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[Senate Hearing 107-148]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 107-148
 
                    S. 803--E-GOVERNMENT ACT OF 2001
=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                                   on

                                 S. 803

   TO ENHANCE THE MANAGEMENT AND PROMOTION OF ELECTRONIC GOVERNMENT 
  SERVICES AND PROCESSES BY ESTABLISHING A FEDERAL CHIEF INFORMATION 
OFFICER WITHIN THE OFFICE OF MANAGEMENT AND BUDGET, AND BY ESTABLISHING 
    A BROAD FRAMEWORK OF MEASURES THAT REQUIRE USING INTERNET-BASED 
    INFORMATION TECHNOLOGY TO ENHANCE CITIZEN ACCESS TO GOVERNMENT 
            INFORMATION AND SERVICES, AND FOR OTHER PURPOSES

                               __________

                             JULY 11, 2001
                               __________

      Printed for the use of the Committee on Governmental Affairs

                        U.S. GOVERNMENT PRINTING OFFICE
75-470                          WASHINGTON : 2002
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512-1800  
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

                   COMMITTEE ON GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 FRED THOMPSON, Tennessee
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
RICHARD J. DURBIN, Illinois          SUSAN M. COLLINS, Maine
ROBERT G. TORRICELLI, New Jersey     GEORGE V. VOINOVICH, Ohio
MAX CLELAND, Georgia                 PETE V. DOMENICI, New Mexico
THOMAS R. CARPER, Delaware           THAD COCHRAN, Mississippi
JEAN CARNAHAN, Missouri              ROBERT F. BENNETT, Utah
MARK DAYTON, Minnesota               JIM BUNNING, Kentucky
           Joyce A. Rechtschaffen, Staff Director and Counsel
                        Kevin J. Landy, Counsel
         Hannah S. Sistare, Minority Staff Director and Counsel
                Ellen B. Brown, Minority Senior Counsel
                    Robert J. Shea, Minority Counsel
                     Darla D. Cassell, Chief Clerk

                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Lieberman............................................     1
    Senator Thompson.............................................     3
    Senator Carper...............................................     5
    Senator Bennett..............................................    22
    Senator Voinovich............................................    25
    Senator Carnahan.............................................    28
Prepared statement:
    Senator Cleland..............................................    65

                               WITNESSES
                        Wednesday, July 11, 2001

Hon. Conrad Burns, a U.S. Senator from the State of Montana......     6
Hon. Sean O'Keefe, Deputy Director, Office of Management and 
  Budget.........................................................     8
Anne K. Altman, Managing Director, U.S. Federal-IBM Corporation..    31
Costis Toregas, Ph.D., President, Public Technology, Inc.........    33
Aldona Valicenti, President, National Association of Chief 
  Information Officers of the States (NASCIO)....................    35
Greg Woods, Chief Operating Officer, Student Financial 
  Assistance, U.S. Department of Education.......................    38
Sharon A. Hogan, University Librarian, University of Illinois at 
  Chicago, on behalf of the American Library Association, the 
  American Association of Law Libraries, and the Association of 
  Research Libraries.............................................    48
Barry Ingram, Vice President, EDS Global Government Industry 
  Group, on behalf of the Information Technology Association of 
  America (ITAA).................................................    50
Patricia McGinnis, President and Chief Executive Officer, Council 
  for Excellence in Government...................................    52
Hon. Joseph R. Wright, former Director and Deputy Director, 
  Office of Management and Budget, and Vice Chairman, Terremark 
  Worldwide, Inc.................................................    54

                     Alphabetical List of Witnesses

Altman, Anne K.:
    Testimony....................................................    31
    Prepared statement...........................................    72
Burns, Hon. Conrad:
    Testimony....................................................     6
Hogan, Sharon A.:
    Testimony....................................................    48
    Prepared statement...........................................   114
Ingram, Barry:
    Testimony....................................................    50
    Prepared statement...........................................   124
McGinnis, Patricia:
    Testimony....................................................    52
    Prepared statement...........................................   130
O'Keefe, Hon. Sean:
    Testimony....................................................     8
    Prepared statement...........................................    66
Toregas, Costis:
    Testimony....................................................    33
    Prepared statement...........................................    82
Valicenti, Aldona:
    Testimony....................................................    35
    Prepared statement with attachments..........................    86
Woods, Greg:
    Testimony....................................................    38
    Prepared statement with attachments..........................   101
Wright, Hon. Joseph R.:
    Testimony....................................................    54
    Prepared statement...........................................   135

                                Appendix

Copy of S. 803...................................................   147
Prepared statements for the record:
    American Federation of Government Employees, AFL-CIO, Bobby 
      L. Harnage, Sr., National President........................   242
    American Chemical Society, Attila E. Pavlath, President......   246
    Center for Democracy and Technology..........................   250
    Citizens United for Excellence in E-Government, Marc 
      Strassman, President.......................................   256
    The Industry Advisory Council, Shared Interest Group on 
      Electronic Government......................................   267
    Information Renaissance, Dr. Robert D. Carlitz and Barbara H. 
      Brandon....................................................   269
    Information Renaissance, ``Online Rulemaking: A Tool for 
      Strengthening Civil Infrastructure,'' by Barbara H. Brandon 
      and Robert D. Carlitz......................................   275
    Institute of Museum and Library Services, Beverly Sheppard, 
      Acting Director............................................   303
    Interoperability Clearinghouse, John Weiler, Executive 
      Director...................................................   305
    OMB Watch, Dr. Patrice McDermott, Senior Policy Analyst......   307
    Software & Information Industry Association..................   323
    U.S. General Accounting Office, ``Electronic Government: 
      Challenges Must Be Addressed With Effective Leadership and 
      Management,'' by David L. McClure, Director, Information 
      Technology Management Issues...............................   332
    U.S. National Commission on Libraries and Information Science 
      (NCLIS), Martha B. Gould, Chairperson, with an attachment..   371

                    S. 803--E-GOVERNMENT ACT OF 2001

                              ----------                              

                        WEDNESDAY, JULY 11, 2001

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:32 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Joseph I. 
Lieberman, Chairman of the Committee, presiding.
    Present: Senators Lieberman, Carper, Carnahan, Thompson, 
Stevens, Voinovich, Cochran, and Bennett.

            OPENING STATEMENT OF CHAIRMAN LIEBERMAN

    Chairman Lieberman. We will now convene the hearing on 
electronic government. The bill before us is S. 803, the E-
Government Act of 2001.
    I want to welcome our witnesses and guests and thank you 
for joining us today to examine the new universe of 
possibilities that the Internet and other information 
technologies are providing for government and the people whom 
we serve.
    I think we have a strong consensus in this country, in both 
parties, as President Clinton said about 5 years ago, that the 
era of big government is over. Our goal is not to make 
government bigger but to make it smarter, less wasteful, and 
more efficient. That clearly is the responsibility of this 
Committee as the Senate's major oversight committee, and it is 
the purpose of the bill that is the subject of this hearing, 
because today and in the years ahead, I think there is no 
better way to make government smarter and more effective than 
by using the Internet and information technology (IT).
    The reach of the Internet and the speed with which that 
reach was achieved may be the big story of the last decade and, 
notwithstanding the falling fortunes of dot-com stocks, I think 
it may be the big story of the next decade and beyond.
    In order to get ahead in today's world, you pretty much 
have to be plugged in and powered up, connected and ready for 
business 24 hours a day, 7 days a week. The result is that just 
about every aspect of society in America is undergoing major 
transformation, and it is our obligation to see that government 
does not lag behind in that transformation.
    Information technology offers an unprecedented opportunity 
to redefine the relationship between the public and its 
government just as it has redefined the relationship between 
retailers and consumers, teachers and consumers, and in fact in 
a very different area, soldiers and their foes.
    The idea is to apply the lessons of the on-line private 
sector to the missions of government. That means providing 
better services, more accessible information, and greater 
accountability at significant cost savings.
    At its best, next generation government would exchange what 
is now cumbersome, static, and often bewildering for a dynamic, 
interactive, and user-friendly government. In the end, 
hopefully, a more efficient and more effective government will 
emerge.
    I think this Committee has an important role to play in 
that transformation. Today we are going to be considering the 
E-Government Act of 2001, bipartisan legislation that our guest 
and friend and colleague, Senator Conrad Burns of Montana, and 
I, along with 12 other cosponsors introduced 2 months ago to 
bring focused leadership to electronic government. Our goal is 
to use information technology to bring about a revolution in 
current bureaucratic structures so that we can engage the 
public, restore its trust, and ultimately increase 
participation in the democratic process.
    As it stands now, electronic government at the Federal 
level lacks a unifying vision. Fortunately, though, we are not 
beginning at square one. A variety of projects are underway, 
and several agencies have created imaginative websites that 
provide a wealth of information and numerous services on-line. 
For instance, taxpayers may submit their income tax forms on-
line, and millions do so. Students may apply for loans 
electronically. And some agencies have actually instituted 
electronic rulemaking already.
    But overall, progress in digital government at the Federal 
level is uneven. We have a looseknit mix of ideas and projects 
that are often poorly coordinated, sometimes overlapping, and 
frequently redundant.
    Remarkable innovations dreamed up by visionary Federal 
Government employees can be found in some quarters, but 
elsewhere, innovations are hampered by regulatory and statutory 
restrictions, the inability to move beyond traditional models 
of governmental management, and stovepipe conceptions of agency 
jurisdiction.
    The result is that the progress of electronic government at 
the Federal level has been inconsistent, particularly in areas 
that require intergovernmental coordination.
    One of the most important impediments to progress is the 
lack of concentrated high-level leadership on these IT issues. 
That is why our bill creates a Federal Chief Information 
Officer (CIO), inside OMB to implement information technology 
statutes, promote e-government, and foster innovation.
    The CIO would not replace the agencies' authority to pursue 
their own IT programs but rather, would provide a much needed 
strong, government-wide perspective. Among other things, the 
CIO would address privacy and computer security issues, develop 
e-government initiatives with State and local governments, the 
public, private, and nonprofit sectors, and oversee a fund to 
promote cross-agency projects which are central to the kind of 
integrated service delivery and consolidation that will truly 
transform government. We want people to be able to go to a 
single site and do a host of different forms of business with 
the Federal Government, and that requires interagency 
coordination.
    We also want information and services offered over the 
Internet to be accessible to citizens through a single Federal 
on-line portal, building on the progress that has already been 
made by the existing FirstGov.gov website which was launched by 
the Federal Government last year.
    Based on the experience of the private sector, we expect 
major cost savings from more efficient agency-to-agency 
interactions. But progress in this area requires that we 
establish standards for electronic compatibility between the 
agencies and within the agencies.
    As the government steadily moves information and services 
on-line, I think we have to be wary of what Senator Thompson 
has warned against, and that is automating existing 
inefficiencies. If we take this moment of opportunity to 
reexamine our existing processes, then I believe we must also 
implement performance measures to determine which e-government 
applications are successful and cost-effective so we are not 
duplicating government's existing inadequacies.
    The task is not going to be without some headaches, but 
fortunately, we have excellent models in the private sector 
that have transformed their practices and now serve customers 
so much better while saving literally billions of dollars in 
the process, and we are going to hear about two of those models 
today.
    As I said when we introduced this bill, and I want to 
emphasize it again today, this piece of legislation is a work 
in progress. It reflects the insights of many people and 
organizations. But we are going to continue to seek comments 
and feedback, especially from the administration, which is 
represented here today by Mr. O'Keefe and also, of course, from 
Members of this Committee.
    I personally expect that the bill will change as we work to 
achieve a broad consensus, and I hope everyone involved will 
maintain an open mind as we strive for that compromise. This is 
a step forward that is within our reach, and I think that if we 
work together, we can take that step together for the benefit 
of our government and all the citizens whom we serve.
    Senator Thompson.

             OPENING STATEMENT OF SENATOR THOMPSON

    Senator Thompson. Thank you, Mr. Chairman.
    I think that was an excellent summary of where we are. I 
have certainly enjoyed working with you in regard to the 
interactive website that we established a while back for this 
Committee. You are absolutely right that we are all becoming 
more and more aware of not only the need to move in the 
direction that you suggest but the need to do it better.
    I am struck by the fact that, according to the GAO, we have 
809 initiatives right now to disseminate information, which is 
the simplest facet of e-government; 88 initiatives to provide 
downloadable electronic forms; 460 initiatives to allow people 
to complete a transaction like submitting a patent application. 
This is all going on right now, so there are an awful lot of 
things going on out there, but we are not doing it well enough. 
So the question is, what do we do about that, and where do we 
put the management responsibility to handle all that; and I 
think that is what your legislation addresses.
    I look forward to these hearings because hopefully I will 
be able to put into a little better context for myself the 
obvious need that you are addressing with an equally obvious 
problem that I have been dealing with for some time. Just 
before my last day as Chairman, we put out a report which was 
basically a compilation of studies of the GAO, Inspector 
Generals, and others, as to the management situation in our 
government, and we have a pitiful situation as far as 
government management is concerned that has developed over 
several years.
    We have a list of areas, government-wide areas, that the 
GAO delineates as high-risk areas that continue to be endemic 
problems that we seemingly can do nothing about. One of them is 
information technology. We have shown a remarkable inability to 
manage large information technology projects. We have wasted 
billions and billions of dollars in starting these big 
information technology projects that either did not pan out or 
were abandoned altogether. We have human resources problems 
that are going to be much greater in the future. Half of our 
work force will be eligible for retirement in 5 or 6 years. 
Many of these human resources problems are in the information 
technology area. We need some sophisticated, knowledgeable 
people to deal with these things that we are talking about. 
Financial management--hardly any department of government can 
pass an audit--waste and duplication, and so forth.
    So that is the context in which the e-government initiative 
finds itself. So the question is are we trying to arrange it so 
that a citizen can get bad information from the government 
faster; are we paving over the cow path? What do we do about 
this circular problem of trying to come up with some new 
information technology initiatives, when information technology 
management itself is a major governmental problem; it is a 
circular kind of thing as to how we break through that. Is it 
essentially a management problem? I think that in large part, 
it is. Where should that responsibility lie? That is what your 
bill addresses with a new chief information officer. The 
administration has some different views; they think it ought to 
stay with the deputy director for management. That is a good 
question we should discuss and debate.
    The Clinger-Cohen Act decided at that point that for this 
general area, the responsibility should be vested in the 
various departments and that we could get more responsibility 
and accountability that way.
    We have just recently received a GAO report saying that the 
departments are not doing it; they are not meeting this 
legislative requirement as far as managing their information 
technology problems.
    But we do not want to create a new bureaucracy on top of 
this mess and feel that just because we rearranged the boxes 
this will cure the underlying systematic, endemic management 
problems of government.
    So I honestly do not know how all that relates to the 
various components. Do we need to solve one before the other? 
Will the other help solve the former? Do we need to travel down 
the road of trying to do what, I believe, the administration is 
committed to doing--better management in these areas--as we 
proceed with a new e-government initiative?
    Those are all questions that you have brought to the fore 
with this legislation, and they are good questions that need to 
be dealt with. So I look forward to this hearing.
    Chairman Lieberman. Thanks, Senator Thompson.
    I wonder if any of my colleagues want to make a brief 
opening statement?
    Senator Carper. I do, Mr. Chairman. May I?
    Chairman Lieberman. Go right ahead, Senator Carper.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. This is one that I wrestled with as 
governor not too long ago, and unlike the United States, which 
has over a quarter of a billion people, we have only 750,000 
people in Delaware, and it is a small, manageable operation, 
but we still struggled with this. In my last couple of years as 
governor, we put in place the ability to provide folks the 
chance to file their taxes over the Internet, to incorporate in 
our State, to get many of their permits and licenses, whether 
it is auto-related stuff, drivers' licenses, hunting licenses, 
fishing licenses, and we made a fair amount of progress there.
    This is such a rich vein for us to mine. Government has 
many jobs and many responsibilities, but foremost among them is 
serving people. It is so hard for people to get the kind of 
service they want, need, and deserve. A lot of them come to us, 
to our staffs back in our respective States, and that is all 
well and good, but if we can do this right, we can do our 
constituents, our taxpayers, a huge, huge favor.
    There are 50 laboratories of democracy out across this 
country to look to to see how are you doing this, how are you 
doing it at your own level, and to see what lessons we can draw 
from them. I do not know if we have reached out to the States 
to identify just a handful of States, maybe larger States that, 
given their size and scale, might serve as a better example to 
us, but that is something that I would suggest we consider.
    Two other points and then I will stop. One, if we come up 
with an idea about how we think this should be organized and 
structured and try to impose that on the Executive Branch, 
which may not be supportive, welcoming, or cooperative, it will 
die. We will have wasted our time and created turmoil for them.
    The point that you made about inviting the full 
participation of the administration in conceiving of the 
structure, I think, makes all the sense in the world.
    The last thing I would say is that I always felt that the 
people who are best able to come up with some of these ideas 
are the folks who are closest to our customers. The idea of 
folks here in Washington, the people who are running the 
operations, somehow figuring out what is best to serve people 
down in the individual States and at the community level--that 
is not going to happen. To the extent that we can avoid trying 
to mastermind it from Washington, infuse and push down 
incentives to the local level, to the folks closest to the 
customer, to enable them to do that better--terrific.
    Here in Washington, we need to keep in mind that there are 
many different moving parts out there, and they need to be 
coordinated, but to somehow coordinate them all without taking 
away the incentive to be innovative and think outside the box 
at the local level. It is a tough balancing act, and hopefully, 
the hearing today will help us figure out how to do that 
balancing.
    Thank you.
    Chairman Lieberman. Thanks, Senator Carper.
    Senator Bennett. I have no statement, Mr. Chairman.
    Chairman Lieberman. Senator Burns, we are honored to have 
you here, and I am honored to have you as a cosponsor. You have 
become a leader on technology issues in the Senate, and we 
welcome your presence here this morning.

