOs cited five factors as being enablers to effectively carry out their  responsibilities: (1) NIST guidance, (2) the CIO’s position in the agency  hierarchy, (3) OMB guidance, (4) coordination with the Chief Acquisition  Officer (CAO), and (5) legal authority. Further, three factors were cited by  CIOs as major factors that have challenged their ability to effectively carry  out responsibilities: (1) processes for hiring, recruiting, and retaining IT  personnel; (2) financial resources; and (3) the availability of  personnel/staff resources.

As shown in figure 4, the five enabling factors were identified by at least  half of the 24 CIOs and the three factors cited as major challenges were  identified by at least half of the CIOs.

Although OMB has issued guidance aimed at addressing the three factors  that were identified by at least half of the CIOs as major challenges, the  guidance does not fully address those challenges. Further, regarding the  financial resources challenge, OMB recently required agencies to provide  data on CIO authority over IT spending; however, its guidance does not  provide a complete definition of the authority. In the absence of such  guidance, agencies have created varying definitions of CIO authority.  Until OMB updates its guidance to include a complete definition of the  authority that CIOs are to have over IT spending, it will be difficult for  OMB to identify any deficiencies in this area and to help agencies make  any needed improvements.

In order to address challenges in implementing CIO responsibilities, we  made three recommendations to OMB and one recommendation to each  of the selected 24 federal agencies to improve the effectiveness of CIOs’  implementation of their responsibilities for each of the six IT management  areas. Most agencies agreed with or had no comments on the  recommendations. As of November 2018, all 27 of the recommendations  had not been implemented. We will continue to monitor the  implementation of these recommendations.

Agencies Need to Ensure That IT Acquisitions Are Reviewed and Approved by CIOs

FITARA includes a provision to enhance covered agency CIOs’ authority  through, among other things, requiring agency heads to ensure that CIOs  review and approve IT contracts. OMB’s FITARA implementation  guidance expanded upon this aspect of the legislation in a number of  ways. Specifically, according to the guidance:

CIOs may review and approve IT acquisition strategies and plans, rather  than individual IT contracts;

CIOs can designate other agency officials to act as their representatives,  but the CIOs must retain accountability;

CAOs are responsible for ensuring that all IT contract actions are  consistent with CIO-approved acquisition strategies and plans; and

CAOs are to indicate to the CIOs when planned acquisition strategies  and acquisition plans include IT.

In January 2018, we reported that most of the CIOs at 22 selected  agencies were not adequately involved in reviewing billions of dollars of  IT acquisitions. For instance, most of the 22 agencies did not identify all  of their IT contracts. In this regard, the agencies identified 78,249 IT- related contracts, to which they obligated $14.7 billion in fiscal year 2016.

However, we identified 31,493 additional contracts with $4.5 billion  obligated, raising the total amount obligated to IT contracts by these  agencies in fiscal year 2016 to at least $19.2 billion. Figure 5 reflects the  obligations that the 22 selected agencies reported to us relative to the  obligations we identified.

The percentage of additional IT contract obligations we identified varied  among the selected agencies. For example, the Department of State did  not identify 1 percent of its IT contract obligations. Conversely, eight  agencies did not identify over 40 percent of their IT contract obligations.

Many of the selected agencies that did not identify these IT contract  obligations also did not follow OMB guidance. Specifically, 14 of the 22  agencies did not involve the acquisition office in their process to identify  IT acquisitions for CIO review, as required by OMB. In addition, 7  agencies did not establish guidance to aid officials in recognizing IT. We  concluded that until these agencies involve the acquisitions office in their  IT acquisition identification processes and establish supporting guidance,  they cannot ensure that they will identify all such acquisitions. Without  proper identification of IT acquisitions, these agencies and CIOs cannot  effectively provide oversight of these acquisitions.

In addition to not identifying all IT contracts, 14 of the 22 selected  agencies did not fully satisfy OMB’s requirement that the CIO review and  approve IT acquisition plans or strategies. Further, only 11 of 96 randomly  selected IT contracts at 10 agencies that we evaluated were CIO- reviewed and approved as required by OMB’s guidance. The 85 contracts  not reviewed had a total possible value of approximately $23.8 billion.

