United States General Accounting Office

GAO Report to the Chairman, Subcommittee

on Department Operations, Nutrition,

and Foreign Agriculture, Committee on

Agriculture, House of Representatives

June 1998 USDA

TELECOMMUNICATIONS

Strong Leadership Needed

to Resolve Management

Weaknesses, Achieve

Savings

GAO/AIMD-98-131

GAO United States

General Accounting Office

Washington, D.C. 20548

Accounting and Information

Management Division

B-277957 

June 30, 1998

The Honorable Bob Goodlatte

Chairman

Subcommittee on Department Operations,

 Nutrition, and Foreign Agriculture

Committee on Agriculture

House of Representatives

Dear Mr. Chairman:

As requested, we are reporting to you the results of our review of the

Department of Agriculture’s (USDA) efforts to improve its management of

telecommunications resources and act on opportunities to achieve

savings. As agreed, our objective was to determine what actions USDA has

taken to address the telecommunications management problems we

identified in reports issued in 1995 and 1996 and to what extent these

problems have been resolved.1

 In these reports, we recommended that

USDA should act immediately to (1) establish the sound management

practices necessary to cost-effectively manage telecommunications and

eliminate unnecessary services, (2) consolidate and optimize Federal

Telecommunications System (FTS) 20002

 resources where opportunities

exist to do so, (3) plan networks in support of information and resource

sharing needs, and (4) correct telephone abuse and fraud problems and

mitigate future risks in this area.

Results in Brief In response to our reports and recommendations, USDA has taken positive

steps to begin correcting its telecommunications management

weaknesses—improvements that the department says could reduce its

$200 million-plus reported annual investment in telecommunications by as

much as $70 million each year.3

 For example, USDA conducted a

departmentwide reengineering study and is beginning to test a redesigned

1

USDA Telecommunications: Missed Opportunities To Save Millions (GAO/AIMD-95-97, April 24, 1995);

USDA Telecommunications (GAO/AIMD-95-219R, September 5, 1995); USDA Telecommunications:

Better Management and Network Planning Could Save Millions (GAO/AIMD-95-203, September 22,

1995); and USDA Telecommunications: More Effort Needed To Address Telephone Abuse and Fraud

(GAO/AIMD-96-59, April 16, 1996).

2

FTS 2000 is a General Services Administration (GSA) managed network of long-distance voice, data,

and video telecommunications services intended to satisfy the federal government’s needs in the

continental United States through 1998.

3

We did not independently verify the accuracy of USDA’s information on telecommunications costs

and cost-savings projections.

Page 1 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

approach for managing telecommunications resources. USDA has also

taken action to eliminate some redundant services and reduce costs.

However, USDA has not achieved significant cost savings or management

improvements because many of the department’s corrective actions are

incomplete or inadequate. Specifically, USDA has not (1) established the

sound management practices necessary for ensuring that

telecommunications resources are cost-effectively managed and payments

for unused, unnecessary, or uneconomical services are stopped,

(2) consolidated and optimized telecommunications to achieve savings

where opportunities exist to do so, (3) adequately planned integrated

networks in support of information sharing needs, and (4) determined the

extent to which the department is at risk for telephone abuse and fraud

and acted to mitigate those risks nationwide. Further, it is unclear how

and when these needed corrective actions will be implemented because

the department has not established an effective action plan or strategy for

addressing our recommendations with time frames, milestones, and

resources for making improvements. A major factor contributing to this

situation is that no one at USDA has been given overall responsibility,

authority, and accountability for fixing USDA’s long-standing

telecommunications management problems.

Background USDA relies on telecommunications systems and services to help it

administer federal programs and serve millions of constituents. From

telephone calls to video conference meetings to providing nationwide

customer access to information, USDA reports that it spends about

$219 million annually for a wide array of telecommunications technology.4

Voice and data communications, provided by the federal government’s FTS

2000 program, and hundreds of commercial carrier networks help the

department’s 31 departmental offices and agencies and thousands of field

offices carry out USDA’s broad missions and serve customer needs.

In 1995 and 1996, we reported that USDA was not cost-effectively managing

and planning its substantial telecommunications investments and was

wasting millions of dollars each year as a result. Specifically, we found

that

4

In fiscal year 1995, USDA estimated that it spent about $114 million for telecommunications. More

recent estimates by the department report that USDA spends about $219 million each year, including

$38 million for FTS 2000 data, voice, and video services; $72 million for commercial services; and

$109 million for equipment and contractual services.

Page 2 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

• USDA was paying for unnecessary or unused telecommunications

equipment and services because of breakdowns in management controls.

For example, we found that USDA had been paying tens of thousands of

dollars annually for leased telecommunications equipment, such as rotary

telephones and outdated computer modems, that it no longer even had.

• USDA was wasting as much as $5 million to $10 million annually because

the department had not acted on opportunities to consolidate and

optimize its FTS 2000 telecommunications services.

• USDA agencies were spending hundreds of millions of dollars developing

redundant networks that perpetuate long-standing information sharing

problems because the department was not adequately planning

departmentwide telecommunications in support of USDA’s information

sharing goals.

• USDA had hundreds of cases of telephone abuse because the department

lacked adequate controls over the millions of dollars it spends each year

on commercial telephone services. Many of these cases involved

inappropriate collect calls made from individuals in 18 correctional

institutions, accepted and paid for by USDA, and then possibly transferred

to other USDA long-distance lines.

