United States General Accounting Office

GAO Testimony

Before the Subcommittee on Government Management,

Information and Technology, Committee on Government

Reform and Oversight, House of Representatives

For Release on Delivery

Expected at

9:30 a.m.

Friday,

June 5, 1998

DEBT COLLECTION

IMPROVEMENT ACT

Significant Challenges

Remain to Effectively

Implement Treasury’s

Administrative Offset

Program

Statement of Gary T. Engel

Associate Director, Governmentwide Accounting and

Financial Management Issues

Accounting and Information Management Division

GAO/T-AIMD-98-195

Mr. Chairman and Members of the Subcommittee:

Thank you for the opportunity to testify on the Department of the

Treasury’s implementation of the administrative offset provision of the

Debt Collection Improvement Act of 1996 (DCIA). The act, developed under

the leadership of this Subcommittee, among other things, requires that

agencies notify the Treasury of all legally enforceable1

 nontax debts over

180 days delinquent for the purpose of offsetting federal payments,

including tax refunds, and provides authority for disbursing officials to

conduct payment offsets.

As you requested, our testimony today describes (1) the status of referrals

by agencies of delinquent nontax debts to Treasury for administrative

offset, (2) actions Treasury has taken and plans to take to include all

eligible federal payments in the administrative offset program, and

(3) actions Treasury has taken, or plans to take, to consolidate the

administrative, tax refund, and federal salary offset programs.

Summary Treasury has recently made progress in getting the 24 agencies covered by

the Chief Financial Officers (CFO) Act of 19902

 to refer nontax debt over

180 days delinquent for administrative offset. As of April 1998, the CFO Act

agencies had referred to Treasury about $16.7 billion in nontax debt over

180 days delinquent, and Treasury has entered these delinquencies into its

debtor database. This is a substantial increase over the $9.4 billion that

had been referred to Treasury about 7 months earlier, at about the time the

Subcommittee held DCIA oversight hearings in November 1997.

Also, as of April 1998, about $26.4 billion of reported nontax debt over 180

days delinquent had not been referred to Treasury and is unlikely to be

referred in the near future. These delinquencies involve about (1) $12.3

billion of debts involved in bankruptcies, foreclosures, and forbearance

and formal appeals actions, (2) $3.6 billion of foreign debt, (3) $3 billion3

of debts referred to the Department of Justice (DOJ) for litigation, and

(4) $525 million of debts owed to the Department of Housing and Urban

1

Treasury generally considers a debt legally enforceable when the final agency determination

regarding the debt is made or any legal bar to further collection is removed.

2

The CFO Act, as expanded by the Government Management Reform Act, covers the federal

government’s 24 largest departments and agencies, which account for 99 percent of federal

expenditures.

3

According to Treasury reports, agencies have referred about $3.5 billion of delinquent debt to DOJ for

litigation, and DOJ has referred about $500 million of this debt to Treasury for administrative offset.

Page 1 GAO/T-AIMD-98-195
Development (HUD), much of which will be scheduled for sale.

Approximately $7 billion of nontax debt over 180 days delinquent has not

been referred primarily because agencies have not yet completed actions

such as (1) ensuring due process, which is necessary before debts can be

referred for offset, and (2) determining whether loan workout procedures

have been established with debtors, which precludes referral for offset.

On the payment side, because of systems development problems, Treasury

does not yet have a system capable of matching all federal payments

against the delinquent debtor database. As of April 1998, 2 years after

DCIA’s enactment, Treasury had collected about $1.2 million of delinquent

nontax federal debt through its administrative offset program. Currently,

payments subject to offset through the administrative offset program are

limited to those made by Treasury to vendors and to federal retirees,

representing about 5 percent of the total number of payments made, and

about 21 percent of the total dollars paid, by Treasury disbursing offices in

fiscal year 1997. Also, Treasury has made little progress in fully

determining the extent to which federal payments, such as those made by

the Department of Defense (DOD), can be made available for offset.

