Electronic Government: Progress and Challenges in Implementing the Office of Personnel Management's Initiatives
Published: 2003-09-23T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Electronic government (e-government) refers to the use of information technology (IT), including Web-based Internet applications, to enhance access to and delivery of government information and services, as well as to improve the internal efficiency and effectiveness of the federal government. The Office of Personnel Management (OPM) is managing five e-government initiatives whose goal is to transform the way OPM oversees the government's human capital functions. These 5 initiatives are among 25 identified by the Office of Management and Budget (OMB) as foremost in the drive toward egovernment transformation. The 25 initiatives have ambitious goals, including eliminating redundant, nonintegrated business operations and systems and improving service to citizens by an order of magnitude. Achieving these results, according to OMB, could produce billions of dollars in savings from improved operational efficiency. In today's testimony, among other things, GAO identifies the challenges facing OPM as it moves forward in implementing the five human capital initiatives.
section_title: What GAO Found
paragraphs: OPM's five e-government initiatives are an ambitious attempt to transform the way human capital functions and services are carried out in the federal government. OPM faces several challenges that, if not fully met, could prevent it from meeting its objectives and realizing projected improvements and dollar savings. For instance, in order to meet a perceived need for quick results, alterations have been made to the acquisition plans for several of the 25 OMBsponsored e-government initiatives, including OPM's Recruitment One-Stop initiative. In OPM's recent decision to continue with its awarded contract for Recruitment One-Stop, despite a successful bid protest by Symplicity Corporation, agency officials perceived the need for quick results to be one factor outweighing the importance of issues raised by GAO concerning the conduct of the procurement. However, by taking this course, OPM risks alienating potential supporters of its initiative. Further, managing the migration from agency-specific systems to consolidated systems will be a challenge, because agencies may be required to take positive action to shut down existing systems and invest in additional or updated technology to use the new, consolidated systems resulting from OPM's five initiatives. Consequently, it will be crucial for OPM to implement effective change management and communication policies. In addition, technical integration across agencies to support consolidation, including the development of standards, is a formidable task. Finally, OPM also faces a significant challenge in realistically estimating the cost savings to be derived from these initiatives. In many cases, estimates of cost savings are only loosely based on measures that are difficult to quantify, such as the average cost of performing a certain function across the government. To be truly effective in meeting its goals, OPM needs to establish complete, meaningful, and quantitative measures of cost savings.

section_title: Letter
paragraphs: Electronic government  (e-government) refers to the use of  information technology (IT),  including Web-based Internet  applications, to enhance access to  and delivery of government  information and services, as well as  to improve the internal efficiency  and effectiveness of the federal  government. The Office of  Personnel Management (OPM) is  managing five e-government  initiatives whose goal is to  transform the way OPM oversees  the government’s human capital  functions. These 5 initiatives are  among 25 identified by the Office of  Management and Budget (OMB) as  foremost in the drive toward e- government transformation. The 25  initiatives have ambitious goals,  including eliminating redundant,  nonintegrated business operations  and systems and improving service  to citizens by an order of  magnitude. Achieving these results,  according to OMB, could produce  billions of dollars in savings from  improved operational efficiency.
OPM’s five e-government initiatives (summarized in the table) are an  ambitious attempt to transform the way human capital functions and  services are carried out in the federal government. OPM faces several  challenges that, if not fully met, could prevent it from meeting its objectives  and realizing projected improvements and dollar savings.
For instance, in order to meet a perceived need for quick results, alterations  have been made to the acquisition plans for several of the 25 OMB- sponsored e-government initiatives, including OPM’s Recruitment One-Stop  initiative. In OPM’s recent decision to continue with its awarded contract for  Recruitment One-Stop, despite a successful bid protest by Symplicity  Corporation, agency officials perceived the need for quick results to be one  factor outweighing the importance of issues raised by GAO concerning the  conduct of the procurement. However, by taking this course, OPM risks  alienating potential supporters of its initiative.
Further, managing the migration from agency-specific systems to  consolidated systems will be a challenge, because agencies may be required  to take positive action to shut down existing systems and invest in additional  or updated technology to use the new, consolidated systems resulting from  OPM’s five initiatives. Consequently, it will be crucial for OPM to implement  effective change management and communication policies. In addition,  technical integration across agencies to support consolidation, including the  development of standards, is a formidable task.
In today’s testimony, among other  things, GAO identifies the  challenges facing OPM as it moves  forward in implementing the five  human capital initiatives.
Finally, OPM also faces a significant challenge in realistically estimating the  cost savings to be derived from these initiatives. In many cases, estimates of  cost savings are only loosely based on measures that are difficult to quantify,  such as the average cost of performing a certain function across the  government. To be truly effective in meeting its goals, OPM needs to  establish complete, meaningful, and quantitative measures of cost savings.
Purpose  Provide a one-stop Web site for federal job seekers through a single application  point that provides a range of information and tools, including vacancy information,  application submission, status tracking, and other tools.   Improve the efficiency and speed by which federal government clearances are  granted to maximize the efficiency of collecting data, scheduling cases, locating  existing investigations and clearances, and retrieving archived records. www.gao.gov/cgi-bin/getrpt?GAO-03-1169T.
To view the full product, including the scope  and methodology, click on the link above.  For more information, contact Linda Koontz at  (202) 512-6240 or koontzl@gao.gov.
Provide a data repository of standardized core human resource data to replace the  paper Official Personnel File, with an Official Electronic Record, enabling the  electronic exchange of information between agencies during an employee’s  government career.   Support development of the federal workforce through simplified, one-stop access  to high-quality Internet-based training products and services.  Improve federal payroll operations by consolidating 22 existing federal payroll  system providers; simplifying and standardizing policies and procedures; and  better integrating federal payroll, human resources, and finance functions.
Mr. Chairman and Members of the Subcommittee:  I appreciate the opportunity to participate in the Subcommittee’s  hearing on the progress of, and challenges to, implementing the  electronic government (e-government) initiatives that are being led  by the Office of Personnel Management (OPM). Generally speaking,  e-government refers to the use of information technology (IT),  including Web-based Internet applications, to enhance the access to  and delivery of government information and service to citizens,  business partners, and employees, and to improve the internal  efficiency and effectiveness of the federal government. A variety of  actions have been taken in recent years to enhance the  government’s ability to realize the potential of e-government,  culminating in the enactment of the E-Government Act of 2002,  which includes provisions to promote the use of the Internet to  provide government services electronically, strengthen agency  information security, and manage the federal government’s growing  IT human capital needs.
