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Reengineering through Information Technology-- Part 3

IT12: Provide Incentives for Innovation

Creating the Win-Win Scenario

Federal agencies expect to spend over $25 billion in fiscal year 1993 to buy and use information technology (IT) but the dollars are being used so agencies can work faster--not smarter.1 Agency use of IT has failed to keep pace with private industry, where IT innovations have enabled companies large and small to reengineer their business practices. More IT dollars must be focused on the innovation needed for government reinvention as opposed to the automation of existing processes.

To promote innovation, the government needs to reinvent its funding of information technology and its relationships with the IT industry. Agencies must be encouraged to experiment and accept managed risks, which are inherent in innovation. Agencies, the IT industry, and the public will benefit from funding mechanisms and contract terms that encourage the continual introduction of IT solutions--and make government more responsive.

Four recommendations are presented here to foster much needed IT innovation in and among agencies by overcoming fiscal, procedural, and cultural barriers and by providing opportunities for creative partnerships between government and the IT industry:

---retain a portion of agency IT savings for reinvestment,

---promote performance-based contracting for IT,

---use multi-year funding for agency IT projects, and

---establish a governmentwide venture capital fund for innovative IT projects.

Need for Change

      The Budget Paradigm: 
     Today, agency IT managers have few organizational incentives to

innovate.[2] In addition to the cultural resistance that reinvention can generate, funding of new IT initiatives has become increasingly difficult. Agencies face budget reductions in direct response to any savings generated by IT innovation. IT managers are thereby provided with negative incentives to challenge the prevailing culture and accept the risks inherent in innovation. New investment in and experimentation with IT is relegated to a low priority in the face of recurring budget constraints.

Agency budgets must include the funds for IT innovation as well as the funds to operate, maintain, and modernize existing information systems. Agencies that have successfully innovated using IT must be allowed to continue IT investment and experimentation. Success-based funding of IT innovation would provide a new incentive for managers to reinvent agency business practices, since the funds available for new IT investment would relate to savings previously achieved.

Contracting Practices.
With the technical complexity of IT procurements, most agencies have favored low-risk, fixed-price contracts that place the IT industry in the role of a supplier of commodities rather than a partner in innovation. This approach may work when agencies want IT commodities, but it is unresponsive to agencies seeking creative IT solutions, since the contractor is encouraged to sell as much of the offered product or service as the agency is willing to buy. For example, agencies frequently lease equipment from a contractor. Since the contractor needs to fully depreciate the investment in capital equipment being leased to the government, the contractor is discouraged from recommending solutions that would result in termination of the lease. The leased equipment remains in the agency despite the availability of new, more cost-effective products. Under these circumstances, there are few incentives for the IT industry to partner with agencies to get current technologies in place.

Contractors must be allowed to be more than suppliers of goods and services. Contract terms need to incentivize the contractor to perform as a partner, potentially permitting the contractor to share in actual cost savings realized by the agencies in implementing new solutions while minimizing the financial risks when agencies accept new solutions in place of old. Agencies need to create win-win scenarios for government-industry relationships. This points to making improvements in the contract vehicle itself.

The objectives of major IT initiatives are not easily met by a single contract type. The acquisition of innovative information technology often requires a complex systems integration effort that may best be articulated as a combination of fixed-price, cost-reimbursement, incentive, indefinite delivery, time-and-materials, and labor hour provisions within an overall contract structure. Integral to the contract, clauses incorporating performance incentives, award fees, and value engineering must be crafted as positive instruments of reinvention through IT innovation rather than high-risk exceptions to accepted procurement practice.

Through effective management of hybrid contracts, industry IT providers can be given performance-based incentives for making the government more effective and efficient. Where contract terms and conditions allow the industry provider to increase profits by saving the government money, a win-win scenario is created. The price curves in IT hardware and the rapid pace of technology evolution make this scenario possible. For example, a creative solution that uses IT to save an agency $1.00 can be shared as $0.50 in savings to the government and $0.50 in increased profits to the industry provider. This solution truly puts the government and industry in a strategic partnership, working together and using IT-based approaches to reengineer government.

The Office of Federal Procurement Policy has previously encouraged the use of performance and quality measures in service contracts, but limited knowledge and mixed experiences with this type of contracting have resulted in uneven implementation by the agencies.3 Agency IT managers and contracting officials need to be educated and encouraged to use performance-based contracting techniques for IT. Hybrid contract types and contractual relationships based on partnership represent a significant culture change to many in both the government IT and contracting communities. As a starting point, a reeducation process is needed to change the common perception of the Federal Acquisition Regulations (FAR) as imposing an inflexible structure for government contracting.4 Too few government IT acquisitions have effectively used the latitude provided by the FAR.

