[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
YEAR 2000 (Y2K) AND OTHER SOCIAL SECURITY INFORMATION TECHNOLOGY
ISSUES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SOCIAL SECURITY
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
JULY 29, 1999
__________
Serial 106-14
__________
Printed for the use of the Committee on Ways and Means
U.S. GOVERNMENT PRINTING OFFICE
60-114 CC WASHINGTON : 1999
------------------------------------------------------------------------------
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON WAYS AND MEANS
BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
BILL THOMAS, California FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York SANDER M. LEVIN, Michigan
WALLY HERGER, California BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana JIM McDERMOTT, Washington
DAVE CAMP, Michigan GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia
JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
A.L. Singleton, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Social Security
E. CLAY SHAW, Jr., Florida, Chairman
SAM JOHNSON, Texas ROBERT T. MATSUI, California
MAC COLLINS, Georgia SANDER M. LEVIN, Michigan
ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee
J.D. HAYWORTH, Arizona LLOYD DOGGETT, Texas
JERRY WELLER, Illinois BENJAMIN L. CARDIN, Maryland
KENNY HULSHOF, Missouri
JIM McCRERY, Louisiana
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C O N T E N T S
__________
Page
Advisory of July 22, 1999, announcing the hearing................ 2
WITNESSES
Social Security Administration, Hon. Kenneth S. Apfel,
Commissioner of Social Security; accompanied by D. Dean
Mesterharm, Deputy Commissioner for Systems; Kathleen M. Adams,
Assistant Deputy Commissioner for Systems; and Judy Chesser,
Deputy Commissioner for Legislation and Congressional Affairs.. 6
U.S. General Accounting Office, Joel C. Willemssen, Director,
Civil Agencies Information Systems, Accounting and Information
Management Division............................................ 30
YEAR 2000 (Y2K) AND OTHER SOCIAL SECURITY INFORMATION TECHNOLOGY ISSUES
----------
THURSDAY, JULY 29, 1999
House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:10 a.m., in
room B-318, Rayburn House Office Building, Hon. E. Clay Shaw,
Jr. (Chairman of the Subcommittee), presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON SOCIAL SECURITY
FOR IMMEDIATE RELEASE CONTACT: (202) 225-9263
July 22, 1999
No. SS-7
Shaw Announces Hearing on Y2K and Other
Social Security Information Technology Issues
Congressman E. Clay Shaw, Jr., (R-FL), Chairman, Subcommittee on
Social Security of the Committee on Ways and Means, today announced
that the Subcommittee will hold a hearing on Year 2000 (Y2K) and other
Social Security information technology issues. The hearing will take
place on Thursday, July 29, 1999, in room B-318 of the Rayburn House
Office Building, beginning at 10 a.m.
Oral testimony at this hearing will be from invited witnesses only.
Witnesses will include experts from the U.S. General Accounting Office
(GAO), which has examined Social Security information technology
systems, and the Social Security Administration (SSA). However, any
individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Committee and for
inclusion in the printed record of the hearing.
BACKGROUND:
The effective use of information technology is essential to Social
Security's mission of providing timely and accurate benefits to more
than 44 million Americans. As with other government programs, computers
have come to play a critical part in Social Security's ability to
process benefit applications, screen for errors and possible fraud, and
provide timely benefits. Given the importance of information technology
to SSA's mission and the program challenges presented by the Baby Boom
generation as it approaches retirement age, the Subcommittee has asked
GAO to review SSA progress in several areas, including readiness for
Y2K, implementation of its Intelligent Workstation/Local Area Network
(IWS/LAN) initiative, and development of a Reengineered Disability
System (RDS). This hearing will explore the results of that review.
In announcing the hearing, Chairman Shaw stated: ``Computer systems
are vital to ensuring that Americans receive the Social Security
benefits they have come to expect in a timely and affordable manner.
This hearing will be a final check to ensure that Social Security is
fully ready for Y2K. Beyond Y2K, it is vital that we ensure that Social
Security's computer systems are up to the task now, well before the
Baby Boom approaches retirement age and begins drawing disability and
retirement benefits in large numbers.''
FOCUS OF THE HEARING:
The hearing will focus on SSA progress in implementing key
information technology initiatives, including readiness for Y2K,
implementation of its IWS/LAN initiative, and development of a RDS.
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Chairman Shaw. Good morning. Right now, there is still a
Republican conference going on, so that explains the absence of
our Republican Members, who will be in shortly, I am sure.
Today, the Subcommittee will explore how the Social
Security Administration is preparing for the year 2000 and
other information technology challenges that lie ahead.
The effective use of information technology is essential to
Social Security's mission of providing timely and accurate
benefits to more than 44 million Americans today and to tens of
millions or more in the coming years as the baby boom
generation approaches retirement age.
Simply put, without effective computer systems, Social
Security will be unable to efficiently process benefit
applications, screen for errors and possible fraud, and provide
timely benefits. Delivering on the promise of providing world
class service to Social Security's customers, American workers
and retirees, would be impossible without effective information
technology.
Given the importance of information technology to SSA's
mission today and especially in the future, the Subcommittee
has asked the General Accounting Office to review SSA progress
in several areas, including readiness for Y2K implementation of
its intelligent workstation/local area network or IWS/LAN, for
those of you who are into that, initiative, and development of
a Reengineered Disability System, also called RDS.
Can we delete these abbreviations from my statements in the
future?
[The opening statement follows:]
Opening Statement of Hon. E. Clay Shaw, Jr., a Representative in
Congress from the State of Florida
Today the Subcommittee will explore how the Social Security
Administration is preparing for the Year 2000 and the other
information technology challenges that lay ahead.
The effective use of information technology is essential to
Social Security's mission of providing timely and accurate
benefits to more than 44 million Americans today, and to tens
of millions more in the coming years as the Baby Boom
generation approaches retirement age. Simply put, without
effective computer systems Social Security would be unable to
efficiently process benefit applications, screen for errors and
possible fraud, and provide timely benefits.
Delivering on the promise of providing world-class service
to Social Security's customers--American workers and retirees--
would be impossible without effective information technology.
Given the importance of information technology to SSA's
mission today and especially in the future, the Subcommittee
has asked GAO to review SSA progress in several areas,
including readiness for Y2K, implementation of itsIntelligent
Workstation/Local Area Network (or ``IWS/LAN'') initiative, and
development of a Reengineered Disability System (also called
RDS). This hearing will explore the results of that review. We
are pleased to welcome the Commissioner of Social Security, Ken
Apfel, and the Director of the General Accounting Office's
Civil Agencies Information Systems group, Joel Willemssen, to
provide their perspectives and help us answer many questions we
have.
Chairman Shaw. We are pleased to welcome the Commissioner
of Social Security, Ken Apfel, and the Director of the General
Accounting Office's Civil Agencies Information Systems, Joel
Willemssen, to provide their perspectives and help us answer
the many questions that we might have. And I might say that,
from all of the indications that I have, the Social Security
Administration has really been a leader in getting the
technology ready, for which I think congratulations are in
order.
Mr. Matsui is presently in the Capitol on the floor, and if
he gets here, it will be later this morning. But, Mr. Levin, do
you have an opening statement that you would like to make?
Mr. Levin. Yes, I do.
As you mentioned, Mr. Matsui is tied up on matters that, as
I understand, are immense.
Chairman Shaw. Something that has to do with water in his
district.
Mr. Levin. It relates to the Sacramento area.
The Social Security Administration currently faces two
major information technologies. One, preparation for the year
2000, is an immediate and well-publicized challenge. The other,
implementation of new technologies to enhance productivity and
to improve customer service, is not as widely discussed but is
still vitally important.
In preparing for Y2K, the bar has been set relatively high
for SSA, and justifiably so. With the possible exception of the
IRS, the American people interact with SSA more than any
Federal agency, leading to a high degree of visibility for the
agency and to a considerable amount of attention to any Y2K
miscue. More importantly, Social Security benefit payments are
a lifeline for millions of Americans. Any disruption of that
lifeline could prove disastrous.
Nonetheless, SSA is on the verge of clearing that bar. All
of SSA's own computers were certified as Y2K compliant in
December of last year, while the agency has either completely
or almost completely resolved concerns raised by GAO about Y2K
compliance among State Disability Determination Services, data
exchanges with noncompliant employees or vendors, and
contingency plans to ensure benefit payments are made in time.
Moreover, SSA has taken on a leadership role within the
Federal Government, and many of the approaches it has used to
prepare for Y2K have been adopted as best practices by other
agencies. In fact, SSA has received--has consistently received
high marks from the House Subcommittee on government
Management, Information and Technology, chaired by Congressman
Stephen Horn. Since August of last year, SSA has received
straight As, as you know----
Mr. Apfel, did you get report cards always like that?
Mr. Apfel. No, sir. [Laughter.]
Mr. Levin [continuing]. On the Subcommittee's Year 2000
Progress Report Card, and the National Science Foundation is
the only other Federal agency with that record.
In implementing new technologies, SSA has recognized that
the retirement of the baby boom generation will pose a
challenge not just for the program's finances, but for the
agency's work force as well. More and more retirees will, of
course, mean more and more Social Security claims. To meet this
challenge and to allow its employees to process more claims
more quickly and more accurately, SSA has a number of
information technology initiatives underway.
To update its information technology infrastructure, SSA
recently completed the installation of over 70,000 new personal
computer workstations throughout the agency. We look forward to
hearing the contributions SSA expects these computers to make
to enhance productivity and lower operating costs.
Similarly, we look forward to hearing from SSA on how it
intends to proceed with its--Mr. Chairman, you referred to this
Reengineered Disability System, RDS--initiative now that Booz-
Allen & Hamilton has issued its final report evaluating the
initiative and has recommended that the agency discontinue the
initiative. Implementing a system so that all the various
components within that agency that participate in the
disability claims process can share information in a timely and
standardized fashion will be vital to the continued success of
the disability insurance program.
Importantly, we look forward to hearing from the SSA on how
it intends to cope with the funding cuts that the present
Republican budget will entail for the agency over the next
decade. The mammoth tax cut that has been forced through the
House last week is premised on major cuts in discretionary
spending over the next 10 years. These cuts would include a 28-
percent cut in SSA's administrative budget in 2009, relative to
what is needed to keep pace with inflation after 1999. We
sincerely doubt that any amount of automation or any other
information technology initiative would allow SSA to continue
to manage the Social Security Program--just as the baby boom
generation begins to retire.
Thank you, Mr. Chairman.
Chairman Shaw. I don't think that the bill you refer to has
been reported out yet as to the cut in the administrative
costs, so I am not sure that is correct, Sandy.
Mr. Levin. These are observations.
Chairman Shaw. Mr. Commissioner, proceed.
STATEMENT OF HON. KENNETH S. APFEL, COMMISSIONER OF SOCIAL
SECURITY, SOCIAL SECURITY ADMINISTRATION; ACCOMPANIED BY D.
DEAN MESTERHARM, DEPUTY COMMISSIONER FOR SYSTEMS; KATHLEEN M.
ADAMS, ASSISTANT DEPUTY COMMISSIONER FOR SYSTEMS; AND JUDY
CHESSER, DEPUTY COMMISSIONER FOR LEGISLATION AND CONGRESSIONAL
AFFAIRS
Mr. Apfel. Thank you, Mr. Chairman and Members of the
Subcommittee, for inviting me to testify about Social
Security's progress on implementing information technology, IT,
initiatives. These initiatives are essential to managing our
workloads now and in the future.
Accompanying me today are Dean Mesterharm, our Deputy
Commissioner for Systems, and Kathy Adams, our Assistant Deputy
Commissioner for Systems, who really have been remarkable over
the years in Social Security's endeavors. Also behind me, as
always, is Judy Chesser, on crutches today, but with us fully.
It is clear that technology----
Chairman Shaw. Were you kicking people? Is that what
happened?
Ms. Chesser. Yes.
Mr. Apfel. Sometimes the Commissioner.
It is clear that technology is indispensable to SSA's
success in achieving the goals set forth in the agency's
strategic plan. As you yourself have noted, Mr. Chairman,
computers will play a critical role in our ability to process
benefit applications, pay benefits in a timely way, and guard
against fraud.
From 1992 through 1999, Social Security spent $4.3 billion
on IT and systems. My testimony today will focus on how we have
invested those resources and what benefits have been realized.
Like everyone else, we have been preparing for the dawn of
the new century. I am glad to report that our benefit payment
system is year 2000 compliant. As we like to say, we are Y2K
OK. We continue to work with the Treasury Department and the
Federal Reserve to identify any year 2000 issues that might
affect direct deposits. So far, we have not identified any.
We have also developed a detailed strategy for the last
days of 1999 and the first days of 2000, our day one strategy.
To every extent possible, Social Security's facilities and
systems will be fully operational on January 3, 2000, the first
business day of the new century. However, if a problem should
occur, the Treasury Department will immediately issue a
replacement Social Security check, and Social Security offices
will provide emergency payment services to people with critical
needs. I, personally, do not consider our job done until timely
and correct benefit payments are in the hands of all of our
beneficiaries.
Next, I would like to mention our customer-responsive
service delivery system providing employees ready access to the
information they need to serve the public. This system--our
IWS/LAN--is one of the largest information technology
initiatives ever undertaken in the Federal Government.
We have successfully installed more than 75,000
workstations and 1,742 LANs in Social Security and in our State
DDS offices. We did this without interrupting workflow and thus
without interrupting public service. The IWS/LAN system
provides a standardized platform and architecture that now
exists throughout Social Security, the State Disability
Determination System, and our hearings and appeals offices.
This technology already is helping us take claims more
efficiently and provide better online service to national 800-
number callers.
In order to improve service, in 1992 we began the
Reengineered Disability System, known today as RDS. While we
originally planned a single system supporting all SSA
components involved in the disability process, we learned that
this was not the best solution.