The President has embraced e-government as one of five priorities  in his management agenda for making the federal government more  focused on citizens and results. Under the leadership of the Office of  Management and Budget (OMB), a set of high-profile initiatives was  identified to lead the drive toward e-government transformation.  These initiatives—now numbering 25—have ambitious goals,  including eliminating redundant, nonintegrated business operations  and systems and improving service to citizens by an order of  magnitude. Achieving these results, according to OMB, could  produce billions of dollars in savings from improved operational  efficiency. However, to realize such savings, it will be critically  important that these initiatives are well managed as the government  undertakes the challenging task of turning good ideas into real- world results.
OPM, the President’s agent and advisor for human capital matters, is  charged with overseeing the management of the federal  government’s most important asset—its people. OPM is in the  process of transformation—from less of a rulemaker, enforcer, and  independent agent to more of a consultant, toolmaker, and strategic  partner in leading and supporting executive agencies’ human capital  management systems. As part of that transformation, OPM has  taken on the role of managing partner for 5 of the 25 OMB- sponsored e-government initiatives. As requested, in my remarks  today, I will provide an overview of OPM’s initiatives and identify  the challenges facing OPM as it moves forward in implementing  these initiatives. I have also included an attachment that lists other  pertinent GAO publications on e-government issues.
subsections: section_title: Background
paragraphs: Expansion of e-government was one of five top priorities in the  President’s fiscal year 2002 management agenda for improving  government performance. To support that priority, a task force, led  by OMB, was established in 2001 and charged with identifying  electronic government projects that could deliver significant  productivity and performance gains across government. The task  force analyzed the federal bureaucracy and identified areas of  significant overlap and redundancy in how federal agencies  provided services to the public. The task force found that multiple  agencies were conducting redundant operations within 30 major  functions and business lines in the executive branch. To address  these redundancies, the task force evaluated potential projects,  focusing on collaborative opportunities to integrate IT operations  and simplify processes within lines of business across agencies and  around citizen needs. As a result of this assessment, the task force  identified a set of high-profile e-government initiatives for  accelerated near-term implementation. These are now the 25 OMB- sponsored initiatives.
The President’s management agenda outlined the following results  expected as a result of e-government: provide high-quality customer services regardless of whether the  citizen contacts the agency by phone, in person, or on the Web;  reduce the expense and difficulty of doing business with the  government; cut government operating costs; provide citizens with readier access to government services;  increase access for persons with disabilities to agency Web sites and  e-government applications; and make government more transparent and accountable.
OMB also established a portfolio management structure to help  oversee and guide the initiatives and facilitate a collaborative  working environment for each of them. This structure includes five  portfolios: “government to citizen,” “government to business,”  “government to government,” “internal efficiency and effectiveness,”  and “cross-cutting.” Each of the 25 initiatives is assigned to one of  these portfolios, according to the type of results the initiative is  intended to provide. Further, for each initiative, OMB designated a  specific agency to be the initiative’s “managing partner,” responsible  for leading the initiative, and assigned other federal agencies as  “partners” in carrying out the initiative. OPM was designated the  managing partner for five initiatives—Recruitment One-Stop, which  is to provide a consolidated Web site for federal job applicants;  e-Clearance, which seeks to improve the process of granting  security clearances; Enterprise Human Resources Integration,  which is to replace paper personnel files with electronic records;  e-Training, which is to provide Internet-based training for federal  employees; and e-Payroll, which seeks to consolidate federal payroll  systems. The five initiatives are all part of the internal efficiency and  effectiveness portfolio.
In developing this testimony, our objectives were to describe the  progress of the five e-government initiatives being managed by OPM  and identify key challenges associated with implementing them  successfully. To address these objectives, we analyzed relevant  documentation from OPM and interviewed project officials from  each of the initiatives. To assess progress to date and identify major  challenges to implementing the initiatives, we analyzed the reported  accomplishments and planned activities of the projects and  compared them with information provided in the initiatives’ original  business cases. We also held discussions with agency officials to  obtain additional information. We performed our work in September  2003 in accordance with generally accepted government auditing  standards.
section_title: OPM’s e-Government Initiatives Are Designed to Support a Range of Human Capital Functions
paragraphs: OPM’s e-government initiatives are intended to serve as a complete  set of electronic support tools for the federal government’s human  capital functions, including recruitment, security clearances,  personnel records, training, and payroll. OPM’s retirement systems  modernization project—not an OMB-sponsored initiative—rounds  out this set of tools. OPM’s vision is for these initiatives to  streamline and improve the process for moving employees through  the entire life cycle of their employment with the federal  government and to do so consistently with the evolving Federal  Enterprise Architecture as well as with security and privacy  standards. According to the agency, the success of the initiatives  will depend on leveraging of existing IT coupled with  standardization and consolidation practices that are beneficial to  end users.
If successful, these initiatives are likely to accrue savings to the  federal government by reducing redundancy among agency systems  and streamlining the various processes involved in tracking and  managing federal employment. Although we have not evaluated its  claim, OPM asserts that its e-government projects will save  approximately $2.6 billion over the life of the initiatives. These  savings are expected to derive not only from eliminating duplicative  personnel systems, such as payroll systems, but also from such  process improvements as reducing the amount of time it takes to  obtain a security clearance and streamlining the way in which  training is administered. Table 1 provides an overview of OPM’s  e-government projects and key milestones, and table 2 provides a  summary of changes in cost estimates for the initiatives.
subsections: section_title: Recruitment One-Stop
paragraphs: Recruitment One-Stop is a collaborative effort between OPM and its  federal agency partners to develop a comprehensive Web site  (www.usajobs.opm.gov) to assist applicants in finding employment  with the federal government. Full implementation of Recruitment  One-Stop is expected to benefit citizens by providing a more  efficient process for locating and applying for federal jobs, and to  assist federal agencies in hiring top talent in a competitive  marketplace. As we have previously reported, automation has the  potential to provide a variety of benefits in streamlining the hiring of  new employees. The specific objectives of Recruitment One-Stop  that will benefit federal job applicants include a single portal advertising federal job opportunities that supports  searching for jobs by type, location, salary, or level of experience; a  standard method for applying for federal positions that provides  immediate feedback on basic eligibility; and basic eligibility  screening that addresses issues such as citizenship, age, and special  occupational requirements, such as the need to carry firearms; standardized vacancy announcements with additional detailed  information available via electronic “hyperlinks”;  tools to build and store an on-line resume, including a resume  template covering all information normally needed to make basic  qualifications and eligibility determinations; and   the ability to check on the status of federal job applications by  accessing basic information such as closing and/or cancellation  dates, dates of candidate referral, and points of selection.