 TESTIMONY OF HON. CONRAD BURNS, A U.S. SENATOR FROM THE STATE 
                           OF MONTANA

    Senator Burns. Thank you, Mr. Chairman.
    I want to respond to Mr. Carper. Even though Delaware is a 
small State, I have a recommendation from those of us west of 
the 100th Meridian. Several of you smaller States back here 
should get together and make one real State; that would help 
our situation out.
    Senator Carper. When you have as many people as we do, we 
might do that. [Laughter.]
    Senator Burns. We have got that.
    Also, responding to what Senator Thompson said about the 
retirement of the work force and how close we are to a 
turnover, I am not so sure that that is not a good idea, 
because when we try to introduce new ideas on doing things in a 
new way and using the tools of technology, we run into this 
situation in the bureaucracy, whether it be corporate or 
government, that ``I have done this ever since I worked here, 
and my Daddy did it like this, and this is the way I am going 
to do it.''
    We are ready for a new generation, I think, whenever we 
start looking at things. So I thank the Chairman for inviting 
me to testify today on the E-Government Act of 2001. I have 
enjoyed working with the Chairman on some critical issues on 
technology, and of course, we have introduced the CANSPAM bill, 
recently introduced, and we are looking forward to that.
    I have long believed in the power of information technology 
in general and the Internet in particular making government 
more efficient to open up the public policy process to everyday 
citizens.
    I want to recommend a study which was released, and we 
looked at it yesterday. The Marco Foundation released a study 
which I would recommend to the Members of this Committee as you 
consider this legislation, because it tells you a lot about the 
Internet, the attitudes toward the Internet, what people think 
about it, and how they use it, and who uses it, and some 
challenges that we have in front of us.
    Those challenges are the same today as they were a year 
ago, and they have to do with privacy, security, and those 
kinds of challenges. I would recommend that study, and you can 
check with our office, and we will be happy to try to get it to 
you in some fashion.
    On June 12, 1996, I chaired the first ever interactive 
Senate hearing which dealt with the need to reform the Nation's 
then obsolete encryption policy. The hearing was cybercast so 
that anyone with Internet access could follow it. Citizens were 
also able to submit proposed questions, several of which the 
members of the Commerce Committee were asked during that 
hearing.
    I have long shared the Chairman's drive to make government 
more widely accessible on-line. In 1999, I launched a live, 
first of its kind, weekly Internet video broadcast where I 
answered questions from Montanans. For the past couple of 
years, I have often posted drafts of my bills on-line so that 
everyone has access to the legislative process.
    I should add that it is only fitting that the e-government 
bill itself is in many ways a product of a collaborative 
process made possible through the use of the Internet. Several 
key provisions were the result of feedback offered by citizens 
over the Internet.
    So that clearly, the Internet offers unique capabilities 
which help break down the boundaries between government and the 
citizens it serves.
    The future of democracy is digital. It was with this in 
mind that I included the e-government bill as an element of my 
Tech-7 slate of high-technology bills I announced at the 
beginning of the 107th Congress, and I am very enthusiastic to 
be able to join forces with the Chairman to move this 
particular bill forward.
    The e-government bill's guiding philosophy is a simple and 
practical one--the Federal Government should take advantage of 
the tremendous opportunities offered by information technology 
to better serve its constituents. The bill calls for the 
adoption by the Federal Government of the basic best business 
practice of the private sector--the creation of a chief 
information officer. This Federal CIO would serve as a central 
guiding force to coordinate information policy across agencies 
and would allow the government to fully leverage the power of 
the latest communication technologies. I should add that 
industry has been fully supportive of the creation of a Federal 
CIO and that the GAO has recommended the establishment of a 
Federal CIO for several years. And I share some of the concerns 
that Senator Thompson has--do we create another mess to deal 
with a mess. I think that basically, this is one small step in 
the right direction.
    The second key aspect of the bill is the creation of a 
centralized on-line portal to serve as a one-stop shopping 
website for citizens. The Federal CIO would direct the 
establishment of this portal, which would build on the work 
done by the GSA in creating a single, simple website featuring 
all available governmental resources on-line. The bill 
authorized $15 million for the portal for the first year--
2002--which is a small investment in the Nation's interactive 
future of digital democracy.
    The third key component of the bill is the creation of an 
interagency technology fund. This fund would help break down 
the traditional and often arbitrary divisions created by agency 
boundaries and focus government resources on meeting 
constituent needs. I was interested in your statement about how 
do we get rid of the turf wars; how do we get people working in 
a single direction? A collaborative approach on information 
technology issues is far more effective than the silo-by-silo 
way of doing business favored by the traditional budgetary 
process. The bill authorizes $200 million a year to accomplish 
this aim for fiscal years 2002 through 2004.
    In short, Mr. Chairman, I thank you for your leadership on 
this particular issue. The e-government bill would bring the 
Federal Government fully into the age of the Internet.
    I thank the Chairman for moving this legislation with such 
swiftness and enthusiastically support, his ongoing efforts to 
address this critical issue, and I thank you for having me this 
morning.
    Chairman Lieberman. Thank you very much, Senator Burns, for 
an excellent statement. I do not believe I could have said it 
better myself, and I probably have not, so it is good that you 
were here to do it.
    Senator Burns. Thank you very much.
    I shall now go and spend your money.
    Senator Thompson. Just make sure you spend it in the right 
places; that is all I have to say.
    Senator Carper. And do not forget the little States.
    Senator Burns. It is ``pork'' to Tennessee, 
``infrastructure'' to Montana.
    Senator Thompson. You are excused. [Laughter.]
    Chairman Lieberman. Thanks, Conrad.
    I will now call our next witness. We are delighted to have 
the Hon. Sean O'Keefe, Deputy Director of the Office of 
Management and Budget.
    Good morning, Mr. O'Keefe. We welcome your testimony at 
this point and appreciate that you are here.