Because of performance problems, we contracted with Booz-
Allen and Hamilton to independently evaluate the RDS process
and to make recommendations. Based partly on these
recommendations, we will build on the strengths of the existing
software systems already in place and electronically link them
to a new, automated field office disability system, based on
the system we piloted in the Virginia offices.
Roughly half of our $71 million investment continues to be
applicable to the new strategy. Included are valuable software
packages that will strengthen the disability application
process and enhance its cost effectiveness.
Like our success with IWS/LAN and Y2K, Social Security
needs to continue applying information technology advances to
improve our disability claims process. Right now, if you walked
into one of our offices to file a disability claim, the Social
Security representative would complete a detailed paper
questionnaire documenting your disability and then mail it on,
along with the rest of the folder, to the State Disability
Determination System. This paper-based system is not
appropriate for the 21st century.
Last, we are very excited as we prepare to send out our
newly designed, annual Social Security Statement, the largest
customized mailing ever undertaken by the Federal Government.
Beginning in October, we will issue approximately 10 million
statements each month to workers 25 and older. The statements
will provide estimates of Social Security retirement,
disability and survivors benefits, together with a record of
worker's earnings.
Mr. Chairman, Social Security's ability to use technology
and improve systems is critical to our success as an agency.
The Ways and Means Committee developed legislation passed
recently by the House that includes provisions for data matches
and other program integrity provisions, and I would like to
commend the Committee for these efforts.
H.R. 1802 expands our ability to do computer matches for
SSI applicants and beneficiaries. Data matches such as these
will help SSA to use technology to continuously guard our
program's integrity.
I am proud to report that SSA is only one of two government
agencies to receive an A grade in management of information
technology from the government Performance Project at Syracuse
University's Maxwell School of Citizenship and Public Affairs.
Use of technology has already enabled Social Security to
significantly improve the services it provides to the American
people. For example, in 1992, it took 6 weeks for a person to
receive a Social Security card. Now it takes 5 days. In 1982,
Social Security needed 3 weeks' computer processing time to
calculate the annual COLA, now it is done in 24 hours.
There are other examples in my written testimony.
I am pleased with these achievements, and I believe that
our commitment to technology will enable us to do even better.
Throughout our 65-year history, Social Security has made a
vital difference in the lives of Americans. As demonstrated in
our Agency Strategic Plan, we have ambitious goals; and I am
proud of those computer systems achievements that will help us
reach them.
I look forward to working closely with you on these goals
and would be happy to answer any questions you have.
[The prepared statement follows:]
Statement of Hon. Kenneth S. Apfel, Commissioner of Social Security,
Social Security Administration
Mr. Chairman and Members of the Subcommittee:
Thank you for inviting me to testify about the Social
Security Administration's (SSA) progress on implementing
information technology initiatives. These initiatives are
critically important when we consider that our ability to
manage our workloads now--and in the future--rests on our
ability to use technology extensively and effectively, and I am
proud of SSA's achievements in this area.
It is clear technology has been, and will continue to be
indispensable to SSA's success in achieving the goals set forth
in the Agency Strategic Plan. The success of goals such as the
ability to deliver customer-responsive, world class service, to
make SSA program management the best in the business, with zero
tolerance for fraud and abuse, and to be an employer that
values and invests in each employee, is directly linked to
SSA's ability to apply advances in technology. As you yourself
have noted, Mr. Chairman, computers will play a critical role
in our ability to process benefit applications, pay benefits
timely, and guard against fraud.
From 1992 through 1999, SSA has spent $4.3 billion on
information technology to support its programs. These costs
include funds spent from the Information Technology Systems
budget, the automation investment fund, and salaries and
expenses of information technology personnel. My testimony
today will focus on how we have invested those resources and
what benefits have been returned as a result of those
investments. The areas I will discuss today are: SSA's
preparedness for the Year 2000; automation of our disability
processes; a project to provide our employees with workstations
with the capability to process claims and respond to customer
inquiries (also known as the Intelligent Workstation/Local Area
Network or IWS/LAN project); and issuance of Social Security
Statements (formerly known as Personal Earnings and Benefit
Estimate Statements, or PEBES).
Year 2000
Preparing for the change of century date--from 1999 to
2000--is one of the biggest challenges ever to face the
technology industry. At SSA our national computer center
maintains and operates hundreds of mission-critical systems
supported by over 35 million lines of in-house computer code,
as well as hundreds of commercial off-the-shelf vendor products
that had to be reviewed and changed where necessary to ensure
that January 2000 payments will be made correctly and on time
to the nearly 50 million Social Security and Supplemental
Security Income (SSI) beneficiaries who could be affected by
the Year 2000 (or Y2K) changeover.
I want to thank the Subcommittee for holding this hearing
and for your efforts in making the public aware of SSA's
progress to make sure that we will pay benefits timely and that
SSA's system will function as it should. As I testified before
the Ways and Means Committee in February, SSA's benefit payment
system is Year 2000 compliant. As we like to say, ``We are Y2K
OK.'' We have worked closely with the Treasury Department,
Federal Reserve, and the Postal Service to ensure that Social
Security and Supplemental Security Income (SSI) checks and
direct deposit payments for January will be paid on time. Since
October 1998, payments for both Social Security and SSI
programs have been made with Year 2000-compliant systems at
both SSA and Treasury.
We worked with the State Disability Determination Services
(DDS) to make sure that the 55 State DDSs that have automated
systems to support the disability determination process are
Year 2000 compliant. I am happy to report that as of January
1999 all of the State DDS systems are Year 2000 compliant,
tested, and implemented.
We recognize that it is not enough for SSA to be Year 2000
compliant if our trading partners are not ready. We have worked
very closely with all of our trading partners. I am pleased to
report that all outgoing data exchanges are Year 2000 compliant
and implemented. All but three of our incoming data exchanges
are compliant and implemented. The remaining three are in
testing and will be implemented in early August 1999.
We have worked hard to make sure that all of our mission
critical systems are Year 2000 compliant, and now we are taking
steps to make sure that we do not introduce possible date
defects into these systems. Whenever a system that has been
Year 2000 certified is changed due to legislation or other
requirements, we are recertifying the system to make sure it is
still Year 2000 compliant. In addition, beginning this month we
have instituted a moratorium on installation of commercial off-
the-shelf software and mainframe products, and we will impose a
similar moratorium in September for discretionary changes to
our own software. The moratoriums will be in place through
March 2000.
We have developed a detailed strategy that comprises the
comprehensive set of actions that will be executed during the
last days of 1999 and the first days of 2000. The strategy also
includes the activities leading up to the critical century
rollover date, such as identification of key personnel
involved, preparation of facilities checklists, establishment
of the Y2K command center, a schedule for testing all systems
over the weekend, and other activities. Implementation of the
strategy will ensure, to the extent possible, that SSA's
facilities and systems will be fully operational on January 3,
2000--the first business day of the new century. That is,
service to the public and our trading partners will continue
without interruption due to the change of century date.
Finally, we recognize that our system depends on
infrastructure services, such as the power grid or the
telecommunications industry and third parties, which are beyond
our control. In March 1998, SSA completed its Y2K Business
Continuity and Contingency Plan, which is updated quarterly.
The plan identifies potential risks to Agency business
processes, ways to mitigate each risk, and strategies to ensure
continuity of operations.
As part of the plan, we have in place local plans for each
of our field offices, teleservice centers, processing centers,
hearings offices, and State DDSs. We have also developed
contingency plans for benefit payment and delivery. We continue
to work closely with the Treasury Department and the Federal
Reserve to identify any Year 2000 issues that might affect
direct deposit payments. While we have not identified any so
far, if a problem should occur in January, the Treasury
Department will quickly issue a replacement Social Security
check, and SSA offices will provide emergency payment services
to beneficiaries with critical needs. I do not consider Social
Security's job done until timely and correct benefits are in
the hands of all of our beneficiaries.
I know that we are all concerned about ensuring that all
beneficiaries are paid on time, but I want to be sure to urge
you to resist proposals to make the January 2000 Social
Security benefit payment in December 1999. After a thorough
review of the pros and cons of making payments early, the
Administration determined that such action is not necessary
given the readiness of agency payment systems and business
continuity and contingency plans.
We believe that there are risks associated with making
payments early. Such actions could easily be interpreted by the
public as an indicator of the government's inability to make
automated payments in January 2000. Such a signal could prove
disastrous if citizens decide to withdraw their currency in
anticipation of a disruption in benefits or other payments, or
try to cancel electronic payments and revert to check payments.
At this point, the damage that could result from public
overreaction could be far more serious than technology risks
resulting from potential Year 2000 problems. Moreover,
providing early payments in December could require the
government and industry to make additional programming changes
to account for the payments with the requisite testing of those
systems and would raise a number of difficult tax policy issues
if there were a move to extend early payments of other
transactions in the public or private sector beyond simply
Social Security payments.
IWS/LAN Project
As a part of our strategic goal of delivering customer-
responsive, world class service and our strategy for providing
employees ready access to the information they need to serve
the public as described in SSA's Strategic Plan, SSA initiated
the IWS/LAN project. As you know, Mr. Chairman, the Strategic
Plan paints a broad picture of SSA's future, as well as our
means and strategies to achieve our long-range goals. SSA's
business approach to providing world-class service while
workloads grow relies on business process and information
technology improvements, such as IWS/LAN. This technology is
key to our business strategy because it provides employees with
state-of-the-art tools to serve the public and it opens up
exciting new possibilities for doing business with our
customers in the future.
This project establishes a national computer network
including desktop computer workstations for all SSA and DDS
employees supported by appropriate communications and software
systems. This technology is critical in taking claims
efficiently and providing online service to national 800-number
callers. This project also reflects SSA's conviction that
employees deserve a professional environment in which they can
readily access information enabling them to increase
productivity and to provide better service to the public. SSA's
strategic goal--to be an employer that values and invests in
each employee, relies in part on providing such tools and
training needed for high quality performance.
In 1995, at the time Social Security became an independent
agency, one of our first undertakings was the implementation
and distribution of this new computer equipment. SSA has
accomplished what many said could not be done. I am happy to
report that we have successfully installed more than 75,000
workstations and 1,742 local area networks in SSA and State DDS
offices throughout the country. To achieve this, we installed
the new equipment in 75 offices per month, which was a major
undertaking, as all installations had to be done on the
weekends. I am particularly proud that these installations were
accomplished without any disruption to our ability to serve the
public.
SSA is currently in the process of acquiring an additional
6,900 workstations and 275 local area networks to complete the
installation for all employees. This project is one of the
largest information technology initiatives ever undertaken in
the Federal government.
The IWS/LAN project provides the enabling infrastructure
for many of the technology-based initiatives that SSA is
implementing. It provides a standardized platform and
architecture that now exists throughout SSA and the DDSs and
our hearings and appeals offices, which I described earlier. In
addition, the accomplishments of IWS/LAN pave the way for our
ability to provide service electronically and exploit emerging
technologies to improve service to SSA's customers.
Our redesigned title II system is a major investment that
has enabled us to do our job more efficiently. That technology
has allowed us to improve the services we provide, as well as
the manner in which we provide those services. When the public
comes in to file a claim for Social Security or Supplemental
Security Income benefits, their claims are now processed faster
and with greater accuracy than ever before. We are able to
handle more than 70 million telephone calls per year to our 800
number by using automated responses to our customers, as well
as by using technology that allows our employees to quickly
locate necessary information. Our streamlined process for
reporting W-2s allows us to provide more timely and accurate
feedback to our nation's employers. Finally, we are now making
use of the Internet to provide our customers with a wide range
of SSA services. And, we are in the process of converting our
processing centers from paper-bound processing to paperless,
electronic processing, which will make these offices more
efficient, less costly to operate and will provide better
services.
Automation of Disability Process
In 1992, SSA began an ambitious software development
project, the Reengineered Disability System (RDS), to provide
an automated disability case processing system. The primary
goal of RDS was to improve service to our disability clients,
by reducing processing time and providing a framework for more
consistent and uniform disability decisions.
Our initial plan was to develop a single system that would
support all the SSA components involved in the disability
process. That includes our nationwide network of field offices,
the 55 State DDSs and our hearings and appeals offices. We
developed a prototype system and implemented it in the pilot
SSA field offices in Virginia and the Federal DDS in our
Baltimore headquarters. While we achieved some success in the
pilot, we ran into significant performance problems.
Because of these performance problems, we felt it would be
prudent to obtain an independent evaluation of our pilot
system. We delayed further pilot implementation and contracted
with Booz-Allen and Hamilton to evaluate the RDS process and
recommend options for proceeding.
Based on the contractor's recommendations, we are changing
the way we will deploy automation to the disability process.
Rather than replace all of the existing DDS systems with one
central system, we will build on the strengths of the existing
software systems in the DDSs, and link them electronically to
an automated field office disability system, based on the RDS
system we piloted in the Virginia offices. We are now calling
this approach eDIB.
RDS was a very large initiative that required a substantial
early investment to build the hardware and software
infrastructure needed to support the prototype system. From
1992 through 1999, SSA invested a total of $4.3 billion in
information technology investments; we spent a little over $71
million on this project. Roughly, one half of this $71 million
investment continues to be applicable to the new strategy
recommended by the independent review. Included in this is the
automated system which will be used in SSA field offices to
strengthen the disability application process and enhance its
cost effectiveness. The remaining half is the price we have
paid to learn a number of valuable lessons in how to manage the
risks associated with deploying this type of technology
throughout SSA and the 55 DDSs.
Our new strategy will focus on working with the DDSs to
build on their systems, providing more flexibility in the
process and recognizing differences in case processing among
the States. As with our successes with IWS/LAN and Y2K, SSA
needs to continue to strive to apply advances in information
technology to improve our disability claims process. and to do
so in a way that manages the risk inherent in any technology
improvements.
