[Senate Hearing 113-97]
[From the U.S. Government Publishing Office]
S. Hrg. 113-97
REDUCING DUPLICATION AND IMPROVING
OUTCOMES IN FEDERAL INFORMATION TECHNOLOGY
=======================================================================
HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
JUNE 11, 2013
__________
Available via the World Wide Web: http://www.fdsys.gov/
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
----------
U.S. GOVERNMENT PRINTING OFFICE
82-569 PDF WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (800) 512-1800;
DC area (202) 512-1800 Fax: (202) 512-214 Mail: Stop IDCC,
Washington, DC 20402-0001
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota
Richard J. Kessler, Staff Director
John P. Kilvington, Deputy Staff Director
Keith B. Ashdown, Minority Staff Director
Christopher J. Barkley, Minority Deputy Staff Director
Trina D. Shiffman, Chief Clerk
Laura W. Kilbride, Hearing Clerk
C O N T E N T S
------
Opening statements:
Page
Senator Carper............................................... 1
Senator Coburn............................................... 3
Senator Ayotte............................................... 24
Prepared statements:
Senator Carper............................................... 39
Senator Coburn............................................... 41
WITNESSES
Tuesday, June 11, 2013
Steven VanRoekel, U.S. Chief Information Officer, and
Administrator for E-Government and Information Technology,
Office of Management and Budget................................ 6
Simon Szykman, Chief Information Officer, U.S. Department of
Commerce....................................................... 7
Frank Baitman, Deputy Assistant Secretary for Information
Technology, and Chief Information Officer, U.S. Department of
Health and Human Services...................................... 10
David A. Powner, Director, Information Technology Management
Issues, U.S. Government Accountability Office.................. 12
ALPHABETICAL LIST OF WITNESSES
Baitman, Frank:
Testimony.................................................... 10
Prepared statement........................................... 52
Powner, David A.:
Testimony.................................................... 12
Prepared statement........................................... 57
Szykman, Simon:
Testimony.................................................... 7
Prepared statement........................................... 47
VanRoekel, Steven:
Testimony.................................................... 6
Prepared statement........................................... 43
APPENDIX
Vance E. Hitch, Former Chief Information Officer of the
Department of Justice, prepared statement...................... 77
Partnership for Public Service, prepared statement............... 80
Responses to post-hearing questions for the Record from:
Mr. VanRoekel................................................ 83
Mr. Szykman.................................................. 102
Mr. Baitman.................................................. 108
Mr. Powner................................................... 112
REDUCING DUPLICATION AND IMPROVING
OUTCOMES IN FEDERAL INFORMATION TECHNOLOGY
----------
TUESDAY, JUNE 11, 2013
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 10:34 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Thomas R.
Carper, Chairman of the Committee, presiding.
Present: Senators Carper, Coburn, and Ayotte.
OPENING STATEMENT OF CHAIRMAN CARPER
Chairman Carper. Well, good morning. Our thanks to our
witnesses for joining us today as we examine the
Administration's ongoing efforts to identify and eliminate
areas of duplication and areas of waste with respect to Federal
information technology (IT) and the role that Chief Information
Officers (CIOs) can and should play in that process. My thanks
as well to Dr. Coburn, to his staff, and to our staff for their
help in putting this hearing together, and to all of you for
coming and for your preparation.
This Committee is holding this hearing today because, to
put it simply, when it comes to information technology, the
Federal Government needs to do a better job of managing its
considerable investments. I think I will start just by quoting
one of our colleagues, and this is his statement:
``Poor information [technology] management is, in fact, one
of the biggest threats to the government treasury because it
leaves government programs susceptible to waste, fraud, and
abuse.''
That is the quote. And it is not something that Tom Coburn
said or John McCain said or Claire McCaskill said or I said.
That is something that Bill Cohen said when he was a Senator.
Those are the words that he spoke in 1995 when he testified
before this Committee when it was just the Committee on
Governmental Affairs in the summer of 1995, and he was
testifying on behalf of legislation that he had introduced
called the Information Technology Management Reform Act, 18
years ago.
That bill is also known as the Clinger-Cohen Act, and I
have no doubt that all of the witnesses on this panel are quite
familiar with it because it created the position of agency
Chief Information Officer. The Clinger-Cohen Act was passed
almost two decades ago. Back then, a blackberry was a fruit, a
tweet was something that only birds did, and Google was just a
really big number. Today we live in a world of smartphones and
tablets, social media and the cloud. Yet the more things
change, the more they stay the same. Despite passage of the
Clinger-Cohen Act and the creation of agency chief information
officers, our Federal Government still wastes a tremendous
amount of money by poorly managing IT systems and investing in
duplicative systems.
In 1996, when the Clinger-Cohen proposal became law, the
Federal Government was spending about $25 billion a year on
information technology systems. That is not an insignificant
amount of money, but today we spend more than three times that
amount. We spend about $80 billion a year.
I would ask today's witnesses, with all the money we spend
each year on information technology, do we really think we are
getting what we are paying for? Can agency managers look at
their investments in this area and tell the American people
that they are managing the taxpayer dollars entrusted to them
effectively? And I am afraid the answer to both questions has
to be no.
In 2013, we see many of the same problems that Senator
Cohen found in 1995: Poor management of information technology
systems, wasted and duplicative investments, and billions of
dollars spent on outdated legacy systems. Too often, agencies,
or components of agencies, seek to develop new solutions first
before assessing existing options for sharing services with
other agencies or even within their own agency. As I mentioned
before, the more things change, the more they stay the same.
To address these persistent problems, in 2012 the
Administration launched a new initiative called
``PortfolioStat'' which required Chief Operating Officers
(COOs) across government to lead an agency-wide review of their
IT systems and eliminate areas of duplication and waste. The
Federal CIO then met with each agency to discuss, among other
things, potential duplicative systems and investments that did
not appear to be well aligned to agency missions. Through this
process, agencies identified more than $2.5 billion in IT
spending reductions that could be achieved from 2013 through
2015.
We are happy to have the Federal Chief Information Officer
here with us today to tell us about the first version of
PortfolioStat and what the future holds for that initiative.
Mr. VanRoekel, I understand that you have new responsibilities
at the Office of Management and Budget (OMB), but I am hopeful
that, as our Federal CIO, you will stay actively engaged in the
PortfolioStat process because I strongly believe that your
participation in those meetings with the Chief Operating
Officers and the other agency leaders is key to getting the
kind of results we want.
One of the key takeaways from the first round of
PortfolioStat sessions was that the decentralized manner in
which many agencies managed their information technology
investments lead to ``inefficiencies and duplication.'' The
fact is that despite the Clinger-Cohen Act, agency CIOs are
frequently not recognized as the key leaders in managing
information technology at an agency. Too often there are many
CIOs in a department, and many of them act independently of one
another. And as a result, departments are unable to take an
enterprise-wide view of their investments which results in
duplication and missed opportunities to leverage existing
systems.
I am very interested to hear from our panel, and especially
from Mr. Szykman.
Chairman Carper. Mr. Szykman, Mr. Baitman, and Mr. Powner,
I know how to say your name. We have said your name a lot. But
I want to hear from our panel, especially from Mr. Szykman and
Mr. Baitman about their experiences at large decentralized
Departments like Commerce and Health and Human Services (HHS).
Let me just finish my statement with another quote from the
same guy, Bill Cohen. Here is what he said, ``But we must also
understand that statutory change is only half the battle. The
other half involves changing the management culture at agencies
that has traditionally focused on technical performance and
bureaucratic process. We must ensure that the top levels of
agency management understand how information technology can
change and improve their agencies. Cultural change is critical
to changing the way government approaches its information
technology needs.''
And I end with that quote because I think it highlights the
fact that our job is not done once a bill is passed into law.
In many ways that is when the hard work really begins---when we
roll up our sleeves and do the oversight necessary on this
Committee and in other places necessary to ensure that a law is
being implemented properly. It is ultimately congressional
oversight that lets agency leaders know where our priorities
lie and that can help agency leaders break through any
resistance there may be to change.
With that being said, I am happy to turn to Dr. Coburn for
whatever comments he would like to make. Dr. Coburn.
OPENING STATEMENT OF SENATOR COBURN
Senator Coburn. Well, thank you, Senator Carper, and
welcome, all of you.
I think there are four or five problems in front of us, and
having done this a number of years, we keep trying to solve the
same problems. And here is the crux of it.
We are well intentioned. You are well intentioned. But we
do not give people the authority to do what we ask them to do.
And even in OMB's recent guidelines, they essentially in four
or five areas undercut the Chief Information Officer and
agencies by allowing them to place other than our key computer
IT people in charge of the programs. That is the first problem
I see, and I will go into detail as we go through the
questioning on that.
The second problem is we do not have real transparency and
metrics on what we are doing. We do in one Department. It is
very rarely we get to really praise the Department of Homeland
Security (DHS). But if you look at what they have done on their
data centers, they actually track it transparently, know what
they are doing, know how many they have, know how many they
have eliminated, and know how much money they have saved. You
cannot do that anywhere else in the Federal Government.
So we lack transparency, and we lack good metrics. As a
matter of fact, the metrics are changing in the middle of all
this, according to OMB.
The other thing is the IT Dashboard is a farce. We have
looked at computer programs at the Pentagon, and according to
the IT Dashboard, they are doing fine, which is absolutely
opposite of what is actually happening in the Pentagon. Half of
the money we spend on IT goes through the Pentagon. Half of it
is wasted every year. And yet the Dashboard shows no problems
with the Pentagon's programs, just like the Pentagon shows no
problems in improper payments. Just because they do not have
any idea whether they have a problem, and they do not have any
idea whether they really have improperly payments. Which goes
back to Audit the Pentagon Act, that you are never going to
control the Pentagon until we can have numbers and
accountability and metrics to get it done.
The fourth area is just the communication of what is
actually happening. Some of our agencies, some represented here
today, actually know. But once you actually get to working on
this, some of our Secretaries and some of the people inside
some of the agencies do not like it because there is
accountability coming and our CIOs get thrown out, two of which
recently, which were actually doing a good job. But because
other priorities other than transparency, other than metrics,
other than good management take precedence--which goes back to
the first problem, because if you are not going to give CIOs
the authority to do what they need to do, then why do you need
a CIO?
And we have read the testimony. We have looked at all this.
I hope to have a great discussion. But some change ought to
come out of this oversight hearing, both in terms of
transparency, in terms of giving CIOs the authority they need
to actually make the decisions, and create the transparencies
associated with that so it can be measured. And actually my
compliments to DHS to create a timeline so you can actually see
it and manage it, and we can as you see it and manage it.
My final point I would just make is we had expected savings
coming out of the data center consolidation initiative. Those
savings really are not materialized because if we did have
savings, we are spending it somewhere else, essentially. And
now we are going to consolidate the savings to less than what
we had hoped to achieve through the latest iteration. So we are
actually going backward. The stream is more powerful than our
oars. And, with excess of $80 billion a year spent on IT, of
which a conservative estimate, at least a third of it is not
effectively spent. We can do better, and, that is $24 billion.
That is 30 percent of the sequester. I mean, everybody talks
about the sequester, how hard it is. But there is plenty of
money in this government. There is $250 billion of waste,
fraud, duplication, and stupidity, and what we need is to give
you all the authority to go after it and to make smart
decisions.
I will just end with this: I trust the vast majority of
executives in our government. What I do not trust is Congress
to treat them like grownups and give them authority and then
hold them accountable for it. And hopefully through this
hearing today we can make some steps and get some learning
through the communication that will allow us to do that.
