Office of Management and Budget Function 3 in the United States

To Review

How Agencies Can Drive Transformation
Given their principal role in execution of Federal Government responsibilities and service delivery, Federal agencies must be the primary drivers of transforming government technology delivery in their domains. The Executive Office of the President (EOP), General Services Administration (GSA), and Office of Personnel Management (OPM) can aid these efforts by supporting capability-building and reform efforts across government and by orchestrating the definition, development, and operation of the required set of enterprise-wide common services, but it is truly agencies who need to take the lead in mission-oriented areas. Multiple agencies such as the Department of Homeland Security (DHS) and Environmental Protection Agency (EPA) have been innovating on how to drive transformation. Through this experience, it is obvious that there is not a “one size fits all” method that will apply to all agencies. Rather, much like our experience with the implementation of the Federal Information Technology Acquisition Reform Act (FITARA), each agency will have to develop an agency-specific model which embraces some core concepts. Through hard-won learning, we have identified that the following key ingredients are essential to success:

The agency’s senior leadership, including the agency Secretary, Deputy Secretary, and CIO, understands the imperative for, strongly supports, and personally sponsors ongoing transformation.
The management team driving ongoing transformation work includes and truly empowers senior managers/product/engineering leaders who have deep expertise and experience in modern, agile, customer-centered service, software design and development, digital service product management, and mission-driven information technology delivery.
Small, semi-autonomous teams who are experienced in modern technology and working in modern ways, who are empowered to make decisions, and who are responsible and accountable for results. These teams require strong, ongoing support from management to advance transformation as they run into the inevitable barriers and issues that arise when changing how organizations work.
Reforming procurement policies, processes, practices, and capabilities to enable agencies to access modern, best-in-class private sector contractors and commercial product and service offerings in a timely and efficient way.
Transformation efforts are aided by (a) acquisition professionals who are deeply versed in modern digital service contracting best practices, (b) recruiting/hiring professionals who understand how optimally to bring modern technical talent into the U.S. Government (a huge challenge, historically), and (c) ongoing reforms that remove barriers and enable both of these absolutely essential types of professionals to do their job ever better.
Key Enablers of Continued and Accelerating Progress
To continue to drive accelerating positive change, it is important to recognize that effecting this change will continue to be intensely complex and difficult. It will require government to continue to gain new personnel, skills, assets, and capabilities and to execute profound simultaneous shifts in culture, policy, process, and custom. This ongoing journey toward ever better digital government will continue to be an iterative one – a journey whose contours, steps, and timing will continue to differ from agency to agency (and from agency subcomponent to subcomponent) and must be primarily “learned by doing.” Four key enablers of success will be the following:

Continue to recruit and hire a critical mass of high “tech IQ” (“TQ” – modern technological intelligence, expertise, and experience) senior executives for government agencies.
Tech-savvy senior leadership has become fundamental to the success of government agencies (and, indeed, virtually all major institutions) in the 21st century. An agency which does not have high “TQ” individuals on its core senior leadership team – high “TQ” leaders integrally involved in policy and program formulation and execution from the very beginning and each step along the way — will experience increasingly difficult problems and underachieve increasingly dramatically on its mission as time goes on. In today’s world, technology is a key strategic part of formulating policy and action in every field. It has become as essential to have technologists in the room as it is to have legal counsel. It is difficult to think of any major agency responsibility — whether it be responding to Ebola, delivering services to veterans, formulating transportation policy, etc. – that would not benefit a great deal from the application of modern technology expertise.

With respect to digitalization of government services in particular, agency senior leadership is of fundamental importance to the ability of agencies to transform. Senior leaders with deep experience and aptitude leading modern, tech-intensive operations and high-performing tech teams will be able to formulate and drive the iterative, on-the-ground, relentless work needed to modernize agencies. The probability of an agency being able to successfully modernize without such leaders is zero. From a modernization standpoint, having a high “TQ” Deputy Secretary is optimal; if, due to other considerations and needs, an agency must give disproportionate weight to other subject-matter expertise, the next best option is to give the Deputy Secretary a high “TQ” Assistant Secretary for Management/Under Secretary for Management (or equivalent).

