THE WHITE HOUSE
Office of the Vice President
Accompanying Report of the National Performance Review September 1993
Strengthen Leadership in Information Technology
IT01: Provide Clear, Strong Leadership to Integrate Information Technology into the Business of Government..............................................9
Implement Electronic Government
IT02: Implement Nationwide, Integrated Electronic Benefit Transfer..........................................17 IT03: Develop Integrated Electronic Access to Government Information and Services..................................23 IT04: Establish a National Law Enforcement/Public Safety Network............................................29 IT05: Provide Intergovernmental Tax Filing, Reporting, and Payments Processing...................................33 IT06: Establish an International Trade Data System..............37 IT07: Create a National Environmental Data Index................41 IT08: Plan, Demonstrate, and Provide Governmentwide Electronic Mail...........................................43
Establish Support Mechanisms for Electronic Government
IT09: Improve Government's Information Infrastructure...........51
IT10: Develop Systems and Mechanisms to Ensure Privacy and Security......................................57 IT11: Improve Methods of Information Technology Acquisition.....65 IT12: Provide Incentives for Innovation.........................71 IT13: Provide Training and Technical Assistance in Information Technology to Federal Employees...........................77
Each action is followed by a number in parentheses that indicates the necessary avenue for effective implementation. Appendix A organizes all actions according to these categories.
(1) Agency heads can do themselves
(2) President, Executive Office of the President, or Office of
Management and Budgetcan do
(3) Requires legislative action
(4) Good idea, but will require additional work, or may be better
suited for future action
ACS Automated Commercial System AFDC Aid to Families With Dependent Children Arpanet Advanced Research Projects Agency Network ATM Automated Teller Machine BBS Bulletin Board System CD-ROM Compact Disk-Read Only Memory CSIT Customer Service Improvement Team DOC Department of Commerce DOD Department of Defense DOE Department of Energy DSS Digital Signature Standard EBT Electronic Benefit Transfer EDI Electronic Data Interchange EDP Executive Development Program EFT Electronic Funds Transfer EPA Environmental Protection Agency FACET Future Automated Commercial Environment Team FAR Federal Acquisition Regulations FCC Federal Communications Commission FCCSET Federal Coordinating Council on Science, Engineering, and Technology FEMA Federal Emergency Management Agency FIC Federal Information Center FIRMPoC Federal Information Resources Management Policy Council FMS Financial Management Service FNC Federal Networking Council FNS Food and Nutrition Service FOIA Freedom of Information Act FRA Federal Records Act GAO General Accounting Office GITS Government Information Technology Services GSA General Services Administration HHS Department of Health and Human Services HUD Department of Housing and Urban Development IBIS Interagency Border Inspection System ICN Iowa Communications Network IITF Information Infrastructure Task Force INS Immigration and Naturalization Service IRM Information Resources Management IRS Internal Revenue Service ISOO Information Security Oversight Office IT Information Technology MOU Memorandum of Understanding NARA National Archives and Records Administration NASA National Aeronautics and Space Administration NII National Information Infrastructure NISP National Industrial Security Program NIST National Institute of Standards and Technology NOAA National Oceanic and Atmospheric Administration NSA National Security Agency NSF National Science Foundation NSTAC National Security Telecommunications Advisory Committee NTIA National Telecommunications and Information Administration NTIS National Technical Information Service OIRA Office of Information and Regulatory Affairs OMB Office of Management and Budget ONDCP Office of National Drug Control Policy OPM Office of Personnel Management OSTP Office of Science and Technology Policy PC Personal Computer PDD Presidential Decision Directive PIN Personal Identification Number POS Point of Sale PRD Presidential Review Directive PSN Public Switched Network R&D Research and Development SES Senior Executive Service SSA United States Code USDA United States Department of Agriculture USPS United States Postal Service VA Department of Veterans Affairs WCF Working Capital Fund WIC Women, Infants, and Children
When it comes to information technology, horror stories abound in both the public and private sectors. In some cases, the federal government is woefully behind the times, unable to use even the most basic technology to conduct its business. At one point, for instance, three Agriculture Department bureaus were supposed to share a computer system toimprove the management of food and subsidy programs. Five years later, they still could not resolve differences over testing, installation, and maintenance.
In society at large, the widespread use of new technology has caused problems that include threats to personal privacy and safety. In Brooklyn not long ago, crooks used a hidden video camera to watch people withdrawing money at ATM machines. By recording personal identification numbers, the cameras helped the crooks later make unauthorized withdrawals.
Nevertheless, information technology has brought the convenience of revolutionary change to everyday life, from ATM machines at banks to global transfers of funds, from 800 telephone services to personal home computers, "e-mail", and the worldwide Internet computer telecommunications system. Whatever its problems, the information technology revolution is upon us. One author calls such technology the most powerful tool for change in the modern era.
American businesses, particularly the smarter ones, are taking notice. As the cover text of a recent book proclaims, "Computers and telecommunications are reshaping the basic structure of American enterprise, and any competitive business must realize the new technology either to improve its products and services or to create entirely new ones. The private sector is employing information technology to reengineer the way it does business, using human and material resources more efficiently and competing more effectively.
For various reasons--some regulatory, some legislative, some cultural--the federal government lacks appropriate access to the most efficient, costeffective information technology products and services. The government has lacked not only strong leadership in this area, but also a coherent plan on how to most effectively tap information technology 's potential. This report provides Washington with a road map to the future.
The government must not apply information technology haphazardly or sporadically. It also should not simply automate existing practices. Instead, public officials should view information technology as the essential infrastructure for government of the 21st Century, a modernized "electronic government" to give citizens broader, more timely access to information and services through efficient, customerresponsive processes.
For practically everyone, dealing with the government is complicated. Americans complain that government is too slow or confusing in delivering its services or that they have too many places to call or go. Government employees complain even more about trying to deal with other parts of government. A big reason is the incredible volume of information that government processes and files.
Information technology, with its ability to electronically store and rapidly sort, transmit, and access information, is the key to solving this problem. If MasterCard can resolve a credit card issue at 1 a.m. and Federal Express can find the location of a package anywhere in the world, then, theoretically at least, government can do as well. But while technology solutions exist, government is falling dangerously behind the private sector in using technology to deliver services.
President Clinton and Vice President Gore want to use information technology to improve Americans' quality of life and reinvigorate the economy. The administration has identified technology as the "engine of economic growth."  Among its top priorities is accelerating the development of a National Information Infrastructure of high-speed telecommunications networks, advanced computer systems, and software.
Today, information technology can create the government of the future, the electronic government. Electronic government overcomes the barriers of time and distance to perform the business of government and give people public information and services when and where they want them. It can swiftly transfer funds, answer questions, collect and validate data, and keep information flowing smoothly within and outside government. But making electronic government a reality requires two things: (1) leadership to place information technology at the center of the business of governing, and (2) commitment to the necessary support mechanisms.
This report outlines a three-part agenda for spreading information technology's benefits to the federal government: (1) Strengthen Leadership in Information Technology, (2) Implement Electronic Government, and (3) Establish Support Mechanisms for Electronic Government.
-Strengthen Leadership in Information Technology-.
The recently created Information Infrastructure Task Force (IITF) can provide leadership in integrating information technology into systems that support government's operation. Chaired by the Secretary of Commerce, this task force is responsible for articulating and implementing the President's vision for advanced telecommunications and computing technology. It is uniquely positioned to help develop the governmental aspects of America's information infrastructure. The President should expand the task force's work to include a Government Information Technology Services (GITS) Working Group which, in turn, would collaborate with state and local governments as well as the private sector.
