[House Hearing, 107 Congress] [From the U.S. Government Publishing Office] FEDERAL INFORMATION TECHNOLOGY MODERNIZATION: ASSESSING COMPLIANCE WITH THE GOVERNMENT PAPERWORK ELIMINATION ACT ======================================================================= HEARING before the COMMITTEE ON GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTH CONGRESS FIRST SESSION __________ JUNE 21, 2001 __________ Serial No. 107-35 __________ Printed for the use of the Committee on Government Reform Available via the World Wide Web: http://www.gpo.gov/congress/house http://www.house.gov/reform _______ U.S. GOVERNMENT PRINTING OFFICE 77-192 WASHINGTON : 2001 ____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpr.gov Phone: toll free (866) 512-1800; (202) 512�091800 Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001 COMMITTEE ON GOVERNMENT REFORM DAN BURTON, Indiana, Chairman BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California CONSTANCE A. MORELLA, Maryland TOM LANTOS, California CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York ILEANA ROS-LEHTINEN, Florida EDOLPHUS TOWNS, New York JOHN M. McHUGH, New York PAUL E. KANJORSKI, Pennsylvania STEPHEN HORN, California PATSY T. MINK, Hawaii JOHN L. MICA, Florida CAROLYN B. MALONEY, New York THOMAS M. DAVIS, Virginia ELEANOR HOLMES NORTON, Washington, MARK E. SOUDER, Indiana DC JOE SCARBOROUGH, Florida ELIJAH E. CUMMINGS, Maryland STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio BOB BARR, Georgia ROD R. BLAGOJEVICH, Illinois DAN MILLER, Florida DANNY K. DAVIS, Illinois DOUG OSE, California JOHN F. TIERNEY, Massachusetts RON LEWIS, Kentucky JIM TURNER, Texas JO ANN DAVIS, Virginia THOMAS H. ALLEN, Maine TODD RUSSELL PLATTS, Pennsylvania JANICE D. SCHAKOWSKY, Illinois DAVE WELDON, Florida WM. LACY CLAY, Missouri CHRIS CANNON, Utah DIANE E. WATSON, California ADAM H. PUTNAM, Florida ------ ------ C.L. ``BUTCH'' OTTER, Idaho ------ EDWARD L. SCHROCK, Virginia BERNARD SANDERS, Vermont JOHN J. DUNCAN, Tennessee (Independent) Kevin Binger, Staff Director Daniel R. Moll, Deputy Staff Director James C. Wilson, Chief Counsel Robert A. Briggs, Chief Clerk Phil Schiliro, Minority Staff Director C O N T E N T S ---------- Page Hearing held on June 21, 2001.................................... 1 Statement of: Bostrom, Sue, senior vice president of the Internet Business Solutions Group [IBSG], Cisco Systems; and Curt Kolcun, e- government director, Microsoft Corp........................ 32 Daniels, Mitchell E., Jr., Director, Office of Management and Budget..................................................... 10 Willemssen, Joel, Managing Director, Information Technology Issues, General Accounting Office; Jim Flyzik, Acting Assistant Secretary for Management and Chief Information Officer, U.S. Department of the Treasury; John Mitchell, Deputy Director, U.S. Mint; John L. Osterholz, Principal Deputy Chief Information Officer, U.S. Department of Defense; and Norma J. St. Claire, Director, Information Management for Personnel and Readiness, Office of the Secretary of Defense....................................... 61 Letters, statements, etc., submitted for the record by: Bostrom, Sue, senior vice president of the Internet Business Solutions Group [IBSG], Cisco Systems, prepared statement of......................................................... 35 Burton, Hon. Dan, a Representative in Congress from the State of Indiana, prepared statement of.......................... 5 Daniels, Mitchell E., Jr., Director, Office of Management and Budget, prepared statement of.............................. 13 Flyzik, Jim, Acting Assistant Secretary for Management and Chief Information Officer, U.S. Department of the Treasury, prepared statement of...................................... 80 Kolcun, Curt, e-government director, Microsoft Corp., prepared statement of...................................... 43 Mitchell, John, Deputy Director, U.S. Mint, prepared statement of............................................... 89 Osterholz, John L., Principal Deputy Chief Information Officer, U.S. Department of Defense, prepared statement of. 140 Towns, Hon. Edolphus, a Representative in Congress from the State of New York, prepared statement of................... 156 Willemssen, Joel, Managing Director, Information Technology Issues, General Accounting Office, prepared statement of... 64 FEDERAL INFORMATION TECHNOLOGY MODERNIZATION: ASSESSING COMPLIANCE WITH THE GOVERNMENT PAPERWORK ELIMINATION ACT ---------- THURSDAY, JUNE 21, 2001 House of Representatives, Committee on Government Reform, Washington, DC. The committee met, pursuant to notice, at 10:05 a.m., in room 2154, Rayburn House Office Building, Hon. Dan Burton (chairman of the committee) presiding. Present: Representatives Burton, Gilman, Morella, Mr. Tom Davis of Virginia, LaTourette, Ose, Lewis, Platts, Otter, Schrock, Duncan, Waxman, Kanjorski, Norton, Cummings, Kucinich, and Watson. Staff present: Kevin Binger, staff director; David A. Kass, deputy chief counsel; Mark Corallo, director of communications; Nat Wienecke and Michael Canty, professional staff members; Robert A. Briggs, chief clerk; Robin Butler, office manager, Leneal Scott, computer systems manager; John Sare, deputy chief clerk; Corinne Zaccagnini, systems administrator; Phil Barnett, minority chief counsel; Michelle Ash, minority counsel; David McMillen, minority professional staff member; Ellen Rayner, minority chief clerk; and Earley Green, minority assistant clerk. Mr. Burton. Good morning. We want to try to get started as quickly as possible. We were informed that there is going to be a vote on the floor at 10:30, so we will have to break at 10:30 when we have that vote for probably 15 minutes. So I would like to get started if we can. Good morning, Mitch. How are you? A quorum being present, the committee will come to order. I ask unanimous consent that all Members' and witnesses' written opening statements be included in the record. Without objection, so ordered. I ask unanimous consent that all articles, exhibits and extraneous or tabular material referred to be included in the record. Without objection, so ordered. I have always said that government needs to act more like the private sector, private business; and that has never been more true than today. U.S. businesses are more efficient and productive than ever before. They are cutting costs. They are providing better service. They are responding to changes in the marketplace faster. They are doing all this with information technology. They aren't just treating computer systems like a cost of doing business; they are using them to achieve competitive advantage. And that is exactly what we should see and want to see in the Federal Government. We want to see the Federal agencies provide better service. We want them to be more responsive to our constituents. We want to see them become more efficient. If they are going to do all these things, they have to take advantage of new developments in information technology. The problem is, too many agencies are spending hundreds of millions of dollars maintaining outdated computer systems. Too many agencies are saddled with computer systems that can't talk to one another. Too many agencies haven't had the vision to break out of the old way of doing things. In our congressional offices, we have people come to us for help all the time. People have problems with the Social Security Administration. They have problems with the Veterans Administration. They have problems with a lot of different agencies. These agencies are bogged down with outdated information systems and paper files. Sometimes people have cases that get bogged down for months or years when it should only take days or weeks. We have got to do better than that. I know that there is a serious problem between the Department of Defense and the Department of Veterans Affairs. When a veteran goes to the VA to apply for benefits, the VA has to request his personal records from the Defense Department. But their computers can't talk to each other; it has to be done on paper. There is such a huge filing backlog at the Defense Department that these cases sometimes get hung up for years, and that is just not acceptable. As I understand it, there is an ongoing project at the Defense Department to try to fix that problem. It is going to take years, because there is a huge volume of information they are dealing with. I am going to ask the Defense Department some questions about that today. If the government is going to radically improve the way we do business, it is going to take leadership from the top. That is why I am glad we have the Director of OMB, Mitch Daniels, here to testify today. He has made it very clear that management reform is at the top of his agenda. I think he is sending a very positive signal by being here to talk in person today about this. Mitch, thanks for being here. It is nice to see a fellow Hoosier. I think Congress has tried to do its part to give agencies the tools they need. In 1996, we passed the Clinger-Cohen Act. It required all of the major Federal agencies to have chief information officers to coordinate their information resources. In 1998, we passed the Government Paperwork Elimination Act. The idea was to get agencies to let people file government forms electronically. We gave them a deadline. We asked them to have electronic filing for their most important and most widely used forms by October 2003. What we need to do now is to conduct oversight to make sure that agencies are putting these tools to work. That is why we are holding this hearing today. We want to accomplish two things. First, we want to see if agencies are complying with the GPEA, and we want to see if they are taking this mandate seriously and doing what is necessary to make electronic filing happen. Second, we want to go beyond GPEA. We want to see if agencies are thinking strategically and making wise information technology investments. We want to know if they are really taking a hard look at the way they do business to see if there is a way to do it more efficiently. We have some good success stories out there. The U.S. Mint is one of them. We have asked them to come and testify today. They used to have a lot of individual computer systems that couldn't communicate with each other. If they needed to get information from one system to another, they had to print it out on paper from one and type it into another. Coin collectors had to order Mint sets through the mail. It took them 2 or 3 months to get their orders. Over a 12-month period, the Mint changed their entire computer system--in 12 months. Now everything is compatible. Today, coin collectors can order Mint products on-line, and they get them in 2 or 3 weeks. I think that the Mint has been a success story because they had leadership that was committed at the top. One of the questions I have is, how can we take the lessons learned at the Mint and translate them to other agencies? These are complicated issues. We could all spend days talking about all the issues at all of the different agencies. What I thought we would do today is narrow our focus. We are going to look at two agencies, the Department of Treasury and the Department of Defense. Our starting point is, are they complying with GPEA? Are they moving forward with electronic filing? If they are doing that, well, then hopefully that is an indicator that they are doing other things as well, too. Last October, they were required to file plans with OMB. They were supposed to lay out a timetable showing when different forms would be automated. We looked at the Treasury Department's filing. It was pretty impressive. It laid out a strategic plan. It laid out a number of initiatives. It said that 55 percent of their forms will be available for electronic filing by 2003. It was fairly apparent that there is a high level of support at Treasury for getting this job done. We then looked at the Defense Department's filing. It left us with a very different impression. It wasn't very complete. Out of 182 different forms that the public has to fill out, they couldn't give us an estimated completion date for over 100 of them. According to the plan we reviewed, fewer than 25 percent of their forms will be available for electronic filing by 2003. There wasn't any evidence of any strategic planning whatsoever. We sat down with the people from the CIO's office. What they told us is that they just collected the information OMB wanted from the different services and passed it on. It became fairly clear that nobody at a senior level was taking responsibility for making sure the job was getting done. They were just collecting information and passing it on; and that is not acceptable. It seems to me that when Congress passes a law that says you have to do something, and when OMB sends you instructions on how to implement the law, it ought to get a little more serious attention than it has been getting at the Defense Department. Since then, we have learned that there are a lot of different modernization programs going on in the Army and the Navy and Air Force and other parts of the Defense Department. We are going to hear about some of them from our Defense Department witnesses today. But I am now very concerned about how much leadership there is at the top for these initiatives. The Defense Department is a big place with lots of different branches and services. If we don't have somebody very senior taking charge, I am afraid they are going to wind up with lots of new systems that can't talk to each other, replacing all of the old systems that couldn't talk to each other. With the volume of business that the Defense Department does and the millions of paper forms that get filled out every year, hundreds of millions of dollars could be saved if we could automate these processes. We have two witnesses from the Defense Department today, and I hope they will be able to give us a better comfort level with what is going on over there. Let me finish up by going back to what I started with. The government ought to act more like a private business. In the private sector, billions of dollars have been saved by using information technology. We have two witnesses from two of the leading high-tech companies in America here today. They are going to tell us how they did it. Hopefully, they are going to tell us how the Federal Government and the State governments can learn from the private sector and how they ought to do it. We have Sue Bostrom from Cisco Systems and Curt Kolcun from Microsoft here today. I want to thank both of you and your associates for being here. I want to thank Kevin Binger, who has worked very hard on this. Kevin is very interested in the new technologies, and Kevin is our chief of staff. I really appreciate all you have done. With that, I yield to Mr. Waxman. [The prepared statement of Hon. Dan Burton follows:] [GRAPHIC] [TIFF OMITTED] T7192.001 [GRAPHIC] [TIFF OMITTED] T7192.002 [GRAPHIC] [TIFF OMITTED] T7192.003 [GRAPHIC] [TIFF OMITTED] T7192.004 Mr. Waxman. Thank you very much, Mr. Chairman. Thank you for holding this hearing on the Government Paperwork Elimination Act [GPEA]. This legislation was passed as an attachment to a supplemental appropriations bill at the end of the 105th Congress. GPEA requires agencies to give individuals the opportunity to submit information electronically when practicable. In addition, it allows a person to use his or her electronic signature to file the submission. GPEA, just like the Paperwork Reduction Act, which it amends, attempts to reduce the paperwork burden placed on the public by the Federal Government. It has yet to be demonstrated whether electronically submitting information reduces the number of burden hours it takes people to complete the required submissions. However, it may have other benefits, such as easy access to forms or relief from the cost of postage. I have supported e-government initiatives and believe they can benefit the public. By using technology to collect and disseminate information, agencies can help government be more efficient and more responsive to the taxpayers. E-government should include encouraging agencies to allow people to comment on regulations electronically as well as allowing them to read the comments from others electronically. This saves time, money and effort. For some agencies, individuals still have to go to Washington, DC, and review the handwritten docket in order to intelligently comment on a proposed regulation. Although modest steps have been taken to address this issue, much work is left to be done. Care must be taken in developing electronic information collection systems to assure that we protect individually identifiable information, business proprietary information, and truly reduce the burden placed on those submitting information to the government. Privacy protections must be paramount. Over the last decade, we have seen an increase in identity theft; an individual's credit cards, Social Security numbers or driver's license can be stolen or copied with relative ease. As more and more people electronically submit information with electronic signatures, we must work to prevent them from becoming victims of identity theft. Mr. Chairman, GPEA has the potential to help the Federal Government better manage its information collections. As technology advances, I am hopeful that agencies with the proper protections in place will be able to adapt and respond quickly to the needs of the people. I look forward to the insight from our witnesses. Thank you very much. Mr. Burton. Thank you, Mr. Waxman. Do other Members have opening statements? If not, I want to start off by welcoming the great Congressman from Tennessee, John Duncan, my very good friend, to the committee. I know he will be a great asset to us. I ask unanimous consent that he be appointed to the Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs. Without objection, so ordered. Well, we want to welcome Mitch Daniels. He has been a leader in Indianapolis, IN, for a long, long time. He was an executive for the Lilly Co. In fact, I think you were president of International Trade at one time. Mr. Daniels. North America. Mr. Burton. North America. Well, that is close. In any event, he is head of OMB. I think he is a great appointment. I really appreciate you being here. You are recognized for an opening statement. STATEMENT OF MITCHELL E. DANIELS, JR., DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET Mr. Daniels. Thank you, Mr. Chairman and Congressman Waxman. I appreciate the committee's hospitality. And let me reciprocate by being very brief in my opening statement. I will submit a statement for the record, of course. Let me just say two or three things about this very important subject on which you gather us today. The administration has announced and will follow through on a major commitment to use the tools of the Silicon Age to improve the performance of government and also its effectiveness on behalf--or its interaction with individual systems. From a very, very lengthy list, the President has selected five topics as his primary management objectives for this year, and e-government is among those five. Last week, we appointed a seasoned professional with experience both in government and in the private sector, who will work all day every day on this and this alone. In addition to that, we will, of course, support his work with all the resources necessary to make sure OMB upholds its responsibilities here. The Deputy Director for Management, who is yet to be appointed, will carry as a primary responsibility the job of the President--or of the Federal Government's CIO and will chair the CIO Council of his counterparts or her counterparts in each of the agencies. Let me just summarize the problem areas. Success stories are abundant, as you have indicated, but I think the committee and certainly we at OMB want to focus on the areas where improvement is most urgently needed. By our tabulation, there are at least 6,000 eligible transactions, citizen transactions, not yet Web-enabled or with an electronic option. At this point, agencies can only certify to us that something less than half of those will meet the 2003 deadline. We don't consider that acceptable, and we will work to improve--I hope to be able to report to this committee at a later date that that number is headed northward. Our scan of the capital planning process at the agencies and their preparedness to meet the objectives of their assignments here finds good performers and not-so-good performers. It probably bears mentioning that the EPA, Treasury, and HUD, as far as we are concerned, are among the leaders. On the other hand, HHS, Defense and Justice we think have the furthest to go. I would also observe that many agencies, I think, will be hamstrung by their own organizational structures. I will say a word about this as I conclude, but far too many agencies have not one, but