However, success stories will need to demonstrate the advantages of this approach on a pilot basis before the risks of trying something new will be accepted more broadly. As an example of successful performancebased contracting, the Department of Housing and Urban Development (HUD) has documented its experiences with the HUD Integrated Information Processing Services (HIIPS) procurement, a 12-year contract valued at $540 million. The HIIPS program office used performance mechanisms to create a strategic partnership with a vendor that has realized savings for the government in excess of $30 million since 1991.5

Funding for IT.

Major reinventions based on innovative uses of IT may begin with discrete, well-defined pilots, but are typically implemented as complex, multi-year programs. Such programs experience schedule changes because of a variety of unpredictable circumstances, with corresponding adjustments in required funding. The annual appropriations process is inconsistent with the funding flexibility required to effectively conduct these programs and efficiently acquire IT. On the contrary, the year-end spending phenomenon of annual appropriations works against IT innovation by encouraging agencies to acquire IT commodities that support current agency automation practices. Existing IT solutions and technologies are perpetuated and become more difficult to reengineer based on the ever-increasing "sunk cost." Contracts become "dumping grounds" in the recurring year-end "spend it or lose it" syndrome of fiscal year funding. For example, analysis of the federal government's purchasing practices have shown that 50 percent of all personal computers are purchased in the fourth quarter of the fiscal year.[6] The multi-year characteristics of IT programs demand more flexible funding mechanisms to provide effective funding support.

IT innovations that are authorized by specific appropriation should be provided multi-year funding. Although multi-year funding can be accomplished now through the appropriations process, it is done selectively. Greater emphasis on multi-year appropriations is needed for IT innovation. Another means of providing multi-year funding is through the use of legislatively established working capital funds (WCFs). One current example of the benefit of multi-year IT funding is available from the Department of the Treasury. The department operates its working capital fund in conjunction with its Executive Agent Program to fund selected agencywide IT projects.[7] This approach has generated documented savings conservatively estimated at $45 million. The Treasury attributes these savings directly to the multi-year aspects of its fund. Additional savings have also been realized through the reduced staffing requirements and economies of scale inherent in an agencywide program.[8]

Current legislation authorizes several agencies to operate such funds.[9] However, the legislation does not consistently address IT services within the scope of these funds. New legislation to revise WCFs to support IT innovation may be required. In addition, effective use of multi-year funding requires concerted agency effort. As the fund manager, an agency must have in place the expertise and procedures to ensure accountability of the funds expended for each IT program on a continuing basis over multiple fiscal years. This requirement can present a challenge to agencies unfamiliar with this funding arrangement, but the experience of agencies with successful track records managing similar funds can serve as a resource base. For example, the Treasury publishes a handbook that documents the specific procedures that department has used to successfully manage major IT programs funded through its WCF.10

In today's budgetary environment, proposals for innovative interagency use of IT are viewed as low priorities compared to the operation, maintenance, and modernization of existing agency systems. Even promising IT pilots often fail to achieve full implementation. Senior managers are too often unwilling to risk scarce agency dollars on IT innovations with current agency operations and personal careers at stake. This business-as-usual approach to IT funding by agencies will not generate the innovative solutions that are the core of government reinvention. No mechanism currently exists to identify and fund crosscutting innovations that will have multi-agency or governmentwide impact.

IT innovation should be fostered governmentwide through the creation and operation of a fund that operates as the analog of a venture capital firm in the private sector. This fund complements the Innovation Capital Fund recommended in a companion NPR report.[11] Operation of a venture capital fund would allow agency innovators to compete for available funding, ensure that agency initiatives are screened through a critical due diligence process, and permit agency resources to be augmented by the fund to enable selected reinvention projects to proceed. However, the fund's benefit would not be just as a dollar pool for funding IT. A governmentwide IT innovation program would draw the attention and participation of state and local governments and the IT industry, all of whom stand to benefit from IT innovation in government. Thus, the manager of the fund would be positioned to broker the expertise and resources of other interested parties in fund-sponsored projects further leveraging fund dollars.


  1. Retain a portion of agency information technology savings for reinvestment. (2)

By July 1994 the Office of Management and Budget (OMB) should instruct agencies to identify IT savings in agency budget submissions for potential reinvestment starting in fiscal year 1996. As part of its instructions, OMB should establish the reporting requirements by which agencies quantify IT savings and track reinvestment in successive fiscal years as part of agency budgets. The instructions to initiate this budget process must be available to agencies no later than July 1994, to accommodate the fiscal year 1996 budget cycle.