The GITS Working Group should work with the IITF to develop a strategic vision and an implementation plan for using government information resources across and within agencies, and develop steps to improve how government provides information and services to the public. The working group should also develop strategies to empower information technology management in federal agencies and set priorities for sharing information among agencies. In addition, GITS should be the focal point for implementing the actions of this report.
-Implement Electronic Government-
Electronic government extends the idea first seen in electronic banking. Just as ATMs, plastic access cards, and nationwide networks have made banking more convenient, electronic government will make communicating with government easier and faster. Obviously, as in electronic banking, privacy and security issues must be addressed here as well.
We propose seven initiatives to inaugurate the electronic government. They provide dynamic opportunities to improve the efficiency and easy use of government services. Their implementation will provide substantial return on investment through increases in productivity.
-Integrated Electronic Benefit TransferElectronic
benefit transfer will use information technology present in the financial industry to deliver, nationwide, fast and efficient government assistance--including Food Stamps, Social Security benefits, and veterans' benefits.
-Integrated Electronic Access to Government Information and Services-
Access to government is a right of Americans. Existing technology makes possible the integrated electronic access to government information and services. The use of a single nationwide 800 telephone number would simplify access to government agencies. Electronic government kiosks that use technology similar to that in ATMs can provide "one-stop shopping" for both government information and services. Personal computers may also be used to access electronic bulletin board systems, databases, and agency directory services.
-National Law Enforcement/Public Safety Network-
A National Law Enforcement/Public Safety Wireless Network will improve coordination and communication among federal, state, and local law enforcement and public safety agencies, and will save money. It must first focus on establishing standards for sharing information and implementing appropriate privacy and security measures.
-Intergovernmental Tax Filing, Reporting, and Payments Processing-
The IRS already has on file all the tax information needed to calculate the taxes due for about 60 million taxpayers because financial institutions and employers are required to report this information. Yet IRS and state tax agencies still require taxpayers to compute what IRS already knows. If IRS computed taxes and sent a statement, and if electronic filing were used for all others, IRS and state agencies could forgo the mailing of 75 boxcars of forms to taxpayers--and certain classes of taxpayers could ultimately not need to file. For others, they will need to file only once. Enormous administrative savings would accrue to government and the burden on taxpayers would be reduced.
-International Trade Data System-
To help ensure the nation's competitiveness inglobal markets, the Treasury Department should create an all-inclusive database for disseminating international trade data, for use by the government and the trade community.
-National Environmental Data Index-
The National Oceanic and Atmospheric Administration should create a National Environmental Data Index to coordinate the development and use of environmental data gathered by various government agencies. Its goal- -to give government, the private sector, academia, and citizens easy access to environmental information.
-Governmentwide Electronic Mail-
In the private sector, e-mail and messaging systems are becoming as common as the desktop computer. Governmentwide electronic mail is a natural progression from paper-based government to an electronic government. E-mail allows rapid communication among employees across agency boundaries. The administration should work with Congress to resolve issues regarding what constitutes a government record created by e-mail, and how to ensure appropriate security in using e-mail.
-Establish Support Mechanisms for Electronic Government-
The administration isworking with the private sector to more quickly develop a broad, privately operated national information infrastructure (NII). The NII "will revolutionize the way we work, learn, shop, and live, and will provide Americans the information they need, when they need it, and where they need it--whether in the form of text, images, sound, or video." This capability will "enhance the productivity of work and lead to dramatic improvements in social services, education, and entertainment." Nevertheless, this bright future can only become a reality if we adopt "forward-looking policies that promote the development of new technologies and if we invest in the information infrastructure for the 21st Century."
The public and private sectors both must help improve the nation's information infrastructure. Federal officials have a special responsibility since the government produces information resources, uses them and makes policy for their use, acts as a catalyst for their development, and delivers services through them. The government should extensively use the emerging national information infrastructure that American industry is creating and refining. In a recent report, the President of the National Academy of Public Administration writes,
Information is pivotal to the vitality and productivity of government services and the nation's economic competitiveness. At issue is whether we can use information technology effectively to empower government, the private sector, and citizens alike. The complexity of today's world demands that the public and private sectors not only learn to master this tool, but also work cooperatively to maximize the national benefits. The infrastructure will allow the government to consolidate and
modernize its data processing centers and standardize some of government's basic administrative functions, such as payroll, personnel record-keeping, management information systems, and financial and general ledger accounting. The GITS Working Group should develop an implementation plan for consolidating data processing installations and reengineering common application systems.
The administration recognizes that initiatives to bring electronic government to the public require strategic relationships between government and the private sector. These relationships must include necessary incentives for innovation. Agencies should be able to retain a portion of savings produced through information technology for reinvestment, and use multi-year funding for information technology projects. The government should promote performance-based contracting for information technology products, allowing the private sector to increase its profits if it can find ways to make government run more efficiently and cost-effectively. It should create a governmentwide venture capital fund to finance innovative information technology projects within agencies.
Success in implementing electronic government also depends on public confidence. Electronic government must protect the information it processes and ensure individual privacy. It also must protect national security interests, permit legitimate law enforcement activities, enhance global competitiveness and productivity for American business and industry, and ensure civil liberties. The government must define uniform privacy protection practices and generally accepted principles for information security. It also must adopt a digital signature standard, and it must promulgate encryption standards for sensitive information.
The government also must expedite and simplify how it acquires information technology.The market for computer hardware and software involves products for which the shelf life can be as short as a few months. In this environment, the government needs aggressive, innovative purchasing methods. The General Services Administration's (GSA's) current schedules should be replaced with a real-time, on-line electronic marketplace. Dollar limits on agency delegations of procurement authority and on credit card purchases for commercial information technology items should be raised significantly.
Federal employees must get training and technical assistance in information technology. The government should create a program to train nontechnical senior executives and political appointees. Moreover, the Office of Personnel Management and GSA should establish information resources management (IRM) competencies for federal employees pursuing appointments to IRM management positions.
Finally, because the new technology allows a physical restructuring of the organization, making it less hierarchical, employees at all levels should be able to interact electronically, sharing ideas and helping one another with on-line resolution of information technology problems.
The quicker the federal workforce embraces the possibilities of information technology, the sooner the initiatives of electronic government can become a reality benefiting the public. By reengineering through information technology, the Clinton administration will provide the leadership, vision, and commitment to bring government into the Information Age.
Strengthen Leadership in Information Technology
IT01: Provide Clear, Strong Leadership to Integrate Information Technology Into the Business of Government ******************************************************
Making the Vision a Reality
Reinventing government is an enormous, complex undertaking that begins with leadership, not technology. Yet information technology (IT)- -because it can help break down bureau and agency boundaries--can be a powerful tool for reinvention. Its use requires both a clear vision of how government can benefit from technology to change the way it does business, and a commitment to making the vision a reality. Only good leadership, which combines vision and commitment, can ensure sound investments in IT to support the redesign of federal business practices.
The Clinton administration has made expanded use of IT a national goal; its efforts in achieving this goal are two-pronged.
-Creating a National VisionTo
accelerate the development of the National Information Infrastructure, the National Economic Council and the Office of Science and Technology Policy have created a committee--the Information Infrastructure Task Force--to coordinate the administration's efforts to formulate forward-looking telecommunications and information policies. This task force, chaired by the Secretary of Commerce and consisting of deputy-level representatives of relevant federal departments, will articulate and implement the President's vision of a nationwide system in which all Americans can exchange and receive information when and where they need it at a reasonable cost.