multiple IT problems because they have multiple organizations all pursuing different and often incompatible agendas and architectures. HHS might be the most extreme example with its 13 sometimes competing empires. We will try to focus our attention primarily on sort of the high-yield opportunities, those where we think we can make the most improvements the most quickly, those with the most citizen encounters. I will cite tax filings. Although the Treasury has done some excellent work, they have perhaps the largest single job to do, and there are something like 200 applications, I am advised, that could make more simple and straightforward the taxpayers' relationship with the IRS, that have yet to be rendered electronic. One other general point: I think that the Congress and the committee in its oversight of this law has given the Federal Government yet another opportunity, which I hope we will seize, to clean house in terms of activities that may not be necessary at all. We used to say in business there is nothing more tragic than to do very, very well something which is totally unnecessary. As I look at some of the applications or some of the eligible activities of government that could be transformed in an electronic fashion, I think the threshold question is, is this still necessary in the first place? At Agriculture, for example, there are millions of hours of reporting imposed upon farmers and producers, collecting information that may or may not be necessary. Before we invest the taxpayer dollars to make collection of that information electronic, we ought to take the opportunity to check and see if, maybe, this is a once-good idea that is now obsolete. I think Congressman Waxman had an excellent question when he reminded us that we can't automatically assume that simply by switching from paper to a terminal, the burden on anyone has been reduced in the way we hope it will be. I think that question has to be asked each and every time. Last, let me just say that I think one of the largest problems and one we are going to try to work very hard on that encompasses this subject and, frankly, many more, has to do with the efficiency or lack of it with which the Federal Government now spends upwards of $45 billion on IT. In a $2 trillion budget, you know, a 2.5 percent--something like that--investment in information technology is low by private sector standards, but not dramatically below that of many businesses. Yet, I cannot testify today that that money is being well spent or spent in an integrated fashion. In fact, it is my apprehension that much of that money, even as we sit here this morning, is being spent to make a bad situation worse; that as we convene here, people with the best of intentions are assiduously designing and contracting for systems which are tailored, which are customized, which are not compatible with the systems with which they need to interact, and that people are working very hard in a way that is at cross-purposes with this committee's goals and those of GPEA. So we are going to try to identify that, and we are going to try to root it out, try to bring greater cooperation, integration and, frankly, in many cases, dictation of systems decisionmaking in hopes that we can begin to turn this tanker in the way that the committee has and the authors of this bill have wisely directed. Thank you for this opportunity. [The prepared statement of Mr. Daniels follows:] [GRAPHIC] [TIFF OMITTED] T7192.005 [GRAPHIC] [TIFF OMITTED] T7192.006 [GRAPHIC] [TIFF OMITTED] T7192.007 [GRAPHIC] [TIFF OMITTED] T7192.008 Mr. Burton. Let me start the questioning by just asking a couple of, I guess, generic questions or general questions. First of all, I want to get every agency to review whether or not information that they are requiring from different segments of our society are necessary. Then, second, you indicated that--and I read your testimony--that you indicated that there was going to be an effort to have them coordinate their efforts so that there is not one agency going in one direction with technology and another going in another direction. Who is going to be--and you touched on this, but who is going to be--I mean, this is a huge government. And to go through every agency to find out whether or not there ought to be an elimination of some of the information that is coming in and whether or not they ought to adopt a certain type of computer technology, who is going to be put in charge of that? Mr. Daniels. The Deputy Director for Management will have this as a principal responsibility. I regret that, yet again, I have to testify that we don't have that person in place. We have set the specifications for that job very high for this very reason and for several others like it. We have filled every job but this one at OMB, I am happy to say. But this will be a primary responsibility of my primary associate. In the meantime, the other deputy, the general deputy, is acting in this area. We also were fortunate to recruit on a pro bono basis the president of the National Academy of Public Administration, a very seasoned, nonpartisan government administrator, who is filling in and working on these issues now. As I say, next week, a full-time information associate, Mark Forman, will be joining us. Mr. Burton. Well, I---- Mr. Daniels. Let me add just one other thing, Mr. Chairman: It is not simply a matter of interagency, but also intra-agency incapability. Some of the worst problems I have seen in the superficial look I have had a chance to give so far really exists within departments, as opposed to--in their need to connect or interact with other departments. Mr. Burton. We had a press conference yesterday, and the Majority Leader, as well as others--committee chairmen--were talking about this. It seems like--and I think you touched on it in your opening statement--that a lot of the agencies are taking archaic systems and trying to improve the current system, when they probably would be better served to junk them and start with the newest technology instead of trying to bring old technology up to current standards. We are going to have Cisco and Microsoft testify in a little bit. Is anybody working with these various computer companies to find out what the latest technology is going to be that should be used for the entire government, so that--like we were talking about--they can all talk to one another within a given agency, and then intra-agency-wise as well, and to make sure that they are not in the process wasting money on old technology they are trying to bring up to current standards? Mr. Daniels. I think the CIO Council is the appropriate vehicle, or certainly one, for addressing these sorts of problems. We will just try to use it as effectively as we can. Now, I pretend to have no great expertise in this area myself, but I have, through past vocational experiences, come to some general conclusions. Along the lines of your question, standardization and simplification, I learned the hard way, are pretty good objectives. And I think that in many cases it will be important to ask agencies hard questions before they pursue the perfect solution for themselves, which may aggravate the general problem the government has by virtue of its very customized or, you know, mission-specific character. Mr. Burton. Well, I realize that we are asking you questions that you probably aren't prepared to answer yet because, you know, this is a new administration. Mr. Daniels. That won't stop me. I answer questions on unfamiliar subjects all the time. Mr. Burton. When I first got elected to the Congress, 1 day I was a candidate and nobody expected me to know anything. The next day, I was elected, and everybody was asking me questions about international policy that I had nothing to do with. So I am sympathetic with the problem. Mr. Daniels. You get away with it pretty well. I will try to do the same. Mr. Burton. OK. Let me end up by saying, before I yield to my colleagues--and we will have the experts testify in a little bit--it seems to me and maybe my colleagues that it would be advisable--and you may be way ahead of us on this--to bring in some experts from the various high-tech areas and have them do a cursory look at all the agencies to make some recommendations on the front end to whomever you are going to choose to head this up, so that they can have at least a basic idea of where they think the high-tech people think we ought to go. Because technology is moving so fast that I think that to not include them in the loop--and I am sure you will, but to not include them in the loop will be a serious problem. Mr. Daniels. Let me say that is a great suggestion. One way we are active on this sort of front, Bob O'Neill, the gentleman I referred to from the National Academy, has already met for the first time with leadership of some of the Nation's major consulting firms about the management agenda, not limited to the IT challenge, but including it. We expect to call on their patriotism to see if they cannot see their way clear to donate some advisory services that the government would benefit from. Mr. Burton. Very good. Mr. Waxman. Thank you, Mr. Chairman. Mr. Daniels, thank you very much for being here. I realize it is early on some of these issues that we are looking at for you to have definitive positions. You don't have the Deputy Director in place. Maybe this hearing today will also be helpful to the administration in having that Deputy Director be able to review the record of information that comes out of our oversight activities. The Justice Department seems to have serious concerns about the use of digital signatures. How will your administration weigh those concerns against the call from GPEA for a serious effort to increase the role of electronic reporting in Federal information collections. Do you have any view on that at this point? Mr. Daniels. Well, this is one of a number of obvious tensions that we will all have to work together in reconciling. Concerns of privacy, concerns of security are very, very real. I will just say that the President, in particular, has placed a lot of emphasis on the preservation of privacy even as we try to make progress in this and related areas. I will have to take up Justice's specific concerns outside this hearing. In all honesty, I am not sure how to react to their particular worries in this area; but I don't doubt, when I do, I will find that there is some legitimacy to their hesitation. Mr. Waxman. The Paperwork Reduction Act lays the groundwork for information management in the Federal Government. That act has been amended a number of times since being reauthorized in 1995. Some have suggested that the Paperwork Reduction Act needs to be reworked to address the issues of electronic government in the 21st century. The Paperwork Reduction Act authorization expires this year. Will the administration be sending to Congress recommendations for changes to be included in the reauthorization? And when do you think those will be available? Mr. Daniels. I don't know the answer to the when, but I do believe that we will have at least some report to Congress, and possibly some recommendations to accompany it, about the act, the way it is working and how it might work better. I have become aware already of at least a couple of instances--they may be aberrational--in which ironically the act may lead to more, not less, burden in terms of paper and information requests. I think it is our duty to report that there are experiences, good and bad, with the act, and the reauthorization would be the right time. Mr. Waxman. Good. The GPEA report for the Department of Defense shows that it is not moving quickly to implement the requirements of this act. Earlier this week, one of the subcommittees of this committee held a hearing on the Government Performance and Result Act [GPRA]. In that hearing, it was also pointed out that the Department of Defense was not moving quickly to implement the requirements of that act. What will your administration do to persuade DOD that it needs to get on board with these efforts to make government more accountable and user friendly? Mr. Daniels. Well, we are placing a number of demands on the Department of Defense and this administration. This will have to be high on the list. I think we should all recognize the immensity of the management challenges that Secretary Rumsfeld and his colleagues face, and all their predecessors and successors, for that matter, in an enterprise that big. But we will certainly ask them to elevate substantially their attention to this one. Once again, from a list that, as I recall, was originally about 61 items, we distilled to 5 those that the President has designated as governmentwide, mandatory, top-management priorities; and this is one. So we will take his direction and stay on top of them. Mr. Waxman. It occurred to me, as I was reading these questions to you about GPRA and GPEA and PRA, that these are just a few of the laws that we have to deal with; and you have to deal with all of them, all of them within the government. And when people come to you, they must refer to each of these pieces of legislation as if it were the most important thing on your mind at that moment. Mr. Daniels. Well, at that moment, it is. Or at least if it is you asking, it is. Mr. Waxman. I guess the first thing you have to do is to find out what the letters stand for. Well, I want to wish you well in your position. Mr. Daniels. Thank you. Mr. Waxman. And I hope that, as this committee looks at these issues, we can develop a collegial working relationship. We want the same goals. Mr. Daniels. Yes, sir. Well, I trust we will. And I will say very sincerely that hearings like this and questions from the committee are very, very useful, both in forcing us to become better educated about subjects we need to learn more about and keeping our attention from wandering away from important assignments. So we thank you for this invitation. Mr. Burton. Thank you, Mr. Waxman. And I and others who are here today are very interested in working with you. And if you have legislative requests that will streamline government, make it more efficient, especially from an electronic standpoint, we will be very happy to work with you. Mr. Schrock. Mr. Schrock. Thank you, Mr. Chairman. Good morning, Mr. Daniels. You mentioned that agencies like the Mint are doing a good job and that one agency that is dear to my heart, the Defense Department, along with HHS and Justice, are not. Did the Mint create their own program internally or did they contract out? No matter who created it, if it is successful, why can't other agencies use it as a template for their own agencies? Mr. Daniels. It is an excellent question. I honestly don't know. But fortunately you have the people from the Mint here to tell you the origins of the program. I only know that it does rise near the top in the estimation of our people in terms of applications so far. That is a very important point you make--and this we have stressed; we are going to try to stress across the entire management front--this government doesn't transfer learning very well. There are, on any subject I have looked at so far, always pockets of excellence. But very, very rarely has that excellence migrated in the way that a high-performing organization will insist that it do. You have some people here from some high-performing businesses. I know they will tell you, as was our experience, that in a good business today, it is considered a grievous malfeasance for a manager who has done something, or whose unit has done something, innovative to fail to share that information across the organization. It is seen as an affirmative duty. That isn't happening nearly to the extent it should. I do feel it is a heavy responsibility because OMB is a hub in a way and does operate the various councils and so forth, and this should not be hard to do. We should be able to take whatever the Mint has learned and spread it far and wide, wherever it might apply. Mr. Schrock. I agree. Thank you, Mr. Chairman. Mr. Burton. Mr. Duncan. Mr. Duncan. Thank you, Mr. Chairman. Mr. Daniels, I heard a report on CBS national news a few months ago that said 37 percent of the time that people are spending on their computers is spent sending jokes or checking their stocks or on personal matters. Then, week before last, the Inspector General of the Internal Revenue Service came out with a report saying 51 percent of the time IRS employees are spending on their computers is spent visiting porn sites and sending jokes and checking their stocks and all of these types of things. The goal of the Paperwork Elimination Act is to make the government more efficient. Is there anything that you know of that we can do or that can be done to see that less time is spent using these computers, these government computers for--I noticed in your testimony a moment ago you said we shouldn't automatically assume that paper is always less efficient than the computers. I just wonder about that. Is anything being done about that or can anything be done about that? I have to tell you, I did have a couple of friends, though, who said they would be upset if it was another government agency, but with IRS, they would just as soon 51 percent of the time be spent on personal---- Mr. Daniels. They might prefer it was higher. Mr. Duncan. Right. Mr. Daniels. It strikes me as equally important, but a somewhat different question than we are talking about with GPEA, where I think the primary emphasis is on opening up to the external--to the public the external world the better channels of communicating and dealing with its government. The problem you are talking about, I know it is very real. It is not confined to government. Good managers detect the problem when it is out of hand and act against it. You know, here too there has to be some--I think there has to be due sensitivity to employee privacy. But there are pretty well- established rules, as I understand it, for surveillance or back-checking where there is some clear evidence of abuse or misuse. Mr. Duncan. The second thing I wonder about, and it is a little different direction from most people, because it is sort of politically incorrect today not to worship the computers. And everybody always, I guess, is trying to outdo themselves to say that we should always go to the next level and the most advanced technology. But what I think sometimes the computer companies sell us a bill of goods, because they always want us to buy new equipment all the time. Mr. Daniels. Yes. Mr. Duncan. Obviously they make more money if we do that. But sometimes I think it is sort of like buying a car. Sometimes it is more cost-effective and just as efficient if we stick with a car that is a year or two old than if we always try to buy the newest car with the newest bells and whistles. What I am wondering about, since your primary responsibility is the money involved, or that the government is spending, should we be attempting to make sure that our technology purchases are cost-effective and that they will work? I think the chairman or somebody mentioned--or maybe you did in your testimony just now, about not always having to go to systems that are incompatible and so forth. Mr. Daniels. Yes, sir. I think it is very, very important. A good capital planning process--I make reference to that throughout the testimony--will identify the likely rate of return or the benefits to be derived from an investment. Done properly, that will very, very often, I think, steer a buyer, a user, away from the bells-and-whistles applications, the latest and greatest. There is a romance about that. People who are, you know, knowledgeable about technology I think sometimes get captivated by that and go beyond the point of diminishing returns. This is exactly what we are trying to get at in critiquing the capital planning processes within agencies. It is exactly what we will try to get at if we win--I give the direction to the DDM and the intelligence--I mean, the information officer to press always for the simple, the standard, the common, the more easily compatible. Mr. Duncan. All right. Thank you very much. Thank you, Mr. Chairman. Mr. Burton. Mr. Kanjorski, do you have any questions? Mr. Kanjorski. Yes. Mr. Daniels, I don't know that we have won any awards in the Federal Government in utilizing new technologies to provide better service or more efficient service. So I am not certain that I am satisfied that we can accomplish a lot of the things we do in the Federal Government to do that. But what I am most worried about is areas like Pennsylvania. Unfortunately, we have, I think, the second largest number of municipal governments in Pennsylvania of any State in the Union--2,500 municipal governments, 90 percent of which are under 3,500 in population. So it is interesting to analyze what will happen if the Federal Government does go to sophisticated computer systems when more