United States. Congress. Senate. Committee on Gove.

Implementation of the Information Technology Management Reform Act of 1996 : hearing before the Subcommittee on Oversight of Government Management and the District of Columbia of the Committee on Governmental Affairs, United States Senate, One Hundred Fourth Congress, second session, July 17, 1996 online

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Online LibraryUnited States. Congress. Senate. Committee on GoveImplementation of the Information Technology Management Reform Act of 1996 : hearing before the Subcommittee on Oversight of Government Management and the District of Columbia of the Committee on Governmental Affairs, United States Senate, One Hundred Fourth Congress, second session, July 17, 1996 → online text (page 1 of 14)
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S. Hrg. 104-599

IMPLEMENTATION OF THE INFORMATION TECH-
NOLOGY MANAGEMENT REFORM ACT OF 1996



V4.G 74/9:S, HRG. 104-599

Inplenentjtioii of the Inforiution T. .



^ilNG

BEFORE THE

SUBCOM.MITTEE OX

OA^RSIGHT OF GOA^RXMEXT .ALWAGEMEXT

AND THE DISTRICT OF COLUMBIA

OF THE

COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE

ONE HUNDRED FOURTH CONGRESS
SECOND SESSION



JULY 17, 1996



Printed for the use of the Committee on Governmental Affairs



U




0EC12



^S38



U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1996



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-053621-9



S. Hrg. 104-599

\^ IMPLEMENTATION OF THE INFORMATION TECH-
NOLOGY MANAGEMENT REFORM ACT OF 1996



Y 4. G 74/9: S. HRG. 104-599

Inplenentatio. of the Infornation T..



^ilNG

BEFORE THE

SUBCOMMITTEE OX

OA^RSIGHT OF GO^^RXMEXT .AUXAGEMEXT

AND THE DISTRICT OF COLUMBLV

OF THE

COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE

ONE HUNDRED FOURTH CONGRESS
SECOND SESSION



JULY 17. 1996



Printed for the use of the Committee on Grovernmental Affairs







U.S. GOVERNMENT PRINTING OFFICE
26-485 cc WASHINGTON : 1996

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-053621-9



COMMITTEE ON GOVERNMENTAL AFFAIRS

TED STEVENS, Alaska, Chairman
WILLIAM V. ROTH, Jr., Delaware JOHN GLENN, Ohio

WILLIAM S. COHEN, Maine SAM NUNN, Georgia

FRED THOMPSON, Tennessee CARL LEVIN, Michigan

PETE V. DOMENICI, New Mexico DAVID PRYOR, Arkansas

THAD COCHRAN, Mississippi JOSEPH I. LIEBERMAN, Connecticut

JOHN McCAIN, Arizona DANIEL K. AKAKA, Hawaii

BOB SMITH, New Hampshire BYRON L. DORGAN, North Dakota

Albert L. McDermott, Staff Director
Leonard Weiss, Minority Staff Director
Michal Sue Prosser, Chief Clerk



SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT AND
THE DISTRICT OF COLUMBIA

WILLIAM S. COHEN, Maine, Chairman
FRED THOMPSON, Tennessee CARL LEVIN, Michigan

THAD COCHRAN, Mississippi DAVID PRYOR, Arkansas

JOHN McCAIN, Arizona JOSEPH I. LIEBERMAN, Connecticut

HANK BROWN, Colorado DANIEL K. AKAKA, Hawaii

Kim Corthell, Staff Director

Linda J. Gustitus, Minority Staff Director and Chief Counsel to the Minority

Frankie de Vergie, Chief Clerk



(II)



CONTENTS



Opening statements: Page

Senator Cohen 1

WITNESSES

Wednesday, July 17, 1996

Christopher Hoenig, Director, Information Resources Management Pohcies
and Issues Group, Accounting and Information Management Division, U.S.
General Accounting Office 6

John Koskinen, Deputy Director for Management, Office of Management and

Budget 10

Hon. Emmett Paige, Jr., Assistant Secretary of Defense for Command, Con-
trol, Communications and Intelligence, Department of Defense 24

Steven Yohai, Chief Information Officer and Director, Office of Information
Technology, Department of Housing and Urban Development 26

Joe Thompson, Chairman, Federal Chief Information Officer Working Group,

Greneral Services Administration 28

Alan Hald, President, Computing Technology Industry Association Public Pol-
icy Committee, and Vice Chairman, Microage, Inc 37