-Improving Federal IT Practices-
The Paperwork Reduction Act of 1980 gives the Office of Management and Budget's (OMB's) Office of Information and Regulatory Affairs (OIRA) governmentwide responsibility for providing leadership in information management. The act also charges a senior official within each agency--reporting directly to the agency head--to provide agencylevel leadership in this area. With proper vision and direction, these officials could fulfill their potential as agents of change, using information technology to help reinvent their agencies' approach to their mission.
Need for Change
The federal government's attempt to integrate information technology into the systems supporting its operations have produced some successes- -and some costly failures. Despite spending an estimated $25 billion in fiscal year 1993 on information technology, the federal government has lacked the strong and effective leadership required to ensure that government makes the most of these resources. We have operated without any overall, enterprisewide strategic plan or vision of the role of information systems in government, and with little or no regard for connections among various federal agencies, or with state and local governments. Many agency heads and federal executives continue to overlook IT's strategic role in reengineering business practices. Agency information resource managers typically lack the tools or the opportunity to be effective partners with top executives in developing strategies to use technology effectively. Too often, agency information resource management (IRM) plans and agency strategic plans are not integrated. Without clear direction and support from the top, modernization programs tend to degenerate into loose collections of independent systems solving unique problems and automating--rather than improving upon--the existing ways of doing business. For example, three bureaus in the Department of Agriculture were to share a computer system to improve the management of food acquisition and price support programs. However, 5 years after work on the system had begun, no mechanism had been established to resolve disagreements that arose in testing, installation, and maintenance.
The oversight community--OMB, the General Services Administration (GSA), congressional committees, the Inspectors General, and the General Accounting Office (GAO)--often aggravates this situation by overemphasizing specific details such as the acquisition costs of individual IT projects rather than assessing the overall impact on productivity. Instead, effective oversight should foster the analysis of work processes and formulation of strategic plans that integrate information technology with agency missions. Oversight agencies are in an excellent position, given their independent status, to identify and promote opportunities for cross-agency sharing of capabilities.
In particular, OIRA is charged under the Paperwork Reduction Act to provide leadership and oversight for the information resources management activities of federal agencies. Historically, OIRA has placed more emphasis on regulatory and paperwork review responsibilities than on leadership and information policy. The Administrator of OIRA is committed to improving OIRA's performance in the information area. The seeds of change have been sown. Nurturing them will require resources and expertise from the central agencies, and a new partnership between OIRA, GSA, and the agencies.
In a few cases where oversight agencies have attempted
coordination, the results have been positive. For example, in 1988, OMB
analyzed the use of information technology by the Customs Service, the
Immigration and Naturalization Service (INS), and the State Department
to check the names of persons entering the United States against a
master list. Finding duplication of effort and little sharing of
information, OMB worked with the agencies to create the Interagency
Border Inspection System (IBIS), jointly funded and operated by the
three agencies. IBIS allowed Customs and INS to redesign their work
processes. INS agents now conduct all name checks, freeing Customs
agents to inspect baggage--thereby improving enforcement and speeding
the processing of legitimate
An even more powerful example of successful coordination has been the work of the High Performance Computing, Communications, and Information Technology Subcommittee which coordinates the multi-agency High Performance Computing and Communications Initiative. By coordinating and sharing resources and expertise among 12 federal agencies, this interagency working group, under the leadership of the White House Office of Science and Technology Policy, has created a $784 million program that is expanding the nation's computing capabilities. This, and other programs, should be models for the type of coordination across government to realize IT's full potential in reinventing government.
By January 1994, the Information Infrastructure Task Force (IITF) should expand its workto include a Government Information Technology Services (GITS) Working Group. At a minimum, the working group will be composed of representatives from OMB and agencies directly affected by the recommendations made in this report, e.g., the Departments of the Treasury, Justice, Defense, Energy, Agriculture, Commerce, Health and Human Services, Housing and Urban Development, and the General Services Administration. The GITS Working Group will assist the IITF in performing the following:
---Developing a strategic vision for using information resources within thefederal government. This vision will define an overall program and plan for IRM in the federal government and should include specific models of operation, goals for improving government use of IT in mission performance--both across and within agencies--and measures for improving service to the public.
---Developing strategies to improve leadership and authority within federalagencies, and to include information resources management in agencies' mission strategic planning.
---Setting priorities for federal information resources management and assessing the adequacy of resources to support and facilitate important goals.
In addition, the GITS Working Group should perform the following:
---Develop an implementation plan for the recommendations made in this report.
---Work with state and local governments and private sector advisers to promotecooperation and information sharing.
---Establish a continuous improvement plan and process to design, develop, and implement technology-enabled, governmentwide business initiatives--the electronic government as described in this report.
---Identify additional opportunities and oversee follow-up on those opportunities for sharing information resources across agencies to improve program performance.
---Use existing interagency groups such as the Federal IRM Policy Council (FIRMPoC) for assistance where applicable.
---Serve as the focal point for implementing the recommended actions of this accompanying report.
2. Coordinate and oversee implementations of information technology plans.(2)
Beginning November 1993, OMB should:
---In coordination with the GITS Working Group and GSA, convene (or useexisting) interagency teams, chaired by an appropriate program agency, to share information, solve common problems, and represent the government to the public on specific cross-cutting information technology matters.
---Revise OMB Circular A-130 to encourage the integration of agency IRM plans with agency strategic plans and budgets via the creation of strategic IT plans and performance measures.
---Ensure adequate OMB staff expertise to exercise effective leadership offederal information and IT activities. This function should combine technical expertise in information computing and communications, government operations, and service sector innovation. This function must be integrated with--not isolated from--OMB's other management and budget oversight functions. This integration will ensure that OMB speaks with one voice on information and IT issues, and that agencies can rely on consistent guidance.
4 President William J. Clinton and Vice President Albert Gore, Jr., A Vision of Change for America (Washington, D.C.: U.S. GPO, 1993), p. 54.
Citizens and government workers contend with an increasingly complicated array of federal agencies, organizations, processes, and forms. The existing service delivery system is largely based on hierarchical design structures developed in the 1930s. The result is slow, inefficient service that may not satisfy actual customer needs. The information needed for sound decisionmaking and high-quality customer service is not coordinated across government agencies, thus increasing cost and time to provide services. In short, today's government structures, processes, and business practices, which were designed for a different era, cannot keep up with the existing types and volumes of customer demands.
Information technology will be the key to providing more costeffective and user-friendly government services. Industry examples illustrate how exploiting technology can provide superior customer service, significantly decrease costs, increase quality, and improve overall effectiveness and competitiveness. Successful applications of information technology also can be found in federal, state, and local government. Moreover, the Office of Management and Budget estimates that by the year 2000, approximately 75 percent of public transactions will be processed electronically.
The requirement to address ever-more-constrained operating budgets makes integration of information technology into all phases of the federal workforce vital to meeting service demands of the American public.
Information technology must not be applied haphazardly or sporadically. It also must not be used simply to automate existing practices. Instead, information technology must be seen as the essential infrastructure for the government of the 21st century--a modernized electronic government.
Electronic government will allow citizens broader and more timely access to information and services through efficient, customerresponsive processes--thereby creating a fundamental revision in the relationship between the federal government and everyone served by it. Electronic government will enable the creation of "virtual agencies" that will give citizens access to integrated program information and services organized around service "themes" (e.g., unemployment assistance), rather than bureaucratic--and often idiosyncratic-- structures. In a virtual agency, several interconnected federal organizations will be able to provide information and services in a seamless manner.