Until agencies ensure that CIOs are able to review and approve all IT  acquisitions, CIOs will continue to have limited visibility and input into  their agencies’ planned IT expenditures and will not be able to effectively  use the increased authority that FITARA’s contract approval provision is  intended to provide. Further, agencies will likely miss an opportunity to  strengthen their CIOs’ authority and the oversight of acquisitions. As a  result, agencies may award IT contracts that are duplicative, wasteful, or  poorly conceived.

As a result of these findings, we made 39 recommendations in our  January 2018 report. Among these, we recommended that agencies  ensure that their acquisition offices are involved in identifying IT  acquisitions and issuing related guidance, and that IT acquisitions are  reviewed in accordance with OMB guidance. OMB and the majority of the  agencies generally agreed with or did not comment on the  recommendations. As of November 2018, 27 of the recommendations  had not been implemented.

Agencies Have Made Progress in Consolidating Data Centers, but Need to Take Action to Achieve Planned Cost Savings

In our February 2017 high-risk update, we stressed that OMB and  agencies needed to demonstrate additional progress on achieving data  center consolidation savings in order to improve the management of IT  acquisitions and operations. Further, data center consolidation efforts are  key to implementing FITARA. Specifically, OMB established the FDCCI in  February 2010 to improve the efficiency, performance, and environmental  footprint of federal data center activities. The enactment of FITARA in  2014 codified and expanded the initiative.

In addition, in August 2016, OMB issued a memorandum which  established the Data Center Optimization Initiative (DCOI) and included  guidance on how to implement the data center consolidation and  optimization provisions of FITARA. Among other things, the guidance  required agencies to consolidate inefficient infrastructure, optimize  existing facilities, improve their security posture, and achieve cost  savings.

According to agencies, data center consolidation and optimization efforts  have resulted in approximately $4.5 billion in cost savings through 2018.   However, additional work remains to fully carry out the initiative.  Specifically, in a series of reports that we issued from July 2011 through  May 2018, we noted that, while data center consolidation could potentially  save the federal government billions of dollars, weaknesses existed in  several areas, including agencies’ data center consolidation plans, data  center optimization, and OMB’s tracking and reporting on related cost  savings. In these reports, we made a total of 160 recommendations to  OMB and 24 agencies to improve the execution and oversight of the  initiative. Most agencies and OMB agreed with our recommendations or  had no comments. As of November 2018, 47 of these 160  recommendations remained unimplemented.

In addition, in a draft report on data center optimization that we have  provided to the agencies for comment and plan to issue in early 2019, our  preliminary results indicate that agencies continued to report mixed  progress toward achieving OMB’s goals for closing data centers and  realizing the associated savings by September 2018. Specifically, as of  August 2018, over half of the agencies reported that they had met, or  planned to meet, all of their OMB-assigned closure goals for tiered data  centers by the deadline. However, 6 agencies reported that they did not  plan to meet their goals for tiered data centers. In addition, as of August  2018, 11 agencies reported that they had already met the goal for closing  60 percent of their non-tiered centers, 3 agencies reported that they  planned to meet the goal by the end of fiscal year 2018, and 9 agencies  reported that they did not plan to meet the goal by the end of fiscal year  2018.

In all, the 24 agencies reported a total of 6,250 data center closures as of  August 2018, which represented about half of the total reported number  of federal data centers. In addition, the agencies reported 1,009 planned  closures by the end of fiscal year 2018, with an additional 191 closures  planned through fiscal year 2023, for a total of 1,200 further closures.

Further, in August 2018, 22 agencies reported that they had achieved  $1.94 billion in cost savings for fiscal years 2016 through 2018, while 2  agencies reported that they had not achieved any savings. In addition to  that amount, 21 agencies identified a further $0.42 billion in planned  savings through fiscal year 2018—for a total of $2.36 billion in planned  cost savings from fiscal years 2016 through 2018. Nevertheless, this total  is about $0.38 billion less than OMB’s goal of $2.74 billion for overall  DCOI savings.

Agencies Need to Better Manage Software Licenses to Achieve Savings

In our 2015 high-risk report’s discussion of IT acquisitions and operations,  we identified the management of software licenses as an area of concern,  in part because of the potential for cost savings. Federal agencies  engage in thousands of software licensing agreements annually. The  objective of software license management is to manage, control, and  protect an organization’s software assets. Effective management of these  licenses can help avoid purchasing too many licenses, which can result in  unused software, as well as too few licenses, which can result in  noncompliance with license terms and cause the imposition of additional  fees.

