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[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

FEDERAL INFORMATION TECHNOLOGY MODERNIZATION: ASSESSING COMPLIANCE WITH 
                THE GOVERNMENT PAPERWORK ELIMINATION ACT

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 21, 2001

                               __________

                           Serial No. 107-35

                               __________

       Printed for the use of the Committee on Government Reform

  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform

                                _______

                  U.S. GOVERNMENT PRINTING OFFICE
77-192                     WASHINGTON : 2001

____________________________________________________________________________
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                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida         EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York             PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California             PATSY T. MINK, Hawaii
JOHN L. MICA, Florida                CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia            ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
BOB BARR, Georgia                    ROD R. BLAGOJEVICH, Illinois
DAN MILLER, Florida                  DANNY K. DAVIS, Illinois
DOUG OSE, California                 JOHN F. TIERNEY, Massachusetts
RON LEWIS, Kentucky                  JIM TURNER, Texas
JO ANN DAVIS, Virginia               THOMAS H. ALLEN, Maine
TODD RUSSELL PLATTS, Pennsylvania    JANICE D. SCHAKOWSKY, Illinois
DAVE WELDON, Florida                 WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              ------ ------
C.L. ``BUTCH'' OTTER, Idaho                      ------
EDWARD L. SCHROCK, Virginia          BERNARD SANDERS, Vermont 
JOHN J. DUNCAN, Tennessee                (Independent)

                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
                     James C. Wilson, Chief Counsel
                     Robert A. Briggs, Chief Clerk
                 Phil Schiliro, Minority Staff Director

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 21, 2001....................................     1
Statement of:
    Bostrom, Sue, senior vice president of the Internet Business 
      Solutions Group [IBSG], Cisco Systems; and Curt Kolcun, e-
      government director, Microsoft Corp........................    32
    Daniels, Mitchell E., Jr., Director, Office of Management and 
      Budget.....................................................    10
    Willemssen, Joel, Managing Director, Information Technology 
      Issues, General Accounting Office; Jim Flyzik, Acting 
      Assistant Secretary for Management and Chief Information 
      Officer, U.S. Department of the Treasury; John Mitchell, 
      Deputy Director, U.S. Mint; John L. Osterholz, Principal 
      Deputy Chief Information Officer, U.S. Department of 
      Defense; and Norma J. St. Claire, Director, Information 
      Management for Personnel and Readiness, Office of the 
      Secretary of Defense.......................................    61
Letters, statements, etc., submitted for the record by:
    Bostrom, Sue, senior vice president of the Internet Business 
      Solutions Group [IBSG], Cisco Systems, prepared statement 
      of.........................................................    35
    Burton, Hon. Dan, a Representative in Congress from the State 
      of Indiana, prepared statement of..........................     5
    Daniels, Mitchell E., Jr., Director, Office of Management and 
      Budget, prepared statement of..............................    13
    Flyzik, Jim, Acting Assistant Secretary for Management and 
      Chief Information Officer, U.S. Department of the Treasury, 
      prepared statement of......................................    80
    Kolcun, Curt, e-government director, Microsoft Corp., 
      prepared statement of......................................    43
    Mitchell, John, Deputy Director, U.S. Mint, prepared 
      statement of...............................................    89
    Osterholz, John L., Principal Deputy Chief Information 
      Officer, U.S. Department of Defense, prepared statement of.   140
    Towns, Hon. Edolphus, a Representative in Congress from the 
      State of New York, prepared statement of...................   156
    Willemssen, Joel, Managing Director, Information Technology 
      Issues, General Accounting Office, prepared statement of...    64

 
FEDERAL INFORMATION TECHNOLOGY MODERNIZATION: ASSESSING COMPLIANCE WITH 
                THE GOVERNMENT PAPERWORK ELIMINATION ACT

                              ----------                              

                        THURSDAY, JUNE 21, 2001

                          House of Representatives,
                            Committee on Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:05 a.m., in 
room 2154, Rayburn House Office Building, Hon. Dan Burton 
(chairman of the committee) presiding.
    Present: Representatives Burton, Gilman, Morella, Mr. Tom 
Davis of Virginia, LaTourette, Ose, Lewis, Platts, Otter, 
Schrock, Duncan, Waxman, Kanjorski, Norton, Cummings, Kucinich, 
and Watson.
    Staff present: Kevin Binger, staff director; David A. Kass, 
deputy chief counsel; Mark Corallo, director of communications; 
Nat Wienecke and Michael Canty, professional staff members; 
Robert A. Briggs, chief clerk; Robin Butler, office manager, 
Leneal Scott, computer systems manager; John Sare, deputy chief 
clerk; Corinne Zaccagnini, systems administrator; Phil Barnett, 
minority chief counsel; Michelle Ash, minority counsel; David 
McMillen, minority professional staff member; Ellen Rayner, 
minority chief clerk; and Earley Green, minority assistant 
clerk.
    Mr. Burton. Good morning. We want to try to get started as 
quickly as possible. We were informed that there is going to be 
a vote on the floor at 10:30, so we will have to break at 10:30 
when we have that vote for probably 15 minutes. So I would like 
to get started if we can.
    Good morning, Mitch. How are you?
    A quorum being present, the committee will come to order. I 
ask unanimous consent that all Members' and witnesses' written 
opening statements be included in the record. Without 
objection, so ordered.
    I ask unanimous consent that all articles, exhibits and 
extraneous or tabular material referred to be included in the 
record. Without objection, so ordered.
    I have always said that government needs to act more like 
the private sector, private business; and that has never been 
more true than today. U.S. businesses are more efficient and 
productive than ever before. They are cutting costs. They are 
providing better service. They are responding to changes in the 
marketplace faster.
    They are doing all this with information technology. They 
aren't just treating computer systems like a cost of doing 
business; they are using them to achieve competitive advantage. 
And that is exactly what we should see and want to see in the 
Federal Government. We want to see the Federal agencies provide 
better service. We want them to be more responsive to our 
constituents. We want to see them become more efficient.
    If they are going to do all these things, they have to take 
advantage of new developments in information technology. The 
problem is, too many agencies are spending hundreds of millions 
of dollars maintaining outdated computer systems. Too many 
agencies are saddled with computer systems that can't talk to 
one another. Too many agencies haven't had the vision to break 
out of the old way of doing things.
    In our congressional offices, we have people come to us for 
help all the time. People have problems with the Social 
Security Administration. They have problems with the Veterans 
Administration. They have problems with a lot of different 
agencies. These agencies are bogged down with outdated 
information systems and paper files.
    Sometimes people have cases that get bogged down for months 
or years when it should only take days or weeks. We have got to 
do better than that.
    I know that there is a serious problem between the 
Department of Defense and the Department of Veterans Affairs. 
When a veteran goes to the VA to apply for benefits, the VA has 
to request his personal records from the Defense Department. 
But their computers can't talk to each other; it has to be done 
on paper. There is such a huge filing backlog at the Defense 
Department that these cases sometimes get hung up for years, 
and that is just not acceptable.
    As I understand it, there is an ongoing project at the 
Defense Department to try to fix that problem. It is going to 
take years, because there is a huge volume of information they 
are dealing with. I am going to ask the Defense Department some 
questions about that today.
    If the government is going to radically improve the way we 
do business, it is going to take leadership from the top. That 
is why I am glad we have the Director of OMB, Mitch Daniels, 
here to testify today. He has made it very clear that 
management reform is at the top of his agenda. I think he is 
sending a very positive signal by being here to talk in person 
today about this.
    Mitch, thanks for being here. It is nice to see a fellow 
Hoosier.
    I think Congress has tried to do its part to give agencies 
the tools they need. In 1996, we passed the Clinger-Cohen Act. 
It required all of the major Federal agencies to have chief 
information officers to coordinate their information resources.
    In 1998, we passed the Government Paperwork Elimination 
Act. The idea was to get agencies to let people file government 
forms electronically. We gave them a deadline. We asked them to 
have electronic filing for their most important and most widely 
used forms by October 2003.
    What we need to do now is to conduct oversight to make sure 
that agencies are putting these tools to work. That is why we 
are holding this hearing today.
    We want to accomplish two things. First, we want to see if 
agencies are complying with the GPEA, and we want to see if 
they are taking this mandate seriously and doing what is 
necessary to make electronic filing happen.
    Second, we want to go beyond GPEA. We want to see if 
agencies are thinking strategically and making wise information 
technology investments. We want to know if they are really 
taking a hard look at the way they do business to see if there 
is a way to do it more efficiently.
    We have some good success stories out there. The U.S. Mint 
is one of them. We have asked them to come and testify today. 
They used to have a lot of individual computer systems that 
couldn't communicate with each other. If they needed to get 
information from one system to another, they had to print it 
out on paper from one and type it into another. Coin collectors 
had to order Mint sets through the mail. It took them 2 or 3 
months to get their orders.
    Over a 12-month period, the Mint changed their entire 
computer system--in 12 months. Now everything is compatible. 
Today, coin collectors can order Mint products on-line, and 
they get them in 2 or 3 weeks.
    I think that the Mint has been a success story because they 
had leadership that was committed at the top. One of the 
questions I have is, how can we take the lessons learned at the 
Mint and translate them to other agencies?
    These are complicated issues. We could all spend days 
talking about all the issues at all of the different agencies. 
What I thought we would do today is narrow our focus.
    We are going to look at two agencies, the Department of 
Treasury and the Department of Defense. Our starting point is, 
are they complying with GPEA? Are they moving forward with 
electronic filing? If they are doing that, well, then hopefully 
that is an indicator that they are doing other things as well, 
too.
    Last October, they were required to file plans with OMB. 
They were supposed to lay out a timetable showing when 
different forms would be automated. We looked at the Treasury 
Department's filing. It was pretty impressive. It laid out a 
strategic plan. It laid out a number of initiatives. It said 
that 55 percent of their forms will be available for electronic 
filing by 2003. It was fairly apparent that there is a high 
level of support at Treasury for getting this job done.
    We then looked at the Defense Department's filing. It left 
us with a very different impression. It wasn't very complete. 
Out of 182 different forms that the public has to fill out, 
they couldn't give us an estimated completion date for over 100 
of them. According to the plan we reviewed, fewer than 25 
percent of their forms will be available for electronic filing 
by 2003. There wasn't any evidence of any strategic planning 
whatsoever.
    We sat down with the people from the CIO's office. What 
they told us is that they just collected the information OMB 
wanted from the different services and passed it on. It became 
fairly clear that nobody at a senior level was taking 
responsibility for making sure the job was getting done. They 
were just collecting information and passing it on; and that is 
not acceptable.
    It seems to me that when Congress passes a law that says 
you have to do something, and when OMB sends you instructions 
on how to implement the law, it ought to get a little more 
serious attention than it has been getting at the Defense 
Department.
    Since then, we have learned that there are a lot of 
different modernization programs going on in the Army and the 
Navy and Air Force and other parts of the Defense Department. 
We are going to hear about some of them from our Defense 
Department witnesses today.
    But I am now very concerned about how much leadership there 
is at the top for these initiatives. The Defense Department is 
a big place with lots of different branches and services. If we 
don't have somebody very senior taking charge, I am afraid they 
are going to wind up with lots of new systems that can't talk 
to each other, replacing all of the old systems that couldn't 
talk to each other.
    With the volume of business that the Defense Department 
does and the millions of paper forms that get filled out every 
year, hundreds of millions of dollars could be saved if we 
could automate these processes.
    We have two witnesses from the Defense Department today, 
and I hope they will be able to give us a better comfort level 
with what is going on over there.
    Let me finish up by going back to what I started with. The 
government ought to act more like a private business. In the 
private sector, billions of dollars have been saved by using 
information technology.
    We have two witnesses from two of the leading high-tech 
companies in America here today. They are going to tell us how 
they did it. Hopefully, they are going to tell us how the 
Federal Government and the State governments can learn from the 
private sector and how they ought to do it.
    We have Sue Bostrom from Cisco Systems and Curt Kolcun from 
Microsoft here today. I want to thank both of you and your 
associates for being here.
    I want to thank Kevin Binger, who has worked very hard on 
this. Kevin is very interested in the new technologies, and 
Kevin is our chief of staff. I really appreciate all you have 
done.
    With that, I yield to Mr. Waxman.
    [The prepared statement of Hon. Dan Burton follows:]

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    Mr. Waxman. Thank you very much, Mr. Chairman. Thank you 
for holding this hearing on the Government Paperwork 
Elimination Act [GPEA].
    This legislation was passed as an attachment to a 
supplemental appropriations bill at the end of the 105th 
Congress. GPEA requires agencies to give individuals the 
opportunity to submit information electronically when 
practicable. In addition, it allows a person to use his or her 
electronic signature to file the submission.
    GPEA, just like the Paperwork Reduction Act, which it 
amends, attempts to reduce the paperwork burden placed on the 
public by the Federal Government. It has yet to be demonstrated 
whether electronically submitting information reduces the 
number of burden hours it takes people to complete the required 
submissions. However, it may have other benefits, such as easy 
access to forms or relief from the cost of postage.
    I have supported e-government initiatives and believe they 
can benefit the public. By using technology to collect and 
disseminate information, agencies can help government be more 
efficient and more responsive to the taxpayers. E-government 
should include encouraging agencies to allow people to comment 
on regulations electronically as well as allowing them to read 
the comments from others electronically. This saves time, money 
and effort.
    For some agencies, individuals still have to go to 
Washington, DC, and review the handwritten docket in order to 
intelligently comment on a proposed regulation. Although modest 
steps have been taken to address this issue, much work is left 
to be done.
    Care must be taken in developing electronic information 
collection systems to assure that we protect individually 
identifiable information, business proprietary information, and 
truly reduce the burden placed on those submitting information 
to the government. Privacy protections must be paramount.
    Over the last decade, we have seen an increase in identity 
theft; an individual's credit cards, Social Security numbers or 
driver's license can be stolen or copied with relative ease. As 
more and more people electronically submit information with 
electronic signatures, we must work to prevent them from 
becoming victims of identity theft.
    Mr. Chairman, GPEA has the potential to help the Federal 
Government better manage its information collections. As 
technology advances, I am hopeful that agencies with the proper 
protections in place will be able to adapt and respond quickly 
to the needs of the people.
    I look forward to the insight from our witnesses. Thank you 
very much.
    Mr. Burton. Thank you, Mr. Waxman.
    Do other Members have opening statements?
    If not, I want to start off by welcoming the great 
Congressman from Tennessee, John Duncan, my very good friend, 
to the committee. I know he will be a great asset to us.
    I ask unanimous consent that he be appointed to the 
Subcommittee on Energy Policy, Natural Resources and Regulatory 
Affairs. Without objection, so ordered.
    Well, we want to welcome Mitch Daniels. He has been a 
leader in Indianapolis, IN, for a long, long time. He was an 
executive for the Lilly Co. In fact, I think you were president 
of International Trade at one time.
    Mr. Daniels. North America.
    Mr. Burton. North America. Well, that is close. In any 
event, he is head of OMB. I think he is a great appointment. I 
really appreciate you being here. You are recognized for an 
opening statement.