In electronic government, high-speed telecommunications links (information highways) will carry the data necessary to support governmental operations. These information highways will connect federal, state, and local governments, and help form a National Information Infrastructure (NII) made up of public and private transmission circuits and information services. Existing components of the NII include the nation's telecommunications carriers; Internet, which serves both government and private sector as a pathway for electronic mail and data; public libraries; and the electronic settlement services that support the automated teller machines and credit cards that facilitate the flow of funds nationwide.
A conceptual subset of the NII is the government's information infrastructure, the portion of the NII used exclusively by the government. It is composed of all the electronic services and paths that support government operations, such as the computer systems that facilitate the payment of monthly Social Security benefits, the FTS2000 telecommunications systemthe federal government uses for voice and data communications, internal networks run by individual government agencies, and the wealth of data and information that the government makes available.
The following seven initiatives, which NPR proposes implementing on a fully operational or pilot basis, would facilitate and expand government's use of the NII. These initiatives are highlighted because work is already in progress on their development and they offer significant payback opportunities:
---integrated electronic benefit transfer,
---integrated electronic access to government information and services,
---National Law Enforcement/Public Safety Network,
---intergovernmental tax filing, reporting, and payments processing,
---International Trade Data System,
---National Environmental Data Index, and
---governmentwide electronic mail.
Convenient, Secure Funds Receipt at the Press of a Button
Each year, tens of millions of citizens receive government services, either directly from the federal government or indirectly through state and local governments or third parties. The number of recipients of government benefits is large--and is projected to grow.
---In the U.S. Department of Agriculture (USDA) Food Stamp Program,enrollment averaged 25.4 million persons per month in 1992 and had increased to 27.4 million persons by March 1993.
---Approximately 31.4 million low-income people receive monthly authorization for medical assistance through Medicaid.
---Monthly disability insurance benefits are drawn by more than 4.3 millionformer workers and their dependents.
---The Social Security Administration is expected to distribute more than $450billion annually to 44.3 million beneficiaries by 2000.
Provision of these benefits relies primarily on paper-based systems--such as checks, vouchers, or coupons--that are not always customer-friendly, are inefficient and expensive to operate, and are subject to fraud and abuse.
The USDA Food Stamp Program provides an excellent example. It is
perhaps the most paper-intensive of all federal benefits programs. Over
3 billion food stamps are printed yearly and distributed monthly in the
form of coupon booklets to over 10 million households. Each month,
210,000 authorized food retailers receive the coupons in exchange for
eligible food items. The retailers carry stacks of food stamps to 10,000
participating financial institutions, which credit the store accounts
for their value. The banks send the redeemed food stamps to a Federal
Reserve Bank which again counts the coupons, credits the banks' account,
bills the U.S. Treasury for the value of the coupons, and destroys them.
Food stamps cost federal and state governments approximately $400
million per year in administrative expenses to print, ship, store,
distribute, reconcile, and destroy. The paper aspect of food stamps
also creates management control
vulnerabilities and ample opportunities for fraud and abuse.
The Food Stamp Program, together with similar inefficient, outmoded, paper-based systems, can be replaced by proven, cost-effective technology. Electronic benefit transfer (EBT) is already successfully, and cost-effectively, used by the federal government. EBT adopts commercial electronic payment practices to the delivery of government assistance services, enabling benefits to be transferred electronically. Presently, direct federal payment programs such as Social Security, Supplemental Security Income, federal pensions, and veterans benefits are a mixture of electronic direct deposit and paper check issuance.
The savings entailed by converting to EBT are significant. For example, the roughly 450 million paper check payments made per year cost taxpayers up to six times more to deliver than those electronically deposited. Making the transition to electronic transactions, which cost 6 cents per transaction compared to 36 cents per physical paper transaction, would significantly reduce benefits delivery cost.
Recent pilot projects to replace paper-based benefits systems with EBT also confirm that electronic benefit delivery can reduce costs. The Secretary of USDA reported that usingEBT for government issuance of food stamps saved 24 percent in operating costs in pilot projects in New Mexico and 3 percent in Minnesota. Retailers also benefit: the study showed that cost to retailers dropped by an average of $3.98 per $1,000 in food stamp product sales in New Mexico, and by $9.09 in Minnesota. EBT issuance of food stamps also benefits banks that participated in the pilot; their cost fell by $3.17 and $5.48 per $1,000 of benefits redeemed in New Mexico and Minnesota, respectively. The estimated loss due to fraud related to food stamp benefits dropped by 75 percent in New Mexico and 81 percent in Minnesota.
Need for Change
A major expansion of electronic delivery of federal benefits has not been possible in the past for several reasons, including
---lack of banking service accessibility;
---lack of availability of a low-cost alternative to receiving and cashing a government check;
---legislative restrictions limiting flexibility to select a particular method of payment; and
---people's natural resistance to change, e.g., trusting electronic direct deposit.
These reasons are no longer impediments to nationwide electronic benefit delivery. EBT can provide basic bank-like services in neighborhoods where no physical banks exist. Paper check processing has become more expensive than electronic direct deposit. Congress and the public are more receptive to alternative delivery methods. This receptivity is evidenced by recent congressional action permitting EBT as an operational alternative to issuing food coupons and by the overwhelming recipient preference of EBT over food coupons in all EBT demonstration sites.
Compatibility with commercial electronic transaction networks is a critical requirement for retail merchants and financial institutions. EBT could be processed concurrently with commercial electronic transactions by adopting the specific standards and rules promoted by the American Bankers Association and used by the major commercial direct debit point-of-sale and automated teller machine (ATM) networks. This compatibility would allow government transactions to be processed along with existing commercial financial transactions, exploiting previously defined nationally and internationally accepted standards. Industry's support is vital to successful implementation of EBT, especially for federal-state administered programs such as Food Stamps; Special Supplemental Food Program forWomen, Infants, and Children (WIC); Aid to Families With Dependent Children (AFDC); and child support.
The most effective implementation of EBT would be nationwide delivery of multiple, integrated benefits using the existing commercial infrastructure--e.g., electronic funds transfer network, commercial banking, credit/debit card authorization and settlement/interchange networks, and the Federal Reserve's Automated Clearing House system. Benefits that could be delivered over this network include food stamps, veterans benefits, student aid, medical assistance, housing programs including assistance payments to families and individuals, unemployment insurance, Social Security, Supplemental Security Income, AFDC assistance, child support, and WIC assistance.
The nationwide EBT system would use direct deposit of benefits and plastic access cards to replace food stamp coupons, AFDC checks, WIC vouchers, Medicaid authorization cards,state general assistance checks, housing assistance checks, etc. This approach would dramatically improve recipient services, combat fraud and abuse, and save millions in yearly operating costs for federal and state governments.
Federal payments would be deposited directly into recipients' bank accounts. For recipients without bank accounts, or those who prefer not to involve their banks, a federally sponsored electronic account accessible by an EBT card could be established. For recipients without a bank account who are at or below the poverty level, a free electronic service (e.g., a fixed number of free ATM or point-of-sale transactions per month) could be provided. Funding for this service could come from savings achieved by the federal government through conversion to direct deposit.
