USDA Service Centers: Multibillion Dollar Effort to Modernize Processes
and Technology Faces Significant Risks (Letter Report, 08/31/1998,
GAO/AIMD-98-168).
The effort to modernize information technology at the U.S. Department of
Agriculture's (USDA) field service centers, as currently planned, will
be the largest, most costly, and complex in the agency's history. The
goal of this initiative is to provide "one-stop" service to customers of
USDA's farm service, natural resources, and rural development agencies
by collocating field offices and modernizing the business processes and
information technology used in these offices. USDA projects that it
could ultimately spend more than $3 billion on these efforts by the year
2011. This report describes USDA's ongoing efforts to modernize
information technology for its service centers and identifies the
significant risks in these plans.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: AIMD-98-168
TITLE: USDA Service Centers: Multibillion Dollar Effort to
Modernize Processes and Technology Faces Significant Risks
DATE: 08/31/1998
SUBJECT: Private sector practices
Information technology
Accountability
Information resources management
Systems conversions
Agricultural programs
Information systems
Reengineering (management)
Strategic information systems planning
ADP procurement
Life cycle costs
IDENTIFIER: USDA Info Share Program
USDA Service Center Implementation Initiative
Y2K
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GAO/AIMD-98-168
Cover
================================================================ COVER
Report to the Chairman, Subcommittee on Department Operations,
Nutrition, and Foreign Agriculture, Committee on Agriculture, House
of Representatives
August 1998
USDA SERVICE CENTERS -
MULTIBILLION DOLLAR EFFORT TO
MODERNIZE PROCESSES AND TECHNOLOGY
FACES SIGNIFICANT RISKS
GAO/AIMD-98-168
USDA Service Center IT Modernization
(511433)
Abbreviations
=============================================================== ABBREV
CIO - chief information officer
CCC - Commodity Credit Corporation
FSA - Farm Service Agency
IT - information technology
NFAC - National Food and Agriculture Council
NRCS - Natural Resource Conservation Service
OCIO - Office of the Chief Information Officer
OIG - Office of Inspector General
OMB - Office of Management and Budget
RD - Rural Development
USDA - United States Department of Agriculture
Letter
=============================================================== LETTER
B-278602
August 31, 1998
The Honorable Bob Goodlatte
Chairman, Subcommittee on Department Operations,
Nutrition, and Foreign Agriculture
Committee on Agriculture
House of Representatives
Dear Mr. Chairman:
This report responds to your request for information on the
Department of Agriculture's (USDA) effort to modernize information
technology (IT) at its field service centers, which is being
implemented as part of the department's Service Center Implementation
initiative. The purpose of this initiative is to provide "one-stop"
service to customers of the farm service, natural resources, and
rural development agencies by collocating field offices and
modernizing the business processes and IT used within these offices.
As agreed, our objectives for this review were to (1) describe USDA's
current plans and ongoing efforts, including estimated costs, to
modernize IT for its service centers and (2) identify any significant
risks in these plans and ongoing efforts.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
USDA's service center IT modernization effort, as currently being
planned, will be the biggest, most costly and complex in the
department's history. It involves projects to (1) develop new
business processes, (2) acquire and install telecommunications
equipment, (3) acquire, implement, and maintain a common computing
environment at about 3,100 locations, and (4) acquire and develop
geospatial data.
USDA's life-cycle cost estimates show that the department could
ultimately spend more than $3 billion for these projects by the year
2011. The department reported spending about $145 million since
starting its service center IT modernization in 1996, and plans to
spend over $200 million more during fiscal years 1998 and 1999.
USDA's multibillion dollar undertaking faces significant risks.
Specifically:
-- USDA continues to acquire new technology before it has
reengineered business processes for providing one-stop service
in all of its service centers.
-- USDA is not managing its IT-related projects for its service
centers as investments, using cost, benefit, risk, and
performance information to select, control, and evaluate
projects throughout their life-cycle.
-- USDA has not completed a comprehensive plan identifying critical
milestones, project dependencies, and resources required for the
modernization.
-- In acquiring technology, USDA is not following an incremental
approach that uses cost justifications and performance measures
for each increment to reduce risks associated with large-scale
acquisitions or projects.
-- USDA lacks the project management structure needed to manage a
modernization of this magnitude. Specifically, USDA has not
assigned a senior-level official with overall responsibility,
authority, and accountability for managing and coordinating the
separate, service center IT modernization projects and for
ensuring that the Clinger-Cohen mandates have been met and that
critical tasks are completed on time and within budget.
As a result of these risks, even if it spends billions of dollars on
its service center IT modernization, the department may not obtain an
adequate return on its investment nor meet the needs of its customers
or achieve the Secretary's vision of one-stop service.
Many of the weaknesses we identified are similar to those that caused
USDA's earlier Info Share program, which cost more than $100 million,
to fail. Until the department resolves the critical weaknesses and
institutionalizes the processes needed to manage its service center
IT modernization in accordance with the mandates of the Clinger-Cohen
Act, the Congress may wish to limit IT funding for the USDA service
centers to only that necessary to (1) bring mission-critical systems
into compliance with Year 2000 requirements, (2) implement
cost-effective efforts that support ongoing operations and
maintenance, and (3) develop and document a concept of operations and
the new mission-critical business processes necessary to provide
one-stop service at all sites and integrate the service center
business process reengineering project with its county-based study.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :2
In conducting our review, we analyzed relevant service center IT
modernization plans and studies. These included USDA's Service
Center Business Process Reengineering Business Case, Service Center
Business Need and Technical Alternative Evaluation Study, Service
Centers Modernization Strategy, Business Integration Center Project
Plan, Service Centers Strategic Plan, Service Center IT Procurement
Plan, and Common Computing Environment Implementation Strategy. We
interviewed senior USDA officials coordinating the Service Center
Implementation initiative, as well as those leading various projects
under this initiative, to gain an understanding of the department's
efforts and plans to modernize business processes and IT for the
service centers. We interviewed senior Office of the Chief
Information Officer officials to discuss the role that office has
played in overseeing the service center IT modernization and
implementing the Clinger-Cohen mandates within the department, and
met with Office of Management and Budget (OMB) officials to discuss
their reviews of funding requests by USDA for this effort.
To identify significant risks in USDA's activities and plans, we
compared the management of these efforts with requirements of the
Clinger-Cohen Act and with generally accepted sound management
principles as outlined in our executive guides and OMB guidance on
evaluating and managing IT investments, and determined whether
recommendations from past reports, particularly those related to
USDA's Info Share program, had been implemented. We did not validate
the accuracy of agency-provided data on cost or benefit estimates, or
actual costs. Appendix I provides further details of our scope and
methodology.
We conducted our review from September 1997 through May 1998, in
accordance with generally accepted government auditing standards. We
provided a draft copy of this report to USDA for comment. USDA's
comments are discussed in the "Agency Comments and Our Evaluation
Section" and are reproduced in appendix II.