Stephen M. Smith, Andersen Consulting, Washington, DC 42

Milton E. Cooper, President, Computer Sciences Corp 45

Alphabetical List of Witnesses

Cooper, Milton E.:

Testimony 45

Prepared statement 133

Hald, Alan:

Testimony 37

Prepared statement 114

Hoenig, Christopher:

Testimony 6

Prepared statement 53

Koskinen, John:

Testimony 10

Prepared statement 66

Paige, Hon. Emmett Jr.:

Testimony 24

Prepared statement 73

Smith, Stephen:

Testimony 42

Prepared statement 121

Thompson, Joe:

Testimony 28

Prepared statement 97

Yohai, Steven:

Testimony 26

Prepared statement 93

APPENDIX
Prepared statements of witnesses in order of appearance 53



(III)



HEARING ON THE IMPLEMENTATION OF THE
INFORMATION TECHNOLOGY MANAGEMENT
REFORM ACT OF 1996



WEDNESDAY, JULY 17, 1996

U.S. Senate,
Subcommittee on Oversight of Government
Management, and the District of Columbia,

Committee on Governmental Affairs,

The Subcommittee met, pursuant to notice, at 9:36 a.m., in room
SD-342, Dirksen Senate Office Building, Hon. William S. Cohen,
Chairman of the Subcommittee, presiding.

Present: Senators Cohen and Levin.

Staff present: Kim Corthell, Staff Director; Paul Brubaker, Dep-
uty Staff Director; William Greenwalt, Chief Investigator; Frankie
de Vergie, Chief Clerk; Andrea Gerber, Staff Assistant; Shannon
Stuart, Majority Legislative Fellow; and Colleen McAntee, Legisla-
tive Fellow, Minority Staff.

OPENING STATEMENT OF SENATOR COHEN

Senator Cohen. The Subcommittee will come to order.

Todays hearing is going to examine issues related to the imple-
mentation of the Information Technology Management Reform Act,
which goes into effect on August 8th. As many of you know, the law
was designed to fundamentally change how the Government ap-
proaches the use and purchase of technology. Its development and
passage was the result of unprecedented cooperation between the
Administration, Congress, ten General Accounting Office, Federal
agencies and industry.

While there are many individuals who played a critical role in
getting this legislation passed, I would especially like to thank and
commend John Koskinen and Steve Kelman and their staff at 0MB
and the former GSA administrator, Roger Johnson and his staff,
for their help turning this vision into a reality.

A few years ago when I first started talking about the need to
change the way the Government buys computers, a number of my
constituents were curious that I would devote so much time to an
issue which was seemingly abstract and not particularly rewarding.
I explained to them that the better use of technology will enable
the Federal Government to address a number of the critical prob-
lems that confront the country today.

The ability of Government to manage information has a profound
effect on the daily lives of all of us. Government computers keep
track of benefit payments, patents, Government insured loans, con-

(1)



tractor payments, criminal records, Medicaid and Medicare billings,
just to mention a few. In short, the Government keeps track of in-
formation that ensures our financial well-being and is also critical
to our public safety and national security needs.

On the other hand, poor information management is one of the
biggest threats to the Government Treasury because it leaves Gov-
ernment programs susceptible to waste, fraud and abuse. I might
point out, parenthetically, that we have had hearings over the
years that take note that the Internal Revenue Service, to this day,
is unable to tell us exactly how much remains outstanding in un-
collected taxes. Estimates over the years have ranged anjrwhere
from $35 billion to over $165 billion, yet we have no clue in terms
of accuracy of what remains outstanding by virtue of the mis-
management or inability to manage information properly.

This morning, I don't intend to rehash all the reasons why a
change in law was needed. We have hundreds of GAO, IG and Con-
gressional reports outlining the litany of reasons why reform was
so desperately needed. It is sufficient to say that the Information
Technology Management Reform Act or ITMRA was needed to re-
place the outdated, bureaucratic and cumbersome procurement ap-
proach the Government has used in order to buy information sys-
tems.

The existing law was deficient in three key ways: number one,
it failed to meet the Government's real needs; number two, tech-
nology was often obsolete by the time it was delivered; and number
three, it resulted in Government pajdng today's prices for yester-
day's technology.

By eliminating the 30-year old Brooks Act and the volumes of
regulations which it spawned and by replacing a cumbersome proc-
ess with one that emphasizes results, the new law represents a
paradigm shift that will enable agencies to buy the most appro-
priate technology faster and for less money.