than 45 percent of the governments in my congressional district don't have computers. I am just wondering what portion of the population of the United States has the capacity either of having computers or fitting into a network. What I am most worried about is, we are going to move ahead very quickly on some of these things, not realizing that we are leaving behind a very large portion of our population. We had some testimony on that the other day in the Committee on Banking in terms of analysts and what they do in stocks and bonds. I try to draw the analogy, there is a question there, whether or not the information coming out is objective and responsible. But one of the bigger problems that I saw in the analysts' problem that I see now in the technology problem of the government is, you know, I think we are missing the point. The last time I looked at a study, 20 percent of the American people were functionally illiterate. So, at best, right now, we can be talking to only 77 percent of the American people. It seems to me that before we move hell-bent forward on doing a lot of things, we have to make sure that we are giving access to the American people, to the government, and to the municipalities. I have noted recently that--we haven't done a study on it, to confirm it, but I am sure if you do a study, you are going to find that there is a decided difference between how communities interact with the government on some programs to get benefit directly relates to their level of sophistication and technology. I am just noticing in a lot of these rural districts through the country, and in particular Pennsylvania because of our archaic structure, they are just not capable, the local leadership and the citizenry, of really accessing some of these sophisticated systems. Then, the only thing I would add to that is, I wish you would look at the House of Representatives as you go through this system, because I don't think we are famous for having the best system in the world. Mr. Burton. Careful. Mr. Kanjorski. And I don't want to--it is national, not a political criticism, because quite frankly, I would have to give a lot of credit to the revolutionary forces of 1994. They tried very hard. But sometimes philosophically they got bent into accomplishing something with technology, and I could call your attention to one thing. All of us have become purchasing agents now, in the individual Member's offices, of equipment. We are ill prepared to do that. I can tell you that it has been a catastrophe trying to find out the best system, what systems work. Then when you order a system that is misrepresented and it doesn't function, what do you do with it? And negotiating each individual office with a huge or large contractor who, quite frankly, is probably one of two or three providers and really doesn't give a damn if you say, I am going to take out my system. He says, tough luck; go back to typewriters, Congressman, if you are unhappy. So we have a lot of management problems. In a way, I have been trying to convince people in the 17 years that I have been in Congress that your office has an interesting title. The management factor inside of your title has really not been well utilized. I think one of the prior Members mentioned you have great budgets down there. You have good numbers. I respect both administrations', how they happen. They usually come out better than we do up here on the Hill in number crunching. But in management direction and skills, I think there has been a decided failure in the Federal Government in all branches, all three branches of the Federal Government, to really put their management techniques into place. I don't know what can be done about it. Probably government can't accomplish the standard that the private sector has to accomplish if it is going to be competitive. But if in some way you would think about the management aspect of taking this new technology across government, and then, if we get so sophisticated that we can communicate with Mars, but we can't communicate with 23 percent of the American people and we can't communicate with 40 percent of the municipalities, I don't know whether we are going to get value out of the thing. We may just exclude people from the system. Right now, I mean, I hate to tell you, but some of the municipalities in my district don't have typewriters. They actually keep notes by hand. If that applies in my district, I think if we look across the country, we are going to find a lot of communities that are totally devoid of equipment, efficiency, and even if you gave them that--of expertise. I have been particularly involved in GIS for planning purposes. We have been doing fairly sophisticated work in Pennsylvania and across the country with a lot of the GIS movement in how to use this as a tool for government planning. It is a phenomenal tool, a tremendous potential cost-saver. We are working on a program now of land and water reclamation that we estimate we can save anywhere from 30 to 40 percent of the costs that normally are spent by the Federal, State and local governments to do this work, because we can remove the field engineering into the computer operation through use of GIS. But all that being said, if we don't have the operators out there, if we don't find a way to put in kiosks for access for people who don't have computers; and then if we don't have operators who are skilled enough to access the Federal Government, the State government, the local government and all this information that is available, I am not sure we are going to be very successful. So I guess what I would say is, I hope you come forth with a very comprehensive plan, breaking all these areas down and just seeing what types of platforms we have to put in place, both in person skills and various technologies, to get there; or else we are going to spend--I mean, we don't want to make-- is it the FAA that put that very sophisticated system together that didn't work? You know, that is really unforgivable. Those are people that are in an area of expertise that should be able to handle it. I think we are going down the road right now, we may do a lot of hardware and software and not have the programmers or the users that are capable of accessing it. And we may just end up alienating a third to a half of the American population from government, from the Federal Government. Thank you. Mr. Burton. If I might just add to that, you hit on the House of Representatives and how we are all buying our own individual systems, and there is not a lot of coordination there. I know that OMB is not going to be dictating to the House or the Senate on what we do; but what might be advisable is, when you come up with a strategic plan for computerization and consistency throughout the Federal Government, you could make a recommendation. Obviously, we wouldn't always follow it, but you can make a recommendation to the House and the Senate that it would be advisable for us to have a plan consistent with the rest of the agencies so we can all talk to one another electronically. So that would be one thing from Mr. Kanjorski that I might add to the mix. Mr. Kanjorski. I want to add to that. We could maybe model after some of the States. I used to represent municipal governments as an attorney before I succeeded to this great, high office; and the experience in Pennsylvania was that the GAS in Pennsylvania allowed municipalities to dovetail on their contracts, both for prices and service. And just within the government, if all three branches could dovetail on what you are doing, you are going to be buying a much larger area. We don't necessarily have, one, that expertise or that buying capacity to think about dovetailing us in. I am not sure about even dovetailing in the States and the municipalities, so that anything that you come up with has to be compatible among the three branches of the Federal Government and all the lower governments in the country to come in and use the Federal purchasing capacity and expertise of some of this. Mr. Burton. Thank you, Mr. Kanjorski. Mr. Otter. Mr. Otter. Thank you, Mr. Chairman. Welcome back, Mr. Daniels. It is good to see you again. I remember when you appeared before our subcommittee on this very issue. We had some good exchanges. You know, it is interesting to hear some of the conversation in front of the full committee here about how unable we are to respond to this sort of thing. I am reminded, 2 years or 3 years before I got here, I am sure it didn't come out of this committee, but I am sure members of this same committee voted for a law which told all small business that you have to electronically file your tax returns whether they had computers or not. But you have got to do it. You have got to comply. You have got to make it happen. I know that the Paperwork Reduction Act has been in force for a long time. Let me reflect back to our subcommittee. As you will recall, we had 487 violations last year. We had 710 in 1999 that your department reported on, and 872 in 1998, if my memory serves me correctly or my information. And I think I asked you at the time, and I just want to ask you again for the benefit of the full committee: How many people lost their jobs because all those laws were violated, or how many people went to jail? How many people were fined, as we would the private sector? Mr. Daniels. Well, I am unable to report that anyone went to jail---- Mr. Otter. Was anybody fined? Mr. Daniels [continuing]. Or that there were other meaningful penalties. I understand the thrust of your question. Mr. Otter. So that leads next to my real question to you. Wouldn't it be helpful to your organization to enforce this law if we gave you--as the Congress is always fond of calling it-- some ``teeth,'' like we give teeth to OSHA, we give teeth to EPA, we give teeth to the IRS? Wouldn't it be helpful if we gave the Office of Management and Budget teeth to enforce these laws with the Federal agencies? Mr. Daniels. Well, we don't aspire to police powers, though some people think we think we do. I would leave that to the wisdom of Congress, sir, although I will say that even apart from or before any such powers were conferred on us, I think we have a very heavy responsibility in this area. It is not as though we are toothless. A primary reason that I favor the continued integration of management and budget functions--and this is a debate that has run for a long time--is precisely that if we ever get it right, the budget authority and the interactions we have over something very dear to the hearts of agencies and parts of agencies, their budget from year to year resides in the very same place that has the responsibility for oversight or paperwork reduction, GPEA, in all these other agencies. That is why we are going to make a determined run at the goal to strengthen the management side of our operation to train our people in the requirements of these acts and try to use the budget hammer, some would call it, to get greater compliance. You all can work on whether we should also pack side arms and have other forms of coercion. Mr. Otter. Well, I pursue that line of questioning as I did in the subcommittee, as you will recall, simply because I see that we always advise ourselves that in order to get compliance from the private sector or from the general citizenry, from the people, that we have to put teeth in the law. We are about to hear from two sizable corporations here that if they had violated the law 487 times, they would not have got any chance to violate the law 487 times in 2000, because they would have all been in jail from having violated the law 872 times in 1998, whether it was affirmative action or whether it was OSHA or the IRS laws, the tax laws, or any of the rest of these. I am wondering, if we are really serious about paperwork reduction, if we are really serious about making the necessary good impact on our own government that we are willing to make on our own participants in the private sector and in the economy, why aren't we just as enthusiastic and why aren't we just as willing to champion that same sort of compliance with our own government? Thank you, Mr. Chairman. Mr. Burton. Side arms will be required. Mr. Ose. Mr. Ose. Mr. Chairman, thank you. I am tempted to use a portion of my time to celebrate your birthday today. Mr. Burton. Do what? Mr. Ose. To celebrate your birthday today, because I understand you turned 35. Mr. Burton. Thirty-nine. Mr. Ose. But I am not going to sing for you. Mr. Tom Davis of Virginia. How many times? Mr. Ose. Nobody laughed. Happy birthday, Mr. Chairman. Mr. Burton. Thank you. Mr. 0'se. That is in the record, right? You got it in the record? Mr. Burton. Thirty-nine. Get that in the record, too. Mr. Ose. This is my time, Mr. Chairman. Mr. Daniels, I appreciate you coming. You and I have had a couple of conversations in the past. I do want to touch on a couple of things. We had a hearing on April 24th at which many of the witnesses questioned the requirement for reporting extensive and unchanged information on an annual basis; that is, the same information they reported on the previous year's form was the same that they are reporting on this year's form, in particular as it relates to Interior and Agriculture issues. On May 15, I wrote you and Secretary Norton about the results of our investigation, the Bureau of Reclamation in particular, and asked for OMB to work with the Interior and Agricultural Departments to eliminate any duplicative reporting. Where do you stand on your analysis of this problem? Mr. Daniels. We assess it as a general problem, even larger than your letter suggested. I will be meeting with Secretary Norton next Friday, and this will be one of the topics that we take up. I can't tell you this morning how much progress she will have to report. Certainly the work of the committee alerted and sensitized her, as well as us. And certainly an area one of the high-yield opportunities that I made earlier reference to has got to be, you know, alleviating the burden for repeated update or refiling of the same data; and there is work afoot to try to make it possible for people, or businesses in many cases, to file standard information in one place that might handle multiple agency needs, updated only as it changes. Mr. Ose. Could they do that electronically, too? Mr. Daniels. Sure. Mr. Ose. One of the issues that came up in our hearings-- and this related primarily to agricultural use of Bureau of Reclamation water from the Central Valley project in California--is that on the forms that were being used by the Bureau to basically allocate water, it almost seemed as if the simple addition of a box that a farmer could check that says ``no change from the previous year'' would go far toward giving these people the time that they need in the fields. I don't know if you have considered that or not. Mr. Daniels. I have. And also made earlier mention of the fact that, in Agriculture particularly, there is--what we are dealing with, with many programs and an enormous infrastructure, field offices overlapping and all the rest of that, which is a completely separate management problem, there is at least, I think, the strong suspicion of a lot of ``make work'' and a lot of information being collected that need not be collected in the first place. I said earlier it would be a sad mistake to convert from paper to some simpler electronic fashion information collection that is unnecessary in the first instance. Mr. Ose. Your point is very well made. I met with the FSA employees in the Central Valley, particularly, in my district about that exact point; and they would welcome the opportunity to reduce the redundant or repetitive collection of information of this nature. So I applaud your efforts on it. Mr. Daniels. We could use the help of Congress to reducing the redundant and unnecessary overlap in that agency itself. When you have separate silos of employees all dealing with the same farmer but all reporting to different people and all setting up their own systems, you are going to have multiple information demand. Mr. Ose. Your single source idea or your single repository is a great idea. So I want to compliment you on that. Mr. Daniels. It may be great, but it is not very popular. Mr. Ose. Before the light turns red, I want to reiterate what I said at the beginning and say happy birthday to you, Mr. Chairman. Mr. Burton. You are a good friend. Let me just say to Mr. Daniels, if you have suggestions for legislative action that would help you do your job better by streamlining and cutting out duplication, just call us. I mean there is a number of subjects here that we will be very happy on both sides of the aisle to do whatever we can. This is not a political issue in any way. Ms. Norton. Ms. Norton. Thank you, Mr. Chairman. I regret that I have not been here long enough to hear this important testimony. It's an important hearing for this committee to hold. I would like to yield my time to Mr. Kanjorski. Mr. Kanjorski. Thank you very much. Mr. Daniels, I want to tell you a story of how I got into something. It is interesting. I spent time with a former Member who was my dearest friend, Bill Emerson. We used to cross districts. He was a Republican. I was a Democrat. We always made it a point, if I went to his district, we would go to something special, a laboratory or some Federal installation. If he came to mine, we would do the same. When I was in Missouri one time, he was very proud of the USGS facility that is somewhere in Bill's old district, and we spent the day there. It was very enlightening, and it could perhaps give us some guidance here, because I just heard the chairman mention whether or not we could do something. When we were mapping the United States some 20 or 25 years ago, maybe 30 years ago now, of course, the Congress had to authorize the mapping. It was interesting that an interesting question arose that exists all the time when we act here in Congress, whether this is a Federal question or a State question. There was the contention that they wanted to have a Federal map of the United States, but ultimately Congress elected to appeal to States' rights and authorized to pay for a map that would be awarded and built by the States, and they did such. Members may not know this, but when they completed all the surveys of the United States and they went to reassemble the United States, it did not fit. Quite frankly, all the information that was compiled in the lower 48 States just did not come together. We had to redo the situation at great expense, and that is a tendency that we have to anticipate here. If you are going to do something, we should probably get involved in the Congress when we are authorizing but be very certain that we analyze out some of our philosophical positions that can and do cause havoc. Now, as a result of that, I have been very involved in GIS, both using it for government planning and structure. I have found that we are on that same course again, that is in the Federal Government. In almost every department and bureau they are, rather than having a central repository for GIS information, whether it be the Library of Congress, the Department of Congress, I don't care, some single agency that is responsible for standardization and for pulling this information together and to making it available, every department in every bureau of the government has their own little GIS system that they are working with and, unfortunately, a total lack of standardization. Now, I am certain in my own mind standardization should not be established by government fiat and government action alone, and they are well on their way to coordinating both the Federal Government and the private sector in developing standards. But they are--that is extremely important. I am involved with areas now that we are trying to determine are we going to be doing the GIS system down to an accuracy of every 3 feet on the surface of the Earth, every 10 feet on the surface of the Earth, every 30 feet. There are all different measures, different expenses involved. But a great deal of the limitation is what this information can be used for and the quantitative savings that will result therefrom. One of the things I would call your attention to just think about it, we have over there in some of the black areas of the government capacity through satellite use to have tremendous efficiency in siting and locating materials on the face of the Earth with great accuracy. It is, to my knowledge, that the private sector is spending hundreds of millions if not billions of dollars to duplicate that very service that exists right now. We would make tremendous strides if, one, we freed up some of that information. All it takes is the attention of saying that it is not so radical a secret that it has to be contained anymore, because they can do it in the private sector, but, rather than duplicate that expense in the private sector, actually