  STATEMENT OF MITCHELL E. DANIELS, JR., DIRECTOR, OFFICE OF 
                     MANAGEMENT AND BUDGET

    Mr. Daniels. Thank you, Mr. Chairman and Congressman 
Waxman. I appreciate the committee's hospitality. And let me 
reciprocate by being very brief in my opening statement. I will 
submit a statement for the record, of course.
    Let me just say two or three things about this very 
important subject on which you gather us today. The 
administration has announced and will follow through on a major 
commitment to use the tools of the Silicon Age to improve the 
performance of government and also its effectiveness on 
behalf--or its interaction with individual systems.
    From a very, very lengthy list, the President has selected 
five topics as his primary management objectives for this year, 
and e-government is among those five.
    Last week, we appointed a seasoned professional with 
experience both in government and in the private sector, who 
will work all day every day on this and this alone. In addition 
to that, we will, of course, support his work with all the 
resources necessary to make sure OMB upholds its 
responsibilities here. The Deputy Director for Management, who 
is yet to be appointed, will carry as a primary responsibility 
the job of the President--or of the Federal Government's CIO 
and will chair the CIO Council of his counterparts or her 
counterparts in each of the agencies.
    Let me just summarize the problem areas.
    Success stories are abundant, as you have indicated, but I 
think the committee and certainly we at OMB want to focus on 
the areas where improvement is most urgently needed. By our 
tabulation, there are at least 6,000 eligible transactions, 
citizen transactions, not yet Web-enabled or with an electronic 
option. At this point, agencies can only certify to us that 
something less than half of those will meet the 2003 deadline. 
We don't consider that acceptable, and we will work to 
improve--I hope to be able to report to this committee at a 
later date that that number is headed northward.
    Our scan of the capital planning process at the agencies 
and their preparedness to meet the objectives of their 
assignments here finds good performers and not-so-good 
performers. It probably bears mentioning that the EPA, 
Treasury, and HUD, as far as we are concerned, are among the 
leaders. On the other hand, HHS, Defense and Justice we think 
have the furthest to go.
    I would also observe that many agencies, I think, will be 
hamstrung by their own organizational structures. I will say a 
word about this as I conclude, but far too many agencies have 
not one, but multiple IT problems because they have multiple 
organizations all pursuing different and often incompatible 
agendas and architectures. HHS might be the most extreme 
example with its 13 sometimes competing empires.
    We will try to focus our attention primarily on sort of the 
high-yield opportunities, those where we think we can make the 
most improvements the most quickly, those with the most citizen 
encounters.
    I will cite tax filings. Although the Treasury has done 
some excellent work, they have perhaps the largest single job 
to do, and there are something like 200 applications, I am 
advised, that could make more simple and straightforward the 
taxpayers' relationship with the IRS, that have yet to be 
rendered electronic.
    One other general point: I think that the Congress and the 
committee in its oversight of this law has given the Federal 
Government yet another opportunity, which I hope we will seize, 
to clean house in terms of activities that may not be necessary 
at all. We used to say in business there is nothing more tragic 
than to do very, very well something which is totally 
unnecessary.
    As I look at some of the applications or some of the 
eligible activities of government that could be transformed in 
an electronic fashion, I think the threshold question is, is 
this still necessary in the first place?
    At Agriculture, for example, there are millions of hours of 
reporting imposed upon farmers and producers, collecting 
information that may or may not be necessary. Before we invest 
the taxpayer dollars to make collection of that information 
electronic, we ought to take the opportunity to check and see 
if, maybe, this is a once-good idea that is now obsolete.
    I think Congressman Waxman had an excellent question when 
he reminded us that we can't automatically assume that simply 
by switching from paper to a terminal, the burden on anyone has 
been reduced in the way we hope it will be. I think that 
question has to be asked each and every time.
    Last, let me just say that I think one of the largest 
problems and one we are going to try to work very hard on that 
encompasses this subject and, frankly, many more, has to do 
with the efficiency or lack of it with which the Federal 
Government now spends upwards of $45 billion on IT.
    In a $2 trillion budget, you know, a 2.5 percent--something 
like that--investment in information technology is low by 
private sector standards, but not dramatically below that of 
many businesses. Yet, I cannot testify today that that money is 
being well spent or spent in an integrated fashion.
    In fact, it is my apprehension that much of that money, 
even as we sit here this morning, is being spent to make a bad 
situation worse; that as we convene here, people with the best 
of intentions are assiduously designing and contracting for 
systems which are tailored, which are customized, which are not 
compatible with the systems with which they need to interact, 
and that people are working very hard in a way that is at 
cross-purposes with this committee's goals and those of GPEA.
    So we are going to try to identify that, and we are going 
to try to root it out, try to bring greater cooperation, 
integration and, frankly, in many cases, dictation of systems 
decisionmaking in hopes that we can begin to turn this tanker 
in the way that the committee has and the authors of this bill 
have wisely directed.
    Thank you for this opportunity.
    [The prepared statement of Mr. Daniels follows:]