 TESTIMONY OF HON. SEAN O'KEEFE,\1\ DEPUTY DIRECTOR, OFFICE OF 
                     MANAGEMENT AND BUDGET

    Mr. O'Keefe. Thank you, Mr. Chairman. I appreciate it.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. O'Keefe appears in the Appendix 
on page 66.
---------------------------------------------------------------------------
    If you would permit me, I will submit my statement for the 
record and just quickly summarize.
    Chairman Lieberman. Without objection, please.
    Mr. O'Keefe. Thank you, sir. It is a pleasure to see you 
and Senator Thompson and Members of the Committee. It is a 
delight to be with you all again since my last opportunity to 
appear here a couple of months ago.
    I particularly want to thank you for your attention to a 
very, very important initiative, one that certainly this 
Committee and certainly the leadership of the Committee has 
championed for several years. It is a critical element, I am 
very proud to report, of the President's management agenda.
    Indeed, the five elements of the President's management 
agenda are designed to take advantage of the management tools 
that Congress has enacted in the past and that this Committee 
in large measure has been in the forefront of establishing the 
parameters as well as enacting those tools over the course of 
the last 10 years.
    Let me briefly describe those five initiatives and then 
talk about the relevance of the e-government initiative in that 
regard.
    The five specific issues that the President has elected as 
the primary focus of his time in this administration of the 
management agenda that will be focused on and that has been 
handed to the Office of Management and Budget for the purpose 
of shepherding through this particular administration are to be 
found in the February blueprint that was initially the basis 
upon which the President's budget was organized, as you will 
recall, and were fleshed out very specifically in a Cabinet 
session that he had with each of the Cabinet officers about 6 
weeks ago where we delved into these five particular questions 
at great length.
    Each of them are interrelated, and e-government is an 
essential element or mechanism to accomplish the tasks that are 
designed.
    The five specific focuses or issues are, first and 
foremost--and all of them will have resonance with this 
Committee again, given the leadership that you all have 
demonstrated over the years in enacting a range of different 
management tools to specifically implement these particular 
management agenda items, and they have been selected with that 
set context in mind, with the purpose of taking advantage of 
those tools and this unique opportunity now that they have 
fully matured to the point where we can actually utilize them 
in a different and more creative way.
    The first one is a specific, very concerted effort to 
integrate performance criteria into the budget format. 
Beginning with the fiscal year 2003 budget, you will see a very 
specific outline of performance criteria relative to budget 
requests that are made to Congress in the fiscal year 2003 
budget request that will be identified by programs and within 
select agencies and departments, depending on very specific 
criteria for how we are going to accomplish that.
    The second one is very much in line with that--and again, 
all of these are in concert and designed to be complementary 
for the purpose of achieving the agenda itself--is to focus 
very specifically on the strategic management of human capital, 
an issue again that this Committee has delved into at great 
length and has concerned itself with very specifically. The 
actuarial tables tell us that indeed we are going to see a 
dramatic change in the work force over the course of the next 3 
to 5 years even if we do nothing at all to shape that work 
force very actively--but we intend to do just that, to actively 
deal with those particular questions, and again, e-government 
has a specific applicability that I will get to in a moment.
    The third one is to look at competitive sourcing 
procedures, which again is an element that this Committee has 
delved into and worked with many different provisions of the 
law over the course of the last several years that you have 
been championing, as a means to specifically attain the most 
efficient delivery of public service and accomplishment and 
administration of public programs by competitive means, be that 
through public or private accomplishment. So our agenda and our 
focus in those five issues, this third one, is to very actively 
pursue an effort to accomplish those particular tasks by 
whatever the most efficient, most cost-effective, and most 
appropriate method would be.
    The fourth is to tackle a series of issues that, again, 
this Committee has been in the forefront of in dealing with 
financial systems. That is at the very locus of every matter 
that we are ultimately going to be dealing with because 
heretofore, the approach has been to look at financial 
management as a series of accounting systems as opposed to a 
more comprehensive management decisionmaking tool for the 
purpose of examining all those. That in turn leads to the 
propriety of the fourth, which is the e-government initiative 
itself.
    There are three primary features of the e-government 
initiative, which is the fifth feature and is encompassed in 
all five of these particular approaches. It is an essential 
mechanism to accomplish three primary agenda items in addition 
to all the other aspects of the President's management agenda 
as well.
    First and foremost is that it be citizen-centric; that it 
be focused, as I think several of the opening statements have 
very strongly suggested, that it has to be a transparent system 
that facilitates the means by which Americans can access 
information, not just facilitate the faster accomplishment of 
looking at poor information, but that we organize it, as you 
suggested Senator Thompson, in a more comprehensive way.
    Second is that it facilitate the means for business-to-
government transactions and mechanisms to simplify that process 
and make it far more efficient as well as expeditious.
    Third and most important among all is to look at the 
intergovernmental relationships between and among agencies, 
departments, and the State and local communities which in turn 
are interacting with those agencies and departments in a more 
complete way.
    Forty-five billion dollars is what we spend every single 
year on information technology, and in large measure, the 
attempt in this particular initiative and in all the other four 
that accompany these five in total of the President's 
management agency, is to specifically focus on how to leverage 
that $45 billion to accomplish something that you referred to, 
Mr. Chairman, very succinctly in your opening statement--to 
accomplish interoperability, transparency, and standards and 
applications that are at present, at best, uneven. And as a 
consequence of that, we see a wide-ranging set of circumstances 
that we seek to standardize through this approach.
    The e-government fund that we propose and that the 
President's budget incorporates is an attempt to start that 
effort to leverage, and certainly that is an effort which is 
encompassed in S. 803 as well.
    I think the Chairman's and Senator Thompson's description 
of the circumstances that exist today on this was quite 
accurate. It is a very uneven, very disparate set of 
initiatives which need to be pulled together in a more 
comprehensive way.
    Indeed, today's objective, and I guess part of the 
management focus I can report to you today, is that this 
afternoon, we intend to meet as part of the President's 
Management Council, which is the deputy Cabinet officers across 
the Federal Government, on an agenda which incorporates the 
information technology and e-government initiative, one of 
these five major issues, to lay out an aggressive management 
plan to implement the President's vision which has been 
outlined very briefly here and in the statement in a more 
comprehensive way.
    I urge the Committee's support of the President's 
initiative in this regard and look forward to working with the 
Committee to fashion S. 803 in a manner that facilitates the 
realization of that vision, and I appreciate the opportunity to 
be here today, Mr. Chairman.
    Thank you.
    Chairman Lieberman. Thank you very much, Mr. O'Keefe, both 
for the detail and the content of your remarks.
    As I said before, I am very eager to have a dialogue and a 
good working relationship with the administration in developing 
this bill, because it is obvious that we have common interests 
and common goals here. So I appreciated your comments, those 
that were positive and those that were more skeptical, in your 
prepared testimony.
    Let me say, for instance, that your testimony mentioned one 
area of concern, which was that the legislation as proposed 
lacks sufficient performance standards. I want you to know that 
I absolutely agree with that comment. It is a point that we 
have heard now from others since the bill was introduced, and 
we are going to address that shortcoming.
    I think that perhaps the major point of difference that we 
have at this juncture is in how to organize and place and 
define the responsibilities of the Federal Chief Information 
Officer. The bill that Senator Burns and I have proposed, along 
with others, as you know, creates a separate Federal CIO within 
OMB, reporting directly to the director of OMB. In doing so, it 
builds first on the very broad experience in both the private 
sector and in State government, where enterprise-wide CIO's has 
been, as I think we are going to hear from some of our 
witnesses later on.
    I think it also builds on the statement of policy in the 
Clinger-Cohen Act that requires each agency to establish a CIO 
and specifies that the CIO has information resources management 
as that official's primary duty.
    So my concern with the model that the administration thus 
far seems to have established here, which is by naming Director 
Daniels' naming of Mark Forman as Associate Director for 
Information Technology and E-Government. While he is not 
explicitly a CIO, his responsibilities at this point, as I 
understand them, appear to encompass all the things that we 
would expect the Federal CIO to do, yet he would then report to 
the deputy director for management and CIO, who would then 
report to the director of OMB.
    This leads me to a series of questions which relate to why 
that choice has been made and, more particularly, why that 
choice, when in the private sector, the choice generally has 
been to elevate and separate the position of chief information 
officer.
    Mr. O'Keefe. Indeed. Well, first and foremost, we concur in 
your assessment that the focus on information technology needs 
to be elevated within the context of the larger management 
agenda. And certainly, within OMB, that is part of our charge. 
As you correctly cited, Director Daniels, by selecting and 
establishing the position of Associate Director for Information 
Technology and E-Government, I would argue is very, very 
compatible and comparable to how most corporate industry 
standards, that I have been familiar with, have operated for 
the following reasons.
    First and foremost, the President's very strong statement 
about this question over the course of the last year or so has 
been to focus very specifically on identifying the deputy 
director for management as the Federal CIO, to reside within 
that office coordination of the Government Performance and 
Results Act, the Chief Financial Officers Act, Clinger-Cohen--
all of those particular efforts, those tools for management are 
all means to facilitate better decisionmaking. In and of 
themselves, they become stovepiped.
    My personal experience in this matter is that each time we 
seek to look at either financial systems or information 
technology or procurement systems or anything else as an 
individual, separable function with direct reporting 
requirements to the chief executive, it inevitably becomes 
treated as if it were a program element as opposed to a tool or 
a management process for the purpose of facilitating better, 
more comprehensive decisionmaking.
    So in that regard, having that locus for the purpose of 
residing within the deputy director for management, the 
attention of all those particular issues and coordination 
across all elements of the Federal Government is the primary 
objective of this particular approach to this.
    It also has the practical effect, too, I think, of avoiding 
what is again a propensity on the part of any large 
organizational entity to focus on information technology as if 
it were a set of stand-alone systems and programs for its own 
use. It is there; it is a means, as you appreciate better than 
anybody, to facilitate better management information and, 
therefore, decisionmaking to accomplish those tasks, and that 
is what we are focused on.
    In that regard, on par with information technology is the 
focus on financial management incentives as well as Federal 
procurement policy, regulatory focus. All of those issues are 
ultimately tools for larger management objectives, which is the 
primary reason we have organized in the manner that we have.
    Chairman Lieberman. I hear you, and I guess I would say 
that my concern about locating this activity with the deputy 
director for management, apart from what I have already said 
about that, is that is a busy office already, and I fear that, 
therefore, the unique opportunities here in the chief 
information officer may be lost because of all the other 
responsibilities that the deputy director for management has 
and that we would be better served if we separated the office 
but gave it wide-ranging governmental authority to coordinate 
with other offices and then bring it all together under the 
director of OMB.
    So I am going to consider what you have said, and I am 
going to keep my mind open. I hope you will keep your mind 
open. I think this is a point that we will have to continue to 
see if we can work out as we go forward.
    Mr. O'Keefe. If you will permit me, Mr. Chairman----
    Chairman Lieberman. Please.
    Mr. O'Keefe [continuing]. I guess the plea I would make in 
this case is that this was very much an administrative and 
management kind of attention question, and as a consequence, 
given the initiative that the President has launched in a very 
comprehensive manner for the President's management agenda, of 
which this is an essential element, our intent is to follow 
through. We have some very specific guidance from the President 
on how to conduct this. And as a consequence, to the extent 
that you see that there is a deficiency in the management and 
administrative functions in accomplishing that task within some 
period of time that you would consider to be a reasonable 
gauge, then by all means, let us reenjoin on this question. But 
we are quite confident that this is going to be the 
organizational approach that will accomplish this particular 
vision and do it in a way that is most efficient as well as 
integrated so as not to create a separate, stand-alone, 
potentially difficult circumstance of a stovepipe management 
focus, which I think is always the most dangerous element. But 
your indulgence on this point would be most appreciated.
    Chairman Lieberman. Yes, we will have to work closely 
together on this. My hope has been that we could move this 
legislation fairly rapidly. I know that Senator Daschle has 
listed this as one of the items on a longer list, all of which 
is not possible to take up in the fall, but he has listed it as 
one of the priority items for taking up on the Senate floor in 
the fall. So we will continue our discussions.
    Let me briefly, in the minute and a half or so that I have 
left on my time, ask you about the e-government fund. We, both 
in our approaches to this, have the idea of an e-government 
fund. The numbers are a bit different. Senator Burns and I 
include $200 million for each of the next 3 years; the 
administration has proposed $100 million over 3 years, with $20 
million available in fiscal year 2002.
    I just wonder if you could speak for a bit about whether 
the administration believes there is value in setting aside 
money specifically for interagency projects that might not 
otherwise receive funding; and more pointedly, whether under 
the administration's plan, the fund that you have in mind, 
leaving aside the amount of money in it, will be used primarily 
for those interagency projects or for something else.
    Mr. O'Keefe. Well, first and foremost, the objective is to 
utilize the fund for the purpose of leveraging the $45 billion 
that we have budgeted across the entire Federal departments and 
agencies.
    Again, I could not agree with your assessment more, that 
what we have is a very uneven application of standards; so 
until we complete the review this fall, I cannot attest to the 
fact that the $45 billion is on comparable standards. If 
anything, some agencies and departments just anecdotally that I 
can see are definitely on cutting-edged, current-generation 
technology acquisition efforts. Others are still trying to 
wrestle their way into the 20th Century on some of these 
issues.
    So as a consequence, there is no relative measure of merit 
on how much or how little needs to be spent across the board. 
The e-government fund, we believe, is going to be a great 
opportunity to leverage those opportunities which have greatest 
interoperability and interface between and among different 
systems across Federal agencies and departments--and my 
personal obsession is within disciplines, so that we do not 
have a stand-alone procurement system, a stand-alone financial 
system, or a stand-alone personnel system. To the extent that 
they are more integrated, those are the kinds of things that 
will qualify best for financing under the e-government 
initiative.
    The difference that we have between the amounts is again 
certainly arguable. This is not a point of great contention. I 
think we are about in exactly the same framework, which is to 
use it as a leveraging mechanism against that larger set of 
resources involved. And with all deference to the ranking 
member of the Appropriations Committee, the determination of 
exactly how much that will be is certainly more within the 
Appropriations Committee's jurisdiction, and we will certainly 
negotiate with them for the maximum amount we can possibly 
attain.
    Chairman Lieberman. That is true. We propose and they 
dispose.
    Mr. O'Keefe. Indeed, sir.
    Chairman Lieberman. Just out of curiosity, a quick 
question. On first glance, to stress the positive, have you 
seen one or two government agencies that you think are applying 
information technology really well? Do you see any early stars 
is what I am asking?
    Mr. O'Keefe. Again, very preliminary; we just dove into 
this here in the last few months. But I would say that the most 
aggressive application of current technology that is there in a 
way to try to get ahead of what has been an historically 
difficult set of deficiencies is certainly the IRS. They have 
aggressively gone after this, and certainly the commissioner 
there has identified as contemporary an application of 
information technology uses across a wider spectrum as opposed 
to single dedicated purpose that I have seen.
    Now, would there be better examples of that--I suspect 
there certainly are--but the commissioner has identified some 
of the visible examples of that.
    Certainly within the Defense Department, there is a series 
of locations where you can see the very best and, I daresay, 
some of the very worst applications of information technology 
utility, and some of the most historic kinds of stumbling 
blocks that are created by what I would suggest is the same 
kind of stovepiping approach that we have looked at and that 
has been perpetuated in the past.
    Certain elements of the financial community will be out, 
aggressively attempting to implement current applications of 
information technology whereas others will slavishly adhere to 
what has been in place for so long because it is a so-called 
legacy system that they cannot bear to give up.
    So you have the range of those, and unfortunately, within 
departments and agencies, there are both great examples of its 
application as well as very poor ones.
    Chairman Lieberman. Thanks. That is very helpful.
    I commend for your review--it just comes to my mind--the 
Department of Transportation, which has put some of its 
rulemaking on-line, inviting the public to comment on it. It 
has been very interesting and very interactive.
    Mr. O'Keefe. Thank you for jogging my memory on that one. 
You are exactly right. That is a superb example of a system 
that, frankly, many of us just ``dumbed onto.'' Just looking at 
various systems around, it is one that really is a very 
cutting-edge system at the Department of Transportation--not a 
place where we would have naturally gravitated and said there 
should be residing one, but it has done an extraordinary job.
    Chairman Lieberman. Agreed, and to state the obvious, it 
provides the opportunity, again 24 hours a day, for someone to 
come home, log on, and offer a response to a proposed rule.
    Mr. O'Keefe. Thank you for the prompt.
    Chairman Lieberman. Senator Thompson.
    Senator Thompson. I will give Senator Stevens 1 minute of 
my time.
    Chairman Lieberman. Well, since I have described him in 
God-like terms, I think I will have to yield; of course.
    Senator Stevens. That reminds me of the story about Lyndon 
Johnson when the policeman stopped him, opened the door and 
said, ``Oh, my God.'' Johnson said, ``Yes, son, and do not ever 
forget it.'' [Laughter.]
    I came because the person across the table here looks like 
the gentleman who used to sit on my left hand as staff director 
of the Defense Appropriations Committee, and I could not pass 
up the opportunity to ask him a very pertinent question.
    Mr. O'Keefe. Thank you, Senator. It is a pleasure to see 
you.
    Senator Stevens. I happen to be chairman of the Joint 
Committee on the Library, the Congressional library, and we 
have found that we have two libraries now. We have the printed 
world, and we have the e-world libraries. And we are trying to 
run them with the same amount of money we provided for the old 
printed library. We have found that we cannot go too fast, 
because there are generations out there that do not use the e-
world.
    My question to you is are we going too fast in government? 
We still serve a lot of people who do not have e-capabilities, 
and yet we seem to be moving all of our people into the e-world 
very rapidly, including the IRS. Very soon, everyone is going 
to be asked to provide a disk, and that will be their total 
submission for their taxes. But there are many people up my way 
who cannot provide that, out in rural America--and beyond that, 
even in the cities, who are of my generation.
    Are we going too fast? Are you going to accommodate those 
people in your planning, and will this bill push these people 
too fast into the e-world?
    Mr. O'Keefe. Thank you for the question, Senator. I think 
the approach that we are after here, I would characterize more 
as an attempt to make up for a lot of lost ground of where the 
commercial sector is now, which is by no means a fully e-
commerce-oriented kind of approach to things. If anything, we 
are still moving through that process in society in a way that 
is just beginning to tap the potential of what the information 
technology can yield.
    If anything, the government is probably more responsive 
than most public institutions toward the more standard 
requirements for information, and we certainly need to retain 
those for exactly the reasons that you cite. To assure access 
of all citizens to information, however the means and method to 
accomplish that task, is what our objective ought to be.
    But in this particular case, I think we are way behind in a 
lot of respects in terms of an across-the-board kind of 
application of where the electronic commerce and transaction 
information process needs to go within the Federal Government. 
Some have attained that standard that is as good as commercial; 
others are so far away from it as to be not even generationally 
in the same area.
    So if anything, I think that our attempt is to at least try 
to level that playing field a bit more, rather than try to make 
a further expanse and eliminate access through more 
conventional, traditional means. I think we are extremely 
mindful of the point you mention and will continue to be so.
    Thank you.
    Senator Stevens. Thank you. Thank you, Mr. Chairman.
    Chairman Lieberman. Thanks, Senator Stevens. Let me point 
out that the bill itself tries to respond to your concern by at 
least stating the standard that no advances in e-government 
pursuant to the bill should result in a loss of services to 
those who do not have access to e-government. But my 
understanding is that it continues to be a problem.
    Senator Stevens. If you are not careful, you will have to 
double the budget. That is why I am here, because you cannot be 
fully prepared for both e-world and non-e-world. If you are 
looking at internal management and saying we are going to push 
them toward standards and toward total integration of the 
Federal Government into an e-capability, I am for that; but if 
you are saying that all services must be delivered and all 
submissions must be received in terms of e-commerce, then I 
think you are going too far.
    I would like to work with you, and I would urge you to look 
at the Library of Congress to see how we have staged this. They 
are ahead of the rest of the world in terms of digitizing 
materials, but they are still providing the world with our 
printed word, and I think they have done that without doubling 
their budget. They have had an increase in their budget, but 
they have not doubled it.
    So I hope it is a cost saving device rather than an 
increase in expenditure.
    Chairman Lieberman. That is certainly our hope. 
Incidentally, we have a witness from the library community who 
will testify later on.
    Senator Stevens. Thank you very much, Sean O'Keefe.
    Mr. O'Keefe. Thank you, Senator Stevens.
    Senator Thompson. May I pick up from here, Mr. Chairman?
    Chairman Lieberman. Please.
    Senator Thompson. Mr. O'Keefe, you heard my opening 
statement, I guess.
    Mr. O'Keefe. Yes, sir.
    Senator Thompson. And I am sure it was very enlightening to 
you.
    Mr. O'Keefe. Indeed; always.
    Senator Thompson. Picking up on what you said a moment ago 
in response to one of the Chairman's questions about some 
bright lights, you mentioned the IRS, which of course has spent 
billions of dollars in times past trying to modernize its 
computer system unsuccessfully. And you mentioned the 
Department of Defense as having some of the best and some of 
the worst; but it also has clearly some of the worst problems 
in terms of financial management. GAO keeps reminding us of 
that and remains on the high-risk list and so forth--which gets 
to an overall concern of mine.
    Your personal opinion overview--just sit back and tell us 
what you think, big picture--how do these management problems 
that we have and these year-after-year inabilities to get our 
arms around these information technology problems and these 
financial management problems--how do these relate to what we 
are trying to do as far as e-government is concerned? I guess 
it kind of relates to what Senator Stevens was talking about. 
Strictly from a management standpoint, are we kidding ourselves 
here? Do we really have the ability--regardless of whether we 
have a chief information officer inside or outside or cross-
ways or wherever he fits in the box. Did you ever see the chart 
that we had showing the Department of Defense acquisition 
process, that maze?
    Mr. O'Keefe. Yes, sir.
    Senator Thompson. If we put that on-line, are we 
accomplishing anything? [Laughter.]
    What is the relationship between these problems and what we 
are trying to do in terms of e-government?
    Mr. O'Keefe. A range of responses to whether we would be 
accomplishing anything by putting that on-line raced through my 
mind, and I have elected to offer none of the answers I had in 
mind.
    I think in part what you put your finger to is, again, my 
strongest bias on this particular question, and it is the basis 
of the colloquy that the Chairman and I had a few moments ago. 
Any time you set up a condition in which information technology 
for the service of any individual community, be it financial, 
personnel, logistics, acquisition--whatever--if it is set up as 
a means to service that individual community in and of itself, 
self-contained, you have created a marvelous stovepipe that 
positively self-preserves and therefore----
    Senator Thompson. Even if it works.
    Mr. O'Keefe. Even if it works--that is exactly right. And 
as a consequence, it realizes Senator Stevens' worst nightmare, 
which is that you spend at least double--it is usually worse. 
Again, thinking back to a previous incarnation in public 
service, my greatest mistake in the financial management 
community in an opportunity of dealing with financial 
management question in the Department of Defense was not 
looking at the integration of those individual information 
systems and forcing, requiring, that there be an 
interoperability. Instead, we perpetuated, permitted, 
institutional concerns to continue to preserve individual 
stand-alone systems as if somehow those communities were 
sacrosanct for financial systems, for personnel, for inventory 
control--whatever.
    There is not a corporate around that survives today with 
that kind of approach, at all--which I have subsequently 
learned a lot more about. And if there is an opportunity to 
really reinforce that in this initiative, that is the approach 
we are taking to it.
    So if anything, I see not necessarily e-government as much 
as the application of information technology within an e-
government framework as being the approach we are looking at to 
facilitate the accomplish of all those management agenda items 
identified at the beginning.
    Senator Thompson. Well, what does that say about having 
standards, government-wide standards, best practice standards? 
This legislation has some requirements, as I recall. What does 
that say about letting every department find its own salvation 
with strong management at the top, versus having best practices 
or different kinds of standards, or mandates that, government-
wide, everybody has got to do certain things because there are 
certain commonalities with regard to the needs and problems.
    Mr. O'Keefe. Well, again, I am extremely reticent to 
dictate or to advocate that anyone dictate what a common system 
ought to be. Instead--I think you put your finger on it exactly 
right--if you identify with a degree of precision and real 
clarity exactly what performance standards you expect, that in 
turn will facilitate the decentralized management discipline 
that you have outlined very succinctly.
    A quantum, dramatic improvement that we could do that would 
be a real order of magnitude change all by itself is just to 
bring it up to commercial standards and to implement and 
requirement that those performance standards across the board 
for information technology be applied to commercial standards. 
That would be a major improvement. It would be a cake walk for 
some departments and agencies to accomplish. Certainly, as the 
Chairman described, the Department of Transportation system 
would be an ideal model for that kind of a case--and on the 
other side of the equation, to elevate it to at least those 
standards would be an improvement.
    To look at cost savings objectives of what you anticipate 
in business operations to meet commercial standards would be a 
very enlightening approach to it, and to require that the 
technology be no more than two generations behind, which as 
this Committee well appreciates, we are therefore talking about 
not more than 3 years old, because that is how fast the 
technology moves, would be a major improvement in performance 
standards all by itself.
    But if you look across the government, you find systems at 
the Health Care Financing Administration--until they changed 
their name, I guess--where they are operating data collection 
systems that trace their genesis back to the sixties and are 
still maintaining those kinds of systems for those purposes. It 
is incredible.
    Senator Thompson. We are told by Silicon Valley that 
technology is changing so rapidly that they cannot go through a 
30-day licensing process, that that is too onerous for them, 
and yet you are saying that our systems date back to the 
sixties.
    Let me move on to another question. We keep talking about 
management. At OMB, the deputy director for management position 
is still not filled; controller is still not filled; OIRA is 
pending a Senate vote. We have spent quite a bit of time lately 
addressing the Presidential appointment process, and I think 
everybody agrees that that situation is badly broken, and we 
are trying to do something about it. The Office of Government 
Ethics testified that one way to improve the process would be 
to simplify the financial disclosure requirements, and they 
have come up with some suggestions. I understand that that is 
within the bowels of the administration somewhere, over at the 
White House for counsel's review, I suppose.
    Do you know where that is and how fast we can expect some 
kind of response so that we can move that initiative down the 
road? We have got to have White House cooperation with regard 
to the FBI background checks. We have got to have Senate 
cooperation with regard to our forms. We need to review our 
whole policy and how many nominations we really want to have 
hearings on. But a key part of it is the ethics requirement, 
and it has been a while since we have had a chance to look at 
that.
    Do you know where that is?
    Mr. O'Keefe. First and foremost, I want to commend you for 
championing that initiative. On behalf of all others who are 
subjected to the confirmation process, that is a----
    Senator Thompson. About 25 percent of top-level appointees 
now are in place--25 percent--and some are saying that it will 
be well into next year.
    Mr. O'Keefe. Yes, sir. It is a slow, difficult process 
which, again, you have shed a lot of light on through the 
hearings you have conducted, and I think it prompted the Office 
of Government Ethics to move to the legislative initiative and 
the rules changes that you have suggested that are under way 
right now on financial disclosure. As a result, they have 
pushed that forward. It is in fact in the coordination process 
now. I am advised it is with White House counsel, and they are 
due to meet on it, I guess, within the next week to work that 
through. So there are an awful lot of us who are very 
enthusiastic about moving this along expeditiously, and who 
thank you for your efforts on this issue.
    Senator Thompson. Finally, let me ask you very quickly--the 
Chairman mentioned the Associate Director for Information 
Technology and E-Government. How is that going to relate to the 
Office of Information and Regulatory Affairs that has statutory 
responsibility for information technology?
    Mr. O'Keefe. In concert with it, but probably not much more 
so than what we see across all the statutory offices--for 
Office of Federal Procurement Policy, within OIRA, as well as 
the controller's position. I think all of those are going to 
be, as we discussed a moment ago, the kinds of 
interdisciplinary functions that will require a lot of 
coordinated effort with an information technology focus to 
facilitate greater decisionmaking and management coordination.
    So in that regard, I think there is going to be as 
extensive a degree of interrelationship with OIRA within the 
Office of Information and Regulatory Affairs but also with 
other elements of that as well. So it will be very extensive in 
that regard.
    Senator Thompson. I am not sure what that means, but it 
sounds pretty good.
    Mr. O'Keefe. Can I try again?
    Senator Thompson. But if I were taking over OIRA, I would 
be asking you some follow-up questions.
    That is all I have. Thank you, Mr. Chairman.
    Mr. O'Keefe. John Graham seems to be content, if he is ever 
confirmed, assuming the Senate moves in a manner in which that 
is successful.
    Chairman Lieberman. Thanks, Senator Thompson. Senator 
Carper.
    Senator Carper. Thanks, Mr. Chairman.
    Mr. O'Keefe, welcome back. I think the last time you were 
before us was for your confirmation hearing. We are glad that 
you are where you are and delighted that you are joining us 
today.
    Mr. O'Keefe. Thank you, Senator.
    Senator Carper. I want us to back up just a little bit. 
Describe for me if you will the approach in the current 
administration, the new administration, for e-government and 
what--this is a three-parter--just as status quo, where are we 
right now? What you have inherited?
    Second, what would the administration like to do in this 
arena?
    And third, how does that mesh or not mesh with what is 
proposed in the legislation before us?
    Mr. O'Keefe. First and foremost, the e-government 
initiative is part one of five in an interrelated set of 
initiatives that the President has selected as his management 
agenda for this administration and for this term. And it is an 
integral piece of that; the sum of the parts is far greater 
than any individual combination that would make that work, so 
they all have to be interrelated in this regard.
    It is primarily focused on three areas that the President 
is committed to. First and foremost is a citizen-centric focus, 
which is to facilitate the information flow with all Americans 
who want to access through this particular means the 
information that is available throughout the Federal Government 
for that purpose and to make it available for transactions for 
individuals as well.
    Second, is to transact commerce between individual business 
and government, to improve the efficiency in that regard as 
well as make information reporting requirements and all the 
other factors that we require of industry through Federal 
regulation as well as through statutory compliance to be 
reported through that mechanism.
    Third, is to facilitate government-to-government 
relationships, State and local transactions as well as the 
Federal interrelationship with those offices for block grants, 
for a range of different kinds of direct intergovernmental 
kinds of activities that occur--reporting requirements, and so 
on.
    Senator Carper. What was the second one?
    Mr. O'Keefe. Between government and business, again to 
transact business as well as facilitate faster, more 
comprehensive reporting compliance.
    So those three areas are the means by which it leverages 
the accomplishment of the other elements of the President's 
management agenda very specifically, which I outlined at the 
beginning.
    In terms of where we are now, again, to borrow a term that 
the Chairman used in his opening statement, it is an uneven 
application right now. At very best, I think you can say that 
we can see throughout the Federal Government some of the very 
best examples of comparable commercial compatibility in some 
agencies and departments, and it is not necessarily even 
dependent upon whether you think they naturally ought to fit in 
those agencies or departments; it sometimes turn on the 
aggressiveness or the focus or the attention of the senior 
management and leadership of those agencies and departments 
more than any other variable.
    We can also see some of the ultimate examples of 
information technology Luddite throughout the Federal 
Government in other areas. So I think it is an uneven 
application across the board, and where we are now is an 
attempt to at least raise all boats to at least that top common 
standard which we experience within commercial enterprise. That 
is a very ambitious goal in and of itself but one that is 
achievable.
    In terms of how do we intend to mesh this with S. 803, 
which is as I understand the third part of your question, it is 
to take the Chairman and Senator Thompson up on their very 
gracious invitation to work with the Committee to fashion this 
as a means to facilitate this larger agenda and vision that the 
President has outlined as part of his management objective for 
this administration.
    Senator Carper. I want to revisit the structure that you 
have set up within OMB. Is there a person who reports to you 
who is in essence the CIO? I am sorry--you are the CIO; right?
    Mr. O'Keefe. Well, the approach that the President has 
outlined is that he will delegate and seek to have the deputy 
director for management serve as the Federal CIO, and we are in 
the active process right now of recruiting for a deputy 
director for management. In that regard, that individual will 
be the Federal CIO----
    Senator Carper. And whom would that person report to?
    Mr. O'Keefe. To the director and myself; the director, the 
deputy director, and the DDM would all operate within that 
process.
    The Associate Director for Information Technology and E-
Government, Mark Foreman----
    Senator Carper. Who?
    Mr. O'Keefe [continuing]. Mark Foreman--who has been 
brought on board and who is no stranger to this Committee, with 
industry experience as well as a lot of time here----
    Chairman Lieberman. Tom is new; you will have to forgive 
him.
    Senator Carper. Is he from Delaware? [Laughter.]
    Mr. O'Keefe. One of those 750,000, sir.
    Senator Carper. And counting.
    Mr. O'Keefe. Yes, and counting.
    The approach that we have taken there is again on par with 
and comparable to the associate directors who have recognizance 
for individual parts of government review as well as with the 
Office of Information and Regulatory Administration, the Office 
of Federal Procurement Policy, and the controller. So those are 
comparable organizational standing for the purpose of 
facilitating this initiative in information technology across 
the Federal spectrum.
    Senator Carper. I guess the person who you will get to fill 
this position is the deputy for management?
    Mr. O'Keefe. Right.
    Senator Carper. You need someone who can actually reach out 
to the other departments and get their attention, someone who 
knows his stuff but can actually reach out and talk to Cabinet 
secretaries, and they will listen. You need someone who has 
your ear, who has the director of OMB's ear, and also to some 
extent, the President's ear.
    Mr. O'Keefe. We concur. That is exactly the job description 
we are looking at.
    Senator Carper. The idea of the approach that you are 
taking here of putting this power in OMB, I find attractive, 
because there is probably no agency as close to the Presidency 
as OMB. You have the money; you control the budget in OMB, and 
OMB has the clout to be able to reach out across the government 
and get people's attention, and to the extent that we want 
standards and adherence to those standards, that would seem to 
work.
    I would go back to a point that I made earlier. There is a 
lot of innovation going on down at the grassroots that you may 
or may not be aware of, and I am probably not aware of, but 
there are some really good things going on down there, and part 
of what we need to be able to do is to encourage and to incent 
that innovation. To the extent that you have agencies that are 
doing an especially good job--we alluded here earlier to some 
things that are going on in Department of Transportation--to 
find ways for them to serve as role models, to get other people 
excited.
    As my last point, I will just build on what you said 
earlier. If you look at an agency, and you find that exciting 
and innovative things are going on with respect to harnessing 
the power of e-government to serve people and do our job more 
effectively, the leader of that agency is really important in 
that arena. And often in the case of the leaders of those 
agencies, this is not their shtick. It is not something that 
they have grown up believing in or really knowing about. We 
find with our schools back in my State, that the schools that 
do the best job of harnessing technology in the classroom to 
raise student achievement are the ones where the principals 
understand, and the principals get it. So that somehow, we have 
to fashion a system here where not just the principals get it 
but where the folks who are leading our agencies get it and 
will say to the people who work to them: This is important; it 
is important to me, and it is important for those whom we 
serve.
    Thanks very much.
    Mr. O'Keefe. Thank you, Senator. I appreciate it.
    Chairman Lieberman. Thank you, Senator Carper.
    Senator Bennett.