open up those areas. I can tell you just in the area of land reclamation and water treatment in this country we are talking about the capacity to save billions of dollars in just opening up that technology, taking and use what we have rather than reconstructing a commercial-identical force. But even worse than that, one that has no standardization. So I think what you could do in management is work to make sure that we find central information sources, then work with the private sector to standardize and see that we are not having mismatches and wasting our money and our time that can't later on be put together. It would be a tremendous saving just to begin with, and I could offer any information I have. I am very well connected in the GIS system, the private sector that has been doing tremendous work in this country. If we could just pull the government into it, it would be a phenomenal advancement we could make. Final suggestion we would make--I am taking upon myself as a member of the minority to make these suggestions to a new administration, but something I have been trying to get some presence to do for a long time in the Congress, we have a unique opportunity right now at the beginning of this century to reexamine the structure of the Federal Government. And with at least three very vital former Presidents still in existence, we potentially could use their insight to help us restructure to be a more functional executive branch of government. But please don't stop there. Let us have a Hoover Commission to handle the Federal bureaucracy and the Federal executive branch of government. But then let's get the Congress to contemporaneously be working with them so that our structure fits your structure. If we want to be efficient, rather than taking individuals like yourself and having you come up here to 8 or 10 committees to talk about the same nonsense, we really only need you one time with the proper function of the committees with the departments of government. It can't be done in a slow period of time. But if we pin the model time to year 2008 when we don't know who the new President will be but certainly it will be a new President, but we could go about reforming our government and reshaping our government in a more efficient, effective manner that would save time, save money, speed up processes, and also put it functionally more organized, hopefully, to serve the people better. You know, I think we have that opportunity. I would suggest to the new President that this may be something that isn't sexy and isn't too politically important in a contemporary sense but could be politically contributing in a great sense if we took the opportunity at the beginning of this century and feed on that possibility of getting this government organized better so we know how to have the interaction occur. Mr. Burton. Thank you, Mr. Kanjorski. Did you have a response? Mr. Daniels. Well, I will take the idea back; and it ought to be viewed seriously by whatever means. It is a great time for the Federal Government to examine, and each of its branches, whether it is properly configured. Because we all know that, in many ways, it is not. I like the idea of testifying electronically, if we could work that out. I am glad to post my comments on the Web site, and every committee can have them there. Mr. Burton. The one thing we have all noticed today, Mr. Daniels, is that you are a very, very good listener. Mr. Gilman. Mr. Gilman. Thank you, Mr. Chairman; and thanks for arranging this birthday celebration by trying to reduce paperwork in the Federal Government. I recall when we first had the first hearing on reducing paperwork, it goes back a number of years, the committee issued a 400-page report on how do we reduce paperwork. I hope we don't do the same in this hearing. But I want to commend our Director, Mitch Daniels, for attacking a lot of these problems. I see he has touched on the farm service area, USDA, international trade data, simplified ways of reporting systems, SEC filings. I hope we will take a look at court paper filings, and also licensing bureaus throughout our country have massive amounts of forms that they require to be filled out. But I also, in looking ahead at some of the testimony coming up from Microsoft, they are talking about some areas that I am not familiar with--hypertext markup lag and hypertext transport protocols, XML transformers, how applications talk to each other. Are you familiar with all of those, Mr. Daniels? Mr. Daniels. Oh, intimately, Congressman. Mr. Gilman. Certainly I don't know if the committee is, but it sounds like we are on the verge of getting into some very highly technical areas that could save us a lot of paperwork and a lot of money up the road, and we look forward to working with you. That is the extent of my comments, Mr. Chairman. Mr. Burton. Thank you, Mr. Gilman. We now go to Mr. Davis, who has been very involved in the high-tech area for a long time as well as politics. Mr. Tom Davis of Virginia. I am just happy to be here to celebrate your birthday as well. We appreciate Mr. Daniels being here. I am going to be quick, Mitch. We have got a lot of questions that I think have already been covered in here, and we have a couple of other panels. Let me just say we have enjoyed working with your office. We will continue to on a number of issues. I just want to say how much I appreciate your candor in assessing the Federal agencies' GPEA compliance thus far. I also want to applaud your decision to support the new associate director for IT and e-government and the President's commitment to creating a citizen-centric government. In a hearing with my subcommittee, a hearing we held in April on the role of State and local CIOs, one point was raised that relates to the scope of electronic government in the context of the Federal Government. Now in local government we do kiosks, and citizens can call in, but the Federal Government is a little bit different because there are more interactions between governmental agencies than between the Federal Government and State governments. To what extent does OMB's implementation of e- government priorities account for IT planning and infrastructure that will interoperate across all of these areas--citizens, business, interagency, governmental--instead of just one? Mr. Daniels. All very, very important. The interagency issue is a big one. As I mentioned earlier, even within agencies we have major conductivity and interoperability issues. Internally, I am pleased to say that--at least I am told-- that substantial progress is due in the near term in linking first gov, which is meant to be the central Web site of the Federal Government, to thousands of local governments, many of whom are far ahead of the Federal Government in this area. I am told this is a task that on which some real progress is imminent, and we will work to make that so. It could be that we can break some logjams or at least open much wider accessibility by sort of leveraging the connections that citizens already have convenient to them locally or at their State level simply by making the appropriate linkages. Congressman Kanjorski made a number of important points. But I guess one that really sticks with me is that, my view, anyway, sophistication in systems equals accessibility and simplicity. And just as an amateur at this, as a veteran of making some mistakes made in business and elsewhere, I will be very, very skeptical of sophisticated systems that only a handful of, you know, the anointed can operate. I trust that the people who will follow on other panels fully understand that and much of the genius that they bring to this subject really comes from making, through the most sophisticated tools available, systems which any of us, even I, can manipulate easily. So---- Mr. Tom Davis of Virginia. Again, I appreciate the proactive role you are taking over there. I look forward to working with you. Mr. Burton. Thank you, Mr. Daniels. I have known you for so long, I just feel I ought to call you Mitch. I knew you when you and I were both young. You still are. Let me just say, thank you very much for being here. We really appreciate it, and we look forward to working with you to try to solve some these problems. As I said before, if there is anything legislatively that you think we ought to undertake to help you, just give us a call. Mr. Daniels. Thank you, and thank the whole committee. Mr. Burton. Our next panel, we would like to welcome to the table Sue Bostrom and Curt Kolcun. Sue is from Cisco Systems and Mr. Kolcun is from Microsoft, two of the leaders in this industry, and we are anxious to have you give us the solutions to all of our problems. We normally swear in witnesses, but I don't think today it is necessary. So we will just start with Ms. Bostrom and ask if you have an opening statement you'd like to make. STATEMENTS OF SUE BOSTROM, SENIOR VICE PRESIDENT OF THE INTERNET BUSINESS SOLUTIONS GROUP [IBSG], CISCO SYSTEMS; AND CURT KOLCUN, E-GOVERNMENT DIRECTOR, MICROSOFT CORP. Ms. Bostrom. Yes, I do, Mr. Chairman. Thank you, Mr. Chairman and members of the committee. I am Sue Bostrom. I am the senior vice president of the Internet Business Solutions Group at Cisco. First of all, I would like to start out and thank you for your support and commitment and focus on this important issue of how e-government initiatives can be accelerated across the Federal Government. I will make a short statement, but the full record of my statement is on file with the committee. In terms of some background, over the last 6 or 7 years at Cisco, we have used the Internet to really transform the way that we do business both in terms of employee-facing applications, our supply chain, customer-facing applications, really across the entire way that we operate as a company; and what it has resulted in is a phenomenal bottom-line impact for the corporation. Last year alone, we saved approximately $1.4 billion on a revenue base of $18 billion. In the process, we also increased customer satisfaction by over 25 percent. Over the last few years, my team at Cisco has met with about 75 percent of Fortune 250 leaders, CEOs as well as leaders from government organizations, both here in the United States as well as across the globe. What has been interesting is that, while 3 or 4 years ago it was typically the CIO or the network manager, network director that was interested in what technology could do, now we are finding that it is business and government leaders that are interested in what technology can do to transform the way that they operate; and, in fact, over the last 6 months we have had over 300 of these folks visit. Other private sector companies beyond Cisco are also seeing what the transformations of the Internet can do. I think many of you are probably aware of Jack Welch's comments at GE is about how the Internet is now on his list of one, two, three and four top priorities for the company; and he is expecting a $1.6 billion bottom-line impact for General Electric alone. What we have seen at Cisco is that the way--one of the ways to think about the possibilities of the Internet, in addition to improving service levels for citizens or constituents or customers, there is also the opportunity to have this return on investment. We found that there are models that can be used, whether you are looking at what it costs to process a travel and expense report going from $50 per expense report to $2 or whether it is the entire process of how you manage a complete process across the organization. There are significant opportunities to have direct bottom-line benefits. We have seen this both in the private and public sector. One of the public sector examples I like to use is what we have seen in the State of Colorado where Governor Owens has really embraced the Internet as a tool to link agencies across the State. They took over 700 licensing and permitting operations and combined them to have a single face to the citizenry. Now, what has been required, of course, is a strategic plan. They also brought in an outside private sector CTO for a period of time, and they drove coordination across 20 different agencies, which is now resulting in about a $15 to $25 million bottom-line impact for the State and, of course, taxpayer savings. I would like to suggest that, based on what we have seen at Cisco and some public sector organizations, there are about five key success factors that I believe could be very helpful in helping the Federal Government accelerate the initiatives already under way. In order of priority, the first one is very strong, visible top-down leadership. What I mean by this is both the Congress as well as the administration as well as agency secretaries. While I think that in both the private and public sector we like to believe that is all the issue or opportunity of the CIO, in fact, to transform some of the processes that you were referring to earlier it really requires an agency secretary and the entire staff there that gets behind the redesign and the reorganization opportunities. The second major key success factor is around budgeting and funding and ensuring that there are mechanisms that can facilitate flexible and fast funding of Internet initiatives. With the speed with which technology and applications are changing, the idea of committing to a plan that could be 3 to 4 years out is somewhat concerning in that maybe in a few months there could be applications that the agency would want to take advantage of. The third component of this is around accountability, and, again, who is held responsible. What we have seen is that business or functional leaders are really the folks that need to drive the fundamental change within the organization, and those are the people that we have seen from our experience are the ones that should be held accountable with the IT executives. Fourth was a point you have been mentioning quite a bit around enterprise priorities and architecture. I think that we have seen the successful organizations almost have an approach of where the CIO or the chief technical officer is almost like a benevolent dictator when it comes to setting enterprise standards across the organization. You might want to think about it like a highway and cars, where you want that chief technical officer to be responsible for what the highway looks like, how large it will be, what the standards will be, allowing each one of the agencies or functional owners to build cars so whether it be a Volkswagen or Ferrari it can scale on that highway infrastructure. The fifth point is something that we refer to at Cisco as ruthless execution against these initiatives. It is very possible in the Internet age to have 90 to 120 projects and determine what is working, what is not working and make very aggressive changes. Many of the organizations and customers that I talk to may not feel comfortable with the word ``ruthless,'' and they have tried to suggest terms like ``relentless,'' but that actually means something quite different, as I am sure you all know. So the point of saying what are the projects, how can they be implemented, what's working, what is not, and putting the timeframe, the speed which is possible on the Internet into some of these initiatives across the Federal Government would be a significant advantage. So, in summary, I think that you do all play very significant roles in terms of helping to break through some of the perceived barriers and bring together some of the silo thinking that is natural in terms of this organizational structures that currently exist. The opportunities of the Internet are significant, whether it be within an agency or within this House itself or within your own administrative functions of your office. We at Cisco look forward to seeing more examples within the Federal Government's base, and we stand ready to help in any way that we can. Thank you. Mr. Burton. Thank you, Ms. Bostrom. [The prepared statement of Ms. Bostrom follows:] [GRAPHIC] [TIFF OMITTED] T7192.009 [GRAPHIC] [TIFF OMITTED] T7192.010 [GRAPHIC] [TIFF OMITTED] T7192.011 [GRAPHIC] [TIFF OMITTED] T7192.012 [GRAPHIC] [TIFF OMITTED] T7192.013 Mr. Burton. Mr.--I want to make sure I pronounce that correctly--Kolcun. Mr. Kolcun. Good morning, Chairman Burton and members of the committee. I am Curt Kolcun. I am Microsoft's e-government director for Microsoft's government sales organization. In my role, I am responsible for implementing Microsoft's e- government strategy with Federal as well as State and local government customers. Thank you for this opportunity to appear before you to discuss Microsoft's e-government vision and how Internet standard technologies are reshaping business and governments around the world. E-government is a deceptively simple term to use to describe something remarkably broad. Essentially, e-government is about doing the business of government better, more efficiently and more effectively. Microsoft appreciates the responsibility government stewards--particularly those who make spending decisions--have to taxpayers to spends tax dollars wisely and responsibly. Which problems government chooses to address and how government addresses those problems are questions for public debate that will ultimately be decided by elected officials at all levels of government. But there is no question of whether or not government ought to do its business efficiently and economically, and this is where e-government has so much to offer those serving in the public trust. A revolution is upon us. Revolutions are a way of life in the computer industry. Only 20 years ago the world was in the mainframe era. Few people had access to or used computers. The PC, the graphical user interface, and the Internet, though, transformed the personal computer into a mass-market product. Within this information revolution, there is a transformation under way for governments as well. The first phase of this revolution was initially focused on government agencies and organizations creating a Web presence with read- only content and organizational information. Today, we are in phase two, which began when some government sites made simple forms available online. But we are moving to a final phase of e-government transformation and one in which the greatest opportunity lies. That is the digital transformation phase. It is in this phase that governments will be able to interact with their customers by accepting electronic forms, information requests and payments from the Web via PCs, wireless handheld devices, via telephones and on Web-enabled TVs. In this phase, the digital economy will be represented by new constellations of computers, devices and services all working together to deliver broader, richer solutions to everyday challenges. At the heart of the digital transformation phase is a new language for the Web, already widely deployed, called eXtensible Markup Language [XML]. XML is an open industry standard managed by the World Wide Web Consortium. That is, no company owns it, controls it or licenses it. Just as the Web revolutionized how people talk to applications, XML transforms how applications talk to one other. But what is more important than the technology itself is how government businesses and their customers will benefit from it. The industry is creating a new type of software that use XML to provide Web-based service that will enable consumers to receive and act on information any time, any place and with any device. To illustrate the power of XML Web services, one can consider the multiple interactions with government new homeowners might face. They might change their address, register their car, register to vote, set up utilities, ensure government benefits follow them, announce their presence to the new tax jurisdiction and enroll their children in school. These services are independently managed by various government agencies and public utilities. Now imagine if each of these government agents were to use XML provider service and instead of having to repeat that same information at multiple government agencies on multiple forms the new homeowner simply enters her new address once and the relevant government agencies and utilities will have access and act on that information securely, offering choices where appropriate. Today, government services are provided through a variety of channels including retailers, banks and the post office. The government service network that has evolved to reach citizens through multiple channels in the physical world is instructive on how government should reach citizens in the virtual world. Somebody who banks over the Internet should be able to pay their bills and taxes through their online financial institutions. Somebody who buys their fishing gear from an e- commerce site should be able to buy their fishing license at the same time from that same Web merchant. Citizens can interact with government not only through government Web