Federal Manager's Daily Report

GSA’s highly-touted 18F program suffers from “inaccurate financial projections, increased staffing levels, and the amount of staff time spent on non-billable activities,” which added up to a loss to GSA of more than $31 million from fiscal 2014 to the third quarter of fiscal year 2016, an IG report has said.

18F, launched in 2014, is touted “as a team of experts and innovators who work to simplify the government’s digital services, making them more efficient and effective,” the report notes, and is now part of GSA’s Technology Transformation Service, which was established to “transform the way government builds, buys, and shares technology.” GSA funds 18F’s operational costs using an acquisition services revolving fund and 18F is supposed to reimburse the fund from the fees it charges other agencies for its work.

However, the IG found that 18F has not developed a viable plan to achieve full cost recovery, and that 18F senior managers “have established a pattern of overestimating revenue projections.” In 2014, for example, they projected $32.6 million in annual revenue, but ended the year with only $22.3 million; they projected $84.3 million for fiscal year 2016 but through the third quarter only generated $27.8 million.

Further, 18F “has continued to hire staff despite underperforming revenues,” rising from 33 at the outset to 201 by March 2016. Meanwhile, less than half of staff time was spent working on projects billed to other agencies.

The IG also found instances where 18F staff performed work for client agencies before agreements were executed, outside specified periods of performance, and without required CIO approval. “Additionally, some agreements lacked signatures from required signatories, risking the validity of the agreements,” it said.

GSA management agreed with the report’s recommendations.