USDA Telecommunications: Strong Leadership Needed to Resolve Management
Weaknesses, Achieve Savings (Letter Report, 06/30/98, GAO/AIMD-98-131).

Pursuant to a congressional request, GAO reviewed the Department of
Agriculture's (USDA) efforts to improve its management of
telecommunications resources and act on opportunities to achieve
savings.

GAO noted that: (1) USDA has taken positive steps to begin correcting
its telecommunications management weaknesses--improvements that the
department says could reduce its $200 million-plus reported annual
investment in telecommunications by as much as $70 million each year;
(2) for example, USDA conducted a departmentwide reengineering study and
is beginning to test a redesigned approach for managing
telecommunications resources; (3) USDA has also taken action to
eliminate some redundant services and reduce costs; (4) however, USDA
has not achieved significant cost savings or management improvements
because many of the department's corrective actions are incomplete or
inadequate; (5) specifically, USDA has not: (a) established the sound
management practices necessary for ensuring that telecommunications
resources are cost-effectively managed and payments for unused,
unnecessary, or uneconomical services are stopped; (b) consolidated and
optimized telecommunications to achieve savings where opportunities
exist to do so; (c) adequately planned integrated networks in support of
information sharing needs; and (d) determined the extent to which the
department is at risk for telephone abuse and fraud and acted to
mitigate those risks nationwide; (6) further, it is unclear how and when
these needed corrective actions will be implemented because the
department has not established an effective action plan or strategy for
addressing GAO's recommendations with timeframes, milestones, and
resources for making improvements; and (7) a major factor contributing
to this situation is that no one at USDA has been given overall
responsibility, authority, and accountability for fixing USDA's
long-standing telecommunications management problems.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-98-131
     TITLE:  USDA Telecommunications: Strong Leadership Needed to 
             Resolve Management Weaknesses, Achieve Savings
      DATE:  06/30/98
   SUBJECT:  Information resources management
             Telecommunication equipment
             Accountability
             Telecommunication
             Cost control
             Internal controls
             Federal agency reorganization
             Cost effectiveness analysis
IDENTIFIER:  Federal Telecommunications System 2000
             FTS 2000
             
******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO report.  Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved.  Major          **
** divisions and subdivisions of the text, such as Chapters,    **
** Sections, and Appendixes, are identified by double and       **
** single lines.  The numbers on the right end of these lines   **
** indicate the position of each of the subsections in the      **
** document outline.  These numbers do NOT correspond with the  **
** page numbers of the printed product.                         **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
** A printed copy of this report may be obtained from the GAO   **
** Document Distribution Center.  For further details, please   **
** send an e-mail message to:                                   **
**                                                              **
**                                            **
**                                                              **
** with the message 'info' in the body.                         **
******************************************************************


Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Department Operations,
Nutrition, and Foreign Agriculture, Committee on Agriculture, House
of Representatives

June 1998

USDA TELECOMMUNICATIONS - STRONG
LEADERSHIP NEEDED TO RESOLVE
MANAGEMENT WEAKNESSES, ACHIEVE
SAVINGS

GAO/AIMD-98-131

USDA Telecommunications

(511431)


Abbreviations
=============================================================== ABBREV

  AT&T - American Telephone and Telegraph
  CIO - chief information officer
  CFO - chief financial officer
  EDI - electronic data interchange
  FAA - Federal Aviation Administration
  FMFIA - Federal Managers' Financial Integrity Act
  FTS - Federal Telecommunications System
  GSA - General Services Administration
  IRS - Internal Revenue Service
  NFC - National Finance Center
  USDA - United States Department of Agriculture

Letter
=============================================================== LETTER


B-277957

June 30, 1998

The Honorable Bob Goodlatte
Chairman
Subcommittee on Department Operations,
 Nutrition, and Foreign Agriculture
Committee on Agriculture
House of Representatives

Dear Mr.  Chairman: 

As requested, we are reporting to you the results of our review of
the Department of Agriculture's (USDA) efforts to improve its
management of telecommunications resources and act on opportunities
to achieve savings.  As agreed, our objective was to determine what
actions USDA has taken to address the telecommunications management
problems we identified in reports issued in 1995 and 1996 and to what
extent these problems have been resolved.\1 In these reports, we
recommended that USDA should act immediately to (1) establish the
sound management practices necessary to cost-effectively manage
telecommunications and eliminate unnecessary services, (2)
consolidate and optimize Federal Telecommunications System (FTS)
2000\2 resources where opportunities exist to do so, (3) plan
networks in support of information and resource sharing needs, and
(4) correct telephone abuse and fraud problems and mitigate future
risks in this area. 