Similarly, next-generation agency CIOs should be high “TQ,” highly skilled managers who can not only successfully manage the agency’s existing IT operations, infrastructure, and services but also work effectively with leaders across the agency to modernize the agency’s approach to technology infrastructure and service delivery. Optimal candidates will have led organizational migrations from old systems to modern ones, and have a track record of collaborating successfully with operations, product, and engineering leaders in organizations to support the delivery of modern digital services.

To help facilitate the recruitment of such leaders for the highest-priority agencies, the Presidential Personnel Office and the United States Digital Service (a new internal tech team we have created – see below) have created a partnership which turbocharges the government’s ability to source, recruit and hire talented senior “high TQ” executives.

More broadly, to properly inform and guide the policymaking and fundamental actions and reactions of agencies at the highest level, it is vital that deep tech expertise be no more than one step removed from the agency Secretary (or equivalent). This could take the form of a high “TQ” Secretary, a high “TQ” Deputy Secretary, or a senior technology advisor to the Secretary.

Continue to build the capabilities of the United States Digital Service (USDS) and the General Service Administration’s Technology Transformation Service (TTS) – two new internal services.
The United States Digital Service:

Founded in 2014, the USDS is an internal “tech special forces” team based in the White House Office of Management and Budget and consisting of (as of November 2016) 200 of the best engineers, designers, product managers, and strategy/operations specialists in the world, many with previous experience at top private-sector companies, and all serving with USDS on “tours of duty” ranging from 3 months to a maximum of 4 years.
The central focus of the USDS is on the measurable improvement of the performance and cost-effectiveness of important, public-facing Federal Government services.
With the exception of top leadership (who are political appointees), USDS personnel are non-political, term-limited professional staff. USDS’s core model currently includes (a) approximately 100 team members who are deployed from its headquarters (HQ) unit, based in the White House Office of Management and Budget (OMB), to various agencies for short-term or longer term assignments, and (b) approximately 100 additional team members who are on one of multiple agency-based USDS teams and are formally employed by those agencies.
Drawing upon this pool of talent, USDS’s core function is the deployment and operation of “special forces” teams that execute focused engagements to help improve the performance and cost-effectiveness of some of the most important services being built and delivered by the U.S. Government. These engagements may be either reactive or proactive, and may include two-week diagnostic sprints to assess a current situation or help an agency validate a current technological approach, multi-week engagements to help address an emergency situation (e.g., restore a critical service which has gone down), and in-depth, multi-month engagements that drive dramatic improvement in a troubled service or ensure that a project to develop a new digital service gets going on the right foot from the beginning.
In all such scenarios, the core operating approach is fundamentally the same: a small, cross-functional (engineering, design/user experience, product management, strategy/operations) USDS team deploys to a top-priority project at an agency, teams up with the best people on the ground at that agency, and, with high-intensity “air cover” from agency and Executive Office of the President (EOP) senior leadership, works in a rapid, iterative fashion to help the agency apply current best practices to the work in question with measurable results.
Examples of USDS engagements include work with the State Department to successfully restore its visa processing system to active function after an acute outage that had been blocking the bulk of visitors to the United States for two weeks; work with IRS to develop and roll out a Secure Access service that enabled IRS to bring online access to tax transcripts for taxpayers back online after IRS had been forced to block such access because it was being exploited by bad actors to improperly access taxpayer information; work with U.S. Citizenship and Immigration Services to help effect a significant turnaround of work to move from a paper-based immigration system to an electronic one; work with the Department of Veterans Affairs to move from a highly troubled online application for health care (which subjected up to 70% of veterans to error messages that blocked them from applying for health care online) to a hugely improved new online application that has resulted in an 8x increase in online applications, putting VA on track to increase the percentage of Veterans applying online from 10% in 2015 to over 50% in 2017; and more.
The two keys to USDS success are (1) USDS’s continuing ability to attract a critical mass of the best tech talent in the world and (2) strong “air cover” and sponsorship from senior EOP and agency management.
Technology Transformation Service: Formally established in 2016 and bringing together multiple capabilities in the GSA, the Technology Transformation Service (TTS) is an internal service organization whose mission is to improve the public’s experience with the government by helping agencies build, buy, and share technology that allows them to better serve the public. Three key components of TTS are:

18F: Founded in 2013, 18F is an internal consultancy that helps government agencies transform how they deliver digital services to the public – staffed (as of November 2016) with approximately 200 non-political, term-limited technologists, designers, product managers, and operations specialists deeply versed in modern digital service development and procurement approaches. Unlike USDS, 18F is a fee-for-service consultancy – agencies pay it for services rendered (such that 18F can ultimately recover its costs), which uniquely positions 18F to be able to scale to meet demand. 18F’s service offerings also differ from USDS in that they are generally not focused on rapid-cycle turnaround/validation/improvement work in high-intensity situations, but rather on long-term, sustainable change throughout government.
The Office of Acquisitions: This component of TTS focuses on helping the government become a better buyer of technology. It works with agencies on procurement and trains them to specify work in more lightweight, agile ways. It also creates standard government mechanisms for making small purchases efficient and for opening the government market to a larger portion of the private sector, including smaller companies.
The Office of Products and Programs (OPP): This component of TTS is responsible for operations, evolution, and scaling of mature products and services (including products originally built and incubated by 18F).
The Presidential Innovation Fellows (PIF) program: A fellowship program initiated in 2012 which pairs talented, diverse private-sector technologists and innovators on 12-months “tours of duty” with top civil servants and change-makers in the Federal Government to tackle some of our nation’s biggest challenges. Presidential Innovation Fellows actually co-founded 18F and helped co-found USDS. Since the advent of 18F and USDS, the portion of the PIF engagement portfolio focused on government digital service development has gradually wound down (given the help now accessible to agencies via 18F and USDS); current areas of PIF focus include work in the realms of open data, data science, open innovation, public-private partnerships, tech-informed policy, national security, innovation in government policymaking and related action, government R&D activity, and emerging technology areas.
The role of TTS is to help start and support technology transformation efforts throughout government. This informs the work that TTS’s components take on:

Helping agencies become better buyers of technology, because the bulk of government’s digital technology will use software from the private sector:
Digital acquisition – assisting agencies with digital service procurement (e.g., “ghostwriting” requests for proposal to be optimal, functioning as technical advisors on contractor selection) and is setting up and managing “marketplaces” of pre-qualified modern vendors (the first being the Agile Blanket Purchase Agreement, a marketplace of pre-qualified agile software development vendors) for agencies to access. This is an extremely high-leverage service; on one procurement consulting engagement alone, 18F worked with the Department of Health and Human Services to help rewrite the State of California’s Child Welfare System request for proposal – converting it from a monolithic “waterfall” software development procurement to an agile, modular one, and reducing the cost from an anticipated $450 million to an approximate $150 million.
Creating and maintaining some core government-wide technologies:
Products and platforms — TTS is developing common products and platforms which can be reused by agencies across government. Examples: Cloud.gov (a government-wide, cloud-based “platform-as-a-service” offering on which agencies can build applications); login.gov (a universal login system that will enable the American public to access multiple government agency services with one, streamlined account in a more secure manner – and avoid unnecessary duplication of identity management services across agencies); and Federalist (a platform to provide agencies with an easy way to publish static government websites).
Government-wide services — these fall under five mission areas: Secure Cloud (e.g., Cloud.gov and the Federal Risk and Authorization Management (FedRAMP) program, which provides a standardized government-wide approach to security assessment, authorization, and continuous monitoring for cloud products and services), Public Experience (e.g., USA.gov), Data Services (e.g., Data.gov and the Digital Analytics Program that offers agencies advanced web analytics), Innovation (e.g., Challenge.gov), Smarter IT Delivery (e.g., the Federalist platform).
Helping agencies become more digitalized:
Agency solutions — teams that agencies hire to work with them to build agency-specific applications and websites
Embedding – specialists who embed inside agencies to help them build capacity (people, practices, culture) holistically, over the long term.
Learning and training – people who develop and share government-wide lessons and best practices to support agencies through online materials, workshops, and training sessions.
The U.S. Digital Service and Technology Transformation Service are still early in their development. With continued senior leadership focus and iterative evolution, they will grow in their ability to help aid and accelerate modernization efforts.

