Orszag: Feds Suffer from IT Productivity Gap

If the federal government is going to get a better handle on how it spends taxpayers' money, then improving employee productivity is going to be key. But Washington's IT performance still leaves much to be desired. So says Office and Management Budget Director Peter Orszag, who warned Tuesday of a "significant IT gap" that's opened up between the public and private sectors..

Speaking Tuesday morning at the Center for American Progress, Orszag was blunt about  the federal government's failure to keep pace with the way technology is being used.

"Public sector productivity growth matched the private sector's until about 1987. But something changed in the late 1980s. From 1987 until 1995, private sector productivity rose by an average 4 of 1.5 percent a year," he said. "Meanwhile, the public sector's productivity rose by only 0.4 percent per year - or about one-third as much - over roughly the same period."

Getting public sector productivity stats after that point becmes a bit more complicated because, as Orszag noted, the Bureau of Labor Statistics paradoxically stopped collecting the numbers as part of a cost-cutting program.Instead, he pointed to an analysis by the McKinsey Global Institute, which suggests that  the public sector continued to fall behind the private sector since 1995.

"Some of this increasing gap has to do with advances in management techniques in the private sector. Some, undoubtedly, has to do with the challenges the federal government has in attracting and hiring top talent," according to Orszag " Keep in mind that the average time it takes to hire a new federal employee is 140 days - and by that time, many of the best candidates, understandably, have gone elsewhere. But I believe that the biggest driver of this productivity divide is the information technology gap."

Quantifying the extent of the "IT gap" is going to be open to interpretation, but Orszag offered up a few telling metrics:

• IBM reduced the number of data centers it uses from 235 to 12 while Hewlett-Packard has consolidated 14 data centers into one
• Since 1998, the number of federal government-operated data centers climbed from 432 to more than 1100

Also, he noted:

• In the private sector, "high-performing" firms kill about one of three IT projects in their first six months
• Uncle Sam rarely ends a single one

"For example, the Census Bureau awarded in 2006 a $595 million contract to develop a handheld computer for census workers to use this year. Two years and $600 million later, the project was canceled with nothing to show for it," he said. "And census workers out there today still use pen and paper."

It was not all doom-and-gloom. Orszag talked about the increased use of web-based project management tools - including a so-called "IT Dashboard" -  to better track spending against performance. He also pointed to better use of IT to share data between agencies to reduce spending mistakes.