In addition, agencies are expected to be able to search and review  the resumes of consenting applicants in the USAJOBS database, a  process called applicant database mining. This feature will assist  agencies in locating candidates for hard-to-fill positions by capturing  “passive” job seekers who have resumes on file, but who may not  have thought of looking for opportunities within a particular agency,  job field, or location.
To date, the Recruitment One-Stop initiative has met several  planned milestones, including implementing enhancements to the  previously existing www.usajobs.opm.gov Web site in August 2003,  such as a resume builder to assist job applicants in developing up to  five versions of their resume with which to apply for federal jobs,  and a basic application status tracking tool to assist applicants in  finding the status of their federal applications. By the end of this  month, OPM plans to have all executive branch agencies using the  Web site to advertise their jobs. By December 2003, it intends to  begin working with agencies to shut down agency-unique job search  engines and resume builders.
OPM has continued development of the enhanced USAJOBS Web  site despite a successful bid protest against its contract award for  implementing the enhancements. On January 16, 2003, OPM  awarded a contract to TMP Worldwide, Inc., to support  enhancements to the Web site. However, on January 24, 2003, a  competing vendor, Symplicity Corporation, protested the award. We  sustained Symplicity’s protest on April 29, 2003, based on a  determination that OPM did not exercise certain necessary  evaluative controls in its review of the bids before awarding the  contract, resulting in errors in the bidding process that created an  unfair competitive environment. For example, we found that OPM  did not perform an analysis of whether the quoted services, labor  categories, and other direct costs included in TMP’s quotation were  within the scope of TMP’s approved GSA contract schedule. Based  on this finding, we recommended that OPM reopen discussions with  all vendors whose quotations were competitive and request and  reevaluate revised quotations. However, on July 21, 2003, OPM  informed us that it would not reopen discussions with vendors,  citing as one of its reasons the need to complete the system “within  the government’s required time frame.” On August 5, 2003, we  submitted a report to Congress summarizing the protest decisions  and the circumstances of the failure of OPM to implement our  recommendation.
OPM is planning to measure the performance of the enhanced Web  site and features with metrics such as cost per hire, time to fill  vacancies, and the percentage of federal job applicants using  Recruitment One-Stop. OPM expects that once Recruitment One- Stop is fully implemented, it will generate a total of $365 million in  savings through fiscal year 2012. According to project officials, the  expected cost savings were extrapolated from projected average  annual decreases in the cost of hiring each new federal employee.  By fiscal year 2005, OPM’s goal is to reduce the cost per hire from  $2,790 to $2,678, reduce the time to fill job vacancies from 102 days  to 97, and increase the percentage of job applicants using  Recruitment One-Stop from 80 to 84 percent.
The e-Clearance project is designed to improve processing of  security clearances for federal employees. It focuses on  consolidating and increasing access to information to improve the  efficiency of granting or locating previous clearances or  investigations. OPM intends the e-Clearance project to help  streamline data collection and case scheduling by making it easier  to locate existing investigations and clearances, providing for almost  immediate retrieval of archived records as they are needed. The  expected benefits include quicker granting of clearances,  elimination of redundant investigations, and financial savings from a  reduction in the overall costs of clearances. The initiative consists of  three modules:
Electronic Questionnaires for Investigations Processing involves  the automation of the Questionnaire for National Security Positions  (Standard Form 86). This paper-based form requires at least 2 hours  to complete, and some federal employees are required to fill it out as  often as every few months to maintain their security clearances.  Since the current form is processed manually, it must be completed  each time from scratch. In contrast, the electronic version of the  form will be populated with previously submitted data, thereby  streamlining the application process. In addition, a new form has  been deployed that allows federal employees to indicate that there  have been no changes in the data provided on the most recently  filed Standard Form 86, or, where there are changes, to provide only  the newly changed information.
Clearance Verification System consists of the development and  implementation of a cross-agency system to enable a single search  to locate investigative and clearance information from any agency.  This module requires civilian agencies to load their existing  clearance information into OPM’s Security/Suitability Investigations  Index so that new clearance applications can be checked against  existing information. The module also includes developing a link to  the Department of Defense’s Joint Personnel Adjudication System to  access comparable DOD information.
Imaging includes the creation, storage, and retrieval of digital  images of investigative reports and other documents. Often, the  longest delay in an investigation can be the retrieval, copying, and  mailing of previous reports. The use of imaging is intended to ease  retrieval and dissemination of investigative information for  authorized users.
Currently, OPM states that all major milestones for this initiative  have been met, including activating Electronic Questionnaires for Investigations Processing in completing the Clearance Verification System connection between  OPM and DOD at the end of 2002, and having 80 percent of agencies  load their existing clearance information into the Clearance  Verification System at the end of January 2003; and beginning the process of creating digital images of existing  investigative records by May 2003.
The requirements for Imaging were developed between the fall of  2002 and the summer of 2003, and some agencies have begun  imaging while others will phase in this capability. Additionally, OPM  plans to implement a secure network for exchanging imaged files by  early 2004.
OPM plans several performance improvements for fiscal year 2005,  including reducing the average time to process clearance forms  electronically from 28 to 21 days, adding three additional forms to  the one now available in the Electronic Questionnaires for  Investigations Processing application, keeping unscheduled  application downtime at no more than 2 percent, and providing  training to all e-Clearance staff.
OPM estimates that e-Clearance will realize savings of $258 million  through fiscal year 2012. These savings are to be realized through  avoiding agency-unique systems procurements and through a $50  reduction in the average cost of each clearance investigation.
section_title: Enterprise Human Resources Integration
paragraphs: The purpose of the Enterprise Human Resources Integration (EHRI)  initiative is to facilitate human capital management activities by  providing storage, access, and exchange of standard electronic  information, through development of a data repository of  standardized core human capital data for all 1.8 million executive  branch employees. These data will be in the form of an Official  Electronic Record, which is intended to replace the current paper- based Official Personnel File. An Official Electronic Record for each  employee is to be maintained through electronic exchange of  information among agencies throughout an employee’s government  career. Because all EHRI information exchanges will be electronic,  OPM expects to reduce process cycle times, and improve the  accuracy of transactions.