              OPENING STATEMENT OF SENATOR BENNETT

    Senator Bennett. Thank you very much, Mr. Chairman. I 
appreciate the opportunity to be involved here. I have been 
writing down questions, and my staff have been writing down 
questions, and I am going to ignore all of them--well, not all 
of them--and go to an area that has become something of an 
obsession with me, because I think the other questions that I 
would ask are being adequately asked by Members of the 
Committee.
    As you may know, Mr. O'Keefe--we have had this conversation 
privately--I am very concerned about security, and not just 
cyber attacks and terrorism and the kinds of things that give 
rise to those sorts of scenarios, but let me talk for just a 
minute about interruption-in-service attacks. We have seen the 
``love bug'' virus which cost the economy $8 billion or more, 
depending on whose estimates you read. We have seen the 
interruption-of-service attacks that hit Amazon.com and some 
other commercial entities. The vulnerability that the 
government might have if there were an interruption-of-service 
attack levied by someone who was more than a hobbyist--and the 
attacks that I have described have been very unsophisticated 
and almost sophomoric in their technology level--the exposure 
that the government would have if you moved to the level of e-
government activity that you are talking about here would be 
pretty high.
    Could you address that general question, and then I would 
like to get down to specifics about the role of the CIO and so 
on in dealing with that. But first, if you become as accessible 
for e-government as, say, Amazon.com is accessible for e-
commerce, what kinds of vulnerabilities are there for someone 
who wants to create mischief?
    Mr. O'Keefe. I guess my personal bias is that we are going 
to be vulnerable; there is just no question about it. There are 
just so many steps that you can take to be preventive in these 
cases; there are defense mechanisms that you can create for 
those purposes. But I think the key to the problem is to remain 
as attentive as you have suggested we need to be to the fact 
that it is a vulnerability that is out there all the time. 
There is no question that that is going to be a real challenge.
    The approach that we have taken to this, rather than simply 
say here are the defensive mechanisms that we think are 
necessary or the particular approaches that ought to be used 
for security, given the fact that there are lots of different 
ways to go about this, and the nature of those attacks are 
varied, is first and foremost what we have done in development 
of even this first budget submission. But it will really be 
aggressive in the 2003 submission, and that is to require the 
agencies and departments to demonstrate how they have built in 
both security and privacy features in the information 
technology initiatives that they are championing prior to our 
advancement of those requests to the Congress for funding of 
those initiatives, so that at least we can identify what their 
plan is, how they intend to deal with it, and be cognizant of 
what the problem is. Because again, I think the lion's share of 
the problem in this circumstance is to be aware of the fact 
that that vulnerability exists and that it is a fairly easy 
proposition to break. Given the fact that we are looking for 
transparency, that opens us up even further. So we need to be 
more cognizant of that, and work on it very hard.
    The second one I would offer to you is that our greatest 
challenge in this case is, again, back to some organizational 
stovepiping that exists. If it is not in some department's 
jurisdiction, they consider it to be somebody else's problem. 
So part of the approach that has been taken on is to create an 
interagency effort in this regard that is about to be codified 
in an executive order that the President will consider that has 
been in the vetting process for several weeks now, through the 
National Security Council and all the appropriate players 
involved.
    Senator Bennett. I am very familiar with that one.
    Mr. O'Keefe. OK. That is the two-prong approach we are 
trying to take with this.
    Senator Bennett. We held a hearing in the Joint Economic 
Committee on the vulnerability of the economy as a whole, and 
just to repeat as background for my next comment, 85 percent of 
the things that are vulnerable in our society are in private 
hands; so even if we had the very best of security on the 
government level, we would still be vulnerable to someone who 
wished us ill by attacking the phone system or some other key 
infrastructure circumstance in the United States. I have had 
some preliminary conversations with Chairman Lieberman about 
this, and I understand that he wants to pursue it further, as I 
do.
    One thing that came out of the testimony before the Joint 
Economic Committee is that the witness from--I believe it was 
the CIA, but there were enough other witnesses that I may have 
it confused in my mind--he said we are approaching this 
challenge tactically, and we are not thinking strategically. We 
are not backing away from it to get the whole picture and 
understand the strategic vulnerability and opportunities that 
are there for the United States with respect to this world.
    And let us understand, as Chairman Stevens has indicated, 
that we are living, whether we like it or not, in a full new 
world, and we have the old paradigms that are constricting us.
    So if we are talking about a Federal CIO, wouldn't the 
responsibility to view this whole question strategically lie 
primarily with him or her, and would OMB be in a psychological 
circumstance where they could accept that kind of a strategic 
view, so that we are not just talking about from one agency to 
the other, but we are talking about the whole economy here and 
some Federal leadership that says, OK, we have to recognize the 
new world in which we live; it has potential for enormous 
productivity increases, enormous increases in sharing of 
information, enormous increases in efficiency, but at the same 
time, concomitant increases in vulnerability. And someone who 
either wants to shut down the government because they do not 
like us or steal money--organized crime is finding that unlike 
Willie Sutton, who robbed banks because ``that is where the 
money is,'' they can rob the Internet sites, because that is 
where the money is, and we have had examples of organized 
crime, not in this country but from other countries, trying to 
break into American banks and steal money electronically. You 
are talking about putting an enormous amount of Federal 
information now available on the Internet and the vulnerability 
of people coming in and saying, OK, let us screw up the Federal 
Government by coming back at it.
    Are any of these concepts on OMB's radar screen or are you 
saying, as you did in your earlier comment--and I am not being 
critical about it; I am just pursuing it--that this belongs to 
Condoleezza Rice's level----
    Mr. O'Keefe. Oh, no.
    Senator Bennett [continuing]. And she has spent a lot of 
time thinking about it--I have had several conversations with 
her about it--so we at OMB can stovepipe to the extent that we 
can say no, our mission is just to get it efficient, and we 
will leave this other--or are you and your potential CIO 
thinking in these strategic terms?
    Mr. O'Keefe. I appreciate the further clarification. I did 
not mean to suggest that this was something that we considered 
on somebody else's table. If anything, OMB has this as a 
dominant issue in the equation. I can assure you that just in 
the last couple of weeks, having spent several hours with an 
intergovernmental group co-chaired by me and Condy Rice's 
deputy, Steve Hadley, working through the very issues you are 
talking about here--so if anything, I associate myself with 
your remarks very directly, because I think we have failed to 
consider this on a strategic level and consider it to be more 
of a coordinative function and one that requires a lot more 
proactive stance to it. That is part of what the President's 
initiative--the executive order pending that you are familiar 
with--is intended to deal with.
    So we spent a lot of time vetting through that, and again, 
really pushing through the colander the kinds of requirements 
that I outlined on what the department and agencies have in 
mind, at OMB looking specifically at how they intended to 
address security and privacy issues, is a criterion we have 
pursued there.
    So if anything, Condy Rice has done a tremendous job of 
leading the charge in this regard, convening the National 
Security Council sessions, with Steve Hadley as the deputy, but 
it is one that we have a very active part in at OMB and in 
which we are involved very closely in accomplishing that task.
    That is a lot of the reason as well why our effort to 
recruit the Associate Director for Information Technology and 
E-Government was so essential, is to coordinate this on a more 
strategic level as opposed to continually looking at it as 
individual programmatic kinds of questions that fail to have 
that interrelationship.
    So we concur with your assessment entirely.
    Senator Bennett. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Lieberman. Thanks very much, Senator Bennett, for 
raising this subject. You and I have talked about it, as you 
said. I appreciate your interest and concern, and I share it. 
The obvious fact is that the Internet and information 
technology open up extraordinarily exciting new possibilities 
to communicate in every way, and the more we do it, the more we 
become dependent on it and the more, also, there is a 
vulnerability. And of course, it provides people outside the 
United States who may for one reason or another wish us ill an 
unprecedented opportunity to strike at us directly. This evokes 
some of the thoughts that have been bouncing around here for a 
while about homeland defense, but we have become vulnerable in 
a very different kind of way.
    So I hope the Committee can find a thoughtful and 
constructive way, and I look forward to Senator Bennett playing 
the leadership role in it, to pursue these issues and again, of 
course, to work with the administration. So I thank you.
    Senator Voinovich.

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich. Thank you, Mr. Chairman.
    As the Ranking Member of the Subcommittee that oversees the 
management practices of the Federal Government, I am very 
interested in discussing the future of electronic government 
and how information technology can improve the delivery of 
services.
    I think we all agree that the Federal Government lags 
behind the private sector, but Mr. Chairman, one thing--and 
maybe it is because I was a mayor and a governor--that I have 
noticed in Congress is that we have a tendency to mandate on 
the administrative branch of government how we think the 
management side should get the job done. I think the most 
positive thing I have heard today is that the administration is 
going to work with this Committee to try to figure out how we 
can best help. And I would hope that the final result of that 
is not that we impose something on the administration that it 
does not think it needs to get things done. So we will be 
anxious to hear from Mr. O'Keefe how he thinks we can help.
    I think we also cannot forget the fact that e-government is 
going to require a technologically savvy work force and that we 
would be remiss if this hearing did not include a discussion of 
how the Federal Government is going to recruit and retain the 
high-tech work force of the future. I would suspect that one of 
the reasons why many Federal agencies are not as competitive as 
the private sector side is the fact that we have not been able 
to retain and attract the kinds of people that you need in 
those agencies. I would respectfully suggest that hiring 
somebody to be the top person to run this show is in itself not 
going to get anything done unless you have capable troops out 
in the agencies.
    I think I have talked to Mr. O'Keefe about this before, but 
I really think that the most important thing the administration 
should be doing is doing an inventory of the human capital 
resources that you have in respective departments, including 
the status of your capacity in the information technology 
arena, trying to make sure that you keep the folks that you 
have and also try to figure out how you can attract the folks 
that you do not have.
    One of my first legislative priorities when I came to 
Congress was the passage of the Federal Financial Management 
Assistance Act. This act streamlines the application process 
for financial assistance by consolidating Federal paperwork 
requirements.
    I would really like to receive from you a status report on 
the implementation of that Federal Financial Management 
Assistance Act. It is my understanding that OMB has designated 
the Department of Health and Human Services as the lead agency 
to coordinate the efforts of the various grant-making agencies 
and that a joint implementation plan has been drafted by the 
agencies that promotes the use of electronic grant projects.
    My questions are: Do the agencies have sufficient resources 
and training to administer these grants electronically? What, 
if any, barriers prevent this act from fully implemented? And 
what assistance can this Committee give you?
    The only reason I bring it to your attention is that here 
is an initiative that we started a couple of years ago, and I 
know that when we were talking about implementing that 
legislation, I had an argument--or, let me say a discussion--
with the House sponsor about how fast the agencies would be 
able to move forward, and as we looked at the time line, part 
of it went from one administration to the next, and I suggested 
that the next administration might be going through a 
transition period, and it might be difficult to reach the time 
line.
    But I think that if you looked at that legislation and 
where it is at, it would give you a very good insight into just 
how difficult it may be to do some of the things that this 
Committee thinks can be done if we had some person who was just 
dedicated to making it happen.
    You have mentioned in your testimony that ``E-government 
initiatives must be linked with other management reform 
initiatives such as the strategic management of human capital, 
budget and performance integration, competitive sourcing, and 
improved financial performance.'' I would be interested in how 
the administration proposes to integrate these various 
management reform initiatives.
    The other thing that you talked about was the issue of 
standards, that you felt this proposed legislation does not 
provide the performance standards to be effective.
    So if you could, in the few minutes that you have left, 
share with me--maybe the best way to start off is with the 
standards. What are your suggestions on how those standards 
could be put in place?
    Mr. O'Keefe. As usual, Senator Voinovich, you have posed an 
extremely challenging set of questions that I will try to tick 
through quickly.
    Let me start with the standards question at your request 
and then move through the balance of the other questions as 
well. First and foremost, the standard that we are seeking is 
to at least make an order-of-magnitude leap to a commercial 
standard, which would be an improvement in and of itself; if we 
could establish that again as a more level kind of approach to 
things, that would be an accomplishment that I would be very, 
very pleased with in and of itself, because there are so many 
cases in which we are woefully behind even commercial 
standards.
    The second one is to think more in terms of how to achieve 
cost-efficiency in just basic, garden-variety business 
operations. To achieve a cost-efficiency target or objective in 
that regard, which is a standard commercial practice anywhere, 
to just adopt that approach would be a useful mechanism as 
well.
    The third one, very generically, is to look at the 
accomplishment or the attainment of a generational condition 
that is no more than two generations old which, by definition, 
is no more than 3 to 5 years. As a matter of fact, given the 
speed with which information technology advances are 
introduced, 5 years is probably way beyond two generations--it 
is probably much earlier than that--but I just use that as a 
general benchmark. So that would be an approach to start with 
and to flesh out even further than that, but it is one that the 
Chief Information Officer's Council, the CIO Council, will be 
charged with trying to establish what those standards ought to 
be and agree to terms that make more specifically who would 
apply in those three cases.
    Let me work through a couple of other points you raised as 
well, because they are very important ones, and they cut 
directly to the issues that we are involved with.
    First, in working with the Committee, I agree with you 
whole-heartedly, there is no question that we are dedicated to 
the proposition of making S. 803 a bill that will facilitate 
and help accomplish the President's initiative in this regard. 
So there is no doubt about it, this is a very helpful move and 
initiative in that regard. We are anxious to work together to 
do that and appreciate very much your sensitivity to the 
administrative and managerial realities of how this has to be 
done relative to legislative imperatives, and we seek to 
combine those and make them as compatible as possible.
    Second, as far as the work force and the overall strategic 
management of human capital question, you are exactly right. 
Our objective is to inventory, and we are about that business 
right now. We have asked each agency and department to produce 
a work force planning objective which, as a matter of fact, is 
due right now; we are seeing it coming in from each of the 
departments and agencies. They have been working on it for the 
last 3 months, to produce exactly what their objectives and 
targets are for not only overall personnel levels but 
specifically what skill sets and expertise requirements and 
training efforts are necessary, all of which we have asked for 
now as a means to factor into the fiscal year 2003 budget 
review and the 2003 budget presentation that we intend to make 
before Congress next winter.
    So this is our effort to try to accomplish that task, get 
the information that is necessary, and try to factor that into 
the budget itself.
    Finally, on your question on the Financial Management 
Assistance Act, indeed HHS has done a tremendous job of pulling 
this together and taking a leadership role that I heard about, 
as a matter of fact, just this morning in terms of an update of 
where they are on that.
    Secretary Tommy Thompson has really taken this on 
personally, has been actively involved in it, and has, as I 
gather, assembled some 26 different agencies for the purpose of 
trying to pull together all the information necessary to comply 
and to work through this----
    Senator Voinovich. I might make a suggestion that just by 
doing that, it will give you an insight into where those 
agencies are in terms of the personnel that you need.
    Mr. O'Keefe. Absolutely, and as I understand it, that was 
one of his observations, that this has demonstrated some of the 
glaring issues that are required there. And apparently, they 
have worked through this in the course of the last several 
months with the intent of developing a very comprehensive 
response to the requirements of the act that will go through 
not only what the training requirements are, what the funding 
requirements are, but also identify whatever statutory as well 
as administrative impediments and barriers may exist that we 
will identify for you and accompany all of that as part of the 
fiscal year 2003 budget submission.
    So it was a very important initiative and one that has been 
taken seriously, and I was delighted to learn that Secretary 
Thompson has embraced this with a lot of enthusiasm.
    Senator Voinovich. Thank you.
    Mr. O'Keefe. Thank you, sir. I appreciate it.
    Chairman Lieberman. Thanks, Senator Voinovich.
    Senator Carnahan, welcome.
    Senator Carnahan. Thank you very much, Mr. Chairman.
    I would like to take a brief moment to make a few opening 
remarks, if that is all right.
    Chairman Lieberman. Please.

             OPENING STATEMENT OF SENATOR CARNAHAN

    Senator Carnahan. I would certainly like to applaud you for 
your leadership on this very forward-looking proposal. The time 
has come for government agencies to follow the example set by 
the private sector. We must begin to use the Internet and other 
information technology to increase efficiency, bolster 
accountability, and cut wasteful spending.
    E-government will enable users to interact with government 
agencies at their convenience, 7 days a week, 24 hours a day. 
This is exactly what Americans have come to expect on-line from 
the private sector.
    Electronic access provides a means to avoid trips to 
government offices and to avoid the aggravation of standing in 
line. We want to allow citizens to be on-line and not in line.
    I am glad that one of today's witnesses will testify about 
States' efforts in regard to e-government. I am proud to say 
that the State of Missouri is engaged in an aggressive effort 
to deliver digital government services, and I look forward to 
hearing about the status of e-government in other States around 
the Nation.
    Mr. Chairman, I am extremely pleased that this initiative 
contains provisions designed to protect users' on-line privacy 
and security. I have just come from a Commerce Committee 
hearing where the topic was the collection, use, and 
dissemination of personal information by commercial websites.
    I believe strongly, however, that government must take the 
lead in guaranteeing on-line privacy protection. Especially as 
we move government into the digital age, we must pay 
particularly close attention to guaranteeing privacy and 
security on-line. I believe strongly in the importance of e-
government. I am concerned, however, that the benefits that e-
government promises to deliver will only be available to those 
Americans who have a computer and access to the Internet. As 
such, today's discussion must also address the so-called 
digital divide. Digital government must engage everyone, not 
just those who have the means to access the Internet.
    Your legislation today, Mr. Chairman, begins to address 
this concern by calling for the Department of Education to 
evaluate the best practices currently being used by Community 
Technology Centers that receive Federal funds. These centers 
focus on providing Internet access to all visitors with the 
goal of making on-line services available to everyone. The bill 
also promotes the availability of Community Technology Centers 
through a variety of assistance measures.
    But more needs to be done, and I am committed to finding 
ways to bring the benefits of Internet access, particularly 
high-speed access, to more Americans. E-government is a perfect 
example of the type of opportunity that is unavailable to 
Americans who do not have access to the Internet.
    I am extremely supportive of your efforts to provide an on-
line government that is seamless and efficient and secure, and 
I am convinced that digital government will provide countless 
benefits for the American people.
    I look forward to working with you, Mr. Chairman, to ensure 
that digital government is accessible to all Americans. I have 
a question for the witness.
    Mr. O'Keefe, we can create a solid e-government foundation 
and a complex service network, but citizens will not use these 
on-line services if they do not know how to access them or if 
they are unaware of their existence. What can be done once 
digital government is fully implemented to ensure that the 
American people are informed of the new service that is 
available to them?
    Mr. O'Keefe. I think that first and foremost is to keep it 
simple. Accessibility is in and of itself simplicity. I think 
the information technology industry has evolved to the point 
where they have emphasized accessibility. And again, its virtue 
is the simplicity of it. If it is complicated, any of us as 
humans then end up looking at the problem, whether we are 
interested in information technology or not, and do not want to 
go through the mechanics of making that happen. So it is one of 
the greatest advances in the industry.
    What has, I think, made the market for the products of this 
industry so appealing to us as humans is that it is so much 
easier, much more--the old shopworn phrase--``user-friendly.'' 
That has got to be the first guide, and that has got to be the 
first fundamental premise, to make this as transparent and as 
``user-friendly,'' to use that old term, as we possibly can.
    That therefore means it has got to be more interoperable 
with other systems. It cannot be a stand-alone proposition, and 
it cannot be something that only a department or an agency can 
maintain or operate or deal with for the purpose of advertising 
its own objectives.
    One of the great advances that this Committee was on the 
forefront of initiating is the establishment of the 
FirstGov.gov system. It is a nascent effort, it is a beginning, 
but it nonetheless is intended for that purpose of portability, 
interoperability with a number of different systems, and a 
means to access a wide range of different government efforts 
just be a very simple, basic accessing, click-on kind of 
approach to things that they have designed in that site.
    We have to take more and more of those kinds of cues to 
make this a user product, one that citizens and citizen-centric 
kind of focus can always emphasize but that also has the 
sophistication to it necessary to make business and government 
transactions and government-to-government transactions. All 
those things are achievable, and the state of the industry, the 
state of the commercial products that exist out there now, is 
such that this is an attainable objective and one which we 
ought to be able to aspire to.
    Senator Carnahan. Thank you very much.
    Mr. O'Keefe. Thank you, Senator.
    Chairman Lieberman. Thanks, Senator Carnahan. I look 
forward to working with you on this subject.
    Mr. O'Keefe, we have no further questions. Thanks very much 
for your testimony. It has been a good interaction.
    I just want to repeat my commitment to working with the 
administration on this, and I would really like to do it soon. 
In other words, to state the obvious, this technology is moving 
so rapidly, and we have great opportunities. If there are 
differences--and there are some differences, but I do not 
consider them by any means unbridgeable--we ought to try to 
bridge them as quickly as we can so that the country can enjoy 
the benefits of the best information technology in the Federal 
Government that we can manage.
    So we are going to be in touch with you real soon to see if 
we can begin the process of going forward with the legislation.
    Mr. O'Keefe. I am anxious to do that. I appreciate your 
gracious hospitality as always, Mr. Chairman. It is nice to see 
you.
    Chairman Lieberman. Thank you. You, too. Have a good day.
    We will now call the third panel, which includes Anne K. 
Altman, Managing Director, U.S. Federal-IBM Corporation; Dr. 
Costis Toregas, President of Public Technology, Inc.; Aldona 
Valicenti, President of the National Association of Chief 
Information Officers of the States; and Greg Woods, Chief 
Operating Officer of the Student Financial Assistance of the 
U.S. Department of Education.
    Thank you all for being here, and I appreciate your 
testimony.
    Ms. Altman, why don't you begin?