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    Mr. Burton. Let me start the questioning by just asking a 
couple of, I guess, generic questions or general questions.
    First of all, I want to get every agency to review whether 
or not information that they are requiring from different 
segments of our society are necessary.
    Then, second, you indicated that--and I read your 
testimony--that you indicated that there was going to be an 
effort to have them coordinate their efforts so that there is 
not one agency going in one direction with technology and 
another going in another direction.
    Who is going to be--and you touched on this, but who is 
going to be--I mean, this is a huge government. And to go 
through every agency to find out whether or not there ought to 
be an elimination of some of the information that is coming in 
and whether or not they ought to adopt a certain type of 
computer technology, who is going to be put in charge of that?
    Mr. Daniels. The Deputy Director for Management will have 
this as a principal responsibility. I regret that, yet again, I 
have to testify that we don't have that person in place. We 
have set the specifications for that job very high for this 
very reason and for several others like it. We have filled 
every job but this one at OMB, I am happy to say. But this will 
be a primary responsibility of my primary associate.
    In the meantime, the other deputy, the general deputy, is 
acting in this area. We also were fortunate to recruit on a pro 
bono basis the president of the National Academy of Public 
Administration, a very seasoned, nonpartisan government 
administrator, who is filling in and working on these issues 
now.
    As I say, next week, a full-time information associate, 
Mark Forman, will be joining us.
    Mr. Burton. Well, I----
    Mr. Daniels. Let me add just one other thing, Mr. Chairman: 
It is not simply a matter of interagency, but also intra-agency 
incapability. Some of the worst problems I have seen in the 
superficial look I have had a chance to give so far really 
exists within departments, as opposed to--in their need to 
connect or interact with other departments.
    Mr. Burton. We had a press conference yesterday, and the 
Majority Leader, as well as others--committee chairmen--were 
talking about this.
    It seems like--and I think you touched on it in your 
opening statement--that a lot of the agencies are taking 
archaic systems and trying to improve the current system, when 
they probably would be better served to junk them and start 
with the newest technology instead of trying to bring old 
technology up to current standards.
    We are going to have Cisco and Microsoft testify in a 
little bit. Is anybody working with these various computer 
companies to find out what the latest technology is going to be 
that should be used for the entire government, so that--like we 
were talking about--they can all talk to one another within a 
given agency, and then intra-agency-wise as well, and to make 
sure that they are not in the process wasting money on old 
technology they are trying to bring up to current standards?
    Mr. Daniels. I think the CIO Council is the appropriate 
vehicle, or certainly one, for addressing these sorts of 
problems. We will just try to use it as effectively as we can.
    Now, I pretend to have no great expertise in this area 
myself, but I have, through past vocational experiences, come 
to some general conclusions. Along the lines of your question, 
standardization and simplification, I learned the hard way, are 
pretty good objectives. And I think that in many cases it will 
be important to ask agencies hard questions before they pursue 
the perfect solution for themselves, which may aggravate the 
general problem the government has by virtue of its very 
customized or, you know, mission-specific character.
    Mr. Burton. Well, I realize that we are asking you 
questions that you probably aren't prepared to answer yet 
because, you know, this is a new administration.
    Mr. Daniels. That won't stop me. I answer questions on 
unfamiliar subjects all the time.
    Mr. Burton. When I first got elected to the Congress, 1 day 
I was a candidate and nobody expected me to know anything. The 
next day, I was elected, and everybody was asking me questions 
about international policy that I had nothing to do with. So I 
am sympathetic with the problem.
    Mr. Daniels. You get away with it pretty well. I will try 
to do the same.
    Mr. Burton. OK. Let me end up by saying, before I yield to 
my colleagues--and we will have the experts testify in a little 
bit--it seems to me and maybe my colleagues that it would be 
advisable--and you may be way ahead of us on this--to bring in 
some experts from the various high-tech areas and have them do 
a cursory look at all the agencies to make some recommendations 
on the front end to whomever you are going to choose to head 
this up, so that they can have at least a basic idea of where 
they think the high-tech people think we ought to go. Because 
technology is moving so fast that I think that to not include 
them in the loop--and I am sure you will, but to not include 
them in the loop will be a serious problem.
    Mr. Daniels. Let me say that is a great suggestion. One way 
we are active on this sort of front, Bob O'Neill, the gentleman 
I referred to from the National Academy, has already met for 
the first time with leadership of some of the Nation's major 
consulting firms about the management agenda, not limited to 
the IT challenge, but including it. We expect to call on their 
patriotism to see if they cannot see their way clear to donate 
some advisory services that the government would benefit from.
    Mr. Burton. Very good.
    Mr. Waxman. Thank you, Mr. Chairman.
    Mr. Daniels, thank you very much for being here. I realize 
it is early on some of these issues that we are looking at for 
you to have definitive positions. You don't have the Deputy 
Director in place. Maybe this hearing today will also be 
helpful to the administration in having that Deputy Director be 
able to review the record of information that comes out of our 
oversight activities.
    The Justice Department seems to have serious concerns about 
the use of digital signatures. How will your administration 
weigh those concerns against the call from GPEA for a serious 
effort to increase the role of electronic reporting in Federal 
information collections. Do you have any view on that at this 
point?
    Mr. Daniels. Well, this is one of a number of obvious 
tensions that we will all have to work together in reconciling. 
Concerns of privacy, concerns of security are very, very real.
    I will just say that the President, in particular, has 
placed a lot of emphasis on the preservation of privacy even as 
we try to make progress in this and related areas. I will have 
to take up Justice's specific concerns outside this hearing. In 
all honesty, I am not sure how to react to their particular 
worries in this area; but I don't doubt, when I do, I will find 
that there is some legitimacy to their hesitation.
    Mr. Waxman. The Paperwork Reduction Act lays the groundwork 
for information management in the Federal Government. That act 
has been amended a number of times since being reauthorized in 
1995. Some have suggested that the Paperwork Reduction Act 
needs to be reworked to address the issues of electronic 
government in the 21st century.
    The Paperwork Reduction Act authorization expires this 
year. Will the administration be sending to Congress 
recommendations for changes to be included in the 
reauthorization? And when do you think those will be available?
    Mr. Daniels. I don't know the answer to the when, but I do 
believe that we will have at least some report to Congress, and 
possibly some recommendations to accompany it, about the act, 
the way it is working and how it might work better. I have 
become aware already of at least a couple of instances--they 
may be aberrational--in which ironically the act may lead to 
more, not less, burden in terms of paper and information 
requests.
    I think it is our duty to report that there are 
experiences, good and bad, with the act, and the 
reauthorization would be the right time.
    Mr. Waxman. Good.
    The GPEA report for the Department of Defense shows that it 
is not moving quickly to implement the requirements of this 
act. Earlier this week, one of the subcommittees of this 
committee held a hearing on the Government Performance and 
Result Act [GPRA]. In that hearing, it was also pointed out 
that the Department of Defense was not moving quickly to 
implement the requirements of that act.
    What will your administration do to persuade DOD that it 
needs to get on board with these efforts to make government 
more accountable and user friendly?
    Mr. Daniels. Well, we are placing a number of demands on 
the Department of Defense and this administration. This will 
have to be high on the list.
    I think we should all recognize the immensity of the 
management challenges that Secretary Rumsfeld and his 
colleagues face, and all their predecessors and successors, for 
that matter, in an enterprise that big. But we will certainly 
ask them to elevate substantially their attention to this one.
    Once again, from a list that, as I recall, was originally 
about 61 items, we distilled to 5 those that the President has 
designated as governmentwide, mandatory, top-management 
priorities; and this is one. So we will take his direction and 
stay on top of them.
    Mr. Waxman. It occurred to me, as I was reading these 
questions to you about GPRA and GPEA and PRA, that these are 
just a few of the laws that we have to deal with; and you have 
to deal with all of them, all of them within the government. 
And when people come to you, they must refer to each of these 
pieces of legislation as if it were the most important thing on 
your mind at that moment.
    Mr. Daniels. Well, at that moment, it is. Or at least if it 
is you asking, it is.
    Mr. Waxman. I guess the first thing you have to do is to 
find out what the letters stand for. Well, I want to wish you 
well in your position.
    Mr. Daniels. Thank you.
    Mr. Waxman. And I hope that, as this committee looks at 
these issues, we can develop a collegial working relationship. 
We want the same goals.
    Mr. Daniels. Yes, sir. Well, I trust we will. And I will 
say very sincerely that hearings like this and questions from 
the committee are very, very useful, both in forcing us to 
become better educated about subjects we need to learn more 
about and keeping our attention from wandering away from 
important assignments. So we thank you for this invitation.
    Mr. Burton. Thank you, Mr. Waxman.
    And I and others who are here today are very interested in 
working with you. And if you have legislative requests that 
will streamline government, make it more efficient, especially 
from an electronic standpoint, we will be very happy to work 
with you.
    Mr. Schrock.
    Mr. Schrock. Thank you, Mr. Chairman.
    Good morning, Mr. Daniels. You mentioned that agencies like 
the Mint are doing a good job and that one agency that is dear 
to my heart, the Defense Department, along with HHS and 
Justice, are not. Did the Mint create their own program 
internally or did they contract out? No matter who created it, 
if it is successful, why can't other agencies use it as a 
template for their own agencies?
    Mr. Daniels. It is an excellent question. I honestly don't 
know. But fortunately you have the people from the Mint here to 
tell you the origins of the program. I only know that it does 
rise near the top in the estimation of our people in terms of 
applications so far.
    That is a very important point you make--and this we have 
stressed; we are going to try to stress across the entire 
management front--this government doesn't transfer learning 
very well. There are, on any subject I have looked at so far, 
always pockets of excellence. But very, very rarely has that 
excellence migrated in the way that a high-performing 
organization will insist that it do.
    You have some people here from some high-performing 
businesses. I know they will tell you, as was our experience, 
that in a good business today, it is considered a grievous 
malfeasance for a manager who has done something, or whose unit 
has done something, innovative to fail to share that 
information across the organization. It is seen as an 
affirmative duty.
    That isn't happening nearly to the extent it should. I do 
feel it is a heavy responsibility because OMB is a hub in a way 
and does operate the various councils and so forth, and this 
should not be hard to do. We should be able to take whatever 
the Mint has learned and spread it far and wide, wherever it 
might apply.
    Mr. Schrock. I agree. Thank you, Mr. Chairman.
    Mr. Burton. Mr. Duncan.
    Mr. Duncan. Thank you, Mr. Chairman.
    Mr. Daniels, I heard a report on CBS national news a few 
months ago that said 37 percent of the time that people are 
spending on their computers is spent sending jokes or checking 
their stocks or on personal matters. Then, week before last, 
the Inspector General of the Internal Revenue Service came out 
with a report saying 51 percent of the time IRS employees are 
spending on their computers is spent visiting porn sites and 
sending jokes and checking their stocks and all of these types 
of things.
    The goal of the Paperwork Elimination Act is to make the 
government more efficient. Is there anything that you know of 
that we can do or that can be done to see that less time is 
spent using these computers, these government computers for--I 
noticed in your testimony a moment ago you said we shouldn't 
automatically assume that paper is always less efficient than 
the computers.
    I just wonder about that. Is anything being done about that 
or can anything be done about that?
    I have to tell you, I did have a couple of friends, though, 
who said they would be upset if it was another government 
agency, but with IRS, they would just as soon 51 percent of the 
time be spent on personal----
    Mr. Daniels. They might prefer it was higher.
    Mr. Duncan. Right.
    Mr. Daniels. It strikes me as equally important, but a 
somewhat different question than we are talking about with 
GPEA, where I think the primary emphasis is on opening up to 
the external--to the public the external world the better 
channels of communicating and dealing with its government.
    The problem you are talking about, I know it is very real. 
It is not confined to government. Good managers detect the 
problem when it is out of hand and act against it. You know, 
here too there has to be some--I think there has to be due 
sensitivity to employee privacy. But there are pretty well-
established rules, as I understand it, for surveillance or 
back-checking where there is some clear evidence of abuse or 
misuse.
    Mr. Duncan. The second thing I wonder about, and it is a 
little different direction from most people, because it is sort 
of politically incorrect today not to worship the computers. 
And everybody always, I guess, is trying to outdo themselves to 
say that we should always go to the next level and the most 
advanced technology. But what I think sometimes the computer 
companies sell us a bill of goods, because they always want us 
to buy new equipment all the time.
    Mr. Daniels. Yes.
    Mr. Duncan. Obviously they make more money if we do that.
    But sometimes I think it is sort of like buying a car. 
Sometimes it is more cost-effective and just as efficient if we 
stick with a car that is a year or two old than if we always 
try to buy the newest car with the newest bells and whistles.
    What I am wondering about, since your primary 
responsibility is the money involved, or that the government is 
spending, should we be attempting to make sure that our 
technology purchases are cost-effective and that they will 
work? I think the chairman or somebody mentioned--or maybe you 
did in your testimony just now, about not always having to go 
to systems that are incompatible and so forth.
    Mr. Daniels. Yes, sir. I think it is very, very important. 
A good capital planning process--I make reference to that 
throughout the testimony--will identify the likely rate of 
return or the benefits to be derived from an investment. Done 
properly, that will very, very often, I think, steer a buyer, a 
user, away from the bells-and-whistles applications, the latest 
and greatest. There is a romance about that. People who are, 
you know, knowledgeable about technology I think sometimes get 
captivated by that and go beyond the point of diminishing 
returns.
    This is exactly what we are trying to get at in critiquing 
the capital planning processes within agencies. It is exactly 
what we will try to get at if we win--I give the direction to 
the DDM and the intelligence--I mean, the information officer 
to press always for the simple, the standard, the common, the 
more easily compatible.
    Mr. Duncan. All right. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Burton. Mr. Kanjorski, do you have any questions?
    Mr. Kanjorski. Yes.
    Mr. Daniels, I don't know that we have won any awards in 
the Federal Government in utilizing new technologies to provide 
better service or more efficient service. So I am not certain 
that I am satisfied that we can accomplish a lot of the things 
we do in the Federal Government to do that.
    But what I am most worried about is areas like 
Pennsylvania. Unfortunately, we have, I think, the second 
largest number of municipal governments in Pennsylvania of any 
State in the Union--2,500 municipal governments, 90 percent of 
which are under 3,500 in population.
    So it is interesting to analyze what will happen if the 
Federal Government does go to sophisticated computer systems 
when more than 45 percent of the governments in my 
congressional district don't have computers. I am just 
wondering what portion of the population of the United States 
has the capacity either of having computers or fitting into a 
network.
    What I am most worried about is, we are going to move ahead 
very quickly on some of these things, not realizing that we are 
leaving behind a very large portion of our population.
    We had some testimony on that the other day in the 
Committee on Banking in terms of analysts and what they do in 
stocks and bonds. I try to draw the analogy, there is a 
question there, whether or not the information coming out is 
objective and responsible. But one of the bigger problems that 
I saw in the analysts' problem that I see now in the technology 
problem of the government is, you know, I think we are missing 
the point.
    The last time I looked at a study, 20 percent of the 
American people were functionally illiterate. So, at best, 
right now, we can be talking to only 77 percent of the American 
people. It seems to me that before we move hell-bent forward on 
doing a lot of things, we have to make sure that we are giving 
access to the American people, to the government, and to the 
municipalities.
    I have noted recently that--we haven't done a study on it, 
to confirm it, but I am sure if you do a study, you are going 
to find that there is a decided difference between how 
communities interact with the government on some programs to 
get benefit directly relates to their level of sophistication 
and technology.
    I am just noticing in a lot of these rural districts 
through the country, and in particular Pennsylvania because of 
our archaic structure, they are just not capable, the local 
leadership and the citizenry, of really accessing some of these 
sophisticated systems.
    Then, the only thing I would add to that is, I wish you 
would look at the House of Representatives as you go through 
this system, because I don't think we are famous for having the 
best system in the world.
    Mr. Burton. Careful.
    Mr. Kanjorski. And I don't want to--it is national, not a 
political criticism, because quite frankly, I would have to 
give a lot of credit to the revolutionary forces of 1994. They 
tried very hard. But sometimes philosophically they got bent 
into accomplishing something with technology, and I could call 
your attention to one thing. All of us have become purchasing 
agents now, in the individual Member's offices, of equipment. 
We are ill prepared to do that.
    I can tell you that it has been a catastrophe trying to 
find out the best system, what systems work. Then when you 
order a system that is misrepresented and it doesn't function, 
what do you do with it? And negotiating each individual office 
with a huge or large contractor who, quite frankly, is probably 
one of two or three providers and really doesn't give a damn if 
you say, I am going to take out my system. He says, tough luck; 
go back to typewriters, Congressman, if you are unhappy.
    So we have a lot of management problems. In a way, I have 
been trying to convince people in the 17 years that I have been 
in Congress that your office has an interesting title. The 
management factor inside of your title has really not been well 
utilized. I think one of the prior Members mentioned you have 
great budgets down there. You have good numbers. I respect both 
administrations', how they happen. They usually come out better 
than we do up here on the Hill in number crunching.
    But in management direction and skills, I think there has 
been a decided failure in the Federal Government in all 
branches, all three branches of the Federal Government, to 
really put their management techniques into place. I don't know 
what can be done about it. Probably government can't accomplish 
the standard that the private sector has to accomplish if it is 
going to be competitive.
    But if in some way you would think about the management 
aspect of taking this new technology across government, and 
then, if we get so sophisticated that we can communicate with 
Mars, but we can't communicate with 23 percent of the American 
people and we can't communicate with 40 percent of the 
municipalities, I don't know whether we are going to get value 
out of the thing. We may just exclude people from the system.
    Right now, I mean, I hate to tell you, but some of the 
municipalities in my district don't have typewriters. They 
actually keep notes by hand. If that applies in my district, I 
think if we look across the country, we are going to find a lot 
of communities that are totally devoid of equipment, 
efficiency, and even if you gave them that--of expertise.
    I have been particularly involved in GIS for planning 
purposes. We have been doing fairly sophisticated work in 
Pennsylvania and across the country with a lot of the GIS 
movement in how to use this as a tool for government planning. 
It is a phenomenal tool, a tremendous potential cost-saver.
    We are working on a program now of land and water 
reclamation that we estimate we can save anywhere from 30 to 40 
percent of the costs that normally are spent by the Federal, 
State and local governments to do this work, because we can 
remove the field engineering into the computer operation 
through use of GIS.
    But all that being said, if we don't have the operators out 
there, if we don't find a way to put in kiosks for access for 
people who don't have computers; and then if we don't have 
operators who are skilled enough to access the Federal 
Government, the State government, the local government and all 
this information that is available, I am not sure we are going 
to be very successful.
    So I guess what I would say is, I hope you come forth with 
a very comprehensive plan, breaking all these areas down and 
just seeing what types of platforms we have to put in place, 
both in person skills and various technologies, to get there; 
or else we are going to spend--I mean, we don't want to make--
is it the FAA that put that very sophisticated system together 
that didn't work? You know, that is really unforgivable. Those 
are people that are in an area of expertise that should be able 
to handle it.
    I think we are going down the road right now, we may do a 
lot of hardware and software and not have the programmers or 
the users that are capable of accessing it. And we may just end 
up alienating a third to a half of the American population from 
government, from the Federal Government. Thank you.
    Mr. Burton. If I might just add to that, you hit on the 
House of Representatives and how we are all buying our own 
individual systems, and there is not a lot of coordination 
there.
    I know that OMB is not going to be dictating to the House 
or the Senate on what we do; but what might be advisable is, 
when you come up with a strategic plan for computerization and 
consistency throughout the Federal Government, you could make a 
recommendation. Obviously, we wouldn't always follow it, but 
you can make a recommendation to the House and the Senate that 
it would be advisable for us to have a plan consistent with the 
rest of the agencies so we can all talk to one another 
electronically.
    So that would be one thing from Mr. Kanjorski that I might 
add to the mix.
    Mr. Kanjorski. I want to add to that. We could maybe model 
after some of the States.
    I used to represent municipal governments as an attorney 
before I succeeded to this great, high office; and the 
experience in Pennsylvania was that the GAS in Pennsylvania 
allowed municipalities to dovetail on their contracts, both for 
prices and service.
    And just within the government, if all three branches could 
dovetail on what you are doing, you are going to be buying a 
much larger area. We don't necessarily have, one, that 
expertise or that buying capacity to think about dovetailing us 
in.
    I am not sure about even dovetailing in the States and the 
municipalities, so that anything that you come up with has to 
be compatible among the three branches of the Federal 
Government and all the lower governments in the country to come 
in and use the Federal purchasing capacity and expertise of 
some of this.
    Mr. Burton. Thank you, Mr. Kanjorski.
    Mr. Otter.
    Mr. Otter. Thank you, Mr. Chairman.
    Welcome back, Mr. Daniels. It is good to see you again. I 
remember when you appeared before our subcommittee on this very 
issue. We had some good exchanges.
    You know, it is interesting to hear some of the 
conversation in front of the full committee here about how 
unable we are to respond to this sort of thing. I am reminded, 
2 years or 3 years before I got here, I am sure it didn't come 
out of this committee, but I am sure members of this same 
committee voted for a law which told all small business that 
you have to electronically file your tax returns whether they 
had computers or not. But you have got to do it. You have got 
to comply. You have got to make it happen.
    I know that the Paperwork Reduction Act has been in force 
for a long time.
    Let me reflect back to our subcommittee. As you will 
recall, we had 487 violations last year. We had 710 in 1999 
that your department reported on, and 872 in 1998, if my memory 
serves me correctly or my information. And I think I asked you 
at the time, and I just want to ask you again for the benefit 
of the full committee: How many people lost their jobs because 
all those laws were violated, or how many people went to jail? 
How many people were fined, as we would the private sector?
    Mr. Daniels. Well, I am unable to report that anyone went 
to jail----
    Mr. Otter. Was anybody fined?
    Mr. Daniels [continuing]. Or that there were other 
meaningful penalties. I understand the thrust of your question.
    Mr. Otter. So that leads next to my real question to you. 
Wouldn't it be helpful to your organization to enforce this law 
if we gave you--as the Congress is always fond of calling it--
some ``teeth,'' like we give teeth to OSHA, we give teeth to 
EPA, we give teeth to the IRS? Wouldn't it be helpful if we 
gave the Office of Management and Budget teeth to enforce these 
laws with the Federal agencies?
    Mr. Daniels. Well, we don't aspire to police powers, though 
some people think we think we do. I would leave that to the 
wisdom of Congress, sir, although I will say that even apart 
from or before any such powers were conferred on us, I think we 
have a very heavy responsibility in this area. It is not as 
though we are toothless.
    A primary reason that I favor the continued integration of 
management and budget functions--and this is a debate that has 
run for a long time--is precisely that if we ever get it right, 
the budget authority and the interactions we have over 
something very dear to the hearts of agencies and parts of 
agencies, their budget from year to year resides in the very 
same place that has the responsibility for oversight or 
paperwork reduction, GPEA, in all these other agencies.
    That is why we are going to make a determined run at the 
goal to strengthen the management side of our operation to 
train our people in the requirements of these acts and try to 
use the budget hammer, some would call it, to get greater 
compliance. You all can work on whether we should also pack 
side arms and have other forms of coercion.
    Mr. Otter. Well, I pursue that line of questioning as I did 
in the subcommittee, as you will recall, simply because I see 
that we always advise ourselves that in order to get compliance 
from the private sector or from the general citizenry, from the 
people, that we have to put teeth in the law.
    We are about to hear from two sizable corporations here 
that if they had violated the law 487 times, they would not 
have got any chance to violate the law 487 times in 2000, 
because they would have all been in jail from having violated 
the law 872 times in 1998, whether it was affirmative action or 
whether it was OSHA or the IRS laws, the tax laws, or any of 
the rest of these.
    I am wondering, if we are really serious about paperwork 
reduction, if we are really serious about making the necessary 
good impact on our own government that we are willing to make 
on our own participants in the private sector and in the 
economy, why aren't we just as enthusiastic and why aren't we 
just as willing to champion that same sort of compliance with 
our own government?
    Thank you, Mr. Chairman.
    Mr. Burton. Side arms will be required.
    Mr. Ose.
    Mr. Ose. Mr. Chairman, thank you. I am tempted to use a 
portion of my time to celebrate your birthday today.
    Mr. Burton. Do what?
    Mr. Ose. To celebrate your birthday today, because I 
understand you turned 35.
    Mr. Burton. Thirty-nine.
    Mr. Ose. But I am not going to sing for you.
    Mr. Tom Davis of Virginia. How many times?
    Mr. Ose. Nobody laughed.
    Happy birthday, Mr. Chairman.
    Mr. Burton. Thank you.
    Mr. 0'se. That is in the record, right? You got it in the 
record?
    Mr. Burton. Thirty-nine. Get that in the record, too.
    Mr. Ose. This is my time, Mr. Chairman.
    Mr. Daniels, I appreciate you coming. You and I have had a 
couple of conversations in the past. I do want to touch on a 
couple of things.
    We had a hearing on April 24th at which many of the 
witnesses questioned the requirement for reporting extensive 
and unchanged information on an annual basis; that is, the same 
information they reported on the previous year's form was the 
same that they are reporting on this year's form, in particular 
as it relates to Interior and Agriculture issues.
    On May 15, I wrote you and Secretary Norton about the 
results of our investigation, the Bureau of Reclamation in 
particular, and asked for OMB to work with the Interior and 
Agricultural Departments to eliminate any duplicative 
reporting.
    Where do you stand on your analysis of this problem?
    Mr. Daniels. We assess it as a general problem, even larger 
than your letter suggested. I will be meeting with Secretary 
Norton next Friday, and this will be one of the topics that we 
take up. I can't tell you this morning how much progress she 
will have to report. Certainly the work of the committee 
alerted and sensitized her, as well as us.
    And certainly an area one of the high-yield opportunities 
that I made earlier reference to has got to be, you know, 
alleviating the burden for repeated update or refiling of the 
same data; and there is work afoot to try to make it possible 
for people, or businesses in many cases, to file standard 
information in one place that might handle multiple agency 
needs, updated only as it changes.
    Mr. Ose. Could they do that electronically, too?
    Mr. Daniels. Sure.
    Mr. Ose. One of the issues that came up in our hearings--
and this related primarily to agricultural use of Bureau of 
Reclamation water from the Central Valley project in 
California--is that on the forms that were being used by the 
Bureau to basically allocate water, it almost seemed as if the 
simple addition of a box that a farmer could check that says 
``no change from the previous year'' would go far toward giving 
these people the time that they need in the fields.
    I don't know if you have considered that or not.
    Mr. Daniels. I have. And also made earlier mention of the 
fact that, in Agriculture particularly, there is--what we are 
dealing with, with many programs and an enormous 
infrastructure, field offices overlapping and all the rest of 
that, which is a completely separate management problem, there 
is at least, I think, the strong suspicion of a lot of ``make 
work'' and a lot of information being collected that need not 
be collected in the first place.
    I said earlier it would be a sad mistake to convert from 
paper to some simpler electronic fashion information collection 
that is unnecessary in the first instance.
    Mr. Ose. Your point is very well made.
    I met with the FSA employees in the Central Valley, 
particularly, in my district about that exact point; and they 
would welcome the opportunity to reduce the redundant or 
repetitive collection of information of this nature. So I 
applaud your efforts on it.
    Mr. Daniels. We could use the help of Congress to reducing 
the redundant and unnecessary overlap in that agency itself. 
When you have separate silos of employees all dealing with the 
same farmer but all reporting to different people and all 
setting up their own systems, you are going to have multiple 
information demand.
    Mr. Ose. Your single source idea or your single repository 
is a great idea. So I want to compliment you on that.
    Mr. Daniels. It may be great, but it is not very popular.
    Mr. Ose. Before the light turns red, I want to reiterate 
what I said at the beginning and say happy birthday to you, Mr. 
Chairman.
    Mr. Burton. You are a good friend.
    Let me just say to Mr. Daniels, if you have suggestions for 
legislative action that would help you do your job better by 
streamlining and cutting out duplication, just call us. I mean 
there is a number of subjects here that we will be very happy 
on both sides of the aisle to do whatever we can. This is not a 
political issue in any way.
    Ms. Norton.
    Ms. Norton. Thank you, Mr. Chairman. I regret that I have 
not been here long enough to hear this important testimony. 
It's an important hearing for this committee to hold.
    I would like to yield my time to Mr. Kanjorski.
    Mr. Kanjorski. Thank you very much.
    Mr. Daniels, I want to tell you a story of how I got into 
something. It is interesting.
    I spent time with a former Member who was my dearest 
friend, Bill Emerson. We used to cross districts. He was a 
Republican. I was a Democrat. We always made it a point, if I 
went to his district, we would go to something special, a 
laboratory or some Federal installation. If he came to mine, we 
would do the same.
    When I was in Missouri one time, he was very proud of the 
USGS facility that is somewhere in Bill's old district, and we 
spent the day there. It was very enlightening, and it could 
perhaps give us some guidance here, because I just heard the 
chairman mention whether or not we could do something.
    When we were mapping the United States some 20 or 25 years 
ago, maybe 30 years ago now, of course, the Congress had to 
authorize the mapping. It was interesting that an interesting 
question arose that exists all the time when we act here in 
Congress, whether this is a Federal question or a State 
question. There was the contention that they wanted to have a 
Federal map of the United States, but ultimately Congress 
elected to appeal to States' rights and authorized to pay for a 
map that would be awarded and built by the States, and they did 
such.
    Members may not know this, but when they completed all the 
surveys of the United States and they went to reassemble the 
United States, it did not fit. Quite frankly, all the 
information that was compiled in the lower 48 States just did 
not come together. We had to redo the situation at great 
expense, and that is a tendency that we have to anticipate 
here. If you are going to do something, we should probably get 
involved in the Congress when we are authorizing but be very 
certain that we analyze out some of our philosophical positions 
that can and do cause havoc.
    Now, as a result of that, I have been very involved in GIS, 
both using it for government planning and structure. I have 
found that we are on that same course again, that is in the 
Federal Government. In almost every department and bureau they 
are, rather than having a central repository for GIS 
information, whether it be the Library of Congress, the 
Department of Congress, I don't care, some single agency that 
is responsible for standardization and for pulling this 
information together and to making it available, every 
department in every bureau of the government has their own 
little GIS system that they are working with and, 
unfortunately, a total lack of standardization.
    Now, I am certain in my own mind standardization should not 
be established by government fiat and government action alone, 
and they are well on their way to coordinating both the Federal 
Government and the private sector in developing standards. But 
they are--that is extremely important.
    I am involved with areas now that we are trying to 
determine are we going to be doing the GIS system down to an 
accuracy of every 3 feet on the surface of the Earth, every 10 
feet on the surface of the Earth, every 30 feet. There are all 
different measures, different expenses involved. But a great 
deal of the limitation is what this information can be used for 
and the quantitative savings that will result therefrom.
    One of the things I would call your attention to just think 
about it, we have over there in some of the black areas of the 
government capacity through satellite use to have tremendous 
efficiency in siting and locating materials on the face of the 
Earth with great accuracy. It is, to my knowledge, that the 
private sector is spending hundreds of millions if not billions 
of dollars to duplicate that very service that exists right 
now.
    We would make tremendous strides if, one, we freed up some 
of that information. All it takes is the attention of saying 
that it is not so radical a secret that it has to be contained 
anymore, because they can do it in the private sector, but, 
rather than duplicate that expense in the private sector, 
actually open up those areas.
    I can tell you just in the area of land reclamation and 
water treatment in this country we are talking about the 
capacity to save billions of dollars in just opening up that 
technology, taking and use what we have rather than 
reconstructing a commercial-identical force. But even worse 
than that, one that has no standardization.
    So I think what you could do in management is work to make 
sure that we find central information sources, then work with 
the private sector to standardize and see that we are not 
having mismatches and wasting our money and our time that can't 
later on be put together. It would be a tremendous saving just 
to begin with, and I could offer any information I have. I am 
very well connected in the GIS system, the private sector that 
has been doing tremendous work in this country. If we could 
just pull the government into it, it would be a phenomenal 
advancement we could make.
    Final suggestion we would make--I am taking upon myself as 
a member of the minority to make these suggestions to a new 
administration, but something I have been trying to get some 
presence to do for a long time in the Congress, we have a 
unique opportunity right now at the beginning of this century 
to reexamine the structure of the Federal Government. And with 
at least three very vital former Presidents still in existence, 
we potentially could use their insight to help us restructure 
to be a more functional executive branch of government.
    But please don't stop there. Let us have a Hoover 
Commission to handle the Federal bureaucracy and the Federal 
executive branch of government. But then let's get the Congress 
to contemporaneously be working with them so that our structure 
fits your structure.
    If we want to be efficient, rather than taking individuals 
like yourself and having you come up here to 8 or 10 committees 
to talk about the same nonsense, we really only need you one 
time with the proper function of the committees with the 
departments of government. It can't be done in a slow period of 
time. But if we pin the model time to year 2008 when we don't 
know who the new President will be but certainly it will be a 
new President, but we could go about reforming our government 
and reshaping our government in a more efficient, effective 
manner that would save time, save money, speed up processes, 
and also put it functionally more organized, hopefully, to 
serve the people better.
    You know, I think we have that opportunity. I would suggest 
to the new President that this may be something that isn't sexy 
and isn't too politically important in a contemporary sense but 
could be politically contributing in a great sense if we took 
the opportunity at the beginning of this century and feed on 
that possibility of getting this government organized better so 
we know how to have the interaction occur.
    Mr. Burton. Thank you, Mr. Kanjorski.
    Did you have a response?
    Mr. Daniels. Well, I will take the idea back; and it ought 
to be viewed seriously by whatever means. It is a great time 
for the Federal Government to examine, and each of its 
branches, whether it is properly configured. Because we all 
know that, in many ways, it is not. I like the idea of 
testifying electronically, if we could work that out.
    I am glad to post my comments on the Web site, and every 
committee can have them there.
    Mr. Burton. The one thing we have all noticed today, Mr. 
Daniels, is that you are a very, very good listener.
    Mr. Gilman.
    Mr. Gilman. Thank you, Mr. Chairman; and thanks for 
arranging this birthday celebration by trying to reduce 
paperwork in the Federal Government.
    I recall when we first had the first hearing on reducing 
paperwork, it goes back a number of years, the committee issued 
a 400-page report on how do we reduce paperwork. I hope we 
don't do the same in this hearing.
    But I want to commend our Director, Mitch Daniels, for 
attacking a lot of these problems. I see he has touched on the 
farm service area, USDA, international trade data, simplified 
ways of reporting systems, SEC filings. I hope we will take a 
look at court paper filings, and also licensing bureaus 
throughout our country have massive amounts of forms that they 
require to be filled out.
    But I also, in looking ahead at some of the testimony 
coming up from Microsoft, they are talking about some areas 
that I am not familiar with--hypertext markup lag and hypertext 
transport protocols, XML transformers, how applications talk to 
each other. Are you familiar with all of those, Mr. Daniels?
    Mr. Daniels. Oh, intimately, Congressman.
    Mr. Gilman. Certainly I don't know if the committee is, but 
it sounds like we are on the verge of getting into some very 
highly technical areas that could save us a lot of paperwork 
and a lot of money up the road, and we look forward to working 
with you.
    That is the extent of my comments, Mr. Chairman.
    Mr. Burton. Thank you, Mr. Gilman.
    We now go to Mr. Davis, who has been very involved in the 
high-tech area for a long time as well as politics.
    Mr. Tom Davis of Virginia. I am just happy to be here to 
celebrate your birthday as well. We appreciate Mr. Daniels 
being here.
    I am going to be quick, Mitch. We have got a lot of 
questions that I think have already been covered in here, and 
we have a couple of other panels. Let me just say we have 
enjoyed working with your office. We will continue to on a 
number of issues.
    I just want to say how much I appreciate your candor in 
assessing the Federal agencies' GPEA compliance thus far. I 
also want to applaud your decision to support the new associate 
director for IT and e-government and the President's commitment 
to creating a citizen-centric government.
    In a hearing with my subcommittee, a hearing we held in 
April on the role of State and local CIOs, one point was raised 
that relates to the scope of electronic government in the 
context of the Federal Government.
    Now in local government we do kiosks, and citizens can call 
in, but the Federal Government is a little bit different 
because there are more interactions between governmental 
agencies than between the Federal Government and State 
governments. To what extent does OMB's implementation of e-
government priorities account for IT planning and 
infrastructure that will interoperate across all of these 
areas--citizens, business, interagency, governmental--instead 
of just one?
    Mr. Daniels. All very, very important. The interagency 
issue is a big one. As I mentioned earlier, even within 
agencies we have major conductivity and interoperability 
issues.
    Internally, I am pleased to say that--at least I am told--
that substantial progress is due in the near term in linking 
first gov, which is meant to be the central Web site of the 
Federal Government, to thousands of local governments, many of 
whom are far ahead of the Federal Government in this area. I am 
told this is a task that on which some real progress is 
imminent, and we will work to make that so.
    It could be that we can break some logjams or at least open 
much wider accessibility by sort of leveraging the connections 
that citizens already have convenient to them locally or at 
their State level simply by making the appropriate linkages.
    Congressman Kanjorski made a number of important points. 
But I guess one that really sticks with me is that, my view, 
anyway, sophistication in systems equals accessibility and 
simplicity. And just as an amateur at this, as a veteran of 
making some mistakes made in business and elsewhere, I will be 
very, very skeptical of sophisticated systems that only a 
handful of, you know, the anointed can operate. I trust that 
the people who will follow on other panels fully understand 
that and much of the genius that they bring to this subject 
really comes from making, through the most sophisticated tools 
available, systems which any of us, even I, can manipulate 
easily. So----
    Mr. Tom Davis of Virginia. Again, I appreciate the 
proactive role you are taking over there. I look forward to 
working with you.
    Mr. Burton. Thank you, Mr. Daniels. I have known you for so 
long, I just feel I ought to call you Mitch. I knew you when 
you and I were both young. You still are.
    Let me just say, thank you very much for being here. We 
really appreciate it, and we look forward to working with you 
to try to solve some these problems. As I said before, if there 
is anything legislatively that you think we ought to undertake 
to help you, just give us a call.
    Mr. Daniels. Thank you, and thank the whole committee.
    Mr. Burton. Our next panel, we would like to welcome to the 
table Sue Bostrom and Curt Kolcun. Sue is from Cisco Systems 
and Mr. Kolcun is from Microsoft, two of the leaders in this 
industry, and we are anxious to have you give us the solutions 
to all of our problems.
    We normally swear in witnesses, but I don't think today it 
is necessary. So we will just start with Ms. Bostrom and ask if 
you have an opening statement you'd like to make.