BACKGROUND
------------------------------------------------------------ Letter :3
In early 1992, USDA began studying options for restructuring the
department, including the county-based structure consisting of
thousands of county offices nationwide delivering farm and rural
development programs to customers. At that time, USDA had separate
IT modernization efforts planned for each of the farm service,
conservation, and rural development agencies. In light of the impact
of possible restructuring on these plans, the Chairman and Ranking
Minority Member of the Senate Committee on Agriculture, Nutrition,
and Forestry urged USDA to postpone purchases of computer technology
beyond what was necessary to maintain existing systems until the new
structure of the department was defined. USDA agreed, and in April
1993 established a consolidated, multiagency program called Info
Share. The goal of Info Share was to improve operations and delivery
of services to customers by reengineering business processes and
developing integrated information systems.
We reported in August 1994 that Info Share was being managed as a
vehicle for acquiring new technology rather than for reengineering
business processes to better serve farm service customers.\1 We
recommended that Info Share be refocused on business process
reengineering rather than on information technology acquisition, and
that Info Share be linked to the department's reorganization.
In response to our report, the General Services Administration
canceled USDA's procurement authority for the program and OMB placed
Info Share on its list of high-risk programs. However, as reported
by USDA's Office of Inspector General (OIG), over $100 million had
already been spent on the project during fiscal years 1993 and
1994.\2 USDA later disbanded the Info Share program.
USDA established the Service Center Implementation initiative in
February 1995. Its objectives are to (1) reduce the number of field
office locations for the farm service and rural development agencies
from about 3,700 to about 2,500 and (2) restructure these 2,500
locations into one-stop service centers that would serve farm
service, conservation, and rural development customers. In doing so,
USDA expects to improve service delivery to customers and reduce
costs.
Responsibility for the Service Center Implementation initiative is
assigned to a Subcommittee of the National Food and Agriculture
Council (NFAC) consisting of agency administrators for the service
center agencies.\3 To achieve the objectives of the Service Center
Implementation initiative, NFAC has undertaken several activities.
One activity involves the service center IT modernization effort that
consists of several major projects to reengineer business processes
and acquire integrated information systems--computers, software,
telecommunications, and data. Other ongoing NFAC activities include
closing and moving field offices into collocated sites, training
staff on culture change to prepare them to work together within a
single location, and consolidating the agencies' separate
administrative structures into a single structure that supports all
three agencies. A small interagency team--the Service Center
Implementation team--works for NFAC to coordinate these projects and
activities.
The department also has two other activities underway that could have
an impact on the IT modernization projects. One is a county-based
study evaluating, among other things, how the Farm Service Agency
(FSA), Natural Resource Conservation Service (NRCS), and Rural
Development (RD) can best deliver service to customers at the service
centers. The department contracted for this study in December 1997
and intends to use the results, due in September 1998, to help
determine how county offices will be structured and how the
department will deliver services. The second activity is the
department's effort to make its information systems Year 2000
compliant.
USDA's Chief Information Officer (CIO) has overall responsibility for
implementing the Clinger-Cohen Act within the department. This
official also has oversight responsibility within the department for
the service center IT modernization. A senior policy adviser, who
reports to the CIO, is responsible for conducting periodic reviews of
projects under the initiative and contracting for independent
verification and validation assessments when the CIO's office
believes they are warranted.
--------------------
\1 USDA Restructuring: Refocus Info Share Program on Business
Processes Rather Than Technology (GAO/AIMD-94-156, August 5, 1994).
\2 Monitoring of the Info Share Program (USDA/OIG Report 50530-1-HQ,
May 4, 1995).
\3 The service center agencies consist of the Farm Service Agency
(FSA), Natural Resource Conservation Service (NRCS), and Rural
Development (RD). RD is comprised of the Rural Housing Service,
Rural Business-Cooperative Service, and Rural Utilities Service.
SERVICE CENTER IT MODERNIZATION
IS MASSIVE AND COMPLEX
------------------------------------------------------------ Letter :4
USDA's service center IT modernization consists of four major
projects, undertaken concurrently since fiscal year 1996: (1)
developing new business processes, (2) acquiring and installing
telecommunications equipment, (3) acquiring, implementing, and
maintaining a common computing environment at about 3,100 locations,
and (4) acquiring and developing geospatial data.\4 Each is described
below.
--------------------
\4 Geospatial data refers to data files that are comprised of
geographically-referenced features (i.e., land cover or soils types)
that are described by geographic positions and attributes in a
digital format.
BUSINESS PROCESS
REENGINEERING PROJECT
---------------------------------------------------------- Letter :4.1
USDA's NFAC commissioned four business process reengineering teams to
develop new, common business processes for operating the one-stop
service centers. One team was responsible for reengineering
processes used to interface with customers and provide general
information and then refer customers to program specialists for more
detailed information; the second team was responsible for
reengineering processes to assist customers in applying for program
benefits, processing applications, and delivering benefits; the third
team was responsible for reengineering processes used to acquire,
access, annotate, update, analyze, and share geospatial information;
and the fourth team was responsible for reengineering administrative
processes supporting fleet management, travel, and hiring.
In August 1997, these four teams collectively developed 17
recommendations for implementing business improvements. The
recommendations included developing a common database for customer
information and creating a mechanism for providing consistent
cross-training at all service centers. The teams also identified
steps necessary for implementing these recommendations. USDA plans
to begin implementing the recommendations during the remainder of
fiscal year 1998 and in fiscal year 1999.
TELECOMMUNICATIONS PROJECT
---------------------------------------------------------- Letter :4.2
The goal of the telecommunications project is to replace the existing
telecommunications infrastructure to allow the agencies located in
the same building or geographic area to share data and transfer
calls, consolidate telecommunications services, and provide an
integrated electronic mail (e-mail) system and satellite transmission
down-links for training. To do so, USDA is acquiring and installing
new data communications equipment (i.e., modems, routers, hubs),
voice communications equipment (i.e., integrated phone systems), and
wiring. USDA's current plans call for completing installation of
this equipment and wiring at about 3,100 locations--2,554 service
centers, 52 state offices, and 500 other support offices--by the end
of 1998.
USDA's original goal was to install new telecommunications equipment
and wiring at all sites by the end of 1997. However, in January 1997
USDA experienced significant problems when it began nationwide
implementation of the project. Because telecommunications equipment
being installed at the initial sites was not properly configured and
did not interface with the existing computer equipment, it did not
work properly and therefore delayed the installation schedule. As a
result of this, as well as other factors, the telecommunications
project fell more than 1 year behind schedule, and the overall cost
of the project has increased by millions. As of May 31, 1998, about
40 percent of the 3,100 planned installations had been completed.
COMMON COMPUTING ENVIRONMENT
PROJECT
---------------------------------------------------------- Letter :4.3
The goal of the common computing environment project is to replace
the service center agencies' existing information technology systems
(separate and various hardware, software, and applications at the
3,100 locations) with a common computing environment. To do so, the
department plans to install a single, integrated information
system--which USDA refers to as the common computing
environment--consisting of new computer hardware (file and
application servers, workstations, portable computers, and printers)
and software for office automation, geographic information systems,
and e-mail. USDA estimates that it will acquire some 38,000 personal
computers--consisting of 7,000 workstations, 21,000 laptops, and
10,000 personal data assistants--and 24,000 printers, and thousands
of cellular phones, global positioning satellite instruments, and
digital cameras.
To date, USDA has completed planning documents and studies on
configuring application servers for the common computing environment.
