[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

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                      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.
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    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.]



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