The three primary goals of EHRI are to provide for comprehensive knowledge management and workforce  analysis, forecasting, and reporting to further strategic management  of human capital across the executive branch; enable expanded electronic exchange of standardized human  resources data within and across agencies and systems and the  attainment of associated benefits and cost savings; and provide unification and consistency in human capital data across the  executive branch.
OPM plans to implement EHRI in three releases. Release 1 will be a  prototype of the data repository system and is scheduled to be ready  by September 30, 2003. Release 2, scheduled for the second quarter  of fiscal year 2004, is intended to allow biweekly employee data to  be provided electronically. Release 3 is planned to incorporate  interfaces between OPM’s Retirement System Modernization system  and e-Training and to allow two-way electronic transfer of personnel  data between agencies. The system functionality is to be  incrementally available between March and September 2004.
OPM plans to improve performance for fiscal year 2004 in areas  such as personnel management, savings and cost avoidance, and  data reliability and quality. For example, it intends to alter  regulations, executive orders, and laws to enable the conversion of  records to an electronic format. Another planned measure involves  eliminating the need for agencies to develop new human capital  management capabilities. Other measures include a reduction in the  baseline data error rate and participation by 9 of the 18 partner  agencies in electronic workforce forecasting. OPM reported that  EHRI would save taxpayers around $235 million through fiscal year  2012.
The purpose of the e-Training initiative is to create a government- wide e-Training environment—the Gov On-line Learning Center  (www.golearn.gov)—which is to support the development of the  federal workforce and provide a single source for on-line training  and strategic human capital development for all federal employees.  The Gov On-line Learning Center is designed to provide users access  to a broad range of products and services, including mandatory  government-wide training on topics such as computer security,  ethics, and preventing sexual harassment, as well as agency-specific  training and high-interest topics, such as homeland security. Some  of the courses are to be free, while others are to be available on a  fee-for-service basis.
OPM also plans for the GoLearn Web site to provide tools that will  allow human capital specialists and employees to match an  employee’s professional and individual development to available  courses and services. OPM expects that its initiative will allow  agencies to focus their own training efforts on unique needs, thus  maximizing the effectiveness of their expenditures on workforce  performance. Providing agencies with on-demand e-learning  services is expected to enable the government to better attract,  retain, manage, and continuously educate the highly skilled  professionals needed for a flexible and high-performing government  workforce.
The e-Training initiative is intended to benefit the government and  federal workforce by encouraging e-training investments as part of a systematic and  continuous development of federal government human capital;   reducing redundancies in the development and purchase of  e-training content; achieving economies of scale through consolidated purchasing; offering easy, one-stop access to a robust, high quality e-training  leveraging components of existing e-training systems.
The e-Training Initiative is composed of three developmental  modules. Module 1, launched in July 2002, included 37 free  commercial off-the-shelf training courses (on topics such as project  management, prevention of sexual harassment, using Microsoft  Excel spreadsheet software, and change management); “Search and  Select,” a set of quick 5 to 7 minute learning segments; and “E- Books,” a collection of over 100 professional journals and books.  Module 2, launched in January 2003, added access to additional free  commercial and government courses, fee-for-service options for  e-training products and services, enhanced registration and  reporting, and blended learning options for law enforcement  training and executive and management training. Finally, Module 3,  originally scheduled for June 2003, recently became operational.  OPM states that this module will include a Merit Systems Principles  e-course, as well as competency-based workforce development  roadmaps specifically for IT workforce occupations. According to  OPM, future releases of the Gov Online Learning Center will move  from providing content to facilitation of learning. The agency also  plans to introduce knowledge domains, user communities of  practice, and virtual collaboration tools.
OPM estimated that e-Training would save taxpayers about $784  million through 2012. These savings are expected from the lower  cost associated with providing on-line training, such as savings  resulting from less travel. OPM expects to have 30 customized Web  sites in operation for fiscal year 2004. Its goal is to have 77,000  courses completed and 48 sites developed. It is planning to measure  performance of the e-Training initiative through indicators such as  the number of eligible GoLearn users, the number of participating  entities, the number of GoLearn courses completed and the number  of custom sites. For example, OPM plans to increase the number of  individuals registered on the GoLearn site from 142,000 to 193,000.
The goal of the e-Payroll initiative is to substantially improve federal  payroll operations by standardizing them across all agencies,  integrating them with other human resource functions, and making  them easy to use and cost-effective. To achieve this goal, plans are  to consolidate the operations of 22 existing federal payroll system  providers, simplify and standardize federal payroll policies and  procedures, and better integrate payroll with other human capital  and finance functions across federal agencies.
Major objectives of the initiative include (1) defining governance for  the initiative, (2) standardizing payroll policies, (3) establishing an  e-Payroll enterprise architecture, and (4) overseeing consolidation  of agency payroll operations. The first major project deliverable— establishing governance—was completed in April 2002 as  scheduled. OPM chose four agencies to be providers of payroll  services to all 116 executive branch agencies. The four selected  providers are the General Services Administration (GSA) and the  Departments of Defense, Interior, and Agriculture. The initiative is  divided into two major phases: migrating each of the 18 nonselected payroll system providers to  one of the four selected providers by September 2004, and merging the functions of the four selected payroll providers into just  two, while working to develop a single, integrated payroll system for  all executive branch agencies.
Although providers have been selected and a migration schedule  established for nonselected agencies, other actions have been  delayed. Standardization of policies, originally scheduled for  completion in July 2002, is currently ongoing. The enterprise  architecture planning task and the initial phase of agency  consolidations were both scheduled to begin in October 2002 but  were not initiated until January 2003. According to the project  manager, these schedule deviations have not led to a significant  delay in the overall progress of the initiative toward the original goal  of consolidating the 22 payroll providers to 4 by September 2004.
