Source: Washington Post

Big changes may be coming to the way the federal government handles information technology projects. 
The White House's Office of Management and Budget put on hold many programs last week as part of a wide-ranging plan to overhaul the procurement process. 
Here's an outline of the changes and reactions from around the industry. 

Immediate: Some financial system modernization projects are stopped 
Agencies with $20 million or more allotted for financial management system development or modernization projects have been directed to halt new task orders and procurements. 
OMB Director Peter Orszag issued the memos, which said such projects are notoriously sluggish and costly and often fail to deliver a successful product. The memos did not identify individual projects, but the Department of Veterans Affairs confirmed that the Financial and Logistics Integrated Technology Enterprise was one affected program. 
"By setting the scope of projects to achieve broad-based business transformations rather than focusing on essential business needs, Federal agencies are experiencing substantial cost overruns and lengthy delays in planned deployments," the memo states. 
The frozen projects must comply with key guidelines to move forward: 
-- Projects should be divided into short-term tasks that can be completed in less than four months, with the entire project lasting no longer than two years. 
-- Projects should first target issues crucial to the agency's mission, rather than updating an entire system at once. 
-- Senior management must more actively monitor the projects' short-term goals and make sure projects adhere to their budgets and schedules. 
Agencies have been given 60 days to submit plans for adopting the guidelines, which OMB will then have an additional 60 days to review. 
A new advisory board, consisting of agency chief information and financial officers, as well as acquisition and e-government experts, will help OMB review the plans. 
Near-term: High-risk IT projects will be reviewed 
In addition to the financial management systems, other ongoing IT projects have been deemed high-risk by OMB because of budget and schedule overruns. 
Agencies must submit project improvement plans to Chief Information Officer Vivek Kundra, who is expected to unveil details of the review process within the next month. 
"Where serious problems are identified and cannot be corrected, further actions should be taken, including potential adjustments to Fiscal Year 2012 agency budgets," according to the memo, jointly released by Orszag and President Obama's chief of staff, Rahm Emanuel. 
Long-term: A report on IT procurement and management is forthcoming 
While current projects are under review, OMB's deputy director for management, Jeffrey Zients, is tasked with ensuring future projects don't hit similar snags. 
Zients, who is also the chief performance officer, will consult with agencies to compile suggestions for how the overall process can be improved. While the memo doesn't mention any specific recommendations, it hints at what can be expected from the final report. 
"They will include higher standards for project management practices and personnel, additional mechanisms for holding managers accountable for project results, and more rigorous review processes," the memo states. 
Reaction: 
The memos from the top have prompted myriad reactions within the IT community. 
"In one sense, this should not be a shock to either the agencies or the companies. The freeze, however, is a surprise and the surprise is the across-the-board nature of it. ... As a result of that, my concern is that necessary programs and well-performing programs may also be caught up and delayed, even as these reviews are taking place. ... The freeze goes to new contracts and new task orders, but many of those new contracts are in the bidding stage right now, so companies have been spending money and agencies have been spending money to prepare for those contracts. ... The decision process will be stretched out. When that happens and technology gets delayed, bidding proposal costs go up as agencies delay award decisions." 
-- Alan Chvotkin, executive vice president and counsel of contracting industry advocate the Professional Services Council 
"We're concerned that the generic ramification or unintended consequence is the government market will look less attractive for companies. Some companies will see these as another barrier to entry, or some may look at it and say, 'I'm tired of trying to sustain my commercial market activities and having all these additional unique government requirements.' ... Those companies will pretty quickly move into another project, either in the commercial sector, or some other government program or contract that's coming up." 
-- Trey Hodgkins, vice president for national security and procurement policy at IT trade association TechAmerica 
"I know everyone wants to focus on the fact that OMB is going through this review process and that may create a short-term delay. I think the bigger picture is it's a good move for the taxpayer. ... This policy is really driving agencies to conclude that they need to size the procurement in such a way that it meets the 18 to 24 months [guideline]. ... That criteria is favorable to allow more people to come in and bid. " 

-- David Lucas, chief strategy officer at Reston-based shared service provider GCE 
"While something might be taken away in this area, we still project growth in the IT sector to continue. ... From an IT market standpoint, there are still plenty of dollars out there to be had. ... [Coming next from OMB,] I think you could see a broader view of all the overhead-type systems that are common across agencies like [human resources], recruiting systems." 
-- Timothy Dowd, president and chief executive of government contracting research firm Input