For public assistance programs jointly administered by federal and state governments, EBT could dramatically simplify the delivery of separate program benefits to eligible recipients. Ultimately, a single government services plastic benefits card could be issued instead of separate cards for each program. By using one comprehensive EBT infrastructure, federal and state agencies can share both start-up and ongoing operating costs associated with the delivery of government benefits to the public. As a result, all stakeholders should experience lower operating costs and provide measurably improved customer service.
Although much benefit is gained by leveraging the existing infrastructure, there are several liability and policy issues to be considered.
---The Federal Reserve Board in February 1993 proposed making Regulation Eof the Electronic Funds Transfer Act applicable to EBT. Regulation E governs electronic transaction liability in the private sector; it would make federal and state governments liable for the replacement of recipient benefits reported lost or stolen, without regard to recipient responsibilities. The cost of this regulation could effectively deter or even halt EBT expansion.
---To avoid the development of incompatible systems and to realize substantial operating cost reductions through volume (economies-ofscale) pricing, EBT efforts will need to be coordinated nationally while these systems are still in their infancy.
An existing interagency team, the Electronic Benefit Transfer Task Force, chaired by OMB, is defining the roles, responsibilities, and changes required to implement EBT nationwide. This task force should periodically report on its progress to the GITS Working Group and the Vice President and should complete the implementation plan by June 1994.
The most effective implementation of EBT is nationwide delivery of multiple, integrated benefits, which leverages the existing commercial infrastructure. Ongoing benefits delivery improvement efforts should be accelerated. These efforts include implementing electronic delivery of food stamps by USDA's Food and Nutrition Service and direct benefit delivery by the Department of the Treasury's Financial Management Service, the Social Security Administration, the Office of Personnel Management, and the Railroad Retirement Board.
The initiative should press for (1) integrating a package of benefit programs for electronic payment, including Food Stamps, Social Security benefits, and AFDC; and (2) sequencing their implementation to ensure that each new benefit program added builds on prior successes. The initiative should use government and local EBT experiences to pilot and implement integrated benefits delivery nationwide.
The implementation plan should include recommendations on various resource issues, such as cross-agency administrative cost pooling, funding strategies, organization, and staff support; and should establish a calendar with key milestones for progress measurement and review.
2. Legislation should be proposed to facilitate nationwide implementation of EBT. (3)
OMB should direct the Electronic Benefit Transfer Task Force to perform the following policy and legislatively oriented tasks. The team should draft a report of its activities by July 1994.
---Review existing legislation and regulations for each program that may affect nationwide implementation of EBT and draft appropriate changes. For example, one key issue concerns the applicability of Regulation E to EBT. Examine the comments submitted in response to the Regulation E proposal making it applicable to EBT, and determine a governmentwide position on recipient liability in EBT processing.
---Adopt a uniform EBT services pricing structure and attendant funding agreements. Identify standard categories and construct an EBT processing pricing structure to include capture and financial settlement of transactions by and among processing centers and networks, including industry and federal and state operations. Within the pricing structure, address cross-program cost effectiveness. This should maximize the benefits of economies of scale, leverage the commercial direct debit infrastructure, and ensure that cost-effective criteria are used to facilitate and expedite the migration to EBT.
---Define a settlement process that is the financial reconciliation of all debit and credit transactions on a daily basis. High-volume/same-day settlement processing is required to support EBT. This processing closely aligns with and can leverage the financial services industry's current settlement exchange system. The Treasury's Financial Management Service and the Richmond Federal Reserve Bank are in the process of assessing implementation approaches.
---Develop integrated EBT program and operating rules. For example, recipient responsibilities presently vary among different benefit programs. Obtain agreement across programs on how to combine program requirements into a uniform set of EBT rules and responsibilities. Review and modify ongoing efforts to adapt industry's electronic transfer operating procedures and rules. Coordinate with private sector entities to define the government EBT system: this includes technical considerations such as standards and type of equipment deployed, security and privacy protection, and operating rules (e.g., roles and responsibilities of all parties, liabilities, indemnifications, and settlement timing).
---Define benefits delivery options. The presumed method of payment for all new enrollees in direct federal programs would be direct deposit or EBT service. While total conversion from paper checks to electronic payments is the goal, it probably is best to start with a highly publicized voluntary direct deposit program and phase in EBT service over a 3-year period. However, a voluntary dual paper-based and EBT system is not the preferred method for the federal-state administered programs, especially for the Food Stamp Program. An objective shared by the Food and Nutrition Service, food retailers, and financial institutions is to eliminate paper coupons, not create a dual-delivery system. A dual system would be too costly to manage, hinder the interstate flow of transactions, cripple efforts to obtain economies-ofscale pricing, and defeat efforts to combat fraud and abuse in the trafficking of coupons. Consumer and recipient advocacy groups will need reassurance that strong recipient preference exists for EBT and that adequate privacy safeguards are in place.
Cross References to Other NPR Accompanying Reports:
Improving Financial Management, FM04: Increase the Use of Technology to Streamline Financial Services.
Department of Agriculture, USDA07: Deliver Food Stamp Benefits Via Electronic enefits Transfer to Improve Service to Customers While Remaining Cost Effective.
IT03: Develop Integrated Electronic Access to Government Information and Services
Quick Response, Complete Information, and a Happy Ending to Telephone Tag
Imagine this: A recent retiree goes to a government services kiosk, located at his local post office. He wants information about his retirement benefits. After requesting his Social Security Number and other personal ID information, the kiosk prints a summary of his Social Security contributions, as well as the benefits to which he is entitled as a veteran. His annuity distribution options are included on the printout, as are all of the rules governing earning income while collecting retirement benefits. The kiosk then asks him if he wants related information on retirement, information on senior citizens groups--and brochures on collecting stamps as a hobby.
The government's primary mission is to provide quality services to the public in a timely manner. However, access to government services is cumbersome, uncoordinated, and not customer-friendly. If more than one agency is involved, a customer must go through two or more rounds of inquiries, with frequent routings from one government employee to another. Several recent government initiatives involving various information access methods are improving service to citizens by making information more readily available. Several of these initiatives are described below.
Industry pioneered the use of the telephone to provide services to customers. Toll-free numbers and guided questions by either a human or computer speed callers to needed services. Call receipt is logged and automatically distributed, and responsiveness to customers can be measured.
The government has begun to incorporate telephone-based techniques to improve access to its services. For example, 70 percent of taxpayer contacts with the Internal Revenue Service (IRS) are now conducted by telephone. The IRS has made major improvements in theaccuracy of its telephone service information and is able to resolve many taxpayer problems in a single phone call--including accepting verbal statements over the phone. The Social Security Administration (SSA) now receives over 55 million calls a year requesting information and services over its national 800 number. On a cross-agency basis, the Federal Information Center (FIC), operated by the General Services Administration (GSA), provides 800-number telephone service in major metropolitan areas. The public may call FIC with any question or problem related to the federal government. Information specialists then research the question and either provide an answer or the telephone number of the specific federal office that should be contacted.
Federal and state governments are developing approaches to providing information and services through interactive, customeractivated terminals called kiosks, which are modeled after automated teller machines (ATMs).
