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Reducing Areas of Duplication and Overlap in Federal Programs Could Save Billions

Last week, GAO released its fifth annual report on duplication, fragmentation and overlap in federal government programs.  The report is meant to identify areas of opportunity to gain efficiencies, reduce costs, and increase federal revenue by decreasing duplication and overlap.

The report identifies 24 areas of opportunity to improve effectiveness and efficiency, and 66 new actions to this end.  In this year’s report GAO found 12 new areas in which there is evidence of fragmentation, overlap, or duplication, such as the Military Health System US Family Health Plan which duplicates the efforts of DoD’s managed care support contractors.  GAO also offers recommendations for reducing the cost of government operations or enhancing revenue collections in 12 other areas.

Many of the identified areas for improvement involve defense or health related programs and activities, but the report did point out that hundreds of millions of dollars could be saved government-wide if agencies applied better management of software licenses.  GAO suggests OMB issue a directive to assist agencies in this area.

The report also reviewed progress toward areas and actions identified in previous reports to reduce fragmentation, duplication and overlap. 

The chart below shows progress toward ending duplication and overlap in areas identified in FY 2011-2014 reports, as well as progress toward specific actions offered in those reports.

According to GAO, 76% of 458 actions identified had been addressed or partially addressed, and 20% had not been addressed.  Executive branch and congressional efforts to address these actions over the past 4 years have resulted in over $20B in financial benefits, with about $80B more in financial benefits anticipated in future years from these actions.

GAO urged Congress and executive branch agencies to continue progress toward reducing duplication and overlap. Fully addressing the remaining actions identified in GAO’s annual reports could lead to tens of billions of dollars of additional savings.

GAO recognizes the difficulty in addressing duplication and fragmentation, in part due to the lack of reliable performance and budget data.  It suggests that implementation of the DATA Act and the GPRA Modernization Act of 2010 should improve the amount and reliability of financial and performance information.  GAO has also developed an Evaluation and Management Guide to assist agencies in identifying and resolving fragmentation and overlap, and options to consider for addressing or managing such instances.

 

 

GAO Updates High Risk Programs List

Yesterday, GAO released its biennial update of federal high risk programs, a total of 32 programs including two new areas, Veterans Health Care and IT Acquisitions and Operations.

Since the list’s inception in 1990 with an initial slate of 14 program areas, 43 programs have been added and 23 removed.  GAO removes programs from the list when the following criteria are met: leadership commitment, agency capacity, an action plan, monitoring efforts, and demonstrated progress.

This year GAO states that progress is being made, but no programs were removed.  Eighteen of the 30 programs on the list in 2013 partially met criteria for removal and 11 met at least one of the criteria for removal.  GAO is reducing the scope of two high risk areas, Protecting Public Health through Enhanced Oversight of Medical Products and DoD Contract Management, due improvements made.  GAO is expanding its oversight of two other programs due to growing risk potential:  Enforcement of Tax Laws and Ensuring the Security of Federal Information Systems and Cyber Critical Infrastructure and Protecting the Privacy of Personally Identifiable Information (PII).

GAO is adding the program entitled Managing Risks and Improving Veterans Affairs Health Care due to VA’s lack of action on many of GAO’s past recommendations to improve veteran health care access and delivery.  Although VA has taken some action, work still remains in the areas of policies and processes, oversight and accountability, IT, training, and resources.

GAO is also adding the program entitled Improving the Management of Information Technology Acquisitions and Operations.  Despite legislation and administrative efforts to improve IT acquisitions and management, investments are still experiencing cost overruns, schedule lapses, and failure in some cases.  According to GAO’s report, “Over the past 5 years, GAO made more than 730 recommendations; however, only about 23% had been fully implemented as of January 2015.”

Efforts to improve IT acquisition and management will directly affect federal contractors, adding to increased scrutiny of contractor performance and potentially increasing required project performance documentation. Additionally, program areas such as those that are benefits based, may offer opportunities for technology contractors.  Federal demand for IT solutions to combat waste, fraud and abuse will continue to increase over the next several years.  Such products and services include technologies for pre-screening and identity authentication; data capture and processing; examination and detection; big data and analytics; and investigation, prosecution and recovery.

