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NATIONAL RESEARCH COUNCIL COMMISSION ON ENGINEERING AND TECHNICAL SYSTEMS 2101 Constitution Avenue Washington, D.C. 20418 BOARD ON TELECO~IUNICATIONS COMPUTER APPLICATIONS COMMITTEE ON REVIEW OF SSA'S SYSTEM MODERNIZATION (SMP) AND ITS AGENCY STRATEGIC PLAN (ASP) APPENDIX D LETTER REPORT TO DORCAS R. IIARDY llithou~c Attachment The Honorable Dorcas R. Hardy Commissioner Social Security Administration Department of Health and Human Services 6401 Security Boulevard Baltimore, Maryland 21235 Dear Commissioner Hardy: April 3, 1989 Office Location: Hams Building 2001 Wisconsin Avenue, N.W. The Department of Health and Human Services has contracted with the National Academy of Sciences - National Research Council to review the Social Security Administration's Systems Modernization Plan and its Agency Strategic Plan. The first of two reports due under the contract is planned to be released in September 1989. In the meantime, you have asked us to provide accelerated advice regarding: 1) progress since 1982, 2) an assessment of the agency's information processing investments, and 3) computer capacity necessary for provision of SSA services. We understand that these matters bear importantly on critical near-term decisions facing your agency. As you would expect, we are not ready to provide a full assessment of the Systems Modernization Plan at this time. We have not completed our review and still need to deliberate our findings before a consensus can be reached. However, our review thus far has allowed us to observe several aspects of current conditions at SSA and agree upon several points which may be useful to you. We also point out that this response is offered in the specific context of only the SSA's Retirement, Survivors, and Disability Insurance (RSDI) program (Title II of the Social Security Act). We have not examined the Supplemental Security Income (SSI) program (Title XVI) for the aged, blind, and disabled in sufficient detail to be definitive about it. WHAT VE HAVE REVIEVED SSA staff have been cooperative in providing us with overview briefings on SSA's operations, organizations, automation resources, and information technology 75 The National Research Council is the principal operating agency of the National Academy of Sciences and the National Academy of Engineering to serve government and other organizations

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76 projects, and have furnished the committee with supporting documents that include greater detail in these areas. A list of the topics addressed in the three briefings and a list of the documents presently on file at the NRC are attached. In addition, during the course of our meetings, we have visited and reviewed operations at the following SSA facilities: A modern field office (21st and M Streets, Washington, DC) [he SSA's National Computer Center (Baltimore, MD) The Office of Disability Operations (Baltimore, MD) The Western Area Program Service Center (Richmond, CA) Based upon a review of the information thus far provided, the committee offers you the following assessment. PROGRESS MADE SINCE SMP BEGAN We have noted significant improvement in several key areas of performance since the SMP was first issued in FY 1982. To evaluate SSA's progress, we relied upon the SSA to provide us with information, then and now, that we segmented into four categories: service, workforce, information technology, and workload. This information is shown in Table 1. The service and information technology categories reflect levels of performance which show significant improvement during a period when the workload increased and the workforce decreased. Even though these achievements may be impressive in a relative sense, they are not necessarily enough in an absolute sense. Given the rather low overall availability of on-line services to its employees in the facilities we visited, we expect that further improvements in operating efficiency and service levels will result as the use of automation reaches deeper and more comprehensively into the agency. Although factors other than automation have undoubtedly contributed to improving SSA's service, the above figures lead us to conclude that the improved technology base including increased ADP and data transfer capacity has been a key factor. We believe that the downsizing of the SSA's workforce would not have been practicable had Congress not permitted a major capital investment in automation. Downsizing alone is expected to save the trust funds more than $500 million per year (House of Representatives. June 10, 1988. Committee on Appropriations Report No. 100-689~. Furthermore, we noted that in recent studies conducted by the GAO and the Office of the Inspector General, HHS, the percentage of clients rating the SSA's service as good to very good rose from 78% (Social Security. January 1986. Quality of Services Generally Rated High by Clients Sampled, General Accounting Office GAO/HAD 86-8) in 1984 to 87% (Social Security Client Satisfaction Fiscal Year 1988. April 1988. Department of Health and Human Services, Office of the Inspector General, OAI-02-88-00660) in 1988. The SSA needs to select and use a technology that will eliminate or greatly .

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77 reduce the use and handling of paper files and folders. The SSA urgently needs to progress in the storage of information and documents. Managing, storing, and retrieving paper folders are labor intensive, costly, slow, and prone to error. Micrographics has been used for years to deal with this problem and continues to be improved but newer optical and magnetic technologies offer greater promise. This is a significant opportunity to reduce costs and improve operations. COMPARING SSA WITH OTHERS We compared SSA to other large information based service organizations with regard to their internal data processing operations, to ascertain if the agency's investment in automation was unusual in its size or scope. Since several committee members are directly involved in the management of large ADP organizations in the private sector, and several are familiar with comparable Federal agencies, the committee drew upon its own knowledge base and concluded that the SSA is consistent with its operational counterparts in this arena. A case in point is the ADP environment at the Travelers Insurance Company. Table 2 illustrates this comparison by examining the major information system elements employed by each organization. TABLE 1 CATEGORY 1982 PRESENT SERVICE DELIVERY Enumeration (issue social 42 calendar 10 calendar security cards) days days Post annual wage reports 48 months 5 months Process an RSI claim 30 days 20 days WORKFORCE Total employees 80,000 65,000 INFORMATION TECHNOLOGY Computer capacity 50 MIPS 400 MIPS Terminals installed 4,200 25,500 Network down time - 11% 2.2% Online transactions 400,000 7 million WORKLOAD Number of beneficiaries 35.3 million 40 million Post-entitlement actions 64 million 75 million (1984) SSNs issued/replaced 10 million 23 million Earnings records posted 193 million 255 million (1984)