David has been great through what he has done through the
years. Almost every question I am going to ask you, I am going
to ask him what he thinks about it and your answer because what
we want is the best. And this is not meant to knock on anybody,
but we have big problems. And they are getting worse. They are
not getting better. They are getting worse. And the effort is
being made at OMB. I am not saying it is not. But we can do a
far better job than we are doing.
So I look forward to your testimony. Again, I thank you for
being here to discuss these things.
Thank you, Tom.
Chairman Carper. Thanks, Dr. Coburn.
Just to put what Dr. Coburn has said in context, if that
$24 billion number that he held out was roughly a third of the
money we are spending on--that is in the ballpark. That is a 1-
year number. We just passed this week a farm bill that is
designed to overhaul the way we run agriculture programs. It is
expected to save about $24 billion over 10 years. And we are
talking about literally the equivalent, if that $24 billion is
correct, of doing that every year for the next 10 years, like
$240 billion. That is a quarter of a trillion dollars. That is
real money, a lot of money.
The other thing I would say is that if the Department of
Health and Human Services, if they can get this right, if they
can serve as an example, maybe the rest of us can, too. So it
is always good to have somebody out there providing a good
example, and I think we have one. And we are happy that you are
here to talk about that.
Senator Coburn. Could I----
Chairman Carper. Go ahead, please.
Senator Coburn. Could I just have a moment of disagreement
with my Chairman? We state that it saves $24 billion--6 comes
from sequester, $2 billion is the real savings, and none of
that will be there if prices of crops go down. So what
politicians in Washington put out as fact are not fact. My
quote is based on all the hearings we have done through the
years, knowing where we are, and oversighting the Department of
Defense (DOD) and knowing how much they waste. And so that is
not even looking at any of the other departments.
So the efforts that you are doing, we did save some money,
and that is a marked improvement. But we did not come anywhere
close to saving $24 billion for the American people.
Chairman Carper. All right. Well, the Congressional Budget
Office (CBO), they are the ones who score these things, and
that is what they told us, so we will see. We do not want to
get into that argument.
I am glad you are here. Let me just briefly introduce each
of you.
Our first witness is Steven VanRoekel, who was appointed as
U.S. Chief Information Officer by President Obama in August
2011. Prior to his position in the White House, he served in
executive positions in the U.S. Agency for International
Development (USAID) and for the Federal Communications
Commission (FCC). Before joining government, Mr. VanRoekel
spent a number of years at Microsoft Corporation where he
worked closely with the corporation's co-founder Bill Gates.
Our next witness, Simon Szykman, serves as the Chief
Information Officer of the U.S. Department of Commerce. As the
Department's CIO, Mr. Szykman is responsible for maintaining
oversight over a diverse portfolio of programs across the
Commerce Department's dozen bureaus. He previously served as
the CIO of the National Institute of Standards and Technology
(NIST).
Our next witness is Frank Baitman. Mr. Baitman is currently
the Chief Information Officer with the Department of Health and
Human Services, where his emphasis has been on delivering
improved business outcomes for the agency's technology
investments. Recently Mr. Baitman served as the White House
entrepreneur in residence on assignment at the Food and Drug
Administration (FDA).
And our final witness today is David Powner. David is no
stranger to our Committee. Mr. Powner is the Director of
Information Technology Issues at the U.S. Government
Accountability Office (GAO). He is currently responsible for a
large segment of GAO's IT investigations. He has over 20 years
of experience in information technology in both the public and
private sectors.
Your entire statements will be made part of the record. We
will start with Mr. VanRoekel, and I look forward to your
comments, each of you, and then to our questions and
conversation. Thank you. Welcome. Please proceed.
TESTIMONY OF STEVEN VANROEKEL,\1\ U.S. CHIEF INFORMATION
OFFICER, AND ADMINISTRATOR FOR E-GOVERNMENT AND INFORMATION
TECHNOLOGY, OFFICE OF MANAGEMENT AND BUDGET
Mr. VanRoekel. Thank you. Good morning, Chairman Carper,
Ranking Member Coburn, and Members--we do not have other
Members of the Committee--staff of the Committee. Thank you for
this opportunity to testify on the Administration's efforts to
manage the Federal Government's investment in information
technology.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. VanRoekel appears in the Appendix
on page 43.
---------------------------------------------------------------------------
During my nearly 20 years in the private sector, I
witnessed firsthand the power technology can have on
organizations and have seen the incredible impact innovation
has on society. As an executive at Microsoft, I focused every
day on improving core services and customer value while also
cutting costs. And as the United States Chief Information
Officer and now Acting Deputy Director for Management at OMB, I
bring that same vision with me to help drive innovation to grow
the American economy, drive efficiency and effectiveness into
government, and foster an accountable and transparent
government that provides better service to the American people.
Current expectations from the American public underscore
the need to drive innovation and efficiency in government.
Though they make up a small portion of overall government
spending, IT investments have widespread impacts across
agencies and are central to everything we do. As such, we must
ensure that the government maximizes the return on its
investment in IT, drives innovation to meet our customer needs,
and establishes a trusted foundation for securing and
protecting our assets and information.
Simply put, we must manage our IT investments so they
deliver results for our most important customer--the American
people.
Sound management is rooted in evidence, metrics, data, and
incentives. This is why in March 2012, I initiated
PortfolioStat to take a data-driven look across agencies to
identify common areas of spending to reduce duplication and
lower costs. Throughout last summer, I conducted a series of
face-to-face sessions with agency leadership to examine their
IT portfolios. Rather than look at individual investments, the
review took a very broad, horizontal approach. For example,
they spanned agency components and employed both qualitative
and quantitative data to benchmark these agencies against their
peers.
To date, PortfolioStat, as you mentioned, has yielded
nearly 100 opportunities to consolidate or eliminate redundant
IT investments representing more than $2.5 billion in potential
savings for the next 3 years. So far, and a year in, agencies
have reported approximately $300 million in realized savings,
putting us ahead of our target. As we expand PortfolioStat, we
expect our goals to expand, and we will work hard to continue
to drive those results.
OMB recently released guidance for PortfolioStat 2013. This
guidance streamlines agency data collection, adds analytical
capabilities, and establishes consistent reporting to hold
agencies accountable for the goals they set in 2012.
The initial PortfolioStat sessions concentrated on
commodity IT. The fiscal year 2013 effort continues this work,
but focuses on providing agencies with tools to better manage
IT as a strategic investment.
There has never been a more crucial time to make smart
investments in IT. Advances such as cloud computing, big data,
and mobile provide new opportunities for transforming how we
live and function as a society. They equally provide
opportunities for transforming how we operate government. Our
efforts to date have shown that there remains tremendous
opportunity to improve our management of Federal IT, and we
should seize on this opportunity to continuously drive the
delivery of better service, the realization of greater
efficiencies, and the implementation of more vigilant
cybersecurity.
I appreciate the Committee's interest and continued
support. Thank you again for this opportunity, and I look
forward to our conversation. Thank you.
Chairman Carper. Good. Thanks. Thank you, sir.
Next, Mr. Szykman. Please proceed.
TESTIMONY OF SIMON SZYKMAN,\1\ CHIEF INFORMATION OFFICER, U.S.
DEPARTMENT OF COMMERCE
Mr. Szykman. Chairman Carper, Ranking Member Coburn,
members of the staff, I am pleased to have been invited here
today to discuss with you ongoing efforts at the U.S.
Department of Commerce aimed at eliminating duplication and
improving outcomes associated with the Department's information
technology investments.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Szykman appears in the Appendix
on page 47.
---------------------------------------------------------------------------
I have been the Chief Information Officer at the Department
of Commerce for just over 3 years and spent over 3 years before
that as the CIO at the National Institute of Standards and
Technology. And in my 6 years in the role of CIO, I have spent
much of my time working to improve efficiencies and governance
in the organizations that I have supported. Over the past 3
years, Commerce has taken a variety of steps to strengthen
governance relating to its IT investments as well as to improve
the efficiency and effectiveness of IT spending at Commerce.
We have made significant advances in strengthening
governance, both generally and specifically in the area of IT.
Since 2010, Commerce has significantly improved how it conducts
oversight of IT investments through the establishment of a new
Office of Program Evaluation and Risk Management (OPERM), and
through existing mechanisms such as our IT Review Board, our IT
Dashboard Review and Assessment Process, and TechStat reviews.
Last year, then-Commerce Deputy Secretary Dr. Rebecca Blank
recognized the importance of CIO authorities in the quest for
greater efficiencies in the Department's IT spending. She
directed me in my role as CIO to develop an IT Portfolio
Management Policy, which was subsequently issued in June of
last year. The provisions in this policy give the Commerce CIO
a greater role in setting department-wide architecture
standards, identifying and implementing shared services,
supporting department-level budget formulation, reviewing IT
investments, and managing the IT workforce at the Department.
The new policy and related delegations have provided
significant new support for several of the initiatives I will
be discussing today.
The Commerce IT Portfolio Management Policy has led to a
broad push into shared services, both within bureaus and across
bureaus. My written testimony includes several examples of
shared services that have been implemented within Commerce
bureaus. In some cases, implementation of cross-servicing
models has extended beyond individual services and covers a
complete suite of IT services.
At the beginning of this fiscal year, Commerce's Minority
Business Development Agency transitioned its full portfolio of
IT services, staff, and infrastructure to the Office of IT
Services within my office. A similar transition of services is
underway for the Economic Development Administration (EDA).
At the department-wide level, Commerce's Enterprise
Continuous Monitoring Operations Initiative, currently in
implementation, will deploy a single security continuous
monitoring infrastructure across the entire Department. Next
year we are expecting to establish for the first time an
enterprise security operations center that will provide
department-wide analytical capabilities and improve our ability
to respond to and detect cybersecurity incidents.
In addition to these shared services initiatives, data
center consolidation efforts are also underway across Commerce.
In the headquarters building, several bureau level data centers
or data facilities have been closed and consolidated into a
single data center that supports all of the occupants of the
building. Among the larger bureaus, we also have several
bureaus that are now hosting equipment that belongs to the
smaller bureaus, which had previously been located in
independently managed facilities.
Commerce has also been making use of strategic sourcing as
another mechanism to improve the efficiency of our IT spending.
In 2011, the Department had over 100 contracts for purchasing
PCs. In January of last year, we replaced those contracts with
a single contract supporting the entire Department, and we are
now realizing savings of 30 to 35 percent for every PC,
desktop, and laptop computer that we purchase.
Since that time, a number of other department-wide
strategic sourcing vehicles have also been put into place, and
several examples are provided in my written testimony.
The benefits of strategic sourcing contracts go beyond just
the direct cost savings. They also provide significant
improvements in terms of managing of existing staff resources,
because it allows our existing acquisitions staff to focus on
local requirements and mission-unique requirements rather than
replicating the effort of focusing on commodity investments
that are common to multiple organizations.
In order to maintain a department-wide focus on
implementation of improvements in portfolio management, my
office and all of Commerce's bureaus have been asked to include
reporting on IT priorities in our quarterly performance
updates. Through the Department's balanced scorecard process,
the Office of the Secretary, the Secretary, and Deputy
Secretary track outcomes-oriented measures and have covered a
range of initiatives, including updates on implementation of
shared services, strategic sourcing initiatives, bureau IT
portfolio management plans, and improvements to Commerce's IT
security.
I am pleased to have had the opportunity to discuss with
you today the evolution in IT portfolio management at Commerce.
Although we have many accomplishments we are proud of, we
recognize that many more opportunities lie ahead of us. And
with support from the Office of the Secretary, we intend to
press aggressively forward to pursue these opportunities.
