10OMB: Agencies must close small data sites

HERSHEY, Pa.--With new marching orders from the Office of
Management and Budget, agencies must consolidate government data centers to close about
half of them, or roughly 100 centers, by June 1998.

OMB plans to release the final plan before month's end. The new OMB bulletin will
require all agencies to compile data center inventories by March 1 and to develop
consolidation strategies by next June.

To guide agencies' decisions on which data shops should be on the chopping block, OMB
is using a series of minimum processing level requirements based on million instructions
per second rates.

John Ortego, chairman of the Federal Data Center Consolidation Committee, said OMB's
bulletin is consistent with his group's call for serving multiagency processing needs at
larger, more efficient centers that support 400 MIPS [GCN, March 20, Page

The consolidation committee, an outgrowth of the National Performance Review,
recommended a 400 MIPS processing threshold as a benchmark for carrying out the White
House plan to cut the number of centers from about 205 to around 100.

Although OMB is imposing minimum MIPS processing levels, Ortego said agencies will have
the authority to decide which centers will survive and how to streamline operations to
meet the OMB targets. Agencies also will be encouraged to upgrade their facilities and
devise working capital plans and charge-back schemes, Ortego said.

"The bulletin assigns the criteria decisions to the agencies. It will be up to
each department to decide which centers to consolidate and which to close down,"
Ortego said. "There are many ways to size a data center and all are subject to
criticisms. But OMB is being driven to cut costs, and MIPS are as good or bad as any
method for coming up with a national policy."

Speaking at the General Services Administration's annual IRM Conference here, Ortego
said OMB's mandatory bulletin emphasizes the "least investment with the quickest

Agencies can request waivers from OMB. But OMB clearly wants fewer centers with
centralized servers whenever possible, Ortego said.

As for selecting center sites, Ortego said agencies are free to establish their own
consolidation formulas based on the bulletin's basic MIPS requirements. But no data center
will be spared because of its location or mission, Ortego said.

Meanwhile, OMB will allow agencies to establish working capital funds and cost recovery
structures for the consolidated sites.

The bulletin also reinforces OMB's policy on contracting for data processing work when
an agency's internal operations cannot meet the MIPS targets. Ortego said GSA's Office of
Information Technology Integration plans to develop a governmentwide requirements contract
modeled after GSA's recent disaster recovery services deal, he said.

Despite the new MIPS restrictions, Ortego said OMB will grant agencies the authority to
acquire extra resources for handling cross-servicing arrangements.

"There will be fewer centers. But those that remain have a better opportunity to
run more like businesses," Ortego said. "OMB has promised to support working
capital funds and fee-for-service operations."

Ortego said the bulletin simply speeds up a consolidation process that has been going
on for several years. But the more rapid pace means agency data centers must act swiftly
to survive in the next century.

"I believe that agencies that are there first with the most will be here five
years from now," Ortego said. "Agencies have to look at how they're going to
compete to survive. Those that step up to the task first and put their best centers
forward will survive."

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