The Department of Education’s FSA manages and administers student financial assistance programs authorized under title IV of the Higher Education Act of 1965, as amended. These postsecondary programs include the William D. Ford Federal Direct Loan Program (often called the Direct Loan program), the Federal Family Education Loan Program (often called the Guaranteed Loan program), the Federal Pell Grant Program, and campus-based programs. Annually, these programs together provide about $50 billion in student aid to approximately 8 million students and their families. During the past three decades, the Department of Education has created many disparate information systems to support these various student financial aid programs. In many cases, these systems—run on multiple operating platforms using different network protocols and maintained and operated by a host of different contractors—were unable to easily exchange the timely, accurate, and useful data needed to ensure the proper management and oversight of the various student financial aid programs. For example, as we reported in 1997, neither the National Student Loan Data System nor other systems were designed for efficient access to reliable student financial aid information, since many systems were incompatible and lacked data standards and common identifiers. In addition, because FSA used three separate systems to originate and/or disburse title IV funds, access to student and school data was fragmented and unreliable. As a result, FSA found it increasingly difficult to quickly access data to support day-to-day operational and management decisions, and schools could not easily access data to obtain a clear picture of the title IV student aid that had been disbursed. In September 1999, FSA issued its initial modernization blueprint, which was subsequently updated in July 2000, to transform the title IV student financial aid systems using technology. COD is one of four school service business processes in FSA’s blueprint and is intended to implement a simplified process for the operation of the Direct Loan and Pell Grant programs. According to FSA’s modernization blueprint, the common origination and disbursement process is composed of seven steps involving students, the Department of Education, and schools: (1) obtain applicant data, (2) determine eligibility, (3) determine award, (4) notify the Department of Education of the intent to disburse, (5) obtain funds from Education, (6) disburse funds to student, and (7) close out. A common process to support origination and disbursement is considered critical to FSA’s goal of achieving an enterprisewide solution that provides real-time data to students, schools, and financial partners via Web portals. To implement COD, FSA is using middleware and XML technologies. Specifically, middleware is being used to integrate FSA systems that support the COD process. Traditionally, systems integration would require building separate point-to-point interfaces between every two applications. Although this approach can be effective, it creates several problems, such as (1) every connection between two applications requires custom programming; (2) a lot of connections have to be developed when there are multiple data sources; and (3) whenever the logic or data in one application changes, the accompanying interface often also needs to be altered. Middleware represents an alternative means to the traditional approach, and it can provide a quicker and more robust solution to systems integration. In essence, middleware separates the business application from the technical details of interapplication communications. Thus, middleware can simplify and reduce the number of interfaces for multiple systems because it can handle differences in data formats and record layouts. As part of the COD process, XML is being used to consolidate multiple legacy record formats previously used by schools to submit data on the Pell Grant and Direct Loan programs. By using an XML-based common record, schools can transmit one file with all of the student’s data instead of submitting separate legacy records with redundant student and school information. Appendix I provides a high-level depiction of the systems and technologies supporting the COD process as of November 2002. As depicted, the COD system can translate or convert legacy records by using middleware. In addition, middleware has been built into several existing systems so that they can establish connectivity and exchange data with the COD system through a common IT infrastructure. This IT infrastructure, called the Enterprise Application Integration (EAI) bus, is also implemented using middleware to route data between systems in a correct format. In addition, as part of the COD process, some schools have begun submitting Pell Grant and Direct Loan data using the XML-based common record. FSA hired Accenture as its “modernization partner” to help carry out its modernization blueprint, including the implementation of the COD process. Accenture is the prime contractor providing leadership of critical planning activities that are essential to the success of FSA’s modernization. Regarding the COD system part of FSA’s modernization, FSA also hired an independent verification and validation contractor to review the initial release of this system, which was completed earlier this year. FSA has made progress in implementing the new COD process. In particular, it has begun implementing (1) its middleware solution in its IT infrastructure and various existing systems, (2) the COD system, and (3) an XML-based common record. However, FSA’s implementation of COD is behind schedule, and critical work remains to be completed. For example, the basic COD system was to be completed by mid-October 2002; however, only about three-quarters of the COD basic system requirements had been implemented as of October 23, 2002. In addition, FSA is not tracking whether it is achieving certain benefits because it is still in the process of defining applicable metrics to measure progress. Without such tracking processes, FSA lacks critical information about whether it is achieving expected benefits. Finally, FSA lacks assurance that it has captured and disseminated important lessons learned related to schools’ implementation of the common record because it believes that its current ad hoc process is adequate. Accordingly, the thousands of schools that have not yet implemented the common record may not benefit from the experience of those that have. FSA has made progress in implementing COD. The following are significant elements of the COD process that have been implemented: Deployment of the EAI bus. As a prerequisite to implementing COD, in late October 2001, FSA deployed its middleware solution in an EAI “bus”—an IT infrastructure that uses middleware to access data from disparate systems, transform the data formats as necessary, and route the data to the appropriate requesting systems, thus enabling data exchange among disparate systems. The EAI bus provides the set of technical capabilities necessary to integrate FSA’s disparate systems. Initial implementation of basic COD system (release 1.x). On April 29, 2002, FSA went live with version 1.0 of the basic COD system. As of mid- November 2002, FSA had released an additional five sub-versions of the COD system (e.g., version 1.1). The COD system replaces the Direct Loan Origination System and the Recipient Financial Management System, and it currently processes files for all schools participating in the Pell Grant and Direct Loan programs. According to FSA, in the first 6 months of its operation, the COD system processed just under 16 million transactions, representing Pell Grant and Direct Loan awards totaling almost $10 billion to over 5 million recipients. Implementation of middleware in selected systems. As of mid-November 2002, FSA had built middleware into seven systems so that these systems can interact with the COD system through the EAI bus. These systems include (1) the Central Processing System, which determines students’ eligibility and award levels, and (2) the National Student Loan Data System, which contains loan- and grant-level information and is used by schools to screen student aid applicants to identify ineligible borrowers. Development and implementation of the common record. Using XML, FSA developed and began implementing a common record that schools can use to submit student financial aid data to the COD system. The common record, designed with assistance from members of the National Council of Higher Education Loan Programs and the Postsecondary Electronic Standards Council, consolidates multiple legacy file formats previously used by the Pell Grant and Direct Loan programs. Although FSA has made progress in implementing the COD process, critical work remains to be completed. First, FSA is behind schedule in implementing the basic COD system. Although FSA had planned to complete the basic COD system by mid-October 2002, only about three- quarters of the COD basic system requirements had been implemented as of October 23, 2002. For example, as of early November 2002, one of the basic business functions that remains to be implemented is to enable FSA to make automated adjustments in batches to school current funding levels. FSA now estimates that most of the remaining functionality will be completed by the end of September 2003. According to FSA IT and program officials, the implementation of the basic COD functionality was delayed to allow adequate time for testing to ensure the quality of the system. Second, as of November 19, 2002, Accenture reported several operational problems that needed to be addressed. For example, in some cases, the COD system was incorrectly processing school batch data that contained multiple change records for an individual student. According to COD and contractor officials, the causes of operational problems included unclear requirements and software design defects. An independent verification and validation contractor also found problems with the requirements and design aspects of release 1.0. The COD Contracting Officer’s Representative characterized these operational problems as very serious and stated that they could impede operations and the delivery of future COD releases. This same official noted that FSA and Accenture are currently undertaking efforts to address these problems. For example, FSA has established production teams composed of agency and contractor staff to address problems in specific areas.