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Mr. Chairman and members of the Committee, I appreciate the opportunity to appear today to discuss E-Government initiatives within the Department of the Treasury, efforts to comply with the Government Paperwork Elimination Act (GPEA) and how compliance with GPEA fits into the Department's information technology strategic plan. First, I want to thank the Chairman and the other members of the Committee for your continued support and encouragement toward the improvement of information technology and reform in the Federal Government.
As many of you know, I serve as the Acting Assistant Secretary for Management and Chief Information Officer for the Treasury Department. In this role, I provide strategic direction and oversight for all information technology programs within the Treasury Department and its fourteen Bureaus. Since February of 1998, I have served as the Vice Chair of the Federal CIO Council where I play a key role in the strategic direction of the Council and the Federal Government's use of information technology.
The Department of the Treasury is making great strides in harnessing the power of the Internet to improve customer service, increase mission effectiveness, and create operating efficiencies. This progress is evident in the Department's plan to comply with the Government Paperwork Elimination Act (GPEA). However, the Department's drive to be at the forefront of electronic government extends beyond compliance with GPEA requirements. The Treasury CIO Council strategic plan places E-Government at the forefront. The Department is aggressively and proactively developing plans and launching initiatives that will make it a leader in electronic government.
The Treasury CIO Council E-Government plan promotes the development of systems and tools to support the Department's move toward E-Treasury. The CIO Council supports the use of Public Key Infrastructure, Virtual Private Networks, SmartCard and Portal technology to create a platform for E-Government initiatives.
An example of the way that Treasury Bureaus are delivering new value to citizens, businesses, and government partners is FMS' Pay.gov. Pay.gov is an Internet portal and transaction engine that offers a package of electronic financial services to assist agencies. The services of Pay.gov rest on four cornerstones:
- Collections - enabling end-users to authorize collections over the Internet
- Forms submittals and bill presentment - accepting agency forms submitted over the Internet and presenting agency bills to end-users over the Internet
- Authentication - establishing the identity of Internet end-users
- Agency reporting - providing necessary information back to agencies about transactions.
The services of Pay.gov can help agencies meet their GPEA requirements to accept forms electronically by October 2003. The basic services of Pay.gov generally will be free for agencies and the public. FMS will price services that go beyond basic services using an at-cost basis.
I would like to mention a few additional E-Government initiatives within the department. The Information Technology Investment Portfolio System (I-TIPS) is a government-owned, off-the-shelf tool. Treasury hosts this system for use throughout government. I-TIPS is a web-based, E-Government solution that supports the selection, control and evaluation of information technology projects. It houses a broad range of information about the business purposes, technology, costs, risks and return of a specific project. Treasury required the bureaus to use I-TIPS as part of their capital planning and budgeting activities. It enabled Treasury to provide consolidated IT budget information electronically to OMB. I-TIPS eliminated the need for bureaus to develop and maintain separate reporting systems. Treasury is also the government-wide project manager for I-TIPS. Over twenty agencies in the Federal government report using I-TIPS. The federal government reduces system development and maintenance costs substantially through standardization. I-TIPS supports GPEA by replacing the annual paper-based IT Planning Call with an electronic submission.
Treasury also hosted the Federal Bridge Certification Authority (FBCA) project for the Federal government, currently operated by GSA. The FBCA is a mechanism for the secure exchange of information between government agencies. The bridge allows agency public key infrastructures (PKIs) to interoperate as it permits digital credentials (called digital certificates) issued by each agency to its employees to be accepted with trust and confidence by other agencies for electronic transactions. This functionality directly supports E-Government, as agencies will be able to perform Internet-enabled transactions, such as credit card collections through banks, or secure emails between agencies, with previously unattainable trust and confidence. A prototype version of the FBCA became operational in February 2000 and was successfully used in a large-scale test in April 2000.
During that time, the PKIs of five different organizations within the U.S., the Canadian Government and academia, were cross-certified through the prototype FBCA. The agencies were able to interoperate, successfully exchanging digitally signed electronic mail messages. FBCA is operated by GSA and, once cross-certification has been completed, will be used by NASA, USDA's National Finance Center, FDIC, Treasury, the State of Illinois, and the Canadian Government for the electronic transfer of documents.