Continue to aggressively advance tech procurement reform and hiring/workforce reform.
Continued innovation in how the government procures technology and hires/develops talent are absolutely fundamental to continued progress. On the procurement front, a host of actions have been taken and continue to be pursued across government to improve the tech procurement process and outcomes. At the big-picture level and focusing on digitalization in particular, a key theory of the case on this front has been:

Seeking to enable more vendors who are expert at modern software development to enter the government market and be available to be easily and rapidly procured by agencies — building marketplaces to host such vendors (e.g., 18F’s Agile Blanket Purchase Agreement (BPA), DHS’s new Flash marketplace), and lowering non-productive barriers to entry (e.g., GSA eliminating the requirement that a company has to be in existence for 2 years before being able to get on a GSA schedule; getting on a GSA schedule is a prerequisite for getting into the Agile BPA). A current initiative of great promise along these lines is an effort led by OMB’s Office of Federal Procurement Policy (OFPP) that is providing formal guidance to agencies on how to acquire agile software development services as a “commercial item” (an item broadly available in the commercial world and which the government just wants to be able to buy just like anybody else). This will (a) enable agencies to procure agile software development services under dramatically simplified acquisition procedures (including the ability, in effect, to access the open market of vendors in the commercial marketplace) and (b) subject contractors to significantly simplified ongoing reporting requirements — for any software development contract under $7 million. Agencies could conceivably build even large-scale Federal Government digital services through this acquisition approach (by breaking down large-scale software development projects into modules, which is what current best practices call for in any case). In tandem with this “agile-development-as-commercial-item” guidance, we have been pursuing the development of a “market research vehicle” that could build an ongoing public list of pre-qualified agile software development vendors based on a technical assessment process, as a way of helping agencies effectively navigate the open market.
Similarly, lowering non-productive barriers to entry and enabling more modern cloud-based service offerings commonly in use across the commercial market to be accessible and usable by government agencies.
Building more and more project/program/product management teams across government that know how to manage the development and operation of great digital services — and have a strong appetite for modern vendors and know how to manage them well and get good outcomes from them.
Training more and more digital service contracting officers via our new Digital IT Acquisition Professional (DITAP) training program, which trains contracting officers in digital procurement best practices — officers who can then help the growing number of expert government management teams acquire the services of modern, capable vendors via contract structures that support the doing of modern work.
Elements (c) and (d) above help illustrate the need for continued acceleration of hiring/workforce reform. On the hiring front, we have made great, painstaking progress developing and utilizing new approaches to rapidly bring private-sector digital service experts into government via proactive recruiting operations and non-political, non-career, term-limited professional appointment hiring authorities – recruiting and hiring practices that underpin our success building cadres of experts via the Presidential Innovation Fellows program, USDS, and 18F, and which are utilizable by agencies across government. Continued expansion of digital service expert recruiting and hiring across government will be fundamental to continued modernization – without expert people at the helm, modernization efforts in agencies will fail. On the training front, in addition to scaling up the DITAP contracting officer training program, we are working to identify additional high-potential area(s) for development and scaling of training – for example, helping existing government program/project managers gain more familiarity with modern digital service development and management practices. And on the general topic of workforce productivity maximization, it will be critical to continue efforts to enable government to adopt and utilize the modern collaboration and productivity tools that are now commonplace across the private sector – tools which power the work of modern teams developing and managing the operation of modern services and, furthermore, can empower all government teams to be more productive, efficient and effective.

