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The government is cutting IT out

By Ed O'Keefe

Updated 4:09 p.m. ET
Are you planning to upgrade? The government isn’t, at least not right now.

The Obama administration is putting the brakes on upgrades to about 30 major information technology projects, a decision that impacts about $20 billion in government spending. The projects are designed to upgrade computer systems that manage financial information and transactions for federal agencies -- everything from government-issued Smart Cards to internal accounting systems.

White House Budget Director Peter Orszag ordered the moratorium Monday and said the upgrades can't continue until agencies present plans to complete them on time and on budget.

"By setting the scope of projects too broadly rather than focusing on essential business needs, federal agencies are incurring substantial cost overruns and lengthy delays in planned deployments," Orszag blogged this morning. "Compounding this problem, projects persistently fall short of planned results once deployed."

Orszag cited the Department of Veterans Affairs, which spent about $300 million in the past decade trying to build two new financial systems. Both efforts resulted in total failure.

In an effort to avoid similar failures, Orszag ordered the government's chief information officer, Vivek Kundra, to find similar projects that are behind schedule and over budget. He ordered Chief Performance Officer Jeffrey Zients to develop some recommendations on how to avoid similar failures in the future.

Zients noted Monday that private sector companies on average terminate one of every three IT projects in their first six months because of cost overruns or new priorities. But the federal government rarely does so.

Orszag's orders are "not about cost reduction, it’s about a better return on taxpayer dollars," Zients said.

The announcement earned quick praise from Sen. Tom Carper (D-Del.), who's pushing a bill that puts much of the administration's proposals outlined Monday into law.

"At a time when our country is facing record deficits it is simply unacceptable that federal agencies continue to waste billions of dollars by mismanaging information technology investments," Carper said in a statement.

The moves announced Monday are part of the administration's ongoing cost-cutting efforts and come amid Republican pressure to rein in spending on government operations.

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By Ed O'Keefe  | June 28, 2010; 1:59 PM ET
Categories:  Administration, Budget  
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