U.S. gov't looks for IT cost savings

The U.S. government's chief information officer has identified $3 billion that federal agencies can save by collaborating on IT purchasing, and that cost savings is apparently just the beginning of a White House effort to cut federal IT budgets.

Mark Forman, administrator of the Office of E-Government and Information Technology in the White House Office of Management and Budget, on Tuesday outlined ways for the U.S. government to save money by adopting an "enterprise" model of IT purchasing, with agencies banding together to purchase IT products, instead of the "stove-piped," single-agency purchasing approach that's been common in the past.

Forman, speaking before the U.S. House Government Reform Committee's Subcommittee on Technology, Information Policy, Intergovernmental Relations and the Census, estimated that in just six areas of government IT spending, $3 billion could be saved between 2004 and 2008 by taking a cross-agency IT spending approach. In those five years, the government is projected to spend $24.7 billion in those areas, including criminal investigations, public health monitoring and human resources, but significant savings could come from the federal agencies working together and receiving IT discounts through economies of scale, he said.

Forman, commonly called the U.S. government's CIO, told the subcommittee these six "lines of business" -- also including financial management, monetary benefits and data and statistics -- represent the place where IT redundancies and cost-savings can most easily be identified, but that about a third of the 39 lines of business that the U.S. government engages in have "a lot of redundancy."

"It's a question of, how many times do we want to buy the same innovation when the technology allows us to leverage economies of scale," Forman said. "Those opportunities are clearly there -- now come the details of how do we get to take advantage of those opportunities. It probably will mean some agencies will not continue on with their same approach to ... reinventing the wheel."

Forman's comment came in response to a question from Representative William L. Clay, a Missouri Democrat, who asked if IT spending projects identified as redundant would be eliminated from the 2004 budget, which is already working its way through Congress.

"I would like to think there would be total cost savings," Forman answered.

S. Daniel Johnson, executive vice president of BearingPoint, said the consulting company is working on consolidating more than 200 financial systems in the U.S. Navy, with similar efforts going on in the U.S. Army. "I think the Air Force is just watching to see what happens," he said.

Those numbers seemed to surprise subcommittee chairman Adam Putnam, a Florida Republican. "It just boggles your mind to think how we got into 200 financial systems just in the Navy, and the Air Force is going to watch to see what happens," Putnam said. "We've got our work cut out for us, Mr. Clay."

Although the IT spending identified by the George W. Bush Administration could mean smaller federal contracts for IT vendors, representatives of four vendors who do business with the government testified in support of its "federal enterprise infrastructure" plan. "I think we've all accepted the fact that the federal government is modernizing its information technology, and that's going to happen," Johnson said. "The Fortune 1000 (have) done that ... and everyone is seeing significant cost benefits."

The vendors also supported the federal government using its size to negotiate software licenses, instead of paying per seat. "The government has a tremendous opportunity to exercise its buying power," said Craig Conway, president and chief executive office of PeopleSoft Inc. "The opportunity exists to ... license the entire enterprise, whether the enterprise is a commercial company, a university, a series of universities or the entire federal government."