    STATEMENTS OF SUE BOSTROM, SENIOR VICE PRESIDENT OF THE 
 INTERNET BUSINESS SOLUTIONS GROUP [IBSG], CISCO SYSTEMS; AND 
      CURT KOLCUN, E-GOVERNMENT DIRECTOR, MICROSOFT CORP.

    Ms. Bostrom. Yes, I do, Mr. Chairman.
    Thank you, Mr. Chairman and members of the committee. I am 
Sue Bostrom. I am the senior vice president of the Internet 
Business Solutions Group at Cisco. First of all, I would like 
to start out and thank you for your support and commitment and 
focus on this important issue of how e-government initiatives 
can be accelerated across the Federal Government.
    I will make a short statement, but the full record of my 
statement is on file with the committee.
    In terms of some background, over the last 6 or 7 years at 
Cisco, we have used the Internet to really transform the way 
that we do business both in terms of employee-facing 
applications, our supply chain, customer-facing applications, 
really across the entire way that we operate as a company; and 
what it has resulted in is a phenomenal bottom-line impact for 
the corporation. Last year alone, we saved approximately $1.4 
billion on a revenue base of $18 billion. In the process, we 
also increased customer satisfaction by over 25 percent.
    Over the last few years, my team at Cisco has met with 
about 75 percent of Fortune 250 leaders, CEOs as well as 
leaders from government organizations, both here in the United 
States as well as across the globe. What has been interesting 
is that, while 3 or 4 years ago it was typically the CIO or the 
network manager, network director that was interested in what 
technology could do, now we are finding that it is business and 
government leaders that are interested in what technology can 
do to transform the way that they operate; and, in fact, over 
the last 6 months we have had over 300 of these folks visit.
    Other private sector companies beyond Cisco are also seeing 
what the transformations of the Internet can do. I think many 
of you are probably aware of Jack Welch's comments at GE is 
about how the Internet is now on his list of one, two, three 
and four top priorities for the company; and he is expecting a 
$1.6 billion bottom-line impact for General Electric alone.
    What we have seen at Cisco is that the way--one of the ways 
to think about the possibilities of the Internet, in addition 
to improving service levels for citizens or constituents or 
customers, there is also the opportunity to have this return on 
investment. We found that there are models that can be used, 
whether you are looking at what it costs to process a travel 
and expense report going from $50 per expense report to $2 or 
whether it is the entire process of how you manage a complete 
process across the organization. There are significant 
opportunities to have direct bottom-line benefits. We have seen 
this both in the private and public sector.
    One of the public sector examples I like to use is what we 
have seen in the State of Colorado where Governor Owens has 
really embraced the Internet as a tool to link agencies across 
the State. They took over 700 licensing and permitting 
operations and combined them to have a single face to the 
citizenry. Now, what has been required, of course, is a 
strategic plan. They also brought in an outside private sector 
CTO for a period of time, and they drove coordination across 20 
different agencies, which is now resulting in about a $15 to 
$25 million bottom-line impact for the State and, of course, 
taxpayer savings.
    I would like to suggest that, based on what we have seen at 
Cisco and some public sector organizations, there are about 
five key success factors that I believe could be very helpful 
in helping the Federal Government accelerate the initiatives 
already under way.
    In order of priority, the first one is very strong, visible 
top-down leadership. What I mean by this is both the Congress 
as well as the administration as well as agency secretaries. 
While I think that in both the private and public sector we 
like to believe that is all the issue or opportunity of the 
CIO, in fact, to transform some of the processes that you were 
referring to earlier it really requires an agency secretary and 
the entire staff there that gets behind the redesign and the 
reorganization opportunities.
    The second major key success factor is around budgeting and 
funding and ensuring that there are mechanisms that can 
facilitate flexible and fast funding of Internet initiatives. 
With the speed with which technology and applications are 
changing, the idea of committing to a plan that could be 3 to 4 
years out is somewhat concerning in that maybe in a few months 
there could be applications that the agency would want to take 
advantage of.
    The third component of this is around accountability, and, 
again, who is held responsible. What we have seen is that 
business or functional leaders are really the folks that need 
to drive the fundamental change within the organization, and 
those are the people that we have seen from our experience are 
the ones that should be held accountable with the IT 
executives.
    Fourth was a point you have been mentioning quite a bit 
around enterprise priorities and architecture. I think that we 
have seen the successful organizations almost have an approach 
of where the CIO or the chief technical officer is almost like 
a benevolent dictator when it comes to setting enterprise 
standards across the organization. You might want to think 
about it like a highway and cars, where you want that chief 
technical officer to be responsible for what the highway looks 
like, how large it will be, what the standards will be, 
allowing each one of the agencies or functional owners to build 
cars so whether it be a Volkswagen or Ferrari it can scale on 
that highway infrastructure.
    The fifth point is something that we refer to at Cisco as 
ruthless execution against these initiatives. It is very 
possible in the Internet age to have 90 to 120 projects and 
determine what is working, what is not working and make very 
aggressive changes. Many of the organizations and customers 
that I talk to may not feel comfortable with the word 
``ruthless,'' and they have tried to suggest terms like 
``relentless,'' but that actually means something quite 
different, as I am sure you all know.
    So the point of saying what are the projects, how can they 
be implemented, what's working, what is not, and putting the 
timeframe, the speed which is possible on the Internet into 
some of these initiatives across the Federal Government would 
be a significant advantage.
    So, in summary, I think that you do all play very 
significant roles in terms of helping to break through some of 
the perceived barriers and bring together some of the silo 
thinking that is natural in terms of this organizational 
structures that currently exist. The opportunities of the 
Internet are significant, whether it be within an agency or 
within this House itself or within your own administrative 
functions of your office. We at Cisco look forward to seeing 
more examples within the Federal Government's base, and we 
stand ready to help in any way that we can. Thank you.
    Mr. Burton. Thank you, Ms. Bostrom.
    [The prepared statement of Ms. Bostrom follows:]

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    Mr. Burton. Mr.--I want to make sure I pronounce that 
correctly--Kolcun.
    Mr. Kolcun. Good morning, Chairman Burton and members of 
the committee. I am Curt Kolcun. I am Microsoft's e-government 
director for Microsoft's government sales organization. In my 
role, I am responsible for implementing Microsoft's e-
government strategy with Federal as well as State and local 
government customers. Thank you for this opportunity to appear 
before you to discuss Microsoft's e-government vision and how 
Internet standard technologies are reshaping business and 
governments around the world.
    E-government is a deceptively simple term to use to 
describe something remarkably broad. Essentially, e-government 
is about doing the business of government better, more 
efficiently and more effectively.
    Microsoft appreciates the responsibility government 
stewards--particularly those who make spending decisions--have 
to taxpayers to spends tax dollars wisely and responsibly. 
Which problems government chooses to address and how government 
addresses those problems are questions for public debate that 
will ultimately be decided by elected officials at all levels 
of government. But there is no question of whether or not 
government ought to do its business efficiently and 
economically, and this is where e-government has so much to 
offer those serving in the public trust.
    A revolution is upon us. Revolutions are a way of life in 
the computer industry. Only 20 years ago the world was in the 
mainframe era. Few people had access to or used computers. The 
PC, the graphical user interface, and the Internet, though, 
transformed the personal computer into a mass-market product.
    Within this information revolution, there is a 
transformation under way for governments as well. The first 
phase of this revolution was initially focused on government 
agencies and organizations creating a Web presence with read-
only content and organizational information. Today, we are in 
phase two, which began when some government sites made simple 
forms available online.
    But we are moving to a final phase of e-government 
transformation and one in which the greatest opportunity lies. 
That is the digital transformation phase. It is in this phase 
that governments will be able to interact with their customers 
by accepting electronic forms, information requests and 
payments from the Web via PCs, wireless handheld devices, via 
telephones and on Web-enabled TVs. In this phase, the digital 
economy will be represented by new constellations of computers, 
devices and services all working together to deliver broader, 
richer solutions to everyday challenges.
    At the heart of the digital transformation phase is a new 
language for the Web, already widely deployed, called 
eXtensible Markup Language [XML]. XML is an open industry 
standard managed by the World Wide Web Consortium. That is, no 
company owns it, controls it or licenses it. Just as the Web 
revolutionized how people talk to applications, XML transforms 
how applications talk to one other.
    But what is more important than the technology itself is 
how government businesses and their customers will benefit from 
it. The industry is creating a new type of software that use 
XML to provide Web-based service that will enable consumers to 
receive and act on information any time, any place and with any 
device.
    To illustrate the power of XML Web services, one can 
consider the multiple interactions with government new 
homeowners might face. They might change their address, 
register their car, register to vote, set up utilities, ensure 
government benefits follow them, announce their presence to the 
new tax jurisdiction and enroll their children in school. These 
services are independently managed by various government 
agencies and public utilities.
    Now imagine if each of these government agents were to use 
XML provider service and instead of having to repeat that same 
information at multiple government agencies on multiple forms 
the new homeowner simply enters her new address once and the 
relevant government agencies and utilities will have access and 
act on that information securely, offering choices where 
appropriate.
    Today, government services are provided through a variety 
of channels including retailers, banks and the post office. The 
government service network that has evolved to reach citizens 
through multiple channels in the physical world is instructive 
on how government should reach citizens in the virtual world. 
Somebody who banks over the Internet should be able to pay 
their bills and taxes through their online financial 
institutions. Somebody who buys their fishing gear from an e-
commerce site should be able to buy their fishing license at 
the same time from that same Web merchant.
    Citizens can interact with government not only through 
government Web sites but on e-commerce sights or public portals 
such as Yahoo, AOL or Microsoft's MSN. It is in the 
government's interest to reach citizens through as many service 
provider channels as possible. Public portals can reach as many 
citizens in 1 day as a government Web site can in a month or 
more.
    As an example, the United Kingdom Cabinet Office recently 
embarked on a groundbreaking new XML government gateway project 
to deliver secure Internet transactions to its citizens and 
businesses. Let's say that a Briton needs to send a Value Added 
Tax form to the government. He would simply use the VAT 
application, fill in the form and hit the send button. The 
information is electronically signed and relayed to the 
government gateway which authenticates it and redirects it to 
the appropriate Customs and Excise system.
    In summary, there are two things we should do to reach the 
full potential e-government has to offer in the United States. 
First is adopt XML as an integration standard for government 
computer systems; and, second, make government services and 
programs that citizens and business rely on available through 
multiple Web-based channels.
    Microsoft's e-government vision is to enable the public 
sector to lead the information society by providing it with 
great software to deliver services that can be accessed any 
time, anywhere and from any device. Working within public-
private partnerships and in consortiums, Microsoft aims to 
ensure that its solutions and those of its partners are able to 
empower citizens, businesses, government employees and elected 
officials.
    Thank you, Mr. Chairman and members of the committee.
    Mr. Burton. Thank you, Mr. Kolcun.
    [The prepared statement of Mr. Kolcun follows:]