Mr. Chairman, let me illustrate the reason why we must
automate the current disability claims process. If you were to
walk into one of our offices today to file a disability claim,
the SSA representative would complete a paper questionnaire to
document information about your disability. The form includes
doctors' names and addresses, medications you take, tests you
have had performed, documentation of your daily activities, and
other detailed medical information. Depending on your
individual circumstances, the form might need to be
supplemented by additional information concerning your
vocational history. Once this was completed, we would need to
assemble the folder and mail the information to the State DDS.
Compare that with the improvements an automated process
would provide us and which will be facilitated by the software
I mentioned earlier in my testimony. All of the information
needed for the claims application will be entered
electronically by the SSA interviewer using the work station
and transmitted electronically to the State DDS. We will
eliminate the mailing time delays. We will reduce the need to
recontact the disability applicant because the system would
assure that all questions are answered and readable.
Information technology will give us a quicker, more efficient
process and provide much better customer service.
An important facet of the new disability process revolves
around our efforts in working with the medical community to use
advanced technology to efficiently obtain an exchange of
medical evidence. As you know, difficulties in obtaining
medical records have a critical impact on our ability to make
timely and accurate decisions on disability claims. Our efforts
in this area are focused on enabling providers to
electronically transmit medical evidence quickly and securely.
The ability to receive this evidence electronically will
facilitate a number of steps during the disability process
resulting in significant customer service improvements.
Technology improvements will also be invaluable as we work
to improve the hearings process, which is a key performance
indicator of our strategic plan goal to provide customer-
responsive, world-class service. Our hearings office
improvements initiative relies on enhanced automation and
management data collection and analysis. This will facilitate
the monitoring and tracking of case processing and development
steps; facilitate the transfer of case-related information;
help ensure the completeness of case development and analysis;
and increase the efficiency of highly variable labor-intensive
functions such as scheduling.
SSA and its State partners remain committed to the common
goal of providing automation to improve the processing of
disability claims. We plan to follow a strategy that will
manage the risks involved in this initiative. By making
incremental changes, by carefully developing and evaluating our
prototypes before they are put into production, and by making
modest investments that build on our existing infrastructure, I
am confident we will be able to significantly improve the way
we manage the disability claims process.
Social Security Statements
One of SSA's basic responsibilities to the public is to help
Americans understand Social Security and its importance to them and
their families. As part of our public education efforts, SSA has been
issuing earnings and benefit estimate statements to the public since
1988. And, as I mentioned at the beginning of my testimony, our
Strategic Plan identifies strengthening public understanding of our
Social Security programs as one of our five Agency Strategic goals.
So far, more than 37 million people have requested and received
earnings and benefit statements--formerly known as Personal Earnings
and Benefit Estimate Statements (PEBES). In amendments to the Social
Security Act in 1989 and 1990, Congress provided that SSA was to phase-
in issuing PEBES by issuing them to all workers aged 60 or over in FY
1995; in FY 1996 through FY 1999 to individuals who reach age 60 in
those years; and annually to all covered workers aged 25 and older
beginning in FY 2000. In addition to the PEBES mailing required by law,
SSA sent PEBES to increasingly younger individuals in advance of the
schedule in the law. SSA sent a PEBES to workers aged 40 and older--
about 73 million people--between September 1995 and March 1999.
The statements we will begin to mail in October--the largest
customized mailing ever undertaken by the federal government--will be
our newly-designed Social Security Statement which, like its PEBES
predecessor, provides estimates of Social Security retirement,
disability, and survivors benefits that workers and their families
could be eligible to receive now and in the future. The automatic
mailings will take place at a rate of about half a million Statements
per business day, with about 10 million issued each month. Workers can
expect to receive their Statement each year about three months before
their birthday.
SSA's computer based recordkeeping and information technology
improvements will allow us to produce and mail the statements for about
56 cents each This is a considerable achievement when we consider that,
when we began issuing PEBES in 1988, there were private vendors
producing their own version of benefit estimate statements for
individuals and charging them a fee of $10 or more.
SSA redesigned the PEBES format and language to make it easier to
read and understand. We tested four prototypes with focus groups in
three different age groups (ages 25-35, 36-50, and over 50). Additional
public input was obtained through a mail survey of 16,000 randomly
selected individuals from the same age groups. Focus group and mail
survey participants alike overwhelmingly found the redesigned statement
an improvement over PEBES.
I am pleased to report that the results of a recent Gallup survey,
undertaken at SSA's request, revealed that individuals who had received
a statement had a significantly increased basic understanding of Social
Security. The survey also found that the individuals responding had an
increased understanding of some important basic features of Social
Security. This relationship validates the performance measures we use
to track our progress in meeting our ``Public Understanding'' strategic
goal: we track both the increasing number of PEBES we send to the
public and the increasing public knowledge about our programs.
The information in the Statement provides workers with an easy way
to determine whether their earnings (or self-employment income) are
accurately posted on their Social Security record. This is important
because the amount of a worker's future benefits will be based on his
or her earnings record. The Statement tells how to correct inaccurately
posted earnings.
We encourage workers to use the Statement to plan for their
financial future. Workers can use the Statement to better plan for
their financial needs when they retire, or if they become disabled or
die and leave survivors.
Conclusion
As I said at the beginning, Mr. Chairman, SSA's ability to
use technology and make systems improvements will be critical
to our success as an Agency, given the workloads we will face.
I am proud to report that SSA was one of only two Government
agencies to receive an A grade in management of information
technology from the Government Performance Project from the
Alan K. Campbell Public Affairs Institute of Syracuse
University's Maxwell School of Citizenship and Public Affairs.
Use of technology has already enabled SSA to improve
significantly the service it provides to the American people,
and I would like to cite a few examples to illustrate this
point:
In 1982, it took 6 weeks for a person to receive a
Social Security card from SSA. Now it takes 5 days.
In 1982, it took 39 months to post annual wage
reports to workers' earnings records. Now, this task is
completed in 6 months.
In 1982, it took four years to perform annual
recomputations for beneficiaries entitled to higher benefits.
Now this is done in 6 months.
In 1982, SSA needed three weeks of computer
processing time to calculate annual cost-of-living increases.
Now, this done in 24 hours.
In 1982, it took 15 days to issue an emergency
replacement payment. This is done now in 5 days.
I am pleased with these achievements, but I believe that
SSA can do better. In time, we believe the investments in
automation technology that SSA has made in recent years will be
vitally important in enabling SSA to manage the increasing
workloads it will experience in coming years.
As we look to the future, access to data will be vitally
important to SSA's future plans to improve program integrity.
For this purpose, the Administration supports the House-passed
bipartisan ``Foster Care Independence Act of 1999'' (H.R.
1802), which includes provisions for data matches, and I would
like to commend the Committee, Mr. Chairman, for your efforts
on this bill. H.R. 1802 expands the pool of data available for
making SSI eligibility and payment determinations by requiring
frequent SSA matches with the Health Care Financing
Administration and by facilitating electronic exchanges of
information from financial institutions about financial assets
owned by SSI applicants and beneficiaries. It is data matches,
such as these, that will help SSA continuously guard the
integrity of our programs.
Throughout its almost 65-year history, Social Security has
made a difference in the lives of Americans, and we have a
responsibility to be careful stewards of our programs both now
and as we move into the 21st century. As demonstrated in our
Agency Strategic Plan, we have ambitious goals, and I am proud
of those computer systems achievements which will provide the
framework for us to achieve them. I look forward to working
closely with the members of this Subcommittee in that spirit on
these important endeavors, and would be happy to answer any
questions you might have.
Chairman Shaw. Thank you, Commissioner.
Mr. Levin.
Mr. Levin. Well, Mr. Chairman, I do not have any glaring
questions.
It is a pleasure to hear this testimony, Mr. Apfel, and
from your colleagues, and for us to congratulate you on your
accomplishments; and we know, knowing you, that you don't rest
for 1 minute on your laurels.
Let me ask you, I remember a number of years ago there was
discussion at this Subcommittee about what happens when people
call in and the delays that were incurred. And this isn't
directly germane, perhaps, but all of this technology is to try
to make sure that communication with human beings, including
dispatch of their checks, but also handling their complaints,
all of it goes well. How does it go these days when somebody
calls the Social Security Administration? We don't hear very
many complaints anymore, so I take it it is better.
Mr. Apfel. It is better, Mr. Levin.
A number of years ago, a number of people, when calling,
received a busy signal or were not able to get through. We
established formal strategic goals and objectives in a
timeline. These service delivery goals are known throughout the
organization.
We manage those goals. Our resources are devoted to meet
those goals. I think that one of the keys in any large
organization is defining, getting agreement on, and then
communicating as to what our service delivery goal should be.
Thereafter, all of our activities are devoted to managing to
meet those goals.
In the area of the 800 number, over 95 percent of callers
get in, and clearly we have had a significant improvement in
the area over the course of the last 5 years. Technology helps
you go to the 800 number office right now, and there sits an
IWS/LAN on that person's desk to be able to immediately access
for the individual who is calling, their claim, their
information, information that they have had in the past.
I would also point out that we now have a new system that
is a major technology improvement. When that call comes in, now
for the first time, we can pull up what the person has
received, in terms of correspondence, in the immediate past.
This is a tremendous improvement. Rather than a person
saying, ``I got a letter from Social Security'' and our people
are saying, ``Can you read it to me so I can figure out what
the problem is?'' With the click of a button, we can now access
what those letters are, giving our employees tremendous
efficiencies.
That is just one example of how technology has helped us in
meeting what are going to be continual workload demands in the
future with the remarkable staff that we have.
Mr. Levin. Last, let me ask you a question on behalf of my
94-year-old mother-in-law. It is about her Social Security
checks. She receives these mailings about Y2K, and it frightens
her. So you are ready for the year 2000 for January. You have
been working with the Federal Reserve Board. I can tell my
mother-in-law, I mean this seriously, she will receive her
check on time?
Mr. Apfel. Yes. And I think that is a very serious issue.
You absolutely can tell her that.
We have been certified as 100-percent compliant through the
entire network, from Social Security to the Department of
Treasury, through the Federal system. The Federal system is
entirely Y2K compliant.
We have also established contingency plans which are really
at the leading edge of the Federal level. If there are
localized problems, the plan indicates how to work around those
problems to assure that people will receive accurate and
appropriate services as rapidly as possible.
We are very proud of the fact that we are Y2K OK; and we
are, within the week, I hope, sending to the Committee our
public education strategy for Y2K, which we think is an
important step in this process. We need to communicate to the
American public that we are ready for the millennium.
That, I believe, is a very high priority. We can't just
figure it out and then sit on our laurels. That is why we need
to, one, fix the systems; two, contingency plans; and three,
develop a public education strategy for communicating to the
public that we are ready. And we have done all of those things,
and I believe we are absolutely ready for the new millennium.
Mr. Levin. Good going, thanks.
Chairman Shaw. Mr. Portman.
Mr. Portman. Thank you, Mr. Chairman.
Commissioner, thanks for being here. I think SSA deserves
to be commended for taking the lead on Y2K.
And I never got straight As. I don't know about the
Chairman. But Steve Horn is a tough grader.
But I also think that the notion that Mr. Levin just said
about not resting on the laurels is important, and contingency
plans are very important.
What happens if there are external factors such as mail
service is not in place to be able to deliver the checks? Do
you have some alternatives that you are thinking about?
Mr. Apfel. We certainly do.
First of all, the Postal Service is in very good shape for
Y2K, and they have their own contingency plans as well. The
first step in any localized problem, Mr. Portman, would be to
move people to work and to move work to people. That is true
for the Postal Service. That would be true for us as well
within Social Security.
If there is--even today there can be a problem with a
certain mailing address not receiving checks. We have systems
in place to work around that problem, to be able to get
information and get checks to people as soon as possible.
Number one is people to work and work to people.
Number two, if a check has not arrived, say, to a bank, the
electronic transaction cannot be transacted with one particular
bank someplace, we have established contingency plans where, on
that Monday, we would determine with the Treasury Department
and the Federal system whether the bank will be in a position
within the next 24 to 48 hours to be able to make that
transaction.
If that is not possible, we will immediately contact the
Treasury to issue a check. That check will be issued through
the mail. So that will take 5 days roughly, maybe 7 days, by
the time the check is received. But if there is an emergency,
if someone said, ``I really need this money,'' they can come
into our field office and we will automatically and immediately
cut a check for that individual. That will be available.
We also have these localized plans in every one of our
field offices, and included in that is a connection to each one
of your offices. You will be getting a mailing from me sometime
I would hope within the next month with contact names, within
every one of our field offices. If you experience a problem,
you will know who your office should call, and who will be
calling your office if any problem is identified anywhere in
your congressional district.
Mr. Portman. There will be some sort of emergency for
people who need a check badly. There will be--local offices at
their discretion, and they will cut the check?
Mr. Apfel. Absolutely.
Mr. Portman. Let me back up for a second. I don't want to
spend a whole bunch of time on this.
Assuming the mail service does not work, literally does not
work during that period of time after the 1st, you are saying
your contingency would be to get the checks somehow to the
workplace. And also on the electronic side we have to assume
that that is another area where there is some external
vulnerability. And so in terms of electronic transfers or, as
you say, transfers with financial institutions, one would have
to prepare for that.
Mr. Apfel. This year, given the particular circumstances,
we are going to have the actual checks delivered to the Postal
Service on the 29th, which is ahead of schedule, to give
advance time to the Postal Service.
Mr. Portman. They are in place locally?
Mr. Apfel. We are in very good shape for those.
Mr. Portman. OK. Let me talk for a second about RDS.
Unfortunately, this reminds me a lot of the IRS work we did
over the last few years. What was the total budget of the RDS
process from 1992 on?
