S. 946, the Information Technology Management Reform Act of 1995 : hearing before the Subcommittee on Oversight of Government Management and the District of Columbia of the Committee on Governmental Affairs, United States Senate, One Hundred Fourth Congre

386 Pages·1996·13 MB·English

by  United States. Congress. Senate. Committee on Governmental Affairs. Subcommittee on Oversight of Government Management and the District of Columbia

A
.
S. Hrg. 104-363
THE INFORMATION TECHNOLOGY
S. 946,
MANAGEMENT REFORM ACT OF 1995
/ 4. G 74/9: S. HRG, 104-363
2ARING
I. ?Ai, The Infornation Technologg. . BEFORE THE
SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT
IVIANAGEMENT AND THE DISTRICT OF COLUMBIA
OF THE
' COMMITTEE ON
GO\?ERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FOURTH CONGRESS
FIRST SESSION
ON
S. 946
TO FACILITATE, ENCOURAGE, AND PROVIDE FOR EFFICIENT AND EF-
FECTIVE ACQUISITION AND USE OF MODERN INFORMATION TECH-
NOLOGY BY EXECUTIVE AGENCIES; TO ESTABLISH THE POSITION OF
CHIEF INFORMATION OFFICER OF THE UNITED STATES IN THE OF-
FICE OF MANAGEMENT AND BUDGET; TO INCREASE THE RESPON-
SIBILITY AND PUBLIC ACCOUNTABILITY OF THE HEADS OF THE DE-
PARTMENTS AND AGENCIES OF THE FEDERAL GOVERNMENT FOR
ACHIEVING SUBSTANTIAL IMPROVEMENTS IN THE DELIVERY OF
SERVICES TO THE PUBLIC AND IN OTHER PROGRAM ACTIVITIES
THROUGH THE USE OF MODERN INFORMATION TECHNOLOGY IN
SUPPORT OF AGENCY MISSIONS; AND FOR OTHER PURPOSES.
^""mn
JULY 25, 1995
Printed for the use of the Committee on Governmetii,ax.raLMm^o, —rr*.
%
U.S. GOVERNMENT PRINTING OFFICE
92-604cc WASHINGTON 1996
:
ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice.Washington,DC 20402
ISBN 0-16-052370-2

A
S. Hrg. 104-363
THE INFORMATION TECHNOLOGY
S. 946,
MANAGEMENT REFORM ACT OF 1995
M.G
74/9;S, HRG. 104-363
CARING
S. 9A6, The Infornation Technology... BEFORE THE
SUBCOMMITTEE ON OVERSIGHT OF GO\nERNMENT
MANAGEMENT AND THE DISTRICT OF COLUMBIA
OF THE
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FOURTH CONGRESS
FIRST SESSION
ON
S. 946
TO FACILITATE, ENCOURAGE, AND PROVIDE FOR EFFICIENT AND EF-
FECTIVE ACQUISITION AND USE OF MODERN INFORMATION TECH-
NOLOGY BY EXECUTIVE AGENCIES; TO ESTABLISH THE POSITION OF
CHIEF INFORMATION OFFICER OF THE UNITED STATES IN THE OF-
FICE OF MANAGEMENT AND BUDGET; TO INCREASE THE RESPON-
SIBILITY AND PUBLIC ACCOUNTABILITY OF THE HEADS OF THE DE-
PARTMENTS AND AGENCIES OF THE FEDERAL GOVERNMENT FOR
ACHIEVING SUBSTANTIAL IMPROVEMENTS IN THE DELIVERY OF
SERVICES TO THE PUBLIC AND IN OTHER PROGRAM ACTIVITIES
THROUGH THE USE OF MODERN INFORMATION TECHNOLOGY IN
SUPPORT OF AGENCY MISSIONS; AND FOR OTHER PURPOSES.