The benefits we have realized from these initiatives are
merely representative of more fundamental changes to IT
management that is going on at Commerce. Commerce leadership
has worked together to take on one of the most significant
challenges facing senior IT leadership: The need for greater
empowerment to support better decisionmaking needed to drive
efficiencies and improve effectiveness of IT spending across
all Federal agencies. The policies, plans, and initiatives that
have been instituted have created a foundation for sweeping
changes to how IT is being managed. The results of these
portfolio management efforts are only starting to be realized,
and the ultimate impacts are expected to grow over time.
Thank you very much.
Chairman Carper. Thank you. Mr. Baitman.
TESTIMONY OF FRANK BAITMAN,\1\ DEPUTY ASSISTANT SECRETARY FOR
INFORMATION TECHNOLOGY, AND CHIEF INFORMATION OFFICER, U.S.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Mr. Baitman. Good morning, Chairman Carper, Ranking Member
Coburn, and Members of the Committee. My name is Frank Baitman,
and I am the Deputy Assistant Secretary for Information
Technology and the Chief Information Officer at the U.S.
Department of Health and Human Services. I am honored to join
you here today.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Baitman appears in the Appendix
on page 52.
---------------------------------------------------------------------------
The work of this Committee is crucial to the effective
management of government resources. Information technology is
deeply integrated into the business of HHS, and we are
continually focused on delivering improved results through our
portfolio of investments.
The Department of Health and Human Services is a large
knowledge-based organization. We deal with health and human
services spanning fundamental knowledge to delivery, from
applied research to the regulation of drugs and devices, from
public health preparedness to the reimbursement for medical
services. Each of the many missions at HHS is managed by a
distinct operating division, and each division has their own
Chief Information Officer.
Given this federated structure, my role as the Department's
CIO is to have a holistic view of the entire HHS enterprise.
With that high-level view, my responsibility is to ensure the
various distinct missions being carried out across the
Department are supported by a secure, cost-effective IT
infrastructure. I believe this affords me a unique vantage to
reduce duplication and streamline operations. But just as
importantly, because we are a knowledge enterprise, there is
great value in promoting collaboration and enabling information
developed in one corner of the Department to flow freely to
others who can use it to advance public health and human
services.
In my 15 months at HHS, we have seen some notable successes
in providing that kind of secure, cost-effective infrastructure
for the Department. Just a few weeks ago, we announced that
through the FedRAMP process, HHS had granted Amazon Web
Services (AWS) an authority to operate. I highlight that
accomplishment because, with the authority to operate, the
entire Federal Government could now quickly and confidently use
Amazon Web Services for their own business needs, knowing that
this vendor meets strict Federal cybersecurity standards.
I am proud that our team did such a thorough job of
building a robust process that other departments are now asking
to replicate our approach with other vendors. So with that one
project, we have created real value not just for HHS but for
the entire Federal Government. And as other cloud service
providers are approved through the FedRAMP process, we will
create a competitive environment that ultimately benefits the
American taxpayer.
That is a good example of providing the infrastructure I
talk about. When it comes to preventing duplication and
streamlining operations, we are also excited about some of the
structural and procedural advances we are making at HHS. Most
importantly, I think, is our recently implemented IT governance
model across HHS.
Because the majority of the Department's IT resources are
tied directly to our programs and our operating divisions, we
have established three IT steering committees to bring together
technology and program leaders from across these divisions.
That is a key point I would like to emphasize. We believe that
the best investment decisions are made when both the IT and
program leadership collaborate and there is executive ownership
to drive agreement to closure.
These three committees bring together technical and
business leaders to take a functional view of health and human
service systems, scientific research systems, and
administrative and management systems to provide functional
oversight across the Department's IT portfolio.
Some of these priorities we are driving at HHS, but I would
also like to recognize the impact of administrative initiatives
on the technology direction we are taking at HHS, including
those priorities I have just described.
PortfolioStat that we have talked about this morning in
particular is proving to be a valuable tool. As with everything
I am talking about here, knowledge and transparency are key to
success. The first iteration of PortfolioStat helped the most
by making sure that we shared IT planning information across
our enterprise in a clear and consistent way.
Second, PortfolioStat provided a mechanism to drive a
conversation within the Department about department-wide IT
consolidation activities. One of our most comprehensive
consolidation efforts currently underway is the Hire-to-Retire
IT modernization program. Moving the IT systems that support
our core human resources, payroll, and time and leave functions
to a shared service provider. We are effectively outsourcing a
commodity activity and getting a better, more cost-effective
solution than we have in-house today. By the completion of this
effort, we will have sunset at least ten legacy systems, and we
will have consolidated multiple conflicting H.R. data sources
into a single authoritative system of record. PortfolioStat
helped us push forward on this effort.
We are also evaluating the prospect of consolidating our
six existing e-mail systems and moving them to a cloud e-mail
provider, which we expect could have comparable benefits to the
Hire-to-Retire effort. And, of course, we are looking for more
opportunities like these across the Department.
To be sure, there is an opportunity to improve the
management of IT activities, but that does not necessarily mean
that centralization is the right solution in every instance.
Mission-related technologies and business operations are often
best driven by those closest to the mission. What is important
to me at HHS is striking a balance so that I can provide the
support that I am expected to provide while not getting in the
way of anyone accomplishing their specific mission.
As the CIO at HHS, my job is to make sure we effectively
and efficiently manage our information resources. To be
successful, we need to leverage our new governance structure to
identify similar functions that take place across the
Department through a strong business IT partnership. When
dedicated individuals from across the Department come to the
table with this knowledge, we can make enterprise decisions
that reduce our administrative overhead and allow our programs
more resources to accomplish their vital public health and
human services missions.
Thank you for the opportunity to appear here today.
Chairman Carper. Thanks so much, and thanks for coming and
telling that story. That is good.
Mr. Powner, glad to see you. Please proceed.
TESTIMONY OF DAVID A. POWNER,\1\ DIRECTOR, INFORMATION
TECHNOLOGY MANAGEMENT ISSUES, U.S. GOVERNMENT ACCOUNTABILITY
OFFICE
Mr. Powner. Chairman Carper, Dr. Coburn, we appreciate the
opportunity to testify on the Federal Government's efforts to
address duplicative IT spending and save taxpayers billions of
dollars.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Powner appears in the Appendix on
page 57.
---------------------------------------------------------------------------
The Federal Government spends $80 billion annually on IT,
and the past several years has resulted in major improvements
in the transparency in the return on these investments. For
example, the Federal IT Dashboard provides a CIO assessment of
over 700 major IT investments, and the information has been
used to terminate and rescope underperforming projects, and
according to OMB has resulted in almost $4 billion in life
cycle savings.
In addition, the data center consolidation effort was
initiated to improve the government's low server utilization
rates, which was estimated between 5 and 15 percent, far below
the goal of 60 percent. This effort is to result in closing
1,000 centers and save $3 billion.
Despite great progress on these initiatives, much more
needs to be done since the Dashboard currently shows that we
have about 160 projects at risk totaling $10 billion.
Dr. Coburn, to your point, these numbers are understated
because we still have the Department of Defense reporting no
red investments when we all know it has many, and on data
centers, our report delivered last month for this Committee
showed that OMB, the General Services Administration (GSA), and
the Data Center Task Force need to step up efforts to track
cost savings and define metrics further for those centers that
remain to optimize performance.
Also, we are 3 years into the data center consolidation
effort, and the government still does not know how many centers
it has. Just last week, we learned that about an additional
3,000 data centers are now being reported, bringing the
government's total north of 6,000 data centers.
Turning to duplication, this $80 billion IT spend has many
duplicative investments that OMB, to its credit, is attempting
to tackle with its latest IT initiative called
``PortfolioStat.'' Before I comment on OMB's efforts, I would
like to present some numbers on the amount of duplication that
exists.
We issued a report that highlighted hundreds of
investments, providing similar functions across the government.
These numbers are staggering. For example, annually the Federal
Government has invested in 780 supply chain systems totaling $3
billion, 660 human resources systems totaling $2.5 billion, and
580 financial management systems totaling $2.7 billion. Again,
these are annual expenditures. We recommended that Federal
agencies ensure that these IT investments are not duplicative
as part of their annual budget submissions.
Mr. Chairman, following that review, we reported on our
deeper look into investments at the Departments of Defense,
Homeland Security, and Energy. Specifically, we looked at over
800 investments at these three agencies associated with human
resources, IT, and supply chain management. We found 37
investments in 12 categories that were duplicative. For
example, the Air Force had five similar contract management
systems, the Navy had four similar personnel assignment
systems, and Energy had very similar back-end infrastructure
investments. Addressing this duplication is important since
Defense and Energy had planned to spend about $1.2 billion on
these investments over a 5-year period. Our report highlighted
the details of these investments and made recommendations to
eliminate duplication.
I would like to comment here that if auditors could find
this duplication within agencies, there is no excuse for IT
investment boards and agencies' CIOs not to do the same.
The good news, Mr. Chairman, is that each agency has
actions underway to tackle this duplication, and in March of
last year, OMB initiated their PortfolioStat initiative to
tackle this proliferation of duplicative investments. We
currently have a review underway for this Committee where we
are evaluating each of the agencies' plans to tackle
duplication.
OMB in its most recent memo specifying PortfolioStat
guidance States that the results so far have been significant
and that there are nearly a hundred opportunities to
consolidate or eliminate duplicative IT investments, like
mobile and desktop contracts. This initiative is to result in
savings of approximately $2.5 billion through 2015. The latest
PortfolioStat initiative is promising if carried out
effectively. However, I would like to offer four specific
observations regarding it.
No. 1, cost savings are much higher than $2.5 billion. Our
current review shows that agencies collectively are reporting
$2.4 billion in potential savings, and this is without four
agencies reporting, including the Departments of Defense and
Justice (DOJ). Clearly, DHS is the gold standard here. Their
estimated cost savings are $1.3 billion, accounting for more
than half of the reported savings.
No. 2, metrics and transparency are needed to be
successful, and our latest data center report shows that the
Administration can do a much better job in these areas.
No. 3, CIO authorities need to be strengthened at many
agencies if CIOs are to carry this out. We are currently
learning that not all CIOs have authority over commodity IT,
which is not a very high bar.
And, No. 4, over time, portfolio management needs to be
expanded beyond commodity IT and include all IT investments if
we truly want the $80 billion effectively managed.
In summary, Mr. Chairman and Dr. Coburn, many of the
initiatives over the past several years have improved
transparency. They have also resulted in better management of
large IT acquisitions and technology operations, and there has
been some elimination of duplication. However, each agency
needs more leadership, and also there needs to be more
leadership out of OMB if we are truly to do this right over
time.
Dr. Coburn and Chairman Carper, this concludes my
statement. Thank you for your leadership on this topic, and I
would be pleased to respond to your questions.
Chairman Carper. Good. Thanks very much for that statement,
David.
I am going to come back to you and just ask you to start
off. Let us go back in time. Eighteen years ago, Bill Cohen, a
Senator, sat in this room and talked about the legislation that
ultimately became the Clinger-Cohen law. Just think out loud
for us what their vision was. What was their vision all those
years ago?
Mr. Powner. Well, there were two large areas in that bill.
The vision was to give CIOs more authority, to have them report
to the agency head and for them to have a seat at the
management table. I do not think that has happened.
The other big vision was IT investment management. It was
to create a governance process on how we choose investments and
manage those investments on an annual basis. And that is
clearly what Steve is doing with his PortfolioStat initiative.
But we have some agencies that do a decent job on their IT
investment management. We took the Internal Revenue Service
(IRS) off the High Risk List this year. They have a pretty
solid governance process. I think DHS was trying to do things,
and that is why they have the high reported savings on
PortfolioStat. But that was the vision, to have a real strong
leader and to effectively govern the IT investments.