We made numerous recommendations in our reports to help USDA correct

these problems. Given the seriousness of these management weaknesses

and the waste we found, we also recommended in 1995 that the Secretary

of Agriculture report the department’s management of

telecommunications as a material internal control weakness under the

Federal Managers’ Financial Integrity Act (FMFIA).

Under federal law, government agencies are required to properly and

cost-effectively manage all information technology investments, including

telecommunications.5

 To do this, agencies must have processes and

practices established that ensure sound planning and information

technology decision-making, and cost-effective management and use of

information technology investments. To further strengthen executive

leadership in the management of information technology, the Congress

enacted the Clinger-Cohen Act of 1996, which created a chief information

officer (CIO) position in federal agencies and emphasized the need for

instituting sound management practices to maximize the return on

information technology investments.

5

Such laws include the Paperwork Reduction Act of 1995, the Chief Financial Officers Act of 1990, and

the Government Performance and Results Act of 1993.

Page 3 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

In August 1996, the Secretary of Agriculture established a CIO position and

in August 1997 designated the Deputy Assistant Secretary for

Administration as USDA’s first CIO. The CIO, who reports to the Secretary, is

responsible for providing the leadership and oversight necessary to ensure

the effective design, acquisition, maintenance, use, and disposal of all

information technology by USDA agencies, which include

telecommunications, and for monitoring the performance of USDA’s

information technology programs and activities.

Scope and

Methodology

To address our objective, we reviewed agency documentation and

interviewed USDA officials to identify the department’s actions to address

our recommendations to (1) establish sound telecommunications

management practices, (2) consolidate and optimize FTS 2000

telecommunications services for savings, (3) plan networks in support of

information and resource sharing needs, and (4) correct telephone abuse

and fraud. To assess the adequacy of these corrective actions, we

reviewed plans, studies, activity reports, and other documentation at USDA

headquarters, USDA’s National Finance Center (NFC), and agency offices

and discussed the status and progress of actions taken with USDA officials.

We also reviewed studies as well as vendor billing information for FTS 2000

and commercial services to evaluate the results of USDA’s corrective

actions. Appendix I provides further details on our objective, scope, and

methodology.

We conducted our review from August 1997 through April 1998 in

accordance with generally accepted government auditing standards. We

provided a draft copy of this report to USDA for comment. USDA’s comments

are discussed in the report and are included in full in appendix II.

Sound Management

Practices for Ensuring

Cost-Effective

Telecommunications

Not Yet Established

In 1995, we reported that USDA lacked sound management practices over

its large annual telecommunications investments and was not

cost-effectively managing these investments. Because of this, the

department wasted millions of dollars each year paying for unnecessary or

unused telecommunications services and equipment, and services billed

but never provided.6

 We therefore recommended that USDA should report

its management of telecommunications resources as a material internal

control weakness under the Federal Managers’ Financial Integrity Act

(FMFIA) and take immediate and necessary steps to ensure that all

6

GAO/AIMD-95-203, September 22, 1995.

Page 4 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

telecommunications resources are properly managed and costs are

effectively controlled.

USDA agreed that it has to do a significantly better job managing its

telecommunications investments. It reported telecommunications

management as a material management control weakness in its fiscal year

1996 and fiscal year 1997 FMFIA reports, and began improvement initiatives

to reengineer telecommunications management, audit telephone invoices,

establish telecommunications inventories, and strengthen departmentwide

policy. By implementing improvements such as reengineering

telecommunications management, the department reported in

November 1997 that its telecommunications costs could be reduced as

much as $30 million annually.

However, to date, USDA has not fully implemented the revised and

improved management practices. As a result, it has neither achieved

significant savings nor substantially strengthened telecommunications

management.

USDA Reports

Telecommunications

Management as an FMFIA

Material Management

Control Weakness

Under the Federal Managers’ Financial Integrity Act of 1982 (31 U.S.C.

3512), agencies must establish internal controls to reasonably ensure that

agency assets are effectively controlled and accounted for. Agencies must

also annually report material weaknesses in these controls to the

President and the Congress and describe plans and schedules for

correcting these weaknesses. Given the lack of sound management

practices over telecommunications and the serious management

weaknesses we found at USDA, we recommended in our 1995 report that

the Secretary of Agriculture report the department’s management of

telecommunications as a material internal control weakness under FMFIA.

We also recommended that this weakness should remain outstanding until

USDA institutes effective management controls.

In response to our recommendations, USDA reported its overall

management of telecommunications as a material management control

weakness in its fiscal year 1996 FMFIA report. Specifically, the report

generally discussed corrective actions planned or underway to address

(1) inadequate telecommunications management and network planning,

(2) opportunities to consolidate and optimize telecommunications services

for savings, and (3) telephone abuse.

Page 5 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

In USDA’s FMFIA report for fiscal year 1997, the department continued to

report telecommunications management and network planning and the

management of telecommunications services as material weaknesses,

stating that estimated completion dates to resolve these weaknesses have

been delayed. Specifically, the report states that USDA extended the

expected completion date 1 year for resolving its telecommunications

management and network planning weaknesses, from fiscal year 1998 to

fiscal year 1999, and 2 years for addressing opportunities to consolidate

and optimize telecommunications services for savings, from fiscal year

1998 to fiscal year 2000.