Treasury's Bureau of Public Debt partnered with Treasury's Financial Management Service, Mellon Bank, MasterCard and IBM to build an Internet-based system to sell U.S. Savings Bonds directly to the public. Savings Bond Direct allows citizens to buy a savings bond on a 24 x 7 basis through the Internet using a credit card. The Bureau of Public Debt sells directly to the public instead of using its traditional network of over 40,000 commercial banks. Through Savings Bond Direct, Public Debt reduced the delivery time for bonds by one-third. The system cost $350 thousand to develop and implement and within its first 18 months of operation, generated almost $230 million in bond sales.
The Bureau of the Public Debt's Treasury Direct Electronic Services (TDES) allows individuals to directly manage their investments in the U.S. Treasury marketable securities using either the Internet or telephone. The system is an application that uses intelligent agents to automate various investor services, such as purchasing securities, reinvesting maturing securities, viewing account status, requesting account statements, as well as other similar services. TDES was implemented to promote self-sufficiency among Treasury Direct's 700,000 customers and to facilitate Public Debt's consolidation of servicing sites from thirty-seven Federal Reserve Banks to three. By using TDES, Public Debt has reduced the processing cost of a tender to $0.50 as opposed to $30.00 to process a paper tender in the past.
The Savings Bond Connection and the Treasury Direct Electronic Services are two highly secure E-Government applications that allow individual investors the option of purchasing securities on-line, completing transactions to include the payment process, and accessing account information.
The U.S. Mint operates the Online Store, a highly successful electronic commerce web site with an online catalog shopping service. The site offers Internet catalog browsing with mail and phone order capability as well as secure credit card sales. The U.S. Mint's Online Store is recognized as one of the top 20 e-tailers in the nation, with total web sales of more than $256 million during a twelve-month period. The Mint receives orders from customers to electronically buy Mint products. The Mint also receives coin orders electronically from the Federal Reserve Banks (FRB). E-mails and electronic spreadsheets are used quarterly by the FRB to order coins for individual banks by denomination and amount.
The Electronic Federal Tax Payment System (EFTPS), provides an electronic system for reporting and paying Federal taxes. EFTPS is the largest payment collections system in the world. The Financial Management Service (FMS) and the Internal Revenue Service (IRS), working with the private sector, have modernized the federal tax payment environment. They started with the federal tax deposit coupon system then expanded to other business and individual tax payments. By replacing the current paper-based system, EFTPS benefits taxpayers and the Federal Government by providing greater reporting efficiencies and by expediting the availability of funds and investment decision-making information to the Treasury Department. The primary objectives for EFTPS are to reduce the filing burden by providing flexible payment choices for taxpayers; to increase the speed, efficiency, and accuracy of revenue collection and taxpayer account posting; and to expedite the availability of funds to the Government. EFTPS-OnLine was launched in October 2000 as an Internet pilot that allows business taxpayers, by invitation only, to enroll, make payments, and access customer service OnLine. The nationwide launch of EFTPS-OnLine is scheduled for September 2001 and will allow businesses and individuals to make their tax payments electronically.
The IRS E-file program provides faster refunds, an acknowledgement that the tax return has been accepted by the IRS, and nearly 100% accuracy, all of which translates into fewer contacts with the IRS. As of June 8, 2001, the IRS received about 123 million Form 1040 returns, up about 1.3% from last year at that time. This includes 39.8 million returns that were filed electronically, up about 13.3% from the same period last year. Congress has established the aggressive goal that 80 percent of all tax and information returns should be filed electronically by 2007. The IRS has developed a strategic plan that will enable them to make significant progress toward accomplishing this goal and revolutionizing how both individual and business taxpayers transact and communicate with the IRS.
Even though the IRS Restructuring Act of 1998 statutorily exempts IRS from GPEA, the IRS Business System Modernization efforts support the intent of GPEA. The federal tax system, which produces close to $2 trillion in revenue each year, is dependent on a collection of obsolete computer systems developed by IRS over the last 35 years. The purpose of the IRS Business Systems Modernization effort is to raise all major IRS business systems to the level of best practice that exists in private and public sectors, while managing risks inherent in the process. This modernization effort will impact every component of IRS over time. Implementation work on the first approved modernization projects to facilitate call routing and electronic filing will begin in 2001-2002.