Mr. Apfel. From 1992 on, we have expended somewhere in the
vicinity of $70 million. I can give you----
Mr. Portman. That was a budget. Was it budgeted to be $70
million?
Mr. Apfel. You mean to date?
Mr. Portman. Yes.
Mr. Apfel. Well, each year a decision was made as to the
amount needed--there was never a decision in 1992, let's spend
$70 million.
Mr. Portman. Each year since 1992 there has been additional
money spent up to $70 million.
Mr. Apfel. $70 million to date.
Mr. Portman. And you pulled the plug on the project when,
after spending $70 million?
Mr. Apfel. I think it is important to clarify to ``pull the
plugs.'' Clearly, we have changed directions significantly, and
we should have. And it was the right thing to do. We--I made
the decision last March, in our disability management plan,
that we needed to set up a new direction in this area.
To provide the history here, about 2 years ago----
Mr. Portman. Let me just say, Ken, unfortunately, my time
is almost up. I guess if you could--maybe others have other
questions about this--but I think that the questions I would
have when we get them answered, what was budgeted? What was
actually spent? Why did it take us so long to pull the plug?
And what did we learn from it?
I would like to know whether the Booz-Allen study is part
of this $71 million, because it seems to me that was a major
expense that needed to be included in it. And you say roughly
half of the money, the funding that was used, is going to be
used in other ways.
Again, at the IRS, we saw that $3 to $4 billion of that
bubget was literally wasted. It wasn't able to be used in terms
of the reengineering of the software and hardware, information
technology generally. I think we need some answers on that.
And, more importantly, what did we learn from this? The Social
Security recipient who is out there is hearing that $70 million
was wasted on something? Should we have had a mechanism in
place to monitor this so we knew early on what was going wrong
and to be able to pull the plug sooner?
I see my time is up, but if the Chairman will indulge me to
some answers of that.
Chairman Shaw. Go ahead.
Mr. Apfel. I think it is appropriate to try to put the
whole issue in context.
The project was initially started back in the early
nineties. The design was established 2 years ago. The pilot
prototype was established.
Now the original RDS model was for a very comprehensive
system that would replace every system within our State DDS. So
every State would replace their system. One comprehensive
system that would be throughout our hearing offices, our field
offices, as well as the State DDS partners, that prototype was
established 2 years ago.
When I became Commissioner, during the very first week I
received a briefing that there were some operational problems
at that point in time, so it went live, the pilot, the
prototype about 2 years ago. There were some problems that
developed. And my Chief Information Officer brought up the need
for what I think made sense, a significant analysis of the cost
effectiveness of the model and the implications of it.
Really, it was an investment review of the model. We
directed the contract within a very short timeline for an
independent review of our model, and we received the draft of
that report last February. It indicated that it was a very high
risk and a very large system with significant risks involved. I
made the decision that it made sense to redirect the investment
to a much more focused design. Rather than replacing systems
within the Disability Determination Systems, to modify those
systems to establish an electronic folder in our field offices
with applicability to the State computer systems, and with
applicability to our hearing offices.
So the differences are incremental rather than a
comprehensive prototype. It would be an incremental model with
incremental releases, much less investment in the short term
and less risk.
We think it is the right model for electronic commerce in
the disability area. It is a low-risk strategy. It is building
on the $70 million that was expended, and about half of it is
directly applicable to the endeavors that we are involved in to
date. That needs to be put in the context of the $3 to $4
billion that was spent over that period of time on information
technology. So the RDS activity was a fairly small one in terms
of investments, compared to our overall IT budget.
But I believe it was the right decision to redirect away
from the comprehensive prototype which does have higher risks,
to a more incremental product. And we will be moving forward
with modifications, which I think are appropriate. I don't know
whether Dean or Kathy would want to add anything to that. But
it seems to me we have made the right decision earlier to
redefine the scope of the project to assure full cost benefit
for every step that we take in this process in the future.
Chairman Shaw. Mr. Doggett.
Mr. Doggett. Thank you.
I would like to continue that discussion, because I am
sure, as are you, I hate to see $10 wasted, much less $70
million. However, many millions of dollars is alleged to have
been wasted, and I would like to focus on that number. Is it
correct to say that $71 million has been wasted, or is there
some portion of this money that represents hard work costs that
has other application?
Mr. Apfel. Well, we would disagree strongly with the notion
that $70 million was wasted. Roughly half of the endeavors are
directly applicable to our new endeavors that we are involved
with. Now, that is only half. The issue here is that we are
dealing with managing risk. Whenever one tries to move forward
on new major investments in technology, there is risk involved
in any one of those steps.
Indeed, if we look at IWS/LAN, I think that many would have
said, many would have been skeptical of the plan that we had
for IWS/LAN, to do the rollout as quickly as we did throughout
the country. It was a very aggressive schedule. A lot of
resources were invested in that area. That worked flawlessly
and now is applauded, I believe, throughout the country, as an
excellent model of a national rollout, really one of the
largest technology changes throughout the country. The success
of this rollout was recently outlined in the Letters to the
Editor section of the May 3, 1999, ``Government Computer
News.'' I would like to submit the letter for the record.
[The information follows:]
GOVERNMENT COMPUTER NEWS, May 3, 1999, Volume 18, Number 11
LETTERS TO THE EDITOR
SSA gets IT done
Thank you for the article, ``LAN project forces agency,
vendor to meet in middle'' [GCN, March 8, Page 8]. It draws
attention to the massive, successful technology transformation
that the Social Security Administration is undertaking as part
of the Intelligent Workstation/LAN contract.
Your story, like past articles you have run on IWS/LAN,
focused on PC pricing. While this is interesting, you're
missing the big picture: IWS/LAN is one of the largest, most
ambitious information technology modernization efforts ever
undertaken in the federal government, and it will have a
tremendous impact on SSA's ability to continue providing cost-
effective and efficient services to citizens.
In 1995, SSA faced the pending issue of increased
beneficiaries, applicants and workload demands caused in part
by the future retirement of the baby boom generation.
However, the agency's ability to provide expanded services
was limited by outdated information technology and declining
staff resources.
The following year, SSA embarked on the IWS/LAN program. It
involves the integration of 56,500 PCs running Microsoft
Windows NT and 1,742 LANs in state Disability Determination
Services offices and 1,300 SSA field offices. Added to that is
extensive training for all users, many of whom previously were
using dumb terminals.
Today, thanks to a very aggressive schedule that involved
the installation of 75 LANs per week, that program is on cost
and on track to be completed in mid-May.
All this was accomplished without interrupting the
operations of 65,000 SSA employees who every day handle 250,000
phone calls, process 20 million real-time transactions and
transfer some 3 billion bytes of data.
The team at SSA has accomplished in three years what many
people in government said couldn't be done--an on-budget, on
schedule, major IT overhaul that was completed without
disrupting services to the citizens.
T.J. Miller
Vice president and general manager
Information Technology Solutions
Unisys Federal Systems
McLean, Va.
In the RDS area, some of that resource will be applicable
to our new model, but not all of it. So our estimate is
somewhere in the vicinity of half of that $70 million would be
used for this future electronic commerce and our electronic
folder that we are going to be establishing.
Mr. Doggett. In what year did the RDS Program begin?
Mr. Apfel. The model first was developed in 1992, and the
prototype was established 2 years ago this month. Isn't that
right, Dean?
Mr. Mesterharm. Yes.
Mr. Apfel. Two years ago this month. And the problems that
started to emerge, dealing both with our concerns of our State
partners as well as the actual technical problems in our
Federal DDS, started to emerge very quickly at that point in
time. And so, basically, by March, within roughly 6 months of
the time of the start of the prototype, we did the Booz-Allen
study to try to get an independent sense of whether there
should be a change.
Again, I wouldn't use the word terminate. I would say the
word would be redirected significantly. It is a much less
comprehensive model. It is a more workable model. It is one, I
believe, that will lead to significant cost-benefit
improvements, and that has been shown in the Booz-Allen study.
But I must say that it will not be as comprehensive a system,
so it won't be able to do as much as our original model. But I
think we are biting the right bite of the apple in terms of
technology in this area.
Mr. Doggett. And when would you anticipate that would be
completed, and is it impacted to any degree by the Y2K issues?
Mr. Apfel. It is not impacted at all by the Y2K issues. We
are going to be establishing proof of concept right now and
then incremental releases, and that will be starting in our
field offices. We would expect by the end of 2000 to have one
State up and rolling at this point in time, one State and field
offices in that State. We will also be doing a cost-benefit
analysis at that time on the experience to date.
Mr. Doggett. That will be, in essence, a demonstration
project in that area.
Mr. Apfel. It is not a demonstration. It is really a proof
of concept that through that one State we can do a cost-benefit
analysis to determine exactly what the cost-benefit ratios
would be for moving forward on a national level. The long-term
plan right now is for a national rollout by the year 2004.
But this way is, we think, a much more prudent response,
and it gives us incremental steps along the way to be able to
determine cost and benefit analysis.
Mr. Doggett. This may be more appropriate to do after the
next presentation, I am not sure how you are contemplating
handling that, but do you have any response to the findings of
the General Accounting Office that are presented here this
morning?
Mr. Apfel. I think that the General Accounting Office--I
looked at their materials briefly, and I don't know whether
either of my colleagues would want to comment, but I think they
provide a very accurate assessment of where we are on Y2K,
where we are on our IWS/LAN, and where we are on the RDS. And
our new modifications, which now we call eDIB, electronic
Disability Insurance Benefit--we have a new acronym, a new term
for you for our redirected disability design. I think that it
is a pretty fair assessment of where we are.
And we are proud of what we have done in the technology
areas. I think one of the things that has got to be
reemphasized is that technology investments are always about
managing risk, and change is about managing risk. If we want to
expect specific productivity improvements, we have got to be
able to invest in a series of activities. Some may not work as
originally envisioned.
I think we got the right design for incremental
improvements in the disability arena. And if I could say, Mr.
Chairman, if we look at the increases in disability that are
projected over the course of the next 10 years, given the aging
of the baby boom generation, if we are left a decade from now
with a paper-based system, we will drown.
We need to continue to invest in technology to handle
increasing workloads in the disability arena, just as we have
in the retirement and other areas. Given the onset of
disability in the fifties and given the aging of the baby boom
generation, we do project specific increases in cases. We have
got to continue to invest in technology to do this. That may
need some changes, and I think the change we made in terms of
the RDS model was an absolutely appropriate one, but we have
got to keep our eye on the ball, and that ball is to continue
to invest in technology to meet emerging needs.
Mr. Doggett. Thank you.
Chairman Shaw. Commissioner, to follow up on some of Mr.
Doggett's questions early on, focusing on the IWS/LAN
installation project, which was I believe $1 billion--that is
with a B--for the first phase, do we have any way of qualifying
the benefits from this investment? I understand that a
performance review has not been conducted. The General
Accounting Office reports that it has not been done. It is
required by law. Can you tell us when we might expect such a
review?
Mr. Apfel. We conducted a review early on in the
implementation of IWS/LAN to determine both cost-benefit
analysis as well as workload savings. That was done, I think,
on the first 100 offices.
Chairman Shaw. Does the General Accounting Office have
that?
Mr. Apfel. I am sure that they do.
Mr. Mesterharm. Yes.
Mr. Apfel. The issue now is whether, after the fact, it is
possible to do a complete cost-benefit analysis of every
variable that could have changed. It is hard to do that.
I would like to try to explain this in some detail. Many
things changed over the course of the last 3 years, processes
changed as well as automation. To try to figure out after the
fact, 3 and 4 years after the implementation, how much of the
input is due to specifically this activity, is hard.
One of the things we could explore with the General
Accounting Office is whether we could get some recommendations
from them about how to conduct an after-the-fact investment in
these endeavors to be able to factor out how much of it is from
the technology and how much of it is from the changes in
process that took place over the course of the last 3 and 4
years, actually.
We believe that our original assessment of the first 100
offices provided a very solid justification in cost benefit----
Chairman Shaw. How were these chosen?
Mr. Apfel. I think it is the first 100 offices.
Ms. Adams. It was a stratified sample throughout the
country so we could take that data and then extrapolate it out
to our whole enterprise.
Chairman Shaw. How were they chosen, the first 100 offices?
How many offices are there?
Ms. Adams. They were chosen to be a representative sample.
Chairman Shaw. Was it a random sample?
Ms. Adams. No, it was not random. A lot of discussion and
thought went into the choice of the 100 pilot offices.
Mr. Apfel. That is because, again, the way that IWS/LAN was
rolled out was not starting slowly in each office. It was going
in office by office and over a weekend doing a major
installation. The staged rollout over the last 2 and 3 years
was not a slow upgrade throughout all of our 1,300 field
offices and our hearings offices. It was every weekend tearing
apart one particular office, installing a whole new system. So
these 100 were some of our first offices that were installed.
Chairman Shaw. Well, you mentioned in your testimony, I
believe I am quoting you correctly, ``this has been a huge
success.'' And I do acknowledge the law that does require a
determination as to the effectiveness. I would hope that you
would get with the folks over at the General Accounting Office
and set up the parameters of that review in a manner that would
be satisfactory to both you and to them and have this completed
at an early date. If the law is incorrect in requiring this,
then we should change the law, but I doubt if that is the case.
I think this type of accountability is needed and is a good
thing to have.
Mr. Apfel. We will have conversations with the GAO on how
to do that.
Chairman Shaw. Thank you.
Mr. McCrery.
Mr. McCrery. Mr. Commissioner, the $71 million figure that
was the cost of RDS, did that include the cost of the Booz-
Allen study?
Mr. Apfel. Yes, it did.
Mr. McCrery. How much was the Booz-Allen study?
Ms. Adams. About $1 million.
Mr. McCrery. How much?
Mr. Apfel. About $1 million.