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    Mr. Burton. Let me start off by asking you, Ms. Bostrom, 
you said you need a benevolent dictator, or words to that 
effect. So I presume what you are saying is that at the 
executive level in government for the executive branch that you 
have to have is somebody up there that is responsible, who can 
dictate to all the agency heads and department heads this is 
the system that we are going to use, approach we are going to 
use, and you all have to follow it. Otherwise, you are not 
going to have the kind of coordination that you think is 
necessary, is that correct?
    Ms. Bostrom. Yes.
    What I was referring to was there is--as I mentioned, there 
are almost two levels of technology. One is the underpinning 
infrastructure that is required. So that may be the data base, 
it could be the network connectivity, it could be the legacy 
systems. And I think that what Director Daniels was talking 
about earlier is that there needs to be some level of 
standardization that is established so that various systems and 
agencies can talk to one another.
    Even with standardization at that level, there is still 
quite a bit of flexibility and autonomy that can be allowed 
then at the agency level or at the functional level. Because, 
based on the standards, the data can communicate with each 
other. So at that base level of standards it usually does 
require a decision on what those standards will be.
    And the word benevolent was very explicit there because 
typically the way this is approached in the private sector and 
also in some public sector environments is a group of 
individuals gives input as to what might be required, and then 
some final decisions are made. So it is actually quite 
collaborative, but at the end of the day there are decisions 
that are adhered to.
    Mr. Burton. I might just say that I know that Mr. Daniels 
is gone, but whatever recommendations both of you have for a 
basic approach to dealing with this problem of governmentwide 
we will submit to them for their perusal; and, hopefully, they 
will take that to heart.
    You, Mr. Kolcun, were talking about the UK gateway project; 
and that was, I am sure, a major undertaking. The UK government 
is a lot smaller than the government of the United States, but 
I presume that the approach that you took would be a similar 
approach to the U.S. Government. Can you tell us a little bit 
about that, the difficulty that you encountered in dealing with 
their government and how that would translate into dealing with 
ours?
    Mr. Kolcun. Certainly. You are correct, Mr. Chairman, that 
the government in the UK, their system was designed to support 
about 60 million citizens. Their approach in looking at how 
they would interface to the existing legacy of the older 
systems that were there within their various departments was to 
standardize on XML through their government organization 
through what they called an electronic government framework and 
interoperability framework that received input from all the 
agencies and from all the CIOs to define the XML interfaces to 
the existing systems that they had.
    Their approach was, rather than rearchitecting or replacing 
the existing investment that they had in technology, they would 
use the secure gateway that communicated via XML with citizens 
through public portals as well as through business and 
applications. So this gateway, run through the office of the e-
envoy, manages these transactions; and they approached it from 
the standpoint of being able to facilitate interaction between 
the existing systems that were there and securely exchanging 
data through this gateway using the XML technology that I 
mentioned in my testimony.
    Mr. Burton. So I gather from what you just said that our 
government might be able to utilize a lot of the technology 
that they already have by this gateway approach that you are 
talking about where you could take the new technologies and 
link them in, is that correct?
    Mr. Kolcun. That is correct. The XML technology will allow 
for the access to those legacy systems. Really, the effort is 
opening up that back-office data and make it available to the 
front office. So through efforts and through discussions that 
we have started with the XML Working Group of the Federal CIO 
Council, this has been a proposal that we have provided for 
government to move forward and to open up communications 
between the existing systems that we have today without 
replacing them.
    Mr. Burton. Well, that is new information for me, because I 
thought we would probably have to replace a great deal of what 
we already had.
    They had a target date of 2005 over there, and I guess that 
is achievable goal. We have a target date of 2003, and we are 
not anywhere near there. Do either one of you have suggestions 
on how we can meet that goal? Is that a realistic goal?
    Why don't you start, Ms. Bostrom.
    Ms. Bostrom. Well, I think that, based on our experience, I 
would always suggest an aggressive goal is always a good goal.
    I believe that one of the factors that I think there was 
quite a bit of discussion on a little bit earlier was what do 
you target first and what really makes sense to put on the Web, 
etc. So what I think would be most effective would be to very 
clearly establish the top priorities.
    So if you said that by 2003 these either key transactions 
or key interfaces, whether they be government agency to 
employee or to citizen, our top priority is where we are going 
to get the greatest impact in the shortest period of time and 
let's strive very aggressively for that by 2003. I think that 
would be a very achievable goal and would demonstrate success 
that could then be rolled out more aggressively across other 
groups that were not impacted as dramatically in the near term.
    Mr. Kolcun. I would say, as to Ms. Bostrom's statement, 
that we see the same thing in the UK government in the effort 
in the work done to look at quick wins and to analyze the 
systems we have today that will have the most impact on the 
citizen as far as their interactions with government. I think 
that by selecting pilots and working with progressive States, 
Colorado, the State of Washington, the State of Pennsylvania, 
who have some systems in place already, I think that we can 
quickly do this.
    I would point out that the e-government gateway was 
developed in 15 weeks of time with about 50 developers. So the 
technology has evolved to allow us to do these things quickly; 
and that allows us to get these quick wins, demonstrate success 
and move forward in a structured fashion.
    Mr. Burton. Fifteen weeks.
    Mr. Kanjorski.
    Mr. Kanjorski. Before we get to that on the Federal 
Government, let me say some distinction I see between the UK 
and the United States is different layers of government. We 
have 50 States in between that they don't have.
    Second, I don't know if they have resolved the security 
problem. But we are still wrestling over that as to what level 
of security we are going to go to; and I think our intelligence 
agencies, both the CIA and the FBI, want to constrain to what 
level we go to so that they can utilize this information and 
intercept it.
    So doesn't that bring us to a forceful philosophical 
argument that the country has to undergo as to what information 
should be made available to intelligence agencies and what type 
of protection can we put in place or shall we put in place? And 
isn't that a decision under our system that constitutionally 
has to be made by the Congress?
    Mr. Kolcun. Sir, I would address that.
    I agree that security and privacy are key points to e-
government as well as government in general, and they continue 
to be. In the UK, they decided on an implementation of a public 
key infrastructure with digital certificates. And I think the 
determination for government to look at is determining what 
level of security need be applied for the type of information 
interaction that the citizen or consumers are doing with the 
system itself.
    Mr. Kanjorski. As I understand, we have not agreed to go to 
the amount of security that Europe has accepted as a standard. 
The United States wants, our agencies want a much lower 
standard so that they can exercise their inherent right as they 
define it to intercept communications between citizens and 
citizens and the government. Is that not correct?
    Mr. Kolcun. I am not familiar with that, sir.
    Mr. Kanjorski. I don't want to appear to be against it. If 
I were young again, I would hope to be engaged in your type of 
activity. It offers tremendous efficiencies and growth of 
wealth and protection of people's rights if we do it right.
    But I am trying to point out some of the frustrations on 
this side and in the Congress we get, one being that I had just 
recently gone through a hearing with securities commissions to 
the 50 States. And for stock fraud, for instance, in this 
country we still don't have a single repository of information 
on individuals that commit intrastate fraud. There are some 
frauds committed, and the same individual goes to each 
individual State, and some have practiced in 13 and 15 States. 
And any State in the Union can't find out that they have been 
prosecuted and have provided that.
    Now that necessitates standardization and clearinghouse 
operations that aren't very sophisticated really, but the fact 
that we don't have them raises the question why. And I really 
think it is an argument--two things, one, privacy and, two, 
that jealousy of States' rights as opposed to national 
standards and national rights. It seems to me the Congress and 
the people have to engage in that debate and get over it rather 
quickly.
    Whereas in the UK they have had the debate. They have 
decided they trust their government. They decide their 
government will impart a standard that is sufficient to protect 
people's privacy, and they have moved on. Here, every day that 
issue comes up in committee hearings or on the floor; and we 
really haven't developed a philosophical standard consistent in 
the country to allow you all to move ahead and put in a system.
    But I am worried about doing partial things that can't 
complete the action. And in testimony you said to try and 
define something that is reachable. I can see some areas that 
we could do that with, probably cause some efficiencies in 
government but wouldn't necessarily allow us to have the 
opportunity to have a superstructure in place to really move 
ahead with what we are all hoping will be a tremendous e-
government facility in the United States of a highly 
sophisticated nature.
    I am just wondering whether or not is it up to your 
companies and your industry and your professions to come 
forward and start shaming the Congress and the American people 
into addressing some of these political and philosophical 
issues that no longer can be put under the rug and ignored but 
must be faced, decided upon, and then moving out from there. 
Other than that, aren't we sort of just skating around hoping 
to do little things but not in context and not comprehensively?
    Ms. Bostrom. Well, Mr. Kanjorski, I believe that there is 
quite a bit of truth in the statement that you make. I believe 
that the challenge that the Federal Government faces or the 
public sector faces here in the United States is very similar 
to similar challenges that are faced in the private sector, one 
being that there is almost simultaneous initiatives that must 
go on, one area being the rearchitecture of the things that you 
are describing, the data bases, and combining information. And 
many of those are philosophical, longer term decisions that 
must be made.
    At the same time, though, there is the opportunity to 
perform initiatives and take on initiatives that will begin to 
offer quick wins. What I found in the private sector is that 
oftentimes those quick wins can accelerate change in that core 
rearchitecture. Because, as you see what is possible, whether 
it be private sector organizations like Cisco or Microsoft or 
whether it be the citizens, they begin to see what is possible 
and begin to help accelerate the architectural or structural, 
philosophical decisions that need to occur.
    So my thinking would be that there needs to be simultaneous 
action at both levels, and I think for any one situation what 
ultimately drives the kind of transformation I think you and I 
are hoping for I think time will tell.
    Mr. Kanjorski. Yes. And I just make the comment that the 
difference between the private sector and government is that 
the private sector is politically an authoritarian 
dictatorship. That is why it gets done. The CEO says it shall 
be done, and the implementation gets it done.
    Unfortunately--or fortunately--government is a democratic 
process--that could be a bad quotation--and it makes it much 
more difficult.
    But what you are suggesting, as I understand it, is for us 
to identify something that can be rather quickly resolved and 
handled with your new technology that will create the dawn to 
create the political sympathy both in the citizenry and in the 
Congress to think about maybe appointing an e-government czar 
to help us, but under constraints, but building on one win or 
several wins and successes that will trust the authority to go 
there until proven otherwise to start implementing the entire 
system. Is that what you--taking care of the different 
structures of the private sector?
    Ms. Bostrom. I think there needs to be a mechanism, 
whatever it is, that helps to establish these standards. In 
addition, there needs to be accountability, whether it be at 
the agency level or otherwise, where the agency heads or 
functional heads are being held responsible for helping to 
drive these initiatives. So not a central point of control from 
that perspective. But I think that could certainly be helpful 
in leveraging a lot of the good work that has already been done 
within agencies and accelerating more work to occur.
    Mr. Burton. We have to go to Mr. Davis. He has a luncheon. 
Mr. Davis.
    Mr. Tom Davis of Virginia. Thank you.
    Let me ask both of you, from the work of the full committee 
staff and my staff have done in examining the progress of the 
Federal Government with respect to implementing the GPA and 
thinking outside the traditional stovepipe information manage 
the structure, the progress of agencies in implementing the GPA 
as the first phase of an e-government we think is uneven at 
best. Would you give me a private sector perspective on what 
would be the preliminary steps that any organization, including 
the Federal Government, would take to achieve the cost 
efficiencies and improve services that have been realized in 
the business world?
    Start, Mr. Kolcun, with you.
    Mr. Kolcun. OK. I think that some of the things that we 
have talked about, Congressman, already are the support and--
the management support for looking at the process. It is one 
thing to be able to place a form online, but that form 
represents a process, and you have to make sure that when we 
look at this form and put these forms online that we are also 
analyzing the process. What is the process? Is it a necessary 
process?
    I know at Microsoft when we moved--we use the term ``eat 
our own dog food'' when we use our own technology to change. 
When we moved our systems online, the chief executive of our 
company was intimately involved in looking at the process and 
questioning the process to find out if it was involved and then 
applying technology accordingly.
    I think that at the Federal level we need to really elevate 
the CIOs to be able to do that and look to that organization to 
be able to help and be tied to the strong management 
organization to be able to move these initiatives forward.
    Mr. Tom Davis of Virginia. OK.
    Ms. Bostrom. Congressman Davis, I think the approach that I 
might suggest in an agency that isn't moving quite as quickly 
as one might like, I would say first is establishing what the 
top priorities are. By that I mean, in a quite simple way, we 
talk to the citizens that the agency serves. I would talk to 
the employees, and I would find out what are the two or three 
key things that really make it difficult to do business with 
that agency or to be an employee within that agency. And then I 
would prioritize those initiatives based on the ability for the 
Internet or Internet capabilities to make the difference there 
as well as how easy they are to implement. So, in other words, 
how many philosophical debates need to occur before progress 
can be made?
    Second, I would hold the accountability with the functional 
executives inside of that agency and create an IT functional 
partnership so that the people that are required to change the 
process have skin in the game to help make it happen and 
understand what the returns can be for their organization.
    And, finally, we put a terrific amount of emphasis on near-
term tracking and results and really looking over, whether it 
is 90 days, 120 days or 6 months or 9 months, what progress is 
being made so that corrective action could occur very quickly.
    Mr. Tom Davis of Virginia. Thank you. That is all I have.
    Mrs. Morella [presiding]. Thank you, Mr. Davis.
    I am sorry that I wasn't here to hear your testimony, but, 
of course, I have your written testimony. It is difficult when 
you have three different committees meeting at the same time.
    Spencer Abraham was speaking to us on the energy policy, 
which actually ties in, because there is this demonstration 
program called, let's see, Don't Pollute, E-commute, which is 
being done with businesses where they can store up the energy 
that they have preserved and sell it and keep it in the bank. I 
just think the idea is great, and the District of Columbia 
region is part of that.
    But I would like to ask you both maybe the same question. 
In order to receive most government services, citizens must 
first provide some personal information. The idea of the 
government agency sharing all of this information over the 
Internet with other government Web sites sounds like it might 
present security problems. So I just wonder how you would 
respond to that. When the citizen wants to work with government 
online, how do you protect their information and what control 
will they have to limit the way their information is handled? 
That security and privacy is one of the biggest issues. I know 
that Mr. Davis shares that, since we have worked on this in the 
past.
    Maybe, Mr. Kolcun, you want to respond first.
    Mr. Kolcun. Thank you, Congresswoman.
    Yes, I would point out that, as we discussed, security and 
privacy are key aspects of e-government. Some of the same laws 
for security in the sharing of information between agencies 
exists today, and those same laws would still apply in the 
Internet world.
    I know that has been a lot of discussion around privacy and 
initiatives such as the Platform for Privacy Preferences, P3P, 
which actually allows the citizen to determine what type of 
information they would like to provide in the commercial world. 
So as a user I can determine and set preferences on my computer 
to say that I want this Web site to get this type of 
information or I don't. And if I access the site that tries to 
get that information, I will get the warning to say that it is 
trying to get that information, and it won't allow that to 
happen.
    From the government perspective, the issue of privacy also 
needs to be included in privacy statements that we have today 
on our government Web sites. And the point I will make, as far 
as government being able to monitor the sharing of information, 
is that, from the technology perspective, we will be able to 
apply audit controls to that information in ways that we have 
not been able to in the paper world.
    So I would say that the existing laws and regulations we 
have will be able to be applied more efficiently and more 
effectively with Internet technology.
    Mrs. Morella. That is if we implement the current laws that 
we do have, and I think that has been one of our difficulties 
with the Federal agencies.
    Ms. Bostrom.
    Ms. Bostrom. Congresswoman Morella, on the security issue, 
I believe that, like you, I have concerns about the feelings of 
citizens in terms of providing information online. There is 
certainly the technology that can ensure that citizens will 
feel that the information they have provided is secure and that 
will only go to certain Web sites. But at the end of the day 
what I think is required is education around what is available, 
what is possible.
    Referring back to the point that you made, Mr. Kanjorski, 
that you made earlier about the comfort level that the average 
person has with technology, I think it will require some 
education so that individuals will know that when they provide 
information exactly where does it go. I must also say, though, 
in the paper world oftentimes you provide information and you 
have no idea where it goes. So I think that same form of 
education will be required so that people understand that the 
technology is in fact providing them with greater privacy and 
security than in some cases they may have had in the paper 
world.
    Mrs. Morella. Thank you.
    I will now defer to Mr. Kanjorski for another round of 
questioning, if he has any.
    Mr. Kanjorski. Let me ask a question. Something did disturb 
me. Most recently, within the last 2 years I think, one of our 
national core manufacturers inserted a chip in an automobile 
that kept track of where the automobile was and the processes 
it was going under, supposedly for better engineering purposes, 
to have a sample test, but unbeknownst to the buyers. I am sure 
it shook up some people that found out that their activities 
could being traced that thoroughly with just the addition of a 
very cheap chip and that in fact it was monitored and therefore 
their information or their privacy was in some way invaded 
unbeknownst to them.
    I think there are enough stories out of that happening even 
in the private sector, that adding on the natural suspicion of 
government and the black helicopter conspiracy that some people 
have of government that I agree with you that if you could 
undertake that as a corporate contribution to the U.S. 
Government to really educate the American people that would 
probably be the greatest contribution you could make.
    There are a high number of people in this country that are 
fundamentally somewhat ignorant of new technology and the use 
of it and even the potential use of it but in that ignorance 
can only imagine or apply their wildest imagination. Therefore, 
in protection of what they consider a very important right, and 
I do, too, their privacy, they'd rather have it all.
    They are a large segment of our population we have to deal 
with and have an obligation to be fair with in implementing and 
passing laws. So, if I had my way, I think the great 
contribution to the government has been made by C-SPAN. If 
people can at least see what we do, make some judgments of how 
ridiculous we are sometimes, and maybe if we had a C-SPAN of 
high technology, it wouldn't be bad. I mean, it would start 
raising the level, if you will, of some people to understand, 
some people I am talking about are old codgers like me that 
have been born and been in the generation long enough to know 
and think that most of this is awfully new stuff. I guess it is 
when you think about it. It can be frightening to those who 
resist change or are traditionalists.
    I guess I am interested in how fast we could get there, 
what we could do to create that ease, that political comfort 
level and then to have an understanding of whether there are 
functional or fundamental changes in government and 
organization that have to be made. I think we need a national 
repository of information, as opposed to having it--I sort of 
analogize it to the Yucca Mountain. Would you rather have all 
the nuclear waste in the Yucca Mountain or do you want it at 
110 nuclear plant sites around the country? It is tough to make 
the decision, but the decision has to be made. I tend to come 
down to I would rather have a single place that I have to 
protect, rather than having to protect 120 or a number of 
sites.
    This information is just too scattered, too unstandardized, 
requires too much programming to interface with the material.
    I am working on a program in the Commonwealth of 
Pennsylvania now, on applications for welfare programs that are 
interactive, and I am not too impressed with the idea that they 
want to take a 19-year-old program and try to update it because 
it has a great deal of material in it. But in the updating of 
it, it creates ever so many more likelihoods for error and 
mistakes to be in the system.
    I think we have to. But what does impress me is that it is 
interactive so that, when you work, you can ask a question and 
you don't have to necessarily read the answer; it orally can 
come to you. And to the people on welfare, that is a much 
larger percentage of the population that are functionally 
illiterate than the general population. So at least we are 
taking into the consideration that they may not have the 
capacity to type or even spell or punctuate correctly and can 
still extract the information.
    I would hope that is where government sensitivity is, 
knowing that we have this generational and educational span 
that we have to get over and to make it--we could do the e-
world of the future. But then those of us that are old duffers 
wouldn't be part of the world, and we would like to be part of 
that world.
    So anything that your companies--and I have respect, 
tremendous respect, for both of them; if you can interact with 
the government some special way, make sure that we constantly 
change and grow and adapt to the flexibility of that tremendous 
technological change.
    One of our problems in government very often is that we set 
upon this course you talk about, 5 years; by the time we 
implement it, it is obsolete. It is useless and stupid and 
expensive, and other breakthroughs have occurred in the 
meantime; but we were too inflexible either because of our 
bidding process and our contracting process or implementation 
process to understand that.
    We are dealing with a new world, almost instantaneous 
change and breakthroughs and new things happening, and yet we 
are operating on a very slow horse and buggy, and we are having 
difficulty getting into the speed age. So you can help us more 
than we can help you.
    Thank you.
    Mr. Burton [presiding]. Well, thank you, Mr. Kanjorski.
    Let me just thank both of you very much. As you can tell 
from our questions probably, we are neophytes in this area, and 
you folks are the experts. If you have suggestions--and I made 
the same comment to the head of OMB, Mr. Daniels, if you have 
suggestions that you think we ought to take a look at and try 
to come up with some kind of a plan to deal with this problem, 
we would sure like to have it. We will make sure that Mr. Mitch 
Daniels at OMB, as well as the leaders here in the Congress, 
can have it so we can get into the 21st century, as we should.
    We really, really appreciate--and, once again, Kevin, 
thanks for all your help on this. He worked very hard on this. 
Thanks a lot.
    Our next panel is Joel Willemssen from GAO; John Osterholz 
from DOD; Norma St. Claire from DOD; and Jim Flyzik--is that 
correct--Jim Flyzik from Treasury. Would you please--I am 
sorry; I guess we have others here we haven't included.
    OK, 1 second.
    Forgive me. Joel Willemssen, Jim Flyzik, John Mitchell, 
John Osterholz, and Norma St. Claire.
    Since we are going to be asking you to give testimony on 
what you are doing, I think I will have you sworn, so we have 
it for the record. Will you all please stand and raise your 
right hands? Is somebody back there pointing a finger? Do you 
want to be sworn as well.
    Mr. Mitchell. The chief and commissioned officer has asked 
to.
    Mr. Burton. Oh, sure.
    [Witnesses sworn.]
    Mr. Burton. We'll start with you, Mr. Willemssen. You have 
an opening statement.

