Taxing the Taxpayers: An Empirical Investigation of the Drivers of Baseline Changes in U.S. Federal Government Technology Programs

Problem definition: The U.S. federal government makes significant investments in technology programs to deliver essential services to the public. The execution of a program is monitored against a baseline—an aggregate plan representing the program’s planned budget, schedule and scope. Recent reports suggest that federal technology programs are re-baselined multiple times, resulting in additional spending of taxpayer money. Although a program’s scope has often been considered a driver of baseline changes, we have a limited understanding of the execution factors that may affect this relationship. Academic/Practical Relevance: With increasing bipartisan scrutiny of federal spending in technology programs and continuing debate in the media about their execution, a nuanced understanding of the drivers of baseline changes in federal technology programs is a critical and contemporary line of inquiry relevant to both policymakers and managers. Our study also responds to recent calls in the operations management literature for research on public sector operations. Methodology: The study sample comprises detailed archival data on 240 U.S. federal government technology programs across 24 federal agencies. We estimate a negative binomial regression specification that accounts for agency fixed effects and several program-specific characteristics to test four hypotheses on the interrelationships between a program’s scope, granularity, management competency, execution methodology and baseline changes.. Results: The results indicate that program scope is positively associated with the number of baseline changes. However, increasing levels of program granularity and program management competency attenuate this positive relationship. Additional analysis highlights the significant savings in taxpayer contributions that can occur by reducing baseline changes in programs of greater scope through an increase in the levels of program granularity and program management competency. Managerial Implications: The study results emphasize the need for federal agencies to invest greater efforts in granularizing a program and in identifying managers with high levels of program management competency when program scope is high, as such efforts can translate into a reduction in the number of baseline changes. The results also highlight the role of number of baseline changes as a valuable in-process metric for program managers and federal agencies to monitor the execution of federal technology programs and identify programs with greater potential. for experiencing cost overruns.