Further, Treasury has not yet consolidated the administrative, tax refund,

and federal salary offset programs. Treasury’s systems development

problems have also caused delay in consolidating these programs and

thus, any debt collection efficiencies envisioned by such a consolidation

have not yet been realized.

In developing an administrative offset system, Treasury did not apply a

disciplined systems development process, including the development of an

overall concept of operations and functional requirements. The resulting

system, which was planned for implementation in January 1998, was not

placed into operation, and a subsequent systems development effort is

underway.

In current efforts to develop an administrative offset system, Treasury has

recently taken several actions to address systems development issues. We

identified and discussed with Treasury several areas where additional

actions are needed, including giving a higher priority to developing a

concept of operations, the functional requirements, and a risk

management plan for the entire system. We are encouraged by Treasury’s

commitment to address these issues. But it will be important for

Treasury’s top management to ensure that the planned corrective actions

are effectively and expeditiously completed prior to making any significant

Page 2 GAO/T-AIMD-98-195
investment in the development of an administrative offset system.

Otherwise, Treasury is significantly exposed to risks that it may

experience costly modifications and additional delays in developing a

system for implementing the administrative offset provision of DCIA.

Recent Progress to

Identify and Refer

Delinquent Nontax

Debt for Offset

The Subcommittee’s November 1997 oversight hearing on DCIA’s

implementation underscored the need for progress in referring delinquent

nontax debts to Treasury for offset. At about the time of the hearing,

agencies had referred $9.4 billion of nontax debt over 180 days delinquent

to Treasury for administrative offset.

Initially, agencies had been slow to refer delinquent nontax debt for

administrative offset under DCIA largely because of uncertainty as to the

delinquent nontax debt that should be referred. Also, Treasury had not

made a concerted effort to identify delinquent nontax debt that could be

offset or to develop time frames for agencies to refer the debt for offset.

In January 1998, Treasury began actively working with agencies to reach

agreement on the outstanding nontax debts over 180 days delinquent that

can be referred for administrative offset and to obtain commitments from

the agencies on referral of those debts. Treasury initially met with the five

major credit agencies—the Departments of Agriculture, Education,

Housing and Urban Development, and Veterans Affairs (VA) and the Small

Business Administration. Later, Treasury expanded its work to include the

other CFO Act agencies.

As of April 1998, the CFO Act agencies had referred about $16.7 billion of

delinquent nontax debt to Treasury for administrative offset—a 78 percent

increase over about 7 months. Most of this increase resulted from

Treasury’s work with the agencies to bring the nontax delinquent debts

they submitted for the Internal Revenue Service’s (IRS) tax refund offset

program into Treasury’s administrative offset database. Debts that

agencies normally would have referred to IRS for tax refund offsets in

calendar year 1998 were, instead, referred to Treasury’s Financial

Management Service. These debts were incorporated into the database

Treasury uses for matching debts for administrative offset and then

referred to IRS, which maintains a separate database.

In addition to the delinquent nontax debt that has been referred for offset,

the CFO Act agencies also hold considerable delinquent nontax debt that

has not been referred to Treasury. According to Treasury reports, in

Page 3 GAO/T-AIMD-98-195
April 1998, these agencies held $43.1 billion4

 of nontax debt over 180 days

delinquent, including the $16.7 billion of referred debt. Treasury and the

CFO Act agencies have determined that $19.4 billion, or almost 75 percent,

of the $26.4 billion in unreferred nontax delinquent debt would not be

referred for administrative offset, at least not in the near term, for the

following reasons:

• about $12.3 billion relates to nontax delinquent debts that are involved

with bankruptcies, foreclosures, statutory forbearance, or formal appeals.