These studies identified three alternatives for configuring various
types of application servers and placing them within the service
centers and/or at the state offices. USDA also recently acquired a
limited number of network servers for office automation to test the
integration of this new equipment with the agencies' existing
computer equipment in a controlled environment. The department plans
to conduct pilot tests at nine sites during the summer of 1998, and
to begin acquiring new network servers before the end of fiscal year
1998. Plans show that the department will acquire the application
servers during 2001.
Included under this project will be the complex and time-consuming
task of modifying the service center agencies' existing business
applications to operate on the new application servers. Currently,
FSA, NRCS, and RD together have about 150 existing applications
comprising about 12 million lines of code, much of which must be
modified. USDA estimates show that this task will require as many as
1,500 staff years to complete. It is not clear when USDA will
complete this task as some planning documents show that this may be
completed by fiscal year 2002 while others show a completion date as
late as fiscal year 2008. Until existing business applications are
modified, the department plans to concurrently maintain and operate
the new application servers and legacy systems.
GEOSPATIAL DATA PROJECT
---------------------------------------------------------- Letter :4.4
The geospatial data project entails two primary activities to acquire
and develop data for the geographic information systems that will be
installed. The first of these is the acquisition of digital
orthophotography--aerial photographs of farm land digitized to be
readable by a computer and augmented to provide detail related to
land terrain and elevation. The second involves the acquisition and
development of digitized data describing aspects of the nation's
soils or wetlands data. USDA plans to complete the acquisition of
these data by 2003.
As of May 1998, about 31 percent of the specified digital
orthophotography had been acquired, and about 7 percent of the
specified digital soils data had been obtained.
OVERALL LIFE-CYCLE COSTS
ESTIMATED TO EXCEED $3 BILLION
------------------------------------------------------------ Letter :5
USDA's life-cycle cost estimates show that the department could
ultimately spend more than $3 billion on its four service center IT
modernization projects from 1996 to 2011.\5 As shown in table 1, most
of this amount (over 75 percent) would be spent on the common
computing environment project. A more detailed breakout of these
cost estimates is provided in appendix III.
Table 1
Summary of USDA Life-Cycle Cost
Estimates for Each of the Four Major
Projects Under Service Center IT
Modernization
(Dollars in millions)
Estimated life-cycle
Major project costs
---------------------------------------------- ----------------------
Business process reengineering project $ 253
Telecommunications project 129\a
Common computing environment project 2,687 to 2,991
Geospatial data project 472
======================================================================
Total estimated life-cycle costs (fiscal years $3,541 to $3,845
1996-2011)
----------------------------------------------------------------------
\a Costs for the telecommunications project represent primarily
acquisition and maintenance costs for the period from 1996 through
1999, since USDA has not developed total life-cycle costs for this
project.
Source: USDA's service center IT modernization project planning
documents. We did not independently verify USDA's life-cycle cost
estimates.
By completing these projects and incurring these costs, USDA expects
to significantly improve customer service, such as reducing the
number of trips customers must make to an office or the amount of
information they must provide to enroll in programs. USDA estimated
the value of such improvements to customers to total about $773
million by 2011.\6 Also over this time period, USDA estimates savings
of $5.5 billion achieved mostly through productivity gains from
reducing staff time needed (an estimated 19 million hours annually)
to handle such tasks as explaining programs or determining
eligibility.\7 The department cautioned, however, that these
estimates must be validated in an operational environment.
While there is little doubt that modernizing processes and IT for the
service centers can result in significant qualitative and
quantitative improvements for the department and its customers, none
of the estimated billions in productivity gains identified will
result in actual dollar savings to the department. This is because
USDA currently has no plans to make additional staff reductions
(i.e., reductions beyond those already planned as part of the
administrative consolidation) based on these expected productivity
gains.
Table 2 details reported actual and planned costs for the four major
service center IT modernization projects by fiscal year, from 1996
through 1999.
Table 2
Reported and Planned Costs for Service
Center IT Modernization Projects
(Dollars in millions)
FY FY
FY FY 1998 1999
1996 1997 planne planne
Major project actual actual d d
-------------------------------------- ------ ------ ------ ------
Business process reengineering project $ .8 $ 8.6 $ 9.3 $ 13.8
Telecommunications project 72.7 10.7 23.4 9.0
Common computing environment project 4.2 0.0 42.3 69.5
Geospatial data project 30.0 17.5 19.8 13.8
======================================================================
Total $107.7 $36.8 $94.8 $106.1
----------------------------------------------------------------------
Source: USDA's Service Center Implementation Team budget documents
and supporting documents for fiscal year 1999 OMB budget submissions.
We did not independently verify the information provided in these
documents.
To date, the reported source of funding for the service center IT
modernization projects has primarily been the Commodity Credit
Corporation (CCC), as shown in table 3. CCC is a government-owned
and operated corporation used to finance many domestic and
international agricultural programs. In 1996, the Congress limited
CCC's funding for computer and telecommunications equipment and
services to a maximum of $170 million in fiscal year 1996 and a
maximum of $275 million for fiscal years 1997 through 2002. About 70
percent of USDA spending for the service center IT modernization
projects in fiscal years 1996 and 1997 came from CCC funds. Only
about 35 percent will come from CCC in fiscal years 1998 and 1999.
The remainder will come from appropriated funds.
Table 3
Reported and Planned Source of Funding
for Service Center IT Modernization
Projects
(Dollars in millions)
FY 1996 FY 1997 FY 1998 FY 1999
Funding source actual actual planned planned
------------------------------ -------- -------- -------- --------
CCC funds $ 94.7 $ 6.5 $51.7 $ 17.3
FSA appropriations 1.8 1.2 1.1 30.1
NRCS appropriations 8.0 27.5 36.2 35.3
RD appropriations 2.4 1.5 5.8 7.0
Info Share appropriations\a .8 -- -- --
Unallocated\b -- -- -- 16.4
======================================================================
Total $107.7 $36.8\c $94.8 $106.1
----------------------------------------------------------------------
\a In 1995, the Congress appropriated $7.5 million for the Info Share
program. These funds were appropriated to the Office of the
Secretary and are under the Secretary's control.
\b Planned funding for which no source has yet been identified.
\c Does not add due to rounding.
Source: USDA's Service Center Implementation Team budget documents
and supporting documents for fiscal year 1999 OMB budget submissions.
We did not independently verify the information provided in these
documents.
In addition to spending funds for the service center IT
modernization, USDA agencies continue to acquire IT independently.
Over the past 2 years, agencies have reported spending about $100
million to acquire computer hardware and software separate from the
$145 million specifically reported under the service center IT
modernization (see table 4).
Between 1995 and 1997, for example, NRCS and RD purchased about 6,800
computers/laptops at a reported cost of about $51 million to replace
equipment in the service centers. FSA, NRCS, and RD also plan to
spend about $50 million total on computer hardware and software in
fiscal years 1998 and 1999, at least $8.5 million of which would be
used to replace existing service center equipment.