Through Congressional oversight and legislation, along with OMB leadership and agency accountability and corrective actions, vast improvements have been made to areas remaining on the high risk list.  Continued diligence by agencies in implementing GAO recommendations will lead to continued progress and elimination of federal program areas from the list.  

 

Federal Spending on Enterprise Business Systems Stays Strong

Ongoing initiatives to modernize government business systems offer prime examples of the ways federal agencies are looking to leverage technology transformation to achieve cost savings and efficiency gains. 

At end of 2014, Deltek’s Federal Industry Analysis team completed analysis of the market for business systems, identifying four segments characterized by different types of enterprise solutions. These four segments are financial management, asset and material management, human resources management, and administration and government management. 


Financial Management – The goal of improving financial management across the government has led to updated guidance for financial management system and shared services initiatives. Systems in this segment include solutions for payroll, accounting, invoice processing, budget formulation, and collections. This segment is expected to grow by 4.7% from FY 2014 to reach $3.4 billion in FY 2015.

 

Asset and Materials Management – Business systems for asset and materials management facilitate tighter asset control. Systems in this segment include solutions for supply chain management, inventory control, and fleet management. This segment remains flat from FY 2014 to 2015.

 

Human Resources Management – These systems support efforts to improve workforce performance. Solutions include personnel management, performance management, recruiting, and compensation management. This segment is expected to grow by 8.3% over FY 2014 levels to $3 billion.

 

Administration and Government Management – These systems include solutions for contract management, program management, customer relationship management, and travel management. Spending in this segment continues near FY2014 levels.

 

Deltek predicts contractor addressable spending on federal business systems to total $10.6 billion for FY 2015, increasing slightly over FY 2014 spending levels.  While many government efforts to improve business systems have been underway for some time, policies and legislative mandates continue to shape both the strategic direction and agency progress. For example, demand for improved business performance is underscored by reporting requirements and the need for increased financial transparency. The goal of reducing spending is also linked to efforts like adoption of shared services and plans to address auditability of financial systems. Ongoing budget pressure has increased the tendency to take an incremental approach to streamlining and enhancing government business operations.

 

Agencies making the largest investments in modernizations efforts include the Department of Defense, Treasury, and Veterans Affairs. Going forward, agencies are looking to continue advancing business system capabilities through mobile access and business analytics. The role of cloud environments is expected to expand, as only a small percentage of systems have completed migrated to cloud environments. Further exploration of the government initiatives targeting modernization of business systems is available in the recent Federal Industry Analysis report Federal Enterprise Business Systems, 2015.

 Originally published for Federal Industry Analysis: Analysts Perspectives Blog. Stay ahead of the competition by discovering more about GovWinIQ. Follow me on twitter @FIAGovWin.

 

Analyzing Federal Program Overlap is Difficult at Best

Finding duplicative federal programs in order to combine, consolidate, or eliminate them is next to impossible with current reporting mechanisms according to a recent GAO report. 

The GPRA Modernization Act of 2010 calls for the creation of an inventory of all federal programs, along with related budget and performance data, which could make it easier to better manage, reduce, or eliminate overlap and duplication.  Over the past four years, GAO has found over 90 areas where the government could benefit from reducing or removing fragmentation and duplication.

However, GAO’s recent report on the status of federal program inventories indicates that inconsistent definitions and information limit their usefulness.  OMB’s inventory guidance allowed for latitude regarding defining programs and the types of information reported.  This has led to non-uniform information across agencies, and made it difficult to spot duplication and overlap. 

Something which seems as simple as just defining what constitutes a “program” is a challenge across agencies.  OMB’s guidance has allowed flexibility in defining programs by allowing agencies to use different approaches based on their missions and programmatic tactics.  But because of these differing approaches, identifying similar programs across agencies is a challenge.

As part of GAO’s study, they attempted to locate programs across agencies related to science, technology, engineering, and mathematics (STEMS) using the agency inventories released by OMB in May 2013.  GAO only found nine programs out of 179 that matched exactly, and 51 others that were identified based on their program descriptions. 

GAO attributes the lack of comparability to the fact that the agencies did not work together when developing their inventories.  GAO believes collaboration among the agencies on program definitions and inventories would lead to identifying overlap and duplication. 