An automatic stay that generally prevents the government from pursuing

collection against debtors in bankruptcy is provided by 11 U.S.C. Section

362. In addition, debts in foreclosure are governed by state laws that may

preclude the government from pursuing foreclosure if collection is

attempted through offset. Further, debts subject to forbearance generally

are not legally enforceable, thus precluding collection of the debt until the

forbearance process is completed.5

 Also, agencies generally cannot certify

debts under appeal as valid and legally enforceable until the appeal

process is completed. Consequently, Treasury has agreed with agencies

that these types of debts should be excluded from referral for offset.

• about $3.6 billion involves delinquent foreign debts. Treasury has stated

that, for the most part, collecting these delinquent debts through

administrative offsets is infeasible primarily due to foreign diplomacy

considerations and affairs of state.

• about $3 billion of delinquent nontax debt has been referred by agencies to

DOJ for litigation. (See footnote 3.) These debts are no longer under the

control of the agencies and, therefore, Treasury does not hold the agencies

responsible for referring such debt for administrative offset. Rather, DOJ is

to determine if, and when, such debt is referred for offset.

• about $525 million of delinquent nontax debt owed to HUD, much of which

will be scheduled for sale, is not being required to be referred for

administrative offset at this time.

In addition to these categories of unreferred debt, about $7 billion of

outstanding nontax debt over 180 days delinquent remains. Most of this

debt involves circumstances that may delay or preclude offset.

For example, the vast majority of the Department of Education’s

approximate $3.1 billion of unreferred nontax delinquent debt consists

4

These delinquencies comprise over 90 percent of the debt over 180 days delinquent reported for the

entire federal government.

5

Forbearance action taken by a creditor, generally, extends the time for payment of a debt or

postpones, for a time, the enforcement of legal action on the debt.

Page 4 GAO/T-AIMD-98-195
primarily of debts related to student loans, most of which were being

serviced by state or private guaranty agencies. According to Education

officials, although delinquent debt serviced by guaranty agencies is subject

to referral for administrative offset, many referrals have not yet been made

because the required due process for the debtors has not been completed.

Another example involves delinquent debts related to the Department of

Agriculture’s (USDA) state-administered food stamp program and farm

loans. According to USDA officials, the food stamp program’s delinquent

debts, which totaled about $775 million, must be further reviewed by the

states to determine whether these debts are in repayment status or

whether the debtors have been afforded due process. Also, according to

USDA officials, statutory servicing rights normally require that the farm loan

debtors be offered workout alternatives prior to collection by offset. As

such, this debt, which totaled about $420 million, will not be made

available for offset until this statutory process has been completed.

Finally, according to a DOD official, DOD delinquent debts totaling about

$2 billion are primarily in protest or dispute. Accordingly, these debts have

not yet been referred to Treasury for offset.

Few Payments

Brought Into

Administrative Offset

Program

While referring all legally enforceable delinquent nontax debts for offset is

an essential element of an effective administrative offset program, the

program’s objectives cannot be achieved in the absence of another equally

essential element—payments that can be offset. As discussed later,

systems development problems have hampered Treasury’s ability to

attempt to bring additional payments into its administrative offset

program.

Currently, payments that are available for administrative offset are limited

to (1) vendor payments disbursed by Treasury and (2) retirement

payments made by the Office of Personnel Management (OPM). These types

of payments have been in the administrative offset program since 1996.

Further, they comprised about 5 percent of the total number of

disbursements made, and about 21 percent of the total dollars paid, by

Treasury disbursing offices during fiscal year 1997.

In addition, although almost all of the vendor payments disbursed by

Treasury are currently available for administrative offset, many of these

payments cannot be matched against debtor information in Treasury’s

delinquent debtor database because the vendor records do not contain

Page 5 GAO/T-AIMD-98-195
Taxpayer Identification Numbers (TIN). According to Treasury, during

March 1998, about one-third of the payment requests submitted by the

agencies for payment by Treasury did not include TINs.

Further, Treasury does not yet know the total number of federal payments

that may be available for administrative offset. In addition to federal

payments made by Treasury, more than 50 Non-Treasury Disbursing

Offices (NTDO) make federal payments. However, Treasury has not yet

identified the total volume of NTDO payments, which include those made by

DOD, the U.S. Postal Service (USPS), and numerous other federal agencies.