sites but on e-commerce sights or public portals such as Yahoo, AOL or Microsoft's MSN. It is in the government's interest to reach citizens through as many service provider channels as possible. Public portals can reach as many citizens in 1 day as a government Web site can in a month or more. As an example, the United Kingdom Cabinet Office recently embarked on a groundbreaking new XML government gateway project to deliver secure Internet transactions to its citizens and businesses. Let's say that a Briton needs to send a Value Added Tax form to the government. He would simply use the VAT application, fill in the form and hit the send button. The information is electronically signed and relayed to the government gateway which authenticates it and redirects it to the appropriate Customs and Excise system. In summary, there are two things we should do to reach the full potential e-government has to offer in the United States. First is adopt XML as an integration standard for government computer systems; and, second, make government services and programs that citizens and business rely on available through multiple Web-based channels. Microsoft's e-government vision is to enable the public sector to lead the information society by providing it with great software to deliver services that can be accessed any time, anywhere and from any device. Working within public- private partnerships and in consortiums, Microsoft aims to ensure that its solutions and those of its partners are able to empower citizens, businesses, government employees and elected officials. Thank you, Mr. Chairman and members of the committee. Mr. Burton. Thank you, Mr. Kolcun. [The prepared statement of Mr. Kolcun follows:] [GRAPHIC] [TIFF OMITTED] T7192.014 [GRAPHIC] [TIFF OMITTED] T7192.015 [GRAPHIC] [TIFF OMITTED] T7192.016 [GRAPHIC] [TIFF OMITTED] T7192.017 [GRAPHIC] [TIFF OMITTED] T7192.018 [GRAPHIC] [TIFF OMITTED] T7192.019 [GRAPHIC] [TIFF OMITTED] T7192.020 [GRAPHIC] [TIFF OMITTED] T7192.021 [GRAPHIC] [TIFF OMITTED] T7192.022 [GRAPHIC] [TIFF OMITTED] T7192.023 Mr. Burton. Let me start off by asking you, Ms. Bostrom, you said you need a benevolent dictator, or words to that effect. So I presume what you are saying is that at the executive level in government for the executive branch that you have to have is somebody up there that is responsible, who can dictate to all the agency heads and department heads this is the system that we are going to use, approach we are going to use, and you all have to follow it. Otherwise, you are not going to have the kind of coordination that you think is necessary, is that correct? Ms. Bostrom. Yes. What I was referring to was there is--as I mentioned, there are almost two levels of technology. One is the underpinning infrastructure that is required. So that may be the data base, it could be the network connectivity, it could be the legacy systems. And I think that what Director Daniels was talking about earlier is that there needs to be some level of standardization that is established so that various systems and agencies can talk to one another. Even with standardization at that level, there is still quite a bit of flexibility and autonomy that can be allowed then at the agency level or at the functional level. Because, based on the standards, the data can communicate with each other. So at that base level of standards it usually does require a decision on what those standards will be. And the word benevolent was very explicit there because typically the way this is approached in the private sector and also in some public sector environments is a group of individuals gives input as to what might be required, and then some final decisions are made. So it is actually quite collaborative, but at the end of the day there are decisions that are adhered to. Mr. Burton. I might just say that I know that Mr. Daniels is gone, but whatever recommendations both of you have for a basic approach to dealing with this problem of governmentwide we will submit to them for their perusal; and, hopefully, they will take that to heart. You, Mr. Kolcun, were talking about the UK gateway project; and that was, I am sure, a major undertaking. The UK government is a lot smaller than the government of the United States, but I presume that the approach that you took would be a similar approach to the U.S. Government. Can you tell us a little bit about that, the difficulty that you encountered in dealing with their government and how that would translate into dealing with ours? Mr. Kolcun. Certainly. You are correct, Mr. Chairman, that the government in the UK, their system was designed to support about 60 million citizens. Their approach in looking at how they would interface to the existing legacy of the older systems that were there within their various departments was to standardize on XML through their government organization through what they called an electronic government framework and interoperability framework that received input from all the agencies and from all the CIOs to define the XML interfaces to the existing systems that they had. Their approach was, rather than rearchitecting or replacing the existing investment that they had in technology, they would use the secure gateway that communicated via XML with citizens through public portals as well as through business and applications. So this gateway, run through the office of the e- envoy, manages these transactions; and they approached it from the standpoint of being able to facilitate interaction between the existing systems that were there and securely exchanging data through this gateway using the XML technology that I mentioned in my testimony. Mr. Burton. So I gather from what you just said that our government might be able to utilize a lot of the technology that they already have by this gateway approach that you are talking about where you could take the new technologies and link them in, is that correct? Mr. Kolcun. That is correct. The XML technology will allow for the access to those legacy systems. Really, the effort is opening up that back-office data and make it available to the front office. So through efforts and through discussions that we have started with the XML Working Group of the Federal CIO Council, this has been a proposal that we have provided for government to move forward and to open up communications between the existing systems that we have today without replacing them. Mr. Burton. Well, that is new information for me, because I thought we would probably have to replace a great deal of what we already had. They had a target date of 2005 over there, and I guess that is achievable goal. We have a target date of 2003, and we are not anywhere near there. Do either one of you have suggestions on how we can meet that goal? Is that a realistic goal? Why don't you start, Ms. Bostrom. Ms. Bostrom. Well, I think that, based on our experience, I would always suggest an aggressive goal is always a good goal. I believe that one of the factors that I think there was quite a bit of discussion on a little bit earlier was what do you target first and what really makes sense to put on the Web, etc. So what I think would be most effective would be to very clearly establish the top priorities. So if you said that by 2003 these either key transactions or key interfaces, whether they be government agency to employee or to citizen, our top priority is where we are going to get the greatest impact in the shortest period of time and let's strive very aggressively for that by 2003. I think that would be a very achievable goal and would demonstrate success that could then be rolled out more aggressively across other groups that were not impacted as dramatically in the near term. Mr. Kolcun. I would say, as to Ms. Bostrom's statement, that we see the same thing in the UK government in the effort in the work done to look at quick wins and to analyze the systems we have today that will have the most impact on the citizen as far as their interactions with government. I think that by selecting pilots and working with progressive States, Colorado, the State of Washington, the State of Pennsylvania, who have some systems in place already, I think that we can quickly do this. I would point out that the e-government gateway was developed in 15 weeks of time with about 50 developers. So the technology has evolved to allow us to do these things quickly; and that allows us to get these quick wins, demonstrate success and move forward in a structured fashion. Mr. Burton. Fifteen weeks. Mr. Kanjorski. Mr. Kanjorski. Before we get to that on the Federal Government, let me say some distinction I see between the UK and the United States is different layers of government. We have 50 States in between that they don't have. Second, I don't know if they have resolved the security problem. But we are still wrestling over that as to what level of security we are going to go to; and I think our intelligence agencies, both the CIA and the FBI, want to constrain to what level we go to so that they can utilize this information and intercept it. So doesn't that bring us to a forceful philosophical argument that the country has to undergo as to what information should be made available to intelligence agencies and what type of protection can we put in place or shall we put in place? And isn't that a decision under our system that constitutionally has to be made by the Congress? Mr. Kolcun. Sir, I would address that. I agree that security and privacy are key points to e- government as well as government in general, and they continue to be. In the UK, they decided on an implementation of a public key infrastructure with digital certificates. And I think the determination for government to look at is determining what level of security need be applied for the type of information interaction that the citizen or consumers are doing with the system itself. Mr. Kanjorski. As I understand, we have not agreed to go to the amount of security that Europe has accepted as a standard. The United States wants, our agencies want a much lower standard so that they can exercise their inherent right as they define it to intercept communications between citizens and citizens and the government. Is that not correct? Mr. Kolcun. I am not familiar with that, sir. Mr. Kanjorski. I don't want to appear to be against it. If I were young again, I would hope to be engaged in your type of activity. It offers tremendous efficiencies and growth of wealth and protection of people's rights if we do it right. But I am trying to point out some of the frustrations on this side and in the Congress we get, one being that I had just recently gone through a hearing with securities commissions to the 50 States. And for stock fraud, for instance, in this country we still don't have a single repository of information on individuals that commit intrastate fraud. There are some frauds committed, and the same individual goes to each individual State, and some have practiced in 13 and 15 States. And any State in the Union can't find out that they have been prosecuted and have provided that. Now that necessitates standardization and clearinghouse operations that aren't very sophisticated really, but the fact that we don't have them raises the question why. And I really think it is an argument--two things, one, privacy and, two, that jealousy of States' rights as opposed to national standards and national rights. It seems to me the Congress and the people have to engage in that debate and get over it rather quickly. Whereas in the UK they have had the debate. They have decided they trust their government. They decide their government will impart a standard that is sufficient to protect people's privacy, and they have moved on. Here, every day that issue comes up in committee hearings or on the floor; and we really haven't developed a philosophical standard consistent in the country to allow you all to move ahead and put in a system. But I am worried about doing partial things that can't complete the action. And in testimony you said to try and define something that is reachable. I can see some areas that we could do that with, probably cause some efficiencies in government but wouldn't necessarily allow us to have the opportunity to have a superstructure in place to really move ahead with what we are all hoping will be a tremendous e- government facility in the United States of a highly sophisticated nature. I am just wondering whether or not is it up to your companies and your industry and your professions to come forward and start shaming the Congress and the American people into addressing some of these political and philosophical issues that no longer can be put under the rug and ignored but must be faced, decided upon, and then moving out from there. Other than that, aren't we sort of just skating around hoping to do little things but not in context and not comprehensively? Ms. Bostrom. Well, Mr. Kanjorski, I believe that there is quite a bit of truth in the statement that you make. I believe that the challenge that the Federal Government faces or the public sector faces here in the United States is very similar to similar challenges that are faced in the private sector, one being that there is almost simultaneous initiatives that must go on, one area being the rearchitecture of the things that you are describing, the data bases, and combining information. And many of those are philosophical, longer term decisions that must be made. At the same time, though, there is the opportunity to perform initiatives and take on initiatives that will begin to offer quick wins. What I found in the private sector is that oftentimes those quick wins can accelerate change in that core rearchitecture. Because, as you see what is possible, whether it be private sector organizations like Cisco or Microsoft or whether it be the citizens, they begin to see what is possible and begin to help accelerate the architectural or structural, philosophical decisions that need to occur. So my thinking would be that there needs to be simultaneous action at both levels, and I think for any one situation what ultimately drives the kind of transformation I think you and I are hoping for I think time will tell. Mr. Kanjorski. Yes. And I just make the comment that the difference between the private sector and government is that the private sector is politically an authoritarian dictatorship. That is why it gets done. The CEO says it shall be done, and the implementation gets it done. Unfortunately--or fortunately--government is a democratic process--that could be a bad quotation--and it makes it much more difficult. But what you are suggesting, as I understand it, is for us to identify something that can be rather quickly resolved and handled with your new technology that will create the dawn to create the political sympathy both in the citizenry and in the Congress to think about maybe appointing an e-government czar to help us, but under constraints, but building on one win or several wins and successes that will trust the authority to go there until proven otherwise to start implementing the entire system. Is that what you--taking care of the different structures of the private sector? Ms. Bostrom. I think there needs to be a mechanism, whatever it is, that helps to establish these standards. In addition, there needs to be accountability, whether it be at the agency level or otherwise, where the agency heads or functional heads are being held responsible for helping to drive these initiatives. So not a central point of control from that perspective. But I think that could certainly be helpful in leveraging a lot of the good work that has already been done within agencies and accelerating more work to occur. Mr. Burton. We have to go to Mr. Davis. He has a luncheon. Mr. Davis. Mr. Tom Davis of Virginia. Thank you. Let me ask both of you, from the work of the full committee staff and my staff have done in examining the progress of the Federal Government with respect to implementing the GPA and thinking outside the traditional stovepipe information manage the structure, the progress of agencies in implementing the GPA as the first phase of an e-government we think is uneven at best. Would you give me a private sector perspective on what would be the preliminary steps that any organization, including the Federal Government, would take to achieve the cost efficiencies and improve services that have been realized in the business world? Start, Mr. Kolcun, with you. Mr. Kolcun. OK. I think that some of the things that we have talked about, Congressman, already are the support and-- the management support for looking at the process. It is one thing to be able to place a form online, but that form represents a process, and you have to make sure that when we look at this form and put these forms online that we are also analyzing the process. What is the process? Is it a necessary process? I know at Microsoft when we moved--we use the term ``eat our own dog food'' when we use our own technology to change. When we moved our systems online, the chief executive of our company was intimately involved in looking at the process and questioning the process to find out if it was involved and then applying technology accordingly. I think that at the Federal level we need to really elevate the CIOs to be able to do that and look to that organization to be able to help and be tied to the strong management organization to be able to move these initiatives forward. Mr. Tom Davis of Virginia. OK. Ms. Bostrom. Congressman Davis, I think the approach that I might suggest in an agency that isn't moving quite as quickly as one might like, I would say first is establishing what the top priorities are. By that I mean, in a quite simple way, we talk to the citizens that the agency serves. I would talk to the employees, and I would find out what are the two or three key things that really make it difficult to do business with that agency or to be an employee within that agency. And then I would prioritize those initiatives based on the ability for the Internet or Internet capabilities to make the difference there as well as how easy they are to implement. So, in other words, how many philosophical debates need to occur before progress can be made? Second, I would hold the accountability with the functional executives inside of that agency and create an IT functional partnership so that the people that are required to change the process have skin in the game to help make it happen and understand what the returns can be for their organization. And, finally, we put a terrific amount of emphasis on near- term tracking and results and really looking over, whether it is 90 days, 120 days or 6 months or 9 months, what progress is being made so that corrective action could occur very quickly. Mr. Tom Davis of Virginia. Thank you. That is all I have. Mrs. Morella [presiding]. Thank you, Mr. Davis. I am sorry that I wasn't here to hear your testimony, but, of course, I have your written testimony. It is difficult when you have three different committees meeting at the same time. Spencer Abraham was speaking to us on the energy policy, which actually ties in, because there is this demonstration program called, let's see, Don't Pollute, E-commute, which is being done with businesses where they can store up the energy that they have preserved and sell it and keep it in the bank. I just think the idea is great, and the District of Columbia region is part of that. But I would like to ask you both maybe the same question. In order to receive most government services, citizens must first provide some personal information. The idea of the government agency sharing all of this information over the Internet with other government Web sites sounds like it might present security problems. So I just wonder how you would respond to that. When the citizen wants to work with government online, how do you protect their information and what control will they have to limit the way their information is handled? That security and privacy is one of the biggest issues. I know that Mr. Davis shares that, since we have worked on this in the past. Maybe, Mr. Kolcun, you want to respond first. Mr. Kolcun. Thank you, Congresswoman. Yes, I would point out that, as we discussed, security and privacy are key aspects of e-government. Some of the same laws for security in the sharing of information between agencies exists today, and those same laws would still apply in the Internet world. I know that has been a lot of discussion around privacy and initiatives such as the Platform for Privacy Preferences, P3P, which actually allows the citizen to determine what type of information they would like to provide in the commercial world. So as a user I can determine and set preferences on my computer to say that I want this Web site to get this type of information or I don't. And if I access the site that tries to get that