And much like leading private sector organizations, Government
agencies will now have to provide simple, understandable evidence
that they have carefully planned and justified their technology ex-
penditures in terms of dollars spent and anticipated returns on in-
vestment. The new law will help transform the way the Govern-
ment does business. If Government is going to regain the con-
fidence of taxpayers, it must successfully modernize. And, as we all
know, we can't successfully modernize unless we approach the task
in a very businesslike fashion.

The new law requires agencies to pose three questions. First,
what functions are being performed and are they consistent with
the agency's mission. In other words, should we be doing what we
are doing?

Second, if the agency should be performing these particular func-
tions, could these functions be performed more effectively and at
less cost by the private sector?

And, finally, if the function should indeed be performed by the
agency, the law requires that the function be examined and rede-
signed or reengineered before applying technology. Reengineering
these processes before investing in technology enables the Govern-
ment to take full advantage of modernization.



There are five key issues which I beheve are critical to the suc-
cessfiil implementation of ITMRA. Number one, top agency man-
agement must become more involved in the role that technology
plays in their organization; number two, agencies must focus on re-
sults, rather than process; three, agencies must appoint qualified
chief information officers or CIOs, as outlined in the law; four,
there are many cultural challenges and a need for trained, quali-
fied and informed work force, both in the agencies and at 0MB;
and finally, 0MB must play a vital role in ITMRA implementation.

One of the critical elements to ensuring the success of ITMRA is
the commitment and focus of top agency management. In fact, ex-
perience has shown that one of the most essential factors with suc-
cessful private sector organizations is a good relationship between
the CIO and the organization head.

As the Federal Government begins to appoint its CIOs, over the
next several months, I'm hopeful that agencies are going to begin
to see technology as a tool that can help them perform mission-
related and administrative processes much more efficiently. Wheth-
er it is tracking storms, processing educational benefits or issuing
disability checks, technology is a critical component of fulfilling the
agency's mission.

The new law clearly mandates that not only must agencies
change their focus from doing the same old things faster, they must
reexamine functions, reengineer processes and integrate new and
old systems. The approach should be incremental and fit within an
overall strategic plan. Most importantly, however. Federal expendi-
tures on technology must be justified in terms of weighing what's
being spent on the system versus the anticipated benefits that will
be derived from the new system.

We also have to understand that the statutory changes made by
the new law really constitute only half the battle. The other half
involves changing the management and organizational culture in
agencies, at 0MB and also, here in Congress. In order for the new
law to succeed, all the parties involved in the implementation must
do several things.

Number one, government must embrace new ways of doing
things. I think of the old Charlie Brown cartoon where he says,
how do I do new math with an old math mind? And it seems to
me that we have got to start thinking about how we will implement
new math and develop new math minds.

Number two, government must understand and participate in
the process of change. And three, government must appreciate the
need to treat technology expenditures like investment.

Overcoming these cultural barriers is going to require the com-
mitment of management at the highest levels of the Federal Gov-
ernment. And that cultural change can start today. Instead of view-
ing these changes as simply more burdens to overcome, federal
managers ought to view this as an opportunity to manage well.

I am thankful that we have such a distinguished group of panel-
ists this morning. I'm looking forward to hearing from our wit-
nesses and continuing to work with all of you in the coming weeks
to successfully implement the Information Technology Management
Reform Act.



PREPARED STATEMENT OF SENATOR COHEN

Today's hearing will examine issues related to the implementation of the Informa-
tion Technology Management Reform Act which goes into effect on August 8th.

As many of you know, the law was designed to fundamentally change how the
government approaches the use and purchase of technology. Its development and
passage was the result of unprecedented cooperation between the Administration,
Congress, the General Accounting Office, federal agencies and industry.

While there are many individuals who played critical roles in getting this legisla-
tion passed, I would especially like to thank and commend John Koskinen and Steve
Kelman and their staff at 0MB, and former GSA Administrator Roger Johnson and
his staff for their help in turning this vision into reality.

A few years ago when I first started talking about the need to change the way
the government buys computers many of my constituents wondered, given the nu-
merous problems facing government, why I thought this was an important issue.
The answer is that the appropriate use of technology will enable the federal govern-
ment to address many of the critical problems facing the nation today.

The ability of government to manage information has a profound effect on the
daily lives of all of us. Gk)vernment computers keep track of benefit payments, pat-
ents, government insured loans, contractor payments, criminal records, and Medic-
aid and Medicare billings. In short, the government keeps track of information that
ensures our financial well being and is also critical to our public safety and national
security needs.