Chairman Carper. All right. I was talking with someone the
other day about the role of the executive branch versus the
role of the legislative branch, and one of the things we do, we
legislate and try to create policy, with input from the
executive branch, but we do not execute. That is the role of
the executive branch. And a big part of our role is to come
back from time to time and do oversight to see how are they
doing with respect to this vision laid out all those years ago
by Bill Clinger and Bill Cohen. How well are we meeting that
vision, measuring up to that vision?
When you think--and there are some bright spots here. This
is not all doom and gloom, as you suggest. We have a couple of
bright spots that are represented here by Mr. Szykman and Mr.
Baitman. But in terms of why significant parts of this vision
have not been realized and what the Administration needs to do
further and what we need to do further to better ensure that
the bigger pieces have been realized, give us some good advice
here today.
Mr. Powner. This goes back to many years when we were at
the Subcommittee holding hearings on this. I think one of the
keys is transparency. We have fought for years and this
Committee was essential on getting an accurate list of troubled
projects so that we could do something about it. It goes back
to the Management Watch List and the High Risk List, and that
was not always transparent. We now have the Dashboard. And, Dr.
Coburn, I agree with you. DOD, what is on there for DOD is not
accurate. But you have other agencies that----
Chairman Carper. Say that again about DOD.
Mr. Powner. It is not accurate what DOD is currently
reporting. I mean, they are reporting no red investments, and,
in fact, they have red investments. We highlighted that in a
report a year ago, and we think something should be done about
that. You cannot fix a problem on your acquisitions if you do
not acknowledge that you have a problem. And it is just
important that we have accurate information. Steve has a great
process in place, the TechStat process that tackles a lot of
these red and yellow investments. We need more of that.
So I think it starts with transparency. Also, you need
effective leadership. But then there needs to be follow-
through. Over the years we have seen many good plans, but we
never drive them to closure.
Chairman Carper. OK. In terms of leadership, Dr. Coburn and
I have been working with Sylvia Burwell to try to help make
sure that we have a leadership team at OMB in place. And a guy
who has come out of this Committee has been nominated by the
President to be the Deputy OMB Director. I think his name was
hotlined yesterday. I do not know if he got through in order to
be confirmed. But Sylvia has been pretty much, in the month or
so she has been in place, not running the show but, I mean,
there is no confirmed Deputy OMB Director, there is no
confirmed Deputy for Management, there is no one confirmed to
run the regulatory part of the House at the Office of
Information and Regulatory Affairs (OIRA). And they got Danny
Werfel over there running the IRS instead of being in our
control. There are just huge leadership challenges. One of the
Administration's responsibilities is to nominate good people,
and one of our responsibilities is to vet them when they do,
and if they measure up, to get them confirmed.
Let me come, if I could, to either of our witnesses. I will
go back in time. Let me put this in some context. In my old
role as Governor, I used to say to my cabinet from time to
time, when we were dealing with a particular challenge, I would
say, ``Somebody in some State, some Governor, has faced this
challenge, and they have dealt with it effectively. Our
challenge in Delaware was to find out who had done it and to go
out there and see if that result, their methods were
transferable, exportable to us and could be right-sized in what
we could learn from them.
Commerce, the Department of Health and Human Services, you
all are doing something right here, and the reason why we asked
you to come today and testify is because we think you set an
example for our other agencies, certainly for the Department of
Defense but for others as well.
What is it about your two agencies that have enabled you to
stand out in the crowd here, to receive not brickbats but some
bouquets for a change?
Mr. Szykman. I think where I want to start is just by
saying that I cannot overstate the importance of senior
leadership support. Of anything that I could conceivably take
credit for accomplishing over the past 3 years, I would not
have been able to do it without support from the chief
financial officer (CFO) of the Department, Scott Quehl, who
left back in January, and then Dr. Rebecca Blank, who at
varying times was the Acting Deputy Secretary--Deputy Secretary
and Acting Secretary.
The support from leadership at that level has been critical
in not just changing policies but really driving and assessing
outcomes. I mentioned earlier our internal performance
management process, our balanced scorecard process, and holding
all of the bureaus accountable from the senior levels at the
Office of the Secretary through that process has helped ensure
that the entire community, not just CIOs in the department-wide
IT community, but senior career people, chief operating
officers, chief financial officers, and bureau chiefs have been
very strongly supportive and aligned with the priorities coming
out of the Office of the Secretary. So I think the----
Chairman Carper. But it all starts with leadership, doesn't
it? It all starts with leadership.
Mr. Szykman. It does.
Chairman Carper. Yes, OK. Mr. Baitman, go ahead, and then I
will turn it over to Dr. Coburn.
Mr. Baitman. Well, I will say ditto, it always starts with
leadership and I think that is foundational.
One of the things that we are doing at HHS that I mentioned
in my opening remarks is the new governance structure that we
are putting in place. We recognize that we did not have an
enterprise-wide view of investments, and because of that there
was redundancy, there was waste.
The new governance structure that we are putting in place--
and we are right in the midst of doing that right now--is going
to give us a view where we can sit down with business leaders
and technologists and say, these are the systems that we are
spending our money on. Is there a better way of doing this? Is
there an opportunity to take these multiple systems,
consolidate them, and move to a better place as we modernize.
I think that it gets back to the issue of transparency.
When you know what you have, you can actually manage it.
Chairman Carper. All right. Thanks. Dr. Coburn.
Senator Coburn. Well, thank you. Steve, I think you have
done a good job at OMB, and I appreciate you coming out of the
private sector and serving the country.
My real concern is, as I said in my opening statement, how
do we empower CIOs, and I was really worried as you--the
decision came out of OMB to not mandate that the CIO was head
of your latest program, and so we have, what, five agencies
where we did not make the CIO head of the PortfolioStat. In
other words, we have five agencies where the Secretary decided
not to make the Chief Information Officer head of it. And my
thought is that what we have done is disempower the CIOs in
those agencies as we are going to do this. Because if you go
back to quote Mr. Szykman or Mr. Baitman, leadership was the
key, and buy-in, and Mr. Baitman has experience at a couple of
agencies. At one he had buy-in and at one he did not. And so
consequently one of them is a mess, and the one that is getting
better, he has management buy-in.
So would you comment on that decision? Rather than really
strengthen CIOs, what you all did is allow Secretaries the
capability to not utilize that.
Mr. VanRoekel. Well, I am not really sure about the
decision in particular on PortfolioStat. CIOs, of course, are
central to the leadership team to execute on that. Two points.
One is the first memo issued by my office when I got this
job in 2011 was specifically on CIO authorities. It was M-11-
29, basically reminding agencies of their obligation to empower
CIOs, especially in the area of commodity IT and other things.
Connecting the dots to today and going back into the past, as
Senator Carper has referenced, the Clinger-Cohen Act actually
begins by saying ``the head of agencies shall,'' and it is very
specific about empowering the head of the agency, the
Secretary, the Deputy Secretary, Chief of Operations, et
cetera, to take ownership for the IT resources and to focus on
that.
What I have found in PortfolioStat and my agenda when
conducting these face-to-face meetings was really to teach
agencies how to run a private sector investment review board,
how to get all the C-level executives together in a room and
understand, to meet the mission of their agency, to serve the
American people, to reduce, maniacally reduce duplication, and
to save money. That is a motion across all of the executives,
not just the CIO. You have to have tight alignment with the
human capital person who is thinking about expertise. You have
to have the acquisition officer sitting at the table thinking
about how they make that happen and realize the duplication and
drive that out of the system.
And so the convening of PortfolioStat, I do. I sit across
the table from the Deputy Secretary, and they are flanked by
all their C-level executives, and then we have that discussion
on how they are going to realize this across the myriad of
management initiatives they do in their agency.
Senator Coburn. The point is that the vast majority of the
agencies did use their CIO to do this, but in your guidance,
the National Science Foundation (NSF) did not, Social Security
Administration (SSA) did not, USAID did not, the Veterans
Administration (VA) did not, Treasury did not, DOJ did not, the
United States Department of Agriculture (USDA) did not, and the
Department of Transportation (DOT) did not. So my point is, my
opening statement, what you have is a couple examples here
where leadership matters and bought in and we have given
authority, but we have to also give the authority to Chief
Information Officers to actually make the difference. And what
you all put out did not mandate that. Where you could have
mandated it so that you would have empowered the CIO
everywhere, instead you empowered in 12 or 13 agencies. I know
there are other ways to skin a cat, but my preference would
have been to empower CIOs.
Let me go to my list. Let me ask, David, do you have any
criticisms of having somebody other than the CIO in charge of
PortfolioStat?
Mr. Powner. I think when it comes to IT investment
management, the CIO should be the key executive with the
support of those other C-level executives. When I saw the
PortfolioStat process being rolled out, I think what it did was
it helped those CIOs get a seat at the table where they did not
have one. And I think to Steve's credit, I mean, that is part
of what--there was an acknowledgment that a lot of them did not
have that authority.
Senator Coburn. Yes, I agree.
Mr. Powner. And I think in that sense, I think that was the
whole purpose, to try to elevate their position within the
agency with having Steve sitting there saying we have got
duplication, let us admit it, let us tackle it the right way
and go about it. So I think that was good. And, again, I think
the key is now let us followup on that. We have these 100
opportunities, 2.5, it could be double that amount if you throw
DOD in there.
Senator Coburn. Well, if I just added up what he indicated
in his testimony, it was well in excess of $30 billion. The way
you get rid of trillion dollar deficits is a billion dollars at
a time. So if we just did the recommendations, that if we could
actually execute what GAO has outlined, you are talking $300
billion over the next 10 years, and it is ripe.
Just a couple of little questions. On the H.R. stuff that
you are consolidating, is that a fixed-price contract?
Mr. Baitman. We are actually outsourcing it to another
shared service provider in the Federal Government, the
Department of Agriculture's National Finance Center, which is
in New Orleans. So it is basically a fixed-price contract in
that you get charged for the number of seats that they are
taking on.
Senator Coburn. OK. So you know what the cost is.
Mr. Baitman. We do.
Senator Coburn. And so you do have a comparison.
Mr. Baitman. And, in fact, we are estimating roughly $6.5
million a year in continual savings.
Senator Coburn. Great. And one other question, Steve. So
you have the CIOs of the different agencies come together and
share some of the things that Simon has mentioned in terms of
here is where--in other words, is there a learning process
between the CIOs across the Federal Government so that they can
take the good work that Simon has done or Frank has done and
share it with other people?
Mr. VanRoekel. Yes, sir. We convene the CIO Council every
month. Every other month we focus on cybersecurity specifically
and then the off months we convene. I also host an executive
committee that gets together. It is the largest agencies. It is
a smaller group, and we meet on a very regular basis.
The other thing, actually 2 weeks from now, I am hosting
something we now call ``CIO University,'' which is getting new
CIOs in the government together. We do this at the National
Defense University to sit down for a deep dive for a day, bring
in a myriad of professionals across different disciplines--
acquisition, finance, procurement, or procurement acquisition--
all those to teach these agencies best practices and get them
hitting the ground running on this.
We have a lot of turnover in the IT ranks in government, so
I think it is important to convene on a very regular basis.
Part of the CIO University work we shipped last year something
we call ``CIOipedia,'' which is an online resource for
government CIOs to take advantage of to learn to quickly search
and dive into best practices and to take that forward as well.
Senator Coburn. Is part of the reason we are having
turnover because we cannot compete in the IT field for CIOs?
Mr. VanRoekel. I think that is a big part of it, and there
is so much demand in the U.S. economy.