Another NPR accompanying report proposes that up to 50 percent of agency appropriations unobligated at the end of a fiscal year be identified for carryover to the next fiscal year.[12] For IT savings, this could be accomplished in two ways. During the current fiscal year, recognized savings could be transferred to an agency's WCF to support IT innovation.[13] In future years, recognized savings could be identified within the annual budget and appropriations process and included in agency appropriations. Through these two mechanisms, a percentage of recognized savings would effectively be carried forward to fund credible programs for IT innovation and experimentation. Such programs would specifically take advantage of new IT technology, demonstrate measurable improvements in agency services, and realize additional savings.

OMB should also collaborate annually with the General Accounting Office to identify the minimum agency accounting procedures and performance measurement criteria required to support agency claims of IT savings. This will facilitate agreement between OMB and congressional appropriations committees on the specific agency savings that will be considered for reinvestment. Results of the collaboration should be reflected in the OMB instructions recommended earlier.

Success-based funding must be grounded in an auditable baseline of agency performance in terms of outcomes and costs in order to attribute specific savings to IT innovation. Only those agencies that meet the challenge of demonstrating auditable results would receive the benefits of success-based funding. Consistent accounting procedures and performance measurement criteria must be employed across agencies to clearly identify those savings resulting from IT innovations. The close relationship between documented agency savings from IT innovation, agency budgets, and the appropriations process point to the central role of OMB in implementing success-based funding.

2. Promote performance-based contracting for information technology. (2)

The Administrator of GSA, by April 1994, in coordination with the interagency team developing a plan for Federal IT acquisition, should lead a governmentwide effort to promote performance-based contracting for IT, starting with the preparation of an action plan by July 1994. A concerted effort is essential to address the needed revision of agency IT acquisition practices, development of new training materials, and publication of case studies to exemplify performance-based contracting. Consideration should also be given to include specific language in the FIRMR and FAR encouraging performance-based contracts and clarifying the latitude available for IT procurements.

3. Use multi-year funding for agency information technology projects. (3)

Beginning in July 1994 OMB should identify major agency innovations appropriate for multi-year funding beginning with agency budget submissions for fiscal year 1996. OMB should then collaborate with the congressional appropriations committees on an annual basis to secure multi-year funding for these IT projects thereby establishing its acceptance and use.

OMB should also complete an agency-by-agency review of current WCF legislation by December 1994. Based on the results of this review, OMB should assist agencies in establishing or revising WCFs to support multi-year funding for agency IT innovation.

4. Establish a governmentwide innovation fund for innovative information technology projects. (3)

By September 1994, OMB should develop a proposal to establish a government- wide innovation fund - including draft legislation, if needed. This fund would support projects with significant benefits to more than one program or agency. Enabling legislation for the fund should parallel the legislation for existing agency WCFs; with concurrence from appropriations committees, appropriated monies should be transferred to the fund and retained without fiscal year spending restrictions until expended on fund-sponsored initiatives. The legislation would also contain provisions establishing funding procedures and operating mechanisms that distinguish this fund from a traditional WCF. Consideration should be given to the options of creating an independent fund or expanding the scope of the existing Information Technology Fund administered by the General Services Administration.[14]

Considerations in the fund's operational framework must ensure that the fund is established and operated with the conditions necessary to promote partnership with the IT industry; leverage the fund with other resources of federal, state, and local agencies, and the private sector; and manage the risk of IT innovation. The criteria by which initiatives are evaluated and selected for fund sponsorship are critical to the value of the fund. The criteria should be established, reviewed, refined, and published in a process open to public comment. The objective of the criteria should be to identify those initiatives that present the best value to the government, considering both return on investment and risk. The criteria would need to address potential improvement of agency, interagency, and intergovernmental operations. Implementation costs, demonstrated savings, agency competency, technological feasibility, interagency and intergovernmental commitments, and the participation of the IT industry would all be carefully weighed.

Capital equivalent to 1 percent of the federal government's annual expenditures for IT would provide sufficient capital to operate the fund. Based on fiscal year 1993 estimates, the 1 percent formula would result in a funding level of approximately $250 million.[15] However, it would be self-defeating to IT innovation to obtain this funding from agency IT funds which are already constrained. Therefore, funding should be identified from within existing agency program appropriations and, with concurrence from the appropriations committees, transferred to the fund to avoid new appropriations. The method of capitalization, together with procedures for periodically reviewing and setting the funding level in succeeding fiscal years, would be key ingredients of the enabling legislation to establish the fund. The relationship of the fund and fund-sponsored initiatives to agency information system plans, budgets, and appropriations points to OMB for fund oversight and development of its operational framework.

