In an effort to accelerate modernization and drive new levels of efficiency and citizen service delivery across government, today we at the Alliance for Digital Innovation released a report detailing the steep costs of the Federal Government’s heavy reliance on custom-built IT solutions and legacy systems.
Our report examines the historical “buy versus build” decision that has faced federal leaders, and the lack of progress that has been made since the passage of the Federal Acquisition Streamlining Act (FASA) of 1994 – which was designed to encourage government agencies to purchase commercial IT whenever possible.
Some key takeaways from the report include:
Agencies Still Largely Build Custom Systems Rather than Using Available Commercial Solutions
- Software development projects across both government and industry have a high failure rate (31 percent), but while commercial solutions fund their own failures and restarts, custom government solutions pass those risks and costs onto taxpayers.
- A recent estimate of government spending between 2018 and 2023 estimates new commercial software will only account for 11 percent of $664 billion in total IT expenditures.
- Between 2003 and 2013 at least $9.2 billion custom IT projects had to be canceled because the systems wouldn’t work.
A Growing Portion of the Federal IT Budget Goes to Maintaining Legacy Systems
- Between 2010 and 2017, at least $440 billion was spent on operations and maintenance (O&M) for existing systems.
- In 2017, O&M spending grew to 77 percent of the budget. If this trend continues, eventually 100 percent will be spent on maintaining legacy systems, not leaving any budget to spend on the acquisition of new technologies.
There are Many Unrealized Benefits of Not Adopting Commercial IT, Including Loss of R&D
- If government IT spending matched the industry average as a percentage of revenues, the government would have saved about $717 billion since 1994.
- For government, ignoring commercial innovation leaves over $300 billion in research and development on the table every year.
- In 2017, commercial technology companies spent $341 billion on research and development, while the Department of Defense only spent $75 billion.
I urge everyone to read this report. We have to break the culture of reinventing the wheel to address mission challenges that can be solved by proven commercial technologies that exist today. In addition to the risks and costs, the old model simply isn’t agile enough to keep pace with the speed of innovation. It’s time for agencies to empower their personnel and the citizens they serve, with fast access to technologies that have been available to the private sector for a long time.