GAO recommends OMB and agencies take the following steps to ensure usefulness of program inventories: 

  • Present program-level budget information 
  • Provide complete performance information 
  • Consult with stakeholders

GAO further recommends that OMB require additional agencies to report inventories.  Currently, GPRAMA only requires 24 agencies to report.  GAO also suggests that tax expenditures be included in the federal program inventory, as well as web-based sorting capabilities. 

Threatening to complicate reporting even further, is the on-going implementation of the 2014 Digital Accountability and Transparency Act (DATA Act) which stipulates more program and budget data be displayed on federal websites.

Rooting out duplication, overlap and waste will be an iterative and on-going process.  Contractors need to be aware of advances in identifying overlapping programs, because progress could result in program, project and/or contract consolidations or cuts.  On the flip side, opportunities may arise for contractor assistance with program consolidation efforts.

 

Compliance Failings Hinder Defense Business System Efforts

The Department of Defense is working towards business system modernization and auditability targets, but some agencies are struggling with competing priorities. According to an inspector general report published October 28, 2014, the Defense Logistics Agency (DLA) enterprise business efforts have failed to synch compliance requirements and implementation objectives, creating challenges for the organizations financial managers.

The Defense Business Council is responsible for portfolio analysis and process integration related to defense business systems (DBS) lifecycles. If an implemented DBS doesn’t comply with the business enterprise architecture (BEA), it might not get funding approval from the Defense Business Council. Each year, the Defense Department updates BEA transformation priorities and capabilities. In February 2013, the tenth version of the BEA was delivered containing 15 standard, integrated, end-to-end business processes, including the business processes for Procure-to-Pay. The BEA Procure-to-Pay business process supports purchasing of goods and services while generating accurate and reliable financial management information.

DLA started Business Systems Modernization (BSM) in 2000.  The Enterprise Business System (EBS) was developed in FY 2007 through the combination of business system modernization initiatives with customer service management and product data management initiatives. Some 22,000 personnel use EBS to support and operate a $44 billion global enterprise. By September 30, 3013, DLA spending on EBS implementation reached $2.5 billion. The business case document for EBS submitted with the FY 2015 budget request included $18.9 million for development, modifications, and enhancements (excluding planning costs) as well as operations and maintenance funding that amounted to $120.1 million. Approximately $21.0 million in operations and maintenance resources would provide government personnel for the program.

At the end of October 2014, review of the EBS program revealed some implementation shortfalls. According to the Defense Department’s Inspector General (IG), the EBS program management office did not configure EBS to comply with evolving BEA standards a top priority. In the IG’s words, they “placed higher priorities on ensuring mission accomplishment.” The PMO also did not complete re-engineering of the Procure-to-Pay business process. Validation and certification procedures were not executed by the Deputy Chief Management Officer in a way that ensured managers implemented and reported BEA requirements. The DOD’s Inspector General found that the Defense Logistics Agency did not fully implement the business enterprise architecture Procure-to-Pay business process in the Enterprise Business System. The system suffers incorrect posting logic and lacks the re-engineering to avoid abnormal balances. As of the end of September 2013, $942.2 million in abnormal balances were reported for DLA activities within the general ledger. This creates a need for Although DLA has spent $2.5 billion on EBS, the agency’s financial managers cannot rely on EBS trial balance data to prepare financial statements.

As the DOD IG notes, “Data standardization was essential for achieving auditable financial statements and providing DoD managers with the financial information needed to make effective day-to-day budget and management decisions.” The FY 2015 business case for the EBS program highlights the benefits it will bring to the agency: “Enterprise-wide data is more readily available and financial cycle times shorter. Virtually all companies with such systems report substantial reductions in financial cycle times. With increased financial accountability, DLA will be able to achieve an unqualified audit certification for the first time.” However, until the various compliance and re-engineering issues are addressed, progress toward DOD audit readiness goals will be hampered.

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Originally published in the GovWin FIA Analysts Perspectives Blog. Follow me on Twitter @FIAGovWin.

