April 25, 1997
M-97-12
MEMORANDUM FOR HEADS OF SELECTED AGENCIES
| FROM: |
Franklin D. Raines
Director |
| | |
| SUBJECT: |
Evaluation of Agency Implementation of Capital
Planning and Investment Control Processes |
As the first-year anniversary of the Information Technology Management
Reform Act (ITMRA) of 1996, P.L. 104-106 approaches, OMB would
like to evaluate your agency's implementation of the act. Specifically,
OMB would like to ascertain the status of agencies' capital planning
processes. In addition, OMB would like to verify the status of
compliance with OMB Memorandum 96-20, Implementation of the Information
Technology Management Reform Act of 1996, regarding the duties,
qualifications, and placement of the chief information officer
(CIO). This memorandum requests that you provide to OMB by May 1, 1997, information to assist us in this evaluation. Subsequent
to providing these written materials, each agency may be invited
to meet with OMB to discuss the agency's ITMRA implementation
status.
Background
ITMRA directs the head of each executive agency to design and implement processes for ensuring effective and efficient
management and acquisition of information technology (IT), and
makes the CIO responsible for providing assistance to the agency
head in implementing these IT management and acquisition practices,
focusing on:
- selecting, managing and evaluating investments in IT
- linking the selection of IT investments to the budget, financial and program management
processes of the agency; and
- identifying and cooperating in cross-governmental IT investments.
A review of best practices in the private sector and Federal government
demonstrates that these processes are critical elements of an
agency's success in using IT. These planning and performance
based management processes are consistent with the ITMRA, OMB
Circular A-11 guidance, and OMB's forthcoming Capital Programming
Guide. This guide has been developed with input from many agency
staffs and will be available soon for agency use.
Meeting with OMB
After materials are received, OMB may schedule a meeting with
the chief operating officer and CIO of your agency to discuss
your agency's implementation of ITMRA, to identify improvements
for the coming year, and where appropriate, discuss preliminary
agency plans for the FY 1999 budget request. In addition, each
agency should be able to discuss its strategy with regard to the
transition to year 2000. You should also be able to discuss how
the IT investments listed in Table IV-3, Program Performance Benefits
from Major Information Technology Investments (pp.45-46, The President's
Budget, FY 1998) comply with each of the eight investment criteria
contained in OMB Memorandum 97-02, Funding Information Systems
Investments(October 25, 1996).
Written Materials Requested
In responding to this request, the creation of new materials should be minimized
-- existing materials should be referenced and attached to the
submission whenever possible. If materials are not readily available,
the agency should provide a timetable indicating when the materials
will be provided. In instances where an agency has several investment
review processes underway -- at the department-wide level as
well as at the subcomponent (or bureau level), please provide
information on the integration of the review processes, discussing
how the multi-level capital planning processes will interact.
For the purposes of this memorandum, military departments should
coordinate their submissions through the Department of Defense
CIO.
By May 1, 1997, each agency listed in the Attachment needs
to describe its activities in the following areas:
1. The agency organization(s) and process(es) involved
in selecting information technology investments. Such a description
may include:
a) a listing of your agency's IT Investment Review
Board's membership and a copy of its charter; and
b) the process by which the IT Investment Review Board makes its
decisions for selecting investments. (For example, describe how
that decision process is linked to the finance and budget process,
how the Board factors programmatic priorities into investment
selection decision making, or how each investment helps the agency
achieve its strategic goals).
2. The agency organization(s) and process(es) involved in assuring the success of an IT investment.
Such a description may include:
a) your process for tracking
milestones in IT investments and selected tracking examples.
For example, describe your agency's use of earned-value process
or other processes that ask, "Do incremental deliverables
arrive on schedule within the anticipated budget and work as expected?"
b) your process to ensure that IT investments are compliant
with the agency's IT architecture as well as the other investment
criteria described in OMB Memorandum 97-02; and,
c) your evaluation
criteria for deciding whether to continue, modify, or terminate
an investment, which should include how senior management will
be able to determine, in a timely manner, that IT investments
are meeting their anticipated milestones and that developing risks
are being adequately addressed.
3. The process used to quantitatively
asses the costs, benefits, and risks associated with a particular
investment, and the process of reporting these scores to the agency
officials responsible for making the investment decisions. Such
a description may include:
a) a method for doing Return-On-Investment
(ROI) calculations, such as an economic analysis that provides
net present value dollar estimates of costs and savings for the
status quo versus alternative(s); and,
b) a method for conducting IT prototype evaluations -- with
the focus on validating projected benefits.
4. The way the agency obtains other Federal
agency, State, and local government input in IT investments when
there are shared issues being addressed.
Provide an updated version of the materials requested under OMB. Specifically
provide:
1. An organizational chart which identifies the CIO by name, the CIO's position relative to the head of the agency and
other senior agency officials, and the agency staff assigned (or to be assigned) to the CIO for the performance of functions described
by the PRA and ITMRA.
2. A description of the CIO's authority, responsibilities, and qualifications.
Additional Information:
Inquiries may be directed to Jasmeet Seehra, (202) 395-3123, or Lew Oleinick
(202) 395-4638. Please mail all materials to the Information
Policy and Technology Branch, Room 10236, NEOB, Washington, DC, 20503.
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