    TESTIMONY OF ANNE K. ALTMAN,\1\ MANAGING DIRECTOR, U.S. 
                    FEDERAL-IBM CORPORATION

    Ms. Altman. Thank you, Senator.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Altman appears in the Appendix on 
page 72.
---------------------------------------------------------------------------
    Chairman Lieberman, Senator Thompson, and Members of the 
Committee, I am delighted to be here today to speak to you 
about IBM's views on e-government.
    I am Anne Altman, the Managing Director for IBM Federal. I 
was really eager to testify today, because we believe the E-
Government Act of 2001 will truly speed the transformation of 
the Federal Government to a more contemporary enterprise, a 
government that can improve services for its citizens, improve 
efficiencies, reduce costs, and continue the leadership of the 
United States into this networked society.
    S. 803 also hits very close to home for those of us at IBM. 
We have gone through our own transformation out of necessity. 
So I would like to spend a moment talking a bit about IBM's 
transformation.
    Incorporating Internet technology into our core business 
allowed us to be successful in today's very global and changing 
economy. We have become an e-business leader, and we have done 
so by breaking down silos or the walls between our own 
business; we have integrated across business through our 
processes and systems, and we now approach the market as one 
IBM, a single integrated organization rather than the 20 
separate business units that we had several years ago. The 
results of that transformation were well worth the risk and the 
discomfort that we experienced along the way.
    To regain control of our IT environment, we consolidated 
155 data centers across IBM. We replaced segregated networks 
into one global network. We appointed a single, enterprise-wide 
CIO responsible for defining consistent architectures and 
standards. And we restructured our IT strategy to be consistent 
with the overall business strategy of IBM--and that is 
something that has been brought up today--very important in 
aligning that IT strategy with the mission and objectives of 
the business of government.
    These changes enabled a lot. We did $23 billion over the 
Internet last year. That is nearly one-quarter of all of IBM's 
revenue.
    Chairman Lieberman. That was business-to-business or 
business-to-consumer?
    Ms. Altman. Both business-to-business and business-to-
consumer. That is up 350 percent in just 2 years.
    We also provided a means to handle 99 million self-service, 
self-customer service over-the-web transactions. That was up 
from 14 million just 2 years ago.
    But that is not all. We did 96 percent of all of our 
procurement with paperless invoicing.
    The benefits of these changes were truly significant. We 
save now 70 percent of the cost of every service transaction 
that we do over the web versus the old paper way. Seventy 
percent is tremendous.
    All told, we saved $377 million in 2000, and beyond the 
hard savings is the actual cost avoidance. That was $2.4 
billion for IBM, or nearly 2.7 percent of our revenue. If you 
were to apply these metrics to government, you begin to focus 
on the size of the opportunity that e-government offers.
    Consider, for example, the discretionary spending in the 
HHS budget alone, at $55 billion--2.7 percent cost avoidance 
there would be nearly $1.5 billion; or for HUD, with 
discretionary spending in their budget of $30 billion, that 
cost avoidance would be around $810 million.
    So for the Federal Government, transformation will not be 
easy. There will be problems. We have talked about some of them 
this morning--technical, political, bureaucratic problems. But 
I assert that the results will be well worth it.
    To create transformation, government leaders have to focus 
on several critical policy issues and choices surrounding 
leadership, integration, and infrastructure. In addition, you 
have to address human resources, privacy, security, and 
resistance to change. This bill successfully addresses the most 
crucial of these.
    Developing a transformation plan in the starting point. The 
E-Government Act of 2001 begins the process and will address 
the most important issues in creating linkages to integrate the 
entire government enterprise--interoperability, funding, and 
leadership.
    The most fundamental aspect of the transformation is 
creating a technical foundation that will enable the agencies 
to communicate with each other and with the outside world. With 
the breadth and size of the technology currently used in the 
Federal Government, I think that this interoperability is key.
    To that end, those serious about e-government must create 
and maintain standard, spaced information infrastructure. The 
speed of technological advancements in our networked world 
demands this, and the technology exists today to do it.
    The second major aspect of the bill is the e-government 
fund. Once you recognize the need for connection between or 
within agencies, you then have to get them to actually do it. 
Our experience has shown that starting in small steps through 
pilots projects such as those anticipated with the e-government 
fund helps break down resistance to change.
    Pilot projects reduce risk, they create momentum, and they 
allow success to breed success. It results in providing an 
example and raising the bar of success for everyone involved.
    The fund will promote interagency cooperation, it will 
provide an incentive for savings to the people doing the saving 
themselves, it allocates money based on the value of a project, 
not on the basis of a fiscal year time line. All are excellent 
means to drive cooperation which is necessary for the success.
    The funding level proposed in the bill is a start. It is a 
minimum necessary to have impact. But I believe that to truly 
implement transformation, agencies must have their skin in the 
game within their ongoing IT budgets.
    A third point regards the Federal CIO provisions of the 
bill. In our experience, executive leadership is the critical 
element in enterprise-wide transformation; without it, nothing 
really happens. This is especially true in large organizations 
with great inertia and the ability to wait it out, wait until 
the next, less demanding leader comes along.
    We believe that the title ``CIO'' is not as important as 
the accountability and the strategic leadership of the 
position. To move forward quickly with interagency cooperation, 
visionary, aggressive, top-down leadership is required. This 
leader must be appointed by the President, recognized by most 
senior leaders in the government as a peer and a partner. This 
leader must focus on cross-government IT infrastructure and on 
implementation.
    The E-Government Act of 2001 is a giant step toward closing 
the growing gap between e-transformation in the public and the 
private sectors.
    Chairman Lieberman, Senator Thompson, and Members of the 
Committee, I thank you for the opportunity to be here today. 
IBM is ready and able to work with you on this issue.
    Chairman Lieberman. Thanks very much, Ms. Altman, for a 
very thoughtful statement.
    Dr. Toregas, thanks for being here. Please proceed.

   TESTIMONY OF COSTIS TOREGAS, Ph.D.,\1\ PRESIDENT, PUBLIC 
                        TECHNOLOGY, INC.

    Mr. Toregas. Chairman Lieberman, Senator Thompson, and 
Members of the Committee, I am very pleased to be here 
representing the voice of local governments.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Toregas appears in the Appendix 
on page 82.
---------------------------------------------------------------------------
    Public Technology, Incorporated is a nonprofit, tax-exempt 
institution created over 30 years ago in the belief that 
technology has a role to play for cities and counties--the very 
rubric of our society.
    Our mandate is to focus on technology, and you will not be 
surprised to hear that cities and counties have been 
experimenting around the edge of this e-government opportunity 
since the early 1990's when the City of Palo Alto and the City 
of San Carlos and a few other small communities set up what 
they thought was an experimental thing called a ``website'' on 
the Internet. This was 7 or 8 years ago, before most of us 
appreciated the power that was to be an electronic government 
potential.
    I would like to share with you a couple of lessons that the 
local governments, the cities and counties of this country, 
have learned in the true hope and belief that we can learn from 
one another.
    First, we have found that in order for e-government to 
work, there has to be an e-citizen. I think the Committee has 
already heard quite a lot about the concerns about 
accessibility. The only slightly different answer that I would 
give to the answer that was given to Senator Stevens on the 
question about how about the people who cannot access is that I 
would just overturn the order and make that my priority. I 
would make it my priority to make the system, the technologies, 
become more and more accessible to those who do not have it 
today.
    I think that allowing the systems as currently existing to 
separate people from their government is not right. So I would 
urge the Committee and I would urge this bill, S. 803, to 
enhance the opportunities for the elderly, for the young, for 
those who do not have the financial resources to find access to 
the Internet.
    Second, the opportunity from e-government is massive in the 
area of reengineering. The consultants would call it ``business 
process reengineering'' or BPR. We have found at the local 
government level that it is not as important to have a 
beautiful website as it is to do the work behind the website 
and to get the departments and agencies to begin to butt some 
heads and change the way they have traditionally done their 
business. I believe that Ms. Valicenti will also speak to that 
from the State perspective.
    That opportunity to reengineer is a tremendous opportunity, 
speaking to Senator Thompson's concern about how can we get the 
whole government mandate reformed. E-Government is an 
opportunity and a tool for government reform.
    The fund that the bill contemplates is a wonderful idea for 
what I would call horizontal systems, where you try to 
integrate systems across departments and agencies. But I would 
add the little footnote that it is across departments and 
agencies of the Federal Government. The States have exactly the 
same concerns, and the cities and counties have exactly the 
same concerns.
    So what we have are three parallel platforms, each spending 
billions of dollars, each committed to some kind of organized 
and integrated approach. I would say that instead of thinking 
only horizontally, we have to start thinking about the vertical 
dimension, the intergovernmental dimension. And more important 
is the diagonal dimension, because the citizen does not really 
care whether it is the Federal Government, the State 
Government, or a county or a city that provides the service; 
they simply want the service, and they want it quickly, 
cheaply, and efficiently.
    So that imperative for diagonal systems development and 
implementation I think is a tremendous opportunity that S. 803 
has a great chance to focus on.
    My final quick remark--and Mr. Chairman, I do have prepared 
testimony, and I believe it will be made part of the record----
    Chairman Lieberman. Yes, indeed, Dr. Toregas. We are going 
to accept testimony from all the witnesses, and it will be 
printed as part of the record.
    Mr. Toregas [continuing]. Thank you, Mr. Chairman--the last 
point I want to make is about the opportunity that e-government 
offers us to learn how to work together in a more collaborative 
fashion and in a nonhierarchical fashion.
    The Internet is a very strange animal. If I have a website 
and you have a website, and you attach my website to yours, you 
do not lose control of your website, but all of a sudden, you 
become enriched with what I have. It is that horizontal, that 
networked feeling of connection between agencies, departments, 
and levels of government that I think the American public will 
really enjoy.
    If I can, I would like to end with my own definition of e-
government, because it is very difficult to have a bill on e-
government without knowing exactly how you feel that e-
government should be defined.
    Our own definition of e-government at the local level has 
three very important components. The first one is service 
delivery--making sure that the residents, the citizens, and the 
taxpayers receive prompt and efficient service.
    But there are two other components. The second one is 
economic activity. I believe you touch on it when you speak 
about the massive investments that we make in IT overall. Those 
investments have to produce economic activity, jobs, happiness, 
and food on the table. I think that e-government has a great 
opportunity to do just that in the area of trade promotion, in 
the area of job creation at the local level.
    Finally, democracy is the third and most important 
component that e-government has to begin to address. This very 
hearing here today is a hearing done in old style. We are here 
physically, we speak with you--but imagine the thousands of 
people who would like to contribute.
    I will tell you a quick story. In Des Moines, Iowa, they 
set up a communication system for their city council. 
Traditionally, they would get about 40 or 50 e-mails per week 
from residents of Des Moines. One significant issue came up in 
front of the council, and they received 5,000 e-mails in a 
week. Now, that says two things. One, we had better make sure 
that our democratic systems are able to accommodate that kind 
of surge of people who want to become involved in democracy 
once again. On the other hand, how do you deal with 5,000, or 
10,000, or 100,000 e-mails in a week's time? The very 
mechanisms of government that we have may not be quite ready 
for it. So I would say that the e-government direction also has 
to begin to prepare us to change the democratic principles and 
institutions that we have.
    Mr. Chairman, the localities and the counties of this 
country stand very, very ready to work with you and the Members 
of the Committee and with the private sector, which is an 
important counterpart, and our friends at the State level, to 
implement the results of your bill.
    Chairman Lieberman. Thanks very much, Dr. Toregas. That was 
very helpful.
    Next is Aldona Valicenti, who is President of the National 
Association of Chief Information Officers of the States.
    Welcome.

     TESTIMONY OF ALDONA VALICENTI,\1\ PRESIDENT, NATIONAL 
    ASSOCIATION OF CHIEF INFORMATION OFFICERS OF THE STATES 
                            (NASCIO)

    Ms. Valicenti. Thank you very much, Mr. Chairman, and thank 
you for the opportunity to be here.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Valicenti with attachments 
appears in the Appendix on page 86.
---------------------------------------------------------------------------
    Senator Thompson, in this Committee, it is great to have an 
opportunity to talk about what the States are doing.
    I bring to you probably a blend of experiences, and as 
President of the National CIO organization, very much about 
what the States are doing. I bring to you the experience of 
Kentucky, because I am the CIO for the Commonwealth of 
Kentucky. And third, in my past, I come from the private 
sector, so I bring to you a meld of experiences.
    First of all, I very much appreciate the opportunity for 
the organization to comment on this bill, because we in fact 
have spoken out on various parts of the bill over the last few 
years in terms of direction for the Federal Government.
    I would like to do that by commenting in a couple of 
areas--first, the leadership issue, the integration issue, 
consultation and what has gone on in the last couple of years, 
the investment part that is addressed, and last but by no means 
least, that this is now a citizen-centric world, and we are in 
the service business.
    The leadership issue is one where I would like to draw from 
my own experience. I was specifically recruited into the State 
of Kentucky to become its first CIO, to sit at the executive 
cabinet level. So I have enjoyed the luxury of actually 
creating my position. The vision for the position in many ways 
is very similar to what you have envisioned in this bill. It is 
someone who will have not only the budgetary accountability, 
but someone who will have the vision and the responsibility to 
look forward at how to best manage the information technology 
process.
    Technology waits for no one. It turns over every few weeks 
or every few months. It is our ability, though, on when we 
invest in it to make it useful.
    We have looked at various models, and I would suggest to 
you that much of what I heard this morning was very interesting 
discussion. Ultimately, I think it is not so much about titles, 
but it is very much about accountability and whether the 
constituency will buy into that leadership.
    At the State level, we see more and more States creating a 
CIO position. In many cases, that position reports directly to 
the governor because it is viewed as being so important, not 
only from an expenditure perspective but also from a 
perspective of leadership and how technology will be used to 
serve not only the citizens but to make government much more 
efficient.
    The integration issue is a very important issue. We have 
heard various facets of that this morning. Traditionally, 
departments, agencies, and cabinets tended to have their own 
control and viewed the IT direction strictly from their own 
perspective. We cannot serve citizens that way. Citizens do not 
know our structure, do not want to know our structure, and 
should not need to know our structure. All they need to know 
is, from a functional perspective, where can they get the 
service and how quickly can they get the service. And by the 
way, that is not confined to State boundaries any longer or to 
county boundaries or to city boundaries. In fact, it is not 
confined to any boundaries.
    So that how we work together is very important, and that is 
one reason why the Federal CIO position is so important, 
because it has to continuously drive that.
    Some of the discussion this morning was about whether 
things can be done from a departmental perspective or an 
enterprise perspective. I suggest to you that this is not an 
and/or proposition. We have to do both, and we have to figure 
out how to do both.
    Our organization very much appreciates the part of the bill 
about the consultation process. It is only through 
consultation, because it is not just a horizontal integration 
but is also vertical integration. So the ability now for the 
Federal Government to actually propose legislation, which in 
many cases is really enabled through information technology, 
and the States actually become the implementers of that 
technology. Consultation is vital to that process.
    On the investment portion, I will refrain from speaking 
about the amounts, because frankly, I am not sure that I am the 
best person to comment on that. But I think investment is 
critical, and I would like to use the example that we actually 
had in Kentucky. We set up a technology trust fund, not only to 
talk about enabling the new processes but also about 
reengineering processes. I would suggest to you that that is 
probably the most important part that we have discussed here 
today. We need to redesign how we work, not necessarily enable 
how we work today and do it much faster.
    The last point is on citizen-centric and service delivery. 
I have brought you a piece of technology to show you a couple 
of State portals, because I think there is an opportunity to 
look at the portal. And by the way, a portal is described as 
nothing more than a gateway to services. If we think of it as a 
gateway or a doorway--hopefully, you can see them on the 
screen.
    Chairman Lieberman. Yes, we can.
    Ms. Valicenti. Let me address the first issue. Citizens 
really are consumers first--I want to do it myself, on my own 
schedule, fast and easy. I think you have already heard that 
this morning.
    Chairman Lieberman. Senator Thompson and I both identify 
with those three things. [Laughter.]
    Ms. Valicenti. The first one that you see up there is 
Connecticut. The portal is not organized according to the 
traditional lines of structure, but according to services.
    Let us move on to the next one--I think I have chosen the 
right two--Tennessee.
    Chairman Lieberman. Excellent. I understand this was a 
random selection.
    Ms. Valicenti. Very random, Mr. Chairman.
    I think you can see the idea that citizens do not have to 
know the organizational structure; they really need to know 
what it is they would like to do.
    The third one is the State of Washington, and one must give 
credit to Washington, which has been viewed very much as a 
leader in the digital State. They have been very successful. 
And by the way, we borrow from each other, very proudly; it is 
called sharing of best practices.
    Pennsylvania has been very instrumental in organizing their 
website to services. What you see now is true portals and 
examples of portals.
    The State of Michigan very recently unveiled their portal, 
and again, it is all about services.
    North Carolina is one where the citizen can design it, so 
it becomes my portal, and I will see my information. Again, 
many of us will probably repeat that in what we are doing at 
the State level.
    Utah recently unveiled a new portal which is all around 
citizen services.
    The last but hopefully by no means the least is Kentucky, 
``Kentucky Direct.'' We do the same. You can get your hunting 
or fishing license. You can sign all kinds of forms to start a 
business. You can order birth certificates and death 
certificates; tax filings.
    We have one more, and I would like to address this one 
specifically, because it is also an opportunity to educate. It 
is the Kentucky Virtual University. We now have over several 
years enrolled almost 10,000 students. This is another way to 
learn--not only to use the technology but to upgrade your 
skills.
    Chairman Lieberman. Is that 10,000 from within Kentucky or 
outside as well?
    Ms. Valicenti. It is available to anyone.
    Chairman Lieberman. That is great.
    Ms. Valicenti. Thank you very much, Mr. Chairman.
    Chairman Lieberman. Thanks, Ms. Valicenti, for sharing your 
experience. I look forward to asking you some questions.
    Mr. Woods, thank you for being here.