Mr. McCrery. OK. Can you explain in terms that I can
understand, I know you can't know that, but try, the change
between the original concept of RDS and what you have gone to
now with electronic folders? What did you hope to gain from RDS
that you are not going to gain with electronic folders and what
are you going to gain from electronic folders?
Mr. Apfel. I will try to do that, Mr. McCrery.
The original model was a fully automated single
comprehensive system for all of our organization, both our
field offices, our State Disability Determination Services
partners, of which there are over 50, needless to say, and our
hearing offices, so that there would be one data system that
would be used; one system, a very comprehensive model, that
would provide the ability ultimately to move information back
and forth absolutely readily, as we do with our IWS/LAN and
many of our other cases.
That was the original design, and that meant new computer
systems in our field structure and replacing computer systems
in every one of the 50 States, because we have the State
partners.
The Booz-Allen study pointed up that that kind of change,
particularly to the State systems, was going to be high risk,
potentially very high benefit, but very high risk. The new
model is for an electronic folder so there is new automation in
our field offices, modifications to the State systems, so that
now in our field office a person takes the information with the
computer, as opposed to on paper, and the data elements will be
changed within the State computer systems to make them
consistent.
We still get the information in all three of our pieces,
our field offices, our States, and our hearings offices, but we
haven't established one comprehensive system. We have an
electronic folder of information for the individual, that is
the new model, and it is a smaller model. It is a much less
comprehensive system change.
But it is an appropriate one, because changing those State
systems, given the fact that so many State systems have their
own unique systems, would have been a significant hurdle to
overcome. We have lost some of our comprehensiveness in terms
of the design and the ability to move information, all
information across all of our components, but we have gained
some improvement. I think this goes really to what we see in
many of our other areas. We have got to be able to do an
investment and show a payoff immediately, in incremental
improvements.
The electronic folder is an incremental improvement. It
is--ultimately, I would have preferred--I think everyone would
prefer--one comprehensive system, but that is just too big a
bite of the apple, and moving in the direction of the
electronic folder is an incremental step that can be tested as
it goes forward in ways that I think are very productive for
the organization.
Mr. McCrery. Let me ask--I am still not really clear--are
you just saying that the electronic folder means we are going
to go from paper to computer? That seems to be your big
advance.
Mr. Mesterharm. Let me try to simplify, if I can.
To talk about the previous strategy that we had, the
original strategy was based on one set of software. As we said,
we rolled out the IWS/LAN. That means that each individual
personal computer out there would have this one piece of
software. It would be the same software that would run in every
field office. It would run on everybody's desk in the DDS. It
would run every place in the OHA. That would give us
standardization so that we wouldn't have to worry about
supporting different versions. That was the goal that we had.
The size of that system was too large. It made it complex.
So instead of focusing on this one big common system, we now
are, number one, taking what we already coded for the field
office portion of it, we are taking the DDS part out, and we
are having a system that is only focused on the field office.
That will go in the field office. Rather than building new
systems for the DDSs, which already have automation, we are
taking the current system that they have, and we are having
that system interface with a database, which we are calling an
electronic folder.
It is a common storage for information. The field offices
will move the disability information to that common storage
area. The current DDSs systems will pick up that information
off of that storage area and be able to process it.
Where we get savings in both cases is the fact that, number
one, currently, it is a paper process that is manual and
intensive. We can cut about 20--anywhere from 10 to 20 percent
off of a case time in the field office and in the DDSs because
we pick that information up and send it over to them. They can
save time because we have already picked up the information.
They don't have to rekey it again.
We save time in the DDSs. We don't have to redo all of
their software. They are going to interface with that database.
OHA will be a similar situation. It will interface with
that database. So the new approach is to tackle each section at
a time, not redo the DDS code.
Mr. Apfel. If I could add, Mr. Chairman, you walk into one
of our hearing offices for a hearing with a very large stack of
paper. The first step is to open it up and to start copying
some of the information down on a new form. The potential for
productivity improvements are significant by being able to have
common data elements, so that we don't have individuals
recopying down on a third piece of paper what has been in
separate pieces of paper in the past.
Is it a dramatic redesign of the process? The answer is no.
This electronic folder ultimately will help get larger
productivity enhancements by automating the process. This is
less of a streamlining process than an automating process. I
think that is a fair statement. Still significant
improvements--to do the latter is a more comprehensive and
higher risk strategy. I think it is where we will be 3 and 4
and 5 years from now, how to take the automated systems and now
build in more redesign structure to it.
But, ultimately, it is a saver, but it is not as bold. It
is not as high risk a strategy.
Mr. McCrery. Thank you, Mr. Chairman. I have some other
questions, but I will wait until the second round.
Chairman Shaw. Mr. Cardin.
Mr. Cardin. Thank you, Mr. Chairman.
Just to maybe complete this part on the disability claims
process. You were very specific as to what you were able to
accomplish on getting a Social Security card out, what you were
able to do in getting the COLA calculation. What will my
constituents experience as a result of the new disability
claims technology? We have had far fewer complaints recently
than we did in the past. There is no question that you have
made tremendous progress in dealing with constituent contact
with SSA.
The disability claim process is still one of the most
difficult ones for my constituents. They have difficulty
getting determinations, and the appeal process is cumbersome.
Once this is implemented, what type of improvement will our
people see in the disability claim process?
Mr. Apfel. We view the automation endeavors as one of the
keys to improving processing times. In the very near future, we
will be unveiling our plan for hearings process improvement. We
have already unveiled and are working toward the prototypes on
the disability improvements at the front end of the process in
the State structures. Inherent in both of those designs are the
technology improvements that we are talking about here.
It will mean less time, it will mean, given current
resources, a speedup of that process. So that the decreases in
backlogs that we have seen will come through this improvement.
Part of it will also be through the other management steps that
we will be unveiling in the next month or so.
Mr. Cardin. Let me just use Mr. Portman's analogy for one
moment for IRS in a different area, and that is one of the
problems we had with the Internal Revenue Service in IT
improvements was the inconsistency of Congress in providing
support for the administrative budget. This Subcommittee on a
bipartisan basis has always supported resources for SSA,
administrative resources in order to get your job done and to
deal with some of the backlog problems.
We are threatened now by the overall budget that could
require reductions in your budget. I just really want you to go
on record as to how important it is for us to continue to
provide the resources necessary if we are going to be able to
hold you accountable to make the type of progress that you
expect is reasonable.
Mr. Apfel. Well, I will go on record that our
administrative budget is a central part of both our service to
the public as well as the program integrity to maintain the
confidence of the taxpayers. Our request is for level staffing
from 1999 into the year 2000 to hold the line and to utilize
technology to help us deal with emerging workloads. We will
need investments in the future, there is no doubt about it,
within Social Security. The workload increases, the retirement
of the baby boom generation, which is a decade away, the
increases in disability cases that will come from the aging of
the baby boomers will place great strains on us.
It is clear that we will need significant resources in the
future to be able to meet our customer service goals, given
increased workloads.
I do thank this Subcommittee enormously for the support
over the years for your endeavors in keeping a strong Social
Security and the support for our automation activities. And we
are going to need that support in the future, I believe, if we
are going to continue to provide quality service to the
American public.
Mr. Cardin. And last, let me--as we started this hearing on
Y2K and the purpose of it, let me also congratulate you for the
progress that you have made on information technology generally
and particularly Y2K. And I hope that you will express--it has
been pretty uniform here in Congress how pleased we are with
what SSA has been able to accomplish. I hope that message will
get to the employees at SSA, because a lot of times they hear
from us in an unfriendly way. I think they should know they
have done a very good job, and we appreciate that on the Hill.
Mr. Apfel. Thank you. And I will pass that along, sir.
Chairman Shaw. The Subcommittee will stand in recess. There
is one vote on the floor, and then I understand there will be a
couple of hours before we get another vote, so we should be
able to conclude the hearing.
So we will recess for approximately 15 minutes, and then we
will come back and complete the hearing.
[Recess.]
Chairman Shaw. I think we are about ready to wrap this up.
Mr. McCrery had some additional questions I believe he wanted
to pose to the Commissioner.
Mr. McCrery. Thank you, Mr. Chairman.
Mr. Apfel, I am interested in an assessment of productivity
gains as a result of all of the expenditures we are making for
computerization of your work, this electronic folders project
that we are now about to undertake, and I understand that you
are estimating this project to cost about $200 million over the
next 10 years.
Mr. Apfel. About 300 million.
Mr. McCrery. About $300 million over the next 10 years,
that is a fairly substantial investment in a process that we
would hope would allow productivity increases. What gains are
you estimating for the taxpayer as a result of these
expenditures that we are making?
Mr. Apfel. We specifically wanted that information to
justify the expenditure, and that is clearly what a cost-
benefit analysis is to do. We talked to Booz-Allen about that,
and there was a range--a minimum return of about 1.28 to 1 up
to well over 2 to 1 in terms of productivity enhancements.
Now, in the private sector, ``a star to steer by'' is
somewhere in the 2 to 1 range. At the lower end of productivity
enhancements, that would be lower than the star to steer by
that many in the private sector use, but at the higher end, it
will be considerably higher than that.
We can provide for the record the breakout of the various
cost-benefit analyses that were done based on various
assumptions for productivity enhancements that were included in
the Booz-Allen report that I think will make the point here. I
believe we will see from this investment somewhat on the higher
end of the scale of productivity enhancements, because it is
going to take less time, less time per case in our field
offices and in our DDSs, and that is really what the cost-
benefit analysis shows for the various options.
As we move forward, we are going to be expending somewhere
in the $10 million range. Over the 2 or 3 years in this
endeavor, we will be continuing to do cost-benefit analysis so
that we will find 2 years from now what the costs and the
benefits are for the endeavor that we have done.
If we find that somehow we are very bottom end, we are down
at 1 to 1, then we should be reassessing that model. I think
what you are going to find, and I think what we will find 2
years from now when we sit before this Subcommittee, is that
the cost-benefit work on the incremental improvements that have
been done are going to show a significant payoff.
But what I will provide for the record is the various
alternative cost-benefit analyses that were included in the
Booz-Allen report, which are all positive and I think will not
be at the lower end of that range but at the higher end of that
range.
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Mr. McCrery. Well, thank you.
Mr. Chairman, I hope that this Subcommittee will continue
to provide oversight of what is going on with productivity
improvements or enhancements. I think it is absolutely
necessary that we invest in these technologies to avert an
explosion of needs in terms of personnel and time as the Social
Security Administration has to cover more and more people in
the not-too-distant future.
I am hopeful that we are doing all of this with the thought
that in the end we are going to save taxpayer dollars by these
early expenditures.
Just one more question on the electronic folders. And just
tell me if this has not been determined yet or if you don't
know. I am completely understanding of that. But--and I am just
curious, do you anticipate that there will be some technology
that will be provided that will take a software, say, a floppy
disk that comes from the Federal SSA and is converted to
software that is usable by the States? Or is it going to be
necessary for the State to take the floppy, print it out and
then hand input into their own software--into their own? Do you
know?
Mr. Apfel. The answer is no. But I would like very much
for Dean or Kathy to go through the specifics on that. If we
had our original model, it had to be the same exact software.
Mr. McCrery. I understand that.
Mr. Apfel. The idea is to have common elements of
information that can flow to the two and which provide changes
to the computer system but do not replace their system. But I
would like Kathy or Dean to explain it.
Mr. Mesterharm. If I understand your question correctly,
you are talking about the claim information. That claim
information will be transmitted over telecommunication wires
and they will not have to print anything out. They will be
working with that on their computers. So that is not going to
be paper-printed out a second time. That information will be
moved electronically. It will come up on their screens
electronically. They will work with it.
No paper is involved. We are trying to eliminate paper, if
that is the question you are asking.
Mr. McCrery. Yes, I was just curious to know.
Mr. Mesterharm. There aren't any floppy disks involved in
this. It is all handled electronically. It is submitted from
their computer over telephone wires to the other computer, all
electronic, no floppy disks or anything else involved.
Mr. McCrery. You can't do that now?
Mr. Mesterharm. No. We can do that for a minimal amount of
information that we send back and forth right now. But they
still key in some of that information. We are trying to make it
all electronic.
Mr. McCrery. This will eliminate the need for them to key
in?
Mr. Mesterharm. Yes.
Mr. McCrery. OK, great. Thank you.
Chairman Shaw. Just one area I want to cover, and you
covered it pretty good on your answer--in your statement and
also to answers to other questions. But I want to be a little
bit more specifically geared toward an idea that Mr. Manzullo
had which I sent to you which you replied to. I wish you would
comment on that. This is the question of, as an added caution,
of putting the checks out early at the end of this year to
avert any possible foul-up in the Y2K problem.
Mr. Apfel. Mr. Chairman, I must tell you, when I first
heard about this notion as a possibility, I was intrigued
myself about whether to send out early payment checks. And we
spent a lot of time looking at the potential benefits. The
potential benefit is that this would be a check that would be
there early and, therefore, that check would not be potentially
affected.
The more we looked into this and the more that we talked
about it throughout the government, it became very, very clear
to me--I changed my opinion very significantly on this. I no
longer think this is anything like the right thing to do. The
risks are just too high with such an approach.
I believe John Koskinen has testified on this accordingly
and I agree with him fully, that that kind of an action would
be interpreted as our inability to be able to deliver service
to the American public. And the risks just get too high from
that. Given the readiness of the Federal structure, which is,
in our case, entirely complete; given the readiness of the
banking industry, which John Koskinen has testified is one of
the leading areas. I heard, but I haven't had this documented,
that Alan Greenspan recently said that money is safer in the
year 2000 in the bank than it is if you bring it home and put
it under your mattress.