Efforts to Reengineer

Telecommunications

Activities Delayed

In response to our 1995 report, USDA’s Deputy Assistant Secretary for

Administration—who has since been appointed CIO—and the acting chief

financial officer (CFO) established a telecommunications task force in

October 1995 to assess and determine actions necessary to address our

recommendations and resolve the department’s material weaknesses. The

task force concurred with our findings and recommendations, noting that

department leadership in telecommunications management had been

seriously deficient. Specifically, the task force concluded in its

February 1996 report that

“The processes of planning, acquiring, ordering, billing, invoicing, inventory control,

payments, and management of telecommunications services and equipment [are] chaotic at

best and totally out of control at the very least. These processes are disparately performed

across agencies and even within agencies. The capability to plan, review, and capitalize on

USDA telecommunications investments is far beyond the reach of any USDA manager to make

rational decisions based on hard inventory and billing facts. Agency managers who are

responsible for telecommunications services have neither the information they need to

manage these resources nor the billing/invoice information to ensure that USDA is receiving

the services it ordered and for which it is being billed. The systems/processes are outdated

and broken.”7

The task force recommended a series of critical and essential actions to

begin to address these problems. It identified business process

reengineering of telecommunications management activities across the

department as the most critical action for fundamentally improving the

processes and systems supporting telecommunications management. The

activity included, among other things, redesigning approaches for

obtaining and reviewing billing information through electronic data

7

United States Department of Agriculture: The Report of the Telecommunications Task Force,

February 1996.

Page 6 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

interchange (EDI) and creating management processes that (1) reduce

payments made for services not received and equipment not owned,

(2) promote increased resource sharing between agencies, and (3) provide

accurate and timely reports to agency managers for monitoring the

cost-effective use of all telecommunications resources.

Later in February 1996, the Deputy Assistant Secretary for Administration

and the acting CFO accepted the task force’s recommendation to complete

a telecommunications reengineering study within 6 months, and pilot test

and implement reengineered telecommunications management processes

throughout the department within 24 months. USDA has reported that it

expects to correct its most serious management weaknesses through this

effort and, at the same time, save up to $30 million annually by

streamlining administration of telephone bills and validating agency

payments made to telephone companies to eliminate unnecessary charges

for services, lines, and features that are not in use.

However, USDA did not complete its reengineering study until August 1997

and does not expect to have its reengineered telecommunications

management processes fully implemented before September 1999, at the

earliest, which is 3-1/2 years after USDA accepted the task force’s

recommendations. Much of this delay occurred because USDA’s

reengineering effort, although critical, lacked effective direction and

oversight. For example, it took USDA nearly 4 months (from February 1996

to June 1996) to form a project team for the reengineering study. Project

officials said further delays resulted from the lack of clear direction over

project activities. This was because management responsibility for the

work on the study was split among the Deputy Assistant Secretary for

Administration and acting CFO and an executive review board made up of

program and management officials.

USDA’s One-Time Audit

Finds Millions of Dollars in

Savings

Concurrent with the reengineering effort, USDA began additional initiatives

to address other management improvement and cost-savings

recommendations we made. For example, because USDA agencies do not

generally review commercial telephone bills to verify charges, we reported

that the department was paying tens of thousands of dollars for leased

telecommunications equipment and other services it had not used for

years.8

 We therefore recommended that USDA review commercial

8

As we reported in 1995, bills for commercial services are sent directly from the carriers to NFC where

the bills are processed and paid. NFC receives thousands of bills in paper form each month and, in

most cases, does not forward copies to the agencies for verification of charges.

Page 7 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

telephone bills for accounts over 3 years old to identify instances where

the department may be paying for services that are no longer being used.

Following the Secretary’s direction, in May 1996, USDA’s acting CFO and NFC

began a one-time audit of all commercial telephone invoices. To do this,

copies of all billing invoices paid to telephone companies for a 1-month

period in 1996 were sent by NFC to USDA agencies for verification. The audit

involved the review of over 25,000 paper invoices. Agencies and offices

were asked to identify duplicate services, unnecessary services, and

services billed but not received. As of March 1998, the audit was about

90 percent complete and had identified about $470,000 in annual savings.

USDA expects to recoup the overall cost of this audit from the savings

achieved during the first year.

Opportunities to save millions more were also identified when it was

disclosed that USDA agencies were paying tens of thousands of dollars each

month for thousands of unused FTS 2000 e-mail boxes. As a result, more

than half of USDA’s 15,953 FTS 2000 e-mail accounts were disconnected,

reducing USDA’s telecommunications costs by about $3.3 million. In one

case, for example, we were told that the Secretary’s office found it had

been paying monthly storage charges for an FTS 2000 e-mail box for a

former Secretary who had left the department in 1993. Efforts to identify

and eliminate additional unused e-mail accounts are continuing.

USDA Still Lacks Complete

Telecommunications

Inventories

In 1995, we reported that USDA and its agencies lacked basic information

describing what telecommunications equipment and services USDA uses

and what it pays for these resources because telecommunications

inventories had not been established by the department. As we pointed out

in our report, inventories are fundamental to sound telecommunications

management and are necessary, among other things, to identify

telecommunications resources that are outdated or no longer used and

ensure that agencies pay for only those services that they use.

Consequently, we recommended that the department take immediate steps

to ensure that departmentwide telecommunications inventories were

established and properly maintained.