--------------------
\1 USDA Telecommunications:  Missed Opportunities To Save Millions
(GAO/AIMD-95-97, April 24, 1995); USDA Telecommunications
(GAO/AIMD-95-219R, September 5, 1995); USDA Telecommunications: 
Better Management and Network Planning Could Save Millions
(GAO/AIMD-95-203, September 22, 1995); and USDA Telecommunications: 
More Effort Needed To Address Telephone Abuse and Fraud
(GAO/AIMD-96-59, April 16, 1996). 

\2 FTS 2000 is a General Services Administration (GSA) managed
network of long-distance voice, data, and video telecommunications
services intended to satisfy the federal government's needs in the
continental United States through 1998. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

In response to our reports and recommendations, USDA has taken
positive steps to begin correcting its telecommunications management
weaknesses--improvements that the department says could reduce its
$200 million-plus reported annual investment in telecommunications by
as much as $70 million each year.\3 For example, USDA conducted a
departmentwide reengineering study and is beginning to test a
redesigned approach for managing telecommunications resources.  USDA
has also taken action to eliminate some redundant services and reduce
costs. 

However, USDA has not achieved significant cost savings or management
improvements because many of the department's corrective actions are
incomplete or inadequate.  Specifically, USDA has not (1) established
the sound management practices necessary for ensuring that
telecommunications resources are cost-effectively managed and
payments for unused, unnecessary, or uneconomical services are
stopped, (2) consolidated and optimized telecommunications to achieve
savings where opportunities exist to do so, (3) adequately planned
integrated networks in support of information sharing needs, and (4)
determined the extent to which the department is at risk for
telephone abuse and fraud and acted to mitigate those risks
nationwide.  Further, it is unclear how and when these needed
corrective actions will be implemented because the department has not
established an effective action plan or strategy for addressing our
recommendations with time frames, milestones, and resources for
making improvements.  A major factor contributing to this situation
is that no one at USDA has been given overall responsibility,
authority, and accountability for fixing USDA's long-standing
telecommunications management problems. 


--------------------
\3 We did not independently verify the accuracy of USDA's information
on telecommunications costs and cost-savings projections. 


   BACKGROUND
------------------------------------------------------------ Letter :2

USDA relies on telecommunications systems and services to help it
administer federal programs and serve millions of constituents.  From
telephone calls to video conference meetings to providing nationwide
customer access to information, USDA reports that it spends about
$219 million annually for a wide array of telecommunications
technology.\4 Voice and data communications, provided by the federal
government's FTS 2000 program, and hundreds of commercial carrier
networks help the department's 31 departmental offices and agencies
and thousands of field offices carry out USDA's broad missions and
serve customer needs. 

In 1995 and 1996, we reported that USDA was not cost-effectively
managing and planning its substantial telecommunications investments
and was wasting millions of dollars each year as a result. 
Specifically, we found that

  -- USDA was paying for unnecessary or unused telecommunications
     equipment and services because of breakdowns in management
     controls.  For example, we found that USDA had been paying tens
     of thousands of dollars annually for leased telecommunications
     equipment, such as rotary telephones and outdated computer
     modems, that it no longer even had. 

  -- USDA was wasting as much as $5 million to $10 million annually
     because the department had not acted on opportunities to
     consolidate and optimize its FTS 2000 telecommunications
     services. 

  -- USDA agencies were spending hundreds of millions of dollars
     developing redundant networks that perpetuate long-standing
     information sharing problems because the department was not
     adequately planning departmentwide telecommunications in support
     of USDA's information sharing goals. 