 STATEMENTS OF JOEL WILLEMSSEN, MANAGING DIRECTOR, INFORMATION 
   TECHNOLOGY ISSUES, GENERAL ACCOUNTING OFFICE; JIM FLYZIK, 
ACTING ASSISTANT SECRETARY FOR MANAGEMENT AND CHIEF INFORMATION 
OFFICER, U.S. DEPARTMENT OF THE TREASURY; JOHN MITCHELL, DEPUTY 
DIRECTOR, U.S. MINT; JOHN L. OSTERHOLZ, PRINCIPAL DEPUTY CHIEF 
 INFORMATION OFFICER, U.S. DEPARTMENT OF DEFENSE; AND NORMA J. 
ST. CLAIRE, DIRECTOR, INFORMATION MANAGEMENT FOR PERSONNEL AND 
         READINESS, OFFICE OF THE SECRETARY OF DEFENSE

    Mr. Willemssen. Thank you, Mr. Chairman. I'll briefly 
summarize our statement.
    As requested, we looked at the GPEA plans for three 
departments and agencies--Treasury, EPA, and Defense. We found 
that the plans submitted by Treasury and EPA generally provided 
the kind of information specified by OMB.
    For example, in its plan, Treasury pointed out the 
criticality of its electronic activities in fundamentally 
redefining how it performs its missions. Excluding IRS, 
Treasury identified more than 300 information collection 
processes that could be done electronically rather than by 
paper.
    In its submission, EPA highlighted that it was undertaking 
several activities to provide electronic services, including 
developing an overall computer network as a central focal point 
for electronic reporting and also improving computer security 
weaknesses, which we previously reported on.
    Regarding Defense, its plan did not include a description 
of the Department's overall strategy. DOD officials could not 
provide us with documentation specifically addressing a 
Department-wide implementation strategy. In addition, in taking 
a look at DOD's submission, we found indications of inaccurate, 
incomplete, or duplicative data. In those cases, Department 
officials agreed to followup to correct potential 
discrepancies.
    Speaking more globally, from a governmentwide perspective, 
we see several challenges that Federal departments and agencies 
are facing in meeting the goal of providing services 
electronically.
    First, security and privacy assurances must be provided 
through the use of public key infrastructure technology, 
especially for sensitive transactions. That will be needed very 
critically as Federal agencies move forward in this area.
    Second, it's going to be important to adequately plan and 
implement computer network and telecommunications 
infrastructures to provide the capacity and connectivity needed 
to support increased electronic traffic.
    Third, agencies will need adequate capabilities for 
storing, retrieving, and disposing of electronic records.
    Fourth, agencies are going to have to implement disciplined 
investment management strategies to ensure that the full cost 
of providing electronic filing and record keeping are examined 
within the context of the benefits of doing so.
    And, fifth, agencies need to make sure that they have 
addressed their IT human capital needs so that these systems 
can not only operate effectively, but they can provide 
oversight of contractors developing the systems for them.
    OMB is also going to be challenged in its role of ensuring 
that agencies comply with the law. The plans that we looked at, 
that were submitted by the agencies, really don't provide 
sufficient information with which to assess the strategic 
activities and other tasks expected to be performed and 
schedules and milestones for completing those tasks.
    Accordingly, from here on out, OMB may want to consider 
proposing more comprehensive agency status reporting so that 
they, OMB, will have a sense, especially from a priority 
perspective, on where those agencies stand and that they are 
pursuing the most cost-beneficial opportunities for moving from 
paper to electronic submissions.
    That concludes the summary of my statement. I will be 
pleased to address any questions you may have.
    Mr. Burton. Thank you sir.
    [The prepared statement of Mr. Willemssen follows:]

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    Mr. Burton. Mr. Flyzik.
    Mr. Flyzik. Mr. Chairman. First of all, happy birthday.
    Mr. Chairman, members of the committee, my complete record 
will be submitted. I will summarize briefly here.
    I do appreciate the opportunity to appear today to discuss 
the e-government initiatives within Treasury and our efforts to 
comply with GPEA, and also how GPEA fits in our overall 
information technology strategic plan.
    I want to thank you, Mr. Chairman, and the other members 
for your continued support and encouragement toward improving 
information technology management and reform in the government.
    As many of you know, I serve as the Acting Assistant 
Secretary for Management and the Chief Information Officer at 
the Treasury Department. I have also served, since February 
1998, as the vice chair of the Federal CIO Council where I play 
a key role in the strategic direction of the Council and the 
Federal Government's use of information technology.
    At Treasury, we are making great strides in harnessing the 
power of the Internet to improve customer service, mission 
effectiveness, and all of our operating efficiencies.
    CIO Council's strategic plan places e-government at the 
forefront. The Department is aggressively and proactively 
developing plans and launching new initiatives. We intend to be 
a leader in the Federal Government in electronic government. We 
are supporting the use of Public Key Infrastructures, Virtual 
Private Networks, SmartCard and Portal technology to put in 
place the platform to do everything we do electronically.
    As an example, we are now delivering new value to citizens, 
businesses and government partners through the Financial 
Management Services' pay.gov initiative. It is an Internet 
portal and transaction engine that will offer a package of 
electronic financial services to assist all agencies.
    Services of pay.gov will allow for collections, form 
submittals, bill presentment, authentication and agency 
reporting, all electronically. Pay.gov will help all government 
agencies to accept forms electronically by October 2003.
    We have an information technology investment portfolio 
system which is a government-owned, off-the-shelf tool. 
Treasury hosts this system for use throughout the entire 
government. It is a Web-based e-government solution that 
supports selection control and evaluation of all information 
technology projects. Treasury requires all of its bureaus to 
use this, and we were the first agency this year to submit all 
of our consolidated budget information electronically to OMB.
    We are also the governmentwide project manager for this 
tool. Over 20 agencies are now reporting the use of I-TIPS. It 
will support GPEA by replacing all the annual paper-based IT 
Planning Call submissions to OMB.
    We also hosted the Federal Bridge Certification Authority 
Project for the Federal Government, which we now have operating 
at GSA. The bridge allows agency public key infrastructures to 
interoperate as it permits digital credentials, issued by each 
agency to its employees, to be accepted with trust and 
confidence by other agencies. I suggest you think of the power 
of that as we begin to proliferate that across government.
    Agencies will be able to perform Internet-enabled 
transactions, such as credit card collections through banks, or 
secure e-mail between agencies with previously unattainable 
trust and confidence.
    PKIs of five different organizations within the United 
States, the Canadian Government and academia were cross-
certified through the prototype. The agencies were able to 
interoperate successfully, exchanging digitally signed 
electronic mail messages. It will be used by NASA, the USDA's 
National Financial Center, FDIC, Treasury, the State of 
Illinois, and Canadian Government for moving documents 
electronically.
    Our Bureau of Public Debt, partnered with the Financial 
Management Service, Mellon Bank, MasterCard and IBM to build an 
Internet-based system to sell savings bonds directly to the 
public. Savings Bond Direct allows citizens to buy a savings 
bond on a 24 x 7 basis using a credit card. The Bureau of 
Public Debt sells directly to the public instead of traditional 
networks. The system cost $350,000 to develop and implement, 
and within its first 18 months of operation, it generated over 
$230 million in bond sales.
    The Bureau of Public Debt's Treasury Direct Electronic 
Services allows individuals to directly manage their 
investments in U.S. Treasury marketable securities, using 
either the Internet or telephone. It promotes self-sufficiency 
among 700,000 customers and facilitates debt collection and 
consolidates from 37 Federal Reserve Banks to 3. By using this 
system, public debt reduced the processing cost of a tender to 
50 cents, as opposed to $30, to process a paper transaction 
form.
    U.S. Mint also has the on-line store recognized as one of 
the top 20 e-tailers of the Nation. I'll defer to my good 
friend and colleague, Mr. Mitchell, to talk a little bit more 
about the Mint.
    We also operate the Electronic Federal Tax Payment System, 
which is the largest payment collection system in the world. 
The primary objectives of that are to reduce the filing burden 
by providing flexible payment choices to taxpayers, increasing 
speed, efficiency and accuracy of all revenue collections.
    IRS, of course, has its e-file program, which continues to 
break records. Our U.S. Customs Service continues to use 
electronic means to get goods and products into the country, 
and the international trade data system, which Director 
Mitchell spoke about, as a way to facilitate that.
    Our Alcohol, Tobacco and Firearms now has an electronic 
program which will permit 630 members of their industry to file 
all forms electronically securely over the Internet. They will 
use the same technology to solicit, award, administer and pay 
commercial vendors conducting business with ATF.
    Our electronic funds payment program continues to grow on 
an annual basis, and our strategic plan supports all the goals 
of GPEA.
    In summary, I would like to reiterate that the Department 
drive to be at the forefront of electronic government extends 
well beyond just GPEA requirements compliance. We are seeking 
to fundamentally redefine the ways we perform all of our 
fundamental mission objectives.
    I would like to thank the subcommittee for the support it 
has given to e-government. Without your support, we would not 
be able to achieve the national success we enjoy to date. I 
would like to thank the members of the committee for the 
opportunity to be here this afternoon.
    This concludes my formal remarks. I look forward to 
questions.
    Mr. Burton. Thank you, Mr. Flyzik.
    [The prepared statement of Mr. Flyzik follows:]