Senator Coburn. Is that something we should legislate on to
give agencies more flexibility in terms of payments to be able
to be competitive in the IT field?
Mr. VanRoekel. I think, the uniqueness we have in the
Federal Government is not necessarily pay. I think from the
incentive structure that exists in the private sector versus
here, the thing we have in the Federal Government is really the
breadth of the experience. If you come in as the CIO of the
Department of Veterans Affairs, your ability to affect a very
large budget, a very large staff, and things like that is
unparalleled in the world and will build skills for you, and
muscle, that you maybe never had.
I think we need to actually work on that, and as we think
about CIO authorities and really--my vision of CIO authorities
is the central CIO should really be the hub for all the
commodity computing. There should be one help desk. There
should be one e-mail system, one way to buy a computer, one way
to get mobile. And that CIO should also then provide services
to the CIOs sitting on the periphery.
Senator Coburn. Right.
Mr. VanRoekel. I want the CIO of the Federal Aviation
Administration (FAA) to wake up every day thinking about flight
safety, and I want them to think about flight safety when they
go to bed at night. I do not want them to wake up and think: Is
the e-mail up and running? How are BlackBerrys going? I have to
acquire this. What is the throughput on my help desk? That
should be done elsewhere, and we should focus the professionals
on the mission at hand and get the centralization happening to
root out duplication and drive everything in a do-one, use-
often methodology.
Senator Coburn. OK. Tom, I will come back.
Chairman Carper. Let me just go back to one of the points
that Dr. Coburn was raising with you, and that is, whether or
not Federal agencies have the flexibility to hire the talent
that they need. We had a tough time in State government in
Delaware retaining IT personnel, and what we ultimately did,
gosh, in this last decade, is we took them out of the merit
system, and we said to the agency, pay people what you need to
pay them in order to be able to attract and retain good talent.
Just to followup on Tom's question, is that a problem or
not in the Federal Government? It sounds like it is maybe not
as much as I might have thought.
Mr. VanRoekel. At the top ranks, I do not think it is much
of a problem. We have a turnover rate of about 18 to 24 months,
which is pretty average I think in the Federal Government for
some senior positions. It is below that I think we have some of
the issues. If you look at cybersecurity in particular, the
private sector is able to attract talent at a rate that is much
higher than the Federal Government. We are doing things to
mitigate that, working with Homeland Security on new training
to train the people that are on staff and to drive that
forward. But with technology jobs in this economy growing at 4X
any other category, it is putting a strain on the ability for
us to bring and retain talented people across the myriad--throw
into that, sequester impacts and furloughs and things that are
causing other issues. My biggest concern with the sequester and
furloughs is actually the talent drain that we are beginning to
see now, and if we continue, I think will drive forward.
Chairman Carper. OK. I do not think we have talked much
about what kind of--I talked about lessons learned from the
Department of Commerce, from the Department of Health and Human
Services, from the rest of our Federal agencies. How about the
private sector? What are some lessons learned that we can take
from them, particularly some of the larger enterprises, one of
which you worked for a number of years? I will just start with
you, Steve, if you would, just lessons from the private sector
that we have learned, that we are acting on, and maybe some
that we ought to.
Mr. VanRoekel. In the private sector, I was part of a
team--my last job at Microsoft was part of a team that was in
the server division and had you spun the team off the day I
left, it would have been a very large software company on its
own right. And we had, under the 4 or 5 years I was there, 26
consecutive quarters of double-digit growth. I think we were
doing things right.
The amazing thing for me was we never grew our budget. Our
spend on marketing, on product development, and all that stayed
very flat, if not declined, because the dollars we were
generating on the balance sheet were going to fund other
aspects of the mission. It was funding new emerging businesses
to expand the portfolio to affect the stock price and things
like that. And that mentality does not necessarily exist in
government. If you go and do the hard work to find savings or
to drive your costs down, that return on investment often is
not realized where you sit. It goes somewhere else, and there
is not this aggregate sort of notion of the mission to think
about how am I driving value for my entire department that is
going to bring value to the American people, et cetera. And so
you tend to have people that, when they get something, they put
their arms around it, and they fiercely defend their budget or
their ability to--you take things away from them. And so I
think the current fiscal environment, we have to look at two
things. One is the forces acting on these groups. The current
fiscal environment helps us a lot, cybersecurity helps us a lot
to create the mechanisms to have those conversations. And the
second thing is to really think hard about the incentive
structures. What incentivizes these groups inside these
agencies to do this hard work, to provide a better return?
And so I think to get there, because to date that has
largely been an ideology discussion, two people doing the same
thing in the Department, they just have to--they are never
going to work it out on their own on which one should stop
doing it and which one should be doing it. We need data, we
need analytics, we need to be informed on how to understand who
is getting the best return on investments (ROI), who is getting
the best result, and how do we then create the right structures
to eliminate that.
So PortfolioStat gets us part of the way there. I, as part
of PortfolioStat, stood up a very modest small group inside my
team to actually get me data and analytics. That is what you
are now starting to see, and enhancements in the Dashboard and
the reports that come out of our PortfolioStat work.
The President's 2014 budget actually proposes a similar
effort that I proposed to actually expand that evidence
gathering to programs and grants so we can actually look beyond
IT and to think about how can we get real data and analytics to
understand what works and then pour our dollars into what works
and eliminate the duplication on things that are not working.
And so I think we have big potential there if we do it right.
Chairman Carper. Anybody else? David Powner. Anybody else
on lessons we might learn from the private sector?
Mr. Powner. Well, in the private sector, if you look at
governance and how they oversee their portfolio of investments,
you would never have a situation where you have this
duplication that exists. And the other thing, when their
program is in trouble, governance boards get after it. They
cannot let this linger for a long period of time. And everyone
knew that you had to escalate issues and report accurately.
That is what we do not have here. We do not have the governance
that is really needed, and that goes back to Clinger-Cohen,
what was envisioned, what Steve is trying to do.
One other comment, too, is in the private sector you tackle
things incrementally. We talk about agile development now like
it is something new, but that is something that I did in the
late 1990s, going small in development. We still try to do too
many big bang approaches when we tackle these acquisitions.
Chairman Carper. Let me stick with that for just a second.
A lot of times when I get to the end of a hearing, I will ask
what are the takeaways for us in terms of a to-do list for us
on this side of the dais. And just to followup on what you just
said, what are some things that we need to be doing that we are
not doing. We get a lot of advice to do oversight, and we do
quite a bit of that. Maybe not enough, but we do a lot. But
what should be our takeaways from this?
Mr. Powner. Well, I think this is a good start because I
think this PortfolioStat process has--there is great
opportunity here, 2.5 billion plus how ever many billion when
everyone reports this. And I think this is a good place to
start, that we drive this to closure and we eliminate
duplication here. But then there are other things going
forward. I think using the Dashboard to still tackle those
troubled projects is really needed. We still have those
failures at DOD that just occurred, and those are things we
need to avoid.
Chairman Carper. OK. Dr. Coburn.
Senator Coburn. Steve, let us talk about the Dashboard for
a minute and DOD. TechStat works, does it not? And the fact
that DOD has no programs, everything is green for DOD, which
means they are ducking having TechStat work on 20 to 30
programs that are in trouble. How do we fix that?
Mr. VanRoekel. Because I am a very data-driven person and
when personalities are involved or personal inputs or ideology
is involved in assessing programs, I do not warrant that as a
triggering event. We do not use red, yellow, green as the event
that says we should go TechStat. We look much deeper. Are
things on budget? Are they on schedule? All of that, that
systems report, that technology reports into us are the things
we use to go in and look at investments. Just asking someone to
self-assess their program----
Senator Coburn. Well, let me ask the question another way.
When was the last time TechStat has been applied to a DOD
program?
Mr. VanRoekel. We do TechStats on--I am actually very
actively involved in the joint work of DOD and VA on the
electronic health care system, and there is an ongoing TechStat
right now. I have actually got meetings here on the Hill this
afternoon to talk more about that. So that is the most recent
one.
One of the things that the system was not reporting to me
is, as you can imagine from a behavioral insights standpoint,
people have the ability to go in and change the delivery--the
deadlines on their schedule, to change their budget allocations
on the IT Dashboard. And prior to my arrival, we had no
visibility into that. And so if you saw something green, it
looked on budget, on schedule, et cetera, it looked like
everything was good. One of the features I added under my watch
was a triggering event that would tell us every time someone
went in and re-baselined any of their metrics. So now when you
go to the IT Dashboard, you can actually see on this date
someone went in and changed their due date; on this date
someone reallocated their budget in some way to this or that
project. That then creates a triggering event for us.
Another key thing that I have driven relative to the
Dashboard is--we are a very modest team over in OMB doing this
level of oversight. Of course, we partner with Dave in GAO a
lot on thinking broadly about reforming Federal IT. But we do
not scale across the entire Federal Government. And so we have
trained over 1,000 people to conduct TechStat reviews, and what
you are starting to see and what we are encouraging through
PortfolioStat and other mechanisms is that TechStat has become
a regular order of business, that when things are going awry,
when things are triggering, then they send in, they parachute
in the TechStat people to look at these investments and run our
methodology against it.
That being said, I still get involved with TechStats and
step in on ones that are important.
Senator Coburn. One of the things that I have noticed, 3
years ago I outlined an Air Force program, an IT program, said
we ought to cancel it. We did not cancel it. We canceled it
this year and paid an $80 million cancellation fee.
One of our problems in purchasing IT--and the reason I
asked about fixed-price contracting--is when you have
contracting other than fixed price, what happens is either the
person that is making the decision or the company that is not
performing, there is no consequences. And in the private
sector, if you contract for something and somebody does not
perform, you hold them accountable.
Now, you either do that privately or you take them to a
civil court and get money damages for not performing under a
contract. The other thing they do in the private sector is the
person who made the blunder does not have a job anymore.
And so how do you incorporate that into what you are trying
to do in terms of guidance? I have a son-in-law that is very
good at this stuff. He travels all over the country. He is a
fixer for a big firm. And what he tells me is business is not
much better than we are about this nebulous area of IT, and so
they are kind of held up, too, in not knowing what they are
going to get or maybe not knowing what they want when they
start a contract.
How do we get a handle on that?
Mr. VanRoekel. I think the other phenomenon you see is that
planning costs suck up the entire initial allocation of
funding, and we have very expensive three-ring binders sitting
around on shelves in this town that people paid planning costs
for.
I think the way we get around it is, I love to use the
analogy, the football analogy of, how many--you or I could
easily throw a football to someone a few yards away with a high
level of----
Senator Coburn. Very few, in my case.
Mr. VanRoekel. But with a high level of assurance, I could
hit someone that is that close. There are very few elite
quarterbacks who can throw a 50-, 60-yard pass and hit someone
with a high level of accuracy, especially on the move.
From a product manager standpoint, we have a lot of product
managers in government that can hit the 90-day deliverable.
They can hit it, they can deliver on it, they can get it on
time, on budget. We have very few product professionals inside
the government who can hit the 5-year deliverable, the 4-year
deliverable with any level of accuracy way down the road. And
so the goal here--and, the things we have been doing inside--
and the guidance I have been issuing have been really to the
goal of, let us let 2013 mark the end of the multiyear big
giant deliverable and break everything down.
Last summer, Joe Jordan, the head of Federal Procurement
Policy, and I issued modular contracting guidance. That was the
first step to start to teach the acquisition community how to
actually break these big monolithic deliverables down into a
lower risk surface so you are not doing these big whale things
that are likely to fail, and so trying to get those down.