In response to our report, the CIO’s office began work with a contractor to

help the department establish telecommunications inventories. As part of

this effort, the contractor (1) prepared a plan for conducting inventories

departmentwide and (2) initiated a pilot project to conduct a physical

inventory of telecommunications equipment at six sites for two USDA

Page 8 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

agencies in the Washington, D.C., area. At just these six sites, the

contractor found the USDA offices were being billed more than $200,000

annually for inactive lines, active lines not in use, and lines that could not

be identified. However, the department did not implement the contractor’s

plan and did not act to ensure that all unneeded or unused services were

eliminated.

Although the contractor’s plan was not implemented, USDA has taken other

actions to begin collecting inventory information. Specifically, in

connection with efforts now underway to test USDA’s reengineered

telecommunications management processes and address Year 2000

readiness,9

 the CIO’s office told USDA agencies to have their

telecommunications inventories completed by July 1998. Until USDA

establishes inventories and fully tests and implements improved

telecommunications management processes departmentwide, USDA cannot

ensure that unnecessary or unused services have been discontinued.

Termination of Services at

Closed USDA Offices Is

Not Assured

In 1995, we also recommended that USDA establish and implement

procedures necessary to ensure that all unneeded telecommunications

services are terminated at offices that close or relocate. Since passage of

the Federal Crop Insurance Reform and Department of Agriculture

Reorganization Act of 1994,10 USDA has closed or relocated about 1,300

field offices and plans to close or relocate hundreds more in the next few

years. Effective procedures are essential to precluding payments for

services at offices after they have been closed or relocated.

While the CIO’s office revised the department’s telecommunications policy

in March 1996 to require USDA agencies and offices to ensure the

termination of telecommunications services at offices that close or

relocate, CIO officials said that they did not monitor agencies’ compliance

with this policy. Accordingly, USDA does not know whether the policy had

been implemented throughout the department. Telecommunications

managers at two USDA agencies we spoke with said that they had not done

reviews of billing records to ensure that telecommunications services

were terminated for all of their offices that had closed or relocated. In fact,

cases have been identified by USDA in which the department continued to

incur service charges at agency offices that had closed or relocated. For

9

This involves taking necessary steps to ensure that information technology accurately processes date

and time data (including calculating, comparing, and sequencing) from, into, and between the 20th and

21st centuries.

10Public Law 103-354, 108 Stat. 3178.

Page 9 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

example, one USDA agency told us that the department continued to pay a

total of about $90,000 for vendor-provided services for an office in Florida

that had been closed since 1984. After identifying this case, the agency

telecommunications manager terminated the service in October 1997 and

sought reimbursement from the vendor for some of these charges.

USDA Continues to

Pay for Redundant

FTS 2000 Services

In 1995, we also reported that USDA was missing millions of dollars in

savings because the department had not consolidated and optimized FTS

2000 telecommunications services where there were opportunities to do

so.11 Such savings opportunities existed because, over the years, hundreds

of field office sites across the department had obtained and continued to

use separate, and often times redundant, telecommunications services at

office sites where multiple USDA agencies are located within the same

building or geographic area. Therefore, we recommended that USDA

identify and act on opportunities to consolidate and optimize FTS 2000

telecommunications services and preclude departmental agencies and

offices from obtaining and using redundant services.

USDA agreed with our recommendation and began a departmentwide

initiative, called Initiative 6, that used a network analysis tool12 to identify

instances in which USDA agencies and offices located in the same building

could consolidate and optimize FTS 2000 telecommunications services for

savings. By November 1995, USDA agencies and offices had been provided

with 775 specific opportunities to eliminate FTS 2000 redundant services.

USDA eliminated about $3.2 million in redundant FTS 2000 services under

this effort but took no action on nearly half of the Initiative 6 cost-savings

opportunities and terminated the initiative. The CIO’s office later

reactivated Initiative 6 after we began our review and, once again,

identified additional opportunities for savings. However, CIO officials told

us that they were not actively following up on these because new

priorities, such as the need for USDA agencies to ensure Year 2000

compliance, were consuming most of the agencies’ information technology

staff resources.

11GAO/AIMD-95-97, April 24, 1995.

12An automated tool developed by USDA to analyze telecommunications configurations at specified

locations and, on the basis of actual traffic, tariffs, and rates, determine where services can be

combined for volume discounts and where more cost-effective telecommunications arrangements can

be selected.

Page 10 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

USDA also began tracking agency purchases of FTS 2000 services. As part of

the department’s moratorium on information technology investments,

established by the Deputy Secretary in November 1996, the CIO’s office

began reviewing individual agency requests for new telecommunications

services and equipment to help ensure that opportunities to share

resources among agencies and offices are considered before

telecommunications services are acquired. The CIO’s office also created a

new centralized management structure for ordering FTS 2000

telecommunications services to help eliminate agency purchases of

redundant services. Under these new procedures, which are still being

implemented, USDA has reduced the number of individuals throughout the

department who are authorized to purchase new telecommunications

services and equipment by about 77 percent from 332 to 75 and has

required agencies to forecast their planned telecommunications purchases

in advance to identify opportunities for savings.

Networks Still Not

Planned in Support of

Information and

Resource Sharing

Needs

In September 1995, we reported that USDA had hundreds of stovepipe

networks and systems, built by its agencies, that hinder information

sharing.13 This situation evolved over time because USDA allowed its

agencies to build their own separate stovepipe networks. Even though the

department had often acknowledged that it had a pressing need to

overcome this problem, we found that USDA agencies continued to spend

hundreds of millions of dollars to develop redundant networks that could

not interoperate and could not share information. We recommended in

1995 that USDA determine the interagency information sharing

requirements necessary to effectively carry out the department’s

crosscutting programs and plan networks in support of information and

resource sharing needs.

