GAO report hits agencies' IT spending accounting

Just after the Bush administration proposed a slight increase in the fiscal 2007 budget for IT expenditures and reported a lower number of projects on its at-risk watch list, a new report from the Government Accountability Office concluded that agencies struggled last year to adequately account for how they spent money on major IT investments.

In the new report, the GAO said that a 2005 review of five agencies with large IT budgets revealed that the agencies failed to adequately document project milestones or demonstrate that they complied with Office of Management and Budget requirements.

'Without adequate support in key areas, OMB and agency executives may be depending on unreliable information to make critical decisions on IT projects, thus putting at risk millions of dollars,' the report said.

The report was released a week after the White House proposed to give agencies an IT budget of $64.2 billion, a 3 percent increase over fiscal 2006.

In the budget, OMB said that its watch list of at-risk IT projects declined in fiscal 2006, reporting that 263 projects worth $9.9 billion are at risk for not implementing security and earned-value management or establishing performance measures.

OMB said agencies fixed 84 percent of the 342 major projects identified in the 2006 budget request on the management watch list'leaving only 19 business cases valued at $314.5 million.

GAO in its report analyzed business cases'or exhibit 300s'for 29 projects at five agencies over the last fiscal year: the Agriculture, Commerce, Energy, Transportation, and Treasury departments. Agencies submit the exhibit 300s to OMB when they request money for major IT projects.

All 29 exhibits had documentation weaknesses, GAO found, and several did not comply with OMB and other federal requirements.

GAO said 21 of the business cases it analyzed were required to use an earned-value management system to track project milestones and expenditures, but only six actually did.

'In addition, none of the investments under review had cost analyses that fully complied with OMB requirements for completing cost-benefit and cost-effectiveness analyses,' the report added.

In interviews with GAO, agency officials said a lack of understanding about EVM and other OMB requirements led to the weaknesses in their business cases.

This finding backs up a recent OMB report that stated the government fell short of its goal last year of having 50 percent of agencies using EVM for project management.

But while GAO recommended that OMB improve guidance and training in exhibit 300 requirements, it also (at OMB's request) placed much of the burden on the agencies.

'[W]e place significant responsibility on agencies ' to disclose weaknesses and to describe their approach to mitigating these weaknesses,' GAO said. 'This recommendation clearly places responsibility on the agencies for assessing the quality of their budget information and the processes that produced this information.'

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