IT modernization has bipartisan support, but where are the dollars?

The White House’s recently released IT Modernization Report, out for public comment until September 20, says all the right things.

The American Technology Council draft, required by Executive Order (EO) 13800, Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure, recommends that agencies take the following steps to secure and modernize federal IT:

• Modernize and consolidate networks: Cloud computing, modernization of government-hosted applications, and better security for legacy systems.
• Use shared services to enable future network architectures: Commercial cloud, cloud email and collaboration tools, and additional security for shared services.

These initiatives are like motherhood and apple pie, sure to enjoy bipartisan support.

Game theory

Appendix D of the draft report recommends an acquisition pilot that applies Nash equilibrium, a game theory, to create virtual “street corners” to drive better government-wide volume pricing for cloud email providers, thus lowering costs and speeding migration. Appendix D also throws in a shout out to the 1929 Hotelling’s Law of Spatial Competition, a principle of minimum differentiation. Basically, this theory states that the government could use its purchasing power to more efficiently procure email services that are very similar across providers. Agencies could then take advantage of publicly advertised volume pricing that would create a base rate for cloud email licenses.

Comments due but sparse funding

The director of the ATC will consolidate comments and coordinate with the secretary of the Homeland Security Department, the director of the Office of Management and Budget, and the administrator of the General Services Administration in consultation with the secretary of Commerce to issue a final report.

The draft report recommends that OMB direct federal CIOs to coordinate with their chief financial officers and other senior agency executives to prioritize systems for modernization and reallocate resources accordingly. Meanwhile, the president’s fiscal 2018 budget calls for a $228 million technology modernization fund, which is a tiny percentage of the total request of $95.7 billion for government-wide IT spending.

IT Modernization Act

The IT Modernization Act bill, which passed the House and is now in the Senate, calls for a slightly larger $250 million fund. The bill had previously died in the Senate after the Congressional Budget Office estimated that modernization would cost $9 billion over 5 years. This time around, CBO estimates the fiscal 2018 and 2019 cost at $500 million to finance a yearly $250 million IT modernization fund administered by a Technology Modernization Board. The bill would include a working capital fund for each major federal agency to retire and replace legacy systems and make all systems more secure.

FITARA’s uneven track record

All of this begs the question of enforcement and funding. The history of OMB directing agency CIOs to act is spotty. For example, in 2016 OMB’s Data Center Optimization Initiative directed agencies to develop data center strategies to save money, improve cybersecurity, and transition data to the cloud by September 2018. However, the Government Accountability Office reports that 17 of 22 agencies have no plans to achieve data center optimization by the deadline. The GAO report states, “Until agencies improve their optimization progress, OMB’s $2.7 billion initiative-wide cost savings goal may not be achievable.”

The data center optimization initiative was part of the 2014 Federal Information Technology Acquisition Reform Act (FITARA), which at best has had mediocre results. The latest scorecard for 2016 showed the lowest grades to date, with 10 agencies receiving an F for data center optimization.

Good ideas, but unclear implementation

The ATC has solid ideas and good intentions. However, with less than 3% of IT modernization up for funding, stovepipe agency efforts to modernize, and OMB’s mediocre track record in getting agencies to comply with FITARA-directed IT initiatives, the future is uncertain.

As we used to say back in the ‘80’s, “Where’s the beef”?

This article was originally published September 14, 2017 in WashingtonTechnology.com.

by Lisa Pafe, APMP-NCA President, CPP APMP Fellow, and PMI PMP

Connect with Lisa Pafe on LinkedIn

Lohfeld Consulting

See Full Bio