Summary

The State Department is spending hundreds of millions of dollars to replace its antiquated information technology with modern hardware and software. In January 1997, the Department issued its five-year, $2.7 billion information resource management (IRM) strategic plan designed to achieve several key goals by the end of fiscal year 2001. These goals include (1) installing Year 2000 compliant hardware and software throughout State, (2) upgrading State's information technology infrastructure, and (3) instituting professional management principles in all aspects of State's information technology operations. In light of disappointing results from State's earlier modernization efforts and widely publicized accounts of failed and costly modernization programs at other federal agencies, this report examines the soundness of State's approach to modernizing its information technology infrastructure. GAO provides information and analysis on State's progress in implementing key information technology oversight and investment planning requirements mandated by law and Office of Management and Budget guidance. GAO also examines the soundness of the five-year cost estimate included in the Department's IRM strategic plan and whether this amount incorporates potential cost savings and efficiencies from State's modernization efforts.

GAO noted that: (1) State has developed an IT planning and investment framework for managing its IT resources that is consistent with the intent of applicable federal guidance; (2) however, full implementation of the framework does not appear to be a top management priority; (3) without a fully functioning framework, State cannot be assured that it is making the most cost-effective decisions as it modernizes its IT operations, that systems will perform as expected, or that its IT cost estimates are sound; (4) as a result, there is substantial risk that State's modernization program will not achieve desired results, will cost more than anticipated, and will take longer to put in place; (5) State's oversight mechanisms are not fully functioning as envisioned in its conceptual framework; (6) while an IRM Program Board has been established, it has not yet adopted the more disciplined project management processes called for by the Clinger-Cohen Act and related OMB guidance; (7) State does not yet have an agency-approved IT architecture to help guide the Department's investment decisions; (8) the Department has not established a specific action plan or related timetable to implement these remaining components of the framework; (9) Department officials attributed delays in implementing this framework to a number of factors, including senior management turnover, internal reorganization, competing priorities such as the year 2000 and computer security issues, staffing shortages, and the absence of an agreed upon vision regarding the Department's technical direction and operational requirements; (10) State's 5-year cost estimate, prepared in October 1996 and referenced in State's strategic plan submitted to Congress, is speculative; (11) the estimate was not based on a rigorous analysis of IT requirements and related project funding needs; (12) an estimated $600 million in Consular Affairs' IT costs were not included in the estimate; (13) some of the requirements and associated costs included in the original estimate have changed; and (14) State's original budget estimate and related planning documents do not identify or quantify potential cost savings opportunities associated with its ongoing IT support and IRM modernization activities.