Despite some initial efforts to develop a draft information systems

technology architecture, USDA has not yet identified business data needs

and information sharing requirements for the department. The

Clinger-Cohen Act of 1996 requires agency CIOs to develop, maintain, and

facilitate integrated information systems architectures for evolving or

maintaining existing information technology and acquiring new

information technology to achieve the agency’s strategic goals and

information resources management goals.14 An effective systems

architecture should be derived by systematically and thoroughly analyzing

and defining agencies’ target operating environments, including business

13GAO/AIMD-95-203, September 22, 1995.

14Public Law 104-106, section 5125, 110 Stat. 684 (1996).

Page 11 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

functions, information needs and flows across functions, and system

characteristics required to support these information needs and flows.

However, according to a contractor’s January 1998 assessment, USDA’s

initial architecture does not identify many of the kinds and/or types of data

used in the department and does not provide a clear foundation for a

seamless flow of information and interoperability among all agency

systems that produce, use, and exchange information. According to the

CIO’s office, work is still underway to capture data on information flows

and needs and this work will not be completed until September 1999.

Concurrent with this ongoing work to identify data requirements, the CIO’s

office has begun evaluating USDA’s current network structure. As a first

step, the CIO’s office used a contractor’s network design tool to identify or

map, for the first time, the department’s existing data networks so that

redundancies may be eliminated and economies may be gained. When this

work is complete in June 1998, project officials said the CIO will begin

considering design alternatives for migrating to a departmentwide

enterprise network15 that is intended to satisfy the connectivity needs of

USDA information technology systems, processes, and users. However, USDA

does not plan to have completed its work identifying business data and

information sharing requirements by that time. USDA officials stated that

while the department does not now and may never fully understand its

business requirements, it can nonetheless design its new departmentwide

enterprise network.

By moving forward on an enterprise network without completing an

architecture that defines USDA’s business data and information sharing

requirements, USDA runs the risk of investing in a network that may not

fully support its strategic business/program and operational needs. As we

have reported in the past, agencies have experienced significant problems

and cost increases by trying to design and build information and network

systems without a systems architecture that defines business needs. For

example, we found that incompatibilities among air traffic control systems

cost the Federal Aviation Administration (FAA) $38 million to fix because it

began building these systems without completing a systems architecture

that defined requirements and standards governing information and data

structures and communications.16 In another case, after the Internal

15Enterprise network is defined as a unified, standards-based telecommunications infrastructure that

serves all organizations of the department.

16Air Traffic Control: Complete and Enforced Architecture Needed for FAA Systems Modernization

(GAO/AIMD-97-30, February 3, 1997).

Page 12 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

Revenue Service (IRS) spent $3 billion attempting to modernize its tax

systems without adequately defining its business needs in a systems

architecture, it was unable to demonstrate benefits commensurate with

these costs and had to restructure its modernization effort.17

Telephone Abuse

Corrected at USDA

Headquarters, but

Departmentwide

Risks Have Not Been

Addressed

In April 1996, we reported that USDA lacked adequate controls for ensuring

that its telephones were properly used.18 As a result, the department,

which spends tens of millions of dollars each year on commercial

telecommunications services, had experienced hundreds of cases of

telephone abuse in the Washington, D.C., area and was at risk of further

abuse and fraud. We recommended that USDA determine its risk of and

vulnerability to telephone fraud, waste, and abuse departmentwide and

develop and expeditiously implement an appropriate plan with

cost-effective controls to mitigate these risks. In the interim, we

recommended that the department identify and implement cost-effective

actions to minimize USDA’s exposure to telephone abuse.

Following our report, USDA identified telephone abuse at the department as

a material management control weakness in its fiscal year 1996 FMFIA

report, and took a number of positive steps to reduce telephone abuse in

USDA’s Washington, D.C., headquarters offices. For example, in

October 1996, USDA began blocking collect calls in all of its Washington,

D.C., area offices, and the hundreds of inappropriate collect calls from

individuals in correctional institutions have been significantly reduced.

Also, the CIO’s office implemented procedures for obtaining and reviewing

the local carrier’s monthly telephone bill for the Washington, D.C., area to

identify questionable long distance calls as well as other potentially

inappropriate charges. After taking these actions, USDA reported in its

fiscal year 1997 FMFIA report that corrective actions on telephone abuse

were completed.

However, the department has not determined the risk of and vulnerability

to telephone fraud, waste, and abuse departmentwide as we

recommended, nor has it developed and implemented an appropriate plan

with cost-effective controls to mitigate these risks. The CIO official

responsible for telecommunications operations told us no further action

17Tax Systems Modernization: Management and Technical Weaknesses Must Be Corrected If

Modernization Is To Succeed (GAO/AIMD-95-156, July 26, 1995); Tax Systems Modernization: Actions

Underway But IRS Has Not Yet Corrected Management and Technical Weaknesses (GAO/AIMD-96-106,

June 7, 1996); and Tax Systems Modernization: Blueprint Is a Good Start But Not Yet Sufficiently

Complete to Build or Acquire Systems (GAO/AIMD/GGD-98-54, February 24, 1998).

18GAO/AIMD-96-59, April 16, 1996.