  -- USDA had hundreds of cases of telephone abuse because the
     department lacked adequate controls over the millions of dollars
     it spends each year on commercial telephone services.  Many of
     these cases involved inappropriate collect calls made from
     individuals in 18 correctional institutions, accepted and paid
     for by USDA, and then possibly transferred to other USDA
     long-distance lines. 

We made numerous recommendations in our reports to help USDA correct
these problems.  Given the seriousness of these management weaknesses
and the waste we found, we also recommended in 1995 that the
Secretary of Agriculture report the department's management of
telecommunications as a material internal control weakness under the
Federal Managers' Financial Integrity Act (FMFIA). 

Under federal law, government agencies are required to properly and
cost-effectively manage all information technology investments,
including telecommunications.\5 To do this, agencies must have
processes and practices established that ensure sound planning and
information technology decision-making, and cost-effective management
and use of information technology investments.  To further strengthen
executive leadership in the management of information technology, the
Congress enacted the Clinger-Cohen Act of 1996, which created a chief
information officer (CIO) position in federal agencies and emphasized
the need for instituting sound management practices to maximize the
return on information technology investments. 

In August 1996, the Secretary of Agriculture established a CIO
position and in August 1997 designated the Deputy Assistant Secretary
for Administration as USDA's first CIO.  The CIO, who reports to the
Secretary, is responsible for providing the leadership and oversight
necessary to ensure the effective design, acquisition, maintenance,
use, and disposal of all information technology by USDA agencies,
which include telecommunications, and for monitoring the performance
of USDA's information technology programs and activities. 


--------------------
\4 In fiscal year 1995, USDA estimated that it spent about $114
million for telecommunications.  More recent estimates by the
department report that USDA spends about $219 million each year,
including $38 million for FTS 2000 data, voice, and video services;
$72 million for commercial services; and $109 million for equipment
and contractual services. 

\5 Such laws include the Paperwork Reduction Act of 1995, the Chief
Financial Officers Act of 1990, and the Government Performance and
Results Act of 1993. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3

To address our objective, we reviewed agency documentation and
interviewed USDA officials to identify the department's actions to
address our recommendations to (1) establish sound telecommunications
management practices, (2) consolidate and optimize FTS 2000
telecommunications services for savings, (3) plan networks in support
of information and resource sharing needs, and (4) correct telephone
abuse and fraud.  To assess the adequacy of these corrective actions,
we reviewed plans, studies, activity reports, and other documentation
at USDA headquarters, USDA's National Finance Center (NFC), and
agency offices and discussed the status and progress of actions taken
with USDA officials.  We also reviewed studies as well as vendor
billing information for FTS 2000 and commercial services to evaluate
the results of USDA's corrective actions.  Appendix I provides
further details on our objective, scope, and methodology. 

We conducted our review from August 1997 through April 1998 in
accordance with generally accepted government auditing standards.  We
provided a draft copy of this report to USDA for comment.  USDA's
comments are discussed in the report and are included in full in
appendix II. 


   SOUND MANAGEMENT PRACTICES FOR
   ENSURING COST-EFFECTIVE
   TELECOMMUNICATIONS NOT YET
   ESTABLISHED
------------------------------------------------------------ Letter :4

In 1995, we reported that USDA lacked sound management practices over
its large annual telecommunications investments and was not
cost-effectively managing these investments.  Because of this, the
department wasted millions of dollars each year paying for
unnecessary or unused telecommunications services and equipment, and
services billed but never provided.\6 We therefore recommended that
USDA should report its management of telecommunications resources as
a material internal control weakness under the Federal Managers'
Financial Integrity Act (FMFIA) and take immediate and necessary
steps to ensure that all telecommunications resources are properly
managed and costs are effectively controlled. 

