Agencies to propose billions in IT spending cuts

Agencies were directed last fall to cut a combined $7.7 billion from their information technology budgets in 2014 and propose ways to redirect those funds for priority projects.

Duplicative investments, failing projects, help desks and contracts for email, desktops and mobile devices are among the areas targeted for cuts, according to budget guidance released by the Office of Management and Budget in August.

Details of the proposed cuts were included in agencies’ budget submission documents and were incorporated into the president’s budget, which is due out Wednesday.

For each agency, cuts will amount to 10 percent of their average annual IT spending from 2010 to 2012. The combined cuts would reduce agencies’ IT budgets from $74.1 billion – the figure in the president’s 2013 budget plan – to $66.4 billion for 2014.

Hardest hit will be the Defense Department, which will see a $3.5 billion reduction; followed by the Health and Human Services Department, $662 million; and the Department of Homeland Security, $587 million.

Agencies must propose to OMB how they would reinvest at least 5 percent of that money in priority areas that align with administration initiatives such as:

* Cloud First, which requires agencies to use cloud computing technologies when a reliable and cost-effective solution exists.

* Shared First, an effort to share common IT services within agencies and ultimately across agencies.

* The Digital Government Strategy, aimed at providing better online services to citizens and making government data available in standard, digital formats.

Agencies must propose reinvestment projects that will show a return on investment within 18 months, according to OMB’s guidance. OMB will then decide whether to approve those plans. Projects can include:

* Improved citizen services or administrative efficiencies.

* Shared services.

* IT consolidation, including data center consolidation.

* Improved IT security and information assets.

* Improved energy efficiency of IT facilities and equipment.

* Innovative investments such as cloud computing, modular development, improper-payment reduction and digital government.

* Data analytics or data management consistent with administration priorities.

Chief information officers are also contending with across-the-board cuts, which took effect last month and total $85 billion governmentwide.

“Cuts like this require hard choices,” said Roger Baker, former CIO at the Veterans Affairs Department. If a program is facing a 9 percent cut, agencies have to decide what they can and cannot get done.

Baker, who now serves as chief strategy officer for Virginia-based Agilex Technologies, suggested CIOs prioritize what they can get done with their remaining funding, rather than trying to fund everything with a reduced budget.

At VA, there is a prioritized unfunded list for key projects that are next in line for funding, Baker said. A departmentwide team agrees on projects and submits those recommendations to an IT leadership board. The project list is then approved by the deputy secretary.

The issue for most agencies is they can’t move funding across different projects, he said.

Whether OMB will allow agencies to reinvest some or all of their savings is unclear, but Baker said software license spending is one area ripe for savings.

Agencies are better prepared to negotiate pricing when they know what software licenses they are using and how many. Over the past five years, VA has saved about $200 million on software licenses by purchasing only what is needed.

“Typically, what happens is in the year you make the optimization you get to keep the dollars, but there is no guarantee where federal budget is concerned,” Baker said.