As is the case with startups in the private sector, we have been learning to scale and improve our organization. During our first two years, we grew quickly and focused on delivery. But one of our core values is that we’re honest and open to feedback about how to improve. Today the GSA Inspector General (IG) issued a report that identified areas for improvement, and we are thankful for their oversight. We have made many improvements over the last few months to address the issues outlined in this report and will take all additional actions necessary.

First, with respect to internal controls, we take these issues seriously and have taken significant steps to strengthen 18F’s operations. We brought in an independent third party to review our financial processes and controls. We have instituted additional controls around agency agreements, including review of agreements by the Chief Financial Officer (CFO) and General Counsel, and we are also amending our timekeeping system to detect any work being done outside of the performance period or without signed agreements. We have conducted a reconciliation of past agreements to ensure accurate billing, and we have transitioned to monthly customer billing and expense accruals to identify errors in a more timely fashion. We are also making organizational changes to improve operations. We have standardized the relationship between 18F and the Chief Information Officer (CIO) by, among other things, having a CIO lead who reviews all internal technology projects for 18F. In addition, the CFO is in the process of establishing dedicated resources to support 18F, which will help strengthen financial operations even further. Finally, we have created a Chief Operating Officer position within the Technology Transformation Service (TTS) to ensure an ongoing focus on internal operations of all parts of the organization, including 18F.

In addition, we agree that we must continue to refine business operations to ensure the organization achieves full cost recovery and have taken significant steps towards that goal. Earlier this year, we instituted an escalated review for new hires, and created dashboards that allow for greater real-time management of financial performance and staff utilization. We are also putting in place greater controls over non-billable work and improving our allocation of staff to projects. The Administrator reviews our performance at least quarterly to ensure progress.

We also updated our financial plan as part of the annual budget process. Like with many other investments, 18F’s cost recovery plan was structured to build to long-term financial sustainability over time. Since the launch of 18F, we have learned much about customer demand, which has allowed us to continue to improve our business strategy. We have seen significant positive signs, including a 69 percent increase in revenue from 2015 to 2016. With this and other information, we worked with the CFO to develop a detailed financial plan to achieve full cost recovery by FY 2019.

18F has come a long way since our formation in March 2014. We’ve worked with dozens of agency partners to develop and procure user-centered applications in an open and iterative manner. We’ve pushed forward innovation in government procurement and recruiting. We’ve helped improve the government’s adoption of user-research methods, information security, open source software, and APIs. We’ve built tools that have been re-used by state and local governments, as well as non-governmental entities. The Presidential Innovation Fellowship (PIF) program has been codified in an Executive Order, and both PIF and 18F are now part of the General Service Administration’s Technology Transformation Service, established by a GSA Administrative Order earlier this year.

To date, 18F has worked on more than 250 projects with 37 different agencies across the federal government. We have worked on key projects across the government, from helping the Department of the Treasury increase the transparency of federal spending, to helping the Environmental Protection Agency and the Bureau of Alcohol, Tobacco, Firearms and Explosives to make their regulations easier to find, read, and understand. We also partnered with the Department of Health and Human Services to help modernize California’s child welfare system, helping to align their procurement processes to ensure better delivery of services for children in the state.

But we have more work to do. As an organization, 18F is committed to delivering; that is the strategy. Our mission requires us to be relentlessly focused on helping our agency partners, and that means we need to ensure that we continuously improve on our controls and processes to meet that mission. The oversight of GSA’s Inspector General is a critical part of how we can continue to improve, and we appreciate their review and agree with their recommendations. In our first blog post, we wrote that “we want to build the 21st century government you deserve.” To make good on that desire, we will need to embrace opportunities to improve and innovate.