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    Mr. Burton. It sounds like you're doing a good job over 
there.
    Mr. Mitchell.
    Incidentally, to the Members, we have 10 minutes on the 
clock on a vote. I will conduct the hearing here until we have 
about 5 minutes. And if you want to leave, you can leave, or 
you can come back later.
    Mr. Mitchell.
    Mr. Mitchell. Thank you for this opportunity, Mr. Chairman, 
and members of the committee. With your permission, I would 
like to submit my formal testimony and the Web site customer 
analysis that we provided to the committee for the record----
    Mr. Burton. Without objection.
    Mr. Mitchell [continuing]. And briefly run through a 
PowerPoint presentation which you see on the screens before 
you.
    On the second page, you can see that back in 1993 the Mint 
had many challenges, including a disclaimer on its financial 
statements, very few measures, and no strategic plan.
    On the third page, you can see what we affectionately refer 
to as our ``spaghetti chart.'' This was a legacy of no--never 
having automated--excuse me, implemented an automated system 
across the Mint and having a hodgepodge of nonintegrated 
systems with a lot of manual processes. In short, it was not 
helping us drive the strategic objectives and visions of the 
Mint.
    On page 4, you can see that instead of--a decision was made 
in 1996 and 1997 that instead of spending approximately $20 
million to do a Y2K solution and not gain any additional 
functionality, and stay with systems that were not delivering 
for the Mint, we decided instead to start from scratch, do a 
requirements analysis, and go out and select systems off the 
shelf with no customization that would meet our requirements. 
And we chose PeopleSoft as our core solution, along with other 
systems.
    That system was implemented in 12 months in October 1998. 
And as you can see on slide 5, in December 2000, we completely 
upgraded that system and added additional functionality to it, 
our system called COINS 2.0.
    On slide 6, you can see that we have two upgrades under 
way, one of which we will be implementing this August that will 
add substantial functionality to our e-retail site. This will 
be our third upgrade of the site since we implemented it. And 
later in fiscal year 2002, we will be adding personnel 
functionality and outsourcing our payroll processing.
    Page 7, you can see that as a result of these systems, we 
have eliminated all of our Federal Manager Financial Integrity 
Act and FFMIA material weaknesses. We have no material 
weaknesses at the U.S. Mint. We close our books every month in 
10 days or less. We have greatly improved our customer service, 
and our ERP implementation provided the foundation for our e-
retail launch.
    On page 8, you can see the statistics that are fun 
statistics about the growth of our Web site in the year 2000. 
As Jim Flyzik mentioned, we actually had orders in the 
neighborhood of about $156 million that put us in the top 20 to 
30 e-tailers in the Nation.
    Where are we now? On page 9, you can see that we have 
generated record revenues and profits for the U.S. Government 
and the American people. Last year, we generated $2.6 billion 
in bottom-line profits, which was roughly four times our 
previous record set just a few years ago. I stress, that's 
bottom-line profit that goes to the Treasury general fund, 
reduces the amount of debt issue, and saves hundreds of 
millions of dollars.
    The employees of the U.S. Mint are proud that in addition 
to our customer-centric focus, we're contributing in some small 
way to the American public. Seven consecutive clean audit 
opinions and other attributes you see there.
    On page 10, you can see a brief summary of the most recent 
macro and micro-level surveys that we conduct. We have 
conducted both of these for the last 5 and 6 years.
    On page 11, you can see a summary of the University of 
Michigan's prestigious customer satisfaction index. Heinz 
absolutely blew the rest of us away with a 90 score on the 
scale of 100. You can see that the U.S. Mint received a score 
of 84, which equates us with amazon.com, BMW, and others. 
``World class'' is determined by a University of Michigan to be 
score of 80, and the private sector median is a score of 71.
    You can see our scores on page 12 that we have participated 
and received since 1995.
    On page 13, I want to give you an example of how we have 
improved, yet how much further we have to go. You can see our 
results for the year 2000 were anywhere from OK to poor. You 
can see that so far this year, we have increased tremendously, 
including answering our calls within 17.5 seconds.
    By the way, a lot of what we do, we benchmark against the 
public and private sector and aspire to be the best in all of 
our functional areas. However, you can also see some poor 
results toward the bottom of the page.
    In the Web survey that was conducted on our behalf, we had 
over 25,000 respondents that let us know what was well and what 
was not well in terms of what they needed from us on our Web 
site. You can see the good news is, nearly 80 percent rated us 
as excellent or very good. You can see those numbers on the 
next page that follow out from the January through the May 
surveys.
    At the same time, you can see from page 16 that there are a 
number of things they both told us in terms of feedback as well 
as what they would like to change that included the fact that 
even though we've won many awards for our Web site, there are 
still components of it that are not best practices.
    With our August launch, we will now be able to have 
customer service self-servicing on our Web. They will be able 
to communicate via e-mail with us through our e-retail site and 
other components.
    In closing, several slides I would like to give to you. 
Page 17, you're no doubt familiar with. Your leadership role, 
as well as the Council For Excellence in Government, noting 
that 73 percent of all adults consider e-government to be a 
high priority. And also the Mint's commitment not only to 
compliance, but a proactive approach to GPRA and GPEA.
    Let me just say that in terms of our customer-centric 
focus, recruitment and retention is a challenge for us, 
especially as high, as private-sector-oriented as we are. But 
our ultimate success will be measured by the fact that 
everyone--our employees, the American public, customers, our 
business partners--we want them to get everything they need 
from the U.S. Mint products and services electronically.
    Mr. Burton. Thank you very much, Mr. Mitchell.
    [The prepared statement of Mr. Mitchell follows:]

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    Mr. Burton. We have to go vote. We will be back in about 
10, 12 minutes. And then we will get to the DOD folks.
    Thank you very much. We stand in recess.
    [Recess.]
    Mr. Burton. The committee will once again come to order. We 
will now hear from Mr. Osterholz.
    Mr. Osterholz. Thank you, Mr. Chairman. First of all, I 
join everybody in wishing you a happy birthday. My son had a 
birthday a few days ago. I'll report to him that he is in very 
good company.
    I would like to give some brief opening comments to 
supplement the written statement, which you indicated is placed 
in the record, and give you a better, a more broad picture, a 
more comprehensive picture of what we're doing with respect to 
GPEA.
    To provide a functional view--and this is very critical, 
because as the folks from industry pointed out, getting a 
functional buy into anything that utilizes information 
technology is so vital today--I have Norma St. Claire, who is 
the information technology senior executive in our Personnel 
and Readiness community. So she is here to provide you with a 
functional perspective as we walk through this.
    The GPEA report, in response to the data call, represented 
only a portion of what we are doing with GPEA and related 
activities. And I acknowledge, while I didn't have cognizance 
of this area at the time of the report, I have got to 
acknowledge the shortcomings of that report. I went over it 
yesterday, and in fact it is not the best product we could have 
submitted.
    At the enterprise level, which really is the level that we 
are operating at, what we are responsible for as the Chief 
Information Officer of the Department of Defense is those 
cross-functional issues that come as a result of the process 
reengineering and the integration of the process reengineering 
that occurs within the business functions of the Department.
    As a result of that, a lot of our emphasis is in the areas 
of architecture, enterprise, capital planning, and in the area 
of assurance, because the way we achieve security and assurance 
for our transactions needs to be uniform in order not to open 
up vulnerabilities as a consequence of different procedures 
leaving seams that, in fact, could erode confidence with our 
partners on our systems.
    The execution of GPEA is a decentralized affair, and it's 
tied to those directly responsible for the processes in the 
Department, the business processes in the Department. And that 
is consistent with the testimony that you heard in the prior 
panel.
    Our functional process owners are responsible for process 
transformation. However, doing that, we must ensure the ability 
to electronically protect both citizen and employee privacy, 
the intellectual property rights of our partners--very 
important--and sensitive DOD information, particularly that 
information that might be revealing of plans to be executed.
    The Department is on a path to achieve strong electronic 
authentication of sensitive documents. The Department has an 
aggressive, probably the most aggressive, public key 
infrastructure and public key enablement initiative in the 
Federal Government today and is partnering with many of our 
agencies.
    The Department, as such, is involved in a number of 
implementations to validate our steps and journey toward GPEA 
compliance. These pilots and initiatives are absolutely 
necessary to prove that we can properly apply--not only on a 
small scale, but on a large scale, the Department has these 
solutions.
    Before I bring you down close to the weeds, I just wanted 
to point out a few things that gets to some of the opening 
statements, opening points, you made earlier.
    Secretary Rumsfeld has just announced the formation of a 
Senior Executive Council which will consist of himself, the 
Deputy Secretary, the Under Secretary for Acquisition 
Technology and Logistics, and the service Secretaries. The 
purpose expressed to that is to bring together those senior 
individuals, each one of which is a captain of industry in his 
own right, in dealing with new ways of doing business within 
the Department of Defense.
    So, yes, we're poised for the kind of leadership--looking 
at the way, bringing the private-sector approach within the 
Department in a way that I don't remember in recent memory. So 
we're looking forward to the leadership that will come from 
that panel or that council to kind of bridge together the 
islands of excellence that we have got in the Department.
    Another point that I would like to make before I bring you 
again close to the weeds is, we now have, as a result of a lot 
of hard work, the first enterprise IT architecture in 
Department of Defense history. So we now have the ability to 
look across the enterprise known as the Department of Defense 
and address the value of information, how hard we need to 
protect it, what are the interoperability difficulties 
associated with moving that information around both within the 
Department and externally, and be able to address the value of 
the capital investments necessary to move us further forward 
toward GPEA compliance.
    That is a major achievement, to have that enterprise 
architecture. We didn't have that before. I point out that was 
required by Clinger-Cohen.
    Another point is, we looked at interoperability very hard. 
Some of the other members mentioned interoperability more than 
once. When we looked at interoperability within the Department 
ourselves--and title 10 was modified in 1999 to make the Chief 
Information Officer of the Department of Defense responsible 
for ensuring interoperability across the Department--we looked 
at the process that basically provided that interoperability.
    We found that policy was 10 years old. That policy goes 
back to when we may have argued about whether e-mail was a 
relevant way of doing government. We have gone past that point.
    So we basically have taken the entire interoperability 
process down to bare metal and have rebuilt it back up, so it 
effectively works in the network age and the GPEA. And the 
progress in GPEA will, of course, benefit from that new process 
that we're putting in place under this administration.
    Along the same lines, the acquisition of our capabilities 
to include information technology now incorporates 
interoperability as a key performance parameter. That is a 
technical term in acquisition talk. But what it means is 
failing to meet a key performance parameter is cause to stop a 
program. So interoperability has now achieved that importance 
within the Department of Defense.
    So those are some of the kind of top-level things that get 
at the very important and correct questions that you brought 
up.
    Let me, if I may, take you a little closer to the weeds. We 
are cosponsoring with a number of others the Federal Bridge 
Certificate Authority that Jim Flyzik discussed earlier. That 
started out as a Navy project through the Department that was 
housed in GSA and--excuse me, Treasury--and has moved to GSA 
for instantiation.
    That is a very important activity and initiative to us 
because that allows for addressing differences among agencies 
from the point of view of security and transactions. So that 
bridge will be kind of a gateway in the sense of allowing us to 
arbitrate and deal with security differences between partners 
and between members of the Federal Government in a way that we 
still can preserve the benefits of electronic business.
    We are issuing SmartCards, those common-access cards that 
you might hear about. Here is an example. We are, in fact, 
issuing them; we have issued 25,000 to date, and we are going 
to be issuing, at the end of the game, 3.5 million of these.
    This revolutionizes our ability to gain access to 
information technology services in a paperless way. It 
increases our ability to audit, as I think was brought up by 
some of the members earlier, the uses of our IT to make sure 
that the IT utilizations are lawful and legal, that they do not 
usurp resources that are needed elsewhere.
    So this is a very important reengineering step where 
technology is applied for the purposes of better electronic 
business.
    We are pursuing initiatives to use PKI in the export 
licensing process involving the Departments of Defense, 
Commerce, State and Energy, a very critical reach-out from our 
point of view. That will include 10,000 businesses.
    We are making great strides toward achieving a paperless 
end-to-end contracting process. Today, we are able to achieve 
83 percent paperless. That is the capability we can get to. The 
7 percent that is beyond our reach at the present time requires 
us to implement the public key infrastructure [PKI], that I 
talked about and also to recognize that some of the smaller 
business partners will have difficulty working electronically 
because of the investment necessary on their end. That is an 
important point that we are mindful of. But that 7 percent, our 
last mile, if you will, we are working hard to overcome.
    Finally, we are moving toward electronic submission and 
processing of claims for payments we called e-invoicing. The 
target date for that is October 2002, which is 1 year before, 1 
year ahead of the GPEA target. So we have a number of short-run 
milestones on our plate.
    Other than to introduce Ms. St. Claire, this concludes my 
comments, sir. Ms. St. Claire is here to give you a quick 
summary of Personnel and Readiness initiatives, again focusing 
on the importance of the functional buy-in for any of our 
information technology investments.
    [The prepared statement of Mr. Osterholz follows:]