The use of kiosks can create savings and generate revenues, as well as provide information and services. For example, the Info/California kiosk, a customer-activated terminal implemented by the State of California, has generated major benefits, including lower costs for customers of state information. For example, the kiosk offers a job match service in which customers preregister to determine relevant statewide employment openings. Previously, the job match service cost $150 per applicant. With preregistration at the kiosk, the cost is now $40 per applicant. Additionally, a California Department of Motor Vehicle address change costs $5 in person, $2 if received in the mail, and $1 if the transaction is received via the kiosk.[1) The State of Iowa estimates that its kiosk technology saves the state $6 per birth certificate issued ($7 manually versus $1 by kiosk technology).[2)
SSA is developing a new customer service initiative using kiosk technology to provide a wide range of services. This pilot program, to begin in late 1993, will provide information (retirement and disability benefits information, Supplemental Security Income eligibility requirements, etc.) and direct services (processing of entitlements, status of pending claims, etc.).[3) The pilot program should result in:
---reduction in claims processing time,
---reduction in paper flow and file retention,
---enhanced customer service through a one-stop shopping concept, and
In conjunction with this initiative, SSA, the U.S. Postal Service (USPS), and the Department of Veterans Affairs (VA) are developing a combined government services kiosk. This kiosk will be a single access point to services provided by the three agencies. Since these three agencies represent a significant share of the federal government "s contact with the public, this partnership will have a dramatic effect on decreasing costs by reducing duplicate efforts and improving service by providing public access from more locations.
Additional Access Methods
Many of the recent initiatives to provide electronic access have included the use of personal computers. For example, the Library of Congress has placed a searchable version of its catalog on Internet. For computational scientists, the Department of Energy, the National Aeronautics and Space Administration, and the National Science Foundation (NSF) research centers have established Internet-accessible libraries of government- sponsored software.
NSF and the National Institutes of Health routinely place their program announcements and various other documents in an easily searchable and retrievable form on Internet. NSF's Science and Technology Information Service is accessed many thousands of times each week for information about NSF activities, funding opportunities, abstracts about research grants, and various reports on science and technology. Access is easy, and is provided at no charge.
The National Technical Information Service (NTIS) operates a publicly accessible dial-up electronic bulletin board system (BBS). This BBS, called FedWorld, provides access to over 100 federal government databases and bulletin board systems. Planning is under way to place this collection on Internet. A study has been completed recently to examine the feasibility of expanding FedWorld into a locator service that is a "comprehensive inventory and authoritative register of information products and services disseminated by the federal government," that can "assist agencies and the public in locating federal government information."
The Clinton administration has established Internet mailboxes for the President and the Vice President (e.g., firstname.lastname@example.org) for direct electronic mail access by the public. The House of Representatives has a pilot project under way to provide public e-mail to seven congresspersons, and the Senate is expected to announce a similar program shortly. If successful, all members of Congress will eventually be accessible through Internet.
Most new information technology initiatives have their roots in the private sector, since it is the private sector--not government--that is usually first to adapt new information technologies to improve customer service. One example of government and industry working cooperatively to provide services is France's Minitel system. In the early 1980s, the French Government opened its telephone network to provide a wide range of services. Minitel service is routinely used in homes and businesses. It includes on-line retrieval services, credit reporting services, airline reservations, telephone directories, and government information. U.S. telecommunication and information services companies have begun to offer similar services. The federal government, as a potential customer and a provider of information that could be made available electronically, could stimulate development of these services.
Need for Change
Citizen access to federal government information and services is uncoordinated and not customer-friendly. Individuals must frequently contend with several different organizations and processes in order to complete a single transaction. In turn, the federal government expends an inordinate amount of resources to complete actions. To receive service, a customer must know whom to contact and how to contact that organization: Government has not made public access easy. Information technologies may be employed to reduce the complexities that citizens face and consolidate actions required for providing services.
Several organizations have recommended (to different government entities) ideas for employing information technology governmentwide to improve services.
---The Service to the Citizen Intergovernmental Task Force requests one-stop, easy citizen access to information.
---The National Academy of Public Administration asks for electronic access to government services.
---The Program on Strategic Computing and Telecommunications in the Public Sector suggests replacing face-to-face services with teleservice and self-service.
These organizations are but three of many that are organized and committed to improving government. They advocate the increased use of information technology as a key to improving customer service. However, as similar as their recommendations may be, their suggested implementations are quite dissimilar, pointing to a problem needing action. Further, there is no lead agency or organization that can coordinate the implementation of customer service initiatives. An authoritative charter is needed to trigger progress.
A true nationwide one-stop 800-number government service does not exist. Access to FIC is limited and not well-publicized. FIC primarily serves customers in certain key metropolitan areas representing approximately 50 percent of the U.S. population. For individuals who live outside these metropolitan areas, FIC's telephone number is not listed in many of their local telephone company directories and may not be available through directory assistance.
In the future, government information collection and distribution could be accomplished directly by the public using electronic kiosks, personal computers, interactive telephone voice response equipment, or other electronic off-the-shelf devices. Interactive computers or electronic kiosks could deliver a wide variety of government services, such as the following.
---Governmentwide service directories--access directories of government services, addresses (postal and electronic), and telephone numbers.
---Change of address service--automatically transmit, through a single transaction, a new address to all service agencies selected by a customer.
---Forms and publications--locate and request copies of government forms and publications; these could be delivered and filled out electronically, printed at the kiosk, or delivered by the post office.
---Tax filing--electronically input necessary financial data to allow the IRS to perform tax computations for federal, state, and local governments.
---Governmentwide information locator service--perform searches on selected topics, list locations for the information, and provide electronic links to the information.
---Multimedia and multilingual service delivery--provide information to meet special needs of clients using video, audio, or multiple languages.
---Public messaging entry station--allow entry of messages to government agencies and officials.
Government should form partnerships with the private sector to develop and implement ideas on how to use information technology to provide new and better services. Using the French Minitel model, both government and business services would be accessible. These partnerships will allow the federal government to provide additional services at less cost and will take advantage of lessons learned by industry.
The Government Information Technology Services (GITS) Working Group should charter an interagency team by May 1994 to coordinate, recommend, and implement information technology initiatives to improve customer service. The progress of this team should periodically be reported to the Vice President. OMB should work with this Customer Service Improvement Team (CSIT) to develop funding strategies. An existing interagency team, the Service to the Citizen Intergovernmental Task Force, may be appropriate for this role. CSIT should work closely with GITS to ensure complementary strategies exist toward common goals. Membership of this team, as a minimum, should include representation from the following: the GITS Working Group, the Service to the Citizen Intergovernmental Task Force, the FIC, the SSA-USPS-VA kiosk implementation organization, FedWorld, and the National Academy of Public Administration.
As one of its first tasks, this team should develop and test an integrated governmentwide "one-stop service shop." This would consist of simple "Yellow Pages"-style databases of federal programs and automated links to the information and service providers. This one-stop shop should include access not only to information (e.g., how to apply for a program) but also the capability to process information (e.g., ability to accept an application electronically from the user). Customer access to this one-stop shop should be available through a variety of means. Access methods should include the telephone, information kiosk, and personal computer. Building blocks for the one-stop shop include the Federal Information Center, government services kiosks, and FedWorld (see actions 2, 3, and 4). Links between these services should be established where feasible, so that these efforts complement one another and are not duplicative, e.g., government services kiosks should be able to link to FedWorld's locator service. A draft strategic plan for development and implementation of the one-stop service shop should be completed by November 1994.
Significant customer service-related applications developed by individual agencies or organizations should be directed to this team. The team will then determine whether those initiatives may be appropriate for governmentwide application. Recommendations from private and public sector organizations should also be considered by this team.
2. Implement an integrated governmentwide national one-stop 800-number calling service. (1)
The Administrator of GSA should develop, by July 1994, an implementation plan for expanding to a national 800-number service to begin by December 1994. Under this plan, a customer should be able to call a single number and have the call routed by FIC to an individual in the appropriate agency who can respond. (Presently, callers are given agency phone numbers to dial themselves.) FIC's national 800 number should be listed in all local telephone company directories and be available from directory assistance nationwide.
