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Board Report: 2014-IT-B-002 February 7, 2014

Audit of the Board's Data Center Relocation

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Appendix B: Management's Response


January 23, 2014

Mr. Mark Bialek
Office of Inspector General
Board of Governors of the Federal Reserve System
Washington, DC 20551

Dear Mark:

We have reviewed your report entitled "Audit of the Board's Data Center Relocation" prepared as part of your office's review of the implementation of the Board's Strategic Framework.

We appreciate the report's findings that the IT Division is following a structured, well thought out, approach to the planning of the relocation of the data center. As you know, the data center relocation budget which is embedded in the Board's Strategic Framework, represents a ten year projected cost of operating a production data center as well as the cost of migrating to the new facility. While we agree, in principle, with your first recommendation to reevaluate the data center relocation budget, this must be done in accordance with Board budget policy. Any change to this budget is subject to Board budget approval, consistent with the Board's budget process and guidelines. While the Director of IT can influence this discussion, the director has no budget approval authority. With this as clarification, we have already taken actions to implement a process for reevaluating and updating the project status on a monthly basis based on project changes, and track project expenditures in three separate categories including, design and construction, transition and migration, and operations. As part of project monitoring, we periodically hold budget meetings with Bill Mitchell, Chief Financial Officer and Don Hammond, Chief Operating Officer. Finally, project expenditures are tracked against the total project budget and are reflected in the quarterly performance reports provided to the CBA.

We agree with your second recommendation and have already taken action to continue to closely monitor project schedule risks and to identify possible approaches to mitigating the impact of potential delays. Extensive project governance and communication strategies involving dependent project stakeholders have been established.

We appreciate the professionalism and courtesies provided by the staff of the Office of Inspector General during the review, and we look forward to working with your office in the future. Thank you for the opportunity to provide comments on this report.



Sharon Mowry
Director, Information Technology

Andrew Patchan
Donald Hammond
Bill Mitchell
Michell Clark
Geary Cunningham
Ray Romero