The U.S. Federal Bureau of Investigation (FBI) has officially scrapped a troubled US$170 million computer initiative designed to help its agents investigate terrorism.

Although the fate of the Virtual Case File project had been in doubt for some time, FBI Director Robert Mueller made the announcement Tuesday in testimony before a subcommittee of the U.S. House Appropriations Committee.

"I am disappointed that we did not come through with Virtual Case File," he told the committee.

But Mueller said he sees the decision as an opportunity to develop a more up-to-date system, using mostly off-the-shelf products, that will allow agents to share information more easily.

"Right now, we"re in the process of evaluating commercial off-the-shelf products to fulfill the needs that we have for our information technology systems," said an FBI official who asked that he not be identified. "We should be done with the evaluation process and have a more firm direction ... toward the end of this month."

The Appropriations Committee said it"s opening a formal investigation into why the Virtual Case File project failed.

Last month, a U.S. Department of Justice audit criticized the FBI"s efforts to develop an investigative case management system to replace the antiquated system that was in place before the Sept. 11, 2001, terrorist attacks and that"s still in use.

The new software was commissioned from San Diego-based Science Applications International Corp. (SAIC) in 2001, but was delayed and not delivered until December 2004.

In January, the FBI acknowledged that it might not be able to salvage the Virtual Case File program.

"The project that was presented to us from the contractor, SAIC, wasn"t meeting the needs that we had set forth, so we needed to evaluate what they had given us, as far as user capability and usability," the official said. "We"re doing a prototype test of the most recent (software) delivery ... right now in our New Orleans division and at headquarters. ... At the same time, we"re evaluating off-the-shelf products to meet our standards and our requirements."

SAIC spokesman Jared Adams argued that the FBI hasn"t decided to kill off the Virtual Case File project and pointed to the ongoing tests as proof that a final decision hasn"t yet been made. "When the tests are done at the end of March, I think then a decision will be made," he said.

But the FBI official said the agency is incorporating lessons learned from the failed project and moving forward.

"For instance, we"ve created an enterprise architecture system, so anytime we create a new program, or anytime we apply a commercial off-the-shelf program to our systems, it will ... meet all the standards for the overarching enterprise architecture," the official said.

Mueller said the FBI will develop another plan for the software overhaul. He said the new project, which won"t be called Virtual Case File, will be done in four phases and take approximately 39 months. He declined to estimate how much a new system would cost.