OPM reported that e-Payroll should save $1.1 billion through fiscal  year 2012. These savings would result from reducing operating  costs, eliminating duplicative systems investments, and simplifying  payroll processing. OPM plans to use several indicators to measure  performance and improvements regarding e-Payroll for fiscal year  2005, including reductions in payroll costs per W-2 per employee,  improvements in the accuracy of Treasury disbursements, and  reductions in response time. Currently, the cost of payroll services  per W-2 per employee can vary from $125 to $225. OPM’s plan is to  lower these costs to $97. Other planned improvements include  increasing the accuracy of Treasury’s disbursements from 98  percent to 100 percent and reducing the cycle time involved in  delivering payroll services.
section_title: OPM Faces Significant Challenges in Implementing Its e-Government Initiatives
paragraphs: OPM’s portfolio of e-gov initiatives represents an ambitious attempt  to transform the way human capital functions and services are  carried out in the federal government. In implementing the  initiatives, OPM faces a number of challenges that, if not fully met,  could erode support for the initiatives or prevent OPM from meeting  its objectives and realizing the improvements and dollar savings that  the agency has projected. We have commented in the past on the  many challenges facing e-government projects in general. Today, I’d  like to concentrate on three challenges that are especially pressing  for OPM’s efforts. These include (1) managing accelerated  acquisitions, (2) achieving governmentwide consolidation of  common electronic functions, and (3) estimating and measuring  cost savings.
subsections: section_title: Managing Accelerated Acquisitions
paragraphs: Program managers for many of the 25 OMB-sponsored  e-government initiatives have been under pressure, both from OMB  and within managing partner agencies, to achieve results quickly.  One of the criteria for OMB’s selection of its e-government  initiatives was the potential for the project to be completed “within  18–24 months.” In order to meet the demand for quick results,  significant alterations have been made to the acquisition plans for  several initiatives.
For example, in the case of the e-Authentication initiative, which is  focused on developing a centralized gateway for electronic  authentication in support of the other OMB-sponsored initiatives, a  decision was made to compress to approximately 3 months the  competitive contracting process, which had originally been planned  to take place over a full year. The major factor in this decision was  the perceived need to make the planned gateway fully operational as  soon as possible. However, this accelerated schedule may be  difficult to achieve because it is based on an extremely short time  frame, in which the selected contractor must develop, test, and  deploy a fully operational gateway.
In the case of the Geospatial One-Stop initiative, which aims to  establish a Web portal for locating and disseminating geospatial  information, the initiative’s board of directors decided in early 2003  to make an award based on an unsolicited proposal rather than  continue a competitive procurement, largely because of a perceived  need to implement the Web portal as quickly as possible. The  change in acquisition plans has caused concern among many in the  geospatial information systems community that the contractor’s  proprietary approach to developing the Web portal could make it  difficult for many potential contributors to share data with the  portal—which would prevent the initiative from meeting its goal of  providing one-stop access to geospatial data.
OPM has likewise taken a controversial step with its recent  Recruitment One-Stop acquisition. In its decision to continue with  its awarded contract for Recruitment One-Stop, despite a successful  bid protest by Symplicity Corporation, OPM officials perceived the  need to implement an e-government initiative as quickly as possible  to be one factor outweighing the importance of issues that we raised  concerning the conduct of the procurement. In its letter to us  explaining why it intended to proceed without implementing our  recommendation, OPM made clear that it was concerned about  implementing Recruitment One-Stop quickly: “The [Recruitment  One Stop] program is ready to become operational. National  security demands and critical domestic needs underlie the  Government’s vital need for efficient recruitment and hiring  methods. No other contractor can complete the system within the  Government’s required timeframe.” However, in our report to  Congress, we noted that OPM did not provide any details to support  this claim. While it is important to adhere to agreed-upon schedules  and milestones, it is also important to follow established contracting  procedures, which are intended to ensure fair competition. A rapidly  chosen vendor may not represent the best value for the  government’s investment.
By leaving questions about the fairness of the Recruitment One-Stop  competition unresolved, OPM risks alienating potential supporters  of its e-government initiative. In order to ensure the ultimate  success of its initiatives, it is important that OPM—as well as the  other managing partners of OMB-sponsored initiatives—carefully  weigh the risks and benefits of making significant changes to its  planned acquisitions solely based on the need to produce results  quickly.
section_title: Achieving Governmentwide Consolidation of Common Electronic Functions
paragraphs: Each of OPM’s five initiatives aims to ultimately create a single  system or Web-based service to support a specific human capital  function across the federal government. In each case, agency-unique  systems and processes must be either replaced or integrated into  the planned single system. Clearly, one of OPM’s biggest challenges  is managing the process of migrating agency-unique systems into  consolidated systems and services that are flexible enough to  effectively support the needs of virtually all federal agencies.
Many current federal human capital systems are based on  proprietary systems that were originally developed for the narrowly  defined needs of a single agency or bureau. These systems were not  designed to be interoperable with external systems, and generally  were not built to government standards (which have not yet been  defined for many human capital functions). The development of  systems based on narrowly defined needs, combined with  traditional barriers to interorganizational cooperation, have led to  the current environment of duplicative, inefficient, nonintegrated  (“siloed”) operations.
One way to encourage interagency cooperation on multiple systems  migrations is to develop a concerted strategy for managing change  and communicating effectively with all affected parties. In June  2002, OPM submitted to OMB its change management and  communication plan, which specified steps that OPM planned to  take in managing change and communications. In implementing its  plan, OPM established change management councils and delivered  presentations on its plans for specific initiatives, as well as for  governmentwide integration of human capital functions, to a range  of audiences, including high-level officials (such as the  e-Government committee of the President’s Management Council  and the Chief Human Capital Officers Council) and line managers  (such as human resource managers).
Effective change management and communication will be critical,  as agencies may be required to take positive action to both to shut  down existing redundant systems and invest in new technology to  connect with OPM’s standardized systems. OPM is planning for  agencies to shut down a number of agency-unique systems and  applications. For example, the e-Payroll initiative is set to reduce  federal payroll providers from the current 22 to just two  partnerships of two providers each. Nonselected payroll providers  will be required to shut down operations. Another example is the  Recruitment One-Stop initiative, which envisions that agency on-line  resume building and job search engine capabilities will be shut  down in favor of OPM’s centralized system. The e-Training initiative  also plans for agencies to shut down their unique systems in favor of  OPM’s offering.