Page 13 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

was taken on our recommendation because USDA believed that the risks of

departmentwide telephone abuse and fraud would be better addressed by

implementation of the department’s reengineered telecommunications

management processes, which will allow agencies and offices to review

and verify telephone billing information. However, as discussed earlier,

work on this project is not complete and full implementation of the

reengineered processes is not expected before September 1999. Therefore,

until that time, USDA agencies and offices outside of the Washington, D.C.,

area remain at risk for telephone abuse and fraud.

USDA Lacks an

Effective Action Plan

for Resolving Its

Telecommunications

Management

Weaknesses

Although USDA agreed with our 1995 report on the need to resolve its

telecommunications management weaknesses and has identified millions

in potential savings, it lacks an effective action plan for implementing

these necessary improvements. Specifically, USDA has not established a

plan that (1) assigns clear responsibility and accountability for initiatives

intended to correct the department’s telecommunications management

weaknesses, (2) coordinates and integrates these initiatives, (3) sets

priorities, time frames, and milestones for their completion, (4) establishes

procedures for monitoring activities to ensure they are carried out, and

(5) allocates necessary resources.

In December 1997, the CIO issued a plan of action for resolving the

department’s long-standing problems managing information technology.

This plan, which was prepared in response to the Secretary’s May 1997

request, discusses telecommunications as one of five major areas and

provides a general description of the goals and objectives of ongoing

initiatives to reengineer and improve departmentwide telecommunications

management and lists tasks associated with these efforts.

However, the plan does not adequately describe how needed corrective

actions will be implemented, nor does it specify clear time frames,

milestones, and resources associated with all these efforts. Specifically,

while the plan lists tasks associated with the telecommunications

improvement initiatives, it does not describe how USDA intends to carry out

all these tasks. For example, the plan lists a project to consolidate and

optimize telecommunications services in the Washington, D.C., area to

provide more effective and economical telecommunications systems. But

the plan provides no information describing the project’s activities and

how these activities will need to be integrated with numerous other

planned or ongoing efforts to consolidate and optimize services, nor does

Page 14 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

it discuss milestones, time frames, and resources necessary for carrying

them out.

In addition, the CIO’s action plan also does not designate a specific

senior-level official with overall, day-to-day responsibility, authority, and

accountability for managing and coordinating all of the department’s

separate telecommunications initiatives. Instead, the plan generally

assigns responsibility for tasks to the CIO’s office and other USDA agencies

and offices, but does not identify responsible individuals, provide them

requisite authority, and make them accountable for ensuring that these

tasks are fully carried out. For example, while the CIO’s Associate Director

for Telecommunications Services and Operations acknowledged having

responsibility within the CIO’s office for many corrective actions, this

official said she did not have the overall authority necessary to direct and

coordinate departmentwide action on all telecommunications

improvements and cost-savings efforts. Instead, she could only attempt to

get agencies and offices to act on such efforts through a process of

consensus-building. Without an action plan that establishes clear lines of

responsibility, authority, and accountability for directing and

implementing departmentwide telecommunications improvements, many

of USDA’s corrective actions will likely not be fully implemented.

Conclusions After more than 2 years, USDA has not fully implemented our

recommendations. It continues to miss identified opportunities to achieve

the total estimated $70 million in annual savings and cannot ensure that

telecommunications resources are cost-effectively managed across the

department. It has undertaken some initiatives that have saved several

million dollars, but these initiatives are uncoordinated, poorly managed,

and do not address all of USDA’s telecommunications weaknesses. Further,

USDA has not established an overall plan or strategy for directing and

integrating these separate improvement efforts and for ensuring that

critical corrective actions are cost-effectively and promptly implemented

throughout the department. A major factor contributing to this situation is

that no one at USDA has been given overall responsibility, authority, and

accountability for doing so.

Recommendations We recommend that the Secretary of Agriculture direct that the CIO

complete and implement a departmentwide corrective action plan that

fully addresses all of our recommendations for resolving the department’s

telecommunications management weaknesses and achieving savings

Page 15 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

wherever possible. In addition, we recommend that the Secretary, in

consultation with the CIO, assign a senior-level official with day-to-day

responsibility and requisite authority for planning, managing, and

overseeing implementation of this plan and for ensuring that all

telecommunications management improvements and cost-savings

activities are effectively and fully carried out. We further recommend that

the Secretary of Agriculture direct the CIO to periodically report to the

Secretary on the department’s progress (1) implementing this corrective

action plan and (2) achieving the estimated $70 million in annual savings

identified by the department.

Agency Comments

and Our Evaluation

USDA’s CIO provided written comments on June 15, 1998, on a draft of this

report. USDA’s comments are summarized below and reproduced in

appendix II.

USDA generally agreed with our findings, conclusions and

recommendations. Specifically, USDA agreed that it has not fully

implemented recommendations in our previous reports aimed at resolving

the department’s telecommunications management weaknesses and

agreed that the department can improve by placing greater emphasis on

planning and coordination of its telecommunications program. USDA also

stated that the department has made real progress in telecommunications

management and has achieved significant savings, but did not disagree

that USDA continues to miss savings opportunities and cannot ensure that

telecommunications resources are cost-effectively managed across the

department.

In its comments, USDA provided details on actions it is taking to address

telecommunications problems we identified, but did not specifically state

whether or how the department plans to implement our recommendations.

In subsequent discussions with USDA, the Deputy CIO stated that the

department plans to fully address and implement all our

recommendations.

