Orszag Targets ‘IT Gap’ in Reducing Government Spending
Policy + Politics

Orszag Targets ‘IT Gap’ in Reducing Government Spending

Under pressure to show progress in reducing the deficit, White House Budget Director Peter Orszag outlined plans Tuesday to weed out ineffective programs and overhaul the government’s antiquated technology.

The White House issued a memo at the same time ordering every government agency, including those involved in national security, to identify at least five programs that are ripe to be eliminated or cut back substantially. The Obama administration issued similar marching orders last year, which resulted in proposals to eliminate or cut programs costing about $20 billion a year. Congress has approved about 60 percent of those cuts.

The effort is part of President Obama’s call for a three-year freeze on nonsecurity discretionary spending, which in turn is a small part of the strategy to reduce the government’s trillion-dollar deficits over the next several years. But Orszag pinned much of his hope on a broader strategy to bring the government’s discombobulated hodge-podge of information and accounting systems into the 21st century.

Budget analysts and government auditors said potential savings and benefits are huge. But they also cautioned that the idea is excruciatingly difficult to implement and has frustrated reformers for decades.

Orszag compared the gap to “going from an X-box to an Atari.”

In a speech to the Center for American Progress, a liberal think tank in Washington, Orszag said that the government’s “IT gap,’’ compared to private industry, is the biggest reason for its sluggish productivity growth. He added that closing that gap is “perhaps the single most important step we can take in creating a more efficient and responsive government.”

“Over the years, Americans have seen huge advances in efficiency and technology both at work and in their daily lives,’’ he said. “The government, however, has not kept pace.” On his blog at the White House Office of Management and Budget, Orszag compared the gap to “going from an X-box to an Atari.”

As examples of flawed technology spending, Orszag noted that the Census Bureau awarded a $595 million contract to develop a handheld computer for census workers, only to kill the program after two years with nothing to show for it. Likewise, the Patent Office now receives most patent application electronically – but it manually rescans all those applications and enters them into an outdated “case management” system. By contrast, he said, smart use of technology has led to big savings and better service in other sectors. 

To cut back on wasteful contracting, the administration has launched a new system that makes it easy for officials at one agency to identify companies that have underperformed on contracts for other agencies. Similarly, he said, the administration has created a new “IT dashboard’’ that allows federal agencies to keep better track of troubled technology projects and shut them down early.  The Veterans Administration used it to spot 45 projects that were “at risk’’ and canceled 12 of them.

“There are huge savings to be achieved, but getting three million
government employees to make it all happen is incredibly difficult.’’

Pete Davis, an economic consultant in Washington and a former budget and tax analyst for Congress, said it was hard to exaggerate how inefficient and tangled the federal government’s sprawling and often incompatible collection of information systems is. But even though the problems have been documented for years by the Government Accountability Office, the investigative arm of Congress, as well as by outside whistleblowers, the problems keep surfacing with each new generation of technology.

“There are huge savings to be achieved, but getting 3 million government employees to make it all happen is incredibly difficult,’’ said Davis. “The government is slow, and the technology cycle is not holding still for them. By the time they finish all the consulting studies and the requests for proposals, and meet all the requirements that Congress imposes on them, the stuff they want to buy often isn’t even being made anymore.’’

Examples abound. Just two weeks ago, the Government Accountability Office reported that efforts to modernize the Pentagon’s widely criticized accounting practices on war spending in Iraq had fallen well short of the mark. The GAO noted that the military has spent nearly $1 trillion on “overseas contingency operations’’ since 2001, and that it had a manual system for entering many of its costs. But it said the new system, called CORAS, lacked “key internal control activities’’ – the backstops to make sure that money is being spent appropriately.

On a separate front, The New York Times reported Tuesday that doctors and hospitals are complaining that provisions in the new health care reform law aimed at spurring better information technology are so rigid that they cannot be used.

Orszag argued that the opportunities are big precisely because the problems are so widespread that the government can leapfrog over intermediate technologies. Though Orszag refused to estimate the possible savings, he said the effort could go a long way toward implementing the three-year freeze without gutting important programs.

Orszag instructed civilian government agencies to cut their budget requests to 5 percent below what Congress appropriated for them this year. Though some agencies would be allowed to have smaller cuts and a few could even get budget increases, the White House’s goal is to end up with a net freeze in overall nonsecurity discretionary spending.

The freeze covers about 15 percent of all government spending. It excludes the Pentagon, the intelligence agencies and other programs to bolster security. It also excludes the giant “mandatory’’ programs like Social Security and Medicare, in which benefits are paid based on formulas written by Congress.

Edmund L. Andrews covered economics and business for The New York Times for 20 years.