Consolidation may also mean that agencies must make new  investments in order to connect with a new, integrated system. The  e-Clearance initiative, for example, requires all agencies with  archives of clearance investigations to make those materials  available electronically, thus necessitating agency expenses for new  imaging equipment. Likewise, EHRI will require agencies to make  modifications to their systems allowing electronic personnel records  to be transmitted to OPM’s central repository. Getting cooperation  from all affected agencies in making these investments will be  challenging.
OMB’s support is a critical factor in facilitating these consolidations.  For several e-government initiatives, OMB has used its statutory  authority under the Clinger-Cohen Act of 1996 to direct agencies to  identify and halt funding of potentially redundant IT investments.  For example, OMB issued on January 10, 2003, a letter to federal  agencies directing them to halt spending on agency-specific payroll  modernization efforts not associated with migrating to the e-Payroll  initiative. A similar letter had been issued in April 2002 directing  agencies to load their security clearance information into  e-Clearance’s Clearance Verification System.
Beyond issues of organizational cooperation, technical integration  can also be very challenging. Developing a common set of standards  that are agreed to and used by all project partners is a key factor for  integrating disparate, noninteroperable systems and services.  Ensuring that processes are in place by which partners can select  and agree upon standards and that all partners are adopting them  are key factors in successfully establishing standards. Finally,  standardization within the framework of the emerging Federal  Enterprise Architecture is key to promoting compliant development  and implementation across the government. OPM officials said they  plan to use the Federal Enterprise Architecture to document  specific data requirements for the human capital functions  supported by their e-government initiatives.
OPM has taken steps to involve its partners and other federal  agencies in the process of identifying opportunities for  standardization on the e-Payroll initiative. However, it still faces the  challenging task of getting federal agencies to reach agreement on a  single payroll standard that they all can use. As agencies migrate  ultimately to this single standard, changes may need to be made  either to provider payroll processes and standards—so that the  various payroll mandates can be accommodated—or to the  mandated requirements themselves, so that agencies can conform to  the single-payroll standard. For example, the Department of  Veterans Affairs’ Acting Deputy Assistant Secretary for Finance  expressed concern that administering payroll systems under Title 38  of the United States Code—the legislation that governs the  agency’s payroll processes—was very complex, and that significant  changes in payroll processing could be necessary as the agency  migrates to its new payroll provider. According to an OPM study, in  addition to Title 38, there are at least 13 other sets of legislated  federal payroll provisions that will need to be reviewed and  addressed before a single federal payroll system can be  implemented. Without agreement on standards, changes mandated  by OPM may not fully address agencies’ individual payroll  processing requirements, increasing the risk that agencies will not  be able to migrate as planned to the chosen governmentwide  standard.
OPM may face similar challenges in establishing standards for  official electronic personnel records, as part of EHRI. OPM officials  conducted an exercise to identify all the various types of data  captured by federal personnel forms. OPM officials identified 89  major data categories, with over 500 data elements. OPM officials  recognize the challenge they face in seeking agreement across  federal agencies on standardizing these data elements, a process  which is still in its early stages.
While it is relatively easy to develop and implement Web sites that  facilitate exchange of information—as some of OPM’s initiatives  do—the agency can expect greater challenges in getting cooperation  across the government to consolidate functions by shutting down  redundant systems, investing in new technologies, and committing  to new governmentwide standards. For several of OPM’s  initiatives—including e-Payroll and EHRI—much of this process still  remains to be completed.
section_title: Estimating and Measuring Cost Savings
paragraphs: One of the goals of OMB’s e-government strategy includes achieving  cost savings as an outcome of implementing the 25 e-government  initiatives. For example, in its 2002 strategy OMB estimated that  these initiatives could generate several billion dollars in savings by  reducing operating inefficiencies, redundant spending, and  excessive paperwork, and it also estimated that the initiatives would  make available over $1 billion in savings from realigning redundant  investments. In addition, OMB has stated that the initiatives were  selected for inclusion in the e-government strategy because they  provided the most value to citizens while generating cost savings or  improving the effectiveness of the government.
OPM has estimated substantial cost savings that officials believe can  be attributed to the e-government initiatives. Specifically, the agency  estimates that the total savings expected from all five of its  e-government initiatives will be more than $2.6 billion through fiscal  year 2012. Such savings would be realized through performance  enhancements that could reduce expenses such as costs per  application for security clearances, costs per transaction for payroll  processing, and costs associated with hiring new federal employees.  Table 3 provides an overview of the cost savings estimated by OPM  for its initiatives.
OPM faces a significant challenge in realistically estimating the  financial savings to be derived from its e-government initiatives. In  many cases, estimated cost savings associated with process  improvements are only loosely based on measures that are  inherently abstract, such as the average cost of performing a certain  function across the government. For example, e-Training project  officials estimate that federal agencies can reduce training costs  substantially by substituting electronic courses taken through  e-Training—which cost approximately $10 to $15 per training  instance—for traditional courses, which cost on average $150 per  training instance, including travel. However, it is unclear the extent  to which this kind of substitution will actually take place, or how it  could lead to savings of $784 million through 2012, as forecast by  OPM. The e-Training project manager told us that the estimate was  based on cost avoidance for training tuition, travel, and economies  of scale in acquiring training software licenses.
Similarly, for the Recruitment One-Stop initiative, project officials  predict that implementation will lead to a reduction in the average  cost of hiring a new federal employee of $112 in fiscal year 2005— from $2,790 to $2,678, or about 4 percent. With about 150,000 new  federal hires each year, the total savings through 2012 would  amount to about $168 million—significantly less than the total cost  savings of $365 million over that period that OPM estimates.  According to OPM officials, the additional savings would be gained  through other factors contributing to future efficiencies, although  specific performance measures had not yet been established.
OPM’s method for projecting cost savings due to process  improvements may overstate the savings that can be reasonably  attributed to those improvements. Specifically, officials stated that  for at least one initiative, Recruitment One-Stop, estimated savings  included continuing annual efficiency gains due to such things as  expected “policy improvements” that would not be a direct result of  implementing the Recruitment One-Stop initiative.
Further, OPM has not developed mechanisms to track actual  training expenditures at agencies to determine whether its  estimated governmentwide savings are being realized. With  estimated savings based on abstract, average governmentwide costs,  it will likely be very difficult to develop methods for documenting  the savings associated with process streamlining at each agency  across the federal government. In another example, e-Payroll is  planned to reduce the number of federal payroll service providers  from 22 to 4, and then consolidate those 4 to 2. Clearly, cost savings  can be found by reducing the number of payroll systems operated  and maintained by the federal government and avoiding the costs of  updating or modernizing those systems. However, OPM has not  clearly identified all the factors that would contribute to such  savings, or what measures will be used to measure them. Cost  savings from eliminating redundant systems is also a factor—though  a smaller one—in savings projected for Recruitment One-Stop and  e-Training.
