More temporary IT spending freezes on the way

Norman Lorentz

The Office of Management and Budget intends to temporarily freeze more information technology spending to eliminate redundant IT investments among federal agencies, according to a White House official.

OMB recently put holds on more than $1.3 billion in planned IT spending in fiscal 2002 and 2003 by the agencies slated for inclusion in the proposed Department of Homeland Security. The targeted areas for review by OMB and officials from the affected agencies are infrastructure and financial management and other business systems.

Speaking at an investor's conference in New York July 31, OMB Chief Technology Officer Norman Lorentz said OMB will begin temporarily freezing IT spending in other agencies as well, most likely those involved in some of the 24 e-government initiatives.

"We have to spend our money smarter. We are at war," Lorentz said at the conference sponsored by RBC Capital Markets, New York.

The spending freeze for the proposed Homeland Security Department was first outlined in two OMB memos. A July 19 memo froze new spending over $500,000 on IT infrastructure. A July 30 memo froze new spending over $500,000 on financial management procurement and human resources systems.

In the July 19 memo, OMB Director Mitch Daniels Jr. estimated that consolidation of systems related to IT infrastructure could save $100 million to $200 million over the next two years. Consolidating financial management systems within the seven homeland security agencies could save $65 million to $85 million over the next two years, OMB said.

OMB's July 30 memo also advised the homeland security agencies to make maximum use of several e-government initiatives overseen by OMB, including e-training, integrated acquisition, e-travel, recruitment one-stop and integrated human resources and payroll processing.

In a July 31 conference call from Washington with reporters, OMB official Mark Forman sought to reassure government and industry that the temporary holds do not halt all ongoing IT projects in the affected agencies.

For example, only the financial management system components of the Customs Service modernization project are on hold. That's about 17 percent of the total fiscal 2002 funds appropriated for the project, said Forman, OMB's associate director of information technology and e-government.

"I would hope most people would understand that it doesn't pay to hook up to a department system if [Customs] is not going to be part of that system" due to its pending move to a new department, Forman said.

Expect more memos calling for additional IT spending freezes for federal agencies, Lorentz said. OMB and the agencies to be affected by the yet-to-be-released memos are working together to determine when the new freezes should occur, he said.

The memos are being issued under a provision of the Clinger-Cohen Act that allows OMB to shut down underperforming programs and redeploy the funds to programs that are properly managed, Lorentz said.

"This is not a trivial action," he said.

OMB has issued three memos ? the two on homeland security, and a third, which was issued earlier and established a federal enterprise architecture. Lorentz oversees the creation of the enterprise architecture.

The first draft of the architecture is being used to review the spending that has been put on hold so far, he said.

"The most important thing to understand is that we are going to do investments on clearly defined outcomes," he said. "The homeland security experience is going to be a real-time experience about horizontal transformation of the federal government."

Staff Writer Gail Repsher Emery contributed to this story.

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