mi
JULY 25, 1995 ~^"^ff^^y-
Printed for the use of the Committee on GovernmeM^'i
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON 1996
:
ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402
ISBN 0-16-052370-2
COMMITTEE ON GOVERNMENTAL AFFAIRS
WILLIAM V. ROTH, Jr., Delaware, Chairman
TED STEVENS, Alaska JOHN GLENN, Ohio
WILLIAM S. COHEN, Maine SAM NUNN, Georgia
FRED THOMPSON, Tennessee CARL LEVIN, Michigan
THAD COCHRAN, Mississippi DAVID PRYOR, Arkansas
CHARLES E. GRASSLEY, Iowa JOSEPH I. LIEBERMAN, Connecticut
JOHN McCAIN, Arizona DANIEL K. AKAKA Hawaii
BOB SMITH, New Hampshire BYRON L. DORGAN, North Dakota
Franklin G. Polk, StaffDirector and ChiefCounsel
Leonard Weiss, Minority StaffDirector
Michal Sue Prosser, ChiefClerk
SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT AND
THE DISTRICT OF COLUMBIA
WILLL^M S. COHEN, Maine, Chairman
FRED THOMPSON, Tennessee CARL LEVIN, Michigan
THAD COCHRAN, Mississippi DAVID PRYOR, Arkansas
CHARLES E. GRASSLEY, Iowa JOSEPH I. LIEBERMAN, Connecticut
JOHN McCAIN, Arizona DANIEL K. AKAKA, Hawaii
Kim Corthell, StaffDirector
Paul R. Brubaker, Deputy StaffDirector
William C. Greenwalt, ChiefInvestigator
Linda J. Gustitus, Minority StaffDirectorand ChiefCounsel to the Minority
Frankie de Vergie, ChiefClerk
(II)
CONTENTS
Opening statements: Page
SenatorCohen 1
WITNESSES
Tuesday, July 25, 1995
Philip Howard, author, "The Death ofCommon Sense" 7
Gene L. Dodaro, Assistant Comptroller General, Accounting and Information
Management Division, U.S. General Accounting Office, accompanied by
Christopher Hoenig, Director, Information Resource Management, Policies
and Issues Group 11
John A. Koskinen, Deputy Director for Management, Office of Management
and Budget 27
RogerW. Johnson, Administrator, General Services Administration 33
Steven Kelman, Administrator, Office ofFederal Procurement Policy 35
Colleen A. Preston, Deputy Under Secretary of Defense for Acquisition Re-
form, DepartmentofDefense 39
Renato A. DiPentima, Vice President and Chief Information Officer, SRA
Corporation 45
John M. Kost, Deputy Director for Procurement and Information Technology,
ChiefInformation Officer, State ofMichigan 47
Paul A. Strassmann, former ChiefInformation Systems Executive 50
Alphabetical List of Witnesses
DePentima, RenatoA.:
Testimony 45
Prepared statement 305
Dodaro, Gene L.:
Testimony 11
Prepared statement 216
Howard, Philip:
Testimony 7
Johnson, RogerW.:
Testimony 33
Prepared statement 245
Kelman, Steven:
Testimony 35
Prepared statement 254
Koskinen, John A.:
Testimony 27
Prepared statement 237
Kost, John M.:
Testimony 47
Prepared statement 308
Preston, ColleenA.:
Testimony 39
Prepared statement 279
Strassmann, PaulA.:
Testimony 50
Prepared statement 313
(III)
IV
Page
APPENDIX
TextofS.946, The InformationTechnology ManagementReform Act 53
Prepared statements ofwitnesses inorderofappearance 216
Charts'
1995 Federal ComputerSpending = $27 Billion (Source: GAO, 0MB) 336
Major Provisions of the Information Technology Management Reform
OGM
Act. (Source: Subcommittee) 337
IRS Computer Systems Modernization: Third Time's a Charm? (Source:
GAO) 338
The Cohen Bill: Keeping Pace With Technology. (Source, OGM Sub-
committee) 339
Current Information System Life Cycle: Little Attention to Capital Plan-
ning (Source: 0MB) 340
Computer Chaos: Billions Wasted Buying Federal Computer Systems, an
investigative reportofSenatorWilUam S. Cohen, October 12, 1994 341
THE INFORMATION TECHNOLOGY
S. 946,
MANAGEMENT REFORM ACT OF
1995
TUESDAY, JULY 25, 1995
U.S. Senate,
Subcommittee on Oversight of Government
Management, and the District of Columbia,
Committee on Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 9:32 a.m., in room
SD-342, Dirksen Senate Office Building, Hon. William S. Cohen,
Chairman ofthe Subcommittee, presiding.
Present: Senators Cohen, Grassley, and Glenn.
Staff present: Kim Corthell, Staff Director; Paul Brubaker, Dep-
uty Staff Director; Frankie de Vergie, Chief Clerk; Andrea Gerber,
Staff Assistant; Marty Grenn, Congressional Brookings Fellow;
Chris Condon, Legislative Fellow; Peter K. Levine, Minority Coun-
sel; and Scott Parr, Minority Legislative Fellow.
OPENING STATEMENT OF SENATOR COHEN
Senator Cohen. The Subcommittee will come to order.
