Federal IT Shifting to a “Cloud First” Policy, Says OMB Chief

White House Chief Performance Officer, and Acting Director of the Office of Management and Budget Jeffrey Zients created a buzz with that announcement this morning at the Northern Virginia Technology Council‘s monthly Titans Breakfast.

Citing a need to pursue “light technologies and shared solutions,” Zients announced that the OMB intends to stand up its own government-wide cloud platforms, and instruct agencies to procure cloud-based solutions before procuring any other software systems.

Federal Chief Information Officer Vivek Kundra joined Zients on stage to take questions on the cloud initiative. He explained that the National Institute of Standards and Technologyhas authored three standards for cloud computing, one related to interoperability, one to data portability and one to security. “Our goal is to make sure that agencies don’t end up in a place where they’re locked into agreements, and can’t move from vendor A to vendor B,” Kundra explained. “Our vision of the world isn’t that you’re going to end up with a handful of cloud providers, but that you’re going to end up with a viable ecosystem of providers, large and small.”

Acting OMB Director Jeffrey Zients announced a “cloud first” policy for future federal IT procurements at the NVTC’s Titans Breakfast November 19, 2010

Acting OMB Director Jeffrey Zients announced a “cloud first” policy for future federal IT procurements at the NVTC’s Titans Breakfast November 19, 2010

The initiative is part of an effort to bring new efficiencies to government IT purchases, and in turn, to the government functions that use them. “Over the last few decades, productivity gains have transformed private industry,” Zients said, “increasing output, lowering prices and boosting customer satisfaction all at the same time. Unfortunately, the federal government has been largely left out.”

Drawing on programs that have been successful on a smaller scale in other agencies, Zients announced four other initiatives.

• A plan to “align budget and acquisitions with the technology cycle” – based on a program piloted at the Department of Veterans Affairs, this would give agencies the ability to re-program appropriated funds each fiscal year based on their needs and current IT portfolio. “The way we currently budget and acquire IT is broken,” Zients said. “The process forces agencies to detail what they’re going to build 24 months ahead of time, and the acquisition process routinely tacks on another 18 months.” As a result, agencies buy IT solutions that are “out of date before they are purchased.”
• A plan “strengthening program management” within federal agencies – based on a program created by the Social Security Administration, this would “create, for the first time, a formal, government-wide program management career track.” When the program is in place, Zients said, “OMB will not greenlight a project until the agency has signed off that a complete and qualified project team is in place,” led by a designated individual who has been through the new program management training process. This announcement won spontaneous cheers from an audience – made up of leaders of local IT companies – that had been asked to hold applause.
• An effort to “streamline governance and increase accountability” in IT projects – based on an Interior Department initiative, this effort will actually remove layers of oversight in order to “create a clear lines of accountability from the program manager to the secretary.” Currently, Zients said, oversight responsibilities are too widely distributed. “With so many people having some responsibility for oversight, true accountability is almost non-existent. OMB plans to reconstitute existing Investment Review Boards to conduct more meaningful strategic reviews of agency IT portfolios.
• An initiative intended to “increase engagement with industry” – Zients cited an effort at the Department of Education, where vendors were asked to share the cost of a proof-of-concept effort for a new IT acquisition. As a result of the experiment, Zients said, Education was able to award a contract in half the time it had originally estimated, and at significant cost savings. OMB plans to launch a government-wide “myth-busting campaign” clarifying the rules for industry engagement, in order to facilitate a more open culture in federal IT.

OMB has set a very aggressive timetable for each of these efforts, hoping to show tangible results within six months. Zients believes the targets are achievable, however, because each is “derived from practices already working somewhere in the government.”

Since 1975, Zients said, government productivity has risen at about one-third the rate at which private sector productivity has increased. “When you look at the public sector, you’re struck by the absence of the systems, analysis and tools that we all take for granted in the private sector,” he said. The new efforts are an attempt to streamline the IT acquisition process, and allow government to close the productivity gap.

“Despite spending more than $600 billion on IT projects over the last decade, the federal government has failed to realize the benefits of IT,” Zients said. “Fixing IT is central to everything we’re trying to do. IT is now our top priority at OMB.”

Federal Chief Information Officer Vivek Kundra and Chief Performance Officer Jeffrey Zients taking questions from the crowd.

Changing the culture of government IT despite intense budget pressures, however, will require making strategic cuts. “Historically, under budget pressure, federal agencies have trimmed evenly across the board,” he noted. “Contrast that with industry, where you do an analysis of sectors that are not providing return on investment. Through a detailed, line-by-line analysis of the federal budget, we’re now doing the same.”

He pointed to a decision earlier this year to halt all IT projects related to financial systems — which have proven costly and inefficient at many agencies – for a thorough review of return on investment. “Today I am prepared to announce the results of the first 20 of those reviews,” Zients said. “Ten projects are on track. Five have been significantly reduced in scope. For three, we have accelerated the delivery of meaningful functionality, and two have been terminated altogether.” Taken together, Zients said, those decisions mean $1.6 billion in spending cuts.

Zients and Kundra also predicted that an investment of $158 million in hiring and training new procurement officials will result in savings. “Contracts doubled from 2000 to 2008 but the procurement workforce stayed flat,” Zients noted. “We think that the $158 million will have an impact in allowing us to build a procurement workforce that is specialized. Procuring IT is different than procuring office supplies.”