Poor information management is, in fact, one of the biggest threats to the govern-
ment treasury because it leaves government programs susceptible to waste, fraud
and abuse.

This morning I will not rehash all of the reasons why the law was needed. We
have hundreds of GAO, IG and congressional reports outlining the litany of reasons
why reform was so desperately needed. It is sufficient to say, however, that the law
was needed to replace the outdated, bureaucratic and cumbersome procurement ap-
proach the government used in order to buy information systems that 1) failed to
meet the government's real needs; 2) were obsolete by the time they were delivered;
and 3) resulted in the government paying today's prices for yesterday's technology.

By eliminating the thirty year (old Brooks Act and the volumes of regulations
which it spawned, and by replacing a cumbersome process with one that emphasizes
results, the new law represents a paradigm shift that will enable agencies to buy
technology faster and for less money. Much like leading private sector organizations,
government agencies will now have to provide simple, understandable evidence that
they have carefully planned and justified their technology expenditures in terms of
dollars spent and anticipated return on investment.

The new law will help transform the way the government does business. If gov-
ernment is going to regain the confidence of taxpayers, it must successfully modern-
ize. And, as we all know, we cannot successfully modernize unless we approach the
task in a business-like manner.

The new law requires agencies to pose three questions. First, what functions are
we performing and are they consistent with our mission. In other words, should we
be doing what we are doing? Second, if we should indeed be performing particular
functions, could these functions be performed more effectively and at less cost by
the private sector? Finally, if a function should indeed be performed by the agency,
the law requires that the function be examined and redesigned or re-engineered be-
fore applying technology. Re-engineering these processes before investing in tech-
nology enables government to take full advantage of technology.

There are five key issues which I believe arc critical to the successful implementa-
tion of the new law:

1) the need for top agency management to become more involved in the role
technology plays in their organization;

2) the need to focus on results rather than process;

3) the need to appoint qualified Chief Information Officers as outlined in the
law;

4) cultural challenges and the need for a trained, qualified and informed
workforce both in the agencies and at 0MB; and

5) OMB's critical role in implementation.

One of the critical elements to ensuring the success of the new law, is the commit-
ment and focus of top agency management. In fact, one of the critical factors with
successful private sector organizations is a good relationship between the CIO and
the organization head.



As the federal government begins to appoint its CIOs over the next several
months, I am hopeful that agencies will begin to see technology as a tool that can
help them perform mission-related and administrative processes much more effi-
ciently. Whether it is tracking storms, processing educational benefits or issuing dis-
ability checks, technology is a critical component of fulfilling the agency mission.

The new law clearly mandates that not only must agencies change their focus
from doing the same old things faster, they must re-examine functions, re-engineer
processes and integrate new and old systems. The approach should be incremental
and fit within an overall strategic plan. Yet most importantly, any federal expendi-
ture on technology must be justified in terms of weighing what is being spent on
a system versus the anticipated benefits that will be derived from it.

We must also understand that the statutory changes made by the new law are
only half the battle. The other half involves changing the management and organi-
zational culture in agencies, at 0MB and within Congress. In order for the new law
to succeed, all of the parties involved in implementation must: 1) embrace new ways
of doings things; 2) understand and participate in the process of change; and 3) ap-
preciate the need to treat technology expenditures like investments. Overcoming
cultural barriers will require the commitment of management at the highest levels
of the federal government.

The cultural change can start today. Instead of viewing these changes as more
burdens to overcome, we should view this as an opportunity to manage well. I am
thankful that we have such distinguished panelists this morning. I am looking for-
ward to hearing from our witnesses and continuing to work with all of you in the
coming weeks to successfully implement the ITMRA.

Senator Cohen. I want to welcome our first panel this morning.
First, I want to welcome Chris Hoenig of the U.S. General Account-
ing Office. He has been a tremendous help to me and the Sub-
committee staff in developing this legislation and I also want to ex-
press my thanks to the GAO staff. They have worked diligently on
the legislation, specifically. Gene Dodaro, Dave McClure, Dan
Latta, and Edith Pyles.

Our second witness on the panel is John Koskinen, who is Dep-
uty Director for Management at 0MB and a person, I think, who
is singularly responsible for implementing ITMRA. John's assist-
ance and his leadership is deeply appreciated, not only by me, but
the entire staff and all who have worked so closely with you. I
want to express my heart-felt thanks to you, John.