 TESTIMONY OF GREG WOODS,\1\ CHIEF OPERATING OFFICER, STUDENT 
       FINANCIAL ASSISTANCE, U.S. DEPARTMENT OF EDUCATION

    Mr. Woods. Thank you, Mr. Chairman, and Senator Thompson.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Woods with attachments appears in 
the Appendix on page 101.
---------------------------------------------------------------------------
    I am the Chief Operating Officer for the Student Financial 
Aid Program within the Department of Education, and I was asked 
to testify about our use of the web and our e-commerce 
strategy.
    The context for this story is a new kind of government 
organization, the ``performance-based organization.'' Congress 
made us the first PBO. The heart of the PBO idea is a contract 
where we are held accountable for results and given control 
over the things that determine those results.
    Congress wanted our organization to improve service, cut 
costs, to get off the GAO high-risk list, and to do it by 
modernizing what was a tangle of old computer systems.
    Most of my career was spent in the private sector, where I 
ran businesses in the technology community, so these kinds of 
challenges were a natural for me.
    Secretary Paige has made systems modernization one of his 
six major management goals in his Blueprint for Excellence, his 
plan for correcting the management problems and restoring the 
confidence of the Congress and the American public in the 
Department.
    To get all this done, we do not just do websites, but we 
are changing practically everything. We changed the people, we 
changed the organization, we changed the financial systems, how 
we make investments, how we contract to buy new systems. By the 
way, we are already using share-in-savings contracting to 
finance our modernization.
    We have built numerous award-winning web products in the 
process, and we have had a number of firsts. We tied all this 
to a strong use of back office operations and systems proven in 
the commercial financial sector, tools used by Wells Fargo, 
Bank of America, and others.
    The idea behind all this is to be able to integrate 
customer services--and this is a key point I would like to 
make--so that once we get an electronic customer, we keep him 
as an electronic customer. We do not chase him back to paper.
    We do this with a series of websites. Let me show you what 
this means for students, who are our primary customers. The 
first business that a student does with us is the completion of 
his application for aid. This is known as a FAFSA. A few years 
ago, practically nobody filed the FAFSA via the web, but 
customers vote with their mouses, and this year, half of our 
applicants, about 5 million, will file electronically. The 
counter on my slide shows that we have a visitor to this site 
every 1.1 seconds.
    Chairman Lieberman. So that 5 million people will apply for 
financial assistance this year electronically.
    Mr. Woods. Five million, yes, sir; half of our population.
    Chairman Lieberman. That is great. How old is this site?
    Mr. Woods. We are trying to operate at web speed, so we are 
actually on the fifth iteration of our website, our fifth 
iteration of this application. We change it not just annually 
but within the year whenever it is appropriate.
    To get a loan to make this whole thing happen, people have 
to sign a promissory note. This is the toughest piece of litter 
to get off the information highway, because of its legal 
standing and its importance in enforcement. Thanks to GPEA and 
the E-Sign legislation, they can now even sign with us on-line. 
This application actually went live last week; it is the first 
of its kind in government and probably the first of its kind in 
the world. Private lenders use our system to make their student 
loans. The e-signature promissory note process, because it has 
inherent checks, balances, and extensive electronic 
recordkeeping, actually produces a lower-risk system for us 
than a paper version.
    Next, we keep these e-customers in the system with our 
direct loan site, where direct loan borrowers can service their 
loans on-line. They can see their account status, including the 
private sector loans, not just the government loans; they can 
change the payment schedule and see what the impact will be on 
them; they can opt for automatic debit payments, which is 
growing exponentially; and they can get deferrals and 
forebearances. They can also do a number of other things. 
Customers using this website have climbed to 3.5 million this 
year.
    We have similarly reengineered the process for how we deal 
with schools and members of the financial community. It is all 
tied to another one of Secretary Paige's priorities, that is, 
to completely retool and modernize our financial system so that 
we can produce auditable reports, the kinds of reports that you 
need for oversight and that we need in order to manage this 
operation.
    I think a key question is whether e-commerce really saves 
money. My answer to that is yes, it does, but it is not that 
simple. I know from my business experience that you cannot just 
automate a current system and assume that you save money.
    Look at that FAFSA process that I talked about, that 
application for student aid. If you look at the electronic 
application itself and compare it to the paper version, you 
will find that the electronic application costs about 50 
percent as much as the paper one. Good--it looks like a victory 
for e-commerce--but not so fast. If you look at the total 
system, you will find paper everywhere; we are mailing out and 
printing signature pages; we are printing and mailing out PIN 
numbers; we are printing and mailing the results from the web 
application itself. And even though millions more applicants 
file with us electronically, the schools were still ordering 
the same number of paper applications to distribute to their 
students. And we found that the web applications were calling 
our 1-800 number, asking simple questions but being connected 
with our most expert and most expensive operators to get those 
questions answered.
    So we attacked this issue. We revamped the phone system. 
Now, most of the calls are handled by a voice response unit. We 
are weeding the paper and mailings out of the web process, and 
we are working with schools to cut down on their demands for 
the paper FAFSAs. When I am done with all this, I expect that 
my electronic version will cost one-third or less compared to 
the paper version.
    The lesson in this that I want to leave is that e-commerce 
is a powerful tool in this battle of the budget, but you cannot 
win this battle from the air. This thing is trench warfare, and 
you have got to get down there and change the system.
    Thank you for listening to the story. I believe it is one 
of the success stories that the deputy director of OMB has not 
gotten to yet.
    Chairman Lieberman. I agree.
    Mr. Woods. Thank you for the E-Sign and GPEA legislation. 
They have made a huge difference in reality and attitude about 
how you do this business. And thank you for making SFA a PBO 
and giving us a chance to improve this important system for 
America.
    Chairman Lieberman. Thanks, Mr. Woods. In fact we invited 
you because we think you are one of the success stories. We 
appreciate very much your story.
    How many are filing today in paper as opposed to the 5 
million?
    Mr. Woods. Five million each.
    Chairman Lieberman. Five million each. And I presume you 
have no doubt that the number filing electronically will go up 
in the years ahead?
    Mr. Woods. We make people very much aware of that. Our goal 
is to get that number as high as we can. Our particular 
population will include people who do not have computer access. 
We are mindful of that, but we believe that with the population 
that we serve, numbers up in the 90 percent utilization range 
for the electronic aspect of our business are well within 
reach, so that is where we are headed.
    Chairman Lieberman. We have had discussion throughout the 
morning about the digital divide. I know it exists, but I saw 
numbers recently over the last 5 years which showed a 
remarkable increase in the percentage of people who are now on-
line. But you are the experts in this. Does anybody have a 
number of what it is today and what it is projected to be?
    Ms. Valicenti. Mr. Chairman, I think it really depends on 
whatever survey you look at and how recently it was done, but 
that number is probably well over 50 percent in many cases. I 
know that Kentucky has had a digital divide and continues to 
have a digital divide issue, but 53 percent of our population 
can actually get to the computer through work, home, school, or 
the library.
    Chairman Lieberman. This is somewhat to the side of the e-
government program, but obviously not, really, if the aim is to 
extend services and involve more people. We are talking in this 
bill about support for Community Technology Centers, which 
Senator Carnahan pointed to in her statement.
    Let me ask any of you what you think about those, and what 
other ideas do you have for rapidly closing the digital divide?
    Dr. Toregas.
    Mr. Toregas. We asked cities and counties, and about 2,000 
responded in a survey about 3 months ago. One question we asked 
was what are you doing to implement a digital divide bridge. 
Not surprisingly, about 83 percent of the cities and counties 
that answered--and this included about 2,000 cities and 
counties, so it is a very large percentage of the major cities 
and counties in the United States--provide Internet public 
access at government facilities. More important, 45 percent are 
working with local schools to establish bridges and provide the 
capability not only for the students but for their parents to 
come in, sign on, and become part of the e-generation. In 
addition, 22 percent are funding technology technical support 
efforts for the citizens out of their own local budgets.
    Those are three numbers that might give you some examples 
of ways that you can begin to look at the digital divide. A 
smaller number, about 13 percent, is using the Community 
Technology Centers. Perhaps what this indicates is that we need 
to make sure that these programs are well-understood and easy 
to get to by the localities.
    Chairman Lieberman. Ms. Altman.
    Ms. Altman. I will just make one comment which is really 
more on the technology side. The transformation of technology 
is occurring at such a pace that the device we think of as 
interacting with government or with business today, we think of 
as a PC, but very, very soon, devices like the handheld 
telephone and other devices will be the means for accessing 
information, and through that, accessing our government.
    So I think that although the digital divide is real, it is 
going to be shrinking based on the fact that technology will be 
so accessible to everyone.
    Chairman Lieberman. That is great. Thank you. I agree.
    There was some testimony here and I think a good-natured, 
good faith discussion between Mr. O'Keefe and members of the 
panel about how to construct the CIO office. I take it from 
your testimony that you feel that the closer the connection 
between the CEO and the CIO, the better off we are, and the 
more you can highlight and separate the CIO functions, the 
better it is going to be.
    Based on your various experiences, Ms. Altman, Dr. Toregas, 
and Ms. Valicenti, could you respond to that point?
    Ms. Altman. Yes, I would be happy to. Certainly, in 
industry and IBM, our CIO is both the business transformation 
executive and the CIO, and in that capacity is responsible for 
defining our strategic growth with technology, marrying that 
strategy to our business strategy as well as executing the 
overarching information technology plan, which includes, as you 
are discussing, an interoperable architecture, an overall 
architecture to allow us to move our business forward.
    I do not know that I can make a real judgment on where this 
individual should reside, so as I read through the proposed 
legislation, having this individual in OMB is fine; it is 
really a matter of is this individual accountable, is this 
individual a leader, is this individual going to hold a place 
at the table with the senior leadership of this government and 
be able to project the change and be essentially a change agent 
for this e-government transformation?
    Chairman Lieberman. Thank you. Dr. Toregas.
    Mr. Toregas. I would add to what Ms. Altman said the fact 
that it is not only the technology argument that is important 
in transformation but also the programmatic one. Somehow, 
whether you do it in the flesh of another human being or 
intellectually, you have to get the programmatic initiatives of 
the agencies linked with the information technology question. 
You cannot address business transformation from an IT 
perspective alone. You have to have the programmatic people 
there. In fact, the absence of a table around which the 
information technology experts and the program people who are 
responsible for delivering programs and the elected officials 
who have the mandate to do that is, I think, something that 
stymies our ability to transform government. Such a table, such 
an intergovernmental, interdepartmental platform to discuss, 
dialogue, and make decisions to change the way government is 
done is a weakness right now of our system. I think S. 803 
could be strengthened by providing a platform not only for a 
single human being, the CIO, but a platform between program 
people, IT people, and the elected officials who ultimately 
hold the will of the people to discuss how we transform 
government along the intergovernmental dimension.
    Chairman Lieberman. Would you write into the law some 
committee of that kind?
    Mr. Toregas. Some ability to dialogue between three levels 
of government and across programs. It is almost an 
impossibility to imagine as a bill paragraph, but perhaps we 
need a new process. We need something. Right now, there is no 
place to discuss these e-government issues and opportunities.
    Chairman Lieberman. Yes, and to state it as a goal.
    Mr. Toregas. That is right.
    Chairman Lieberman. Ms. Valicenti.
    Ms. Valicenti. I would like to emphasize a couple of things 
that were said before that I would like to put a little 
different spin on. I think that being a peer at the table is 
very important. I think the investments that have been made in 
the past have been done strictly from a technology 
perspective--that I now need to automate the system, and I will 
put a system in place; I now need to do e-government, and 
consequently, I will put up a website.
    I would suggest to you that the dialogue that goes on with 
your peers is before you implement anything. It is whether the 
process is the right one. Do we need to change the process? Do 
we need to make two or three agencies work together that 
traditionally have not worked together?
    I can tell you from my own experience that we would have 
built three imaging centers if we had not come to the table and 
said maybe we only need to build one and share it, and we need 
to build it with standards that all of us can use it. I talk 
about technology standards, not just performance standards. 
Both are important, but I would suggest that technology 
standards are as important to make interoperability work and to 
have a vision for what we are going to deliver.
    When we embark on what we now call ``e-government'' or 
``digital government,'' I think we are at the low end of 
investment yet. We are primarily thinking about commerce and 
commercial transactions. Ultimately, I would suggest, as has 
already been talked about, where is e-democracy, how do we 
involve our people in the democratic process differently.
    I think the only way that we are going to be able to do 
that is if we get this part somewhat right.
    Chairman Lieberman. Amen. Thank you. Those were very 
helpful responses.
    Senator Thompson.
    Senator Thompson. Thank you very much, Mr. Chairman.
    This is a very good Committee--a very good panel, I should 
say--well, it is a good Committee, too.
    Chairman Lieberman. Thank you. We are just trying to build 
on the record of the previous leadership.
    Senator Thompson. It reminds me of several things. Ms. 
Altman, we often say that some people say government ought to 
be more like business, and other people say it is different 
because we are not in the profit business and so on, but I 
think that at least in your area, you are reminding us that in 
some respects, we can certainly learn from business, because 
what you are talking about has been one of the driving forces 
of the savings that you have achieved through increased 
productivity. And while we may not be striving to make a 
profit, we certainly need to not have so much in losses and 
deficits that we have had in some departments, and we can 
increase our productivity. I think that that is one of the 
things that we are looking for.
    Dr. Toregas, I was taken by your comment about the Des 
Moines example, and it caused me to think about the Federal 
Government. If we are having such difficulties in doing some of 
the things we are trying to do, and if we really get geared up 
the way we are talking about, are we going to be able to handle 
the volume that we may be asking for. We feel it in our own 
offices now. So that is going to be something.
    Ms. Valicenti, you mentioned accountability. I think that 
having someone like you probably in large part accounts for the 
success that Kentucky has had, and that is certainly important 
and something that we have not had in times past.
    Mr. Woods, your department or your program represents what 
troubles me the most about what we are talking about--and I 
hope that this is constructive, because to me, it goes to the 
heart of what we need to address and some things we need to 
avoid as we move forward in a way that we all want to move.
    I am talking about this idea of having a shiny, new chassis 
over an engine that is not running, and the car is not going 
anywhere. The student financial aid programs have been on GAO's 
high-risk list ever since the high-risk list started in 1990. 
You were made a PBO 3 years ago and given some additional 
flexibility to do some things. There are some positive signs, 
but you are still on the high-risk list, in large part because 
financial management is lacking.
    Here is what the GAO said in January, ``These student aid 
programs, however, continue to be at high risk for fraud, 
waste, error, and mismanagement, because education lacks the 
financial and management information needed to manage these 
programs effectively and the internal controls needed to 
maintain the integrity of their operations.''
    The IG and GAO for some time have addressed this problem. 
It is not just yours, but yours is one of the 23 or so on the 
list, and one of the few that has been on the list for a decade 
as subject to waste, fraud, abuse, and mismanagement.
    The GAO said in March of last year, ``Beginning with its 
first agency-wide audit effort in fiscal year 1995, Education's 
auditors have each year reported largely the same serious 
internal control weaknesses, which have affected the 
Department's ability to provide financial information to 
decisionmakers both inside and outside the agency.'' That is 
department-wide.
    Talking about the student financial assistance program, 
``highly vulnerable to waste, fraud, abuse, and 
mismanagement''; ``have been on the list since 1990''; ``have 
been included in every update since then.''
    ``Student assistance programs,'' according to the IG, 
``have spawned a cottage industry of criminals who counsel 
students and their parents on how to obtain loans and grants 
fraudulently.'' And they have been very successful. In the 
Inspector General's report, they recount numerous instances of 
where this has happened, and these are the ones that we know 
of.
    ``The IG recommended that the Department develop a method 
to estimate how much it loses each year in improper payments.'' 
Millions of dollars are sent out by the Department improperly. 
``Thus far, the Department has failed to act on this 
recommendation. Also, the Department has failed to implement a 
1998 law intended to allow it to verify with the Internal 
Revenue Service income information submitted by student aid 
applicants.''
    In the financial management area, both the GAO and the IG 
have reported year after year on largely the same financial 
management problems. The IG found many cases that proved the 
point of the financial management weaknesses. In October 1999, 
for example, the Department's system generated several 
duplicate payments; one was a $19 million double payment of 
grant funds.
    There are information technology management problems. One 
is the Department's failure to comply with the Clinger-Cohen 
Act, which goes to the heart of what we are trying to do here, 
because that has to do with management of information 
technology. The Department is not complying yet.
    Another problem is its computer systems security. They say 
the weaknesses constitute a significant threat. And the last 
audit of Ernst and Young, the most recent audit last year, 
talks about approximately $859 million, primarily representing 
funds drawn down by schools for which the loans have not yet 
been recorded. That means that the schools have not yet 
demonstrated that they are eligible for those loans--but they 
have already drawn down the $800 million.
    So you have drawn the short stick, I guess, today by 
accident. I could go through this with a lot of other 
departments. But here we are celebrating a website with regard 
to a program that in many ways is a basket case in terms of 
waste, fraud, abuse, and mismanagement.
    If you talk about accountability, I do not know where our 
accountability is in Congress. Long before you got here, and I 
trust--I do not mean this personally to you; you do have an 
excellent background, and I am sure you are trying your best. 
Maybe it just shows how endemic the problem is and how 
difficult it is to solve, but you have been dealing with it for 
3 years now. But we are talking about what--making it so that 
these criminals can rob the Department of Education more 
efficiently? Could that be part of what would be happening 
here?
    We clearly have not been able to get a grip on these basic 
management problems, and I am worried that if we get more 
people using this, and we have the human resources problems 
that we know we have and keeping our arms around it, can one 
guy over at the OMB ride herd on all this?
    As I said, I am talking to you about a lot of problems that 
you do not have anything to do with, but some of them, you do. 
I guess I am interested in knowing if you appreciate the 
interrelationship of these things that I am talking about. It 
does not matter what kind of website you have or how many 
people are using it if your underlying management is that 
deficient, it seems to me.
    Now, I have laid out quite a lot of charges here, and you 
should have a right to respond at whatever length you wish, or 
as far as the Chairman is concerned.
    Mr. Woods. May I respond, Senator?
    Chairman Lieberman. Yes, sir.
    Mr. Woods. I take the criticism as constructive. The reason 
I started my remarks by talking about changing everything is 
because these issues of integrity and program integrity are at 
the heart of what we are trying to do. One reason I was 
reluctant to testify here about websites is because we are not 
just about websites. We are completely retooling these computer 
systems. The financial problems, the financial audits that we 
have had and the systems that we have had are nothing like the 
tools I had to manage my businesses in the private sector. We 
do things with spreadsheets. We are replacing all that. We have 
half the modules up for a brand new system that will kick in 
for next year's audit. We are very proud of things like that.
    We do work with the IRS to do statistical matches that 
allow us to verify that students seeking Pell Grant monies are 
reporting the proper income. We do not have the ability to do 
individual data matches with them. Their legal counsel does not 
believe that the law allows them to do that. But we have pushed 
that as hard as we can.
    Across the board, we have hundreds of people reporting and 
working on all of these issues, and I can report progress to 
you in all of those areas.
    Maybe the most important thing goes to where the biggest 
dollars are. Defaults in this program were by GAO and others 
viewed for years as our biggest issue. In the past several 
years, the default rates come from 22 percent down to 6.9 
percent. I would hasten to point out that defaults are only 
dollars at risk; they are not dollars lost. In the past 2 
years, years of the PBO, the collection efforts have brought 
more money back in than has gone out in default. We have turned 
the corner on that, and the computer systems are part of that. 
The systems we use in debt collection, for data matching, for 
comparing profiles and identifying addresses for people who owe 
us money--those tools are powerful forces in trying to combat 
exactly the ills that you described.
    We are not about websites. We cannot get it done just with 
websites. Websites are the customer service window, but the 
back end stuff, this back office stuff, the kinds of tools used 
by the best banks and the best in the private sector, have to 
be part and parcel of it, and I think that given time, sir, I 
could convince you that we are making progress in those areas.
    Senator Thompson. Well, I hope so. The GAO suggests that 
the downward trend in defaults may be more attributable to the 
strong economy of recent years. They also have a problem with 
the calculation method used by the Department; they say that it 
understates the default rate.
    So we could talk about all of this in detail for a long 
time, but the bottom line is--and please take it back to the 
Department and let it, hopefully, soak in to you, who have been 
there for 3 years--if I were you, I would concentrate on the 
things that I was talking about along with the high-tech 
glitter stuff that we are all interested in and we need to make 
progress on, because the bottom line, we talk about 
accountability, and we talk about results-oriented government, 
and by either of those measures, the student loan program has 
real problems. I would bet that 90 percent of the people in the 
audience, or whoever might be watching or listening to this, 
are not aware of that because it is part of a much bigger 
problem. It is a government-wide problem, and that is the 
point. Like I said, you happen to be here today, but I could go 
through this with any number of folks.
    To me, it shows perhaps a wrong emphasis or not 
appreciating that you have got to walk before you can run. I 
really am concerned with regard to some programs and some 
departments--if we put all this emphasis on this stuff, and we 
gear up, and we have all these applications coming in that we 
are dealing with, and all these programs, we already have 
numerous schools that are not qualified for loans being 
reimbursed by the Federal Government. And all that is going on 
now under the current circumstances. I do not want to make that 
easier to do. I want to make it easier for the ones who need it 
and deserve it, but that can only be done while being 
accompanied by progress in these other areas.
    I do not know what else to do. When an area stays on a 
high-risk list for a decade, and the GAO--it is not us; it is 
not just the Members of the Committee--when the GAO tells us 
that they make recommendations for changes that are not being 
carried out; you still get funded in the same ways every year; 
budget time rolls around, and we take a look at this and say 
``That is a shame,'' and we give you the same amount of money 
or even increase it--it is a real problem.
    So I would just ask you to take back from this today, while 
you are doing the good things that you are doing in terms of e-
government, to realize that it is going to create more problems 
than it solves unless we do something about the underlying 
management of your program.
    Mr. Woods. Yes, sir. We will take it back, and I assure you 
that those issues that you have addressed and raised we take to 
heart, and those things are being fixed as I sit here.
    Senator Thompson. Thank you, Mr. Chairman.
    Chairman Lieberman. Thanks, Senator Thompson.
    Senator Thompson makes a strong point. E-government is a 
means to an end; the end is government, and government is an 
imperfect instrument that we are constantly trying to make 
better. There are obviously ways in which e-government not only 
allows more people to more conveniently, for instance, apply 
for student loans, but if used properly, as you have all 
testified and as our experience suggests, allows us to be more 
efficient as well--in other words, not just to improve ease of 
access but to actually reorganize internally so that you are 
doing what you are supposed to do better. And of course, both 
of those are our hopes in this bill.
    I thank this panel very much. You have been extremely 
helpful. If you have any afterthoughts, we will keep the 
hearing record open for a while for you to submit those to us.
    Thank you very much.
    We will now call forward our final panel today, which 
includes Sharon Hogan, University Librarian, University of 
Illinois at Chicago; Barry Ingram, Vice President and Chief 
Technology Officer of EDS Government Global Industry Group, who 
is here on behalf of the Information Technology Association of 
America; Patricia McGinnis, who is President and CEO of the 
Council for Excellence in Government; and finally, Hon. Joseph 
Wright, Jr., former Director and Deputy Director of OMB and now 
Vice Chairman of Terremark Worldwide, Incorporated.
    Thanks very much to all of you for being here. Thanks for 
your patience in listening to the preceding discussion. I hope 
you found it as interesting as I have.
    Ms. Hogan, it is a pleasure to hear from you now.