 

HHS Inspector General Reports on Healthcare.gov Spending

In the wake of the troubled launch of the Federal Marketplace for health insurance, the Office of Inspector General (OIG) for Health and Human Services (HHS) is reviewing the planning, acquisition, management, and performance oversight of the contracts associated with the effort as well as aspects of Federal Marketplace Operations. The first in a series of reports on the findings of the review was released in August 2014.

On December 10, 2013, Kathleen Sebelius, Secretary of Health and Human Services from 2009 to 2014, issued a letter to the department's Inspector General. The letter requested review of several aspects of the contracting process including:

  • the acquisition process for the contracts that supported the October 1st launch,
  • contractor selection, contract administration, and project management of the development of Healthcare.gov,
  • contractor performance, supervision of the development contracts, and payments to contractors throughout the process, and
  • whether contract specification were met.

Between January 2009 and January 2014, some sixty different contracts started work on the development and operations for the Federal Marketplace. One third of the contracts started before 2012. Just over one third of the contracts started during 2012. Most of the remaining began in 2013, and a single contract started in 2014. These contracts covered a range of goods and services including health benefit data collection, consumer research, cloud computing, and website development.

OIG found that the development of the Federal Marketplace primarily leveraged two types of contracts: fixed-price and cost-reimbursement. In the former, the contractor assumes the risk of cost overruns. In the latter, the government carries the cost overrun risks (as far as prescribed in the contract). This is worth noting because combined obligations for the federal marketplace grew from $86 million in September 2011 to over $294 million in February 2014. This rise was related to cost increases, schedule delays, and lagging system functionality related to changing requirements. With contract values spanning from under $700,000 to over $200 million, the original value of these contract totaled $1.7 billion. Through February 2014, one third of these contracts exceeded the estimated value of the awards. Over ten percent of those contracts surpassed the estimated value in excess of 100 percent.

Not long before HHS OIG released its first report on the review, the Government Accountability Office (GAO) issued a study on Healthcare.gov that had been requested by Congress. GAO's study assessed selected contracts from the Center for Medicare and Medicaid Services (CMS) for acquisition planning, oversight of cost and schedule, system capability changes, and actions to regarding contactor performance. Among other things, GAO recommended that CMS take immediate actions to assess ballooning contract costs and that required oversight tools be used.

This first report from HHS's Inspector General offers an overview of the contracts such as basic financial information. HHS OIG reports from additional, ongoing reviews related to contract procurement and oversight are expected in 2014 and 2015. These reports will offer more detailed analysis, findings, and recommendations.

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Originally published in the GovWin FIA Analysts Perspectives Blog. Follow me on Twitter @FIAGovWin .

 

Raising the Stakes of Contractor Past Performance Information

Contractor past performance information is one tool federal agencies are being pressed to use more effectively to guard against acquisition risk and recent White House acquisition policy and a Government Accountability Office (GAO) assessment signals that the pressure in this area will only continue to grow. Some efforts are fairly standard government approaches, but others expand into new areas and have implications for both agencies and their contracting companies.

The Office of Federal Procurement Policy (OFPP) has issued numerous reporting compliance guidelines and recommendations over the last half-decade or more to move agencies to improve their reporting of contractor past performance. Further, Congress has included past performance reporting mandates in the last several National Defense Authorization Acts (NDAA). In typical fashion, GAO is looking for continued signs that these efforts are materializing so that agencies have this information available to make informed acquisition decisions.

Most Agencies Fall Short of Contractor Past Performance Reporting Compliance Targets

In August, the GAO released an assessment of how federal agencies were doing with regard to improving their reporting of contractor past performance information. According to OFPP’s annual reporting performance targets, agencies should have been at least 65 percent compliant by the end of fiscal year 2013. GAO found that agencies generally have improved their level of compliance with past performance reporting requirements issued by OFPP. However, the rate of compliance varies widely by agency and most have not met OFPP targets. As of April 2014, for the top 10 agencies, based on the number of contracts requiring an evaluation, the compliance rate ranged from 13 to 83 percent and only two of the top 10 agencies were above 65 percent compliance. (See chart below.)


 

OFPP Expanding Scope of Contractor Past Performance Information

In July, the OFPP directed agencies to research past performance more deeply before awarding complex IT development, systems and services contracts greater than $500 thousand in value. Further, OFPP directed agencies to expand the scope of the research processes used to collect contractors’ past performance information during source selection.

