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CHAPTER I I Background THE EXISTING SYSTEM Since the passage of the Social Security Act in 1935, the SSA's responsibilities and workload have grown, largely as a result of legis- lation, far beyond those envisioned by the 74th Congress. Today, the SSA's programs cover 111 million of the nation's workers, and in fiscal year 1978 the SSA paid nearly $103 billion in monthly cash benefits to more than 37 million people. SSA administers the Retirement and Survivors Insurance and the Disability Insurance programs, the Supplemental Security Income program, and part of the Health Insurance program.* While the SSA manages the Aid to Families with Dependent Children program, it is administered through a network of state welfare offices and payment organizations. For the programs it administers directly, SSA provides more than 400 services that can be grouped into the following eight categories: the granting of social security numbers, maintenance of earnings records, claims, payments and settlements, appeals, changes in status, data exchange with other agencies, and general inquiries and information. The SSA operates 1,300 permanent local offices, 3,400 additional part-time local offices, 30 telephone service (teleservice) centers, 7 program service centers (including one in Baltimore that handles all disability cases), a special facility for foreign cases, 10 regional management offices, and a central computer complex in Baltimore, Maryland. There are nearly 80,000 full-time SSA employees. Over 50 agencies of the states and territories employ some 9,500 employees to determine disability issues. The local (district and branch) offices and teleservice centers are the primary points of contact with the public for the delivery of social security services. The 7 program service centers review complex claims, maintain beneficiary records, and perform functions that are required because of the SSAts reliance upon paper records, and because data base and systems inadequacies require that the more complex claims and change-of-status actions receive special manual handling. *The 1977 reorganization of the Department of Health, Education, and Welfare removed most Medicare functions from SSA jurisdiction. Those functions that remain include computer support services and such client- related services as enrollment, claims taking, and collection of health insurance premiums. 5 -

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6 The main computing center in Baltimore consists of several separate computer systems, generally aligned in support of separate legislated programs. Each computer system maintains its own data base, mainly on magnetic tape. Most inter-system communication is accomplished by moving tapes from one system to another. Supplementary security income data and some retirement and survivors insurance data are made available to field offices from on-line disk files in a real-time, direct-access mode, but most of the files are off-line. Some field offices are linked to the central complex and to each other by a data telecommunications network, others by a teletype network. As its responsibilities have increased over the years, the SSA has absorbed additional workloads on an ad hoc basis by increasing the number of its personnel and the capability of its computers. PLANNING A FUTURE SYSTEM In December 1974, President Ford, responding to an SSA request for additional personnel, urged the Secretary of Health, Education, and Welfare to search for more comprehensive and durable solutions. The President directed the agency to prepare a plan for an automatic data processing system using advanced computer technology. The Commissioner of Social Security then established the Office of Advanced Systems (OAS) to design and develop a service delivery system that would maximize efficiency, curtail increasing personnel requirements and administrative costs, improve service to the public, and maximize the utilization of the most advanced technology. In its "Recommended Design Concept for the Future SSA Process,"2/ the GAS outlined in 1977 a design concept that emphasizes on-line, integrated data base techniques, and whose major features are that: Local offices would continue to be the primary point for dealing with the public. All claims for cash benefits and post-entitlement events would be received at local offices. Claims would be adjudicated at local offices in most cases although hard-to-process and selected high-risk claims and changes would be processed at a specialized facility. On-line files would be used extensively to provide for immediate access to the data base and for interactive processing when desirable and cost effective. Safeguards would be built into the system to guarantee the privacy and confidentiality of client information. . The process would incorporate the "whole-person" concept --the integration of all the records of each individual client in order to make it possible to transact all current business and render all applicable services to a client in a coherent manner.

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7 The Office of Advanced Systems projected that the first module of the new system would be in place in 1982, and that the complete system would be operational in 1985. It estimated that the total one-time cost of the new process would be $560 million, and that it would yield an annual saving of $300 million beginning in 1985. PANEL REVIEWS During 1977, the panel reviewed the GAS planning, and in its first report, issued in 1978, the panel . Described the major technologies that SSA should consider in developing its new system, Outlined the major decisions that needed to be made about the architecture of the data base, Emphasized the importance of such system consideration as transition planning, human factors, and privacy and security. The panel concluded that: The cornerstone of good system design is modularity, using subsystems with clearly defined interfaces. . No technological breakthroughs are necessary, nor are custom-made hardware components required--though some new software will be. The data base should be structured in such a way as to enable it to be distributed to several geographic locations, to provide redundancy for continued service in the event of a localized breakdown or catastrophe. The telecommunications subsystem should be a separable module in the sense that it have simple interfaces with the rest of the system, and not contain functions that are clearly processing rather than telecommunications. For this second report, the panel reviewed the continuing planning by SSA, and in particular: its strategy for the acquisition of a new system, its planning for transition from the present process to the new one, and its efforts to plan for privacy and security and for the whole range of human factors considerations. During the period of this review (roughly, calendar year 1978) SSA's Office of Advanced Systems commissioned independent studies by contractors on four significant subjects: human factors, privacy/security/freedom of information, systems engineering, and data base design. The GAS carried its documentation of the present process through three levels of the functional hierarchy, and developed performance specifications for

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8 the future process. In addition, the OAS has been developing a Request for Proposal (RFP) for the system acquisition. FEDERAL PROCUREMENT OF MAJOR COMPUTER SYSTEMS Besides the existing federal procurement regulations, two major policies govern the planning for the acquisition of major computer-based systems by federal agencies. The Brooks Act of 1965 (P.L. 89-306) directs the Administrator of General Services to coordinate and provide for the economic and efficient purchase, lease, and maintenance of automatic data processing equipment by federal agencies. This directive has been interpreted by the House Committee on Government Operations to require federal agencies to procure their ADP systems on a fully competitive basis. The basic policy of the Executive Branch in the acquisition of major systems is set forth in the Office of Management and Budget's Circular A-109, dated on April 5, 1976. It has its origin in a series of recommendations made by a Commission on Government Procurement to the Congress in December 1972 after three years of comprehensive study. Basically, this policy seeks to encourage innovation and competition in the creation, exploration, and development of alternative system design concepts. OMB Circular A-109 requires federal agencies to pursue a systematic and sequential process in the determination of their requirements and the fulfillment of those requirements through the acquisition cycle. The process requires four specific decisions by the head of the agency: Determination that a new capability is required by the agency to fulfill its mission, expressed in the form of a mission need statement. Exploration of alternative means of fulfilling the need; the solicitation, where appropriate, from the industrial sector of alternate concepts to satisfy this need; and the selection of the most promising concepts for further exploration. Selection of the most promising concept for full scale development based upon adequate competitive demonstra- tion of their merit. . Selection, where applicable, for full production, of the concept that has been adequately verified through demonstration as fulfilling the agency's need. Where the mission needs of an agency involve the acquisition of major ADP and/or telecommunications systems, the policies and requirements of the Federal Procurement Regulation and the Federal Property Management Regulations also govern the agency's procurement actions. Temporary Regulation 47, published September 14, 1978 (included as the Appendix to this report) delineates the actions and responsibilities of both GSA and the procuring agency.

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9 In a December 1977 memorandum to the Commissioner of Social Security, the Under Secretary of Health, Education, and Welfare, after reviewing the SSA Advanced Systems Project, stated that it "should proceed without conceptual change or redirection." This memorandum is understood by the GAS staff as constituting approval of a mission needs statement.