Moreover, Treasury has not yet fully determined the extent to which

payments will be exempt from administrative offset. Currently, Treasury

has a request pending from the Pension Benefit Guaranty Corporation for

discretionary exemption for a number of payment types, including those

related to premium refunds to pension plans. In the future, other agencies

may identify payments exempt by statute or request means-tested or

discretionary exemption of payments.6

To date, Treasury has primarily relied on the agencies to identify

potentially exempt payments. For example, VA informed Treasury that

certain payments were exempted based on Section 5301(a) of Title 38, and

Treasury confirmed the exemption. In addition, the Social Security

Administration (SSA) and USDA requested and received exemptions for

Supplemental Security Income and certain Food and Consumer Services

payments, respectively, based on DCIA’s requirement that the Treasury

Secretary exempt payments under means-tested programs. At this stage,

Treasury does not know the total effect on the administrative offset

program of payments that will be excluded from the program in

accordance with DCIA, or other statutory provisions, and on the basis of

requests for exclusions by heads of agencies.

To facilitate implementation of payments into the administrative offset

program, Treasury is developing several regulations applicable to payment

issues. Some regulations have been published as Interim Rules (for

example, those relating to federal salary offset), while others are currently

being drafted or are with another agency for comment. For example, the

rule for offset of federal benefit payments has been forwarded to SSA for

consultation. Retirement and Survivors Benefits and Disability Insurance

Benefits under the Social Security Program accounted for about

6

DCIA excludes payments certified by the Department of Education under Title IV of the Higher

Education Act of 1965 and payments made under United States tariff laws. In addition, DCIA requires

exemptions for means-tested programs and allows other discretionary exemptions when the head of

the agency makes the request to the Treasury Secretary, and the Secretary approves the request.

Page 6 GAO/T-AIMD-98-195
61 percent of the number of payments made by Treasury Disbursing

Offices in fiscal year 1997.7

 According to Treasury’s most recent DCIA

Implementation Plan, it does not intend to publish a final rule for

offsetting federal benefit payments, including Social Security payments,

until October 1998. In addition, according to Treasury and SSA officials,

even if the final rule were published, SSA will not be ready to make

required systems changes until 1999 because of demands on its staff

related to the Year 2000 computing crisis.8

Offset Programs Not

Yet Consolidated

One of the DCIA’s goals is to minimize debt collection costs by

consolidating related functions and activities. To date, however, Treasury

has not yet consolidated the administrative, tax refund, and federal salary

offset programs.

The Federal Tax Refund Offset Program (TROP) has been a cooperative

effort of IRS and the federal program agencies. Legislation, beginning with

the Deficit Reduction Act of 1984 (Public Law 98-369), authorized the use

of tax refund offsets to recover delinquent federal nontax debts. The

Emergency Unemployment Compensation Act of 1991 (Public Law

102-164) provided permanent authority to use tax refund offsets. Since

TROP’s inception in 1986, approximately $8.5 billion of delinquent debt has

been recovered through the program.

The Debt Collection Act of 1982 authorized, but did not require, federal

salary offsets and administrative offsets to liquidate delinquent nontax

debt owed to federal agencies. The DCIA requires agencies to participate in

an annual matching of records to identify federal employees delinquent on

federal debts.

Since 1987, the federal employee salary offset program has been a

cooperative effort between the federal agencies and DOD’s Defense

Manpower Data Center (DMDC). Under the program, DMDC performs the

computer matching necessary to identify federal employees who are

delinquent on their debts using delinquent nontax debtor files provided by

the various creditor agencies. DMDC matches these files against active and

retired civilian employment files provided by OPM, as well as against DOD’s

7

DCIA provides that, except for $9,000 a debtor may receive within a 12-month period, all payments

due to an individual under the Social Security Act shall be subject to offset.