In order to have the most relevant, recent, and meaningful information about potential contracting partners considered in the pre-award phase of the acquisition process agencies were instructed to have their acquisition officials perform the following steps:

  • Recent Contracts - Contact contracting officers (COs) and/or Program Managers (PMs) on at least 2 of contractors’ largest, most recent contracts to review work history.
  • News Searches – a Review articles and publications (include. GAO and IG reports) on contractor performance and business integrity.
  • Commercial Sources - Review public sources and databases for business reviews, customer evaluations, contractor management reports, etc.
  • References – a Request 3-5 references from public and commercial customers, partners, subcontractors, etc. for work done in past 3-5 years.
  • Teaming Partners – Request past performance information on subcontractors and team arrangements.

Implications

The impacts on agencies and contractors alike include greater time and effort (i.e. expense) in collecting and providing this performance information. This will stretch an already-overly-tasked federal acquisitions workforce even further and will require that contractors pay broader attention to their performance reputations and those of their teaming partners.

The new OFPP directives and others like them will also likely extend the time it takes to complete the source selection process on applicable acquisitions, at least until all sides of the acquisition process build some repeatable processes and efficiencies into their systems.

What we can hope for in the end is more transparency, better managed acquisitions with fewer protests, and overall better performing contracts that meet the government’s goals with economy and efficiency and provide business growth opportunities along the way.

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Originally published in the GovWin FIA Analysts Perspectives Blog. Follow me on Twitter @GovWinSlye.

GAO Recommends Further Implementation of Best Practices to Improve Federal IT

Earlier this month, David A. Powner, Director Information Technology Management Issues at GAO, testified before the Senate Committee on Homeland Security and Governmental Affairs regarding critical factors necessary for successful IT projects and acquisitions.

Powner used information from previous GAO reports and studies to offer insight into best practices and reform initiatives that can help improve IT investment management.  Expanded use of critical success factors in IT acquisition, such as active stakeholder engagement and support from agency executives, along with further implementation of government and industry best practices, will better position agencies to more effectively deliver mission-critical systems, according to GAO.

One key reform initiative has been the IT Dashboard, launched by OMB.  The dashboard provides information on 760 major IT investments at 27 federal agencies.  As of April 2014, 74% of the investments were low or moderately low risk, 21% were medium risk, and 6% were moderately high or high risk.  GAO issued a report in 2011 which voiced concerns about accuracy and reliability of dashboard data, but also pointed out that data was improving over time.  Recently, GAO reported that agencies had removed major investments from the dashboard which raises concerns about transparency.  Additionally, GAO noted that the timeliness of updates to the dashboard was lacking.  As of December 2013, the public version of the dashboard was not updated 15 of the previous 24 months.

Powner also cited OMB recommendations for increased incremental development, but GAO’s recent findings indicate that almost 75% of investments reviewed did not plan to deliver capabilities every six months and less than half planned to deliver capabilities in 12 month cycles.

Additionally, Powner refer to data center consolidation efforts, and the continued need for oversight and tracking.  He also praised PortfolioStat efforts, but recommended more consistent implementation across agencies.

With over $80 billion in federal IT spending per year, it’s incumbent upon agencies and the administration to learn from successful IT implementations, as well as failed projects.  While use of best practices, legislation, and OMB efforts at transparency and oversight have improved IT execution and spending, continued leadership and attention is necessary to build on current progress.

 

 

FY 2016 Budget Guidance Calls out Information Technology

The Office of Management and Budget (OMB) released guidance on May 5, 2014 outlining requirements for federal agency budgets in fiscal 2016. The details included lower discretionary spending and a continued focus on areas like improving customer services and information technology delivery.

According to guidance from OMB, the FY 2016 budget will aim to build on the strategy for growth, opportunity, and national security by decreasing funding on lower priority programs “in order to create room for effective investments in areas that remain critical to securing our Nation’s future.” Agency guidance in the memoranda falls into the following categories:

2016 Discretionary Budget Submissions: Agency budget submissions for FY 2016 should reflect a 2 percent reduction from the FY 2016 total provided in the FY 2015 budget, unless OMB has given an agency “explicit direction otherwise.” These reductions are to be met through prioritizing spending and reducing duplicative or ineffective investments. The guidance attempts to close historic loopholes by explicitly stating that submissions are to exclude across-the-board cuts and shuffling activity (e.g. reclassification of discretionary spending to mandatory, shifts of costs to other budget areas). However, these approaches may be included in a separate proposals. Agencies are also tasked with providing recommendations to increase effectiveness within their own programs and those at other agencies.