USDA also raised several additional matters, none of which affect our

conclusions and recommendations and thus are not discussed here. These

matters and our responses are discussed in appendix II.

As agreed with your office, unless you publicly announce the contents of

this report earlier, we will not distribute it until 30 days from the date of

Page 16 GAO/AIMD-98-131 USDA Telecommunications
B-277957 

this letter. At that time we will send copies to the Secretary of Agriculture;

the Chairmen and Ranking Minority Members of the Senate Committee on

Governmental Affairs, the Senate and House Committees on

Appropriations, and the House Committee on Government Reform and

Oversight; the Director of the Office of Management and Budget; and other

interested parties. Copies will also be made available to others upon

request.

Please contact me at (202) 512-6408 if you or your staff have any questions

concerning this report. I can also be reached by e-mail at

willemssenj.aimd@gao.gov. Major contributors to this report are listed in

appendix III.

Sincerely yours,

Joel C. Willemssen

Director, Civil Agencies Information Systems

Page 17 GAO/AIMD-98-131 USDA Telecommunications
Contents

Letter 1

Appendix I 

Objective, Scope, and

Methodology

20

Appendix II 

Comments From the

Department of

Agriculture

23

Appendix III 

Major Contributors to

This Report

38

Abbreviations

AT&T American Telephone and Telegraph

CIO chief information officer

CFO chief financial officer

EDI electronic data interchange

FAA Federal Aviation Administration

FMFIA Federal Managers’ Financial Integrity Act

FTS Federal Telecommunications System

GSA General Services Administration

IRS Internal Revenue Service

NFC National Finance Center

USDA United States Department of Agriculture

Page 18 GAO/AIMD-98-131 USDA Telecommunications
Page 19 GAO/AIMD-98-131 USDA Telecommunications
Appendix I 

Objective, Scope, and Methodology

Our objective was to determine what actions USDA has taken to address the

telecommunications management problems we identified in 1995 and 1996

and to what extent these problems have been resolved. To address our

objective, we reviewed studies, reports, plans, and other documentation

describing USDA’s actions to address our recommendations for

(1) correcting telecommunications management weaknesses,

(2) identifying and acting on opportunities to consolidate and optimize FTS

2000 telecommunications services, (3) planning networks in support of

information and resource sharing needs, and (4) resolving telephone abuse

and fraud. We also interviewed CIO, CFO, and agency officials to confirm

our understanding of actions taken by the department and to identify

whether the actions were complete, underway, or planned. We did not

independently verify the accuracy of USDA’s overall telecommunications

costs or projected cost savings.

To identify USDA’s efforts to improve telecommunications management, we

examined departmental responses to our report recommendations, USDA

FMFIA and interagency task force reports, and reengineering and other

studies. We also reviewed project plans, status reports, and other

documentation pertaining to telecommunications management

improvement initiatives to identify the status of these actions, and we

discussed plans for completing them with CIO, agency, and project team

officials who are responsible for carrying them out.

We also reviewed other actions taken by USDA to address our

recommendations on specific telecommunications management problem

areas. To assess the effectiveness of USDA efforts to disconnect

telecommunications services at closed offices, we discussed the

implementation of revised policy in this area with CIO officials and

reviewed procedures followed at two agencies that recently closed offices.

In addition, we met with CIO, agency, and contractor officials involved with

USDA’s 1996 inventory pilot and reviewed project reports and other

documentation to determine the results and savings achieved. We also

discussed USDA’s ongoing one-time audit and procedures used for selecting

and auditing billing invoices with officials at USDA’s National Finance

Center. To test the thoroughness of the audit, we randomly selected

several invoices and discussed actions taken to verify billing data on these

invoices with the appropriate agency officials. We also reviewed reports

and billing data associated with other cost-savings efforts to eliminate

unused FTS 2000 e-mail boxes and met with CIO and agency officials to

discuss current and future plans for establishing telecommunications

inventories.

Page 20 GAO/AIMD-98-131 USDA Telecommunications
Appendix I 

Objective, Scope, and Methodology

To assess efforts by USDA to consolidate and optimize FTS 2000

telecommunications services, we reviewed reports and examined billing

data showing the results of USDA’s Initiative 6 project. We also discussed

the overall results of this initiative with CIO and agency officials. We

examined documentation and billing data associated with USDA’s recent

effort to reactivate Initiative 6 and discussed the status of efforts to

achieve savings with CIO and agency officials. To assess departmental

requirements to preclude agencies from purchasing redundant FTS 2000

telecommunications services, we reviewed procedures established by the

department under the November 1996 moratorium and new centralized

management structure for ordering FTS 2000 services and discussed their

impact on purchases of redundant service with CIO officials.

To assess USDA’s efforts to plan integrated networks that address the

department’s information and resource sharing needs, we reviewed

reports showing agency network purchases. We also reviewed USDA’s

information systems technology architecture and discussed it with CIO

officials to determine the extent to which the architecture defines

information sharing needs. Finally, we reviewed the department’s plans for

implementing an enterprise network, including the interim results of a

contractor’s network design evaluation of telecommunications traffic and

performance, and discussed the extent to which USDA’s enterprise network

plans address departmental information and resource sharing needs.