The subject of todays hearing is the Information Technology
Management Reform Act of 1995, legislation I introduced along
with Senator Levin to improve the way the Government ap-
proaches and acquires information technology. I might point out
that Senator Levin is now on the floor managing the lobby and gift
disclosure bill and is unlikely to be here. But in the event that he
should come, obviously he will join in welcoming all of our wit-
nesses.
The Federal Government is the largest information manager in
the world. The IRS, for example, collects more than 200 million tax
forms a year. The Social Security Administration has hundreds of
millions ofrecords dealing with disability claims, educational bene-
fits, and payments. In addition, these agencies and others have
records dealing with personnel, travel, and supply expenses. The
list is endless.
The ability of Government to manage this information has a pro-
found effect on the daily lives of all of us. Government computers
keep track of benefit payments, patents. Government-insured
loans, contractor payments, criminal records, and Medicare and
Medicaid billings. In short, the Government keeps track ofinforma-
tion that ensures our financial well-being and is also critical to our
public safety and national security needs.
But these Government information systems are headed for cata-
strophic failure ifwe fail to address the challenge ofmodernization.
(1)
The FAA, for example, relies on 1950's vacuum tube technology to
monitor the safety ofmillions ofairline passengers on a daily basis.
Occasionally this antiquated technology fails.
As many of you might be aware, last evening ABC and others
ran a news item pointing out another failure at the FAA control
center in Aurora, Illinois. It marks the third time this week that
that system has broken down, the fifth time this year. They are
now relying upon a backup system, and in the event that backup
system does not prove to be effective, they are going to rely upon
controlling the air traffic system by using paper strips, something
that dates back prior to the 1950's technology.
Other Government computers fail to detect fraud in the Federal
student loan program and excess inventories at the Department of
Defense. Because of inadequate information systems, the Justice
Department fails to collect millions in civil penalties, the IRS fails
to collect billions in overdue taxes, and the Department of Health
and Human Services fails to detect fi'aud in the Medicare program.
Poor information management is, in fact, one of the biggest
threats to the Government treasury because it leaves Government
programs susceptible to fraud, waste, and abuse.
Focusing on reforming how the Government approaches and ac-
quires information technology can have a profound impact on the
way Government does business in much the same way it has
changed corporate America.
The Government's current approach to bu5ring computers is out-
dated and takes little account of the competitive and fast-changing
nature ofthe global computer industry. Markets and prices change
daily, yet Government often gets locked into paying today^s prices
for yesterday's technology.
When the Brooks Act was written back in 1965, the Federal Gov-
ernment was the dominant computer buyer in the world, and it
purchased over 60 percent of the industrys entire output. Today,
the Federal market comprises only 3 percent of industry sales.
While Government is still the largest single buyer, it no longer
moves the market.
Over the past 3 decades, the Brooks Act has produced a process
that has become too bureaucratic and too cumbersome. It has
spawned hundreds of pages of regulations and caused agencies to
be primarily concerned with conformit—y to the process. What the
process fails to addre—ss are the results more efficient and less ex-
pensive Government and fairness to the taxpayers.
In addition, an adversarial culture has developed between Gov-
ernment and business. Many companies believe they will not get a
fair shake. Federal employees are suspicious of companies because
of a fear ofbeing second-guessed and having the procurement itself
protested.
In short, it is a culture of little trust, less communication, and
no incentive to use information technology to improve the way Gov-
ernment does business and achieve the savings that we so des-
perately need.
It is time to move the Government's use of information tech-
nology into the 21st century, and that is the reason I introduced
S. 946 to significantly alter how the Government approaches and
acquires information technology. The legislation would repeal the
Brooks Act and establish a framework that will respond more effi-
ciently to the needs of Government now and in the foreseeable fu-
ture.
Among its many provisions, the bill would eliminate the Delega-
tion of Procurement Authority at GSA and establish a Chief Infor-
mation Officer at 0MB and ChiefInformation Officers at the major
Federal agencies. The CIO's job will be to emphasize up-fi-ont plan-
ning, monitor risk management, and work with the contractors to
achieve workable solutions to the Government's information needs.
The legislation will also discourage the so-called megasystem
buys. Following the private sector model, agencies will be encour-
aged to take an incremental approach that is more manageable and
less risky.
By replacing the current system with one that is less bureau-
cratic and process driven, the bill is designed to enable agencies to
buy technology faster and for less money. More importantly, the
bill is designed to make sure that before investing a dollar in infor-
mation technology, Government agencies will have carefully
planned andjustified their expenditures.
Similar to managing an investment portfolio, decisions on wheth-
er to invest in information technology will be made based on poten-
tial return. Decisions to terminate or make additional investments
will be based on performance. Much like an investment broker,
agency management and contractor performance will be measured
and rewarded based on managing risk and achieving results.