Mandatory Budgets: Agencies are expected to address mandatory investments with the same level of precision spent on discretionary spending. OMB is encouraging agencies to propose new savings within mandatory spending areas.

Support for the Administration’s Management Agenda and Cross-Agency Priorities: The FY 2015 budget focused on four areas of reform priorities (i.e. effectiveness, efficiency, economic growth, and people and culture). Agencies are expected to continue to target these priorities areas in their FY 2016 submission. Several areas are specified in particular: customer service, information technology, and employee engagement. Specific to information technology, agencies will target improvements to infrastructure along with addressing necessary reforms around security clearances and insider threats.

Emphasis on Strategic Reviews: OMB recommends that agencies use the results of reviews and progress on objectives in the new agency strategic plans (published with the FY 2015 budget) to align their FY 2016 requests with agency goals. Additionally, agencies should note investments linked to Agency Priority Goals.

Evidence and Evaluation: Building on efforts to drive data and evidence-based decision making, agencies will be supported in using data and evidence-based tools and techniques to improve program delivery and to expand successful approaches. Going forward, agency budget materials will include: an overview of agency (or department) progress and plans with accomplishments and priorities, as well as an agency plan for embedding evaluation in programs.

The priorities outlined in this guidance stands to bolster spending on key information technology programs related to both IT infrastructure reform and information security. While program oversight investments continue to receive support for funding, contractors can expect ongoing scrutiny into program delivery and performance.


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Originally published for Federal Industry Analysis: Analysts Perspectives Blog. Stay ahead of the competition by discovering more about GovWinIQ. Follow me on twitter @FIAGovWin.

 

Governors focusing on educational performance, corrections, and mental health

2014 finds the governors as committed as ever to their growth agendas launched over the previous two year. Continued budget surpluses open the door to state innovation and experimentation.

Each year Deltek compiles the forward-looking agenda items from each of the governors' state of the state addresses.  This year found some interesting shifts in the areas of emphasis.  States have been out of recession for more than two years now, and governors have been ambitious with their agendas.

Deltek classifies each of the governors' agenda items by vertical (as shown in Figure 1 below).  We also track the popularity of each vertical as compared to the recent trend.  For 2014, Education, Justice/Public Safety, and Social Services are the stand-out verticals.

Figure 1. 2014 Agenda Item Popularity vs. 2012-2014 Average, by Deltek Vertical

Source: Deltek

Deltek also subclassifies each agenda item below the vertical level (not shown above).  In the Education vertical, the governors were specifically interested in improved performance for Pre-K through 12 public education.  They are also keen to blend high school education into the two- and four-year higher educations systems to create a seamless pipeline of educational attainment for workforce development purposes.  Containment of higher education tuition costs is also a significant interest and a key part of performance measurement for these institutions.

Corrections continues to dominate the Justice/Public Safety vertical, where governors want to contain costs by moving non-violent offenders to community supervision.  They also want to develop better processes for reintroducing ex-cons back into society and the workforce.  This year marks the first time government have begun to look at the economic impacts of incarceration as well as the fiscal impacts.

Governor interest in Social Services increased for the first time since the recession.  With little federal direction in this area, the vertical has been adrift.  However, this year found governors interested in addressing public mental health concerns, driven in part by school shootings, veterans, and drug addiction.  Drug addiction and treatment, given recent upswings in crystal meth and heroine usage, has emerged a top level priority.

Learn more at our FREE upcoming webinar (May 8th).

More detailed information for all of the verticals covered in Deltek's recent report "State of the State, 2014." The report is available for immediate download by Deltek State & Local Industry Analysis subscribers.  It can be purchased online by those who are not subscribers.  The report comes with a spreadsheet that includes all of the governors agenda items categorized for easy sorting and reference by market strategists.

 

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