And then what we have been doing is the open data Executive
Order that just came out, the digital strategy in May 2012 and
all the moving parts associated with that, all lead us to these
small interoperable components that can be reused inside
government. We need to build a community around that. We need
to build private sector capability there. And so we are putting
all the pieces in place to make small and modular--to Dave's
point, when he said we were doing this in the late 1990s about
modular and agile development, that needs to be the new normal
inside government. We can no longer do these 5-year, $100
million---if I ever see those, those are like an instant
TechStat trigger for me, and I go in and I say, OK, what is
your 90-day deliverable? We are going to break this thing down.
And in the cases where I have done that, they have turned out
successful.
Senator Coburn. Yes. So that is called management.
Talking about DOD and TechStat, we have this report, the
Integrated, Efficient, and Effective Uses of Information
Technology (IEEUIT) Report. How does Congress know what is
happening in DOD if it is not ever reported?
Mr. VanRoekel. The IEEUIT Report reports savings reported
from--it is a net we cast, and we ask the agencies to come back
and report against our initiatives, and we pull this back in.
A change I made this year is in the 2013 PortfolioStat
guidance, one of the things I needed to do is just kind of
cleanup my own shop. What I found out is--I was wanting to
understand what burden we were putting on agencies, just hit--
compliance of OMB guidance. What I found was that we were
asking agencies to report over 30 times in a year the----
Senator Coburn. Which consumes resources.
Mr. VanRoekel. Which consumes a lot of resources. And so I
asked the team to print that all out, lay it on the table, let
us understand where we duplicate our requests and things like
that. We are now down to three. In 2013 with the PortfolioStat
guidance, we do three of them. They are basically an
information resource plan, a strategic plan, and then I ask
them to do quarterly reporting. At the end of every quarter,
they are going to report in on savings and metrics against the
initiatives we have done. And so that is now ordered to every
agency, and we are starting that process. We just got the plans
in on May 15, and then the quarterly reports are going to
start, and DOD will be one of those as well.
Senator Coburn. I guess I will wait, and we will go on to
Kelly.
Chairman Carper. Senator Ayotte, your timing is pretty
good. If you would like to jump in here, you are recognized.
Welcome.
OPENING STATEMENT OF SENATOR AYOTTE
Senator Ayotte. Thank you very much. I want to thank the
Chairman and the Ranking Member for this important hearing, and
I would ask the witnesses--I wanted to ask Mr. Szykman about
the Federal data centers. You had testified that Commerce has
been working to consolidate the data centers. But I wanted to
know how much of those consolidated centers are actually being
used. And the government buys a lot of servers, lots of space
for data, and then leaves them mostly empty. And as I
understand it, in a 2009 OMB report, the average utilization
rate for Federal servers was between 5 and 15 percent. So
private sector utilization is often 60 or 70 percent, looking
at a cost/benefit analysis. So are we paying for excess
capacity? And what is the average utilization rate? Do I have
that wrong? And what are the metrics we are using? And can you
help me understand how much we are looking at this issue as we
continue to invest in this area?
Mr. Szykman. Certainly. I will be happy to answer your
question. At the Department of Commerce, I would have to check
on precisely what our utilization rates are, and I would be
happy to get back to you, but I can tell you without checking
the numbers that they are not where they should be in terms of
the high percentage of utilization of our servers that we would
like to have.
We do have some initiatives that are pushing this forward.
For example, within the Census Bureau they have issued a
virtualization first policy which requires establishment of
virtualized servers before they can create any new physical
servers, and this is intended precisely to drive up that
utilization rate from low percentages to high percentages. I
will be happy to followup with more details.
In general, though, the issue of utilization is an
important one. It is not just about the number of data centers
but how they are being utilized. And along those lines, I would
say that the Department of Commerce has been supportive of
where OMB is going with evolving the data center--Federal Data
Center Consolidation Initiative, focusing on not just numbers
of data centers and closures, but focusing on distinguishing
between core data centers, non-core data centers, closing the
ones that are non-core, but just optimizing the ones that are
core. And that is key because many of the benefits are going to
come not just from closing data centers but really optimizing
the equipment that is in existence regardless of where that
equipment is being housed.
So I think we definitely understand the issue, and we are
working on improving, particularly in the utilization area.
Senator Ayotte. How quickly do you think we could make this
happen?
Mr. Szykman. I would say, to be frank, at Commerce things
take time simply because we do have decentralized structure
within Commerce. And so my office directly manages one of the
Department's data centers, and the overwhelming majority of the
Department's data centers are being managed at the bureau
level. I do know that the bureau CIOs are keenly aware of this
issue as well. I mentioned Census has been focusing on
increasing utilization. The National Oceanic and Atmospheric
Administration (NOAA), which is the bureau where most of our
data centers are, they are currently working on a data center
consolidation plan to address many of these issues.
Senator Ayotte. Well, one of the things I hope would just--
there is so much, obviously, in this whole area, but we need
metrics, we need goals, we need to have results, because we all
can sit here and say, well, this is a problem, we are
acknowledging it, but until we have--what I would like to see
is some metrics on how quickly we can meet them, what is our
plan, what are we going to measure in terms of how we get this
done.
So I hope that I could get some followup on that because I
think that would be helpful to this issue.
Mr. Szykman. Certainly.
Senator Ayotte. And I also wanted to ask, Mr. VanRoekel, in
your written testimony at least--I apologize I was not here for
your testimony here today--you state that the CIOs should be
empowered, as I understand it. Now, if we empower them, which I
want everyone who works for the government to be empowered, and
we give them more power within the agencies, I think that we
also need to impose greater obligations on them to act on
issues of duplication and consolidation as part of their
mission. And so how would you--how would we accomplish that? I
mean, when you talk about empowering them--and you may have
already covered this--what is it that we are going to ask for
them to take actual ownership and responsibility for this issue
of the duplication and the consolidation of programs doing the
same thing? So much of it we see in the Federal Government.
Mr. VanRoekel. Absolutely, and the empowering nature is
really to root out the duplication. That is why we would
empower them. Oftentimes--in the private sector, it is
unthinkable for a company to run more than one e-mail system.
You just have one and sort of everyone is in the address book
and you utilize this as a cost-effective way of doing your e-
mail. That is not the norm in the public sector. There are
agencies of government that run seven, eight, ten--I have seen
more than 20 e-mail systems in an agency. That should be
unthinkable.
The reason they are not consolidated into one is often the
CIO is not given the authority to go and say the most effective
way to do this is to run one. And I think the opportunity here
is it begins with commodity computing, things like e-mail.
There should be one way of buying a computer. There should be
one way of getting a mobile device. And if you saw a couple
weeks ago I established sort of what I am calling the ``family
plan'' for government so we start to pool our minutes and
things like that to start to save money in the mobile space.
So all of that should be centralized under the authority of
the headquarters and the CIO. And then the next step is to let
that CIO then provide mission capabilities out to the periphery
of the organization. So, say, if the CIO of the Federal
Aviation Administration comes to the Department of
Transportation CIO and says, ``I have an idea that is going to
improve flight safety,'' that central headquarters CIO can say,
``Great. Here is a development environment as a service. Here
is a test environment as a service. This is how we will educate
our help desk to help with this project,'' et cetera, and make
rooting out duplication and providing these cross-agency
services just the norm. It is how we get to be the most
effective and efficient.
I think the other opportunity is to then look at inherently
governmental opportunities and to root out duplication there.
So getting our payroll systems in government down to one,
streamlining our financial management systems across
government, doing those things that we can do that are very
vanilla across the agencies, and to establish sharing at that
level, too.
So all of our policies, our guidance, everything we have
been doing has been in this motion to do exactly that.
Senator Ayotte. Thank you, and I look forward--I thank
again the Chairman and the Ranking Member for having this
important hearing, and thank you all for being here. And I know
that there is much work to be done in this area, and I look
forward to working with the leadership of this Committee to
address these issues and with all of you.
Thank you.
Chairman Carper. Thanks for your question. Thanks for
joining us. I know you have a lot on your plate, but you were
good to come. Thank you.
We have focused a fair amount--and Senator Ayotte just did
again at the beginning of her questioning--on the data center
consolidation. I want to dwell on it just for another moment,
if I could, and ask a question of David. In its recent
PortfolioStat guidance, OMB folded the Data Center
Consolidation Initiative into the PortfolioStat process,
shifting the goal of the initiative away from just closing data
centers and instead have agencies--I guess the word is
``optimize''--their data center inventory.
I would just like to hear, if I could, your thoughts on
OMB's change in the approach with regards to the Data Center
Consolidation Initiative.
Mr. Powner. I think combining the two makes sense, and that
is fine to do it that way as long as you have the right metrics
on data center consolidation, Senator, to your point. What
remains, we need to get the average server utilization rates
up.
I think when all this is said and done and we close all
these centers and here is what remains, let us go measure
average server utilization, and hopefully it is higher than 5
to 15 percent, on average.
Chairman Carper. How much higher?
Mr. Powner. Sixty to 70 I think is industry average. You
want to build--you need excess capacity. But we are nowhere
near the goal of 60 to 70 percent.
Chairman Carper. Are we moving in the right direction?
Mr. Powner. I think we are. There were plans--when there
were data center consolidation plans, we saw by agency their
average server utilization rates. DOD was reporting in the 30s.
DHS was in the high teens. So that is fine.
But if you step back, that is fine to focus on
optimization, but you cannot lose sight of the savings. We are
closing a thousand centers. That is the goal. Now, we found out
about an additional 3,000 centers. Many of them are small, in
Agriculture and DOD, but there are more than a thousand we can
close, and if the server utilization is that low, there is a
lot of cost to--there is hardware, there is networking, there
are security costs. DOD reported in fiscal year 2014 alone $575
million in savings with data center consolidation.
Chairman Carper. We do oversight here on this Committee,
but who should we be looking to hold responsible for closing
the next thousand or whatever, two thousand----
Mr. Powner. Agency CIOs and the Federal Chief Information
Officer.
Chairman Carper. All right. Let us talk a little bit about
budget control, if we could. I think a couple of years ago, the
budget for information technology at the Veterans Affairs
Department was consolidated under the Chief Information Officer
for that Department. This year the Administration's budget
request for the General Services Administration also sought to
consolidate most information technology spending under the
office of the CIO. The consolidation of spending under the CIO
is, I think, clearly one way to empower an agency's CIO.
I would just ask each of you this question: Do you believe
that it is necessary for an agency's CIO to have budget
authority for IT spending across an agency? And are there other
better ways to empower an agency's CIO? Do you want to go
first, Steve?
Mr. VanRoekel. Sure. Thank you. I think it is one way. I
think there are a myriad of other things we have to consider
and bring into play because it is not the only way.
I think the essence of good IT management in an agency is
one where there is coordination across the budget motion and
you are watching the dollars flow and you are making sure that
there is not duplicative spend and all of that. But you also,
as you heard earlier, need for oversight of senior leadership.
We have seen the private sector go through this in the last 15
years where IT went from this very discretionary thing--it was
the ability to print or share a document or save a document--to
this very strategic thing. It is the way you connect to your
customers; it is the way you drive productivity gains in the
organization, the way you streamline your operations, control
quality, inventory, et cetera. And the public sector has not
necessarily gone through that transition yet where IT is this
strategic thing and the way we, change outcomes of research
that we are doing and keep America safer and drive economic
value and benefit and efficiency.
And so as we go through that inflection point, it is going
to take a lot of different people than just the CIO watching
the checkbook to make that happen. We need the coordinated
efforts of acquisition, to Senator--Dr. Carper's comment on the
person not making the decision at the point of execution. We
need acquisition at the table. We need the Deputy Secretary's
chief operating officers at the table. We need human capital
people training the next generation of professionals in the
space, et cetera, to really make that motion happen. And so it
has to be a village approach.