Recommendation of projects to be sponsored by the fund would be an appropriate role for the Government Information Technology Services (GITS) Working Group proposed earlier in this report. In addition, the views of state and local government and the private sector should be considered through an advisory role for industry groups and government associations and/or a consultant role for distinguished innovators.

Cross References to Other NPR Accompanying Reports

Mission-Driven, Results-Oriented Budgeting, BGT05: Provide Line Managers with Greater Flexibility to Achieve Results.

Improving Financial Management, FM07: Create Innovation Funds; and FM12: Manage Fixed Asset Investments for the Long Term.

Reinventing Federal Procurement, PROC15: Encourage Best Value Procurement.


  1. U.S. Office of Management and Budget (OMB), Current Information Technology Resource Requirements of the Federal Government: Fiscal Year 1993 (Washington, D.C.: U.S. Government Printing Office [GPO], 1992), p. 3.
  2. U.S. General Accounting Office, Transition Series: Information Management and Technology Issues, GAO/OCG-93-5TR (Washington, D.C.: U.S. General Accounting Office, December 1992), pp. 19-22.
  3. U.S. Office of Management and Budget, Office of Federal Procurement Policy, Service Contracting, Policy Letter 91-2 (Washington, D.C., April 9, 1991), p. 2.
  4. The FAR is issued as chapter 1 of title 48, Code of Federal Regulations.
  5. Arky, M. Elizabeth, Special Assistant to the Secretary, Department of Housing and Urban Development, "HUD Comments On Reengineering Through Information Technology," August 9, 1993, p. 3. (Letter.)
  6. Brewin, Bob, "PC Price War Forecast For End of Fiscal Year," Federal Computer Week (August 9, 1993), p. 4.
  7. U.S. Department of the Treasury (Treasury), Establishment of Executive Agents, TD 84-02 (September 4, 1991), p. 2.
  8. U.S. Department of the Treasury, Office of Telecommunications Management, Innovation in Telecommunications Management (February 1993),
  9. 7.
  10. Agencies with a legislatively enacted WCF include the Departments of Commerce, Health and Human Services, Housing and Urban Development, the Interior, Justice, Labor, State, Transportation, and the Treasury.
  11. Treasury, Innovation in Telecommunications Management, pp. 11-27.
  12. National Performance Review Accompanying Report, Improving Financial Management (Washington, D.C.: U.S. GPO, September 1993).
  13. National Performance Review Accompanying Report, Mission-Driven, Results-Oriented Budgeting (Washington, D.C.: U.S. GPO, September 1993).
  14. Working capital funds have been authorized for a number of agencies. For example, the Departments of Transportation and the Treasury have long-established funds.
  15. The Information Technology Fund was authorized by the Paperwork Reduction Reauthorization Act of 1986. The fund enables the General Services Administration to efficiently provide common information technology resources to federal agencies on a coordinated basis.
  16. OMB, Current Information Technology Resource Requirements of the Federal Government: Fiscal Year 1993, p. 3.
  17. Arky, p. 3.
  18. Treasury, Establishment of Executive Agents, p.2.
  19. Treasury, Innovation in Telecommunications Management, p. 7.

     IT13:  Provide Training and Technical Assistance in Information 
     Technology to Federal Employees 

People Helping People Cope with Technology

Every year, increasing numbers of federal workers are expected to use information technology (IT) skills and knowledge in performing their jobs. However, many members of the federal workforce lack sufficient training and background to use new technologies effectively, and many managers fail to realize the importance of IT training. Compared with private industry, the federal government invests few dollars and little time in IT training and retraining.[1] Without this investment, the federal workforce is unable to keep pace with the rapid changes in technology and improved methods of customer service. Federal agencies rely on information technology and are increasingly dependent on the skills and capabilities of their workforce to enhance productivity and ensure quality service to the American public. Yet they provide insufficient incentives to their workforce to seek IT education and training as well as insufficient opportunities to obtain training--even when it is desired and necessary--and do not generally incorporate IT training in their strategic mission planning.

The cost of insufficient or no training in information technology is significant. In a worst-case scenario, people do not use their computers at all, and the organization's investment in hardware and software is wasted. In a less extreme circumstance, every time a user relies on a formal support function rather than performing IT work on his or her own, the organization pays at least $25 in overhead and salaried time. Every time a user asks a coworker for help, it costs from $15 to $100.[2]

Need for Change

Modest changes could improve the knowledge and skills of the federal workforce. Skills enhancement efforts at all levels of the federal workforce are crucial, because IT is a fundamental enabler of organizational change. IT awareness must also be improved at all levels of the federal workforce to encourage and support continuing reinvention efforts.