Effectively measuring e-government cost savings is a challenge for  all agencies engaged in efforts to streamline or transform  government processes through e-government. To be truly effective  in meeting the goals set out in OMB’s e-government strategy,  agencies need to establish complete, meaningful, and quantitative  measures of cost savings. Until such measures can be implemented,  predicted cost savings will be difficult to confirm.
In summary, OPM has made progress in moving forward with its five  e-government initiatives, which, if fully implemented, could have  significant benefits by providing more streamlined and seamless  federal personnel processes, and by saving the taxpayers millions  through eliminating redundant payroll and other systems. However,  OPM continues to face several challenges in implementing and  carrying out its e-government initiatives, including managing  acquisitions while working to meet accelerated e-government  project schedules; consolidating common, governmentwide human  resource-related functions; and realistically estimating and  measuring the cost savings that can be expected from these  initiatives.
Mr. Chairman, this concludes my statement. I would be pleased to  answer any questions that you or other members of the  subcommittee may have at this time.
section_title: Contact and Acknowledgements
paragraphs: If you should have any questions about this testimony, please  contact me at (202) 512-6240 or via E-mail at koontzl@gao.gov. Other  major contributors to this testimony included Barbara Collier,  Felipe Colón, Jr., Larry Crosland, John de Ferrari, and Elizabeth  Roach.
section_title: Attachment I: Selected GAO Products Related to Electronic Commerce and Electronic Government
subsections: section_title: Electronic Commerce
paragraphs: Internet Cigarette Sales: Limited Compliance and Enforcement of  the Jenkins Act Result in Loss of State Tax Revenue. GAO-03-714T.  Washington, D.C.: May 1, 2003.
Electronic Procurement: Business Strategy Needed for GSA’s  Advantage System. GAO-03-328. Washington, D.C.: February 19,  2002.
Internet Gambling: An Overview of the Issues. GAO-03-89.  Washington, D.C.: December 2, 2002.
International Electronic Commerce: Definitions and Policy  Implications. GAO-02-404. Washington, D.C.: March 1, 2002.
Electronic Commerce: Small Business Participation in Selected  On-line Procurement Programs. GAO-02-1. Washington, D.C.:  October 29, 2001.
On-Line Trading: Investor Protections Have Improved but  Continued Attention Is Needed. GAO-01-858. Washington, D.C.: July  20, 2001.
Internet Pharmacies: Adding Disclosure Requirements Would Aid  State and Federal Oversight. GAO-01-69. Washington, D.C.: October  19, 2000.
Sales Taxes: Electronic Commerce Growth Presents Challenges;  Revenue Losses Are Uncertain. GGD/OCE-00-165. Washington, D.C.:  June 30, 2000.
Commodity Exchange Act: Issues Related to the Regulation of  Electronic Trading Systems. GGD-00-99. Washington, D.C.: May 5,  2000.
Trade with the European Union: Recent Trends and Electronic  Commerce Issues. GAO/T-NSIAD-00-46. Washington, D.C.: October  13, 1999.
Electronic Banking: Enhancing Federal Oversight of Internet  Banking Activities. GAO/T-GGD-99-152. Washington, D.C.: August  3, 1999.
Electronic Banking: Enhancing Federal Oversight of Internet  Banking Activities. GAO/GGD-99-91. Washington, D.C.: July 6, 1999.
Securities Fraud: The Internet Poses Challenges to Regulators and  Investors. GAO/T-GGD-99-34. Washington, D.C.: March 22, 1999.
Retail Payments Issues: Experience with Electronic Check  Presentment. GAO/GGD-98-145. Washington, D.C.: July 14, 1998.
Identity Fraud: Information on Prevalence, Cost, and Internet  Impact is Limited. GAO/GGD-98-100BR. Washington, D.C.: May 1,  1998.
Electronic Banking: Experiences Reported by Banks in  Implementing On-line Banking. GAO/GGD-98-34. Washington,  D.C.: January 15, 1998.
section_title: Electronic Government—Agency-Specific Initiatives
paragraphs: IRS’s 2002 Tax Filing Season: Returns and Refunds Processed  Smoothly; Quality of Assistance Improved. GAO-03-314.  Washington, D.C.: December 20, 2002.
Tax Administration: Electronic Filing’s Past and Future Impact  on Processing Costs Dependent on Several Factors. GAO-02-205.  Washington, D.C.: January 10, 2002.
GSA On-Line Procurement Programs Lack Documentation and  Reliability Testing. GAO-02-229R. Washington, D.C.: December 21,  2001.
U.S. Postal Service: Update on E-Commerce Activities and Privacy  Protections. GAO-02-79. Washington, D.C.: December 21, 2001.
Computer-Based Patient Records: Better Planning and Oversight  By VA, DOD, and IHS Would Enhance Health Data Sharing. GAO- 01-459. Washington, D.C.: April 30, 2001.
USDA Electronic Filing: Progress Made, But Central Leadership  and Comprehensive Implementation Plan Needed. GAO-01-324.  Washington, D.C.: February 28, 2001.
U.S. Postal Service: Postal Activities and Laws Related to  Electronic Commerce. GAO/GGD-00-188. Washington, D.C.:  September 7, 2000.
U.S. Postal Service: Electronic Commerce Activities and Legal  Matters. GAO/T-GGD-00-195. Washington, D.C.: September 7, 2000.
Defense Management: Electronic Commerce Implementation  Strategy Can Be Improved. GAO/NSIAD-00-108. Washington, D.C.:  July 18, 2000.
Food Stamp Program: Better Use of Electronic Data Could Result  in Disqualifying More Recipients Who Traffic Benefits.  GAO/RCED-00-61. Washington, D.C.: March 7, 2000.
National Archives: The Challenge of Electronic Records  Management. GAO/T-GGD-00-24. Washington, D.C.: October 20,  1999.
National Archives: Preserving Electronic Records in an Era of  Rapidly Changing Technology. GAO/GGD-99-94. Washington, D.C.:  July 19, 1999.
section_title: Electronic Government—General
paragraphs: Geographic Information Systems: Challenges to Effective Data  Sharing. GAO-03-874T. Washington, D.C.: June 10, 2003.