information, I will get the warning to say that it is trying to get that information, and it won't allow that to happen. From the government perspective, the issue of privacy also needs to be included in privacy statements that we have today on our government Web sites. And the point I will make, as far as government being able to monitor the sharing of information, is that, from the technology perspective, we will be able to apply audit controls to that information in ways that we have not been able to in the paper world. So I would say that the existing laws and regulations we have will be able to be applied more efficiently and more effectively with Internet technology. Mrs. Morella. That is if we implement the current laws that we do have, and I think that has been one of our difficulties with the Federal agencies. Ms. Bostrom. Ms. Bostrom. Congresswoman Morella, on the security issue, I believe that, like you, I have concerns about the feelings of citizens in terms of providing information online. There is certainly the technology that can ensure that citizens will feel that the information they have provided is secure and that will only go to certain Web sites. But at the end of the day what I think is required is education around what is available, what is possible. Referring back to the point that you made, Mr. Kanjorski, that you made earlier about the comfort level that the average person has with technology, I think it will require some education so that individuals will know that when they provide information exactly where does it go. I must also say, though, in the paper world oftentimes you provide information and you have no idea where it goes. So I think that same form of education will be required so that people understand that the technology is in fact providing them with greater privacy and security than in some cases they may have had in the paper world. Mrs. Morella. Thank you. I will now defer to Mr. Kanjorski for another round of questioning, if he has any. Mr. Kanjorski. Let me ask a question. Something did disturb me. Most recently, within the last 2 years I think, one of our national core manufacturers inserted a chip in an automobile that kept track of where the automobile was and the processes it was going under, supposedly for better engineering purposes, to have a sample test, but unbeknownst to the buyers. I am sure it shook up some people that found out that their activities could being traced that thoroughly with just the addition of a very cheap chip and that in fact it was monitored and therefore their information or their privacy was in some way invaded unbeknownst to them. I think there are enough stories out of that happening even in the private sector, that adding on the natural suspicion of government and the black helicopter conspiracy that some people have of government that I agree with you that if you could undertake that as a corporate contribution to the U.S. Government to really educate the American people that would probably be the greatest contribution you could make. There are a high number of people in this country that are fundamentally somewhat ignorant of new technology and the use of it and even the potential use of it but in that ignorance can only imagine or apply their wildest imagination. Therefore, in protection of what they consider a very important right, and I do, too, their privacy, they'd rather have it all. They are a large segment of our population we have to deal with and have an obligation to be fair with in implementing and passing laws. So, if I had my way, I think the great contribution to the government has been made by C-SPAN. If people can at least see what we do, make some judgments of how ridiculous we are sometimes, and maybe if we had a C-SPAN of high technology, it wouldn't be bad. I mean, it would start raising the level, if you will, of some people to understand, some people I am talking about are old codgers like me that have been born and been in the generation long enough to know and think that most of this is awfully new stuff. I guess it is when you think about it. It can be frightening to those who resist change or are traditionalists. I guess I am interested in how fast we could get there, what we could do to create that ease, that political comfort level and then to have an understanding of whether there are functional or fundamental changes in government and organization that have to be made. I think we need a national repository of information, as opposed to having it--I sort of analogize it to the Yucca Mountain. Would you rather have all the nuclear waste in the Yucca Mountain or do you want it at 110 nuclear plant sites around the country? It is tough to make the decision, but the decision has to be made. I tend to come down to I would rather have a single place that I have to protect, rather than having to protect 120 or a number of sites. This information is just too scattered, too unstandardized, requires too much programming to interface with the material. I am working on a program in the Commonwealth of Pennsylvania now, on applications for welfare programs that are interactive, and I am not too impressed with the idea that they want to take a 19-year-old program and try to update it because it has a great deal of material in it. But in the updating of it, it creates ever so many more likelihoods for error and mistakes to be in the system. I think we have to. But what does impress me is that it is interactive so that, when you work, you can ask a question and you don't have to necessarily read the answer; it orally can come to you. And to the people on welfare, that is a much larger percentage of the population that are functionally illiterate than the general population. So at least we are taking into the consideration that they may not have the capacity to type or even spell or punctuate correctly and can still extract the information. I would hope that is where government sensitivity is, knowing that we have this generational and educational span that we have to get over and to make it--we could do the e- world of the future. But then those of us that are old duffers wouldn't be part of the world, and we would like to be part of that world. So anything that your companies--and I have respect, tremendous respect, for both of them; if you can interact with the government some special way, make sure that we constantly change and grow and adapt to the flexibility of that tremendous technological change. One of our problems in government very often is that we set upon this course you talk about, 5 years; by the time we implement it, it is obsolete. It is useless and stupid and expensive, and other breakthroughs have occurred in the meantime; but we were too inflexible either because of our bidding process and our contracting process or implementation process to understand that. We are dealing with a new world, almost instantaneous change and breakthroughs and new things happening, and yet we are operating on a very slow horse and buggy, and we are having difficulty getting into the speed age. So you can help us more than we can help you. Thank you. Mr. Burton [presiding]. Well, thank you, Mr. Kanjorski. Let me just thank both of you very much. As you can tell from our questions probably, we are neophytes in this area, and you folks are the experts. If you have suggestions--and I made the same comment to the head of OMB, Mr. Daniels, if you have suggestions that you think we ought to take a look at and try to come up with some kind of a plan to deal with this problem, we would sure like to have it. We will make sure that Mr. Mitch Daniels at OMB, as well as the leaders here in the Congress, can have it so we can get into the 21st century, as we should. We really, really appreciate--and, once again, Kevin, thanks for all your help on this. He worked very hard on this. Thanks a lot. Our next panel is Joel Willemssen from GAO; John Osterholz from DOD; Norma St. Claire from DOD; and Jim Flyzik--is that correct--Jim Flyzik from Treasury. Would you please--I am sorry; I guess we have others here we haven't included. OK, 1 second. Forgive me. Joel Willemssen, Jim Flyzik, John Mitchell, John Osterholz, and Norma St. Claire. Since we are going to be asking you to give testimony on what you are doing, I think I will have you sworn, so we have it for the record. Will you all please stand and raise your right hands? Is somebody back there pointing a finger? Do you want to be sworn as well. Mr. Mitchell. The chief and commissioned officer has asked to. Mr. Burton. Oh, sure. [Witnesses sworn.] Mr. Burton. We'll start with you, Mr. Willemssen. You have an opening statement. STATEMENTS OF JOEL WILLEMSSEN, MANAGING DIRECTOR, INFORMATION TECHNOLOGY ISSUES, GENERAL ACCOUNTING OFFICE; JIM FLYZIK, ACTING ASSISTANT SECRETARY FOR MANAGEMENT AND CHIEF INFORMATION OFFICER, U.S. DEPARTMENT OF THE TREASURY; JOHN MITCHELL, DEPUTY DIRECTOR, U.S. MINT; JOHN L. OSTERHOLZ, PRINCIPAL DEPUTY CHIEF INFORMATION OFFICER, U.S. DEPARTMENT OF DEFENSE; AND NORMA J. ST. CLAIRE, DIRECTOR, INFORMATION MANAGEMENT FOR PERSONNEL AND READINESS, OFFICE OF THE SECRETARY OF DEFENSE Mr. Willemssen. Thank you, Mr. Chairman. I'll briefly summarize our statement. As requested, we looked at the GPEA plans for three departments and agencies--Treasury, EPA, and Defense. We found that the plans submitted by Treasury and EPA generally provided the kind of information specified by OMB. For example, in its plan, Treasury pointed out the criticality of its electronic activities in fundamentally redefining how it performs its missions. Excluding IRS, Treasury identified more than 300 information collection processes that could be done electronically rather than by paper. In its submission, EPA highlighted that it was undertaking several activities to provide electronic services, including developing an overall computer network as a central focal point for electronic reporting and also improving computer security weaknesses, which we previously reported on. Regarding Defense, its plan did not include a description of the Department's overall strategy. DOD officials could not provide us with documentation specifically addressing a Department-wide implementation strategy. In addition, in taking a look at DOD's submission, we found indications of inaccurate, incomplete, or duplicative data. In those cases, Department officials agreed to followup to correct potential discrepancies. Speaking more globally, from a governmentwide perspective, we see several challenges that Federal departments and agencies are facing in meeting the goal of providing services electronically. First, security and privacy assurances must be provided through the use of public key infrastructure technology, especially for sensitive transactions. That will be needed very critically as Federal agencies move forward in this area. Second, it's going to be important to adequately plan and implement computer network and telecommunications infrastructures to provide the capacity and connectivity needed to support increased electronic traffic. Third, agencies will need adequate capabilities for storing, retrieving, and disposing of electronic records. Fourth, agencies are going to have to implement disciplined investment management strategies to ensure that the full cost of providing electronic filing and record keeping are examined within the context of the benefits of doing so. And, fifth, agencies need to make sure that they have addressed their IT human capital needs so that these systems can not only operate effectively, but they can provide oversight of contractors developing the systems for them. OMB is also going to be challenged in its role of ensuring that agencies comply with the law. The plans that we looked at, that were submitted by the agencies, really don't provide sufficient information with which to assess the strategic activities and other tasks expected to be performed and schedules and milestones for completing those tasks. Accordingly, from here on out, OMB may want to consider proposing more comprehensive agency status reporting so that they, OMB, will have a sense, especially from a priority perspective, on where those agencies stand and that they are pursuing the most cost-beneficial opportunities for moving from paper to electronic submissions. That concludes the summary of my statement. I will be pleased to address any questions you may have. Mr. Burton. Thank you sir. [The prepared statement of Mr. Willemssen follows:] [GRAPHIC] [TIFF OMITTED] T7192.024 [GRAPHIC] [TIFF OMITTED] T7192.025 [GRAPHIC] [TIFF OMITTED] T7192.026 [GRAPHIC] [TIFF OMITTED] T7192.027 [GRAPHIC] [TIFF OMITTED] T7192.028 [GRAPHIC] [TIFF OMITTED] T7192.029 [GRAPHIC] [TIFF OMITTED] T7192.030 [GRAPHIC] [TIFF OMITTED] T7192.031 [GRAPHIC] [TIFF OMITTED] T7192.032 [GRAPHIC] [TIFF OMITTED] T7192.033 [GRAPHIC] [TIFF OMITTED] T7192.034 [GRAPHIC] [TIFF OMITTED] T7192.035 [GRAPHIC] [TIFF OMITTED] T7192.036 Mr. Burton. Mr. Flyzik. Mr. Flyzik. Mr. Chairman. First of all, happy birthday. Mr. Chairman, members of the committee, my complete record will be submitted. I will summarize briefly here. I do appreciate the opportunity to appear today to discuss the e-government initiatives within Treasury and our efforts to comply with GPEA, and also how GPEA fits in our overall information technology strategic plan. I want to thank you, Mr. Chairman, and the other members for your continued support and encouragement toward improving information technology management and reform in the government. As many of you know, I serve as the Acting Assistant Secretary for Management and the Chief Information Officer at the Treasury Department. I have also served, since February 1998, as the vice chair of the Federal CIO Council where I play a key role in the strategic direction of the Council and the Federal Government's use of information technology. At Treasury, we are making great strides in harnessing the power of the Internet to improve customer service, mission effectiveness, and all of our operating efficiencies. CIO Council's strategic plan places e-government at the forefront. The Department is aggressively and proactively developing plans and launching new initiatives. We intend to be a leader in the Federal Government in electronic government. We are supporting the use of Public Key Infrastructures, Virtual Private Networks, SmartCard and Portal technology to put in place the platform to do everything we do electronically. As an example, we are now delivering new value to citizens, businesses and government partners through the Financial Management Services' pay.gov initiative. It is an Internet portal and transaction engine that will offer a package of electronic financial services to assist all agencies. Services of pay.gov will allow for collections, form submittals, bill presentment, authentication and agency reporting, all electronically. Pay.gov will help all government agencies to accept forms electronically by October 2003. We have an information technology investment portfolio system which is a government-owned, off-the-shelf tool. Treasury hosts this system for use throughout the entire government. It is a Web-based e-government solution that supports selection control and evaluation of all information technology projects. Treasury requires all of its bureaus to use this, and we were the first agency this year to submit all of our consolidated budget information electronically to OMB. We are also the governmentwide project manager for this tool. Over 20 agencies are now reporting the use of I-TIPS. It will support GPEA by replacing all the annual paper-based IT Planning Call submissions to OMB. We also hosted the Federal Bridge Certification Authority Project for the Federal Government, which we now have operating at GSA. The bridge allows agency public key infrastructures to interoperate as it permits digital credentials, issued by each agency to its employees, to be accepted with trust and confidence by other agencies. I suggest you think of the power of that as we begin to proliferate that across government. Agencies will be able to perform Internet-enabled transactions, such as credit card collections through banks, or secure e-mail between agencies with previously unattainable trust and confidence. PKIs of five different organizations within the United States, the Canadian Government and academia were cross- certified through the prototype. The agencies were able to interoperate successfully, exchanging digitally signed electronic mail messages. It will be used by NASA, the USDA's National Financial Center, FDIC, Treasury, the State of Illinois, and Canadian Government for moving documents electronically. Our Bureau of Public Debt, partnered with the Financial Management Service, Mellon Bank, MasterCard and IBM to build an Internet-based system to sell savings bonds directly to the public. Savings Bond Direct allows citizens to buy a savings bond on a 24 x 7 basis using a credit card. The Bureau of Public Debt sells directly to the public instead of traditional networks. The system cost $350,000 to develop and implement, and within its first 18 months of operation, it generated over $230 million in bond sales. The Bureau of Public Debt's Treasury Direct Electronic Services allows individuals to directly manage their investments in U.S. Treasury marketable securities, using either the Internet or telephone. It promotes self-sufficiency among 700,000 customers and facilitates debt collection and consolidates from 37 Federal Reserve Banks to 3. By using this system, public debt reduced the processing cost of a tender to 50 cents, as opposed to $30, to process a paper transaction form. U.S. Mint also has the on-line store recognized as one of the top 20 e-tailers of the Nation. I'll defer to my good friend and colleague, Mr. Mitchell, to talk a little bit more about the Mint. We also operate the Electronic Federal Tax Payment System, which is the largest payment collection system in the world. The primary objectives of that are to reduce the filing burden by providing flexible payment choices to taxpayers, increasing speed, efficiency and accuracy of all revenue collections. IRS, of course, has its e-file program, which continues to break records. Our U.S. Customs Service continues to use electronic means to get goods and products into the country, and the international trade data system, which Director Mitchell spoke about, as a way to facilitate that. Our Alcohol, Tobacco and Firearms now has an electronic program which will permit 630 members of their industry to file all forms electronically securely over the Internet. They will use the same technology to solicit, award, administer and pay commercial vendors conducting business with ATF. Our electronic funds payment program continues to grow on an annual basis, and our strategic plan supports all the goals of GPEA. In summary, I would like to reiterate that the Department drive to be at the forefront of electronic government extends well beyond just GPEA requirements compliance. We are seeking to fundamentally redefine the ways we perform all of our fundamental mission objectives. I would like to thank the subcommittee for the support it has given to e-government. Without your support, we would not be able to achieve the national success we enjoy to date. I would like to thank the members of the committee for the opportunity to be here this afternoon. This concludes my formal remarks. I look forward to questions. Mr. Burton. Thank you, Mr. Flyzik. [The prepared statement of Mr. Flyzik follows:] [GRAPHIC] [TIFF OMITTED] T7192.037 [GRAPHIC] [TIFF OMITTED] T7192.038 [GRAPHIC] [TIFF OMITTED] T7192.039 [GRAPHIC] [TIFF OMITTED] T7192.040 [GRAPHIC] [TIFF OMITTED] T7192.041 [GRAPHIC] [TIFF OMITTED] T7192.042 Mr. Burton. It sounds like you're doing a good job over there. Mr. Mitchell. Incidentally, to the Members, we have 10 minutes on the clock on a vote. I will conduct the hearing here until we have about 5 minutes. And if you want to leave, you can leave, or you can come back later. Mr. Mitchell. Mr. Mitchell. Thank you for this opportunity, Mr. Chairman, and members of the committee. With your permission, I would like to submit my formal testimony and the Web site customer analysis that we provided to the committee for the record---- Mr. Burton. Without objection. Mr. Mitchell [continuing]. And briefly run through a PowerPoint presentation which you see on the screens before you. On the second page, you can see that back in 1993 the Mint had many challenges, including a disclaimer on its financial statements, very few measures, and no strategic plan. On the third page, you can see what we affectionately refer to as our ``spaghetti chart.'' This was a legacy of no--never having automated--excuse me, implemented an automated system across the Mint and having a hodgepodge of nonintegrated systems with a lot of manual processes. In short, it was not helping us drive the