Table 4
Reported and Planned Agency Expenditures
for IT (Hardware and Software) Made
Within Each Agency Outside of the
Service Center IT Modernization
(Dollars in millions)
FY 1996 FY 1997 FY 1998 FY 1999
Agency (source) actual actual planned planned
------------------------------ -------- -------- -------- --------
FSA (appropriations) $ 3.5 $ .7 $ 2.6 $ 3.3
FSA (CCC funds) 21.2 4.8 10.9 14.2
NRCS (appropriations) 30.2 13.9 9.3 7.9
RD (appropriations) 21.5 2.8 .7 1.2
======================================================================
Total $76.4 $22.2 $23.5 $26.6
----------------------------------------------------------------------
Source: USDA's OMB A-11 submissions. We did not independently
verify this information.
--------------------
\5 Life-cycle costs represent those costs associated with planning,
acquiring, developing, operating, and maintaining the projects during
the entire period of 1996 to 2011. These costs include equipment and
software, personnel, contractor support, services, supplies, and
other related costs.
\6 USDA developed this value by estimating such things as the
reduction in time a customer would annually spend traveling to and
from service centers or providing redundant information, and then
multiplying this by the estimated number of customers affected and an
average dollar value for such benefits (i.e., an average wage rate
for each hour saved).
\7 USDA estimated the savings from productivity gains by having staff
in 13 locations estimate the time it took to complete certain
activities such as explaining programs or determining eligibility and
the time that would be saved if such processes were reengineered.
These estimates were then converted into personnel compensation in
terms of dollars and extrapolated to all service centers.
WEAKNESSES CREATE SIGNIFICANT
RISKS FOR SERVICE CENTER IT
MODERNIZATION
------------------------------------------------------------ Letter :6
USDA's multibillion dollar service center IT modernization has
several significant weaknesses that place the entire effort at risk
of not achieving an adequate return on its investment or its goal of
improved customer service. Specifically, the department (1) has
acquired, and plans to continue acquiring, new technology without
first reengineering its processes to provide one-stop service in all
service centers; (2) is not managing its service center IT
modernization projects as investments using cost, benefit, risk, and
performance information to select, control, and evaluate projects
throughout their life-cycle; (3) lacks a comprehensive plan for its
service center IT modernization that specifies dependencies among
projects, critical milestones, and resources required; (4) is not
following an incremental approach in acquiring technology using cost
justifications and performance measures for each increment to reduce
risks associated with large-scale acquisitions or projects; and (5)
has not established the management structure with the requisite
responsibility, accountability, and authority for managing and
coordinating the separate service center IT modernization projects
and ensuring that critical tasks are completed on time and within
budget.
TECHNOLOGY ACQUIRED AND MORE
ACQUISITIONS PLANNED PRIOR
TO DEFINING NEW BUSINESS
PROCESSES
---------------------------------------------------------- Letter :6.1
The Clinger-Cohen Act requires that agencies analyze their missions
and, where appropriate, reengineer mission-related and administrative
processes before making significant investments in supporting
information technology to avoid wasting funds on IT that does not
meet their needs. We have previously reported that when IT projects
precede business process redesign, they typically fail or reach only
a fraction of their potential.\8
USDA has defined and documented neither a concept of operations nor
the mission-related business processes that will be needed to provide
one-stop service at all its centers. The Secretary envisions every
one-stop service center providing its customers with access and
service for all farm, conservation, and rural development programs.
Yet, the department's plans show that all three agencies--FSA, NRCS,
and RD--will be physically collocated at only about 700 of its 2,554
service centers. Approximately 1,650 other centers will house only
two agencies, with the remaining 200 centers having staff from only
one agency present. Because the department does not currently
provide services and programs for all three agencies at every site,
new and fundamentally different processes, information flows, and
databases would be required to meet the Secretary's vision of
one-stop service in all service centers.
Nevertheless, the department has reported already spending over $140
million on its service center IT modernization, and plans to spend
over $200 million more in fiscal years 1998 and 1999, with most of
these funds used for acquiring new technology. Because the
department's plans show that it will still be reengineering processes
during fiscal years 1998 and 1999, and may not be finished
reengineering until 2003, USDA has no assurance that these new IT
acquisitions will meet customer needs or allow the department to
provide one-stop service as envisioned by the Secretary.
Furthermore, USDA's efforts to reengineer business processes at the
service centers are redundant and uncoordinated. Both the
county-based study USDA contracted for in December 1997 and the
service center IT modernization's business process reengineering
project are evaluating how the service center agencies (FSA, NRCS,
and RD) should provide customer service at the centers. The two,
however, are proceeding independently. Without integrating the study
and the reengineering project, USDA may find costly rework necessary
and waste IT resources. For example, one deliverable of the study is
to include options to consolidate, centralize, outsource, privatize,
cross-service, or franchise programmatic functions. The study may,
therefore, recommend outsourcing or privatizing functions that are
being reengineered by the service center IT modernization.
--------------------
\8 Executive Guide: Improving Mission Performance Through Strategic
Information Management and Technology (GAO/AIMD-94-115, May 1994).
INFORMATION TECHNOLOGY IS
NOT BEING MANAGED AS AN
INVESTMENT
---------------------------------------------------------- Letter :6.2
Agencies are required by the Clinger-Cohen Act of 1996 to use a
capital planning and investment control process to assess and manage
the risks of IT acquisitions. This act requires agencies to compare
and prioritize all IT projects using explicit quantitative and
qualitative decision criteria. In September 1996, we reported that
successful public and private organizations select, control, and
evaluate major IT projects based on objective, reliable data
including expected and actual mission benefits, potential risks, and
estimated and actual costs of each project.\9 In September 1995,
after USDA's OIG reported that the department was not effectively
tracking costs for Info Share, the Senate Appropriations Committee
noted in report language that it expected USDA to develop a
comprehensive cost accounting and budget tracking process prior to
making IT purchases.
USDA's CIO is still in the process of developing and testing a
capital planning and investment control process for the department
and its agencies to use when assessing and managing IT acquisitions.
Also, the department has not yet developed a comprehensive cost
accounting and budget tracking system for the service center IT
modernization. In the absence of a completed investment control
process and cost accounting and budget tracking system, USDA
continues to spend hundreds of millions of dollars on IT with no
assurance that these expenditures will return commensurate benefits,
and with limited ability to control and evaluate these investments
effectively.
For example, the department reviewed and approved the service center
IT modernization plans and fiscal year 1998 and 1999 IT budgets of
$200 million without considering explicit qualitative and
quantitative information that is necessary to effectively assess IT
projects and make high-quality investment decisions. First, no
information on mission-related performance measures for any of the
service center IT modernization projects was used because such
information had not yet been developed, and risk information had been
developed for only the telecommunications project. Second,
information on estimated benefits and costs was not available for
some projects. Moreover, although OMB developed capital asset
criteria and worksheets that agencies are to use to consistently and
objectively rate and rank IT projects, the department did not use
this decision criteria to rate and rank its service center IT
modernization projects.
Once selection has occurred, as we reported in September 1996,
leading organizations continue to manage their investments,
maintaining a cycle of continual control and evaluation. To do so,
projects are reviewed by senior executives at specific milestones as
the project moves through its lifecycle and as the dollar amounts
spent on the project increase. At these milestones, the executives
compare the expected costs, risks, and benefits with the actual costs
incurred, risks encountered, and benefits realized to date. This
enables senior executives to (1) identify and focus on managing
high-potential or high-risk projects, (2) reevaluate investment
decisions early in a project's lifecycle if problems arise, (3) be
responsive to changing external and internal conditions in mission
priorities and budgets, and (4) learn from past successes and
failures in order to make better decisions in the future.
