Raines' Rules

Overview

On October 25, 1996, Franklin Raines, then director of the Office of Management and Budget, issued a memo with the subject line "Information Systems Investments." The memo was quickly renamed Raines' Rules and became a seminal document for guiding how agencies purchase information technology. These Rules:

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establish that investments in major information systems proposed for funding the President’s budget should: Support core/priority mission functions that need to be performed by the Federal Government; Be undertaken by the requesting agency because no alternative private sector or governmental source can support the function more efficiently; Support work processes that have been simplified or otherwise redesigned to reduce costs, improve effectiveness, and make maximum use of commercial, off-the-shelf technology; Demonstrate a projected return on the investment that is clearly equal to or better than alternative uses of available public resources. Return may include: improved mission performance in accordance with measures developed pursuant to the Government Performance and Results Act; reduced cost; increased quality, speed, or flexibility; and increased customer and employee satisfaction. Return should be adjusted for such risk factors as the project’s technical complexity, the agency’s management capacity, the likelihood of cost overruns, and the consequences of under- or non-performance. For information technology investments, be consistent with Federal, agency, and bureau information architectures which: integrate agency work processes and information flows with technology to achieve the agency’s strategic goals; reflect the agency’s technology vision and year 2000 compliance plan; and specify standards that enable information exchange and resource sharing, while retaining flexibility in the choice of suppliers and in the design of local work processes; Reduce risk by: avoiding or isolating custom-designed components to minimize the potential adverse consequences on the overall project; using fully tested pilots, simulations, or prototype implementations when necessary before going to production; establishing clear measures and accountability for project progress; and, securing substantial involvement and buy-in throughout the project from the program officials who will use the system; Be implemented in phased, successive segments as narrow in scope and brief in duration as practicable, each of which solves a specific part of an overall mission problem and delivers a measurable net benefit independent of future segments, unless it can be demonstrated that there are significant economies of scale at acceptable risk from funding more than one segment or there are multiple units that need to be acquired at the same time; and Employ an acquisition strategy that appropriately allocates risk between the Government and the contractor, effectively uses competition, ties contract payments to accomplishments, and takes maximum advantage of commercial technology.

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Raines’ Rules were originally issued on October 25, 1996, in OMB Memorandum M-97-02 and were subsequently incorporated in OMB Circular No. A-11 (1997 and 1998 version), Appendix 300A, Principles of Budgeting for Capital Asset Acquisitions.

Note that Raines’ Rules incorporate what has become known as ITMRA’s “three pesky questions.” These criteria are critical because major information systems will not be funded unless agencies can demonstrate the actions they have taken to address them.