In the last decade, trade has grown 132%. U.S. Customs is currently using the Automated Commercial System (ACS), which is sixteen years old and taxed to its limits.
To address this deficiency, Customs has designated its replacement, the Automated Commercial Environment (ACE) under the overall Customs Modernization Program. Other government agencies, such as Agriculture, Food and Drug Administration, Transportation, Immigration and Naturalization Service, and the Bureau of the Census, rely on Customs systems to perform their internal operations. Currently, a single international shipment can require as many as 40 different government paper forms. Ninety percent of the information is redundant. ACE will significantly reduce the paperwork burden, provide functionality long sought by the trade, and respond to legislative requirements. Further, the International Trade Data System (ITDS) will provide a single, comprehensive front-end interface for over 100 federal regulatory and enforcement agencies. ITDS will also support the data interactions between these agencies and over 350,000 businesses involved in international trade. The ACE and ITDS modernization efforts respond directly to GPEA requirements.
The Alcohol, Tobacco and Firearms' (ATF) electronic government investment expands on and is enabled by the Department's earlier investments in ATF's technology and business modernization efforts. Using current Internet based technologies, ATF will provide the necessary tools to permit the 630,000 members of the alcohol, tobacco, firearms and explosives industries to file all required forms and reports using secure Internet transactions. To maximize the utilization of this investment, these same technologies will be used to solicit, award, administer, and pay commercial vendors conducting business with ATF. ATF's electronic government investment proposes the use of current technology to accomplish a 200 year old core Treasury mission. The technology will support the submission, receipt and audit of tax return data and associated payments as well as the receipt and audit of non-tax related forms filed by regulated industry members. This proposal will replace the current paper-based submission of nearly 1.5 million documents filed annually by industry members with highly accurate electronic data.
The Financial Management Service (FMS) Payment Application Modernization and Government-wide Accounting Modernization efforts include processes in the areas of payments, collections, government-wide accounting and debt management that, when made available in an electronic form, will provide individuals and other entitles that do business with FMS, the option to submit information or transact with FMS more efficiently and with improved customer service and satisfaction. Since the implementation of the electronic funds transfer (EFT) requirement of the Debt Collection improvement Act, the percentage of total Treasury disbursed payments made by EFT has risen to 73%. FMS Payment services touch the lives of over 100 million people. Literally tens of millions of Americans depend on FMS systems to meet lifeline needs every month. FMS makes almost 900 million payments annually on behalf of civilian agencies such as the Social Security Administration, Department of Veterans Affairs and the IRS. FMS also offsets certain payments against debt owed to the Federal Government. Payment modernization is one component of a multi-year effort to replace, streamline and reengineer the critical information systems that support core FMS business processes.
The processes and systems used to account for and report on the execution of the President's Budget, and on the government's receipts, outlays and surplus or deficit, have not changed fundamentally for 30 years. However, there have been dramatic changes in the government's accounting environment. The Government-wide Accounting Modernization initiative will improve the reliability and timeliness of the government's financial information by providing better tools for federal program agencies to check the status of their financial information held by Treasury and by streamlining reporting and reconciliation processes.
Treasury's Strategic Plan and the goals of the Government Paperwork Elimination Act (GPEA) are linked to all of our E-Government initiatives and modernization efforts. I am a member of Treasury's Capital Investment Review Board (CIRB) and one of the criteria we use to analyze business cases is whether the proposed investment is in alignment with strategic business objectives. The goal of reducing the burden of paperwork and increasing the ability of customers to interact with Treasury electronically, while re-engineering and streamlining our business processes makes good business sense. GPEA was a catalyst to our efforts.
In summary, I would like to reiterate that the Department's drive to be at the forefront of electronic government extends beyond compliance with GPEA requirements. Although GPEA-related activities are a critical component of the overall Treasury effort, the Department is seeking to fundamentally redefine the way in which it performs some of its critical missions. The Department is aggressively and proactively developing plans and launching initiatives that will make it a leader in electronic government.
I would like to thank the subcommittee for the support it has given to E-Government. Without your support we would not have been able to achieve the National success we enjoyed to date. I would like to thank the members of the Committee for the opportunity to present this morning. Mr. Chairman, this concludes my formal remarks and I would be happy to respond to any questions.