Although USDA has had the service center IT modernization projects
underway since 1996 and has spent millions of dollars on them, the
department is not systematically controlling and evaluating these IT
projects throughout their lifecycles. First, executives are not
reviewing these projects at specific milestones to ensure that these
continue to be viable investments. Second, the department is not
developing and maintaining the quantitative and qualitative
information needed by these executives to effectively control and
evaluate these IT projects. For example, the department has not
developed an effective cost estimating, budgeting, and accounting
process to identify, track, and report actual costs so that these
could be compared to estimated costs. Third, while benefits have
been estimated for the IT projects, they are not defined in terms of
measurable mission-related performance improvements so that actual
benefits could be tracked against estimates to assess the impact the
IT investments have on productivity and mission performance.
Finally, USDA has not identified and quantified risks for each of the
projects.
--------------------
\9 Information Technology Investment: Agencies Can Improve
Performance, Reduce Costs, and Minimize Risks (GAO/AIMD-96-64,
September 30, 1996).
SERVICE CENTER IT
MODERNIZATION LACKS
COMPREHENSIVE PLAN
---------------------------------------------------------- Letter :6.3
Although USDA began its service center IT modernization in 1996, it
still has no comprehensive plan for this effort. Such a plan is
important for defining the milestones for major segments of each
project under the IT modernization, dependencies among all the
project's segments, and resources required to complete them. It
helps identify priorities as to which project segments must be
completed first and where milestone and resource shifts must be made
to ensure that the most critical segments are completed on time,
within budget, and, more importantly, are successful.
The department has been drafting a plan that identifies activities
under its Service Center Implementation initiative, including
information on the service center IT modernization projects. USDA
expected to complete this plan by September 1997, but had not done so
as of May 31, 1998.
As currently drafted, however, this plan is not comprehensive and
cannot be used for identifying priorities and where resource shifts
must occur among the IT modernization projects to ensure that the
most critical segments are completed. First, the plan does not
identify all major segments of the four IT modernization projects.
For example, milestones and dependencies for some major
segments--such as implementing reengineered processes or migrating
applications to the new computing environment--are not identified.
Second, the draft plan does not include any information on resources
needed to complete the IT modernization projects. Project estimates
show that as many as 1,600 IT staff will be needed in fiscal years
1999 and 2000. This includes about 1,500 IT staff to carry out and
support the common computing project and another 100 IT staff to
implement the reengineering and geospatial projects. Staff estimates
were not available for the telecommunications project. Currently,
however, USDA documents show that there are only about 1,380 total IT
staff within FSA, NRCS, and RD combined. USDA could not explain why
its resource estimates were incomplete and inconsistent, and could
not provide a plan for meeting the requirement for 1,600 IT staff.
Better planning of IT resources for the modernization is especially
critical because IT resources will also be required for other
important USDA efforts. For example, a large number of the existing
1,380 IT staff will be needed to ensure Year 2000 compliance of the
service center agencies' application systems that comprise about 12
million lines of code in thousands of offices. In May 1998 we
testified that USDA faces tremendous challenges in ensuring that
vital public services are not disrupted due to Year 2000-related
computing problems and that FSA expressed concern that they may lack
the staff resources necessary to complete Year 2000 work.\10
Similarly, IT resources will be required to consolidate the three
service center agencies' separate administrative structures.
However, as part of this consolidation, which USDA began in March
1998, NFAC plans to reduce the service center agencies' current IT
staffing levels by about 400 over the next 4 fiscal years.
None of these major efforts (i.e., the modernization, Year 2000
conversion, or the administrative consolidation) will succeed unless
USDA plans effectively for the use of its IT resources.
--------------------
\10 Year 2000 Computing Crisis: USDA Faces Tremendous Challenges in
Ensuring That Vital Public Services Are Not Disrupted
(GAO/T-AIMD-98-167, May 14, 1998).
INCREMENTAL APPROACH NOT
BEING USED TO REDUCE RISKS
---------------------------------------------------------- Letter :6.4
To reduce risks associated with large-scale IT projects, the
Clinger-Cohen Act requires agencies to implement major IT
acquisitions in manageable increments. Each increment is
independently cost-justified and performance-based measures are
developed to ensure that each increment provides an attractive return
on investment and provides mission-related benefits.
To date, USDA has not been acquiring new technology incrementally.
For example, rather than divide its $129 million telecommunications
project into successive increments, and demonstrating the
effectiveness of each increment before acquiring the next, USDA
committed to implementing the entire project, which includes
completely replacing voice and data communications equipment at all
3,100 sites. By not using an incremental approach, USDA has
significantly increased the risks associated with this project, which
has already fallen more than a year behind schedule and according to
USDA will be $17.5 million over its budget of $111.3 million.
For planned fiscal year 1998 and 1999 acquisitions for its common
computing environment project, USDA has identified a phased
implementation strategy where each phase could be acquired
separately. For example, one phase entails acquiring network servers
for all of the centers, while another entails acquiring application
servers to provide the common computer equipment to run service
center business applications. However, the department has not
developed cost justifications and performance measures for each phase
to ensure that each phase independently provides an attractive return
on the planned investment and measurable mission-related benefits.
SERVICE CENTER IT
MODERNIZATION MANAGEMENT
STRUCTURE HAS NOT BEEN
ESTABLISHED
---------------------------------------------------------- Letter :6.5
To succeed, complex IT projects must be managed effectively. We have
reported in the past on the need for strong project management at
USDA when undertaking IT projects.\11 In a September 1994 assessment,
a contractor identified the lack of a manager dedicated full-time to
Info Share as one of the root causes for its problems.\12 In May
1995, USDA's OIG raised similar concerns citing the fact that USDA
lacked a single individual or group with the requisite responsibility
and authority to make decisions and manage the various projects under
Info Share. Subsequently, in September 1995, the Senate
Appropriations Committee noted in report language that it expected
USDA to defer new technology acquisitions until concerns raised by
USDA's OIG about project management, and other areas, were satisfied.
Although the Secretary delegated overall responsibility for
implementing the Service Center Implementation initiative to a
subcommittee of NFAC and an executive officer was appointed to
coordinate the activities of this subcommittee, USDA still lacks the
project management structure needed to manage a modernization of this
magnitude. Specifically, USDA has not assigned a senior-level
official with overall responsibility, authority, and accountability
for managing and coordinating the separate service center IT
modernization projects and ensuring that critical tasks are completed
on time, within budget, and in accordance with the Clinger-Cohen
mandates. Although USDA has a CIO, the CIO is not responsible for
the service center IT modernization. Instead, responsibility,
accountability, and authority for control of the four service center
IT modernization projects and resources is fragmented and
ineffective. Three of the four IT modernization projects have
managers who report to their service center agency, while the fourth
reports to the executive officer. Because each service center agency
controls its own project resources, effective joint planning and
execution in the interest of USDA as a whole has not occurred and
completion of key tasks has been delayed.
