This week, the Obama administration announced plans to cut 30 IT programs with combined annual development costs of about $3 billion, and total life cycle costs estimated at about $20 billion.
Trey Hodgkins, TechAmerica’s VP of National Security and Procurement Policy, said the decision brings to a “screeching halt some very significant programs,” and added that stopping these projects now will cost the government more long-term if they are re-started later. “It’s going to cost the federal government, we believe, more money by taking this action then they will actually be saving.”
But while many large-scale modernization programs are getting the axe, federal IT spending will still increase overall this year and is projected to grow to $112 billion by 2015, a combined annual growth rate of 5.4%.
The affected programs are financial services modernization programs, an area where projects “persistently fall short of planned results once deployed,” according to a recent blog post by Peter Orszag. “For instance, the Department of Veterans Affairs (VA) has invested over $300 million in two financial system projects over the past 10 years. The first project ended in failure and no operational capability has been realized with the second.”
Additionally, Orszag announced that Federal CIO Vivek Kundra will conduct a detailed review of the “highest risk” IT projects across the federal government. Agencies will have to present improvement plans to Kundra for projects that are behind schedule or over budget.
Finally, Federal Chief Performance Officer Jeff Zients will produce recommendations within 120 days to improve federal IT procurement and “address the root-causes of problems plaguing federal IT projects and focus on proven best practices from inside and outside the federal government.”
These steps are undoubtedly part of a wider policy shift on the part of the Obama Administration to combat swelling federal deficits, as CBO director Douglas Elmendorf has been warning for months that current deficit levels are unsustainable and that spending on national debt interest and entitlements would soon eclipse defense spending as a share of GDP.
Expect more measures to trim federal deficits as we draw closer to November.