Chairman Carper. ``Dr. Carper.'' We have become
interchangeable parts here. [Laughter.]
It is a good thing. It is kind of scary.
Any other witnesses want to respond to the question that
Mr. VanRoekel responded to? Please.
Mr. Szykman. Sure. From my perspective I think the key is
not necessarily to centralize the entire organization's budget
into a single budget managed by one individual. From my
perspective I think much of the benefit can be obtained by
improving visibility and transparency and providing enough
authority that the CIO can influence the right types of
decisions going on across the organization.
I think from the centralization perspective, the key is a
focus on commodity IT. As Mr. VanRoekel had mentioned, agencies
do not need to have well over a dozen e-mail systems, which the
Department had a couple of years ago. Our largest bureau had
over ten alone. They have consolidated down to one, and the
rest of the Department is in the process of moving to the
cloud.
So that type of proliferation of replication in commodities
is unnecessary. But at the same time, there is a lot of
mission-related IT, and I would not necessarily argue, for
example, that NOAA's satellite programs should be run out of my
headquarters organization when the experts in satellite systems
and programs and the people who really connect that to the
National Weather Service's mission are at the bureau level
versus the headquarters level. But the transparency and the
ability to influence decisions is key.
One other example I just want to touch on, at the Census
Bureau in the 2010 decennial census which took place a few
years ago, the Census CIO was not directly involved in the
management of the IT for the census program. What that meant
was that the census program ran their own IT infrastructure.
There are already written administrations in place for the 2020
decennial census that states that the decennial program will
run on IT infrastructure managed by the Census CIO, not managed
by the program themselves, from an infrastructure perspective.
All of the mission-specific application development is still
going to be run out of the program. And the other part of the
agreements that are in place there provide the Census CIO with
actual approval authority over acquisitions that are coming out
of the decennial program, and that is something that is also
new from how things have been done in the past.
So I think the key is to be able to know how money is being
spent and to influence how it is being spent. The
centralization of the budgets themselves do not necessarily
need to be there to get the outcomes we want.
Chairman Carper. Well, that is encouraging. I do not know
that Dr. Coburn and I will still be sitting here when they are
doing the 2020 decennial, but at least there is maybe cause for
hope that when it comes around, the cost overruns that we were
plagued with this last time will maybe be less of a problem.
I am going to come back and ask one last question, not now
but after Dr. Coburn does, but the question I am going to ask,
I will just telegraph the pitch. Sometimes at a hearing,
especially I think this one lends itself to it, I like to come
back at the end of the hearing and just ask you give a closing
statement. You can just reflect on something someone else has
said, or if there is something you want to reiterate for us,
for our takeaways, that would be good. But one more question,
and that will be it. And I am going to step out of the room for
just a moment and then come right back.
Senator Coburn. I would just make a comment on the census.
I am glad to hear those are the kind of decisions--we spent
$500 million on a cost-plus contract that got us nothing on a
handheld device for the Census, and nobody was held accountable
for it, nobody got canned. The company did not perform. We did
not sue the company for not performing. I mean, it was just
throwing $500 million away. That is what happened. We held the
hearings here, and everything they were doing you could have
done on an Apple iPhone, with no contract. I mean, so putting
controls in and making people responsible and accountable is
very important, and if the 2020 census is not done online, we
ought to shoot ourselves. We can save billions of dollars. And
if that is not the Administration's plan and top-down enforcing
that this is what we are going to do--we cannot do it all, but
all the money we can save on doing an online census is
unbelievable. And you can incentivize people to participate.
The same thing with the American Community Survey (ACS). It
ought to be all online right now. There is no reason why it
should not.
The one thing I did not hear from you, Mr. Baitman, in your
testimony was metrics, and Senator Ayotte talked about that. Do
you all now know where all your inventory is, where all your
computers are, where all your servers are? Do you actually
know? Do you know in HHS where they are?
Mr. Baitman. We have a good idea where they are, but as I
said in my opening remarks, I think we are benefiting from
PortfolioStat. Last year, when we went through the
PortfolioStat process, we realized that there were a lot of
gaps in our knowledge base, and at least in the commodity IT
area, which is what PortfolioStat last year focused on, we were
able to begin to work with our operating divisions to say this
is the data that we need so that we can actually make
knowledgeable decisions about allocation of resources and
consolidation.
Senator Coburn. So you do not know where all your stuff is
right now.
Mr. Baitman. I would say we have a better idea than we had
a year ago----
Senator Coburn. I know, but the answer is you do not know--
I am not being critical. I am just saying we really do not know
in HHS where all the servers are.
Mr. Baitman. We have a good idea, but not a complete idea.
Senator Coburn. OK. Well, a ``complete idea'' is you do not
know, OK? And that is part of the problem. Information down is
great, but if you do not get information back up, you do not
get to make the right decision.
Mr. Szykman, when you did all this consolidation in
Commerce over the last 3 years, did you use GSA to perform
this? Or did you do it with your own people?
Mr. Szykman. We have worked at GSA on some of our
contracting activities. For the most part, most of our
strategic sourcing initiatives and several of our shared
services initiatives have been things that we have done
internally. The Department of Commerce does already have its
own strategic sourcing contract called NOAALink, which is under
NOAA, and we have used that in a couple of cases.
We have also taken advantage of existing acquisitions that
were ongoing within some of the Commerce bureaus and expanded
them to become department-wide acquisitions. So those were
things that we were doing anyway at the bureau level and which
have been expanded to now become department-wide contracts,
which----
Senator Coburn. So you used GSA some, but----
Mr. Szykman. Correct.
Senator Coburn [continuing]. Basically you ran the show.
Mr. Szykman. That is correct. The one area where we have
been holding back and waiting for GSA is in the area of mobile
phones and mobile plans. GSA just recently announced the final
awards of contracts in that area, and we had been anxiously
waiting for those contracts to be available for us. So we do
intend on using those as well.
Senator Coburn. Steve, I have one question for you. The
estimated savings out of the server consolidations was supposed
to be a minimum $3 billion. Now with PortfolioStat, the
estimated savings governmentwide is $2.5 billion--$500 million
less than what we thought we were going to get. Would you
clarify for me--first of all, we ought to be shooting for a
whole lot more than that. Clarify that number for me. Second,
how much is ghost savings where we are saving the money and
then spending it somewhere else within these agencies?
Mr. VanRoekel. So I have said publicly that I thought the
$2.5 billion in PortfolioStat was the tip of the iceberg and a
very conservative assessment. I am being very diligent about
making sure that the money we report in is acquired in a very
consistent way to make sure that we are not double counting or
doing other things across the 2.5. That is why you do not see,
as you mentioned earlier, the DOD and--or I think Mr. Powner
said DOD and Department of Justice and a couple others are not
reported in, because they did not come in through the reporting
infrastructure we had in 2012. So I decided not to put them in
because I want to make sure it is apples-to-apples. In 2013,
they are all required to report in this quarterly way, and so
we are going to see a very consistent view across the savings.
And I think we are going to see even more of that.
There is overlap in some of the data center consolidation
work and what we are seeing in PortfolioStat, and we will
continue to drive those numbers forward, and I am encouraged by
that. I think we are at the tip of the iceberg on where we are
going to go with the savings that are associated with that, and
these quarterly reports we have been doing for the
Appropriations Committees prove out that we are hitting the
mark. We are at over $500 million now reported to the
Appropriations Committees on line item savings.
On where do the savings go, my budget guidance for 2014
kind of follows the spirit which I bring to this, which is I
asked for a cut-and-invest strategy in budget guidance. I
basically ordered government agencies to cut 10 percent of
their IT spending. I gave them very specific areas, and I gave
them a tool called PortfolioStat to go do that. And then I
asked them to reinvest 5 percent of that, so half of it back
into the agency to do one of three things. One is employee
productivity, so how are you driving efficiency gains inside
your organization to root out duplication and other things? Two
was customer facing, so how are you building services for your
constituents, the American people? And then the other was
cybersecurity.
I then asked them to give me 5 percent back of priority
add-backs if we saw budget flexibility, if we had Presidential
priorities we wanted to fund, I wanted to hear from them what
they would spend an additional 5 percent on, and then I can
make a value judgment across that.
So we had very good turnout from the agencies on this work,
and the notion of depreciation, something we use in the private
sector all the time is, one, a balance sheet tool. But I think
more importantly it is a cultural tool that basically says that
we need to cut from the bottom of the list to give to the top
of the list. We need to take from the operating expense (OPEX)
column to give to the capital expense (CAPEX) column in order
to create a virtuous cycle to make sure we are taking advantage
of the latest technology. When we talked about server
utilization at these low single-digit percentages, a big
problem there is having the capital to go buy new servers and
new software in order to do the consolidating and optimization
to get the savings that you are going to see long term.
And so I am intending to create, and through my budget
guidance, these tools, that notion of depreciation, let us stop
what is not working or what is duplicative, and let us take
those savings and in some cases pour them back in to get the
capital expenditure to do this, because smart investment in
technology can scale you in efficiencies and other ways.
Senator Coburn. Just as a little aside, the Federal
Government's balance sheet has $86 trillion worth of
liabilities, and all the assets in the United States of America
are under $80 trillion. That is all the land, the buildings,
the businesses, and everything else in this country.
So it is not enough to just cut it and reinvest it. We have
to get real dollar savings that flow to the bottom line so that
we can quit adding to that imbalance on our balance sheet.
David, I am going to make one final statement, and I would
like your comment on it, and I again want to thank each of you
for being here, and we will followup with a list of questions
that I did not get to ask.
We have, if you count intelligence organizations, far in
excess of $80 billion a year. From your learned position, how
much can we save a year in IT? If we did everything Steve would
want to do, we copy what Mr. Szykman has done, and the changes
that we are starting to see at HHS, if we really executed over
the next 5 years, how much money could we really save?
Mr. Powner. Out of the 80, I think it is safe to say--well,
if you look at--and I agree with Steve. With the PortfolioStat
initiative and data centers, some of those that go away, that
is mutually exclusive from consolidating applications. So I
agree there is some overlap there. But I clearly--if there is
2.5 in PortfolioStat and DOD is not in, you could double that
with Justice. You can get the $5 billion there on
PortfolioStat, I think that--I do not know what Steve would
think of that, but you have $5 billion there. And if you take
away the $3 billion on data center consolidation, clearly
another couple billion. But also, too, I think you need to
focus on those troubled projects on the Dashboard. If we got
$10 billion at risk, you could actually rescope some of those
and save a fair amount of money there. You could easily get the
$10 billion if you do the math real quickly out of the 80,
easily get to 10.
Senator Coburn. All right. Thank you. Thank you all.
Chairman Carper. And just to followup, David, on Dr.
Coburn's question and your response, for us in the legislative
branch, especially on an oversight committee, what more do we
need to be doing to better ensure that we are as close to that
$10 billion as we can be?
Mr. Powner. Well, I have comments on the Dashboard Data
Center and PortfolioStat, but I want to start with this
comment. I think the CIO authority, if we do not fix that, you
cannot accomplish these other things. I think the big learning
and a big surprise is I agree with Steve that CIOs should--it
is a no-brainer to have them have authority over the commodity
IT. And we want to eventually move certain agencies where they
have input on the mission-critical applications.
But what we are learning on PortfolioStat is CIOs are
struggling having authority over commodity IT. Again, that is a
low bar, and that is a big problem. So there is this question
about do you give them budget authority or not. I know we go
back and forth on that. That would be a game changer. But maybe
a starting point is budget authority over all the commodity
stuff, and then they would control that to begin with. And I am
not certain they all have that, so that is a starting point.