Senior managers have not developed the kind of experience and expertise in IT that they have in finance, human resources, and accounting.[3] At a minimum, they need a basic knowledge of how to ensure the development and use of management information systems and other technological resources that meet their agency's needs.[4] Recently, the Office of Personnel Management (OPM) began working with a task force of senior executives to refine Senior Executive Service (SES) qualifications to better match the competencies and skills identified in the recent update of the SES Management Excellence Framework.[5] There is a need to address IT competency in this effort, as well as ensure that it is made a part of the SES recertification program. Including IT competency in the SES recertification program will emphasize IT as an integral part of the continuous and comprehensive learning organization. In order to provide basic knowledge, an IT course should provide insight on how to integrate technology into the workplace, include development strategies for using new technology to manage and improve program effectiveness, and explain the impact of technological changes on the organization.

The General Accounting Office recommends that an agency's senior official for information resources management (IRM) play a leading role in defining and preparing the agency's technology plan, and then ensure that the ongoing and proposed systems development projects fall logically within this plan. Federal IRM leaders need to be highly competent individuals with the appropriate background and capabilities to administer IRM programs and manage IRM resources.

The federal government lacks a mechanism that would allow an end user to receive on-the-spot assistance with simple IT questions regarding hardware configuration, new technologies, application software packages, and information resources needed to perform various program and administrative responsibilities. Throughout the workforce there are individuals who have both the expertise and desire to assist colleagues in solving such problems. There is a need for a support system that can be institutionalized as a network of individuals with specific skill sets available to help colleagues via electronic (e.g., bulletin boards, e-mail, on-line databases, etc.) or personal interaction. These individuals can function as on-line pals to provide agencies with helpdesk functions where none presently exist and to diffuse innovation.

The federal government spends billions of dollars each year in IT contracts and acquisitions. A majority of the contracts and acquisitions do not include training provisions in the initial design stages; as a result this places a tremendous burden on the overall agency training budget.


  1. Establish a program to train nontechnical senior executives and political appointees in information technology. (2)

By June 1994, the Government Information Technology Services Working Group should direct OPM and the General Services Administration (GSA) to jointly develop and administer a training program, which should begin by September 1994. OPM and GSA should consult with each agency on the program development and implementation strategies at the agency level. The program can be delivered as a series of executive technology seminars implemented through "centers of excellence" such as the Information Resource Management College of the National Defense University, the Federal Executive Institute, or a university. The program could be modeled after the New York City Department of Personnel's Executive Development Program, which consists of monthly half-day sessions on a variety of sophisticated IT and management topics, including strategic planning/top-down planning, reengineering, implementing systems, electronic mail, video conferencing, voiceenhanced technologies, geographic information systems, database management systems, imaging, and multi-agency complaint and inspection systems.

Program participants should develop a clear understanding of how their organization can benefit from information technology; learn effective uses of IT--particularly in the federal sector; and intensify their commitment to using, managing, and implementing IT. Program topics could include IT acquisition and implementation, principles of organizational change and the impact of new technologies, customer service, and the role of technology in stimulating service redesign. In addition, the program should provide an opportunity for executives to share their experiences in IT implementation with their peers.

2. Require "minimum competency" in information technology for Senior Executive Service candidates. (1)

Agencies and OPM, by September 1994, should jointly require that candidates demonstrate a minimum competency in IT prior to their appointment in the SES. Specifically, candidates should be able to (1) integrate technology into the workplace, (2) develop strategies using new technology to manage and improve program effectiveness, and (3) understand the impact of technological changes on the organization.[6]

Agencies and OPM should also require that IT competency be included in the SES recertification program. The standard for IT competency in SES recertification should include the development and use of management information systems and other technological resources to meet an agency "s current and future needs.

3. Require IRM managers to meet certification standards. (1)

OPM and GSA should identify IRM competencies and skills requirements for IRM managers, establish an IRM Executive Institute to provide needed management training, and identify programs or centers of excellence for implementation. All federal employees pursuing an appointment to an IRM management position should be required to complete a 2-year IRM management training program or demonstrate mastery of competencies before receiving their appointment.

The first training program should begin by September 1994. It should consist of courses and seminars tailored to achieve the individual IT needs of each agency. The program should provide a clear vision of how an organization can benefit from information technology and provide the skills needed to develop an agencywide IRM management strategic plan that is linked to overall agency goals and objectives. In addition, the program should build the competency required to manage major IT acquisitions of general purpose data processing and telecommunications systems, facilities, and related services. Various components of the IRM Executive Institute could partner with programs such as GSA's
Trail Boss Program, the Federal Acquisition Institute, and/or the centers of excellence listed in action 1.