Electronic Government: Success of the Office of Management and  Budget’s 25 Initiatives Depends on Effective Management and  Oversight. GAO-03-495T. Washington, D.C.: March 13, 2003.
Electronic Government: Selection and Implementation of the  Office of Management and Budget’s 24 Initiatives. GAO-03-229.  Washington, D.C.: November 22, 2002.
Electronic Government: Proposal Addresses Critical Challenges.  GAO-02-1083T. Washington, D.C.: September 18, 2002.
Information Management: Update on Implementation of the 1996  Electronic Freedom of Information Act Amendments. GAO-02-493.  Washington, D.C.: August 30, 2002.
Information Technology: OMB Leadership Critical to Making  Needed Enterprise Architecture and E-government Progress. GAO- 02-389T. Washington, D.C.: March 21, 2002.
Electronic Government: Challenges to Effective Adoption of the  Extensible Markup Language. GAO-02-327. Washington, D.C.: April  5, 2002.
Information Resources Management: Comprehensive Strategic  Plan Needed to Address Mounting Challenges. GAO-02-292.  Washington, D.C.: February 22, 2002.
Elections: Perspectives on Activities and Challenges Across the  Nation. GAO-02-3. Washington, D.C.: October 15, 2001.
Electronic Government: Better Information Needed on Agencies’  Implementation of the Government Paperwork Elimination Act.  GAO-01-1100. Washington, D.C.: September 28, 2001.
Electronic Government: Challenges Must Be Addressed With  Effective Leadership and Management. GAO-01-959T. Washington,  D.C.: July 11, 2001.
Electronic Government: Selected Agency Plans for Implementing  the Government Paperwork Elimination Act. GAO-01-861T.  Washington, D.C.: June 21, 2001.
Information Management: Electronic Dissemination of  Government Publications. GAO-01-428. Washington, D.C.: March 30,  2001.
Information Management: Progress in Implementing the 1996  Electronic Freedom of Information Act Amendments. GAO-01-378.  Washington, D.C.: March 16, 2001.
Regulatory Management: Communication About Technology- Based Innovations Can Be Improved. GAO-01-232. Washington,  D.C.: February 12, 2001.
Electronic Government: Opportunities and Challenges Facing the  FirstGov Web Gateway. GAO-01-87T. Washington, D.C.: October 2,  2000.
Electronic Government: Government Paperwork Elimination Act  Presents Challenges for Agencies. GAO/AIMD-00-282. Washington,  D.C.: September 15, 2000.
Internet: Federal Web-based Complaint Handling. GAO/AIMD-00- 238R. Washington, D.C.: July 7, 2000.
Federal Rulemaking: Agencies’ Use of Information Technology to  Facilitate Public Participation. GAO/GGD-00-135R. Washington,  D.C.: June 30, 2000.
Electronic Government: Federal Initiatives Are Evolving Rapidly  But They Face Significant Challenges. GAO/T-AIMD/GGD-00-179.  Washington, D.C.: May 22, 2000.
Information Technology: Comments on Proposed OMB Guidance  for Implementing the Government Paperwork Elimination Act.  GAO/AIMD-99-228R. Washington, D.C.: July 2, 1999.
section_title: Electronic Signatures
paragraphs: Bank Regulators’ Evaluation of Electronic Signature Systems.  GAO-01-129R. Washington, D.C.: November 8, 2000.
Electronic Signature: Sanction of the Department of State’s  System. GAO/AIMD-00-227R. Washington, D.C.: July 10, 2000.
section_title: Internet
paragraphs: Internet Management: Limited Progress on Privatization Project  Makes Outcome Uncertain. GAO-02-805T. Washington, D.C.: June  12, 2002.
Telecommunications: Characteristics and Competitiveness of the  Internet Backbone Market. GAO-02-16. Washington, D.C.: October  16, 2001.
Telecommunications: Characteristics and Choices of Internet  Users. GAO-01-345. Washington, D.C.: February 16, 2001.
Telecommunications: Technological and Regulatory Factors  Affecting Consumer Choice of Internet Providers. GAO-01-93.  Washington, D.C.: October 12, 2000.
Department of Commerce: Relationship with the Internet  Corporation for Assigned Names and Numbers. GAO/OGC-00-33R.  Washington, D.C.: July 7, 2000.
section_title: Privacy
paragraphs: Internet Privacy: Implementation of Federal Guidance for Agency  Use of “Cookies.” GAO-01-424. Washington, D.C.: April 27, 2001.
Record Linkage and Privacy: Issues in Creating New Federal  Research and Statistical Information. GAO-01-126SP. Washington,  D.C.: April 2001.
Internet Privacy: Federal Agency Use of Cookies. GAO-01-147R.  Washington, D.C.: October 20, 2000.
Internet Privacy: Comparison of Federal Agency Practices with  FTC’s Fair Information Principles. GAO-01-113T, Washington,  D.C.: October 11, 2000.
Internet Privacy: Comparison of Federal Agency Practices with  FTC’s Fair Information Principles. GAO/AIMD-00-296R.  Washington, D.C.: September 11, 2000.
Internet Privacy: Agencies’ Efforts to Implement OMB’s Privacy  Policy. GAO/GGD-00-191. Washington, D.C.: September 5, 2000.
Social Security Numbers: Subcommittee Questions Concerning the  Use of the Number for Purposes Not Related to Social Security.  GAO/HEHS/AIMD-00-253R. Washington, D.C.: July 7, 2000.
section_title: Security
paragraphs: Electronic Government: Challenges to the Adoption of Smart Card  Technology. GAO-03-1108T. Washington, D.C.: September 9, 2003.
Electronic Government: Progress in Promoting Adoption of Smart  Card Technology. GAO-03-144. Washington, D.C.: January 3, 2003.
Computer Security: Weaknesses Continue to Place Critical Federal  Operations and Assets at Risk. GAO-01-600T. Washington, D.C.:  April 5, 2001.
Information Security: Advances and Remaining Challenges to  Adoption of Public Key Infrastructure Technology. GAO-01-277.  Washington, D.C.: February 26, 2001.
Information Security: IRS Electronic Filing Systems. GAO-01-306.  Washington, D.C.: February 16, 2001.