I want to take the opportunity to commend Bruce McConnell,
Jasmeet Sehra, of John's staff, for their invaluable help in develop-
ment and implementing the legislation. And, although the OFPP
administrator, Steve Kelman, is not testifying this morning, I want
to publicly thank him for meeting with my staff on so many occa-
sions, dating all the way back to January of 1993, when my inter-
est was first stirred in the issue.

And, finally, thank Allan Brown, Matt Blum, and Nathan Tash
of the OFPP staff who were also very instrumental in this effort.
And, of course, Paul Brubaker, of my own staff, who has been es-
sential and Shannon Stuart who's also helped me with this particu-
lar Committee hearing.

So, with that in mind, Mr. Hoenig, perhaps you could begin and
then, John, we will turn to you.



TESTIMONY OF CHRISTOPHER HOENIG.i DIRECTOR, INFOR-
MATION RESOURCES MANAGEMENT POLICIES AND ISSUES
GROUP, ACCOUNTING AND INFORMATION MANAGEMENT DI-
VISION, U.S. GENERAL ACCOUNTING OFFICE

Mr. HOENIG. Thank you, Mr. Chairman.

Good morning. It's a real pleasure to be here before you to talk
about reviewing the progress of the implementation of the Informa-
tion Technology Management Reform Act. If you don't mind, I
would just like to submit my statement for the record, so that I
could summarize my remarks.

Senator Cohen. Sure, your full statement will be included in the
record.

Mr. HOENIG. Let me start with where we are and where we're
going and how we're going to define success. The challenge before
us is simple in my view. Today, we have a poor track record of high
costs, low value investments, with indeterminate value to the pub-
lic in many cases. Largely the result of chaotic, slow, fragmented,
and out-dated management process. That is today.

Tomorrow, in 5- to 7-years, if agencies successfully implement
this act, we should have a positive track record across-the-board of
low-cost, high-value smaller investments that clearly reduce costs
and improve service to the public and they should be driven by
management processes that are institutionalized, efficient and up
to date.

The implementation question is how to get where we want to go
as efficiently and effectively as possible from where we are today.
My focus this morning will be on three vital elements that will de-
termine our success or failure in my view.

Avoiding past mistakes and building on success by learning the
right lessons from experience with previous management reforms:
we don't have to reinvent the wheel.

Accurately assessing how things are going so far, the progress
and implementation to date, and challenges that still lie ahead so
that we can make course corrections, if necessary. And determining
oversight focus in the short-term looking ahead, and identifying
clearly the early signs of success or the risk of failure, as well as
setting longer-term expectations.

Let me begin with learning the right lessons. Those who don't
know history are condemned to repeat it. There is much to learn
from prior reform efforts, such as the CFO Act and GPRA. To in-
crease the chances of success, several key lessons stand out. One,
the need for talent. Good processes don't work without good people.
The first few years of the CFO Act implementation showed how
much time could be lost if a concerted effort is not made from the
start to get qualified professionals in key positions.

Second, the importance of incentives. The status quo has a great
deal of inertia, as you mentioned in your comments on cultural
change. Proactive, persistent Congressional oversight and Adminis-
tration support and leadership, as we've gotten so far from the
start, is necessary to create the pressure to change at an appro-
priate pace.



'The prepared statement of Mr. Hoenig appears on page 53.



Third, having quahty guidance. One size may not fit all but pro-
ducing thoughtful, in-depth and useful guidance that is internally
consistent and focused on results can dramatically speed the rate
of implementation. Even greater impact comes from consistency
across 0MB, the IGs, and GAO. If we integrate the guidance with
GPRA, FASA, FARA the Paperwork Reduction Act, and the CFO
Act, then we get even faster implementation if we are integrated
about it.

And fourth, keeping a strategic focus. Implementation in a com-
plex environment, like the one we work in, makes it easy to lose
focus on the goal by getting lost in the details. It's going to be criti-
cal to concentrate on results, good people and institutionalized
processes.

Now, let me turn my attention to how things are going so far.
Overall, the Administration, with OMB's leadership, is taking a
proactive, broad-based flexible approach to implementing the Act,
under the influential guidance of Mr. Koskinen. But I must empha-


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Online LibraryUnited States. Congress. Senate. Committee on GoveImplementation of the Information Technology Management Reform Act of 1996 : hearing before the Subcommittee on Oversight of Government Management and the District of Columbia of the Committee on Governmental Affairs, United States Senate, One Hundred Fourth Congress, second session, July 17, 1996 → online text (page 1 of 14)