Given the readiness of the banking community, the Postal
Service and the Social Security Administration, for Federal
transactions, an action of moving that check up I think could
be interpreted as an inability to be able to get out payments,
which I think could produce disastrous results. People might
withdraw large amounts of currency beforehand. People may want
to rush to eliminate electronic transactions that are
automatically provided to the banks.
I think it goes exactly counter to what our public
education endeavors are aimed at right now. Our public
education plan, which we will be submitting to you and to the
American public, is to send the message that we are ready for
Y2K. We will identify the audiences that we are looking at, the
public, the business community, the banks, where we are ready,
what the potential contingencies would be if there are any
problems in any localized areas and the vehicles for how we are
going to be doing that.
We are going to be doing a mailing this October to every
Social Security beneficiary saying that we are Y2K OK. Our goal
right now is to move to tell the American public that we are
prepared to deal with all eventualities, that we are Y2K OK and
that we do have contingency plans if there are other minor
problems in different areas.
Sending out those checks early could send a disastrous
countermessage that we are not ready. I think it would run
counter very much to the entire Federal effort to assure people
that appropriate steps have been taken.
So where I was originally intrigued by the notion, I must
say I am not now. I believe it is the right thing, to stay with
our current system.
Chairman Shaw. Do you do electronic transfers into foreign
banks?
Mr. Apfel. Yes, we do.
Chairman Shaw. And what is their readiness?
Mr. Apfel. This is still one of the areas that has
potential vulnerabilities. About two-thirds of our foreign
checks go electronically, is that right? One-third. This is one
of the areas that I know that Mr. Koskinen, John Koskinen, has
been doing a lot, working with the international bank arena.
But I would like to ask either Dean or probably Kathy to
respond on the international banking situation.
Ms. Adams. We have 300,000 payments that go outside of the
country; 100,000 of them are direct deposited. The other
200,000 are checks. We obviously do know less about the
international banking scene than we know about the domestic.
We do send the majority to Canada and Mexico of the direct
deposits. There are only a couple of countries that we actually
do direct deposit with, and they tend to be the more advanced
technology countries, that is why we do it with them, and the
ones that tend to be in better shape.
But there is no question that we have less information,
obviously, because we don't regulate those banks as we regulate
American banks. But Mr. Koskinen has spent a lot of time at the
UN. In fact, he just had a meeting, the largest meeting that
was ever attended by the UN. There were 170 nations there. And
he is working very closely with the foreign scene.
And Bruce McConnell, who used to be over at OMB, is
focusing on that full time for John, and they are trying to get
as much information as they can about the foreign banks. But
there potentially would be 100,000 folks that would be
affected, and we do have contingency plans to get payments for
them if there is an issue.
Chairman Shaw. OK. Thank you. Thank you all very much for
being with us.
And, Commissioner, could you have somebody stay behind for
the next witness so if any questions come up that they will be
able to respond to it?
Mr. Apfel. Yes. Good.
Chairman Shaw. Thank you.
The next witness, from the U.S. General Accounting Office,
Joel Willemssen. He is Director of Civil Agencies Informations
Systems, Accounting and Information Management Division.
I believe, sir, that you were here during the testimony of
the previous witness.
Mr. Willemssen. Yes.
Chairman Shaw. We have a copy of your full statement, which
will be made a part of the record; and you may proceed as you
sit.
STATEMENT OF JOEL C. WILLEMSSEN, DIRECTOR, CIVIL AGENCIES
INFORMATION SYSTEMS, ACCOUNTING AND INFORMATION MANAGEMENT
DIVISION, U.S. GENERAL ACCOUNTING OFFICE
Mr. Willemssen. Thank you, Congressman. Thank you for
inviting GAO to testify today; and, as requested, I will
briefly summarize our statement.
Achieving Y2K readiness has been SSA's top information
technology priority, and the agency continues to make excellent
progress in this area. SSA remains a Y2K leader among Federal
agencies and has initiated a number of government-wide best
practices to help ensure preparedness for the turn of the
century.
Among those best practices are development of a framework
for business continuity and contingency planning, working with
the Department of the Treasury and Federal Reserve to test the
delivery of benefit payments, development of a detailed day 1
strategy for the rollover period of late December and early
January, and implementation of a change management process to
further reduce the risk of Y2K-induced disruptions.
While it has been a leader on Y2K, SSA's job is not done.
It must still complete several tasks. These include making sure
that all critical data exchanges with other organizations are
made compliant. Second, SSA must still complete steps in its
contingency plans, including testing of those plans. Third, SSA
still has one mission--critical system, used for scanning and
converting W-2 forms that it must certify as compliant. And,
fourth, SSA must correct a number of errors recently identified
using a quality assurance tool.
Next, let me turn to SSA's workstation modernization, an
effort that to date has involved the installation of about
70,000 computers and over 1,700 local area networks. Last year,
we expressed concern about SSA lacking a process for
determining whether this investment was yielding expected
improvements in service to the public. Although SSA agreed with
the need for such measures, no such reviews of what actual
benefits are accruing from the modernization have occurred yet,
and this becomes increasing important, since SSA now plans to
acquire more workstations and networks at additional cost.
And the last information technology initiative that I will
touch on is SSA's development of its Reengineered Disability
System. As noted earlier, SSA has experienced numerous problems
and delays with this particular system, and, in particular, the
software for this system. For example, in 1996, we reported on
these problems and discussed the 2-year delay that was
appearing at that time.
Now, in response to these problems, as noted earlier, SSA
has contracted for an independent assessment of the initiative;
and based on that assessment and the recommendation that the
system be discontinued, SSA has decided to terminate the
original strategy after 7 years of effort and, as noted
earlier, the reported expenditure of about $71 million.
SSA now plans to proceed with a revised strategy to address
the needs of that determination process. In doing so, we think
it is especially important that SSA link the initiative with
the other steps SSA is taking to improve its software
development capability. Without such a linkage, we think SSA
risks another failed initiative; and, therefore, we think it is
very important that that linkage occur.
That concludes a summary of my statement, and I will be
pleased to address any questions you might have.
[The prepared statement follows:]
Statement of Joel C. Willemssen, Director, Civil Agencies Information
Systems, Accounting and Information Management Division, U.S. General
Accounting Office
Mr. Chairman and Members of the Committee:
We are pleased to be here today to discuss the Social
Security Administration's (SSA) progress in implementing key
information technology initiatives critical to its ability to
effectively serve the public. Achieving Year 2000 (Y2K)
readiness is SSA's top information technology priority.
Consistent with our prior reports,\1\ SSA continues to make
excellent progress on Y2K and has taken important steps to
implement our recommendations for mitigating risks. Further, it
has initiated a number of governmentwide best practices to help
ensure its preparedness for the change of century. Nonetheless,
SSA's work is not yet complete; certain tasks integral to
ensuring its overall readiness for the year 2000 must still be
accomplished.
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\1\ Social Security Administration: Significant Progress Made in
Year 2000 Effort, But Key Risks Remain (GAO/AIMD-98-6, October 22,
1997); Year 2000 Computing Crisis: Continuing Risks of Disruption to
Social Security, Medicare, and Treasury Programs (GAO/T-AIMD-98-161,
May 7, 1998); and Year 2000 Computing Crisis: Update on the Readiness
of the Social Security Administration (GAO/T-AIMD-99-90, February
24,1999).
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Another major focus of SSA's information technology
activities is implementation of its Intelligent Workstation/
Local Area Network (IWS/LAN), which SSA expects will provide
the agency with the basic automation infrastructure to support
redesigned work processes and improve its service delivery. SSA
continues to implement IWS/LAN and reports that it has now
installed intelligent workstations and LANs in most of the
approximately 2,000 SSA and state Disability Determination
Service (DDS) sites included in the initiative. However, it has
not yet implemented key processes that are essential to
measuring the benefits derived from this investment.
The third initiative that I will discuss today is SSA's
development of its Reengineered Disability System (RDS). RDS
was intended to support SSA's modernized disability claims
process and was to be the first major programmatic software
application to operate on IWS/LAN. However, SSA experienced
numerous problems and delays in developing this software. Based
on a contractor's recent assessment of the initiative, SSA has
now decided to terminate the original RDS strategy after 7
years of effort and about $71 million in reported costs. SSA
now plans to proceed with a new strategy to address the needs
of its disability determination process.
YEAR 2000: CONTINUING PROGRESS, BUT CRITICAL TASKS REMAIN
SSA first recognized the potential impact of the Y2K
problem in 1989, and in so doing, was able to launch an early
response to this challenge. SSA initiated early awareness
activities and made significant progress in assessing and
renovating mission-critical mainframe software that enables it
to provide Social Security benefits and other assistance to the
public. Because of the knowledge and experience gained through
its Y2K efforts, SSA has been a recognized federal leader in
addressing this issue.
Despite its accomplishments, however, our 1997 report on
SSA's Y2K program identified, and recommended actions for
addressing three key risk areas: \2\
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\2\ GAO/AIMD-98-6, October 22, 1997.
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SSA had not ensured Y2K compliance of mission-
critical systems used by the 54 state DDSs that provide vital
support in administering SSA's disability programs.
Specifically, SSA had not included these DDS systems in its
initial assessment of systems that it considered a priority for
correction. Without a complete agencywide assessment that
included the DDS systems, SSA could not fully evaluate the
extent of its Y2K problem or the level of effort that would be
required to correct it. We therefore recommended that SSA
strengthen its monitoring and oversight of state DDS Y2K
activities, expeditiously complete the assessment of mission-
critical systems at DDS offices, and discuss the status of DDS
Y2K activities in SSA's quarterly reports to the Office of
Management and Budget (OMB).
SSA had not ensured the compliance of its data
exchanges with outside sources, such as other federal agencies,
state agencies, and private businesses. Unless SSA can ensure
that data received from these organizations is Y2K complaint,
program benefits and eligibility computations that are derived
from the data provided through these exchanges may be
compromised and SSA's databases corrupted. Accordingly, we
recommended that SSA quickly complete its Y2K compliance
coordination with all data exchange partners.
SSA lacked contingency plans to ensure business
continuity in the event of systems failure. Business continuity
and contingency plans are essential to ensuring that agencies
will have well-defined responses and sufficient time to develop
and test alternatives when unpredicted failures occur. At the
time of our October 1997 review, SSA officials acknowledged the
importance of contingency planning, but had not developed
specific plans to address how the agency would continue to
support its core business processes if its Y2K conversion
activities experienced unforeseen disruptions. We therefore
recommended that SSA develop specific contingency plans that
articulate clear strategies for ensuring the continuity of core
business functions.
SSA agreed with all of our recommendations and efforts to
implement them have either been taken or are underway.
Regarding state DDSs, SSA enhanced its monitoring and oversight
by establishing a full-time project team, designating project
managers and coordinators, and requesting biweekly status
reports. It also obtained from each DDS a plan identifying the
specific milestones, resources, and schedules for completing
Y2K conversion tasks. In its most recent (May 1999) quarterly
report to OMB, SSA stated that all DDS claims processing
software had been renovated, tested, implemented, and certified
Y2K compliant by January 31, 1999.
To address data exchanges, SSA identified all of its
external data exchanges and coordinated with all of its
partners on the schedule and format for making exchanges Y2K
compliant. As of June 27, 1999, according to the agency, over
99 percent of SSA's 1,954 reported external data exchanges had
been made compliant.
Among SSA's most critical data exchanges are those with the
Department of the Treasury's Financial Management Service (FMS)
and the Federal Reserve System for the disbursement of Title II
(Old Age, Survivors, and Disability Insurance program) and
Title XVI (Supplemental Security Income program) benefits
checks and direct deposit payments. SSA began working with FMS
in March 1998 to ensure the compliance of these exchanges, and
reported earlier this year that the joint testing of check
payment files and testing from SSA through FMS and the Federal
Reserve for direct deposit payments had been successfully
completed. Further, SSA stated, it began generating and issuing
Title II and Title XVI benefits payments using the Y2K
compliant software at SSA and FMS in October 1998.
Regarding its contingency planning, SSA has instituted a
number of key elements, in accordance with our business
continuity and contingency planning guidance.\3\ In addition to
developing its overall strategy for Y2K business continuity,
SSA has completed local contingency plans to support its core
business operations and has received contingency plans for all
state DDSs. Also included among its plans is SSA's Benefits
Payment Delivery Y2K Contingency Plan, developed in conjunction
with Treasury and the Federal Reserve to ensure the
continuation of operations supporting Title II and Title XVI
benefits payments.
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\3\ Year 2000 Computing Crisis: Business Continuity and Contingency
Planning (GAO/AIMD-10.1.19, March 1998 [exposure draft], August 1998
[final]).
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Another key element of business continuity and contingency
planning, as noted in our guide, is the development of a zero-
day or day-one risk reduction strategy, and procedures for the
period between late December 1999 and early January 2000. SSA,
as a recognized leader in addressing Y2K contingency planning
issues, has developed such a strategy. For example, the agency
plans for select SSA and DDS sites to process late December
1999 data during the first 2 days of January 2000 as a means of
testing the accuracy of the systems prior to the start of
business on Monday, January 3. Other features of the strategy
include implementation of (1) an integrated control center with
responsibility for the internal dissemination of critical data
and problem management, (2) a timeline detailing the hours
during which certain events will occur (such as when workloads
will be placed in the queue and backup generators started)
during this rollover period, and (3) a personnel strategy and
leave policy which includes commitments from key staff to be
available during the rollover period. Such a strategy should
help SSA manage the risks associated with the actual rollover
and better position it to address any disruptions that occur.
SSA has taken other vital steps to help ensure its
preparedness for the year 2000. For example, it has used a Y2K
test facility to test operating systems, vendor products, and
mission-critical systems. SSA's test and certification
procedures included (1) baseline testing to establish current-
year data for comparison, (2) forward year testing of
applications with business and systems dates set in 2000 and
beyond, (3) comparisons of aged baseline results with forward
year test results, (4) forward date integration testing of
entire business functions (i.e., all interrelated
applications), and (5) independent reviews of test outputs to
certify Y2K compliance.