This national 800-number service should be supplemented by a telephone network of individual agency 800 numbers. Customers who do not know what agency (or number) to call may call this federal government information specialist. Otherwise, they can contact the agency directly. Agencies that do not now offer 800-number calling services should develop implementation plans by July 1994, to provide this service by December 1994.
3. Implement an integrated one-stop government services kiosk. (2)
The Customer Service Improvement Team should coordinate the development and implementation of a one-stop government services kiosk. The SSA-USPS-VA initiative should be used as a model, and as a likely candidate for further development and expansion by additional agencies. It should develop a preliminary implementation plan by November 1994. This plan should identify appropriate agencies and customer services to be included, and timetables for nationwide expansion. The locations of kiosk-based access points to federal government services must be numerous and nationwide in order to facilitate customer access to information and services. Existing agency kiosk systems will need to be examined for the feasibility of upgrading them to include the services of the one-stop government services kiosk.
The kiosk concept is proving itself viable in delivering fast and efficient government services to the public. However, before it is used to collect and deliver sensitive information such as financial data, critical issues including user authorization, privacy, and network security must be addressed.
Access to services through the electronic kiosk could be controlled in the same manner as access to ATMs. A kiosk access card could be used to access personal information in government files, including Social Security account balances and security background information reports. More general access could be provided without restriction for information on federal programs and to government yellow and white pages directories.
The functionality of a kiosk access card could also be expanded through smart card technology. Smart cards could be used for additional purposes such as storing and distributing data. This card could then be used for electronic transfer of funds or to allow the user to receive federal, state, and local benefits.
4. Implement an integrated governmentwide one-stop electronic bulletin board system. (2)
The Customer Service Improvement Team should develop an integrated one-stop electronic BBS by upgrading NTIS' FedWorld. A preliminary implementation plan should be developed by November 1994. This system should enable customer access, from a personal computer, to government information, services, and databases via easy-to-use interfaces. The upgraded FedWorld should not only be a locator service to federal information, but be capable of "closing the deal" and providing the information. Customers must be able to retrieve information from the databases, order copies of reports, and connect, via links, to other government information and services providers.
5. Work with private industry to advance the implementation of technologies that provide citizen access to government information and services. (2)
The Customer Service Improvement Team should begin to implement a program, by December 1994, that actively encourages private sector investment in technologies that will enhance public access to the government. Partnerships with industry should be developed that encourage and provide incentives for industry to assist government in improving customer service. A strategic plan for this program should be developed by November 1995.
Cross References to Other NPR Accompanying Reports
Improving Customer Service, ICS01: Create Customer-Driven Programs in All Departments and Agencies That Provide Services Directly to the Public.
Reinventing Support Services, SUP02: Ensure Public Access to Federal Information.
Transforming Organizational Structures, ORG05: Sponsor Three or More Cross-Departmental Initiatives Addressing Common Issues or Customers.
Integrated Communications Simplify Emergency Response
Imagine this: A fire following an earthquake is devastating a large urban area in northern California. Several local, state, and federal agencies--including fire and police units, state highway units, and national guard and defense units--are rushing to the scene. Even though they come from different jurisdictions, the units coordinate easily because they share a common communications system. The fire is contained quickly, emergency services are dispatched where needed, lives are saved, and property loss is reduced as a result.
Whether they are responding to a natural or technological disaster or performing search-and-rescue or interdiction activities, federal, state, and local law enforcement and public safety workers must be able to communicate with each other effectively, efficiently, and securely. Most of this communication occurs over tactical land mobile radio systems.
However, interoperability across these different radio systems is difficult to achieve. Federal, state, and local law enforcement agencies operate in different parts of the radio spectrum. Complicating this problem is the lack of security on most systems, leaving them open to interception and monitoring. When security is applied to the radio systems--as isdone with many federal radio systems--interoperability depends on having the correct encryption key to communicate.
Moreover, every federal, state, and local law enforcement agency operates separate tactical networks in every metropolitan area in the country. Often, there are several independent network control centers operating within the same federal building with no interoperation. This expensive duplication of effort prevents the use of spectrally efficient equipment and results in less-than-optimum coverage for many agencies. In addition, technical and administrative support is duplicated throughout the federal government.
Need for Change
Recently, the National Telecommunications and Information Administration, a part of the Department of Commerce, mandated that federal radio users begin the transition to more spectrally efficient (digital narrowband) radio systems beginning in 1995. The Federal Communications Commission is currently addressing this same issue applicable to state and local law enforcement and public safety. The Associated Public Safety Communications Officers, Inc., is sponsoring a federal, state, local, and industry effort to develop technical standards for the next generation narrowband digital radio systems.
Over the next 10 to 15 years, all federal government radio systems will be replaced with digital technology. If this is done on an agencyby -agency basis--as was done in the past--the cost will be enormous and the same problems with interoperability will occur, resulting in costly redundancies of equipment and staffing. Current budget conditions make it critical that the federal law enforcement, public safety, and disaster response agencies coordinate the transition to digital narrowband systems. Only through a coordinated approach will cost savings be realized and the serious interoperability problems of the past be overcome.
An excellent mechanism for addressing these complex issues--and saving considerable dollars--is a shared infrastructure: a National Law Enforcement/Public Safety Wireless Network. Development of this network can be based on the efforts of two ongoing interagency initiatives.
---The Federal Law Enforcement Wireless Users Group, a joint TreasuryJustice Department initiative, was formed to plan and coordinate future shared-use wireless telecommunications systems and resources.
---The Communications Interoperability Working Group, which consists of representatives from the Department of Defense, Coast Guard, and federal law enforcement agencies, under the auspices of the Office of National Drug Control Policy, has been defining minimum baseline requirements for current, secure, interoperable federal radio systems.
These new technological advances will permit the deployment of intelligent radio systems that are feature enhanced, spectrally efficient, and secure. Interoperability will be accomplished, and the radio system can be connected to other fixed networks to improve the flow of information--e.g., fingerprints, mug shots, or criminal records to the uniformed officer or special agent on the street. A consolidated approach will result in numerous advantages in cost and quality of service.
The Secretary of the Treasury and the Attorney General will co-sign a memorandum of understanding (MOU) to formalize the Federal Law Enforcement Wireless Users Group byApril 1994. The MOU should define the charter and membership of the group, which should include--at a minimum- -representation from all Justice and Treasury law enforcement agencies and bureaus, with participation from other federal, state, and local law enforcement and public safety stakeholders.
2. Establish a National Law Enforcement/ Public Safety Wireless Network for use by federal, state, and local governments. (2)
The Government Information Technology Services Working Group should issue a memorandum by July 1994 directing the Federal Law Enforcement Wireless Users Group to coordinate establishment of an intergovernmental wireless network.
The users group should work with the Office of Management and Budget, the National Telecommunications and Information Administration, the Communications Interoperability Working Group, the Federal Emergency Management Agency, and state and local entities to:
---further define costs and benefits, and develop budget strategies; and
---develop an implementation plan for the National Law Enforcement/Public Safety Network to cover the next 10 years.
Responsibilities must be clearly defined, since the issue of which agency or activity funds and controls the network will be a point of contention. Establishment and use of the network must be handled at the highest level to avoid turf conflicts and to focus on goals, roles, methods, and relationships.