strategic objectives and visions of the Mint. On page 4, you can see that instead of--a decision was made in 1996 and 1997 that instead of spending approximately $20 million to do a Y2K solution and not gain any additional functionality, and stay with systems that were not delivering for the Mint, we decided instead to start from scratch, do a requirements analysis, and go out and select systems off the shelf with no customization that would meet our requirements. And we chose PeopleSoft as our core solution, along with other systems. That system was implemented in 12 months in October 1998. And as you can see on slide 5, in December 2000, we completely upgraded that system and added additional functionality to it, our system called COINS 2.0. On slide 6, you can see that we have two upgrades under way, one of which we will be implementing this August that will add substantial functionality to our e-retail site. This will be our third upgrade of the site since we implemented it. And later in fiscal year 2002, we will be adding personnel functionality and outsourcing our payroll processing. Page 7, you can see that as a result of these systems, we have eliminated all of our Federal Manager Financial Integrity Act and FFMIA material weaknesses. We have no material weaknesses at the U.S. Mint. We close our books every month in 10 days or less. We have greatly improved our customer service, and our ERP implementation provided the foundation for our e- retail launch. On page 8, you can see the statistics that are fun statistics about the growth of our Web site in the year 2000. As Jim Flyzik mentioned, we actually had orders in the neighborhood of about $156 million that put us in the top 20 to 30 e-tailers in the Nation. Where are we now? On page 9, you can see that we have generated record revenues and profits for the U.S. Government and the American people. Last year, we generated $2.6 billion in bottom-line profits, which was roughly four times our previous record set just a few years ago. I stress, that's bottom-line profit that goes to the Treasury general fund, reduces the amount of debt issue, and saves hundreds of millions of dollars. The employees of the U.S. Mint are proud that in addition to our customer-centric focus, we're contributing in some small way to the American public. Seven consecutive clean audit opinions and other attributes you see there. On page 10, you can see a brief summary of the most recent macro and micro-level surveys that we conduct. We have conducted both of these for the last 5 and 6 years. On page 11, you can see a summary of the University of Michigan's prestigious customer satisfaction index. Heinz absolutely blew the rest of us away with a 90 score on the scale of 100. You can see that the U.S. Mint received a score of 84, which equates us with amazon.com, BMW, and others. ``World class'' is determined by a University of Michigan to be score of 80, and the private sector median is a score of 71. You can see our scores on page 12 that we have participated and received since 1995. On page 13, I want to give you an example of how we have improved, yet how much further we have to go. You can see our results for the year 2000 were anywhere from OK to poor. You can see that so far this year, we have increased tremendously, including answering our calls within 17.5 seconds. By the way, a lot of what we do, we benchmark against the public and private sector and aspire to be the best in all of our functional areas. However, you can also see some poor results toward the bottom of the page. In the Web survey that was conducted on our behalf, we had over 25,000 respondents that let us know what was well and what was not well in terms of what they needed from us on our Web site. You can see the good news is, nearly 80 percent rated us as excellent or very good. You can see those numbers on the next page that follow out from the January through the May surveys. At the same time, you can see from page 16 that there are a number of things they both told us in terms of feedback as well as what they would like to change that included the fact that even though we've won many awards for our Web site, there are still components of it that are not best practices. With our August launch, we will now be able to have customer service self-servicing on our Web. They will be able to communicate via e-mail with us through our e-retail site and other components. In closing, several slides I would like to give to you. Page 17, you're no doubt familiar with. Your leadership role, as well as the Council For Excellence in Government, noting that 73 percent of all adults consider e-government to be a high priority. And also the Mint's commitment not only to compliance, but a proactive approach to GPRA and GPEA. Let me just say that in terms of our customer-centric focus, recruitment and retention is a challenge for us, especially as high, as private-sector-oriented as we are. But our ultimate success will be measured by the fact that everyone--our employees, the American public, customers, our business partners--we want them to get everything they need from the U.S. Mint products and services electronically. Mr. Burton. Thank you very much, Mr. Mitchell. [The prepared statement of Mr. Mitchell follows:] [GRAPHIC] [TIFF OMITTED] T7192.043 [GRAPHIC] [TIFF OMITTED] T7192.044 [GRAPHIC] [TIFF OMITTED] T7192.045 [GRAPHIC] [TIFF OMITTED] T7192.046 [GRAPHIC] [TIFF OMITTED] T7192.047 [GRAPHIC] [TIFF OMITTED] T7192.048 [GRAPHIC] [TIFF OMITTED] T7192.049 [GRAPHIC] [TIFF OMITTED] T7192.050 [GRAPHIC] [TIFF OMITTED] T7192.051 [GRAPHIC] [TIFF OMITTED] T7192.052 [GRAPHIC] [TIFF OMITTED] T7192.053 [GRAPHIC] [TIFF OMITTED] T7192.054 [GRAPHIC] [TIFF OMITTED] T7192.055 [GRAPHIC] [TIFF OMITTED] T7192.056 [GRAPHIC] [TIFF OMITTED] T7192.057 [GRAPHIC] [TIFF OMITTED] T7192.058 [GRAPHIC] [TIFF OMITTED] T7192.059 [GRAPHIC] [TIFF OMITTED] T7192.060 [GRAPHIC] [TIFF OMITTED] T7192.061 [GRAPHIC] [TIFF OMITTED] T7192.062 [GRAPHIC] [TIFF OMITTED] T7192.063 [GRAPHIC] [TIFF OMITTED] T7192.064 [GRAPHIC] [TIFF OMITTED] T7192.065 [GRAPHIC] [TIFF OMITTED] T7192.066 [GRAPHIC] [TIFF OMITTED] T7192.067 [GRAPHIC] [TIFF OMITTED] T7192.068 [GRAPHIC] [TIFF OMITTED] T7192.069 [GRAPHIC] [TIFF OMITTED] T7192.070 [GRAPHIC] [TIFF OMITTED] T7192.071 [GRAPHIC] [TIFF OMITTED] T7192.072 [GRAPHIC] [TIFF OMITTED] T7192.073 [GRAPHIC] [TIFF OMITTED] T7192.074 [GRAPHIC] [TIFF OMITTED] T7192.075 [GRAPHIC] [TIFF OMITTED] T7192.076 [GRAPHIC] [TIFF OMITTED] T7192.077 [GRAPHIC] [TIFF OMITTED] T7192.078 [GRAPHIC] [TIFF OMITTED] T7192.079 [GRAPHIC] [TIFF OMITTED] T7192.080 [GRAPHIC] [TIFF OMITTED] T7192.081 [GRAPHIC] [TIFF OMITTED] T7192.082 [GRAPHIC] [TIFF OMITTED] T7192.083 [GRAPHIC] [TIFF OMITTED] T7192.084 [GRAPHIC] [TIFF OMITTED] T7192.085 [GRAPHIC] [TIFF OMITTED] T7192.086 [GRAPHIC] [TIFF OMITTED] T7192.087 [GRAPHIC] [TIFF OMITTED] T7192.088 [GRAPHIC] [TIFF OMITTED] T7192.089 [GRAPHIC] [TIFF OMITTED] T7192.090 Mr. Burton. We have to go vote. We will be back in about 10, 12 minutes. And then we will get to the DOD folks. Thank you very much. We stand in recess. [Recess.] Mr. Burton. The committee will once again come to order. We will now hear from Mr. Osterholz. Mr. Osterholz. Thank you, Mr. Chairman. First of all, I join everybody in wishing you a happy birthday. My son had a birthday a few days ago. I'll report to him that he is in very good company. I would like to give some brief opening comments to supplement the written statement, which you indicated is placed in the record, and give you a better, a more broad picture, a more comprehensive picture of what we're doing with respect to GPEA. To provide a functional view--and this is very critical, because as the folks from industry pointed out, getting a functional buy into anything that utilizes information technology is so vital today--I have Norma St. Claire, who is the information technology senior executive in our Personnel and Readiness community. So she is here to provide you with a functional perspective as we walk through this. The GPEA report, in response to the data call, represented only a portion of what we are doing with GPEA and related activities. And I acknowledge, while I didn't have cognizance of this area at the time of the report, I have got to acknowledge the shortcomings of that report. I went over it yesterday, and in fact it is not the best product we could have submitted. At the enterprise level, which really is the level that we are operating at, what we are responsible for as the Chief Information Officer of the Department of Defense is those cross-functional issues that come as a result of the process reengineering and the integration of the process reengineering that occurs within the business functions of the Department. As a result of that, a lot of our emphasis is in the areas of architecture, enterprise, capital planning, and in the area of assurance, because the way we achieve security and assurance for our transactions needs to be uniform in order not to open up vulnerabilities as a consequence of different procedures leaving seams that, in fact, could erode confidence with our partners on our systems. The execution of GPEA is a decentralized affair, and it's tied to those directly responsible for the processes in the Department, the business processes in the Department. And that is consistent with the testimony that you heard in the prior panel. Our functional process owners are responsible for process transformation. However, doing that, we must ensure the ability to electronically protect both citizen and employee privacy, the intellectual property rights of our partners--very important--and sensitive DOD information, particularly that information that might be revealing of plans to be executed. The Department is on a path to achieve strong electronic authentication of sensitive documents. The Department has an aggressive, probably the most aggressive, public key infrastructure and public key enablement initiative in the Federal Government today and is partnering with many of our agencies. The Department, as such, is involved in a number of implementations to validate our steps and journey toward GPEA compliance. These pilots and initiatives are absolutely necessary to prove that we can properly apply--not only on a small scale, but on a large scale, the Department has these solutions. Before I bring you down close to the weeds, I just wanted to point out a few things that gets to some of the opening statements, opening points, you made earlier. Secretary Rumsfeld has just announced the formation of a Senior Executive Council which will consist of himself, the Deputy Secretary, the Under Secretary for Acquisition Technology and Logistics, and the service Secretaries. The purpose expressed to that is to bring together those senior individuals, each one of which is a captain of industry in his own right, in dealing with new ways of doing business within the Department of Defense. So, yes, we're poised for the kind of leadership--looking at the way, bringing the private-sector approach within the Department in a way that I don't remember in recent memory. So we're looking forward to the leadership that will come from that panel or that council to kind of bridge together the islands of excellence that we have got in the Department. Another point that I would like to make before I bring you again close to the weeds is, we now have, as a result of a lot of hard work, the first enterprise IT architecture in Department of Defense history. So we now have the ability to look across the enterprise known as the Department of Defense and address the value of information, how hard we need to protect it, what are the interoperability difficulties associated with moving that information around both within the Department and externally, and be able to address the value of the capital investments necessary to move us further forward toward GPEA compliance. That is a major achievement, to have that enterprise architecture. We didn't have that before. I point out that was required by Clinger-Cohen. Another point is, we looked at interoperability very hard. Some of the other members mentioned interoperability more than once. When we looked at interoperability within the Department ourselves--and title 10 was modified in 1999 to make the Chief Information Officer of the Department of Defense responsible for ensuring interoperability across the Department--we looked at the process that basically provided that interoperability. We found that policy was 10 years old. That policy goes back to when we may have argued about whether e-mail was a relevant way of doing government. We have gone past that point. So we basically have taken the entire interoperability process down to bare metal and have rebuilt it back up, so it effectively works in the network age and the GPEA. And the progress in GPEA will, of course, benefit from that new process that we're putting in place under this administration. Along the same lines, the acquisition of our capabilities to include information technology now incorporates interoperability as a key performance parameter. That is a technical term in acquisition talk. But what it means is failing to meet a key performance parameter is cause to stop a program. So interoperability has now achieved that importance within the Department of Defense. So those are some of the kind of top-level things that get at the very important and correct questions that you brought up. Let me, if I may, take you a little closer to the weeds. We are cosponsoring with a number of others the Federal Bridge Certificate Authority that Jim Flyzik discussed earlier. That started out as a Navy project through the Department that was housed in GSA and--excuse me, Treasury--and has moved to GSA for instantiation. That is a very important activity and initiative to us because that allows for addressing differences among agencies from the point of view of security and transactions. So that bridge will be kind of a gateway in the sense of allowing us to arbitrate and deal with security differences between partners and between members of the Federal Government in a way that we still can preserve the benefits of electronic business. We are issuing SmartCards, those common-access cards that you might hear about. Here is an example. We are, in fact, issuing them; we have issued 25,000 to date, and we are going to be issuing, at the end of the game, 3.5 million of these. This revolutionizes our ability to gain access to information technology services in a paperless way. It increases our ability to audit, as I think was brought up by some of the members earlier, the uses of our IT to make sure that the IT utilizations are lawful and legal, that they do not usurp resources that are needed elsewhere. So this is a very important reengineering step where technology is applied for the purposes of better electronic business. We are pursuing initiatives to use PKI in the export licensing process involving the Departments of Defense, Commerce, State and Energy, a very critical reach-out from our point of view. That will include 10,000 businesses. We are making great strides toward achieving a paperless end-to-end contracting process. Today, we are able to achieve 83 percent paperless. That is the capability we can get to. The 7 percent that is beyond our reach at the present time requires us to implement the public key infrastructure [PKI], that I talked about and also to recognize that some of the smaller business partners will have difficulty working electronically because of the investment necessary on their end. That is an important point that we are mindful of. But that 7 percent, our last mile, if you will, we are working hard to overcome. Finally, we are moving toward electronic submission and processing of claims for payments we called e-invoicing. The target date for that is October 2002, which is 1 year before, 1 year ahead of the GPEA target. So we have a number of short-run milestones on our plate. Other than to introduce Ms. St. Claire, this concludes my comments, sir. Ms. St. Claire is here to give you a quick summary of Personnel and Readiness initiatives, again focusing on the importance of the functional buy-in for any of our information technology investments. [The prepared statement of Mr. Osterholz follows:] [GRAPHIC] [TIFF OMITTED] T7192.091 [GRAPHIC] [TIFF OMITTED] T7192.092 [GRAPHIC] [TIFF OMITTED] T7192.093 [GRAPHIC] [TIFF OMITTED] T7192.094 [GRAPHIC] [TIFF OMITTED] T7192.095 [GRAPHIC] [TIFF OMITTED] T7192.096 [GRAPHIC] [TIFF OMITTED] T7192.097 Mr. Burton. Ms. St. Claire. Ms. St. Claire. Good afternoon. I am pleased to be here to tell you about the way we are implementing GPEA in the DOD personnel community. The Office of the Under Secretary of Defense for Personnel and Readiness works with all of the services within the Department of Defense, as well as with all of the external agencies that need to have access to DOD personnel records. As a matter of fact, a couple of years ago, we did this report--we did this study on what the external customer base was for the military personnel records, so that we could prioritize those areas where we had the most problems. And as you mentioned in your opening statement, we recognize that we do have some issues with Veterans Affairs in being able to provide them the paper that they need as quickly as possible. Our goal is the elimination of redundant data capture forms and other paperwork. And that is a critical component of our entire business process reengineering program. We have a Personnel and Readiness strategic plan and a Military Personnel Management Information strategic plan. They are on our Web site. I can give you the address for our Web site. Our entire business process reengineering program is described there. It is www.mpm.osd.mil. We would be happy to have you look at everything there. We have already implemented a number of initiatives that we feel satisfy the GPEA requirement, and they are discussed in more detail in my written statement. We are trying to ensure that the way we do this is smart. We do not want to automate processes and forms that would be better eliminated. And that's what the goal of our business process reengineering program is. We are finding that we can eliminate a lot of the forms and paperwork, and then we wouldn't have to worry about automating them. So we are trying to take this in a very smart way. The work that we do in military personnel impacts our entire community, and it impacts military personnel through their entire life cycle. Our military people, we start with when they first access--actually, when we first start recruiting them. They come into the military. They go back and forth between Active and Reserve components, of course. They leave the military. And we still have an obligation to them as they go out and are entitled to benefits that they are entitled to because of their military service. We also track all of their dependents. So we have a very large community that we take care of. I would like to close by emphasizing that both in P&R and in the Department, we fully support the goals of GPEA, and we have actually used this law to help highlight some of our issues and problems to help us move faster with our whole program for business process reengineering and making maximum use of new technology. Thank you. Mr. Burton. Thank you. Let me start the questioning to Mr. Willemssen. We asked you to look at the GPEA plans for the Treasury Department and the Defense Department, and I have some questions about both of those. Have you reviewed the plan of the Defense Department that was submitted to OMB? Have you reviewed that yet? Mr. Willemssen. Yes, sir. We did, Mr. Chairman. Mr. Burton. What was your impression of it? Mr. Willemssen. We were disappointed with the lack of a strategy that would have detailed the Department's approach to addressing GPEA. The plan, instead, was a listing of potential activities that could be electronically done, rather than by paper; but we did not see any kind of strategy. Upon meeting with Department officials, we again did not receive any kind of documented strategy. Mr. Burton. So I presume you conclude that by the goal of 2003, they won't be able to comply? Mr. Willemssen. Based on progress to date, it will be a challenge for them. Setting up interim milestones would be a step in the right direction. If the Department can lay out tasks and milestones to try to get there, that is definitely where they need to go. Mr. Burton. Did your staff then meet with people from the Defense Department to determine, you know, how they were going to put the plan together? Mr. Willemssen. Yes, we did. Mr. Burton. I know you have heard some of the things today that were positive. Mr. Willemssen. We did contact the Department to try to understand the process that they used. And, bottom line, what we could determine is, the process was going out with the data call to