As part of its PortfolioStat initiative, OMB has developed a policy that  addresses software licenses. This policy requires agencies to conduct an  annual, agency-wide IT portfolio review to, among other things, reduce  commodity IT spending. Such areas of spending could include software  licenses.

In May 2014, we reported on federal agencies’ management of software  licenses and determined that better management was needed to achieve  significant savings government-wide. Of the 24 selected agencies we  reviewed, only 2 had comprehensive policies that included the  establishment of clear roles and central oversight authority for managing  enterprise software license agreements, among other things. Of the  remaining 22 agencies, 18 had policies that were not comprehensive, and  4 had not developed any policies.

Further, we found that only 2 of the 24 selected agencies had established  comprehensive software license inventories, a leading practice that would  help them to adequately manage their software licenses. The inadequate  implementation of this and other leading practices in software license  management was partially due to weaknesses in agencies’ policies. As a  result, we concluded that agencies’ oversight of software license  spending was limited or lacking, thus potentially leading to missed  savings. However, the potential savings could be significant considering  that, in fiscal year 2012, 1 major federal agency reported saving  approximately $181 million by consolidating its enterprise license  agreements, even when its oversight process was ad hoc.

Accordingly, we recommended that OMB issue a directive to help guide  agencies in managing software licenses. We also made 135  recommendations to the 24 agencies to improve their policies and  practices for managing licenses. Among other things, we recommended  that the agencies regularly track and maintain a comprehensive inventory  of software licenses and analyze the inventory to identify opportunities to  reduce costs and better inform investment decision making.

Most agencies generally agreed with the recommendations or had no  comments. As of December 2018, 27 of the 135 recommendations had  not been implemented. Table 2 reflects the extent to which the 24  agencies implemented the recommendations in these two areas.

Agencies Need to Address Shortcomings in Information Security Area

Since information security was added to the high-risk list in 1997, we  have consistently identified shortcomings in the federal government’s  approach to cybersecurity. In particular, in a September 2018 report, we  identified four major cybersecurity challenges: (1) establishing a  comprehensive cybersecurity strategy and performing effective oversight,  (2) securing federal systems and information, (3) protecting cyber critical  infrastructure, and (4) protecting privacy and sensitive data.

To address these challenges, we identified 10 critical actions that the  federal government and other entities need to take. For example, in order  to address the challenge of securing federal systems and information, we  identified 3 actions that the agencies should take: (1) improve  implementation of government-wide cybersecurity initiatives, (2) address  weaknesses in federal information security programs, and (3) enhance  the federal response to cyber incidents. Figure 6 depicts the 10 critical  actions to address the four major cybersecurity challenges.

As we have previously noted, in order to strengthen the federal  government’s cybersecurity posture, agencies should fully implement the  information security programs required by FISMA. In this regard, FISMA  provides a framework for ensuring the effectiveness of information  security controls for federal information resources. The law requires each  agency to develop, document, and implement an agency-wide information  security program. Such a program should include risk assessments; the  development and implementation of policies and procedures to cost- effectively reduce risks; plans for providing adequate information security  for networks, facilities, and systems; security awareness and specialized  training; the testing and evaluation of the effectiveness of controls; the  planning, implementation, evaluation, and documentation of remedial  actions to address information security deficiencies; procedures for  detecting, reporting, and responding to security incidents; and plans and  procedures to ensure continuity of operations.

Since fiscal year 2010, we have made over 3,000 recommendations to  agencies aimed at addressing the four cybersecurity challenges. These  recommendations have identified actions for agencies to take to  strengthen technical security controls over their computer networks and  systems. They also have included recommendations for agencies to fully  implement aspects of their information security programs, as mandated  by FISMA. Nevertheless, many agencies continue to be challenged in  safeguarding their information systems and information, in part, because  many of these recommendations have not been implemented. Of the  roughly 3,000 recommendations made since 2010, 73 percent had been  implemented as of November 2018; leaving 688 recommendations  unimplemented.

Agencies’ Inspectors General Are to Identify Information Security Program Weaknesses

In order to determine the effectiveness of the agencies’ information  security programs and practices, FISMA requires federal agencies’  inspectors general to conduct annual independent evaluations. The  agencies are to report the results of these evaluations to OMB, and OMB  is to summarize the results in annual reports to Congress.