4. Promote collegial assistance for IT. (1)

Each agency head should develop a mechanism for identifying individuals with varying levels of IT expertise who wish to participate as on-line pals. The existing Federal Information Resources Management Policy Council (FIRMPoC) should be responsible for coordinating the governmentwide collegial assistance program.[7] This program should be developed by December 1994.

5. Include training as part of all information technology contracts and acquisitions. (1)

By January 1995, each agency' IT contracts or acquisitions in the early stages of development, and all future acquisitions and contracts, should include a provision for training.

Cross References to Other NPR Accompanying Reports Reinventing Human Resource Management, HRM06: Clearly Define the Objective of Training as the Improvement of Individual and Organizational Performance; Make Training More Market- Driven.


  1. Kendrick, James E., "IT Management Focus Must Extend Beyond Tip of the Iceberg: In Perspective: How Government Information Technology Management Can Improve Cost-Effective Performance," Federal Computer Week (September. 21, 1992), p. 17.
  2. Masie, Elliot, and Rebekah Wolman, The Computer Training Handbook: How to Teach People to Use Computers (Raquette, NY: National Training & Computers Project, 1989), p. 12.
  3. Keen, Peter G.W., Shaping the Future: Business Design through Information Technology (Boston: Harvard Business School Press, 1991), p. 9.
  4. U.S. General Accounting Office, Information Management and Technology Division, "Meeting the Government's Technology Challenge: Results of a GAO Symposium," ebruary 1990, pp. 5-6.
  5. Roehmer, Susan, Office of Executive and Management Policy Human Resources Development Group, Office of Personnel Management, "Senior Executive Service Executive/Managerial Qualifications," FPM Letter 920, Washington, D.C., Exhibit 5-A.
  6. These qualifications, needed for technology management, were identified under the "technology management" competency in Office of Personnel Management, Human Resources Development Group, "Leadership Effectiveness Survey," October 1991.
  7. The FIRMPoC comprises the senior agency IRM officials, and it meets regularly to discuss policy and program issues, provide advice to the General Services Administration and the Office of Management and Budget, and share other information of mutual interest.


Appendix A:

Summary of Actions by Implementation Category

(1) Agency heads can do themselves

IT03.2 Implement an integrated governmentwide national one-stop 800- number calling service.

IT04.1 Formalize the Federal Law Enforcement Wireless Users Group.

IT05.1 Integrate governmental financial filings, reporting, and payments processing.

IT05.2 Determine ways to eliminate the need for filing routine income tax returns.

IT06.1 Develop and implement a U.S. Government International Trade Data System.

IT08.2 Issue a governmentwide e-mail records management policy.

IT11.1 Conduct a two-year pilot test of a modernized IT acquisition framework.

IT11.2 Increase delegation of authority to agencies.

IT11.3 Expand use of commercial credit card.

IT11.4 Pilot test innovative approaches under the Multiple Award Schedule program.

IT13.2 Require "minimum competency" in information technology for Senior Executive Service candidates.

IT13.3 Require IRM managers to meet certification standards.

IT13.4 Promote collegial assistance for IT.

IT13.5 Include training as part of all information technology contracts and acquisitions.

(2) President, Executive Office of the President, Office of Management and Budget, or Interagency group can do

IT01.1 Plan for effective use of information technology throughout government.

IT01.2 Coordinate and oversee implementations of information technology plans.

IT02.1 Design an integrated EBT implementation plan.

IT03.1 Coordinate, recommend, and implement information technology initiatives to improve customer service.

IT03.3 Implement an integrated one-stop government services kiosk.

IT03.4 Implement an integrated governmentwide one-stop electronic bulletin board system.

IT03.5 Work with private industry to advance the implementation of technologies that provide citizen access to government information and services.

IT04.2 Establish a National Law Enforcement/Public Safety Wireless Network for use by federal, state, and local governments.

IT07.1 Organize the implementation of a National Environmental Data Index.

IT08.1 Improve electronic mail and messaging among federal agencies.

IT09.1 Develop government's information infrastructure to effectively use government information resources and support electronic government applications.

IT09.2 Consolidate and modernize government data processing centers.

IT09.3 Reengineer basic systems for improved delivery of government services.

IT09.4 Consolidate and integrate federal government private networks.

IT10.2 Establish uniform privacy protection practices and generally acceptable implementation methods for these practices.

IT10.3 Develop standard encryption capabilities and digital signatures for sensitive unclassified data.

IT10.4 Develop generally accepted principles and practices for information security.

IT10.5 Develop a national crisis response clearinghouse.

IT10.6 Emphasize the need for information security in sensitive unclassified systems.