And then if you look at the Dashboard Data Center and
PortfolioStat, Dashboard it is real clear. You need to fix the
reporting inaccuracies, and you need to TechStat the troubled
projects. Data Centers, we need to measure cost savings, and
then we need to make sure that server utilization rates are
where they need to be on what remains.
And then on PortfolioStat, I think that is heading in the
right direction, but I do have one comment on PortfolioStat, is
you need to make sure that we have solid baselines on
PortfolioStat because we do not want to get into a situation
like we are with data centers where we constantly are coming up
with new inventories and that type of thing. I think
PortfolioStat is a real solid process, but you need a solid
baseline, you need to drive that consolidation to closure.
Chairman Carper. OK. And this is an opportunity now--when
Dr. Coburn was leaving, he asked me, Steve, to ask if you might
also send to us the IEEUIT report, not just, I guess, to the
appropriators, but also to us as the authorizers, if you could,
please. Thank you.
OK, closing statements. Steve, if you would like to lead it
off, and we will close with David.
Mr. VanRoekel. Thank you for this important conversation
today. It is great to----
Chairman Carper. No, we thank you.
Mr. VanRoekel. Thank you. I think the key things I wrote
down, sort of the to-do items in the work I think we have to
mutually work on between GAO, the legislative and the executive
branch, one is the CIO authorities and taking this balanced
approach. I think there are areas where we can enable that.
Two is something we did not talk a lot--we talked a little
bit about but not in the broadest sense, which is around budget
authority and flexibility associated with that budget
authority. I think one of the inhibitors we often have in
Federal IT and something that I did not in the private sector
was you could often incubate a new product or think about
something and have a 5-year window in which to really execute
against that with some level of certainty of what your budget
was going to look like and how you could do that, because
oftentimes it takes investment to realize savings, and it takes
investment to realize new capabilities.
And so the ability and flexibility in the budget side to
create capital budgeting or to get capital to do new things I
think is an important one we often overlook in Federal IT. A
lot of data centers do not get consolidated and optimized
because the people do not have the money to spend to get the
work done to get to the end state they want.
And another area we did not talk about today is around the
potential of open data and some of the phenomenon we are seeing
with big data and other things. I think the bottom line I often
carry to the job is teaching agencies that they do not always
have to do the end-to-end solution. If you do just part of the
solution and make data available, great things happen outside
the walls of government to drive the economy, drive jobs, and
others. When the U.S. Government opened up global positioning,
it almost overnight created $100 billion in economic value,
yearly economic value, for this country, and I think we stand
on a treasure trove of that potential for the economy. And so
as we do that and as we all have our takeaways of what to do, I
think thinking about that in the context of legislation we
write and other things could be something we could help really
drive what makes America great, which is innovation.
Chairman Carper. Thank you. Mr. Szykman.
Mr. Szykman. Mr. Chairman, thank you for talking about this
important issue here today. I was happy to be able to be part
of the conversation.
I think it is an exciting time of change in Federal IT
management. I think there are a lot of opportunities for us to
exploit, but we are now having conversations that I think are
key to helping things get done. I found it interesting when you
quoted earlier Senator Cohen back in the roots of the Clinger-
Cohen Act talking about the change in culture and reflecting on
the conversation here today, which was not a conversation about
technology at all. It is still a big question about how to
change culture and change management in Federal IT. So I think
we are still struggling with some of the same questions that we
were dealing with way back then.
I do think it is important for us to be focused on
outcomes, and some of the questions that were discussed today
had to do with understanding what other people are doing and
learning from them, and certainly learning is important. But in
my view, we have a number of people in key positions who really
are change agents. And if we really want to get the outcomes
that we are hoping to get, I think it is not as difficult to
find change agents as it is to enable them to pursue the
changes they would like to pursue. And to be able to do that,
we need better knowledge on which to base decisions. We need
transparency. We need better internal reporting, better
inventories, better baselines. And we need to empower the
people to make the changes that they want to pursue.
So I think we have a lot of the ingredients for achieving
the kinds of change that we would like to see here within the
Federal Government.
On the issue of empowerment, I mentioned in my testimony
the IT portfolio management policy that we had put in place at
Commerce. My approach was not to use that policy to wrestle
control away from the bureau CIOs, but to use delegations to
further empower those CIOs to manage their portfolios, because
ultimately if you do want to hold people accountable for
managing portfolios, then you need to be able to make it
possible for them to define their portfolios, and you need to
give them the ability, the controls and the authority and
responsibility, to manage that portfolio to get the outcomes
that you want.
The only last thing I would like to mention is that we have
had a fair bit of discussion around data centers here, and
certainly data centers are an important part of the overall IT
portfolio in the Federal Government. But the approach to
portfolio management for better efficiency, savings, and
outcomes should be a holistic type of approach, and it is not
just data centers. There are millions, tens of millions,
hundreds of millions of dollars being spent on IT services of
other sorts. There is software and licenses. There is
equipment. And so the approach to portfolio management I think
should extend the discussion beyond just data centers and
really take a holistic look at the IT spending portfolio.
Thank you very much.
Chairman Carper. Thank you, sir. Mr. Baitman.
Mr. Baitman. Thank you for the opportunity to be here
today. I have thought about these issues. Up until 4 years ago,
I had worked exclusively in private industry before taking on
the last two government roles that I have had and tried to
understand why there are differences. Why do we think that
there are redundancies and waste in government when I did not
see that in industry? And what I have concluded is that
government and industry are inherently different in some
fundamental ways. So in a large federated agency like HHS,
Commerce, or other organizations, the programs within those
organizations have had to address what their mission
requirements were and then decide how to invest their dollars
in technology over the past few years.
That brings them all to a different State of maturity. No
one is actually at the same state within HHS, for example. So
when we bring ideas forward for consolidation, when we say,
hey, here is a better way of doing it, technology has changed,
we can do something smarter, better, cheaper, we look at it and
say, ``Why don't they want to go along?'' And the reason they
do not want to go along is because some of them are actually
quite sophisticated and others are laggards. It is very
difficult to ever develop a single business case that will
bring everyone to a better place and everyone will buy into
that.
In private industry, you simply look at the bottom line,
and you make a decision based upon what is best for the whole
enterprise. We do not do that in government. We do not look at
what is the bottom line for Health and Human Services. We look
at the bottom line for International Business Machines (IBM),
where I used to work, and say that new company that we have
just acquired through acquisition is running a system that is
redundant and we are going to get rid of it, we are going to
take that cost off our books. And that is really what the
fundamental difference is.
And I think that gets us to a point that Steve made a
moment ago, which is capital investment. If we are going to get
everyone to a better place, we need to have the capital to
invest so that people do not have to look at the business case
and say it is not going to help me even if it helps 90 percent
of my peers. We need to be able to make that investment to get
everyone to a better place and in the end reduce our operating
costs.
Chairman Carper. Those are very good observations. Thank
you.
Mr. Powner, one last shot?
Mr. Powner. Yes, three things: Leadership, transparency,
and accountability. I think the CIO authority thing is a big
deal, and that needs to be addressed from a leadership point of
view. Transparency, we have talked a lot about the metrics that
are needed with the Dashboard, with data centers, with
PortfolioStat, and so that transparency needs to be very clear,
and then where you can really help is holding the Chief
Information Officers accountable going forward.
Chairman Carper. All right. Thank you.
Mr. VanRoekel, I think you mentioned earlier the work that
is going on between the Department of Defense and the Veterans
Administration with respect to our electronic health records. I
am on active duty 1 day, I finish my obligation, my military
obligation, step down from active duty. The next day I am a
veteran. And we have had a problem, as you know, with the
transfer, interoperability between the two systems. How are we
doing there?
Mr. VanRoekel. The two Departments have been meeting a lot
and have come to an agreement that I think is very sound, which
is really around record interoperability, the ability for that
record to transfer seamlessly from one entity to the other.
Today they share information. If you go into a VA hospital and
there is an active-duty record on you, you will see a little
flashing icon, you pull it up. What happens, though, is that
data is--there are two problems with it. One is it is not
sequential, so I cannot see if you took a medication or issued
a medication in what order, so there is a lot of variability
there. It is two separate experiences to see the two, and I
have to map them together myself. And two is it is not
computable, so we cannot tell if a certain medicine would
interact with a certain other medicine, and if issued those two
medicines it might hurt you or something, and so it is not--the
data is just sort of static and you just look at it.
So the Departments have done some very important things.
One is agreed on record interoperability, and what that
basically means is, much like if you are running a Yahoo! e-
mail account and I am running a Gmail account, you and I can
send e-mail back and forth all day long because the two e-mail
vendors have agreed on record interoperability. The e-mail
record goes back and forth. So that is the important first
step.
The second step is they are going to base all this
technology on national standards that have been coordinated by
the HHS' Office of the National Coordinator in this
Administration. They have specified a bunch of national
standards for this type of record, and the important thing to
note is in the last, I think, 2 weeks, over 50 percent of the
doctors in this country are now utilizing those standards. And
so if DOD and VA--and, importantly, they have agreed to
exchange records in this way, that will create opportunity for
those same veterans to go to private sector providers and have
their records transferred there as well.
And so the important milestone we have hit is on that level
of agreement and that level of interoperability. So I am very
encouraged by that. We held a House Veterans' Affairs Committee
meeting a couple of weeks ago with the vendor community. I
think there were 40 vendors in the room, and they were all in
agreement that this approach, standards-based interoperable
approach, was the one to do. And so I am encouraged by that and
excited to come up and talk to others about it today.
Chairman Carper. Well, as a veteran myself, a retired Navy
captain, I am encouraged by that. I started off the hearing
today by quoting former Senator Bill Cohen about his vision and
the problems we faced 18 years ago, and I will close not by
quoting Bill Cohen again but by quoting a distant relative of
Bill Cohen, Albert Einstein. Really distant. But Einstein used
to say, ``In adversity lies opportunity.''
``In adversity lies opportunity.'' And I quote him from
time to time. There was plenty of adversity 18 years ago when
Bill Cohen and Bill Clinger were working in these vineyards,
and there is still adversity, but there is opportunity as well.
And I am really encouraged to hear a good example, a live,
real-world example of how that adversity--the opportunities
about on its way to being realized.
We have a recurring theme in this Committee as we do
oversight, and the recurring theme is: How do we get better
results for less money in just about everything we do? And it
is a culture change. That is what I think Bill Cohen called for
all those years ago, culture change. And we still need one. I
like to say the road to improvement is always under
construction, and the road to culture change is always under
construction as well.
You have been very helpful to us today with respect to our
obligations in this regard, and just some pretty good reminders
as to things that we are doing on our side that make sense and
what we need to do more of, and also what the executive branch
needs to be doing and how we can help to empower them there.
I asked our staff over here, as we were thinking back about
how 18 years ago what was being said then sounds a whole lot
like what we are saying in today's hearing. There is an old Led
Zeppelin album called ``The Song Remains the Same.'' But the
important thing is that 18 years from now or 18 months from
now, when we gather together for another update on this, the
song will not remain the same and we will have some new lyrics,
maybe some new music, and some better results that will give us
better results for less money.
Our thanks to each of you for joining us today and for your
work that you put on display here today and the work of others
who work with you. We are grateful for that.
I want to thank our staffs for helping to put the hearing
on today, and I am told by our staff over here that the hearing
record will remain open for 15 days--that is until June 26th at
5 p.m. sharp--for the submission of statements and questions
for the record.
With that, this hearing is adjourned. Thank you.
[Whereupon, at 12:30 p.m., the Committee was adjourned.]
A P P E N D I X
----------
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]