component level and then--component levels and then the data call continuing to go to lower levels, and then the data coming back up through the chain. And, unfortunately, we did not see any evidence of review of what came back up; and that is when we looked at the collection information. It also appeared that some of the entries were duplicative and inaccurate. Upon talking with the Department on that, they agreed to followup. And I think they can speak for themselves, but I think they did find those types of discrepancies. Mr. Burton. We will get to that in just a second. As I understand it, if you saw that they were, in essence, just cutting and pasting things that had already been determined. Mr. Willemssen. Yes. Rather than thinking strategically about what should be done electronically versus paper, it appeared to us, based on the audit work we did, that it was an approach of, let's go out with a data call and ask people what they currently do and what they can do electronically instead of on paper. So the data call went out, data came back, and it was aggregated without, from our viewpoint, critical review. Mr. Burton. Did you, when you were going through the process, ever identify anyone who was responsible for implementing GPEA? I mean, was it just nobody was responsible? Mr. Willemssen. Well, at the Department level, I believe the current CIO is in an acting position. And then we had a couple of meetings with a Mr. Grant, who was in the Office of CIO, and then several of his staff. I believe Mr. Grant's title is e-business, e-government. But in terms of, I think, being consistent with Clinger- Cohen, the accountability has to stop with the CIO and the Secretary. Mr. Burton. So, in essence, you didn't really find anyone that was? Mr. Willemssen. We didn't find, from a departmental perspective, somebody willing to sit and take the reins and say, this is what we need to do from a strategic perspective, this is what makes the most sense, as opposed to continuing with business as usual. Mr. Burton. We heard what Mr. Osterholz and Ms. St. Claire just said. But do you think they are making a serious effort over there to comply? Mr. Willemssen. I think oversight activities, such as the hearing today, can make a tremendous difference in the extent to which this is viewed as a priority at the Department. So I sense that, even within the last 1 to 2 weeks, there has been much more of an effort and more of a priority placed on this particular area. Mr. Burton. Have you done--well, of course, you are pretty much working just on the Defense Department, aren't you, over there on your reviews? Mr. Willemssen. I have responsibility for IT across the government. Mr. Burton. You do? Mr. Willemssen. Yes. Mr. Burton. Have you found other agencies of the government that are in the same predicament as the Defense Department? Mr. Willemssen. Yes. The Defense Department is certainly not alone in the challenges it faces in---- Mr. Burton. Could we get a list of those agencies? Because what we will want to do is--I think we ought to send a letter to them telling them of this hearing and telling them that the Defense Department, we think, is now moving in the right direction; but that if they don't, they will be subject to being called before the committee, along with you, to explain why they are not moving in the right direction to make sure they comply by 2003. So--would you make a note of that? So we would like to have that list so we can contact them. So if you can get that to me, I would really appreciate it. Mr. Willemssen. Yes, sir. Mr. Burton. Mr. Osterholz, we want to be fair to you. We didn't bring you up here to beat on you with a ball bat or anything, although I've got one. I understand from what you said that there are a number of good automation programs under way, and hopefully, they'll produce results. At the same time, as you can see, you haven't come off looking as well as you would like. But you feel like you're now moving in the right direction? Mr. Osterholz. We are moving in the right direction. I have to echo what Mr. Willemssen said, that the Department is a very large enterprise. And we have tremendous responsibilities with respect to information technology to support our core missions of warfighting. And prioritization is a daily occurrence with us. And I think clear prioritization is important, keeping us on the right path. Mr. Burton. Let me--with Mr. Kanjorski's approval, I would like to ask just a couple more questions. Then I'll yield to you. Who is the most senior person at the Defense Department who is responsible on a day-to-day basis for implementing the GPEA and electronic filing programs? Mr. Osterholz. The Acting Chief Information Officer is Dr. Linton Wells. Mr. Burton. You say ``acting.'' Mr. Osterholz. He is the Acting Chief Information Officer. He is the Acting Assistant Secretary of Defense for Command, Control, Communications and Intelligence. The President hasn't filed an attempt to nominate a successor. That gentleman is not on board, obviously, and has not been confirmed yet. Mr. Burton. We ought to check and find out when they plan to submit that name for confirmation. So did the person who is currently in charge, did he review the plan before it was submitted? Mr. Osterholz. No, sir, I believe he did not. Mr. Burton. Why was that? Mr. Osterholz. I cannot answer that, sir. I do not know. As I said, I took cognizance of this issue. I can speculate. I took cognizance of this issue after that had gone on. As I said, last night and the last week, I went through this process to verify that in fact what was discussed was substantively correct. I cannot tell you why he did not, at what level it was reviewed. I can only tell you that he did not review it. It was probably reviewed at a Director's level at the Department. A lot of things get done by e-mail. Unfortunately, things get sent out under the press of a time line that don't get the review that they require. Not an excuse, but an explanation, sir. Mr. Burton. But that won't be the case in the future, though? Mr. Osterholz. Certainly not, sir. Mr. Burton. OK. Good. What is that person doing on a day- to-day basis to move the process along? Mr. Osterholz. Mr. Wells is the chair--is the chair of the Chief Information Officer Executive Board, which makes the information technology decisions for the Department. That board involves all of the IT service providers in the Department, as well as the functional process owners in the Department, so that we have the joint of technology and process that again was discussed in the earlier panel. And so information technology is his primary responsibility. In addition to that, the guidance that was put out, which was put out under Art Money, who is the predecessor to Mr. Wells, is very clear about--if I may just simply read the key pieces of it--new or redesigned GPEA-compliant electronic transaction applications will be based upon the following: redesigned business processes, again making sure we're not paving the cow path; relative cost benefits and risk analysis, providing the basis for attempting to maximize benefits by minimizing risks; inclusion of DOD privacy and information security policies and practices; again, the balance between access, what you project, what you protect; the termination and documentation of the chosen electronic signature alternative. And electronic signatures are interesting in that the technology is certainly there. Its acceptability in some cases is questionable. We've had rulings that said electronic signatures, good idea, but send the paper anyway. And that is an important piece to look at. And review of policies to adequately support electronic transactions. So that's the guidance that was given out in January of this year to our components with respect to their GPEA activities. So there is an active role, but it is one role among a number of things that the Chief Information Officer does. Mr. Burton. Mr. Kanjorski. Mr. Kanjorski. Thank you very much, Mr. Chairman. I guess this is the wrap-up panel. And I don't know whether accolades are in order or whether we should be questioning why all the departments and agencies aren't in the same thing. But let me just run through some of the testimony that I heard and get corrections. In the Treasury area, I understand that you think you are moving along very well and making great strides. But besides efficiencies and movement of paper, there is the thing of picking up fraud and abuse, and particularly in tax returns. What I can't understand is, if we do have a sophisticated computer system operating in Treasury, how is it that prisoners can still file for tax returns by the hundreds and receive them, direct mail to their prisons, and we don't have a system that picks that type of fraud up. Mr. Flyzik. Yes, sir. The IRS has a very aggressive program to modernize. The issues you are raising are well known, they are well documented, they are well publicized. It is also well known and well publicized, the history of attempts to modernize in the IRS. I perhaps was able to say in the past that was not my watch. I can no longer say that. I am directly involved in the modernization of the IRS today. I feel real good about the progress we are making. We have a lot of legacy applications in the IRS that date back a long time. And I feel happy with the fact that Commissioner Rossotti is there. He has got an IT background. I feel we have got a governance structure in place, we have got due diligence in place, and we will fix those problems. I think that most of those problems are due purely to the sheer complexity of the legacy systems that exist today in the IRS and the inability to do a lot of interoperability kinds of programs. I like to think the Internet knows no time boundaries like these old legacy applications do; and obviously, what we need to do is get these applications on line to do real-time editing and error correction before the errors can get into the system. And that is our goal. It won't happen overnight, but it will happen. Mr. Kanjorski. In my district, there is a county prison, and one of the prisoners operates a network across the country on the Internet with other prisons. And they are just notorious and extremely successful in making applications for income tax refund checks. And they get them by the dozens, I mean literally. And I have had complaints from the warden of that prison just saying, you know, he just doesn't understand how this can continue to go on. You would think one or two times that they would catch it, but this is year after year. Now they are spreading out through the prison system across the country, and I don't know whether it's on a commission basis that they're doing it, but they are being very successful and still requesting these checks and getting them. Naturally--probably there is strong publicity when that occurs. But you have to understand how offensive it is to a legitimate taxpayer when they find out that all you have to do is get sentenced, go to prison, start filing your returns and make several hundred thousand a year. It tends to rub us the wrong way. But I think you're on the right track. It was a good report. I particularly want to compliment that part of the Treasury that is known as the U.S. Mint. And they are obviously up here because I guess they are the four-star or five-star agency here. They not only are very good in showing how they can correct the system and make the hard decisions to go to a modernized system under the 2000 problem; they showed us all that thinking ahead and using your money wisely can really accomplish some great things. So, Mr. Mitchell, you should take back my compliments. But mostly because you have the good foresight to have press representatives and public relations people like Eva on your staff. I happen to know how competent she is. So that's very good. In regard to Defense, it is a huge agency. And of course if you are not on board, everything everybody else does is minor by comparison. I think that both the Department of Defense and the Department of Energy have real needs to get into the modern age and to work through their systems. I am particularly interested in disposal of property and knowing what assets are out there that are excess or surplus and how we can get utilization of them and get a handle around them in a big way. The only other thing that I would say that did bother me, and I don't know whether it was the Defense Department or the Department of Energy, they seem to have slipped in their awareness of technology and what can be erased from computers. And I know for a fact where they excessed to the waste pile hundreds and hundreds of computers that had all the formulas for nuclear weaponry on them; and we just can't afford to have those types of failures in the system where people aren't aware of what potentially they are throwing away. I happened to find out about it because I was dealing with people who were trying to do construction--or destruction and demanufacturing of computers and found a lot of that material readily accessible on the computers that were discarded. And I would hope that we would tighten up. It's not only to accomplish a paperless society or reduction in paper, but it certainly is important that we protect information, particularly highly classified information such as that. So that, as we go down this road, it seems to me that all the component parts, including disposal of materials, is very important. And I would hope that the departments of government would cooperate. Let me ask you this question, would it be helpful to the various departments to have a centralized clearinghouse operation that would establish the standards of how to handle things, the programs that are available and the information, as a central repository; or do you think it's absolutely essential that each department have its own system and sometimes without standardization and without the capacity to be accessed by other departments of government or outside interests? Maybe I'll direct that as an open question. Mr. Flyzik. I would like to believe that the Federal CIO Council is stepping up to becoming the central repository for a lot of issues. We now have in place a Federal Government architecture model. We are looking at the standardization process. We have an architecture at Treasury, as does DOD, as mentioned. Our Treasury architecture complies with the Federal architecture standard that is being defined. So I think we are getting there. I would like to think the CIO Council has gone through an interesting evolution. Like any other group first put together, we went through kind of a bonding process to figure out who we are and how we work. And I think, though, over the last year or so, it has really evolved into taking on specific, tangible programs and projects that will deliver the kind of results that you're addressing here. Mr. Kanjorski. Do you ever see a day where those of us that sit up on the Hill, that want to find out what is available to a constituent, can dial in that information and type it in, and it is going to source it out and find it? Right now, most of the departments of the executive branch of government, and the bureaus, unless you know what program they are administering and how it works, you can't find it. I mean, it is the most closely held secret. Very simple questions, you know, is there a disaster relief for mortgage holders in a disaster area, and does the Federal Government have a program like that? Unless you know exactly the name of that program or where it is, it is hard to access. Mr. Flyzik. Yes, sir. And I believe I refer you to--we did roll out the portal First.Gov, www.first.gov, and it is designed to do exactly what you are suggesting here. That individual constituent, without any knowledge whatsoever of the functions of government, can get answers to specific questions. I think First.Gov is merely scratching the surface of where we are going to go, because for the first time we will begin to understand the way customers see government. And I agree with you. They don't see government on an agency-by-agency basis. They see government on a functional basis. I think First.Gov is our first start at fundamentally restructuring. I think we will go through phases here where First.Gov will lead to kind of virtual agencies, agencies that are working together in common functional areas. And I think, in the long run, looking out beyond it could actually lead to fundamental restructuring of government. Mr. Kanjorski. Very good. Maybe I'll put this to the Defense Department. Your part of the agencies or departments that are involved, not all of them obviously, but you have an awful lot of technology that is still black-bagged, that is already being duplicated in the commercial area that could be of great assistance to other governments and the commercial interests of the country. How do we go about freeing that stuff up? Mr. Osterholz. I would tell you that--to be honest, tell you, that is a very complicated question, because some of those other parties who would want that technology would not necessarily be interested in using it for the betterment of our interests. So that is a very, very complex question. And it's hard to give you a general answer except perhaps to point out some of the issues that we have to wrestle with today. Understanding what a corporation is and what its interests are and what its pedigree is is an interesting question for us. What a U.S. company is today is sometimes a very complicated question to get an answer on. So understanding the motives for technology transfer is a vital piece of answering that question. To move technologies, you referred to ``black-bagged,'' you are referring to classifying technologies perhaps, such as you might find in geospatial information systems, things that you were very familiar with. Very frankly, we look at commercial geospatial information systems as a very positive factor in that their existence for us gives us access to information that we may not be able to get to because of limited resources on our end. Our own assets obviously are very heavily tasked, and the availability of additional geospatial sources of information is very positive thing for us. Now, we worry a lot about who else has access to that, No. 1, because we would hate to see that sort of capability used against our forces with the sorts of resolutions that I am sure you are aware of that are coming around the commercial world. No. 2, we have to be careful as we deal with them from an electronic commerce point of view. We would buy that information from them. We want to make sure that wasn't necessarily revealing of our interest. It would be very unfortunate if our buying of, say, commercial imagery products revealed an operation pending and put our forces in jeopardy. So we have to worry about that. And that's where the PKI issues come really to the fore. But I think you are going to see, and increasingly--in fact, there aren't a lot of black-bag technologies, as you put it--that the commercial world is, in fact, the place where the technologies are and that its first adoption is not necessarily behind the green door, as it used to be. Its first adoption is in Silicon Valley. Its first adoption may be in the government agency, sir. Mr. Kanjorski. As to the programs, I agree with you. They are probably ahead of the government in what they can do. But the delivery systems, the satellite systems, etc., that could be utilized to help out, particularly in environmental protection, fire protection--I'll throw that out there and leave it; you probably know what I'm talking about--you know, we can save inordinate amounts of money and benefit to the general citizenry, the individual States and individual communities if we can find a way to open up and use the excess capacity that we have in the Defense Department for the private sector, for the government, for State and municipal governments in particular. So I just throw that out there and leave it. Mr. Chairman, I just want to congratulate you for calling this hearing. It seems to me it's one of the more progressive ideas in the role of this committee; and I hope we stay on this course, because for us, as members, who are so ill-informed in this new technology, to have the opportunity to get the testimony and hear the statements of this type of expertise is very rewarding. So thank you very much. Mr. Burton. Thank you, Mr. Kanjorski. We will try to do just that. I want to thank all of you for being here. We appreciate the input. We appreciate the progress that you have made both at the Mint and Mr. Flyzik. And the Defense Department, we hope and wish you well in the future. We will be watching and trying to work with you. With that, we stand adjourned. Thank you. [Whereupon, at 1:15 p.m., the committee was adjourned.] [The prepared statement of Hon. Edolphus Towns follows:] [GRAPHIC] [TIFF OMITTED] T7192.098