CPIC | Capital Planning and Investment Control Forum & Conference

Introduction

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It is rare for OMB to include an introduction to Capital Planning and Investment Control (CPIC) Budget Guidance. This set of guidance requires context so that agencies understand the overarching strategy behind this drive for change. In the FY 2018 CPIC Budget Guidance OMB implemented several substantial changes. The Security and IT Management Standard Investments, CIO oversight authority and end of life budgeting were new elements in each agency’s IT budget request. Learning from that experience has proven to be important as OMB builds on those changes to position the IT budgeting process to deliver the right information at the right time to support the decision-making process. Prior to the changes initiated last year the CPIC process had remained relatively unchanged in the 20 years since the passage of the Clinger-Cohen Act in 1996.

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In this FY 2019 CPIC Budget Guidance OMB is implementing additional changes that build upon what was done in FY 18 and charting a course that will likely continue through 2020 and beyond. The cornerstone of this strategy is the Technology Business Management (TBM) Taxonomy.

Technology Business Management (TBM) is a value-management framework instituted by CIOs, CTOs, and other technology leaders. Founded on transparency of costs, consumption, and performance, TBM gives technology leaders and their business partners the facts they need to collaborate on business aligned decisions. Those decisions span supply and demand to enable the financial and performance tradeoffs that are necessary to optimize run-the-business spending and accelerate business change. The framework is backed by a community of CIOs, CTOs, and other business leaders on the Technology Business Management Council.

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- From TBM Taxonomy Version 2.0, from the Technology Business Management Council.

OMB is leveraging a taxonomy that private, public and academic sectors are adopting and achieving significant value, thereby mitigating some of the risk concerning the utility and long-term viability of the changes made. Leveraging the taxonomy that is proactively managed by a non-profit organization also alleviates some of the burden for the government to identify, define, and achieve consensus on the standards and terms used by the framework.

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It is the intent of OMB to follow an incremental process in rolling out these changes. There will not be a big-bang approach in which the lights are turned off on the legacy process and turned on the next day with a new TBM-based process. Instead, beginning with last year’s CPIC Budget Guidance, elements are being included in small but meaningful amounts. Consistent with the implementation of FITARA (M-15-14), there is a recognition by OMB that each agency has a different level of maturity and capability to absorb these changes and produce the right data. This is why OMB is emphasizing the long-term strategy and approach in implementing changes to the CPIC process. The intent is that by sharing the longer-term vision, agencies can understand the proposed changes, internalize them and establish a program to advance IT budgeting into the 21st century.

 

The below graphic contextualizes the types of structural changes OMB has made and is intending to make through this multi-year process:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The most striking change in this graphic is the change to the Part 3, or Infrastructure investments. This is a change that OMB has been working towards for a number of years in policy though not necessarily from a budget perspective.

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The Arc of Federal IT Policy

• Federal Data Center Consolidation Initiative (FDCCI) Feb. 2010

• M-11-29 CIO Authorities – “Commodity IT. Agency CIOs must focus on eliminating duplication and rationalize their agency's IT investments. Agency commodity services are often duplicative and sub-scale and include services such as: IT infrastructure (data centers, networks, desktop computers and mobile devices)…”

• M-12-10 Implementing PortfolioStat – Commodity IT Consolidation focused

• M-13-02 Improving Acquisition Through Strategic Sourcing

• M-13-09 FY 13 PortfolioStat Guidance – Introduced the Integrated Data Collection (IDC) to collect performance data for a variety of initiatives

• M-14-12 Management Agenda Priorities – Included priorities on smarter IT delivery, strategic sourcing and benchmarking

• M-15-14 Management and Oversight of Federal IT – Implemented FITARA which has a significant focus on commodity IT

• M-16-02 Category Management – Laptops and Desktops

• M-16-12 Category Management – Software Licensing

• M-16-19 Data Center Optimization Initiative

• M-16-20 Category Management – Mobile Devices and Services

 

A key distinction in this budget guidance is in linking the performance data that OMB has been collecting for a number of years on a range of commodity IT capabilities with budget resources.

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OMB intent is to strongly support CIOs in implementing the authorities identified in FITARA. Standard investments like data centers, end user devices (e.g. laptops, desktops and mobile devices), software and networks will have both discrete performance data connected to a budget request. Seeing this is data is critical to making an informed decisions about the performance of an investment. Additionally, the performance of many of these commodity IT capabilities is already reported to the Integrated Data Collection (IDC). OMB will not burden agencies with redundant reporting, and as such, data collected through the budget process will replace reporting requirements to collect the same data in the IDC. As such, while there are many new fields added to the budget process with this guidance, OMB is intending to keep the net-new fields to a minimum when balanced against the existing reporting requirements of the IDC.

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Helping CIOs to work more closely and in better partnership with the CFOs is strategically important. Within OMB OFCIO is committed to, as was done this year, working through the normal budget process mechanisms. This is why the schedule for submitting the FY 2018 CPIC Budget was released in a Budget Data Request. OMB will continue to use the formal process to ensure that CFOs and CIOs are both aware of the needs in budgeting for IT and are working together. One of the new concepts introduced in this budget guidance is the “Cost Pool”. The inclusion of Cost Pools is critical to rationalizing the IT budgeting process across CIO and CFO organizations. CFO organizations deal in Budget Object Classes and Sub-object Classes. CIO organizations typically deal with investments and contracts. Historically these two groups have lacked the Rosetta Stone that reconciles the two methods for budgeting and accounting for the work they are performing. The Cost Pools identified in this guidance relate to the Budget Sub-object Classes and represent a tool by which the budget identified by the CIO can be reconciled with the budget submitted by the CFO.

 

While the opportunity to leverage the Cost Pools is very high, OMB recognizes that each agency has a different level of maturity, capability and resources to meet this change. This is why the Cost Pool information, while expected to be valuable, is indicated as “optional” in this guidance. Some agencies have already been working to achieve this or a closely related capability. Those agencies should endeavor to report the Cost Pool data to the greatest extent practical. Agencies that lack the maturity, capabilities or resources to deliver the Cost Pool data should consider what changes are necessary to achieve it, and develop a plan that bridges the gap. OMB will review these plans prior to the issuance of next year’s budget guidance and will decide whether the Cost Pools remain optional then. 

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While the Cost Pools are an optional capability, agencies electing to submit that data should prioritize the data concerning external labor, internal labor, external services and internal services as these fields help to tell a more complete picture of agency operations, especially as they relate to M-17-22.

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In closing, there are many other changes identified in this guidance, but these are the significant structural ones. It has been 20 years since OMB has really considered these types of changes. Agencies aren’t expected to catch-up and eliminate 20 years of policy debt in a single year. Instead, this is the course OMB is plotting and the collaborative future that is achievable. Change is difficult, and it is not without risk. These changes are worth it because IT is a significant cost driver and CIOs and CFOs must leverage the budget and performance data to support management decisions within each agency.