8

For the past several decades, information systems have typically used two digits to represent the year,

such as “98” for 1998, in order to conserve electronic data storage and reduce operating costs. In this

format, however, 2000 is indistinguishable from 1900 because both are represented as “00.” As a result,

if not modified, computer systems or applications that use dates or perform date- or time-sensitive

calculations may generate incorrect results beyond 1999.

Page 7 GAO/T-AIMD-98-195
active, retired, and reserve military personnel files. Under a similar

program, creditor agencies submit delinquent nontax debtor files to USPS

for matching against USPS personnel files. According to Treasury data,

during fiscal year 1997, agencies collected over $42 million through these

programs.

Treasury’s lack of progress in consolidating the offset programs is

primarily the result of its problems with the development of a new

administrative offset system. I would now like to highlight these problems.

Systems Development

Problems Must Be

Effectively Addressed

Treasury does not have a system that can perform all the administrative

offset functions envisioned as a result of DCIA. This can be directly

attributed to problems Treasury has experienced in managing the

development of such a system. Although Treasury has recently taken

several actions to address systems development issues, it will be some

time before enough information is available to accurately assess the

effectiveness of those actions. In addition, we have identified several areas

where additional actions must be taken immediately to reduce the risk of

further system development problems.

Prior to the passage of DCIA in April 1996, Treasury in conjunction with the

Federal Reserve Bank of San Francisco (FRBSF), developed a pilot system

to demonstrate the feasibility of conducting administrative offsets on a

routine basis. The system, referred to as the Interim Treasury Offset

Program (ITOP), is currently operational and is used to offset vendor

payments disbursed by Treasury Disbursing Offices and OPM retirement

payments. However, Treasury never intended the system, as it was

originally developed, to perform all of the administrative offset functions

envisioned as a result of DCIA.

In September 1996, Treasury awarded a contract for the development and

implementation of a new and expanded administrative offset system,

known as the Grand Treasury Offset Program (GTOP). This system was to

be used to consolidate the administrative, tax refund, and federal salary

offset programs, and was to include all eligible delinquent federal nontax

debt and federal payments. In addition, Treasury intended the system to be

capable of incorporating state child support debts and other state debts,

which DCIA authorizes to be recovered through federal payment offsets.

GTOP was scheduled to be implemented in January 1998. However, because

of systems development problems, it has not been placed into operation.

Page 8 GAO/T-AIMD-98-195
Currently, Treasury is focusing its efforts on enhancing ITOP to handle all

eligible debts and payments for the administrative offset program, as well

as the consolidation of the administrative, tax refund, and federal salary

offset programs.

GTOP’s Development Treasury has concluded that it currently cannot use GTOP for the

administrative offset program primarily because Treasury did not apply a

disciplined system development process for that system. Treasury’s

policies, including its systems life cycle methodology, and our guidance9

call for the completion of a concept of operations and functional

requirements in the development of a major system.

The GTOP development effort was undertaken without (1) completing an

overall concept of operations, which includes the high-level information

flows for the system and (2) documenting the functional requirements that

the system must meet. Treasury’s policies call for such generally accepted

steps to be completed before a system is developed.

We are unsure why the previous management team responsible for GTOP’s

oversight allowed GTOP to be developed before these critical steps were

completed. However, according to Treasury, the effect was that the

completeness and usefulness of the software delivered by the GTOP

contractor in October 1997 cannot be reasonably measured and the system

cannot be tested to determine if it would meet Treasury’s needs. Thus,

Treasury has not placed the system into operation.

Current Treasury Efforts In December 1997, Treasury established a new management team for DCIA

implementation, which includes managing a new systems development

effort for the administrative offset program. The new management team

has decided to halt all work on GTOP and enhance ITOP. Treasury

recognizes that one of the disadvantages of this approach is that it may

result in little or no return on the approximately $5 million it has paid to

the contractor for development of the system software that has been

delivered. However, it also believes that modifying ITOP is the most

practical way to consolidate the administrative and tax refund offset

programs for the 1998 tax year and to begin adding federal salary and

benefit payment streams in the administrative offset program during

calendar year 1998 or early 1999.