IT10.7 Reevaluate security practices related to national security data.

IT10.8 Foster the industry-government partnership for improving services and security in public telecommunications.

IT10.9 Implement the National Industrial Security Program.

IT10.10 Develop a comprehensive Internet security plan.

IT10.11 Coordinate security research and development.

IT11.5 Expand electronic commerce.

IT11.6 Provide incentives for improved IT acquisition service efficiency.

IT12.1 Retain a portion of agency information technology savings for reinvestment.

IT12.2 Promote performance-based contracting for information technology.

IT13.1 Establish a program to train nontechnical senior executives and political appointees in information technology.

(3) Requires legislative action

IT02.2 Legislation should be proposed to facilitate nationwide implementation ofEBT.

IT10.1 Establish a Privacy Organization.

IT12.3 Use multi-year funding for agency information technology projects.

IT12.4 Establish a governmentwide innovation fund for innovative information technology projects.

Appendix B:


The National Performance Review's (NPR) Information Technology (IT) Team consisted of information technology professionals, budget, and logistics personnel from the public and private sectors. The team undertook quality functional deployment (QFD) to define the project and provide a framework for its decisionmaking and ongoing activities. A QFD is a structured total quality management exercise used by planning groups to clarify issues and problems to be addressed and identify strategies to obtain optimal results while achieving objectives within predetermined time frames. The principles developed for guiding the IT Team in the creation of its recommendations were a product of QFD.

The team identified the following issues as priorities to be addressed in order for information technology to support the delivery of government services adequately.

---The information technologies currently employed by the federal government are not delivering what the customer needs, nor is its potential being fully utilized.

---The federal government does not adequately coordinate the systems now in place.

---There is insufficient understanding of who the customers for information technology are and what their needs are.

---Too many barriers exist within the government, both regulatory and legislative, to use information technology effectively.

---All levels of the government workforce need continuous education in information technology.

All of the team's decisions, which are presented as recommendations, were made within the framework of solving the abovelisted issues. Having developed its framework, the IT Team then proceeded to review federal agency planning documents, studies, reports, issue papers, and the current literature on innovative approaches being piloted or planned in the government and private sectors. The team also held a series of meetings with government and private industry representatives to discuss the latest developments in new technology. Team members also reviewed the federal regulatory framework for information technology acquisition. All IT Team recommendations were coordinated with those of the other NPR agency and cross-cutting teams.

Appendix C:


Automated teller machine (ATM). Publicly accessible computer terminal that allows banking customers electronic entry to their accounts.

Bulletin board system (BBS). An electronic filing system through which people can exchange messages with others. Increasingly, BBSs are providing additional services, including electronic mail, software libraries, and information locator services.

Centers of Excellence. Organizations that have developed expertise in particular areas.

Digital signature. An electronic protocol that uniquely identifies a person or institution transmitting an electronic document.

Digital encryption. An electronic encoding protocol to provide security for electronic documents.

Direct federal payment program. A benefit program that is paid by the federal government directly to the recipient.

Electronic benefit transfer (EBT). The electronic payment of benefits to program recipients.

Electronic Benefit Transfer Task Force. An interagency task force established to implement a nationwide EBT program to enhance quality of service to beneficiaries, and to improve administrative efficiency and security. The task force will develop governmentwide goals, performance standards, and a schedule for implementation.

Electronic data interchange (EDI). The electronic transmission of business transaction information in a standard format between trading partners.

Electronic mail (e-mail). Electronic transmission of messages between local or remote workstations through use of local and wide area networks.

Federal Information Center (FIC). The FIC is a one-stop source of assistance on questions related to the federal government. Individuals may call the FIC via an 800 number or contact them by mail. Information specialists either answer the question or pinpoint sources of information.

Federal Information Resources Management Policy Council (FIRMPoC). A federal senior level steering group made up of senior IRM managers who advise GSA on policy and
program issues relating to IRM.

Federal Networking Council (FNC). A federal government interagency council consisting of representatives from federal agencies that have requirements for operating and using networking facilities, mainly in support of research and education, and for advancing the evolution of the federally funded portion of Internet.

FedWorld. An electronic bulletin board system (BBS) operated by the National Technical Information Service that provides links to over 100 federal BBSs and information centers.

FTS2000. The federal government's
existing telecommunications services contracts for intercity voice and data communications.

Information Infrastructure Task Force (IITF). A federal government interagency task force consisting of representatives from federal agencies involved in telecommunications and information policy setting. The task force addresses issues that promote the application of the National Information Infrastructure.

Interagency Information Resources Management Infrastructure Task Group (IIITG). An interagency task group formed by FIRMPoC to look for ways to improve the information infrastructure within the government through cooperative efforts and resource-sharing.