Continue to change governance, budgeting, financing, monitoring, and policymaking practices to most effectively support continuous modernization.
It will be critical for OMB’s Office of the Federal Chief Information Officer (OFCIO) to continue to drive significant changes in governance, budgeting, financing, monitoring, and policymaking practices to most effectively support modernization and digitalization work across government on an ongoing basis. As the entity charged by Congress with setting strategy and policy for and overseeing Federal Government investments in information technology, the OFCIO is serving as the leader of tech modernization and digitalization efforts across the government – coordinating efforts across EOP components and agencies in the realms of tech funding reform, workforce reform, procurement reform, policy reform, common platforms, and more. OFCIO is uniquely positioned, through statutory authority, to drive these transformational improvements and ensure that they become part of the fabric and DNA of the agencies. To accelerate and better coordinate progress, the OFCIO established a Transformation Task Force in the summer of 2016 consisting of key leadership from leading agencies, GSA and its Tech Transformation Service, USDS, OFPP, and other EOP components. The Transformation Task Force is chaired by the Federal CIO. The OFCIO is also increasing the breadth and depth of its in-house technical expertise, which will be vital to successful leadership of transformation work.

Key OFCIO functions include Federal Government IT policy development, agency performance oversight, transformation and technical architecture leadership (newly established in the fall of 2016), data governance (newly established in the fall of 2016), and cybersecurity leadership. Major current OFCIO-led initiatives in the realm of digitalization include:

IT Modernization Fund. Protecting sensitive data and delivering cost-effective services to the public require a Federal IT portfolio that is based on modern, secure, and efficient technologies. However, much of the Federal government operates on a one-year budget cycle that makes it difficult to proactively plan for regular refresh of outdated IT infrastructure and instead incentivizes a “wait ‘til it breaks” approach to managing agencies’ IT portfolios. To help address these challenges, the President proposed the creation of an Information Technology Modernization Fund (ITMF) as part of the FY 2017 President’s Budget and the Cybersecurity National Action Plan (CNAP). The ITMF would facilitate the retirement of the Federal Government’s antiquated IT systems and transition to more secure and efficient modern IT systems. The ITMF would be self-sustaining by requiring agencies to repay the initial investments through efficiencies gained from modernization, ensuring the fund can continue to support projects well beyond the initial infusion of capital. As a result, OMB estimates an initial investment of $3.1 billion into the ITMF would address $12 billion worth of IT modernization projects over the first ten years. The bipartisan Commission on Enhancing National Cybersecurity has strongly endorsed the ITMF and recommended expanding on it even further. Legislation establishing the ITMF (H.R. 6004, the Modernizing Government Technology Act) passed the House in late 2016, but the Senate ran out of time on its legislative calendar to consider it. It is anticipated that the bill’s sponsors will reintroduce the ITMF in the new Congress.
Federal Source Code Policy. OFCIO recently released a new Federal Source Code Policy. This policy requires that: (1) new custom code whose development is paid for by the Federal Government be made available for reuse across Federal agencies; and (2) a portion of that new custom code be released to the public as Open Source Software (OSS).
Advancing shared services. The opportunity to use a shared approach to improve usability, security, and the efficiency of the Federal Government has never been higher. Rather than writing functionality from scratch, a software and IT team can compose cloud APIs and services together to build and deliver much of an application’s functionality. This has resulted in a huge improvement in productivity over the past few years for development teams leveraging these modern approaches. While a growing fraction of cloud services can be securely and cost-effectively provided by external third-party providers, some are difficult or impossible to source externally. Shared services delivered by one Federal agency to another for common IT functions and developer-focused API services available to Federal departments and agencies have the potential to radically improve the efficiency and effectiveness of service delivery. Fortunately, a model for sharing services already exists with the U.S. Federal Government for delivery of common administrative functions such as financial management, human resources, payroll, and acquisitions. On May 4, 2016, the Office of Management and Budget (OMB) issued M-16-11, Improving Administrative Functions Through Shared Services. This policy helped establish the mechanisms upon which sharing of IT and developer tools such as email, collaboration, identity, eligibility verification, payments, networking, and cybersecurity can be built. Indeed, there are already several Federal platforms that demonstrate the potential of common services and platforms. Login.gov is a service provided by GSA to help Federal departments and agencies integrate strong multifactor authentication into citizen-facing services. Another example is Pay.gov, established in October 2000 by the Bureau of the Fiscal Service as a secure platform for handling payments to and from the Federal Government. OFCIO is working with the Transformation Task Force (TTF) and Federal departments and agencies to understand and facilitate support for the growing landscape of Federal IT and developer shared services and provide a prioritized set of areas for potential future investment. A suite of easily discoverable, robust, secure, cost-effective, easy to adopt, end-user friendly, continuously improving Federal shared IT and developer services is a huge force multiplier in work to rapidly digitize agencies and transform service delivery.
Revamp of the Capital Planning and Investment Control (CPIC) process. OFCIO has begun a multi-year effort to drastically revamp its reporting requirements for IT investments – including streamlining them significantly, adapting them for modern technology approaches, adopting better metrics, and promoting automation of data collection.
Updating existing IT policy, including sunsetting out-of-date policy. Recently, OFCIO analyzed existing IT policy and identified that there are currently over 170 OMB IT policies with 4,213 associated requirements. This results in the following issues: it is burdensome for agencies and OMB to understand, implement, and oversee requirements; there is unnecessary risk of implementing outdated and conflicting requirements; and leadership transitions and staff onboarding are made needlessly inefficient. To address this, OFCIO is currently working on identifying outmoded OMB IT policy to recommend policies for retirement, with the goal of identifying at least 20% of OMB policy for potential consolidation or retirement. Continuing these efforts on an ongoing basis will reduce unnecessary compliance and oversight burden going forward and enable the adoption of a more modern approach to policy broadly at OMB and possibly at the agency level.
Data Governance Policy. Agencies hold a vast amount of information that is siloed horizontally across bureaus or departments, or vertically by function. This data becomes difficult to manage without a formally established process outlining roles and responsibilities. The aim of a data governance policy, currently under development, is to manage the overall collection of data assets across the enterprise.
Implementing the Federal Information Technology Acquisition Reform Act (FITARA). FITARA, passed in December 2015, invests the Chief Information Officer at the Federal level and within agencies with the authorities to effectively execute the delivery of technology services, including significant empowerment in the areas of IT financial, budgeting, acquisition and human resources. Since FITARA’s enactment, agencies have made significant progress in implementing the law’s requirements. OFCIO is actively working with all agencies to move toward full implementation.
Cybersecurity National Action Plan (CNAP). This plan was released as part of the Fiscal Year (FY) 2017 Budget, with elements including the IT Modernization Fund (described above), high value asset assessments by the Department of Homeland Security, cybersecurity workforce development reforms, accelerated deployment of automated tools and capabilities to agencies that enable those agencies to have greater insight into their IT systems and networks (including risks and vulnerabilities), and migration of agencies to modern, consolidated email solutions.
A NOTE ON THE BROADER TECH “ECOSYSTEM” IN GOVERNMENT
In addition, it is important to note that the government service delivery improvement efforts as articulated above fit into a larger picture in which government is also modernizing how it makes public policy and innovates in general. For a discussion of current efforts to continue to ramp-up the injection of modern technology expertise into national public policymaking and build the tech and innovation capacity of the government and nation, please see “Toward Ever Better Public Policy Informed by Technical Expertise,” which describes work on that mission being led by the U.S. Chief Technology Officer team. As a contextual note, the U.S. CTO team, based in the Office of Science and Technology Policy (OSTP), played an essential catalytic role in the creation of the Presidential Innovation Fellows, 18F, and USDS programs, and can aid future innovation capability-building efforts in similar fashion.