9

Strategic Information Planning: Framework for Designing and Developing System Architectures

(GAO/IMTEC-92-51, June 1992).

Page 9 GAO/T-AIMD-98-195
According to Treasury officials, the enhancement of ITOP will comply with

Treasury guidance for systems development efforts. Based on our review

of documentation recently provided to us, there are indications that some

of the critical system development requirements are being addressed. For

example, Treasury has identified the information flows associated with

several payment types and has begun to develop the corresponding

functional requirements for those payment types. It has also developed a

DCIA Implementation Plan that includes many of the steps necessary to

enhance ITOP and projected completion dates for each step. This plan

should enable Treasury management and others to promptly and

objectively measure whether the ITOP enhancement is on schedule.

In addition, Treasury’s Financial Management Service’s Debt Management

Services is now routinely briefing the Under Secretary for Domestic

Finance and other top Treasury officials on progress relating to the

administrative offset program with the intention that such high-level

oversight will facilitate keeping the implementation of DCIA on schedule

and help to identify any significant problems early so that corrective

actions can be taken promptly. While these efforts are positive steps, we

have identified several areas where additional actions are needed.

Actions Needed to Reduce

Significant Risks Further

In reviewing Treasury’s plans and actions to date, we have identified

several areas where additional actions must be taken immediately to

adequately reduce the risk of costly modifications and further delays in the

effective implementation of the administrative offset provisions of DCIA.

First, a documented overall concept of operations has not yet been

developed. A concept of operations includes high-level descriptions of

information systems, their interrelationships, and information flows. It

also describes the operations that must be performed, who must perform

them, and where and how the operations will be carried out.

According to Treasury officials, they understand the importance of such a

document, but until recently, have not placed a high priority of completing

it because they believe the individuals involved with the project have an

overall view of how the offset processes should work. After we discussed

this issue with Treasury officials, they have agreed to increase the priority

associated with this effort and have projected completion of an overall

concept of operations in July 1998.

It is important for Treasury to place a high priority on ensuring that this

effort is completed on schedule because it is the primary building block on

Page 10 GAO/T-AIMD-98-195
which the entire systems development effort is based. Moreover, if

personnel changes occur prior to completion of the project, it would be

difficult to effectively complete the project promptly without such

documentation.

Second, overall functional requirements for the administrative offset

system are not yet available. Functional requirements, which describe a

system’s functional inputs, processes, and outputs, are derived from the

concept of operations and serve as the rationale for a system’s detailed

requirements. They are generally expressed in user terminology and are

the foundation that guides the development process.

Although Treasury has begun to develop and document functional

requirements for several key processes, such as federal salary and tax

refund offsets, it has not developed overall functional requirements for the

administrative offset system. While the development of functional

requirements for each key process is a necessary step in the incremental

systems development approach being used, it does not replace the need

for overall functional requirements. Until the functional requirements for

the overall system are defined, the requirements for a given process may

not be adequate. We discussed this issue with Treasury officials, and they

have agreed to increase the priority associated with this effort and have

projected completion of overall functional requirements by the end of

August 1998.

Treasury is in the process of preparing functional requirements for certain

key processes. Treasury personnel stated that for each key process, the

functional requirements would be clearly defined and that a requirements

traceability matrix would be developed so that a test plan could be

prepared.

Treasury must place a high priority on (1) completing the overall

functional requirements, (2) clearly defining the specific functional

requirements as they are prepared for each key process, and (3) ensuring

that the key process functional requirements are consistent with the

applicable overall functional requirements. This is important because

many system developers and program managers have identified ill-defined

or incomplete requirements as one of the root causes of system failures. In

addition, as previously stated, the lack of documented functional

requirements is a major reason GTOP was not able to be tested.