For example, although the executive officer planned to complete a
Service Center Implementation initiative plan by September 1997, he
could not effectively prioritize the tasks involved in staff
reporting to the service center agencies. As a result, the plan had
still not been completed as of May 31, 1998. Likewise, the executive
officer could not reallocate the resources necessary to begin
implementing the recommendations for improvements made under the
business process reengineering project.
--------------------
\11 Information Resources: Management Improvements Essential for Key
Agriculture Automated Systems (GAO/IMTEC-90-85, September 12, 1990).
\12 Project Management Assessment of USDA's Info Share Program,
September 30, 1994, Management Analysis Company.
CONCLUSIONS
------------------------------------------------------------ Letter :7
USDA's effort to modernize business processes and IT for its service
centers is expected to be the biggest, most costly and complex IT
modernization effort in its history, with estimated costs ultimately
exceeding $3 billion. USDA has failed in past efforts to plan and
manage IT modernization, and some of the same fundamental planning
and management weaknesses that caused past failures threaten this
effort. Until the department corrects these weaknesses, it is
unlikely to achieve an adequate return on its investment, meet the
needs of its customers, or achieve the Secretary's vision of one-stop
service.
MATTERS FOR CONGRESSIONAL
CONSIDERATION
------------------------------------------------------------ Letter :8
Until the department resolves its critical weaknesses and
institutionalizes the processes needed to manage its service center
IT modernization in accordance with the mandates of the Clinger-Cohen
Act, the Congress may wish to limit IT funding for the USDA service
centers to only that necessary to (1) bring mission-critical systems
into compliance with Year 2000 requirements, (2) implement
cost-effective efforts that support ongoing operations and
maintenance, and (3) develop and document a concept of operations and
the new mission-critical business processes necessary to provide
one-stop service at all sites and integrate the service center
business process reengineering project with the county-based study.
RECOMMENDATIONS
------------------------------------------------------------ Letter :9
We recommend that the Secretary of Agriculture ensure that the
following actions are completed before investing in any effort to
modernize USDA's IT beyond that necessary for making mission-critical
systems Year 2000 compliant and cost- effectively supporting ongoing
operations and maintenance.
-- Develop and document a concept of operations and the new
mission-critical business processes necessary to provide
one-stop service at all sites.
-- Integrate the service center business process reengineering
project with the county-based study.
One approach for ensuring completion of these actions would be to
assign accountability to the Deputy Secretary who would need to work
with the Under Secretaries and Assistant Secretaries for the service
center agencies and the CIO.
We also recommend that the Secretary hold the CIO accountable, and
provide her requisite authority and responsibility for managing and
implementing the service center IT modernization, and direct that she
complete the following additional actions:
-- Identify, assess, and document the risks, costs, benefits, and
performance measures for each service center IT project before
providing additional funding to ongoing projects and approving
any new projects, and then use this information to review,
control, and evaluate these projects at specific milestones of
the project's lifecycles.
-- Develop a comprehensive plan for the service center IT
modernization that documents and tracks all critical milestones,
dependencies among major segments, and resources needed to
complete them, taking into account the resources that will be
needed to make the service center agencies' systems Year 2000
compliant.
-- Develop an acquisition strategy that focuses on buying
technology in manageable increments, where cost justification
and performance measures are developed and documented for each
increment.
We further recommend that the Deputy Secretary report on a regular
basis to the Secretary on the progress the department is making to
implement each of these recommendations, and notify the Secretary
when all of the identified weaknesses have been fully addressed and
resolved.
AGENCY COMMENTS AND OUR
EVALUATION
----------------------------------------------------------- Letter :10
USDA's Deputy Secretary provided written comments on a draft of this
report. They are summarized below, along with our responses, and
reproduced in their entirety as appendix II.
USDA agreed with some of our findings and recommendations.
Specifically, USDA agreed to integrate the service center business
process reengineering project with the county-based study. USDA also
agreed to complete a comprehensive plan identifying critical
milestones, project dependencies, and resources required for the
modernization. Further, USDA agreed that the Deputy Secretary should
report on a regular basis to the Secretary on progress the department
is making to implement each of our recommendations.
USDA also agreed with two other recommendations, but stated it was
already performing consistent with these recommendations. First, the
department agreed that IT-related projects should be managed as
investments, but said that it was already accomplishing this. For
example, the department stated that "service center IT projects are
subjected to the evolving USDA capital investment and control process
just as any other investment." The department also said that its
Executive Information Technology Investment Review Board has "devoted
considerable effort to examining these activities and monitoring
progress" and that "USDA management is provided information regarding
the progress of the investment in the Service Center Implementation
initiative by means of monthly Program Management Reviews."
Our work showed, however, that the department does not have the
process or the information to effectively manage the service center
IT projects as investments. Although the Clinger-Cohen mandate
requires that agencies use a capital planning and investment control
process to assess and manage the risks of IT acquisitions, USDA has
neither completely developed nor implemented such a process. Also,
the department's senior executives have not been substantively
involved in systematically controlling and evaluating the projects.
For example, USDA's Executive Information Technology Investment
Review Board has met only once since October 1997, when it approved
the service center IT modernization plans and budgets. Minutes from
that meeting, held on June 16, 1998, show no indication that the
board discussed or evaluated information on service center IT
modernization costs, benefits, risks, or performance measures.
Regarding the monthly Program Management Reviews, the CIO's May 15,
1998, review found "irregular attendance" at the monthly meetings and
that monthly progress reports provided to the Deputy Secretary "are
often not timely, complete, or in a format to clearly communicate
whether or not major initiatives are on target or behind."
Second, the department agreed with our recommendation that technology
should be acquired in manageable increments, each of which provides
documented mission-related return on investment, but stated it was
already doing so. We do not agree that this is being accomplished
adequately. As discussed in the report, USDA began implementing the
entire $129 million telecommunications project on a nationwide basis
5 months before it completed the cost/benefit analysis. By the time
the cost/benefit analysis was completed, USDA had already obligated
over half the $129 million for this project. No project increments
were defined, no incremental cost/benefit analyses were prepared, and
no incremental mission-related performance measures were developed.
In addition, USDA disagreed with several of our recommendations.
Specifically, USDA disagreed that it should define and document a
concept of operations for providing one-stop service in all of its
service centers before investing in new IT. USDA stated that it can
simultaneously reengineer business processes and purchase IT, and
said that "because the business process reengineering process will
take several years to complete, the investments cannot wait until the
full process is completed." The department further stated that it
objected to the "premise that every process inherent in delivering
service must be fully reengineered before implementation can begin,"
and asserted that "an incremental and parallel approach is the best
way to proceed given the massive business processes involved and the
changing technology which will allow USDA to achieve efficiencies and
savings as we move through the reengineering process."
USDA's position is not consistent with the Clinger-Cohen mandate that
agencies reengineer mission-related and administrative processes
before making significant investments in supporting IT. If USDA
continues making major IT purchases before determining how it will do
business in its service centers, it risks repeating past failures,
i.e., investing millions of dollars on IT that does not effectively
satisfy its needs. The department needs to understand clearly how it
is going to operate before it acquires supporting technology. This
does not mean that every process must be fully reengineered before
any investments can be made. It means that every process that is
being automated must be fully reviewed and changes understood before
technology is acquired to support it.