USDA agreed that it has to do a significantly better job managing its
telecommunications investments.  It reported telecommunications
management as a material management control weakness in its fiscal
year 1996 and fiscal year 1997 FMFIA reports, and began improvement
initiatives to reengineer telecommunications management, audit
telephone invoices, establish telecommunications inventories, and
strengthen departmentwide policy.  By implementing improvements such
as reengineering telecommunications management, the department
reported in November 1997 that its telecommunications costs could be
reduced as much as $30 million annually. 

However, to date, USDA has not fully implemented the revised and
improved management practices.  As a result, it has neither achieved
significant savings nor substantially strengthened telecommunications
management. 


--------------------
\6 GAO/AIMD-95-203, September 22, 1995. 


      USDA REPORTS
      TELECOMMUNICATIONS
      MANAGEMENT AS AN FMFIA
      MATERIAL MANAGEMENT CONTROL
      WEAKNESS
---------------------------------------------------------- Letter :4.1

Under the Federal Managers' Financial Integrity Act of 1982 (31
U.S.C.  3512), agencies must establish internal controls to
reasonably ensure that agency assets are effectively controlled and
accounted for.  Agencies must also annually report material
weaknesses in these controls to the President and the Congress and
describe plans and schedules for correcting these weaknesses.  Given
the lack of sound management practices over telecommunications and
the serious management weaknesses we found at USDA, we recommended in
our 1995 report that the Secretary of Agriculture report the
department's management of telecommunications as a material internal
control weakness under FMFIA.  We also recommended that this weakness
should remain outstanding until USDA institutes effective management
controls. 

In response to our recommendations, USDA reported its overall
management of telecommunications as a material management control
weakness in its fiscal year 1996 FMFIA report.  Specifically, the
report generally discussed corrective actions planned or underway to
address (1) inadequate telecommunications management and network
planning, (2) opportunities to consolidate and optimize
telecommunications services for savings, and (3) telephone abuse. 

In USDA's FMFIA report for fiscal year 1997, the department continued
to report telecommunications management and network planning and the
management of telecommunications services as material weaknesses,
stating that estimated completion dates to resolve these weaknesses
have been delayed.  Specifically, the report states that USDA
extended the expected completion date 1 year for resolving its
telecommunications management and network planning weaknesses, from
fiscal year 1998 to fiscal year 1999, and 2 years for addressing
opportunities to consolidate and optimize telecommunications services
for savings, from fiscal year 1998 to fiscal year 2000. 


      EFFORTS TO REENGINEER
      TELECOMMUNICATIONS
      ACTIVITIES DELAYED
---------------------------------------------------------- Letter :4.2

In response to our 1995 report, USDA's Deputy Assistant Secretary for
Administration--who has since been appointed CIO--and the acting
chief financial officer (CFO) established a telecommunications task
force in October 1995 to assess and determine actions necessary to
address our recommendations and resolve the department's material
weaknesses.  The task force concurred with our findings and
recommendations, noting that department leadership in
telecommunications management had been seriously deficient. 
Specifically, the task force concluded in its February 1996 report
that

     "The processes of planning, acquiring, ordering, billing,
     invoicing, inventory control, payments, and management of
     telecommunications services and equipment [are] chaotic at best
     and totally out of control at the very least.  These processes
     are disparately performed across agencies and even within
     agencies.  The capability to plan, review, and capitalize on
     USDA telecommunications investments is far beyond the reach of
     any USDA manager to make rational decisions based on hard
     inventory and billing facts.  Agency managers who are
     responsible for telecommunications services have neither the
     information they need to manage these resources nor the
     billing/invoice information to ensure that USDA is receiving the
     services it ordered and for which it is being billed.  The
     systems/processes are outdated and broken."\7

The task force recommended a series of critical and essential actions
to begin to address these problems.  It identified business process
reengineering of telecommunications management activities across the
department as the most critical action for fundamentally improving
the processes and systems supporting telecommunications management. 
The activity included, among other things, redesigning approaches for
obtaining and reviewing billing information through electronic data
interchange (EDI) and creating management processes that (1) reduce
payments made for services not received and equipment not owned, (2)
promote increased resource sharing between agencies, and (3) provide
accurate and timely reports to agency managers for monitoring the
cost-effective use of all telecommunications resources. 

