October 25,1996
M-97-02
MEMORANDUM FOR HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES
| FROM: |
Franklin D. Raines
Director |
| | |
| SUBJECT: |
Funding Information Systems Investments |
The Information Technology Management Reform Act (ITMRA) of 1995
(40 USC 1401 et. seg.) directs the Office of Management and Budget
to establish clear and concise direction regarding investments
in major information systems, and to enforce that direction through
the budget process. Accordingly, the decision criteria set out
below are established with respect to the evaluation of major
information system investments proposed for funding in the FY
1998 President's budget.
The most effective long-term investment strategy is guided by
a multiyear plan. The plan is a roadmap for getting from "where
we are today. to "where we want to be" -- achieving
the strategic mission goals of the organization in the framework
of the Government Performance and Results Act (GPRA). Thus the
first four decision criteria relate specifically to capital planning.
The fifth criterion establishes the critical link between planning
and implementation -- information architecture -- which
aligns technology with mission goals. Under the ITMRA, the Chief
Information Officer is responsible for that architecture. The
last three criteria establish risk management principles to assure
a high level of confidence that the proposed investment will succeed.
Policy
Investments in major information systems proposed for funding
in the President's budget should:
1. support core/priority mission functions that need to be
performed by the Federal government;
2. be undertaken by the requesting agency because no alternative
private sector or governmental source can efficiently support
the function;
3. support work processes that have been simplified or otherwise
redesigned to reduce costs, improve effectiveness, and make maximum
use of commercial, off-the-shelf technology;
4. demonstrate a projected return on the investment that is
clearly equal to or better than alternative uses of available
public resources. Return may include: improved mission performance
in accordance with GPRA measures; reduced cost; increased quality,
speed, or flexibility; and increased customer and employee satisfaction.
Return should be adjusted for such risk factors as the project's
technical complexity, the agency's management capacity, the likelihood
of cost overruns, and the consequences of under- or non-performance
5. be consistent with Federal, agency, and bureau information
architectures which: integrate agency work processes and information
flows with technology to achieve the agency's strategic goals;
reflect the agency's technology vision and year 2000 compliance
plan; and specify standards that enable information exchange and
resource sharing, while retaining flexibility in the choice of
suppliers and in the design of local work processes;
6. reduce risk by: avoiding or isolating custom-designed components
to minimize the potential adverse consequences on the overall
project; using fully tested pilots, simulations, or prototype
implementations before going to production; establishing clear
measures and accountability for project progress; and, securing
substantial involvement and buy-in throughout the project from
the program officials who will use the system;
7. be implemented in phased, successive chunks as narrow in
scope and brief in duration as practicable, each of which solves
a specific part of an overall mission problem and delivers a measurable
net benefit independent of future chunks; and,
8. employ an acquisition strategy that appropriately allocates
risk between government and contractor, effectively uses competition,
ties contract payments to accomplishments, and takes maximum advantage
of commercial technology.
As a general presumption, OMB will recommend new or continued
funding only for those major system investments that satisfy these
criteria. Funding for those systems will be recommended on a phased
basis. (For more information on phases, see the discussion of
"economically and programmatically separable" modules,
in OMB Circular A11, Part 3, "Planning, Budgeting and Acquisition
of Fixed Assets," July 1996.)
A "major information system" is a system that requires
special management attention because of its importance to an agency
mission; its high development operating, or maintenance costs;
or its significant role in the administration of agency programs,
finances, property, or other resources. Large infrastructure investments
(e.g., major purchases of personal computers or local area network
improvements) should also be evaluated against these criteria.
OMB recognizes that many agencies are in the middle of ongoing
projects initiated prior to enactment of the ITMRA, and may not
be able immediately to satisfy the criteria. For those systems
that do not satisfy the criteria, OMB will consider requests to
use FY 1997 and 1998 funds to support the redesign of work processes,
the evaluation of investment alternatives, the development of
information architectures, and the use and evaluation of prototypes.
Action Requested
The policies in this memorandum apply to all agencies. The 28
major agencies listed in Section 3 of Executive Order No. 13011,
"Federal Information Technology," should provide, by
November 12, 1996, a statement listing the major information systems
investments for which new or continued funding is requested in
the agency's FY 1998 budget, and an evaluation of the extent to
which each investment satisfies the decision criteria. For national
security systems as defined in Section 10 of the Executive order,
only the list need be provided. OMB will work with the agencies
to ensure that national security systems satisfy the criteria
to the extent practicable.
Because OMB considers this information essential to agencies'
long-term success, OMB will use this information both in preparing
the FY 1998 President's budget and, in conjunction with cost,
schedule, and performance data, as apportionments are made. Agencies
are encouraged to work with their OMB representative to arrive
at a mutually satisfactory process, format, and timetable for
providing the requested information.
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