The legislation will fundamentally shift the Government's focus
on information technology from a technical issue to a management
issue. Information technology procurements under the current sys-
tem have focused on features like the speed of the computer and
the type of processor. Rarely, if ever, have they focused on whether
the system was going to enhance the agency's mission by, for exam-
ple, reducing benefit processing time or realize savings by reducing
overhead expenditures.
A failure to recognize information technology as a management
issue has cost taxpayers billions of dollars in inefficiency and
abuse. The bill establishes a reasonable goal of reducing overhead
by 5 percent per year, which would save more than $175 billion
over 5 years.
I believe this legislation can help transform the way Government
does business. If Government is going to regain the confidence of
taxpayers, it has to successfully modernize. As we all know, we
cannot successfully modernize unless we can buy the tools which
enable us to automate.
But we also have to understand that statutory change is only
part of the battle. The other half of that battle involves changing
the management culture at agencies that have traditionally focused
on technical performance and bureaucratic process. We have to en-
sure that the top levels of agency management understand how in-
formation technology can change and improve their agencies. Cul-
tural change is critical to changing the way the Government ap-
proaches its information technology needs.
Based on preliminary responses fi"om both industry and Govern-
ment, the legislation has been enthusiastically received. I would
point out there is not, however, universal agreement. Most notably.
the establishment of a strong operational National CIO has drawn
the concern of Government respondents, and some in the industry
have expressed concerns regarding automatic termination and the
elimination ofthe GSBCA bid protest process.
These are the issues that are going to be discussed today. We are
looking forward to hearing from the witnesses and working with all
of you in the coming weeks to pass and implement this needed re-
form.
As I have indicated in the past to virtually all of you who are
in this room, this proposed legislation does not purport to be a pan-
acea. It is not designed to be rushed through the legislative proc-
ess. But I must say that I do intend to see that this is brought to
the floor and completed and acted upon by the Senate before this
session is up.
As you know, the House has taken some action on the defense
authorization bill. I think it has made some needed improvements,
but it is moving in the wrong direction, which we will discuss dur-
ing the course ofthe hearings.
PREPARED STATEMENTOFSENATORCOHEN
The subject oftoday's hearing is the Information Technology Management Reform
Act of1995 (S. 946), legislation I introduced with Senator Levin to improve the way
the government approaches and acquires information technology.
The Federal Government is the largest information manager in the world. The
IRS, for example, collects more than 200 million tax forms a year. The Social Secu-
rity Administration has hundreds of millions of records dealing with disability
claims, educational benefits and payment records. In addition, these agencies and
others have records dealing with personnel, travel and supply expenses. The list is
endless.
The ability of government to manage this information has a profound affect on
the daily lives of all ofus. Government computers keep track ofbenefit payments,
patents, government insured loans, contractor payments, criminal records, and Med-
icaid and Medicare billings. In short, the government keeps track of information
that ensures our financial well being and is also critical to our public safety and
national security needs.
But these government information systems are headed for catastrophic failure if
we fail to address the challenge of modernization. The FAA, for example, relies on
1950's vacuum tube technology to monitor the safety of millions of airline pas-
sengers on a dailybasis. Occasionally this antiquated technology fails.
Other government computers fail to detect fraud in the federal student loan pro-
gram and excess inventories at the Department ofDefense. Because ofinadequate
information systems, the Justice Department fails to collect millions in civil pen-
alties, the IRS fails to collect billions in overdue taxes, and the Department of
Health and Human Services fails to detect fraud in the Medicare program.
Poor information management is, in fact, one ofthe biggest threats to the govern-
ment treasury because it leaves government programs susceptible to waste, fraud
and abuse.
Focusing on reforming how tide government approaches and acquires information
technology can have a profound impact on the way government does business in
much the same way it has changed corporateAmerica.
The government's current approach to buying computers is outdated and takes lit-
tle account of the competitive and fast changing nature of the global computer in-
dustry. Markets and prices change daily, yet government often gets locked into pay-
ing today's prices foryesterday's technology.
When the Brooks Actwas written in 1965, the Federal Governmentwas the domi-
nant computer buyer in the world and purchased over 60 percent ofthe industry's
entire output. Today, the federal market comprises only three percent of industry
sales. While government is still the largestsingle buyer, it no longer moves the mar-
ket.
Over the last three decades, the Brooks Act has produced a process that has be-
come too bureaucratic and cumbersome. It has spawned hundreds ofpages ofregu-
lations and caused agencies to be primarily concerned with conformity to the proc-