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    Mr. Burton. Ms. St. Claire.
    Ms. St. Claire. Good afternoon. I am pleased to be here to 
tell you about the way we are implementing GPEA in the DOD 
personnel community. The Office of the Under Secretary of 
Defense for Personnel and Readiness works with all of the 
services within the Department of Defense, as well as with all 
of the external agencies that need to have access to DOD 
personnel records.
    As a matter of fact, a couple of years ago, we did this 
report--we did this study on what the external customer base 
was for the military personnel records, so that we could 
prioritize those areas where we had the most problems. And as 
you mentioned in your opening statement, we recognize that we 
do have some issues with Veterans Affairs in being able to 
provide them the paper that they need as quickly as possible.
    Our goal is the elimination of redundant data capture forms 
and other paperwork. And that is a critical component of our 
entire business process reengineering program.
    We have a Personnel and Readiness strategic plan and a 
Military Personnel Management Information strategic plan. They 
are on our Web site. I can give you the address for our Web 
site. Our entire business process reengineering program is 
described there. It is www.mpm.osd.mil. We would be happy to 
have you look at everything there.
    We have already implemented a number of initiatives that we 
feel satisfy the GPEA requirement, and they are discussed in 
more detail in my written statement.
    We are trying to ensure that the way we do this is smart. 
We do not want to automate processes and forms that would be 
better eliminated. And that's what the goal of our business 
process reengineering program is. We are finding that we can 
eliminate a lot of the forms and paperwork, and then we 
wouldn't have to worry about automating them. So we are trying 
to take this in a very smart way.
    The work that we do in military personnel impacts our 
entire community, and it impacts military personnel through 
their entire life cycle. Our military people, we start with 
when they first access--actually, when we first start 
recruiting them.
    They come into the military. They go back and forth between 
Active and Reserve components, of course. They leave the 
military. And we still have an obligation to them as they go 
out and are entitled to benefits that they are entitled to 
because of their military service. We also track all of their 
dependents. So we have a very large community that we take care 
of.
    I would like to close by emphasizing that both in P&R and 
in the Department, we fully support the goals of GPEA, and we 
have actually used this law to help highlight some of our 
issues and problems to help us move faster with our whole 
program for business process reengineering and making maximum 
use of new technology. Thank you.
    Mr. Burton. Thank you.
    Let me start the questioning to Mr. Willemssen.
    We asked you to look at the GPEA plans for the Treasury 
Department and the Defense Department, and I have some 
questions about both of those.
    Have you reviewed the plan of the Defense Department that 
was submitted to OMB? Have you reviewed that yet?
    Mr. Willemssen. Yes, sir. We did, Mr. Chairman.
    Mr. Burton. What was your impression of it?
    Mr. Willemssen. We were disappointed with the lack of a 
strategy that would have detailed the Department's approach to 
addressing GPEA. The plan, instead, was a listing of potential 
activities that could be electronically done, rather than by 
paper; but we did not see any kind of strategy.
    Upon meeting with Department officials, we again did not 
receive any kind of documented strategy.
    Mr. Burton. So I presume you conclude that by the goal of 
2003, they won't be able to comply?
    Mr. Willemssen. Based on progress to date, it will be a 
challenge for them. Setting up interim milestones would be a 
step in the right direction. If the Department can lay out 
tasks and milestones to try to get there, that is definitely 
where they need to go.
    Mr. Burton. Did your staff then meet with people from the 
Defense Department to determine, you know, how they were going 
to put the plan together?
    Mr. Willemssen. Yes, we did.
    Mr. Burton. I know you have heard some of the things today 
that were positive.
    Mr. Willemssen. We did contact the Department to try to 
understand the process that they used. And, bottom line, what 
we could determine is, the process was going out with the data 
call to component level and then--component levels and then the 
data call continuing to go to lower levels, and then the data 
coming back up through the chain. And, unfortunately, we did 
not see any evidence of review of what came back up; and that 
is when we looked at the collection information.
    It also appeared that some of the entries were duplicative 
and inaccurate. Upon talking with the Department on that, they 
agreed to followup. And I think they can speak for themselves, 
but I think they did find those types of discrepancies.
    Mr. Burton. We will get to that in just a second. As I 
understand it, if you saw that they were, in essence, just 
cutting and pasting things that had already been determined.
    Mr. Willemssen. Yes. Rather than thinking strategically 
about what should be done electronically versus paper, it 
appeared to us, based on the audit work we did, that it was an 
approach of, let's go out with a data call and ask people what 
they currently do and what they can do electronically instead 
of on paper. So the data call went out, data came back, and it 
was aggregated without, from our viewpoint, critical review.
    Mr. Burton. Did you, when you were going through the 
process, ever identify anyone who was responsible for 
implementing GPEA? I mean, was it just nobody was responsible?
    Mr. Willemssen. Well, at the Department level, I believe 
the current CIO is in an acting position. And then we had a 
couple of meetings with a Mr. Grant, who was in the Office of 
CIO, and then several of his staff. I believe Mr. Grant's title 
is e-business, e-government.
    But in terms of, I think, being consistent with Clinger-
Cohen, the accountability has to stop with the CIO and the 
Secretary.
    Mr. Burton. So, in essence, you didn't really find anyone 
that was?
    Mr. Willemssen. We didn't find, from a departmental 
perspective, somebody willing to sit and take the reins and 
say, this is what we need to do from a strategic perspective, 
this is what makes the most sense, as opposed to continuing 
with business as usual.
    Mr. Burton. We heard what Mr. Osterholz and Ms. St. Claire 
just said. But do you think they are making a serious effort 
over there to comply?
    Mr. Willemssen. I think oversight activities, such as the 
hearing today, can make a tremendous difference in the extent 
to which this is viewed as a priority at the Department. So I 
sense that, even within the last 1 to 2 weeks, there has been 
much more of an effort and more of a priority placed on this 
particular area.
    Mr. Burton. Have you done--well, of course, you are pretty 
much working just on the Defense Department, aren't you, over 
there on your reviews?
    Mr. Willemssen. I have responsibility for IT across the 
government.
    Mr. Burton. You do?
    Mr. Willemssen. Yes.
    Mr. Burton. Have you found other agencies of the government 
that are in the same predicament as the Defense Department?
    Mr. Willemssen. Yes. The Defense Department is certainly 
not alone in the challenges it faces in----
    Mr. Burton. Could we get a list of those agencies? Because 
what we will want to do is--I think we ought to send a letter 
to them telling them of this hearing and telling them that the 
Defense Department, we think, is now moving in the right 
direction; but that if they don't, they will be subject to 
being called before the committee, along with you, to explain 
why they are not moving in the right direction to make sure 
they comply by 2003.
    So--would you make a note of that?
    So we would like to have that list so we can contact them. 
So if you can get that to me, I would really appreciate it.
    Mr. Willemssen. Yes, sir.
    Mr. Burton. Mr. Osterholz, we want to be fair to you. We 
didn't bring you up here to beat on you with a ball bat or 
anything, although I've got one.
    I understand from what you said that there are a number of 
good automation programs under way, and hopefully, they'll 
produce results. At the same time, as you can see, you haven't 
come off looking as well as you would like.
    But you feel like you're now moving in the right direction?
    Mr. Osterholz. We are moving in the right direction.
    I have to echo what Mr. Willemssen said, that the 
Department is a very large enterprise. And we have tremendous 
responsibilities with respect to information technology to 
support our core missions of warfighting. And prioritization is 
a daily occurrence with us. And I think clear prioritization is 
important, keeping us on the right path.
    Mr. Burton. Let me--with Mr. Kanjorski's approval, I would 
like to ask just a couple more questions. Then I'll yield to 
you.
    Who is the most senior person at the Defense Department who 
is responsible on a day-to-day basis for implementing the GPEA 
and electronic filing programs?
    Mr. Osterholz. The Acting Chief Information Officer is Dr. 
Linton Wells.
    Mr. Burton. You say ``acting.''
    Mr. Osterholz. He is the Acting Chief Information Officer. 
He is the Acting Assistant Secretary of Defense for Command, 
Control, Communications and Intelligence. The President hasn't 
filed an attempt to nominate a successor. That gentleman is not 
on board, obviously, and has not been confirmed yet.
    Mr. Burton. We ought to check and find out when they plan 
to submit that name for confirmation.
    So did the person who is currently in charge, did he review 
the plan before it was submitted?
    Mr. Osterholz. No, sir, I believe he did not.
    Mr. Burton. Why was that?
    Mr. Osterholz. I cannot answer that, sir. I do not know.
    As I said, I took cognizance of this issue. I can 
speculate. I took cognizance of this issue after that had gone 
on. As I said, last night and the last week, I went through 
this process to verify that in fact what was discussed was 
substantively correct. I cannot tell you why he did not, at 
what level it was reviewed. I can only tell you that he did not 
review it.
    It was probably reviewed at a Director's level at the 
Department. A lot of things get done by e-mail. Unfortunately, 
things get sent out under the press of a time line that don't 
get the review that they require. Not an excuse, but an 
explanation, sir.
    Mr. Burton. But that won't be the case in the future, 
though?
    Mr. Osterholz. Certainly not, sir.
    Mr. Burton. OK. Good. What is that person doing on a day-
to-day basis to move the process along?
    Mr. Osterholz. Mr. Wells is the chair--is the chair of the 
Chief Information Officer Executive Board, which makes the 
information technology decisions for the Department. That board 
involves all of the IT service providers in the Department, as 
well as the functional process owners in the Department, so 
that we have the joint of technology and process that again was 
discussed in the earlier panel. And so information technology 
is his primary responsibility.
    In addition to that, the guidance that was put out, which 
was put out under Art Money, who is the predecessor to Mr. 
Wells, is very clear about--if I may just simply read the key 
pieces of it--new or redesigned GPEA-compliant electronic 
transaction applications will be based upon the following: 
redesigned business processes, again making sure we're not 
paving the cow path; relative cost benefits and risk analysis, 
providing the basis for attempting to maximize benefits by 
minimizing risks; inclusion of DOD privacy and information 
security policies and practices; again, the balance between 
access, what you project, what you protect; the termination and 
documentation of the chosen electronic signature alternative.
    And electronic signatures are interesting in that the 
technology is certainly there. Its acceptability in some cases 
is questionable. We've had rulings that said electronic 
signatures, good idea, but send the paper anyway. And that is 
an important piece to look at.
    And review of policies to adequately support electronic 
transactions.
    So that's the guidance that was given out in January of 
this year to our components with respect to their GPEA 
activities. So there is an active role, but it is one role 
among a number of things that the Chief Information Officer 
does.
    Mr. Burton. Mr. Kanjorski.
    Mr. Kanjorski. Thank you very much, Mr. Chairman.
    I guess this is the wrap-up panel. And I don't know whether 
accolades are in order or whether we should be questioning why 
all the departments and agencies aren't in the same thing.
    But let me just run through some of the testimony that I 
heard and get corrections.
    In the Treasury area, I understand that you think you are 
moving along very well and making great strides. But besides 
efficiencies and movement of paper, there is the thing of 
picking up fraud and abuse, and particularly in tax returns.
    What I can't understand is, if we do have a sophisticated 
computer system operating in Treasury, how is it that prisoners 
can still file for tax returns by the hundreds and receive 
them, direct mail to their prisons, and we don't have a system 
that picks that type of fraud up.
    Mr. Flyzik. Yes, sir. The IRS has a very aggressive program 
to modernize. The issues you are raising are well known, they 
are well documented, they are well publicized. It is also well 
known and well publicized, the history of attempts to modernize 
in the IRS.
    I perhaps was able to say in the past that was not my 
watch. I can no longer say that. I am directly involved in the 
modernization of the IRS today. I feel real good about the 
progress we are making.
    We have a lot of legacy applications in the IRS that date 
back a long time. And I feel happy with the fact that 
Commissioner Rossotti is there. He has got an IT background. I 
feel we have got a governance structure in place, we have got 
due diligence in place, and we will fix those problems.
    I think that most of those problems are due purely to the 
sheer complexity of the legacy systems that exist today in the 
IRS and the inability to do a lot of interoperability kinds of 
programs.
    I like to think the Internet knows no time boundaries like 
these old legacy applications do; and obviously, what we need 
to do is get these applications on line to do real-time editing 
and error correction before the errors can get into the system.
    And that is our goal. It won't happen overnight, but it 
will happen.
    Mr. Kanjorski. In my district, there is a county prison, 
and one of the prisoners operates a network across the country 
on the Internet with other prisons. And they are just notorious 
and extremely successful in making applications for income tax 
refund checks. And they get them by the dozens, I mean 
literally.
    And I have had complaints from the warden of that prison 
just saying, you know, he just doesn't understand how this can 
continue to go on. You would think one or two times that they 
would catch it, but this is year after year.
    Now they are spreading out through the prison system across 
the country, and I don't know whether it's on a commission 
basis that they're doing it, but they are being very successful 
and still requesting these checks and getting them.
    Naturally--probably there is strong publicity when that 
occurs. But you have to understand how offensive it is to a 
legitimate taxpayer when they find out that all you have to do 
is get sentenced, go to prison, start filing your returns and 
make several hundred thousand a year. It tends to rub us the 
wrong way.
    But I think you're on the right track. It was a good 
report.
    I particularly want to compliment that part of the Treasury 
that is known as the U.S. Mint. And they are obviously up here 
because I guess they are the four-star or five-star agency 
here. They not only are very good in showing how they can 
correct the system and make the hard decisions to go to a 
modernized system under the 2000 problem; they showed us all 
that thinking ahead and using your money wisely can really 
accomplish some great things.
    So, Mr. Mitchell, you should take back my compliments. But 
mostly because you have the good foresight to have press 
representatives and public relations people like Eva on your 
staff. I happen to know how competent she is. So that's very 
good.
    In regard to Defense, it is a huge agency. And of course if 
you are not on board, everything everybody else does is minor 
by comparison. I think that both the Department of Defense and 
the Department of Energy have real needs to get into the modern 
age and to work through their systems.
    I am particularly interested in disposal of property and 
knowing what assets are out there that are excess or surplus 
and how we can get utilization of them and get a handle around 
them in a big way.
    The only other thing that I would say that did bother me, 
and I don't know whether it was the Defense Department or the 
Department of Energy, they seem to have slipped in their 
awareness of technology and what can be erased from computers. 
And I know for a fact where they excessed to the waste pile 
hundreds and hundreds of computers that had all the formulas 
for nuclear weaponry on them; and we just can't afford to have 
those types of failures in the system where people aren't aware 
of what potentially they are throwing away.
    I happened to find out about it because I was dealing with 
people who were trying to do construction--or destruction and 
demanufacturing of computers and found a lot of that material 
readily accessible on the computers that were discarded. And I 
would hope that we would tighten up. It's not only to 
accomplish a paperless society or reduction in paper, but it 
certainly is important that we protect information, 
particularly highly classified information such as that.
    So that, as we go down this road, it seems to me that all 
the component parts, including disposal of materials, is very 
important. And I would hope that the departments of government 
would cooperate.
    Let me ask you this question, would it be helpful to the 
various departments to have a centralized clearinghouse 
operation that would establish the standards of how to handle 
things, the programs that are available and the information, as 
a central repository; or do you think it's absolutely essential 
that each department have its own system and sometimes without 
standardization and without the capacity to be accessed by 
other departments of government or outside interests?
    Maybe I'll direct that as an open question.
    Mr. Flyzik. I would like to believe that the Federal CIO 
Council is stepping up to becoming the central repository for a 
lot of issues. We now have in place a Federal Government 
architecture model. We are looking at the standardization 
process. We have an architecture at Treasury, as does DOD, as 
mentioned. Our Treasury architecture complies with the Federal 
architecture standard that is being defined.
    So I think we are getting there.
    I would like to think the CIO Council has gone through an 
interesting evolution. Like any other group first put together, 
we went through kind of a bonding process to figure out who we 
are and how we work. And I think, though, over the last year or 
so, it has really evolved into taking on specific, tangible 
programs and projects that will deliver the kind of results 
that you're addressing here.
    Mr. Kanjorski. Do you ever see a day where those of us that 
sit up on the Hill, that want to find out what is available to 
a constituent, can dial in that information and type it in, and 
it is going to source it out and find it?
    Right now, most of the departments of the executive branch 
of government, and the bureaus, unless you know what program 
they are administering and how it works, you can't find it. I 
mean, it is the most closely held secret.
    Very simple questions, you know, is there a disaster relief 
for mortgage holders in a disaster area, and does the Federal 
Government have a program like that? Unless you know exactly 
the name of that program or where it is, it is hard to access.
    Mr. Flyzik. Yes, sir. And I believe I refer you to--we did 
roll out the portal First.Gov, www.first.gov, and it is 
designed to do exactly what you are suggesting here. That 
individual constituent, without any knowledge whatsoever of the 
functions of government, can get answers to specific questions. 
I think First.Gov is merely scratching the surface of where we 
are going to go, because for the first time we will begin to 
understand the way customers see government.
    And I agree with you. They don't see government on an 
agency-by-agency basis. They see government on a functional 
basis.
    I think First.Gov is our first start at fundamentally 
restructuring. I think we will go through phases here where 
First.Gov will lead to kind of virtual agencies, agencies that 
are working together in common functional areas. And I think, 
in the long run, looking out beyond it could actually lead to 
fundamental restructuring of government.
    Mr. Kanjorski. Very good. Maybe I'll put this to the 
Defense Department.
    Your part of the agencies or departments that are involved, 
not all of them obviously, but you have an awful lot of 
technology that is still black-bagged, that is already being 
duplicated in the commercial area that could be of great 
assistance to other governments and the commercial interests of 
the country.
    How do we go about freeing that stuff up?
    Mr. Osterholz. I would tell you that--to be honest, tell 
you, that is a very complicated question, because some of those 
other parties who would want that technology would not 
necessarily be interested in using it for the betterment of our 
interests.
    So that is a very, very complex question. And it's hard to 
give you a general answer except perhaps to point out some of 
the issues that we have to wrestle with today.
    Understanding what a corporation is and what its interests 
are and what its pedigree is is an interesting question for us. 
What a U.S. company is today is sometimes a very complicated 
question to get an answer on. So understanding the motives for 
technology transfer is a vital piece of answering that 
question.
    To move technologies, you referred to ``black-bagged,'' you 
are referring to classifying technologies perhaps, such as you 
might find in geospatial information systems, things that you 
were very familiar with.
    Very frankly, we look at commercial geospatial information 
systems as a very positive factor in that their existence for 
us gives us access to information that we may not be able to 
get to because of limited resources on our end. Our own assets 
obviously are very heavily tasked, and the availability of 
additional geospatial sources of information is very positive 
thing for us.
    Now, we worry a lot about who else has access to that, No. 
1, because we would hate to see that sort of capability used 
against our forces with the sorts of resolutions that I am sure 
you are aware of that are coming around the commercial world.
    No. 2, we have to be careful as we deal with them from an 
electronic commerce point of view. We would buy that 
information from them. We want to make sure that wasn't 
necessarily revealing of our interest. It would be very 
unfortunate if our buying of, say, commercial imagery products 
revealed an operation pending and put our forces in jeopardy. 
So we have to worry about that. And that's where the PKI issues 
come really to the fore.
    But I think you are going to see, and increasingly--in 
fact, there aren't a lot of black-bag technologies, as you put 
it--that the commercial world is, in fact, the place where the 
technologies are and that its first adoption is not necessarily 
behind the green door, as it used to be. Its first adoption is 
in Silicon Valley. Its first adoption may be in the government 
agency, sir.
    Mr. Kanjorski. As to the programs, I agree with you. They 
are probably ahead of the government in what they can do.
    But the delivery systems, the satellite systems, etc., that 
could be utilized to help out, particularly in environmental 
protection, fire protection--I'll throw that out there and 
leave it; you probably know what I'm talking about--you know, 
we can save inordinate amounts of money and benefit to the 
general citizenry, the individual States and individual 
communities if we can find a way to open up and use the excess 
capacity that we have in the Defense Department for the private 
sector, for the government, for State and municipal governments 
in particular.
    So I just throw that out there and leave it.
    Mr. Chairman, I just want to congratulate you for calling 
this hearing. It seems to me it's one of the more progressive 
ideas in the role of this committee; and I hope we stay on this 
course, because for us, as members, who are so ill-informed in 
this new technology, to have the opportunity to get the 
testimony and hear the statements of this type of expertise is 
very rewarding. So thank you very much.
    Mr. Burton. Thank you, Mr. Kanjorski. We will try to do 
just that.
    I want to thank all of you for being here. We appreciate 
the input. We appreciate the progress that you have made both 
at the Mint and Mr. Flyzik.
    And the Defense Department, we hope and wish you well in 
the future. We will be watching and trying to work with you.
    With that, we stand adjourned. Thank you.
    [Whereupon, at 1:15 p.m., the committee was adjourned.]
    [The prepared statement of Hon. Edolphus Towns follows:]

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