Internet. A global "network of networks" providing communications among over 1 million computers and 10 million users. National and Government Information Infrastructures will be constructed from the same technologies used to implement the Internet. These include telecommunications linkages, switches, computers, network protocols, and network services for interoperation and transmitting data.

Joint federal-state administered public assistance program. A benefit program that is jointly funded by federal and state governments, but is administered at the state level.

Kiosk. A conveniently located, interactive computer terminal from which the public can readily access governmental services.

Local area network (LAN). A network of computer terminals that are linked by a shared processor that allows individual terminals to communicate electronically with one another.

National Academy of Public Administration. A nonprofit, nonpartisan organization chartered by Congress to improve governance and public management at all levels.

National Information Infrastructure (NII). Consists of (1) thousands of interconnected, interoperable telecommunications networks, (2) computer systems, televisions, fax machines, telephones, and other "information appliances," (3) information databases and services (e.g., "digital libraries"), and (4) trained people who can build, maintain, and operate these systems. In the future, the NII will enable all Americans to access information and convey voice, video, and data to others for an affordable price.

Office of Science and Technology Policy (OSTP). OSTP serves as a source of scientific, engineering, and technological analysis and advice for the President with respect to major technology policies, plans, and programs of the federal government.

OMB Circular A-130. Document issued by OMB titled Management of Federal Information Resources. This document provides uniform government-wide information managementpolicies in such areas as information resources management planning, records management, and information dissemination policy.

One-stop shopping. Customer access to the government or private sector that allows connection to a full menu of services. This may be accomplished via kiosk, personal computer, telephone, or other means.

Paperwork Reduction Act (PRA) of 1980. This act established a broad mandate for agenciesto perform their information management activities in an efficient, effective, and economical manner. This act requires OMB to develop, implement, oversee, and evaluate information management practices and policies governmentwide.

Regulation E (Reg E). Reg E of the Electronic Funds Transfer Act applies to electronic transactions that result in a debit or a credit to a consumer asset account. This provision limits recipient liability for misused, lost, or stolen benefits whether or not they are negligent.

Service to the Citizen Intergovernmental Task Force. An interagency task force established to improve the federal government's delivery of services to customers. This task force alsoworks to develop customer service-related partnerships with state and local governments, private industry, academia, and nonprofit organizations.

Virtual agency. A citizen's view of how the government appears to operate based upon electronically enabled, integrated program information and services organized around common functions of service. Examples could be a virtual housing agency or a virtual entitlement agency.

Working Capital Fund (WCF). A legislatively authorized fund that enables an agency to centrally finance various services. Working capital funds are typically used by agencies to finance administrative services and telecommunications.

Appendix D:

Accompanying Reports of the National Performance Review:

Governmental Systems

 Changing internal Culture                              Abbr
 *************************                              ****
 Creating Quality Leadership and Management             QUAL
 Streamlining Management Control                         SMC
 Transforming Organizational Structures                  ORG
 Improving Customer Service                              ICS

Reinventing Processes and Systems

 Mission-Driven, Results-Oriented Budgeting              BGT 
 Improving Financial Management                           FM 
 Reinventing Human Resource Management                   HRM 
 Reinventing Federal Procurement                        PROC 
 Reinventing Support Services                            SUP 
 Reengineering Through Information Technology             IT 
 Rethinking Program Design                               DES 

Restructuring the Federal Role

Strengthening the Partnership in
 Intergovernmental Service Delivery                      FSL
 Reinventing Environmental Management                    ENV
 Improving Regulatory Systems                            REG

Agencies and Departments

 Agency for International Development                    AID
 Department of Agriculture                              USDA
 Department of Commerce                                  DOC
 Department of Defense                                   DOD
 Department of Education                                  ED
 Department of Energy                                    DOE
 Environmental Protection Agency                         EPA
 Executive Office of the President                       EOP
 Federal Emergency Management Agency                    FEMA
 General Services Administration                         GSA
 Department of Health and Human Services                 HHS
 Department of Housing and Urban Development             HUD
 Intelligence Community                                INTEL
 Department of the Interior                              DOI
 Department of Justice                                   DOJ
 Department of Labor                                     DOL
 National Aeronautics and Space Administration          NASA
 National Science Foundation/Office of 
 Science and Technology Policy                           NSF
 Office of Personnel Management                          OPM
 Small Business Administration                           SBA
 Department of State/ U.S. Information Agency            DOS
 Department of Transportation                            DOT
 Department of the Treasury/ Resolution 
 Trust Corporation                                       TRE
 Department of Veterans Affairs                          DVA