To assess USDA’s efforts to address telephone abuse and fraud in the

Washington, D.C., area, we reviewed status reports, internal memos, and

other documentation describing actions implementing collect call blocking

and establishing billing review procedures. We also discussed these

actions with CIO officials who monitor telephone abuse in Washington,

D.C., and reviewed documentation on the results of these monitoring

efforts to determine whether USDA actions were effective in reducing

improper collect calls from correctional institutions and other forms of

telephone abuse. In addition, we discussed the extent to which USDA had

addressed the risks of telephone abuse and fraud departmentwide with the

CIO official responsible for telecommunications operations.

To confirm our understanding of USDA actions to address our

recommendations and resolve telecommunications management

weaknesses, we discussed the results of our work with USDA’s CIO, as well

as with representatives from the CIO and CFO offices. We performed our

audit work from August 1997 through April 1998, in accordance with

generally accepted government auditing standards. Our work was done at

Page 21 GAO/AIMD-98-131 USDA Telecommunications
Appendix I 

Objective, Scope, and Methodology

USDA headquarters in Washington, D.C.; USDA’s National Finance Center in

New Orleans, Louisiana; and USDA Telecommunications Services and

Operations offices in Fort Collins, Colorado. We also met with contractor

representatives who conducted the inventory pilot in Annapolis, Maryland

and we interviewed telecommunications officials at two agency offices

where telecommunications and network planning activities are

administered, which included the Animal and Plant Health Inspection

Service headquarters in Riverdale, Maryland, and the Agricultural

Research Service in Greenbelt, Maryland.

Page 22 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 23 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

Page 24 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

Page 25 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

See comment 1.

Now on p. 6.

Page 26 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

Now on p. 6.

Now on p. 7.

Page 27 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

Page 28 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

Page 29 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

See comment 2.

Now on p. 8.

Page 30 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

See comment 3.

Page 31 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

See comment 4.

Page 32 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

Page 33 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

Page 34 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

Page 35 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

The following are GAO’s comments on the Department of Agriculture’s

letter dated June 15, 1998.

GAO Comments 1. We modified the report as appropriate to more accurately reflect the

agency official’s title.

2. Regarding the inventory pilot, USDA stated that the report does not

mention that one agency completed a more thorough analysis of the lines

and found that many of the lines identified by the contractor as not in use

or inactive were in fact needed for various agency mission requirements.

Therefore, USDA stated that the $200,000 in annual overbillings identified by

the contractor may have been overstated. While we agree that there may

have been cases where the contractor’s findings were overstated, USDA did

not investigate many of the overbillings identified by the contractor to

determine the total actual savings possible, nor did it act to ensure that all

unneeded or unused services were eliminated.

3. Our statement is accurate. The department explains that it gained

valuable experience through Initiative 6, but does not dispute the facts

that USDA took no action on nearly half of the cost savings opportunities

identified under Initiative 6 and that the initiative was terminated.

4. USDA agreed that it is desirable to develop an enterprise network based

on a comprehensive business architecture and contends that it currently

has a high-level business architecture in place that is based on USDA’s

strategic plan and forms the basis for the definition of requirements for an

enterprise network. USDA also strongly believes that further development

of the department’s business architecture and development of the

enterprise network must continue as a coordinated and integrated effort

and, given that the current telecommunications infrastructure is

fragmented and expensive to maintain, it does not make business sense to

slow the pace of developing an enterprise network. Therefore, as the

department moves forward on its enterprise network, USDA stated that it

intends to update the architecture to include additional information on

business data needs and information sharing requirements and to reassess

telecommunications requirements as a matter of ongoing business

practice.

USDA’s position is inaccurate and misses the point of our recommendation.

The department’s current architecture is incomplete. For example, it does

not identify many of the kinds and/or types of data used in the department

Page 36 GAO/AIMD-98-131 USDA Telecommunications
Appendix II 

Comments From the Department of

Agriculture

and does not provide a clear foundation for a seamless flow of information

and interoperability among all agency systems that produce, use, and

exchange information. As a result, it cannot provide an adequate basis for

defining requirements for an enterprise network. By moving forward on an

enterprise network without completing the architecture, USDA risks

repeating past mistakes, i.e., investing in telecommunications that do not

effectively support the department’s strategic business/program and

operational needs.

Page 37 GAO/AIMD-98-131 USDA Telecommunications
Appendix III 

Major Contributors to This Report

Accounting and

Information

Management Division,

Washington, D.C.

Stephen A. Schwartz, Senior Assistant Director

Mark D. Shaw, Assistant Director

Heather W. McIntyre, Senior Information Systems Analyst

Michael P. Fruitman, Communications Analyst

Kansas City Field

Office

Troy G. Hottovy, Senior Information Systems Analyst

(511431) Page 38 GAO/AIMD-98-131 USDA Telecommunications
Ordering Information

The first copy of each GAO report and testimony is free.

Additional copies are $2 each. Orders should be sent to the

following address, accompanied by a check or money order

made out to the Superintendent of Documents, when

necessary. VISA and MasterCard credit cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address

are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 37050

Washington, DC 20013

or visit:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders may also be placed by calling (202) 512-6000 

or by using fax number (202) 512-6061, or TDD (202) 512-2537.

Each day, GAO issues a list of newly available reports and

testimony. To receive facsimile copies of the daily list or any

list from the past 30 days, please call (202) 512-6000 using a

touchtone phone. A recorded menu will provide information on

how to obtain these lists.

For information on how to access GAO reports on the INTERNET,

send an e-mail message with "info" in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov

PRINTED ON RECYCLED PAPER
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. G100