    TESTIMONY OF SHARON A. HOGAN,\1\ UNIVERSITY LIBRARIAN, 
 UNIVERSITY OF ILLINOIS AT CHICAGO, ON BEHALF OF THE AMERICAN 
LIBRARY ASSOCIATION, THE AMERICAN ASSOCIATION OF LAW LIBRARIES, 
           AND THE ASSOCIATION OF RESEARCH LIBRARIES

    Ms. Hogan. Good afternoon. I am Sharon Hogan, University 
Librarian with responsibility for academic computing at the 
University of Illinois at Chicago. I am testifying today on 
behalf of the American Association of Law Libraries, the 
American Library Association, and the Association of Research 
Libraries.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Hogan appears in the Appendix on 
page 114.
---------------------------------------------------------------------------
    We want to thank you, Senator Lieberman and Senator 
Thompson, for your leadership on e-government, and we want to 
acknowledge our appreciation for the work of your Committee 
staff, especially Kevin Landy.
    We cannot have an effective e-government without access to 
government information. Our Nation's libraries are key access 
points for the American public and already are and should be 
members of e-government teams at the Federal, State, and local 
levels.
    While there are many Federal agency success stories 
exemplifying good practices for public access to Federal 
Government information, the move to an e-government has not 
been accompanied by the development of a comprehensive policy 
framework focusing on the life cycle of electronic government 
information.
    There are three principal points I would like the Committee 
to keep in mind as they consider S. 803.
    One, centralized coordination is necessary to make 
government electronic information accessible, usable, and 
permanently available. That is why we support S. 803. Such 
coordination is ultimately needed for all branches of 
government.
    Two, legislation is absolutely imperative if we are to 
embody life cycle principles in e-government dissemination 
activities. Agencies are not doing it today. This bill 
recognizes the needs and puts a framework in place to 
accomplish that goal.
    Three, the legislation must be adjusted to incorporate and 
built on the institutions and activities going on today.
    I would like to elaborate on these three points. First, 
access and coordination. Librarians, working with the American 
public every day, find that locating the government data or 
document can be exceedingly frustrating because ``finding 
tools'' are inadequate and not comprehensive. Also, much web-
based government information that one might have accessed a 
month or a year ago disappears from agency websites. While many 
agencies do a great job of posting important electronic 
documents to their websites, there is often no recognition of 
the long-term value of that information and the need for it to 
be publicly available for continuous future use and 
preservation. In the electronic environment, an Executive 
Branch CIO can provide leadership where there is currently a 
lack of coordination, cooperation, guidance, or a means to 
oversee and measure agency compliance with many existing 
statutes. However, the emphasis on technology should be 
balanced by an emphasis on public access.
    Second, build a new framework. We want S. 803 to promote 
the teamwork necessary to serve the American public within and 
between agencies. A benefit of section 215 will be to bring 
together within the planning and policy functions how agencies 
manage and coordinate the flow of information within agencies 
as well as to and from the public.
    Agency CIOs play an important role in issues related to 
technology but often do not have the time or resources, do not 
have a strong background in information dissemination, nor are 
they always aware of the agency's responsibilities for public 
use. Agency records managers, webmasters, privacy officers, 
public affairs staff, and agency librarians should work 
together.
    Three, use existing agencies, institutions, and resources. 
You will not need to reinvent all services or functions. For 
example, in setting cataloguing and access standards, 
librarians and information scientists--not information 
technologists--are the specialists in establishing cataloging, 
classification, indexing and metadata standards for government 
information products. Cooperative international bodies already 
set current cataloging and classification standards.
    We are also pleased that S. 803 contains important 
provisions in sections 205 and 206 to improve access to 
information from the Federal courts and regulatory agencies. 
However, the courts and regulatory agencies should not be given 
permanent opt-out options. There should be an annual statement 
of progress each year and a set time frame for compliance. We 
support repeal of current statutory language permitting the 
Administrative Office of the U.S. Courts to charge fees to 
access PACER. Congress should appropriate adequate funding for 
this purpose.
    We recommend clearer roles for the Library of Congress and 
the national libraries as well as the Institute of Museum and 
Library Services and the Federal Library and Information Center 
Committee. Further, permanent public access can be accomplished 
through a comprehensively coordinated program that includes 
Federal agencies, the Superintendent of Documents, the National 
Archives and Records Administration, the Library of Congress, 
other national libraries, depositories, and other library 
partners.
    Effective public access for the American people is the 
first step toward effective e-government. S. 803 includes many 
important provisions that can improve public access. 
Collaborative approaches and government-wide policies across 
all branches and levels of government will be necessary to 
fulfill the potential of e-government. The library community 
stands ready to work with you.
    Thank you for this opportunity to testify.
    Chairman Lieberman. Thanks very much, Ms. Hogan. Just while 
it is in my mind, I believe you were here when Senator Stevens 
spoke and expressed his concern about the fact that 
effectively, we have two libraries now at the Library of 
Congress--the one that we are familiar with and the new one 
which is on-line--and that the net effect would be to add 
costs. That was his concern--obviously, he hopes we would save. 
How would you respond to that?
    Ms. Hogan. I would say that all libraries are now running 
two libraries. We are all running our print libraries and 
trying to build electronic ones. And yes, at the moment, it is 
costing us more. I would hope that it would not double our 
costs, but it absolutely is increasing it. We are making 
investments in the new technologies. Once these investments are 
made, we hope that increased access will make them all 
worthwhile. But yes, right now, it is not cheaper.
    Chairman Lieberman. So that is the hope, that obviously, 
you are involving more people in using the services of the 
library.
    Ms. Hogan. Correct. We are seeing libraries all over this 
country increase access not only to the collections themselves 
but also to the electronic collections. There is actually an 
explosion of use in libraries as people come to libraries to 
access the technology, to access electronic resources--and, by 
the way, to use the print.
    Chairman Lieberman. From the user point of view, obviously, 
it is one of the more thrilling aspects of the whole Internet 
revolution, which is that you can suddenly plug into the 
resources of the Library of Congress and every other library in 
America.
    Ms. Hogan. And then you have more questions, because you 
have accessed the information, so we are finding that people 
then want to ask even more questions.
    Chairman Lieberman. I see. Thank you. Mr. Ingram, welcome.

   TESTIMONY OF BARRY INGRAM,\1\ VICE PRESIDENT, EDS GLOBAL 
    GOVERNMENT INDUSTRY GROUP, ON BEHALF OF THE INFORMATION 
            TECHNOLOGY ASSOCIATION OF AMERICA (ITAA)

    Mr. Ingram. Good afternoon. Thank you for this opportunity 
to testify before you today on this important topic.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Ingram appears in the Appendix on 
page 124.
---------------------------------------------------------------------------
    My name is Barry Ingram. I am Vice President for EDS' 
Global Government Industry Group. You already have my 
testimony, so I am going to give you a slightly shorter 
version.
    I have over 37 years of experience in information 
technology, over 20 of those working with governments, and have 
led many innovative e-government initiatives locally, 
nationwide, and globally for EDS. This morning, however, I am 
representing the Information Technology Association of America, 
or ITAA, which is the Nation's leading trade association for IT 
industry.
    ITAA represents over 500 member companies across the United 
States which produce products and services in the IT industry, 
and the association plays a leading role in public issues for 
the IT industry.
    ITAA has been a long-time proponent of electronic 
government and, as you know, helped provide input on principles 
used early on to develop this legislation. We are particularly 
eager to generate the same interest and progress in e-
government at the Federal level that we have witnessed at the 
State and local levels. We believe the E-Government Act of 2001 
contributes in a meaningful way to these goals.
    Mr. Chairman, we applaud you, Senator Burns, and the 
colleagues who have officially joined you in introducing this 
E-Government Act of 2001. We are particularly pleased with the 
importance that the legislation places on the need for a well-
funded government innovation fund, and with the emphasis on the 
existence of someone at the highest level who has the 
responsibility and the authority to move the Federal Government 
into the e-government sphere. It is crucial for this person to 
have the means, both the budget and the staffing, to implement 
and oversee these efforts for the enterprise, and we hope that 
those resources can be made available in the 2002 budget.
    However, when I say e-government, I do not mean only 
Internet-related efforts, but any efforts where governments are 
using newer technologies to improve their business processes 
and provide enhanced services to citizens, businesses, and 
government employees or other governments. If we limit our 
thinking only to Internet-related efforts, we are limiting the 
scope of the possible.
    In these efforts, I have seen a mixture of successes and 
challenges. The challenges are being overcome, and as you are 
acutely aware, finding and achieving innovative ways of funding 
e-government is very difficult. Curtailing stovepipe or purely 
single-agency-oriented development, while still promoting 
innovation and productivity improvements, requires a real 
vision and a solid execution plan.
    Fortunately also, the successes are many, and in general, I 
see that State and provincial governments are leading the 
charge, for several reasons. They have more transactional 
processes, such as license renewal and property tax payments. 
They have somewhat smaller systems than the Federal and 
national governments, and the most successful ones have senior 
leadership in the form of a chief executive or a CIO who is 
sponsoring and visibly behind the e-government efforts.
    Some of the most successful implementation are also taking 
place at the national level. In the United Kingdom, for 
example, the Inland Revenue, the equivalent of our Internal 
Revenue Service, is undertaking a massive rejuvenation of the 
tax system, and they are already implementing some of the 
improvements. They have developed a National Gateway to 
government and have implemented the ability for citizens to 
self-assess and pay their taxes over the Internet, directly to 
the government, without an intermediary.
    Our own portal, FirstGov.gov, is an excellent start but now 
needs to be expanded to encompass citizens' transactions with 
agencies.
    Without going into a lot of detail, I put together a short 
list of top 10 lessons learned for e-government, and I want to 
highlight just four of those.
    The first one is that implementing successful e-government 
requires sponsorship and visibility from the top, senior 
leadership and championing.
    Second, we need to ensure citizens' privacy and security 
with good information assurance capabilities, and we need to 
build this into the architecture before privacy and security 
become a problem; we cannot wait.
    Third, many existing business processes will need to be 
reengineered--but do not just reengineer--reinvent wherever 
possible and look at new ways of doing business.
    Finally, provide incentives for citizens and businesses to 
use the new e-government processes. Incentives will enable the 
move to the new methods.
    In conclusion, as this important piece of legislation moves 
through the legislative process, I leave you with two thoughts. 
E-Government modernization is the use of technology to 
transform government from the silo organizations that many of 
us have talked about to a seamless organization, or this one-
stop shop. But it is centered around citizens' needs and 
focused on productivity improvements.
    Finally, the success of e-government modernization is not 
only experienced in building and operating our websites. It is 
in the transformation of government processes, wrapped in the 
security of a robust infrastructure supporting and enabling 
that transformation.
    I thank you for your time and attention. ITAA and EDS both 
look forward to working with you and answering any questions 
that you might have.
    Chairman Lieberman. Thanks, Mr. Ingram; well-said. And 
thanks to you and the members of the association for the input 
that you have given the sponsors of the bill as we have gone 
along.
    Ms. McGinnis, welcome back. We look forward to your 
testimony.

    TESTIMONY OF PATRICIA McGINNIS,\1\ PRESIDENT AND CHIEF 
    EXECUTIVE OFFICER, COUNCIL FOR EXCELLENCE IN GOVERNMENT

    Ms. McGinnis. Thank you very much, Mr. Chairman and Senator 
Thompson, for inviting me to be here today to talk about this 
very important issue.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. McGinnis appears in the Appendix 
on page 130.
---------------------------------------------------------------------------
    As you know--well know, because there has been a lot of 
involvement from the Committee and the staff--the Council for 
Excellence in Government worked in partnership with 350 leaders 
from business, civic groups, the research community and 
government to develop a blueprint for e-government, which we 
released last February, and I think you all have copies of it. 
It, of course, can be viewed on our website.
    We call the report ``Electronic Government: The Next 
American Revolution'' because we believe so strongly that 
information technology and the Internet have the potential not 
only to revolutionize the way that government operates but also 
to put ownership back in the hands of all Americans.
    This is not only about e-government; it is also about ``e-
the people,'' a play on words which I think has a lot of 
meaning if you think about it.
    Two recent Council opinion polls conducted by Peter Hart 
and Bob Teeter over the last year show that Americans today 
recognize the potential of electronic government, even those 
who are not on-line, amazingly. A large majority, about three-
quarters, says that developing e-government should be a high 
priority for the new President. Even the 44 percent of 
Americans who believe that government is ineffective--these are 
the cynics--are bullish about e-government and say that tax 
dollars should be invested in it. But by a margin of 2 to 1, 
the public says that privacy and security are its top 
priorities, so we have to deal with those issues.
    The people's vision of e-government goes beyond efficiency 
in services to the opportunity to become more involved and to 
hold government officials accountable. It surprised us that 
more people would rather see candidates' voting records on-line 
than renew their driver's licenses on-line.
    The dot-gov revolution is just beginning----
    Chairman Lieberman. That is unsettling. [Laughter.]
    They ought to do both on-line.
    Ms. McGinnis. It might have something to do with privacy 
and security, but I think it also has to do with this 
accountability issue.
    Even at this early stage in the dot-gov revolution, there 
are lots of examples of productive use of the Internet by 
government. You heard about a lot of them in the last panel. 
The growth in student financial assistance applications--up to 
5 million this year--is amazing and quite a growth. Taxes can 
be filed on-line not only with the IRS but in many States. 
Procurement on-line is growing at the Federal and State levels, 
as are regulations on-line. You know that the Department of 
Transportation has all of its regulations on-line at this 
point.
    These examples of e-government all fall into two 
categories--government to citizens, G to C, and I would put 
that maybe even a little differently--agency by agency, one 
agency at a time to citizens--and also government to business, 
G to B, one agency at a time to businesses.
    What is missing from this? Government to government. At 
this point, there is very little cross-agency or 
intergovernmental collaboration on-line, and this is a very 
significant problem.
    The e-government fund in this bill recognizes, as does the 
President's budget, that we need to invest in collaboration 
across agencies, levels of government, and with the private 
sector in order to break down these very formidable stovepipes 
that now give us e-government agency by agency, and that is 
fine if the service or information you need happens to be 
organized that way. That is not true for most people and for 
most businesses.
    The answers may lie in more powerful search engines 
building on the FirstGov start portals or on-line exchanges 
that can integrate and offer a range of services based on need 
and eligibility. The innovative know-how to accomplish this 
vision of e-government exists in the public and private 
sectors, but it has to be harnessed in a new way.
    The bill, S. 803, now before you addresses the important 
issues required for e-government to succeed. The details of the 
provisions are not exactly the same as the recommendations we 
make--you can look at all of our recommendations--but we both 
address the same dimensions--leadership, strategic investment, 
a skilled e-government work force, access, education, and 
privacy and security.
    I think you may find, as we did in developing this 
blueprint over a period of about 14 months, that the process of 
engaging the key players in government, business, and the other 
communities to refine this legislation will build ownership and 
commitment that are necessary to make it work in the end.
    I am delighted that the administration is so eager and 
willing to work with this Committee to fashion successful 
legislation.
    I want to highlight three of our specific recommendations 
for your consideration. One is creating a public-private 
council that would bring the best thinking of private 
entrepreneurs and a cross-section of Federal, State, and local 
leaders to the e-government enterprise. S. 803 calls for a 
number of forums that engage these different communities. I 
would suggest one conversation, bringing them all to the table.
    Second is establishing a Congressional Office of Electronic 
Government to help members of the House and Senate connect more 
effectively with the public and to advise not only members but 
committees on using e-government to achieve policy goals. 
Senator Thompson and Senator Lieberman launched the first ever 
Senate website to gather ideas and comments used to develop 
this legislation. That ought to be commonplace, and there are 
many more powerful uses of e-government in the Congress.
    Third is organizing public forums around the country to 
engage people, including those on the wrong side of the digital 
divide, in the design and implementation of e-government.
    There is a lot to do. Together, I think we can seize this 
opportunity to make e-government a reality, and I thank you 
very much for your leadership and the opportunity to be here 
today.
    Chairman Lieberman. Thank you, Ms. McGinnis. That was very 
interesting and helpful information.
    Mr. Wright, we appreciate your patience, and we look 
forward to hearing from you now.

  TESTIMONY OF HON. JOSEPH R. WRIGHT,\1\ FORMER DIRECTOR AND 
  DEPUTY DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, AND VICE 
              CHAIRMAN, TERREMARK WORLDWIDE, INC.