USDA also disagreed with our recommendation that the CIO be given
responsibility for managing the service center IT modernization. The
department considered this a reversal of our earlier recommendations
related to Info Share, that pointed out as a weakness that it was
being driven by IT personnel rather than program personnel. USDA
said its strategy has been to assign the responsibility and
accountability for service center initiatives to agency program
leadership. It further said that separating IT modernization from
program change initiatives would invite "repeating mistakes of the
past." USDA agreed that "much needs to be done to improve the project
management structure" and said it is taking steps to do so, but said
it will continue to implement this initiative under its current
approach of "assigning day-to-day leadership and accountability to
agency heads, acting collectively as the NFAC, and assigning the IT
policy and oversight function to the CIO to ensure the effort is
successful."
USDA organizational weaknesses, in particular the fact that its CIO
does not have the responsibility and authority needed to effectively
manage major IT acquisitions agencywide, have contributed to past
failures like Info Share. To correct the weaknesses, we recommended
in past reports, and continue to recommend in this report, that the
senior business managers in USDA be responsible for business process
reengineering, but that the CIO be held accountable and responsible
for managing the service center IT modernization. As currently
planned, this IT modernization will be the biggest and most costly in
USDA's history. If USDA is to avoid repeating past mistakes, it
cannot insist on maintaining the status quo, i.e., having no
senior-level official with overall responsibility, authority, and
accountability for managing and coordinating the separate service
center IT modernization projects and for ensuring that the
Clinger-Cohen mandates have been met and that critical tasks are
completed on time and within budget.
In addition, USDA stated that it is not funding IT projects without
preparing the requisite data and analyses, and that the "common
computing environment [investment] has not been approved by USDA for
procurement and deployment, and the CIO has conditioned any such
approval on meeting capital investment planning and control
requirements and other factors."
Based on the results of our audit work, USDA claims that service
center IT project approval is conditioned on "meeting capital
investment planning and control requirements and other factors" are
not convincing and are not supported by facts. USDA does not define
what its "planning and control requirements and other factors" are,
and has not completed development of, nor implemented, a capital
investment process. Nonetheless, USDA plans to spend over $200
million in fiscal years 1998 and 1999, which includes investments for
the common computing environment. These plans were approved by the
department's Executive Information Technology Investment Review Board
and the CIO.
Finally, the department said it strongly opposes our suggestion that
the Congress limit funding until the weaknesses we identified are
resolved. The department stated that it believed limiting IT funding
at this critical juncture would shut down much of the reengineering
and technical development work that is underway and would cause USDA
to forego implementation of improvements.
USDA's view that our recommendations related to limiting its IT
funding would "shut down much of the reengineering . . . work" is
not correct. Our recommendation allows for funding to help USDA
develop and document a concept of operations and the new
mission-critical business processes necessary to provide one-stop
service at all sites and integrate the service center business
process reengineering project with the county-based study, and we
have amplified the wording in our matters for congressional
consideration to reflect this.
While USDA does not take issue with most of our recommendations, it
does not explain whether or how it plans to implement them. Rather,
USDA cites actions that it already has underway and believes these
are sufficient to mitigate risks. Although some of the steps being
taken by USDA are helpful, they will not and do not correct the
persistent weaknesses we identified.
USDA also raised several additional matters that do not affect our
conclusions and recommendations and thus are not discussed here.
These matters and our responses are discussed in appendix II.
--------------------------------------------------------- Letter :10.1
As agreed with your office, unless you publicly announce its contents
earlier, we will not distribute this report until 30 days from the
date of this letter. At that time, we will send copies to the
Secretary of Agriculture; the Chairmen and Ranking Minority Members
of the Senate Committee on Governmental Affairs, the Senate and House
Committees on Appropriations, and the House Committee on Government
Reform and Oversight; the Director, Office of Management and Budget;
and other interested parties. Copies will also be made available to
others upon request.
Please contact me at (202) 512-6408 if you or your staff have any
questions concerning this report. I can also be reached by e-mail at
[email protected]. Major contributors to this report are
listed in appendix IV.
Sincerely yours,
Joel C. Willemssen
Director, Civil Agencies Information Systems
SCOPE AND METHODOLOGY
=========================================================== Appendix I
To obtain information on USDA's current plans and ongoing efforts to
modernize IT for its service centers, we analyzed relevant plans and
studies for the department's service center IT modernization,
including USDA's Service Center Business Process Reengineering
Business Case and supporting documentation on the business process
reengineering and geospatial data projects; the Service Center
Business Need and Technical Alternative Evaluation Study; the Service
Centers Strategic Plan; the Service Centers Modernization Strategy;
Business Integration Center Project Plan; the Service Center IT
Procurement Plan; and the Service Center Common Computing Environment
Implementation Strategy. We also interviewed the Executive Officer
and his deputy from the Service Center Implementation team and those
individuals leading IT modernization major projects to determine how
these plans and efforts were being managed and undertaken.
Using the Service Center Business Process Reengineering Business
Case, Service Center Business Need and Technical Alternative
Evaluation Study, and telecommunications planning documents, we
identified the department's estimated costs for the service center IT
modernization. We also obtained information from the Service Center
Implementation team budget officer on expenditures the department has
incurred since 1996, as well as planned expenditures for fiscal years
1998 and 1999. We used the agency's OMB A-11 submissions to identify
expenditures that service center agencies had made and planned to
make. We did not validate the accuracy of agency-provided data on
cost or benefit estimates, or actual costs.
To identify significant risks in USDA's service center IT
modernization activities and plans, we compared them with
requirements under the Clinger-Cohen Act and with generally accepted
sound management practices as outlined in GAO guidance--Executive
Guide: Improving Mission Performance Through Strategic Information
Management and Technology (GAO/AIMD-94-115) and Executive Guide:
Measuring Performance and Demonstrating Results of Information
Technology Investments (GAO/AIMD-98-89) and OMB's Circular A-130,
Management of Federal Information Resources. We also determined
whether recommendations made in past GAO reports, particularly those
related to USDA's Info Share Program, had been implemented.
In addition, we met with USDA officials and obtained information on
the two other major initiatives the department has underway that
could affect the service center IT modernization effort--the
county-based study evaluating options for delivering services at the
service center and the Year 2000 conversion of all of the agencies'
IT systems.
Finally, we interviewed senior CIO officials to discuss their roles
in overseeing the service center IT modernization, and met with OMB
officials to discuss their reviews of related funding requests by
USDA. We performed our work at USDA headquarters in Washington,
D.C., and at service centers in Higginsville and Richmond, Missouri.
Our work was performed from September 1997 through May 1998 in
accordance with generally accepted government auditing standards.
(See figure in printed edition.)Appendix II
COMMENTS FROM THE DEPARTMENT OF
AGRICULTURE
=========================================================== Appendix I
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The following are GAO's comments on the Department of Agriculture's
letter dated July 21, 1998.
GAO COMMENTS
1. Reporting USDA's $3 billion life-cycle estimate figure is not
misleading. We explain on page 8 that personnel costs are included
in the $3 billion life-cycle figure. In addition, appendix III
provides a detailed breakout of the life-cycle costs estimated by
USDA for each of the major projects and the cost elements for the
business process reengineering and common computing environment
projects.
