Energy Department IT Shared Services Program Plagued by Cost Problems

Published: May 11, 2016

Acquisition ReformDOEShared Services

A recent audit the Department of Energy's (DOE) Energy Information Technology Services (EITS) shared services program, formerly the department’s common operating environment, found cost recovery, management of the EITS cost model, and service quality issues that contributed to program weaknesses.

At the time of the program review, which ran from April 1, 2015, through July 31, 2015, EITS supported approximately 9,000 users across DOE, costing around $158 million for fiscal years (FY) 2013 and 2014. Despite offering a well-structured technology services catalog and incorporating operational efficiencies to help lower EITS per user costs, the program has suffered from various cost issues. For example, officials did not fully recoup costs from FY 2014 and invoice reporting lacked sufficient levels of transparency. Problem highlighted in the report include:

  • Costs were aggregated at too high a level and no cost type was provided for around 25 percent of FY 2014 spending. In one example, $3 million in costs did not include details to provide insight about the nature of the costs.
  • EITS paid approximately $20 million to vendors based on services consumed, but officials only recovered about $13 million from customers in the first quarter of FY 2014, amounting to a recovery rate of 65 percent. Total cost recovery was 103 percent in FY 2013 and 79 percent in FY 2014.
  • Cost recovery issues stem from outdated program metrics that rely on manual processes and ad hoc reporting.
  • Need to identify operational costs per user. Documentation omits costs for data center management, program personnel support, cybersecurity, and work from other programs and divisions that supports operations.
  • Pricing for various services have not been updated in the last four years.
  • Need for clear processes, definitions, and training to address service incidents contributed to EITS service quality, including unresolved closed service tickets

Although data was not available for FY 2015, the review notes concerns that program costs were expected to increase without any plans to adjust prices. Subsequent to the audit, however, an official indicated steps were being taken to address cost recovery levels. In particular, a new cost had been developed to achieve 100 percent cost recovery and customers billing for FY 2016 is being updated with the new recovery rates. Management responses concurred with the audit findings across the board and outlined efforts to address all issues throughout FY 2016 and 2017. The findings highlight important operational concerns for organizations to bear in mind as federal agencies look to drive efficiencies through the adoption and expansion of shared services models.