Page 11 GAO/T-AIMD-98-195
Third, Treasury’s DCIA Implementation Plan does not yet include all facets

of the administrative offset program. The most recent version of the plan,

dated May 1, 1998, includes the tasks and projected milestone dates

involved with several of the key processes. However, the plan does not

include information on handling certain payment types, such as payments

made by NTDOs (other than USPS and DOD), miscellaneous payments, and

salary payments made by payroll offices other than USDA’s National

Finance Center (NFC), for which Treasury makes the disbursement.10

According to Treasury officials, because of the priorities they have put on

merging the administrative and tax refund offset programs, processing

salary payments from NFC, and processing Social Security Benefit

payments, they have not as yet devoted time to fully developing an overall

DCIA Implementation Plan.

We recognize that Treasury’s current focus is largely directed toward

consolidating existing payment offset programs to improve efficiency and

attempt to minimize the costs of debt collection, which is an important

objective of DCIA. In addition, the degree of specificity associated with a

particular facet of the program may vary depending on the priority that

Treasury assigns to it. However, a complete DCIA Implementation Plan is

critical to the success of Treasury’s systems development efforts. Such a

plan is needed for Treasury management and others to effectively evaluate

(1) how the development and implementation of the overall system is

progressing and (2) when corrective action is needed to ensure that major

slippages do not occur. Treasury officials have agreed to more fully

develop the DCIA Implementation Plan in the near future.

Fourth, Treasury has not yet completed a risk management plan. A risk

management plan is critical for the successful implementation of a

systems development project because it provides management and others

the ability to focus their efforts on the areas that pose the greatest risks. It

also outlines the actions that Treasury will take to mitigate the risks

identified. Treasury officials stated that although they have not developed

such a plan for the overall system, they have developed a plan for the

software development efforts. A risk management plan takes on even

more importance when tight time frames are involved in a given effort

because it outlines the actions that will be taken should the project miss

key delivery dates. Treasury officials agreed that an overall risk

management plan is needed and has projected completion in July 1998.

10During fiscal year 1997, NFC processed about 35 percent of the payroll transactions processed by the

93 payroll offices that used Treasury Disbursing Offices for making salary payments.

Page 12 GAO/T-AIMD-98-195
Finally, Treasury has not yet evaluated the adequacy of the hardware and

software platforms. Treasury has decided to use the hardware and

software platforms11 that were selected for GTOP until it can conduct tests

to determine if these platforms are adequate. Treasury officials

acknowledge that this decision increased project risk because

development efforts were being based on these platforms prior to knowing

whether they were adequate for the requirements of the enhanced ITOP

system. However, they believe the risk is justified because (1) the

hardware has already been acquired and an evaluation of the adequacy of

the platforms should be completed by June 30, 1998, and (2) some work

had been performed to evaluate the adequacy of the platforms before they

were selected for GTOP. Management must ensure that the evaluation of the

hardware and software platforms is completed by the estimated

completion date of June 30, 1998. Otherwise, Treasury runs a risk that the

system it is developing cannot become operational without costly

modification.

Treasury’s commitment to address the systems development issues we

have raised is encouraging. But it will be important for Treasury’s top

management to ensure that the planned corrective actions are effectively

and expeditiously completed prior to making any significant investment in

the development of an administrative offset system. Otherwise, Treasury is

significantly exposed to the risk of costly systems modifications and

additional delay in developing a system to implement the administrative

offset provision of DCIA.

Mr. Chairman, this concludes my statement. I would be happy to respond

to any questions that you or other members of the Subcommittee may

have at this time.

(901774)

11The hardware platform is the physical computer, which consists of components such as the central

processor, memory, and disk storage. The software platform refers to the operating system software

and other system support software. Application software that performs a specific task is designed to

run on a specific combination of hardware and software platforms. Consequently, applications for one

platform generally cannot run on others.

Page 13 GAO/T-AIMD-98-195
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