    Mr. Wright. Thank you, Mr. Chairman, and Senator Thompson.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Wright appears in the Appendix on 
page 135.
---------------------------------------------------------------------------
    I appreciate you including an old war horse from the prior 
management improvement wars at this hearing. I have got to say 
that I spent many, many hours in this particular room during 
the 1980's, and I just want to know why you let Sean O'Keefe go 
for 2 or 3 months without having to come back.
    Chairman Lieberman. An oversight.
    Mr. Wright. I have prepared testimony that I would like to 
submit for the record and will just highlight some of the 
points.
    Chairman Lieberman. Fine. It will be entered in total.
    Mr. Wright. Thank you very much.
    I believe that e-government is a national priority, as I 
stated, for several reasons. First, it is occurring anyway in 
the private sector as well as in the State and the local 
governments, the associations, and citizens are coming to 
expect it. As Pat McGinnis said--and I congratulate the Council 
for coming out with a report as early as they have in the 
administration; I think they are one of the first to do this--
but one of the Council's findings was the Hart-Teeter survey, 
which said that citizens are beginning to expect the same 
performance from their government because they are getting it 
from the private sector.
    So the pressure is going to start coming in, ``on us,'' if 
I may still use that term, because at this stage, it is going 
to be not only pressure for improved services, but it is going 
to be public pressure, and it is going to be political 
pressure. So I think the timing of this is very, very good.
    Second, the reason why it is occurring anyway to some 
extent is because there is already an extraordinary amount of 
money being spent in the IT area. I have $77.6 billion in 
expenditures here, while I know the number that you are used to 
seeing is $40 to $45 billion. The difference is the 
intelligence community; we normally do not include the IT work 
in the intelligence community in this IT total. So let us back 
down to the $40 to $45 billion. Of that number, you have 
probably heard that on e-government, you have about $1.5 
billion to $2 billion being spent. You add portals and some 
modems, and you are going to have another $1.5 to $2 billion 
being spent. Now you are up to about $3 billion. But while you 
have that $40 to $45 billion growing at about 4 to 5 percent 
every, single year, the e-government piece that OMB has been 
able to identify is growing at about 30 percent a year. So you 
are going to have a dramatic increase in spending that is 
basically spending, as my fellow panelists here have said, on a 
stovepipe, or agency and program, basis.
    We heard a wonderful example here in the Department of 
Education. That is a very impressive demonstration of a 
citizen-oriented stovepipe.
    So the money is being spent anyway, but what is it being 
spent on for the most part--and I am saying this from my old 
home, the Office of Management and Budget--is for agencies to 
further automate their incompatibilities. But the problem is 
that our citizens and our businesses are not incompatible. They 
are a single entities who are coming in and making a request of 
his or her government. And it is going to be tough to get our 
agencies to think in those terms. They will say those terms, 
but will they share files? Will they share compatibility? Will 
they share budgets, which is really what drives program 
priorities in this town.
    I have gone into some of the stages that I think are 
important in developing e-government. Some of my fellow 
panelists have already talked about some of the States which 
are doing a very good job on this. I agree. I think that 
Washington State has done a terrific job. The State of 
Massachusetts has joined the group but was not included in 
prior statements. They just announced an e-government strategy 
which to me sounds exactly like what we are trying to do here. 
It is intentions-based rather than agency-based; citizen-
centric; a portal to break through the stovepipes; break across 
traditional agency boundaries. I think that is what we all want 
to do.
    I was in a presentation the other day, Mr. Chairman, in New 
York City, where I live right now, where Mayor Guliani 
surprised me. He had a group of mayors come in to see what New 
York City has done in the whole area of e-government. And to 
hear the mayor of a large city speak to the people who are 
coming in to get licenses for business and tell them that now, 
with all those licenses, you can come in to one location; to 
hear about how they are allocating law enforcement assets to 
where the problems are, using e-government and information 
services, to make a substantial difference, to be able to 
improve the way it will get jobs for people who need them. I 
have got to tell you I was very impressed, and I am sure we can 
see that in many of the cities as we go across our country.
    Chairman Lieberman. Excuse me. In other words, in New York 
City now, a business can apply for a series of licenses on-
line.
    Mr. Wright. Yes, sir--which has not been publicized very 
well. Again, I live there, and I was not aware of it. A silly 
example is if you come in, and you want to open a restaurant--
as you know, in New York City, you cannot keep up with all the 
new restaurants that open and close--you have got to go through 
a whole series of licensing steps. You can now do that on-line 
with a single application.
    Well, if you are the mayor of a city, you want to be able 
to provide that simply because of the fact that you want to 
bring the business people into your city. So I would imagine 
that you are going to see that model being used elsewhere.
    You have heard about Britain coming in with e-government. 
One thing that was not said is that they have a goal of 100 
percent of government transactions being on-line by 2005. That 
is tying in all of their 200 central and 482 local government 
institutions with all 60 million citizens and 3 million 
businesses.
    Whether that is achieved or not, the planning they will 
have to go through and the steps they will have to go through 
to simply allocate the resources to achieve that goal is going 
to make a dramatic improvement.
    Anderson Consulting has said that the United States ranks 
third behind Canada and Singapore--and I guess now, the United 
Kingdom. Why? Why are we third, with our resources, and more 
important, our inventiveness. Most of all, the Internet was 
invented here, in this country. So it bothers me that we are 
falling behind others.
    In terms of our e-government initiatives right now, you 
have heard over and over again, and I think the Council also 
stated in their report, that we have such a low success rate 
simply because we have not had organized central leadership in 
this entire area. That is bothersome, because the Federal CIOs 
have said the biggest problems are not technology, but they are 
turf wars, and government structure.
    The National Electronic Commerce Coordinating Committee 
also points out that policy issues, not technology, are the 
main problems governments face as they adopt e-government. Pat 
McGinnis and the Council said that a barrier to implementing e-
government is government-wide leadership--and so on and so on.
    The Congress in many ways has done its part by passing the 
Government Paperwork Elimination Act. Mr. Chairman, you know 
that there is a deadline of October 2003 to meet the 
requirements of the act, and you know what the chances are of 
the agencies meeting that deadline. In some cases, you will 
care about it a great deal that they did not meet it; in other 
cases, you will not. But where is the priority list? I have 
never seen a priority list. I have never seen the Congress lay 
out a priority list. I have never seen a status in terms of 
where the agencies are or are not. I have heard of some of the 
problems, but 2003 is coming pretty fast.
    FirstGov.gov was one of the first portals, as you know. We 
have over 50 million pages on it right now. State and local 
information is now on it. It is only information. It has to 
have an improved search engine and it has to have improved 
security features. There are security programs within the 
Federal Government that I think are pretty good, and I know 
that when Social Security tried to open up their files last 
year, they did have problems with hackers coming in. And I know 
that the IRS has done a pretty good job in terms of bringing in 
their e-files system--but that is not on-line, that is not on 
the Internet. And, for example, GSA and their ACES program 
looks pretty good. The Postal Service, which we have not heard 
about today, and their Net Post-Certified Program, also looks 
pretty good.
    The main thing, I think, is that the FirstGov.gov expansion 
has got to be part of a well-coordinated management effort. And 
I like what Sean O'Keefe said in terms of including it as part 
of a total management improvement program. And Senator 
Thompson, the comments that you made about the Department of 
Education are exactly what he is talking about. That is, you 
cannot automate a program that, for whatever reasons, is not 
working for other reasons.
    Again, I am not picking on the Department of Education, 
either--OMB picks on everybody--but I believe that what Deputy 
Director O'Keefe said about making e-government a part of the 
overall management review is very important.
    I will finish by saying that, I am delighted that you 
introduced S. 803. But on the position of the CIO--we should 
not focus so much on the ``boxes'' in S. 803 as on the 
responsibilities. And it is the right move, Mr. Chairman, to 
have e-government responsibility in the Office of Management 
and Budget.
    This town, whether we like it or not, speaks in terms of 
the budget. That is the power structure within this town. In 
the private sector, it is not--but over here, it is. People in 
Washington do not ask you so much what you are going to do on a 
program, but how much are you going to spend more than you did 
last year, and that is a measure of whether you care.
    If you do not have the power of the budget, you are not 
going to have the power of the implementation. Therefore, OMB 
is the right place to do it. But Mr. Chairman, the person to 
hold responsible for it is the director of OMB--not a new CIO.
    I came before this Committee for years, objecting to 
breaking out the deputy director of OMB, because I said the 
deputy for management will not have the power of the budget. 
But it was done anyway.
    Beyond that, there are many parts of S. 803 that I agree 
with. I do not necessarily agree with your spending levels, but 
I do believe that a fund is needed. The only thing I would 
suggest in closing is that it is very prescriptive in too many 
ways; it adds a lot of committees and councils. I would look at 
what is already being done. It adds too much spending; I think 
it is about $250 million in total if you add everything up. It 
does not say what is already being spent in those areas in many 
cases, and I think you may find the dollars there.
    Finally, I would say that OMB, Mr. Chairman, also has a 
great flexibility to be able to what I call ``reorient'' agency 
funding. That is the nicest word I can use for it. If this is a 
priority, they can leverage the $100 million over the 3 years 
that they ask for 5-, 10- and 20-fold. The key is to agree on 
the goals, to make sure that this Committee, which is the 
oversight committee of the performance, has a reasonable 
reporting mechanism to hold the director responsible and to ask 
OMB to report on the progress on an everyday basis, cutting 
across administrations.
    Thank you, sir.
    Chairman Lieberman. Thanks, Mr. Wright, for your very 
interesting testimony.
    I started to interrupt to say that part of our hope here in 
the way we have constructed this CIO is to focus on the 
responsibilities and to make sure that we created an office in 
which the CIO had responsibilities that focused almost entirely 
on information technology and not one of several as the deputy 
director for management has.
    Mr. Ingram, from the point of view of ITAA, do you have any 
counsel about the construction--I know you made a few general 
statements--of the CIO, and I suppose particularly on the 
question of whether the CIO ought to concentrate primarily on 
IT issues?
    Mr. Ingram. Yes, sir, I do. First of all, let me relate it 
back if I could to our corporate structure and how a CIO 
operates. For many years, we had multiple architectures 
throughout the corporation--this is EDS now--we had multiple 
architectures, we had multiple business units. Everybody went 
their own way, and we had stovepipe systems.
    Now we have a CIO at the corporate level who reports to the 
highest position in the company. When he speaks, we listen, and 
we follow. It is for several reasons. First of all, he has a 
position, he has leadership, he owns budget, and he sets 
priorities. He sets priorities by working with business unit 
leaders, or in this case, agency heads. But now, through that 
direction, we have one common architecture around the entire 
corporation for all of our desktops, all of our PDAs and our 
Blackberries that we are carrying around and so forth, and we 
are very consistent.
    We have one single format for our web pages and our 
Internet and intranet sites so that everybody knows the common 
look and field, and it is easy to navigate. We are sharing data 
across all of those, and we have one standard architecture for 
everything. I think that that is the way it should work in this 
situation also, absolutely.
    Chairman Lieberman. Thank you.
    Ms. McGinnis, I know that one of the recommendations 
contained in the Council's e-government blueprint, which is a 
very impressive document, is the creation of an e-government 
strategic fund which would receive $3 billion over a 5-year 
period. And I wanted you to talk to us a bit about how that 
figure was arrived at and how you would hope that the money 
would be used.
    Ms. McGinnis. We used the Y2K initiative as a model for 
this, and the amount is comparable to that and represents, when 
you look at this $40 to $45 billion being spent on information 
technology, only about 1.5 percent of that per year. So we did 
not see it as an excessive investment.
    I do not think the exact amount is as important as 
achieving this flexibility in using the money across agencies 
for collaborative initiatives. If there is a way of tapping 
into the $45 billion and creating more flexibility, bringing 
these agencies together to invest in initiatives that will go 
beyond the boundaries of their agencies, then that is a way of 
getting at this.
    But the notion here is that the E-Government Investment 
Fund be focused on cross-agency, intergovernmental, and public-
private initiatives that address the priorities that were 
identified in our report and making these systems more 
interoperable, using the best technology to provide services, 
addressing issues of privacy and security.
    Chairman Lieberman. Let me ask a final and broader 
question, which is that one of our expressed hopes in going 
more and more to e-government is not only that it will make the 
government internally more efficient and make it more 
convenient for the citizenry, for instance, to apply for 
licenses for restaurants or to gain access to library services, 
but that in a broader way, it will help to revive or stimulate 
the vitality of our democracy. From the point of view of the 
Council, I wonder if you think this is pie-in-the-sky or if it 
is a practical possibility that will come from better e-
government.
    Ms. McGinnis. I think it is not pie-in-the-sky. I think it 
is absolutely essential when you look at the symptoms of our 
anemic democracy in terms of the number of people, particularly 
young people, who are voting and participating. And we see in 
our polling--we saw in this polling, and we have seen in a 
whole series of polls that we have done with Peter Hart and Bob 
Teeter over the years--that people do want to be more involved. 
They see themselves as part of the solution, and they feel 
rather frustrated that they do not have opportunities beyond 
going to the voting booth in November in election years, and 
many are not exercising that opportunity.
    So in fact I suggested these public forums. I do not 
necessarily think that you have to write that into the 
legislation here; we can just do it. You will find, as we did 
in our polling and focus groups, that people are very willing 
to engage and say what they would like to have on-line, how 
much they think needs to be offered offline, what is most 
important to them.
    We were quite surprised, and I know that Bob Teeter and 
Peter Hart were, too, quite surprised, to find that people's 
vision of e-government goes far beyond this notion of just 
being able to apply for licenses on-line or get information on-
line. They want to be able to communicate with you. They want 
to be able to communicate with their elected officials at every 
level and to ask for and get information and have input even 
into the policy process of the Federal Government and other 
levels of government.
    I think that that is the dimension, that is the definition 
of excellence in government that we see as equally important to 
making this all more efficient and operate better.
    Chairman Lieberman. That is a very helpful answer. I 
believe you are right, and I am encouraged by the fact that the 
pollsters found that kind of attitude among the public.
    I want to thank the four witnesses, and I am going to yield 
to Senator Thompson. I apologize that there is now ongoing a 
farewell luncheon for a long-time employee of my office, and I 
would be derelict if I did not go. So I am grateful for your 
testimony, and I am grateful to Senator Thompson for being 
willing to wrap up the hearing.
    So I now turn the gavel back to Senator Thompson 
temporarily.
    Senator Thompson. Do you have that other piece of 
legislation that we had? [Laughter.]
    Chairman Lieberman. Thank you.
    Senator Thompson [presiding.] Thank you very much, Mr. 
Chairman.
    Several comments have been made that I think have been 
right on point. Ms. McGinnis, you mentioned in your statement 
the concern over privacy; we never talk much about that, but 
that is another hurdle that we are going to have to overcome. 
The concern that you mentioned that people have is very well-
placed.
    Congressman Inslee and I passed an amendment to the 
appropriations bill last year, requiring the Inspector General 
to report to Congress on how agencies collect and share 
personal information from the Internet site. The IG compiled 
data from 51 IGs--three hundred persistent cookies, or 
information-collecting devices, were found on the website of 23 
different agencies. There were hundreds of violations. 
According to one report, 116 of 206 State Department websites, 
well over half the Department's sites reviewed, had no privacy 
statements and therefore no means of advising users of any 
information collected on the sites.
    That is something that we are going to have to deal with. 
We are not doing a very good job of that so far. I think they 
are making improvements in that now that the spotlight has been 
focused on them, but we will have to wait and see.
    Mr. Wright, you mentioned the Government Paperwork 
Elimination Act, and you are absolutely right; it requires 
Federal agencies by 2003 to provide the public or businesses 
that deal with Federal agencies the option of submitting or 
receiving information electronically. But the GAO has recently 
reported that agency plans for implementing the act do not 
adequately address the requirements set forth in the 
legislation. They concluded that OMB will be challenged in 
providing oversight of agency activities because the 
implementation plans submitted by the agencies do not document 
key strategic actions nor do they specify when they will be 
undertaken. So it is another act they are not going to comply 
with.
    Mr. Wright. Well, Senator Thompson, the Government 
Paperwork Elimination Act is just part of a huge amount of 
management legislation passed during the 1990's. I just went 
through it, and in some ways, I feel a little bit sorry for my 
successors at OMB. On the other hand, what a great challenge 
for them. We did not have the Internet in the 1980's, and I can 
remember the battles that we had to go through--I do not even 
want to bore you with it--but it was difficult just to get 
agencies to use credit cards or to just try to get them to use 
a general ledger system. Now, those are about the most boring 
subjects in the entire world--but they will fight to the death 
over it. Or it was difficult to get agencies to use AFT and 
lockbox systems--but we got that one done because there was 
quite a bit of money involved. We also did not have the 
advantages then that the existing Congress has in your 
oversight.
    Senator Thompson. But on the other hand, we keep adding 
layers of government in all these agencies.
    Mr. Wright. Yes, you do.
    Senator Thompson. We keep adding programs; we keep 
duplicating and overlapping programs. So the tools are greater, 
but the problems are greater too, aren't they?
    Mr. Wright. Well, I was just looking at the GAO report on 
all the management improvement legislation, and much of it 
complements prior legislation and much of it is overlapping. I 
do not want to make your life more complex, but if this 
Committee were to combine all these former bills into a single 
omnibus piece of legislation--that would be an extraordinary 
service.
    Senator Thompson. That is a very interesting idea. I have 
often wondered about that myself. For example, you mentioned 
the nineties. The Clinger-Cohen Act and the Paperwork Reduction 
Act, I am informed, placed the responsibility of the things 
that we are talking about now--maybe they did not realize the 
significance of it then--but they placed it with the director 
of OMB. So I sometimes think we spend an awful lot of time 
rearranging the boxes and putting new slots in place and so on, 
all in a vain effort to try to vest someone with responsibility 
or figure out a way of holding them responsible when it has 
nothing to do with the organizational structure. It is almost 
like we need a one-line piece of legislation that says the 
director of OMB is responsible, and he had better do it or 
else.
    Mr. Wright. The problem is the director of OMB is being hit 
with a budget issue every 15 minutes that must be resolved. 
Management issues are weekly, monthly, and yearly issues. So 
therefore, OMB handles the issue that has to be resolved right 
then.
    The Government Paperwork Elimination Act requires OMB to 
submit a report to the Congress as part of the budget--but in 
addition, look at all the rest of the reports they have to 
submit. How in the world is the director of OMB going to pay 
attention to all of those requirements when they are not 
combined in a ``single'' or in a ``limited'' number that he can 
focus on?
    Senator Thompson. So what you are suggesting is that we are 
overloading that position. Obviously, the budget is always 
going to be the most important part of it. I have been critical 
in the last several years that it has been about the only part 
of it. Management has drifted. The budget is going to have the 
priority. But after all that is over, with the additional 
reporting requirements and additional legislation and 
complication that we put into government now, maybe it has 
gotten to be an impossibility for one person to handle or even 
have direct responsibility for all that. And you are suggesting 
that we simplify at least the management side of that, maybe, 
by combining or streamlining all this management legislation 
into something that is more manageable. Is that what you are 
suggesting?
    Mr. Wright. First, I believe that a lot of people have 
objected to if you want to call it the heavy-handedness of OMB 
forever. When I was up here and elsewhere testifying, I said 
that is fine--if you do not want OMB, disband it, but you are 
going to have to have another OMB. You are going to have to 
have somebody who is going to be there to carry out the 
policies, ``of the President'' and communicate these through 
the budget and other terms of the Congress.
    I saw the way the National Performance Review was done in 
the prior administration, and many of those initiatives were 
very, very good ideas, but they separated it away from the 
budget. And I knew that that was not going to be long-lasting 
and the agencies were not going to pay that much attention to 
it.
    So I think that in terms of this legislation, putting it 
into OMB is the correct thing to do, but it is one more piece 
of management legislation that is placed on top of another 
whole group of requirements that the director is going to 
satisfy in addition to around 20 additional reports with the 
budget.
    Senator Thompson. So do you think it makes any difference, 
really, whether or not we have a CIO as this legislation 
suggests, or whether we have the newly-created position under 
DDM, as Mr. O'Keefe described it?
    Mr. Wright. A newly-created position reporting to the 
Executive Office of the President will simply compete with OMB. 
And I am not saying this out of----
    Senator Thompson. Even if it is within OMB?
    Mr. Wright. Oh, no, not if it is within OMB. I am sorry.
    Senator Thompson. I think the legislation has it within 
OMB.
    Mr. Wright. Yes. If it is within OMB, I would make it 
simple. I would not create another deputy to the director. It 
is tough enough the way it is right now.
    I will tell you, Sean O'Keefe is a wonderful man; he is 
still geared toward the same 15-minute issues hitting him all 
the time. When you now have the deputy for management coming in 
and saying, ``By the way, we are going to provide management 
guidance to the agencies on our data call which is going out in 
a couple of weeks--and I want this to be in it,'' he is going 
to be negotiating with Sean O'Keefe in terms of that guidance.
    Now you have a third person come in, and what if you have a 
fourth person come in on the next Congressional imperative? 
What you are doing is complicating the life of the director of 
OMB substantially. That is all that I am saying.
    I would hold the director of OMB responsible for 
performance under S. 803 and I would make it as clear as 
possible. I would simplify all of these prior management reform 
acts--this Committee could take the lead on that--and make e-
government part of that.
    Senator Thompson. That means we would have to read all of 
them first. Therein lies the problem. [Laughter.]
    Mr. Wright. Yes, sir, that is your problem, and that is why 
you are a Senator.
    Senator Thompson. We could go on for a long time here with 
the other panel members, but it is one o'clock, and I think we 
should wrap it up.
    I really appreciate your being here and making your 
contribution. I think this has been extremely helpful. 
Hopefully, we have been able to point out some of the 
opportunities as well as some of the potential pitfalls, and we 
can move in the right direction.
    The record will be held open for 1 week to accept 
statements on e-government and S. 803.
    We are adjourned.
    [Whereupon, at 1:01 p.m., the Committee was adjourned.]
                            A P P E N D I X

                              ----------                              

                 PREPARED STATEMENT OF SENATOR CLELAND
    Mr. Chairman, on the 4th of July thousands of Americans lined up at 
the National Archives to pay their respects to a 225-year-old piece of 
parchment. The words contained on that faded medium are the words of 
our independence as a nation and the ideals that have guided this 
country for its entire history. The Declaration of Independence, along 
with the other Charters of Freedom, have now been removed from display 
at the National Archives to undergo 2 years of treatment and re-
incasement to preserve both the fragile medium and the message that we 
work every day to protect. I understand that when the documents go back 
on display in 2003 they will be presented in new encasements, more 
accessible to all Americans, including those with disabilities.
    Acessibility of government information is why S. 803, the E-
Government Act of 2001, is so very important, Mr. Chairman, and that is 
why I join you in supporting its vital goals. From the parchment of the 
18th century to the electronic records of the 21st, we must preserve 
and make available the records of our national life and thereby ensure 
accessibility of government services to the people. The life cycle of 
e-government records can not end with first time distribution, but must 
guarantee availability to the people into the decades and centuries 
ahead. That is why, Mr. Chairman, I wish to take this opportunity to 
note the vital work of the National Archives and Records Administration 
(NARA) in that preservation task.
    Building an Electronic Records Archives (ERA) is one of the most 
critical efforts to ensure preservation and access to Government 
records since the establishment of the National Archives in 1934. The 
pace of technological progress and the spread of electronic government 
initiatives make the need for electronic records solutions urgent. 
Among other problems, this progress makes the formats in which the 
record are stored obsolete within a few years, threatening to make them 
inaccessible even if they are preserved intact.
    NARA has been working in collaboration with the Georgia Tech 
Research Institute, the National Science Foundation, Defense Research 
Projects Agency, United States Patent and Trademark Office, the Army 
Research Laboratory, and the San Diego Supercomputer Center to find 
solutions for the preservation and access to electronic records that 
are sustainable over the long term. Progress in these collaborations 
enabled NARA to announce in March 2000 that they foresee the 
possibility of implementing an Electronic Records Archives within a few 
years. Goals of particular interest to private sector records managers 
is NARA's commitment to make solutions transferable and scalable to a 
wide variety of public and private applications.
    In addition to the important link with Georgia Tech on this 
project, Mr. Chairman, Atlanta, Georgia is a proud host to one of the 
14 regional archives of NARA. Currently housed in an inadequate WWII 
warehouse, the Archives has been invited to build a new facility on 
land contiguous to the campus of Clayton College and State University 
in Morrow, Georgia. I am working with the College, the Georgia State 
Archives, and my friend from the 3rd District, Mac Collins, to try to 
make that a reality. The exciting possibility in reference to the 
subject of e-government today, Mr. Chairman, is the fact that the most 
attractive feature of Clayton College and State University to the 
Archives is their information technology curriculum. This specialty 
will allow the University to partner with NARA on technology projects 
that can make the regionally-created e-records more accessible to the 
American public. Talks are already underway on how these collaborations 
might be accomplished.
    So in conclusion, Mr. Chairman, it is my pleasure to support S. 
803, as we take particular note of our responsibility to making the 
records of our government more accessible to the people. From the 
Charters of Freedom to the latest records of the Centers for Disease 
Control or TVA, we must do our part to support the institutions that 
will ensure accessibility both today and tomorrow.
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
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