In these evaluations, the inspectors general are to frame the scope of  their analyses, identify key findings, and detail recommendations to  address the findings. The evaluations also are to capture maturity model  ratings for their respective agencies. Toward this end, in fiscal year 2017,  the inspector general community, in partnership with OMB and DHS,  finalized a 3-year effort to create a maturity model for FISMA metrics. The  maturity model aligns with the five function areas in the NIST Framework  for Improving Critical Infrastructure Cybersecurity (Cybersecurity  Framework): identify, protect, detect, respond, and recover. This  alignment is intended to help promote consistent and comparable metrics  and criteria and provide agencies with a meaningful independent  assessment of their information security programs.

The maturity model is designed to summarize the status of agencies’  information security programs on a five-level capability maturity scale.  The five maturity levels are defined as follows:

Level 1 Ad-hoc: Policies, procedures, and strategy are not formalized;  activities are performed in an ad-hoc, reactive manner.

Level 2 Defined: Policies, procedures, and strategy are formalized and  documented but not consistently implemented.

Level 3 Consistently Implemented: Policies, procedures, and strategy are  consistently implemented, but quantitative and qualitative effectiveness  measures are lacking.

Level 4 Managed and Measurable: Quantitative and qualitative measures  on the effectiveness of policies, procedures, and strategy are collected  across the organizations and used to assess them and make necessary  changes.

Level 5 Optimized: Policies, procedures, and strategy are fully  institutionalized, repeatable, self-generating, consistently implemented  and regularly updated based on a changing threat and technology  landscape and business/mission needs.

In March 2018, OMB issued its annual FISMA report to Congress, which  showed the combined results of the inspectors general’s fiscal year 2017  evaluations. Based on data from 76 agency inspector general and  independent auditor assessments, OMB determined that the  government-wide median maturity model ratings across the five NIST  Cybersecurity Framework areas did not exceed a level 3 (consistently  implemented). Table 3 shows the inspectors general’s median ratings for  each of the NIST Cybersecurity Framework areas.

OMB Requires Agencies to Meet Targets for Cybersecurity Metrics

In its efforts toward strengthening the federal government’s cybersecurity,  OMB also requires agencies to submit related cybersecurity metrics as  part of its Cross-Agency Priority goals. In particular, OMB developed the  IT modernization goal so that federal agencies will be able to build and  maintain more modern, secure, and resilient IT. A key part of this goal is  to reduce cybersecurity risks to the federal mission through three  strategies: manage asset security, protect networks and data, and limit  personnel access. The key targets supporting each of these strategies  correspond to areas within the FISMA metrics. Table 4 outlines the  strategies, their associated targets, and the 23 civilian CFO Act agencies’  progress in meeting those targets, as of June 2018.

In conclusion, FITARA and FISMA present opportunities for the federal  government to address the high-risk areas on improving the management  of IT acquisitions and operations and ensuring the security of federal IT,  thereby saving billions of dollars. Most agencies have taken steps to  execute key IT management and cybersecurity initiatives, including  implementing CIO responsibilities, requiring CIO reviews of IT  acquisitions, realizing data center consolidation cost savings, managing  software assets, and complying with FISMA requirements. The agencies  have also continued to address the recommendations that we have made  over the past several years. However, further efforts by OMB and federal  agencies to implement our previous recommendations would better  position them to improve the management and security of federal IT. To  help ensure that these efforts succeed, we will continue to monitor  agencies’ efforts toward implementing the recommendations.

Chairmen Meadows and Hurd, Ranking Members Connolly and Kelly,  and Members of the Subcommittees, this completes my prepared  statement. I would be pleased to respond to any questions that you may  have.

If you or your staff have any questions about this testimony, please  contact Carol C. Harris, Director, Information Technology, at (202) 512- 4456 or harriscc@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this statement. GAO staff who made key contributions to this testimony  are Kevin Walsh (Assistant Director), Chris Businsky, Rebecca Eyler,  Meredith Raymond, and Jessica Waselkow (Analyst in Charge).

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The federal government has spent billions on information technology projects that failed or have performed poorly. These efforts often suffered from ineffective management. Agencies have also had cybersecurity failures affecting millions of people.

This testimony addresses 2 issues we identified as high risk for the federal government: management of IT acquisitions and operations, and cybersecurity.

We have made numerous recommendations on these issues since 2010.

510 of our 1,242 recommendations on management and operations have not been implemented.

688 of our about 3,000 recommendations on cybersecurity have not been implemented.