To ensure the delivery of benefits payments, SSA worked
jointly with FMS and the Federal Reserve to test the transfer
of approximately 7,500 electronic payments from Treasury to the
Richmond, Virginia Federal Reserve Board through the Automated
Clearing House network. SSA reported that it began generating
and issuing Title II and Title XVI benefits payments using the
compliant software at SSA and FMS in October 1998.
SSA Implemented a Y2K Change Management Process
To further reduce the risk of disruptions, in the fall of
1998 SSA instituted a Y2K change management process. We
previously testified that this effort represented a best
practice governmentwide that should be adopted by other
agencies.\4\ SSA's process is comprised of three key
components: (1) a quality assurance process, (2) Y2K system re-
certifications, and (3) a moratorium on discretionary software
modifications.
---------------------------------------------------------------------------
\4\ Year 2000 Computing Crisis: Readiness Improving, But Much Work
Remains to Avoid Major Disruptions (GAO/T-AIMD-99-50, January 20,
1999).
---------------------------------------------------------------------------
A key feature of SSA's quality assurance process is its use
of a validation tool to assess the quality of its previously
renovated mission-critical applications. SSA began piloting the
tool in November 1998 and expanded its use full-scale in
December. The tool searches application programs to identify
any date field or date logic that may fail as a result of any
inadvertent modifications.
The second key component of SSA's change management process
involves its plans to re-certify previously renovated
applications where date errors had been identified and Y2K
compliant software was then modified. The re-certification
process includes performing forward date testing of the
modified software and re-evaluating the software using the
quality assurance validation tool. In addition, business
function experts perform independent reviews of all test
outputs before re-certifying the software's compliance.
Also, SSA plans to enforce a moratorium on discretionary
software changes between September 1, 1999, and March 31, 2000.
This moratorium is intended to help mitigate the risks
associated with changing its certified systems by reducing the
number of software modifications made. In those instances in
which software changes are necessary--such as when compliant
software must be modified due to legal or other agency
requirements--SSA plans to re-certify the software's
compliance. Examples of software that will be modified include
applications impacted by Title II benefits rate increases and
Title XVI cost-of-living adjustments that are to take effect in
November, and certain cyclical software modifications that are
to occur after September.
SSA Still Needs to Complete Critical Tasks To Ensure Year 2000
Readiness
While SSA has been a Y2K leader, it must still complete
several critical tasks to ensure its readiness for the year
2000. These tasks include:
ensuring the compliance of all external data
exchanges,
completing tasks outlined in its contingency
plans,
certifying the compliance of one remaining
mission-critical system,
completing hardware and software upgrades in the
Office of Telecommunications and Systems Operations, and
correcting date field errors identified through
the quality assurance process.
SSA reported as of mid-July that six of its external data
exchanges were still in the process of being made Y2K
compliant. In each instance, these include files that have been
addressed by SSA but which need further action on the part of
SSA's business partners to achieve Y2K compliance. For example,
SSA transmits one file on cost-of-living adjustments to the
Department of Veterans Affairs (VA). While SSA has made the
file compliant, VA must still complete its testing in order to
receive the file in a Y2K compliant format. VA is scheduled to
complete its testing in August. In addition, SSA is waiting to
verify the successful transmission of three compliant files
from Treasury regarding information on tax refund actions. SSA
expects to verify the compliance of the Treasury files during
the first week of August. SSA also still needs to verify the
successful transmission of two Massachusetts death data files.
SSA expects to complete this activity by the end of this week.
Completing tasks in its contingency plans and coordinating
with its own staff and its business partners to ensure the
timely functioning of its core business operations is likewise
critical. This includes coordinating with its benefit delivery
partners on contingency actions for ensuring timely benefits
payments. For example, SSA plans to assist Treasury in
developing alternative disbursement processes for problematic
financial institutions. SSA is also now in the process of
testing all of its contingency plans, with expected completion
in September. In addition, SSA must implement its day-one
strategy, comprising actions to be executed during the last
days of 1999 and the first few days of 2000.
SSA also has one remaining mission-critical stand-alone
system--the Integrated Image-Based Data Capture System--which
must still be certified as Y2K compliant. This system is used
to scan and convert W-2 forms to electronic format for entry
into the Annual Wage Reporting System. According to officials
in SSA's Office of Systems, the SSA-developed application
software has been renovated, tested, and implemented into
production; however, SSA cannot certify the system's compliance
until it has completed testing of the system's upgraded
commercial off-the-shelf software used for tracking W-2 form
data from the point of receipt to image scanning. This testing
is not scheduled to conclude until late August.
The installation of software and hardware upgrades in SSA's
Office of Telecommunications and Systems Operations must also
be completed. For example, SSA must install Internet browser
patches for the IWS/LAN software by August.
Finally, SSA must correct a number of date-field errors
recently identified using its QA tool. SSA reported that as of
July 23, 1999, it had assessed 92 percent (283 of 308) of its
mission-critical applications (having a total of about 40
million lines of code),\5\ and that it had identified 1,565
date field errors. SSA is in the process of correcting these
identified date problems. As of mid-July, it reported that 44
of the 283 applications had been corrected, recertified, and
returned to production. SSA plans to correct, recertify, and
implement all of its remaining applications by November, when
it is scheduled to modify some mission-critical applications to
reflect Title II benefit rate increases and Title XVI cost-of-
living adjustments.
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\5\ Thirteen applications were not tested because they are no
longer in use (e.g., obsolete, retired, replaced); 10 because they were
incompatible with the QA tool; and 1 because it was no longer part of
SSA's inventory. One application remained to be tested.
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IWS/LAN: INSTALLATIONS CONTINUE BUT CONTRIBUTIONS TO IMPROVED MISSION
PERFORMANCE REMAIN UNCLEAR
The second major information technology initiative that I
will discuss today is SSA's IWS/LAN modernization effort. SSA
expects IWS/LAN to play a critical role by providing the basic
automation infrastructure to support redesigned work processes
and to improve the availability and timeliness of information.
Under this initiative, SSA planned to replace approximately
40,000 ``dumb'' terminals \6\ and other computer equipment used
in about 2000 SSA and state DDS sites with an infrastructure
consisting of networks of intelligent workstations connected to
each other and to SSA's mainframe computers.
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\6\ SSA's ``dumb'' terminals are connected to its mainframe
computers through its data network and are controlled by software
executed on the mainframes.
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The resources that SSA plans to invest in acquiring IWS/LAN
are enormous. The first phase of the planned project that
started in 1996, was to be a 7-year, approximately $1 billion
effort to acquire, install, and maintain 56,500 intelligent
workstations and 1,742 local area networks, 2,567 notebook
computers, systems furniture, and other peripheral devices.\7\
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\7\ The national IWS/LAN initiative consisted of two phases. During
phase I, SSA planned to acquire workstations, LANs, notebook computers,
systems furniture, and other peripheral devices as the basic,
standardized infrastructure to which additional applications and
functionality can later be added. Phase II was intended to build upon
the IWS/LAN infrastructure provided through the phase I effort.
---------------------------------------------------------------------------
The basic intelligent workstation that SSA planned to
procure included a 100-megahertz Pentium personal computer with
32 megabytes of random access memory and a 1.2-gigabyte hard
(fixed) disk drive. We reported in 1998,\8\ however, that the
IWS/LAN contractor--Unisys Corporation--had raised concerns
about the availability of the intelligent workstations being
acquired, noting that the 100-megahertz workstations specified
in the contract were increasingly difficult to obtain. At that
time, SSA's Deputy Commissioner for Systems did not believe it
was necessary to upgrade to a faster processor because the 100-
megahertz workstation met the agency's needs.
---------------------------------------------------------------------------
\8\ Social Security Administration: Technical and Performance
Challenges Threaten Progress of Modernization (GAO/AIMD-98-136, June
19, 1998).
---------------------------------------------------------------------------
Over the past year, SSA has continued its aggressive
implementation of IWS/LAN. The agency reported as of mid-July
1999, that it had completed the installation of 70,518
workstations and 1,742 LANs at 1,565 SSA sites and 177 DDS
sites. As the agency has proceeded with the initiative,
however, it has revised its requirements several times based on
the need for additional workstations. Specifically, between
June 1998 and April 1999, SSA modified its contract with the
Unisys Corporation three times to purchase additional
workstations and related hardware. These modifications
increased from 56,500 to 70,624, the total number of
intelligent workstations acquired under the Unisys contract.\9\
In addition, because Unisys faced difficulty in obtaining the
100-megahertz workstations specified in the initial contract,
the additional workstations acquired through the modifications
were configured with processor speeds ranging from 266
megahertz to 350 megahertz.
---------------------------------------------------------------------------
\9\ SSA also used another procurement vehicle to procure 1,767
additional workstations that are also part of the IWS/LAN architecture.
---------------------------------------------------------------------------
According to SSA officials overseeing the initiative, SSA's
initial estimates of its IWS/LAN requirements had not fully
considered the needs of all SSA and state DDS sites. As a
result, additional workstations were necessary to (1) ensure
Y2K hardware compliance at all DDS sites, (2) complete
installations in some of SSA's larger sites, and (3) support
training needs. SSA reported that the contract modifications
cost about $32 million and that it had completed the
installations of all but 106 workstations acquired via the
modifications by July 11, 1999.\10\
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\10\ According to SSA, the remaining workstations are to be
installed by October 1999.
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Beyond these modifications, however, SSA has continued to
increase its requirements and is currently in the process of
acquiring additional workstations to support the national IWS/
LAN initiative. In particular, SSA's Office of Systems
concluded during fiscal year 1999 that the workstations
acquired via the Unisys contract and its subsequent
modifications were not sufficient to fulfill the IWS/LAN
requirements of all SSA and DDS sites. As a result, the Chief
Information Officer (CIO), in November 1998, approved a request
for a $45 million, 5-year follow-on contract to acquire,
install, and maintain at least 6,900 additional workstations
and about 275 additional LANs.
According to a Systems official, the intelligent
workstation that SSA has specified for the follow-on contract
is, at a minimum, a 333-megahertz Pentium II processor with 64
megabytes of random access memory and a 4-gigabyte hard (fixed)
disk drive. SSA is currently evaluating vendors' proposals and
expects to award the contract by the end of July.
Although the CIO approved the Unisys contract modifications
and the follow-on contract, SSA's Deputy Commissioner for
Finance, Assessment and Management had previously expressed
concerns about SSA's need for the additional workstations and
their expected benefits. In particular, in letters to the CIO
in November 1998 and April 1999, the Deputy Commissioner
recommended that the CIO approve the additional workstations
from Unisys and the follow-on contract award on the condition
that SSA would, respectively, (1) reassess the total number of
work year savings for IWS/LAN and (2) reconcile the number of
workstations against staffing levels. The CIO agreed to these
conditions and requested that relevant agency components
determine the reasons for the additional workstations and
identify the benefits expected to be achieved from them.
Although this effort has been ongoing for about 8 months, as of
July 22, the study had not been finalized.
IWS/LAN's Actual Contribution To Improved Productivity and Mission
Performance Remains Unclear
Last June we expressed concern that SSA lacked target goals
and a defined process for measuring IWS/LAN performance--
essential to determining whether its investment in IWS/LAN was
yielding expected improvements in service to the public.\11\
According to the Clinger-Cohen Act and OMB guidance, effective
technology investment decision-making requires that processes
be implemented and data collected to ensure that (1) project
proposals are funded on the basis of management evaluations of
costs, risks, and expected benefits to mission performance and
(2) once funded, projects are controlled by examining costs,
the development schedule, and actual versus expected results.
We therefore recommended that SSA establish a formal oversight
process for measuring the actual performance of IWS/LAN,
including identifying the impact that each phase of this
initiative has on mission performance and conducting post-
implementation reviews of the project.
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\11\ GAO/AIMD-98-136, June 19, 1998.
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Although SSA agreed with the need for performance goals and
measures, its Information Technology Systems Review Staff had
neither completed nor established plans for performing in-
process reviews of IWS/LAN to (1) compare the estimated cost
levels to actual cost data, (2) compare the estimated and
actual schedules, (3) compare expected and actual benefits
realized, and (4) assess risks. In addition, while the Clinger-
Cohen Act and OMB guidelines call for post-implementation
evaluations to determine the actual project cost, benefits,
risks, and returns, SSA has not scheduled a post-implementation
review to validate the IWS/LAN phase I projected savings and to
apply lessons learned to make other information technology
investment decisions. According to the Director of the
Information Technology Systems Review Staff, the agency has no
plans to perform either in-process or post-implementation
reviews unless problems are identified that warrant such an
effort.
As expressed in our earlier report, it is essential that
SSA conduct in-process and post-implementation reviews for the
IWS/LAN initiative. Since 1994, we have expressed concerns
regarding SSA's need to measure the actual benefits achieved
from its implementation.\12\ Moreover, as the agency continues
to expand IWS/LAN via its follow-on workstation acquisitions,
it is critical for the agency to know how well it has achieved
the savings projected in its initial assessments supporting
this initiative. Without such reviews, the agency will be
unable to make informed decisions concerning (1) whether it
should continue, modify, or terminate its investment in a
particular initiative, or (2) how it can improve and refine its
information technology investment decision-making process.
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\12\ Social Security Administration: Risks Associated With
Information Technology Investment Continue (GAO/AIMD-94-143, September
19, 1994).
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SSA Will Need to Continue to Address DDS Network Management Concerns
Our 1998 report also noted concerns among state DDSs about
the loss of network management and control over IWS/LAN
operations in their offices and dissatisfaction with the
service and technical support received from the IWS/LAN
contractor.\13\ Accordingly, we recommended that SSA work
closely with the DDSs to identify and resolve the network
management concerns.