2. Our report clearly states that the new technology we are
referring to is technology that USDA acquired as part of the nearly
$145 million the department spent on its service center IT
modernization in fiscal years 1996 and 1997. In contrast, the
"moderate investment" that USDA discusses refers to the nearly $100
million that FSA, NRCS, and RD reported spending over this same time
period on hardware and software within each agency and independent of
the modernization.
3. We clarified the report to emphasize that configuration and
integration problems were not the only cause of the delays. However,
the department's characterization of the configuration and
integration problems is misleading. A major reason for these
problems was a failure by the department to properly test and pilot
the telecommunications equipment and promptly correct the problems
that were identified as early as October 1996 in the first two pilot
sites. Instead, the department began installing equipment with known
problems nationwide, thus complicating, delaying, and increasing the
cost of correction.
4. USDA's position that the overall cost of the project remains
under budget is misleading. The department originally set a budget
of $132.5 million, but it was revised to $111.3 million, according to
USDA's records, once the actual cost of the telecommunications
equipment was determined. At the time of our review, however, the
department expected the costs of the overall project to reach $128.8
million.
5. The report recognized that the 38,000 personal computers included
not only workstations and laptops but also personal data assistants.
Nevertheless, we modified the report to specify the number of
workstations (7,000), laptops (21,000), and personal data assistants
(10,000) making up the overall figure. We included the number of
personal data assistants because these are computers.
6. Our statement is accurate. The estimated billions of dollars in
productivity gains discussed refers to gains USDA said it expects to
achieve by reengineering program processes, not gains achieved by
reengineering administrative processes or consolidating
administration. Our report makes this clear by noting that USDA
currently has no plans to make additional staff reductions (i.e.,
beyond those already planned as part of the administrative
consolidation) on the basis of expected productivity gains. In
addition, USDA agrees that it has no plans to further reduce staff.
7. The statement accurately reflects information provided to us by
the department on the number of computers RD and NRCS acquired and
the reported costs of those computers.
8. While IT purchases that are not part of the service center IT
modernization are reviewed by agency administrators, Office of the
Chief Information Officer (OCIO) staff, and "other reviewers,"
neither the agencies nor the department has the process, the
information, or the continual, substantive involvement of senior
executives needed to ensure that the investments are judicious.
Further, since the department has not formulated its concept of
operations and has not yet reengineered its business processes to
support "one-stop" service, it does not know what its new environment
will be and has no analytical basis for determining whether interim
purchases will "fit into it."
9. At the conclusion of our review, the department could not
describe clearly (either orally or in writing) how it would operate
and deliver services at all service center sites. The department
notes in its comments that it is currently updating a concept of
operations document.
10. USDA has misread the clear language of the report which
correctly states that the department plans to spend over $200 million
in fiscal years 1998 and 1999. The report does not discuss whether
the service center agencies have been provided departmental
"approval" for specific amounts.
11. We modified the report to recognize that USDA had identified
risks for its telecommunications project.
12. USDA's statement is incorrect. The information used in our
report was developed independent of any of the department's cited
reviews, including the May 15, 1998, OCIO report. Moreover, USDA did
not provide us with a copy of its May 15 report until after we had
met with departmental officials to review and discuss a draft copy of
our report. While some of the problems identified in the
department's reviews are similar to some of our findings, none are
the same. For example, USDA's internal review notes that delays in
business process reengineering schedules have occurred, whereas we
report that USDA is acquiring IT before reengineering its business
processes. Further, several of our findings, such as those related
to not managing IT projects as investments or not acquiring IT
incrementally, were not discussed in USDA's reviews at all.
13. USDA's assertion is not supported by the facts. Information on
mission-related performance measures was not used because it had not
yet been developed for any of the projects, and risk information has
only been developed for the telecommunications project. Also,
information on estimated benefits and costs for some projects (e.g.,
life-cycle costs and benefits for the telecommunications project) was
not available. Further, USDA does not dispute the fact that OMB
capital asset criteria and worksheets were not used.
14. USDA's statement is not accurate, as the document cited by the
department has no information on risks.
DETAILED BREAKOUT OF LIFE-CYCLE
COSTS ESTIMATED FOR EACH MAJOR
PROJECT
========================================================= Appendix III
Table III.1
Life-Cycle Costs Estimated for Each
Major Project by Year
(Dollars in millions)
Major Project\a
------------------------------------------------------------------------
Business Common
Fiscal process computing Geospati
year Telecommunications reengineering environment al data Total
------ ------------------ -------------- ---------------- -------- ========
1996 $73.2 -- -- -- $73.2
1997 7.5 $14.6 -- $45.0 67.1
1998 31.3 4.3 -- 45.9 81.5
1999 16.8 44.7 $238.2 62.3 362.0
2000 -- 15.6 249.9 71.5 337.0
2001 -- 11.1 261.5 45.4 318.0
2002 -- 66.5 183.3 28.4 278.2
2003 -- 9.5 183.3 29.8 222.6
2004 -- 10.0 183.3 18.0 211.3
2005 -- 8.5 183.3 18.0 209.8
2006 -- 15.3 212.5 18.0 245.8
2007 -- 9.5 215.3 18.0 242.8
2008 -- 9.9 229.8 18.0 257.7
2009 -- 6.9 185.8 18.0 210.7
2010 -- 16.9 187.2 18.0 222.1
2011 -- 9.5 174.0 18.0 201.5
================================================================================
Total $128.8 $252.8 $2,687.4\b $472.3 $3,541.3
--------------------------------------------------------------------------------
\a Costs for the telecommunications project and geospatial data
project represent primarily acquisition costs. However, costs for
business process reengineering and common computing environment
represent several costs and are therefore further broken out in
tables III.2 and III.3, respectively.
\b These figures represent estimates for the lowest cost alternative.
Table III.2
Estimated Life-Cycle Costs for the
Business Process Reengineering Project
(Dollars in millions)
Percent of total
Cost element Total expenditure
---------------------------------------- ======== ------------------
Personnel $55.3 21.9
Travel 4.7 1.9
Contractor support 64.2 25.4
Operations and maintenance 101.6 40.2
Other items 27.1 10.7
======================================================================
Total $252.8 100.0\a
----------------------------------------------------------------------
\a Figures do not add due to rounding.
Table III.3
Life-Cycle Costs Estimated for the
Common Computing Environment Project
(Dollars in millions)
Percent of
total
Cost element Description Total expenditure
-------------- ------------------------------ ======== ------------
Equipment Computers, printers, and $313.7 11.7
peripheral and digital phones
Software Office automation, geographic 84.2 3.1
information system,
administrative software, and
database management system
Services Computer and voice and data 572.9 21.3
communications services,
voice mail, conference
calling, and satellite links
Support Software development, 1,446.5 53.8
services conversion, and maintenance,
hardware maintenance, IT
technical support, and
training
Related costs Contract administration and 240.7 9.0
field technical support
Supplies 29.3 1.1
======================================================================
Total $2,687.3 100.0
----------------------------------------------------------------------
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV
ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, WASHINGTON,
D.C.
Stephen A. Schwartz, Senior Assistant Director
KANSAS CITY FIELD OFFICE
Troy G. Hottovy, Evaluator-in-Charge
Janet M. Jamison, Senior Evaluator
*** End of document. ***