Cross References to Other NPR Accompanying Reports:
Transforming Organizational Structures, ORG05: Sponsor Three or More Cross-Departmental Initiatives Addressing Common Issues or Customers.
Department of the Treasury, TRE01: Improve the Coordination and Structure of Federal Law Enforcement Agencies.
How to Get to Bed Early on April 14
Imagine this: On April 15, a citizen receives a notice in the mail from her state tax office. It contains a bill for her annual state and federal taxes, and was calculated from records submitted electronically by her employer and her bank. She verifies the bill, dials an 800 number, and pays her taxes by credit card. Her state and federal taxes have now been completed in a matter of moments--with no annoying forms to fill out.
U.S. taxpayers use and prepare financial data separately in reporting tax information to federal, state, and local governments. Although in some cases, the base level information required by the Internal Revenue Service (IRS) is used by the states, the filing form or information input follow separate and distinct paths.
Efficient business practices require that a framework for a "single information flow" be developed based on the premise that once data is entered, it serves the needs of the entire enterprise. This enterprise could be defined as all federal, state, and local government agencies that require the same data from a reporting source. For example, corporations or small businesses would report employee wages and withholdings to a single government access point. Upon receipt by the agency, the data could be used to update appropriate records held by the IRS, Social Security Administration, Department of Labor, Department of Veterans Affairs, state agencies, etc. This approach is but one of a series of steps toward a virtual agency and one-stop access for intergovernment transactions.
There are enormous costs associated with tax data processing. The IRS annual operating budget for fiscal year 1992 was $6.7 billion to collect $1.12 trillion in revenues. To collect these revenues, the IRS processed 1 billion tax information documents and 204 million tax returns.1 The federal, state, and local aggregated collection costs are unknown due to the many types of taxes levied and the circuitous filing paths for the various sales, real estate, property, income, and payroll taxes. Innovative approaches to tax collection could lower overhead costs significantly and simultaneously improve customer service by reducing the burdensome, redundant filing techniques used today.
Need for Change
Federal, state, and local government policies need to foster close, cooperative intergovernmental and interagency relationships that eliminate unnecessary duplication of effort and promote enhanced citizen access to information and services. Joint electronic filing of wage and tax data is perhaps one of the best examples of an application that embodies these policies.
The IRS, Social Security Administration (with support from the Office of Management and Budget), and Department of Labor are conducting a Wage Reporting Simplification Project (WRSP). Cross-agency approaches like WRSP should help ensure that "reporting once" pilot programs will be in place in less than 2 years. Reporting once should include providing financial data required to other agencies such as the Department of Health and Human Services for entitlement purposes and the Department of Labor for unemployment considerations. The phase 1 feasibility study for WRSP identifies potential life cycle savings of $1.7 billion to participating government agencies and $13.5 billion in reduced burden to private sector employers.2
An intergovernmental, single information flow concept for tax filings, reporting, and payments processing will provide a seamless government for the benefit of the taxpayer. Technology is present that will enable this to happen.
The IRS is embarking on a comprehensive Tax Systems Modernization program. Although the IRS automation effort will significantly lower the cost of filing, auditing, and processing annual income tax data, reengineering must be a vital part of the overall modernization strategy.
This reengineering should include a broader intergovernmental perspective and address new ways to conduct business with taxpayers, business, financial institutions, and state and local governments. For example, tax information for a large number of taxpayers is already available to the IRS prior to taxpayers" annual filing. Financial institutions, employers, and others report comprehensive financial information about individuals to the IRS electronically or on paper. Reported information includes wages, earnings on investments, and certain financial transactions. The IRS thus has in hand all the information it needs to compute taxes for 60 million filers. Yet it still sends out enough forms to fill over five boxcars and requires taxpayers to compute what the agency already knows. This practice continues because, in most cases, these data are not converted to electronic format for easy use until after taxpayers have filed their tax returns. IRS could calculate returns and send a statement. So could a state government, based on the same file. If IRS did this and if electronic filing were used for all other individual income tax filings, the IRS and state agencies would no longer need to mail the equivalent of over 75 boxcars of forms.
The Secretary of the Treasury should implement integrated financial filings, reporting, and payments processing by January 1997.
This integration should address such areas as individual tax filing and account settlement; business reporting, including wage and withholding information; data from financial institutions; and other employer and employee financial data required by federal, state, and local government agencies.
The integrated filing, reporting, and payment processing program should be piloted by the IRS to prove the concepts and quantify the benefits--not only to citizens in terms of enhanced governmental services, but to the governmental process at large. A network such as the Treasury 's Consolidated Data Network and its successor, the Treasury Communications System, could provide an evolutionary migration path to full implementation minimizing the incremental costs.
To fully implement joint electronic filing of federal, state, and local tax returns, all states and localities that levy income taxes should agree on an uniform wage code that would enable the use of electronic data interchange. Separate federal and state tax filings defeat the purpose of trying to eliminate duplication and make government more efficient. State and local information would similarly flow to a federal access point for data interchange of financial and employment information when required by any federal agency.
In order to make electronic filing more efficient, a digital signature standard that can stand on its technical merits in a judicial court challenge must be adopted.3 Presently, when citizens file returns electronically, they are typically required to sign and mail a paper certificate to the IRS to be matched with the electronic return.
To protect the privacy and confidentiality of individuals and corporations, a method of electronic verification, coupled with a privacy system that has the public's trust, must be employed. Without these safeguards, public fears concerning disclosure of information and governmental concern for data integrity would remain a problem.4
One possible scenario might be that a citizen uses an electronic government services kiosk or home personal computer to file tax return information with the IRS, including appropriate data the state and local governments may require. The data would be transmitted to an IRS service center to be processed, verified for accuracy, and then forwarded to the state, thus meeting the filing requirements of both entities in one step. This approach could be expanded to include the joint auditing of financial data and the joint collection of taxes--the genesis of a virtual tax financial data agency for business and individuals.
Both small and large business alike could benefit from the reduction in the number of reports that have to be submitted to numerous federal agencies and state and local governments. Simplified filing of business financial and employment data could benefit small business operators as desktop computers with communications capabilities are now in widespread use. Until the infrastructure is in place, state and local governments (or the Postal Service) could provide access service for small business reporting and taxpayer financial information filing.
2. Determine ways to eliminate the need for filing routine income tax returns. (2)
The Secretary of the Treasury should eliminate or reduce the need for filing routine income tax returns by January 1998.
The entire IRS filing process must be reengineered to be less paper-intensive. Most of the required financial information is already reported by business and financial institutions to the IRS. The IRS, not the taxpayer, should prepare or process the tax information. Taxpayers should only be required to file exceptions to the norm, e.g., unreported income or transactions, unusual deductions, etc. An annual closing statement could then be prepared and provided electronically to the taxpayer for review, validation, and acceptance or reconciliation. The primary emphasis would be on reconciliation before the fact rather than enforcement and penalties after the fact.
Taxpayers could access the IRS data files by kiosk or by home personal computer to confirm that tax computations are accurate. They could then settle their accounts electronically by either paying taxes due by a credit card or automated teller machine card or by directing the refund to a designated account using electronic funds transfer. At any time during the year, the taxpayer would have the ability to determine if withholdings track with projected year-end tax obligations.
Cross References to Other NPR Accompanying Reports
Department of the Treasury, TRE04: Foster Federal-State Cooperative Initiatives by the IRS; TRE05: Simplify Employer Wage Reporting; and TRE09: Modernize the IRS.