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\13\ GAO/AIMD-98-136, June 19, 1998.
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SSA has worked with the DDSs to address these issues. For
example, it is providing additional servers to give the DDSs
certain administrative rights capabilities, such as access to
specific login scripts and full control over DDS applications.
SSA has also worked with the DDSs to streamline the maintenance
process and establish agreements that would allow the DDSs to
perform their own IWS/LAN maintenance. Under such agreements,
according to SSA, states could rely on their in-house technical
staff--rather than the services of the IWS/LAN contractor,
Unisys Corporation--to address maintenance problems. At the
conclusion of our review, SSA had entered into a maintenance
agreement with one state DDS--Wisconsin--and was considering
the requests of four other DDSs.
Other issues also continue to concern the DDSs. For
example, representatives of the National Council of Disability
Determination Directors, which represents the state DDSs,
stated that they remain concerned about SSA's attempts to
implement a standard print solution. In addition, they stated
that SSA has not ensured that the workstations implemented
adhere to a standard configuration that provides all DDS system
administrators with the same rights. SSA has acknowledged these
issues and plans to work with the states to address them.
RDS: DEVELOPMENT PROBLEMS HAVE LED SSA TO DISCONTINUE THE INITIATIVE
SSA's work toward developing RDS has been ongoing for many
years. The initiative began in 1992 as the Modernized
Disability System and was redesignated as RDS in 1994 to
coincide with the agency's efforts to reengineer the disability
claims process. As shown in Figure 1, SSA had planned to
implement the RDS software starting November 1996 and to
complete the national roll-out by May 2001.
[GRAPHIC] [TIFF OMITTED] T0114.003
When completed, RDS was to be the first major programmatic
software application to operate on SSA's IWS/LAN infrastructure
and be part of the enabling platform for SSA's modernized
disability claims process. Specifically, RDS was to automate
the Title II and Title XVI disability claims processes--from
the initial claims-taking in the field office to the gathering
and evaluation of medical evidence in the state DDSs, to
payment execution in the field office or processing center, and
include the handling of appeals in hearing offices. SSA
anticipated that this automation would contribute to increased
productivity, decreased disability claims processing times, and
more consistent and uniform disability decisions. However,
after approximately 7 years and more than $71 million \14\
reportedly spent on the initiative, SSA has not succeeded in
developing RDS and no longer plans to continue the effort.
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\14\ The reported costs were for RDS software design and
development, pilot tests, and contractor support.
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As Figure 2 shows, between 1993 and 1999, SSA took various
steps toward developing the RDS software.
[GRAPHIC] [TIFF OMITTED] T0114.004
However, even in its earliest stages, this effort proved
problematic and was plagued with delays. For example, in
September 1996, we reported that software development problems
had delayed the scheduled implementation of RDS by more than 2
years.\15\ An assessment of the development effort revealed a
number of factors as having contributed to that delay,
including (1) using programmers with insufficient experience,
(2) using software development tools that did not perform
effectively, and (3) establishing initial software development
schedules that were too optimistic.
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\15\ Social Security Administration: Effective Leadership Needed to
Meet Daunting Challenges (GAO/HEHS-96-196, September 12, 1996).
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SSA proceeded with the initiative, nonetheless, and in
August 1997, began pilot testing the first release of the RDS
software in its Alexandria, Virginia field office and the
federal DDS \16\ for the specific purposes of (1) assessing the
performance, cost, and benefits of the software and (2)
determining IWS/LAN phase II equipment requirements. However,
as we previously reported, SSA encountered performance problems
during the pilot tests.\17\ For example, Systems officials
stated that, using RDS, the reported productivity of claims
representatives in the SSA field office dropped due to the
system's slow response time. Specifically, the officials stated
that before the installation of RDS, each field office claims
representative processed approximately 5 case interviews per
day. After RDS was installed, each claims representative could
process only about 3 cases per day.
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\16\ The federal DDS provides back-up services to state DDSs when
the state offices cannot process their workloads and serves as a model
office for testing new technologies and work processes.
\17\ GAO/AIMD-98-136, June 19, 1998.
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In response to the RDS performance problems, SSA delayed
its plans for expanding the pilot to other offices and in March
1998, contracted with Booz-Allen and Hamilton to independently
evaluate and recommend options for proceeding with the
initiative. According to the statement of work, Booz-Allen and
Hamilton was tasked to provide SSA with a comparative cost,
benefit, risk, and schedule assessment for RDS, and to propose
alternative strategies for achieving its underlying objectives.
The contractor was originally scheduled to deliver its report
to SSA in September 1998, at which time SSA planned to select
an option for proceeding to achieve objectives intended for the
initiative. However, SSA later extended this milestone, with
the draft report being delivered in February 1999. The agency
subsequently required the contractor to address additional
comments and concerns put forth by SSA, resulting in additional
delays. SSA provided the report to us on July 26.
According to the Booz-Allen and Hamilton report, the RDS
software had defects that would diminish the current case-
processing rate at DDS sites. In addition, SSA had not been
timely in addressing the software defects. For example, 90
software problems identified by SSA staff remained unresolved
after more than 120 days. As a result, the Booz-Allen and
Hamilton report recommended that SSA discontinue the RDS
initiative and focus on an alternative solution involving the
use of an electronic folder to replace the paper-based case
folder in the disability determination process. Further, to
reduce development risks, the contractor recommended that the
electronic folder project be segmented into manageable
sections.
SSA Plans to Launch a New Initiative
Based on the assessment it received from Booz-Allen and Hamilton,
SSA has discontinued the development of RDS and has begun to pursue a
new strategy for addressing the needs of its disability determination
process. According to the RDS project manager, the strategy that SSA is
now considering will be multi-faceted, incorporating three components:
(1) an electronic disability intake process--which will include a
subset of the existing RDS software, (2) the existing DDS claims
process, and (3) a new system for the Office of Hearings and Appeals.
In addition, we were told the strategy will rely on the use of an
electronic folder to transmit data from one processing location to
another. The electronic folder is to be a data repository, storing
documents that are keyed-in, scanned, or faxed, and will essentially
replace the current process of moving a paper folder from one location
to another. SSA began pilot testing its new strategy on July 26.
However, as SSA is beginning to move forward with this new
initiative, it needs to take advantage of opportunities to apply
improved software development processes. In January 1998, we reported
that SSA had begun taking steps to improve its software development
capability.\18\ Significant actions that SSA initiated include (1)
launching a formal software process improvement program, (2) acquiring
assistance from a nationally recognized research and development center
in assessing its strengths and weaknesses and in assisting with
improvements,\19\ and (3) establishing management groups to oversee
software process improvement activities. SSA has developed and is
currently applying the improved software development processes to 11
projects.
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\18\ Social Security Administration: Software Development Process
Improvements Started But Work Remains (GAO/AIMD-98-39, January 28,
1998).
\19\ The Software Engineering Institute at Carnegie Mellon
University, in Pittsburgh, Pennsylvania.
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Given the failure of RDS, it is imperative that any future software
initiatives adhere to the improved processes and methods. Without such
linkage, SSA again risks spending millions on a project that will not
succeed. On July 27, SSA officials told us that the new post-RDS
initiative will be linked to the agency's software development
improvement efforts.
In summary, SSA has encountered mixed success in implementing its
key information technology initiatives. The agency has clearly been a
leader on Y2K and has demonstrated a commitment to addressing the
challenges of the century date change. Further, the agency has worked
aggressively to implement IWS/LAN as its basic automation
infrastructure. However, the benefits of the IWS/LAN investment remain
uncertain because SSA has not yet assessed its actual contribution to
improved mission performance. In addition, after years of problems, SSA
discontinued RDS, which will delay expected improvements in the
processing of disability claims. To avoid repeating past mistakes on
its future information technology efforts, SSA will need to, at a
minimum, apply disciplined information technology investment management
practices and adhere to improved software development processes.
Mr. Chairman, this concludes my statement. I would be happy to
respond to any questions that you or other members of the Subcommittee
may have at this time.
Contact and Acknowledgements
For information about this testimony, please contact Joel
Willemssen at (202) 512-6253. Individuals making key
contributions to this testimony included Michael A. Alexander,
Yvette R. Banks, Nabajyoti Barkakati, Valerie C. Melvin,
Kenneth A. Johnson, and Sonal Vashi.
Chairman Shaw. Have you discussed that linkage with SSA?
Mr. Willemssen. Yes, we have. We have discussed it with SSA
this week. And I was informed 2 days ago that SSA now plans to
make that linkage, and the projects that they have underway in
their software improvement initiatives are planned to tie in
with the new redesign system.
Chairman Shaw. In your review, I know that the Commissioner
said, and I think I am quoting him exactly, we have been
certified as 100-percent compliant through the entire system.
Do you agree with that statement?
Mr. Willemssen. In terms of the software that SSA itself
has developed, that would be accurate. However, we are aware
that one system, which includes some commercial off-the-shelf
software, has not been certified as compliant and is planned to
be certified later this summer or early fall.
Chairman Shaw. Where does that come into play?
Mr. Willemssen. That involves scanning in W-2 forms, so it
is not an unimportant system, and it is deemed mission
critical, but it is something outside of SSA's direct control.
Since they didn't develop the software, they have to rely on a
vendor to provide an upgrade.
Chairman Shaw. That is with the IRS, isn't it?
Mr. Willemssen. Yes, that is information that then will be
put in the earnings records.
Chairman Shaw. That is completely on the side of receipts
rather than disbursements?
Mr. Willemssen. I believe so, yes, Mr. Chairman.
Chairman Shaw. Mr. McCrery.
Mr. McCrery. Mr. Willemssen, I understand that Social
Security Administration had planned to procure 100 megahertz
pentium workstations? Are you familiar with that?
Mr. Willemssen. Yes, sir, I am.
Mr. McCrery. Is that still the plan?
Mr. Willemssen. No, sir. At this point, they have gone to
higher speed, up to the 350 range. That was what SSA was doing
up until the last year or so. They worked out some contractual
arrangements with the contractor UNISYS and eventually revised
that. That was an issue in the past; it is not a current issue
in terms of what they are currently procuring. It may turn out
to be an issue from the standpoint of those machines being out
in offices which are at that speed.
Mr. McCrery. You say they worked out some contractual
arrangements with UNISYS?
Mr. Willemssen. Yes.
Mr. McCrery. Can you describe those?
Mr. Willemssen. Yes. What happened is UNISYS, as you might
expect, was finding it increasingly difficult to locate any 100
megahertz anywhere and came to SSA and said we want--we need to
redo the contract a little bit, because we can't find these 100
megahertz. I think, to SSA's credit, they didn't just, say, OK
let's modify it. Because one thing to keep in mind is the kind
of cost for that machine. I think in the third year of the
contract it was a little over $300 a machine. So I think SSA in
that negotiation wanted to make sure that there was some cost
tradeoff by going with a higher megahertz rating.
Mr. McCrery. Yeah. With as many computers as the Social
Security Administration has to have, it seems to me we would
have quite a few companies out there really wanting to do
business with Social Security Administration. And with the
advancement in technology that we are experiencing these days,
do we have a contract now that provides for upgrading every so
often?
Mr. Willemssen. One of the issues that we have discussed
with SSA is looking at periodic refreshment clauses so that you
don't have to go in and modify, but it is done in more of a
standardized fashion. As our hardware capability gradually
escalates, the procurement system allows for that.
Mr. McCrery. Do we have in the Federal Government some kind
of a standard procedure for evaluating these contracts? Does
OMB get involved?
Mr. Willemssen. GSA runs a schedule system where it has
already worked out the contractual arrangements with various
vendors; and Federal agencies then can use that schedule for
standard buys. I don't believe this was the situation with IWS/
LAN. But I think this was bit more of a customized situation,
so that SSA contracted directly with UNISYS. But I can follow
up and check on that.
Mr. McCrery. That is right?
Ms. Adams. Yes.
Mr. McCrery. All right. Thanks very much.
Thank you, Mr. Chairman.
Chairman Shaw. One area that I would like to touch on.
Regarding the SSA attempts to develop the RDS, does SSA have
the right skills and training to plan for and develop the
future systems? Should they be giving some thought to
contracting out or do they have the skills in-house?
Mr. Willemssen. I think there is some level of concern
about whether they would have the skills to develop the
software for this environment, and that is why it is especially
important to tie this initiative in with those software
improvement efforts that I had mentioned earlier. As SSA
embarks on this new strategy and the new software, they should
take those process improvements and collate them within the
effort, so that they do not repeat the mistakes with the
initial redesign effort.
So I think there is some question about the capability. I
think SSA acknowledges that and is willing to try and improve
it.
One thing I would point out, also, though is if SSA decided
to contract out the development, you also need the capability
to manage the contractor. So it is not as if you are just
handing it off. You still have to have some capability in-house
to know what that contractor is doing.
Chairman Shaw. What is the pay scale of people who are
charged with that responsibility at SSA compared to what it is
in the private sector?
Mr. Willemssen. I don't have precise figures, but somewhat
lower. But, on the other hand, there is a bit more security
involved. My experience in the private sector with programmers
is movement is a little bit more frequent. So I think there are
tradeoffs as in anything.
Chairman Shaw. Thank you.
Jim, do you have anything else?
Mr. McCrery. No, that is it.
Chairman Shaw. Thank you, sir.
Mr. Willemssen. Thank you, Mr. Chairman.
Chairman Shaw. I think I mispronounced your name. I think
it is Willemssen.
Mr. Willemssen. Absolutely correct.
Chairman Shaw. OK.
Mr. Willemssen. Thanks.
Chairman Shaw. I bet you are called Mr. Williamson a lot--
Willemssen.
Thank you.
Thank you all for being here.
This hearing is adjourned.
[Whereupon, at 12 noon, the hearing was adjourned.]