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78 TABLE 2 CHARACTERISTIC Travelers SSA MaJor data centers 2 Mainframe capacity Direct access storage Transactions processed/day Terminals (network-wide) Personal computers Fiber optic links Satellite T2 carrier lines LAN technology wired beginning Data processing professionals Number of employees 449 MIPS 2.4 terabytes 6.1 million 12,000 15,000 18 All ma;. loo. 2,500 32,000 1 400 MIPS 1.3 terabytes 7 million 25,500 5, 000 2 4 Pilots 3,000 65, OOO The SSA's operations are dependent upon one data processing center. The agency has developed plans to use a back-up ADP center should the NCC operations be interrupted. However, the intended back-up center is not an SSA facility and will not sustain full operations or use of on-line terminals. We saw no means to access this back-up facility from the various SSA field or headquarters locations in order to perform transactions. Therefore, loss of the NCC for any reason would significantly reduce the agency's ability to serve the public. Furthermore, the agency has not protected its major data links and is unnecessarily w lnerable to mischief. We suggest that the SSA review its vulnerabilities and formulate decisions along with investment alternatives that will mitigate these risks. We believe that a second data center, networked and linked to normal operations, that can also serve as a back-up if needed, is one of the alternatives that the agency should immediately consider. Distribution of load is another alternative that would involve much more effort and newer technology. COMPUTER CAPACITY The SMP was designed to move SSA through 3 phases designated as: survival, transition, and state-of-the-art. The processing capacity acquired through the capacity upgrade program was largely instrumental in bringing SSA to the point where survival is no longer an issue. Although we recognize that adding mainframe capacity is not the only way to meet capacity requirements, we realize that often it is the fastest and sometimes the least expensive alternative. In addition, in 1982, it is likely that the adoption of a strategy using an IBM-compatible hardware and software architecture presented the least technical risk to the agency, an approach that fit with the SMP strategy of adopting proven technologies. This strategy also protected the SSA's software investment by providing a computer program compatible environment. We agree with the SSA's decision to proceed as it did in 1982 to add IBM-compatible capacity. As part of SSA's long-range planning efforts, it seems advisable at this

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79 juncture for SSA to revisit the capacity issue to determine if a new capacity strategy would serve the agency better in the future. Although past decisions often limit available alternatives because of sunk costs, we nevertheless suggest that SSA undertake a system architecture study to determine how best to proceed in the long term. We believe that more intensive use of cost/benefit analysis methods is necessary for selecting and prioritizing the modernization projects that the agency undertakes. Such thoughtful justification will also help communicate the goals and reasons that prompted a project. In this regard, we support SSA's developing approach to strategic management which, when fully operational, should provide the vehicle for integrating systems, identifying priorities and managing resources. We would expect that efforts to develop a modernized information architecture, as envisioned in the Agency Strategic Plan, will include the suggested reevaluation of SSA's capacity strategy. We are also aware that SSA has identified significant short-term capacity needs that, according to the SSA, are delaying the installation and use of newly developed applications. The SSA has outlined several large scale hardware procurements that will increase capacity with appropriate consideration of federal procurement regulations. Though such a solution may not be ideal, it may be preferable in the short term to delaying the availability of applications software which has been or is currently being developed. However, an alternate choice to continued increases in capacity at the National Computer Center (NCC) could be to off-load the mainframe cluster by transferring some of the expanding workload to additional machine capacity in the field. In doing so, the SSA may find the planned near-term configuration of the NCC to be large enough not only for the near term but for the long term as well. As a minimum, the SSA should conduct a system analysis to determine the feasibility and cost-benefit of deploying workload from the NCC to one or more field sites to determine the consequent impact on communications as well as the differential costs of such configurations. This recommendation would also respond to the observations made earlier with respect to the need for a second data center. SUGARY It is difficult to imagine something that could not be improved, and that should be a goal for all organizations. As we proceed with our review and analysis of the SSA's modernization program and strategic plan, we expect to be able to identify further opportunities for improvement. Even though we have not completed our evaluation of the technical management of the modernization program nor endorsed the technical choices made therein, we believe that SSA did, in fact, make real achievements during the years when the~SMP was in force and has continued to do so over the last year. The decisions made by the SSA have moved the agency beyond the survival stage to a point where it can plan for its future. Essentially, the SSA's original decision to increase its ADP resources was prudent and necessary. A continuation of efforts to improve its technology base is now required. On this latter point, we strongly urge a fresh look at the strategies of the past to ensure that the SSA of the future is achievable and achieved.

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80 We acknowledge that SSA's management must consider both social and economic factors in selecting approaches to systems problems as well as the severity of adverse consequences which might accrue from such decisions. We also note the administrative and budgetary constraints under which SSA and other government agencies must operate. Examples are regulations that cause unusually long procurement cycles, line item restrictions in annual budgets, controls over employment levels, legislated wage scales, high leadership turnover, and no access to capital markets. These constraints differ from those in the private sector, but we fully appreciate how they can hamper effective management. If more administrative flexibility and latitude were allowed the agency to prioritize and manage its own resources, SSA could legitimately be held more accountable for the accomplishment of its mission. Sincerely, A/ Willis H. Ware Chairman -