Later in February 1996, the Deputy Assistant Secretary for
Administration and the acting CFO accepted the task force's
recommendation to complete a telecommunications reengineering study
within 6 months, and pilot test and implement reengineered
telecommunications management processes throughout the department
within 24 months.  USDA has reported that it expects to correct its
most serious management weaknesses through this effort and, at the
same time, save up to $30 million annually by streamlining
administration of telephone bills and validating agency payments made
to telephone companies to eliminate unnecessary charges for services,
lines, and features that are not in use. 

However, USDA did not complete its reengineering study until August
1997 and does not expect to have its reengineered telecommunications
management processes fully implemented before September 1999, at the
earliest, which is 3-1/2 years after USDA accepted the task force's
recommendations.  Much of this delay occurred because USDA's
reengineering effort, although critical, lacked effective direction
and oversight.  For example, it took USDA nearly 4 months (from
February 1996 to June 1996) to form a project team for the
reengineering study.  Project officials said further delays resulted
from the lack of clear direction over project activities.  This was
because management responsibility for the work on the study was split
among the Deputy Assistant Secretary for Administration and acting
CFO and an executive review board made up of program and management
officials. 


--------------------
\7 United States Department of Agriculture:  The Report of the
Telecommunications Task Force, February 1996. 


      USDA'S ONE-TIME AUDIT FINDS
      MILLIONS OF DOLLARS IN
      SAVINGS
---------------------------------------------------------- Letter :4.3

Concurrent with the reengineering effort, USDA began additional
initiatives to address other management improvement and cost-savings
recommendations we made.  For example, because USDA agencies do not
generally review commercial telephone bills to verify charges, we
reported that the department was paying tens of thousands of dollars
for leased telecommunications equipment and other services it had not
used for years.\8 We therefore recommended that USDA review
commercial telephone bills for accounts over 3 years old to identify
instances where the department may be paying for services that are no
longer being used. 

Following the Secretary's direction, in May 1996, USDA's acting CFO
and NFC began a one-time audit of all commercial telephone invoices. 
To do this, copies of all billing invoices paid to telephone
companies for a 1-month period in 1996 were sent by NFC to USDA
agencies for verification.  The audit involved the review of over
25,000 paper invoices.  Agencies and offices were asked to identify
duplicate services, unnecessary services, and services billed but not
received.  As of March 1998, the audit was about 90 percent complete
and had identified about $470,000 in annual savings.  USDA expects to
recoup the overall cost of this audit from the savings achieved
during the first year. 

Opportunities to save millions more were also identified when it was
disclosed that USDA agencies were paying tens of thousands of dollars
each month for thousands of unused FTS 2000 e-mail boxes.  As a
result, more than half of USDA's 15,953 FTS 2000 e-mail accounts were
disconnected, reducing USDA's telecommunications costs by about $3.3
million.  In one case, for example, we were told that the Secretary's
office found it had been paying monthly storage charges for an FTS
2000 e-mail box for a former Secretary who had left the department in
1993.  Efforts to identify and eliminate additional unused e-mail
accounts are continuing. 


--------------------
\8 As we reported in 1995, bills for commercial services are sent
directly from the carriers to NFC where the bills are processed and
paid.  NFC receives thousands of bills in paper form each month and,
in most cases, does not forward copies to the agencies for
verification of charges. 


      USDA STILL LACKS COMPLETE
      TELECOMMUNICATIONS
      INVENTORIES
---------------------------------------------------------- Letter :4.4

In 1995, we reported that USDA and its agencies lacked basic
information describing what telecommunications equipment and services
USDA uses and what it pays for these resources because
telecommunications inventories had not been established by the
department.  As we pointed out in our report, inventories are
fundamental to sound telecommunications management and are necessary,
among other things, to identify telecommunications resources that are
outdated or no longer used and ensure that agencies pay for only
those services that they use.  Consequently, we recommended that the
department take immediate steps to ensure that departmentwide
telecommunications inventories were established and properly
maintained. 

In response to our report, the CIO's office began work with a
contractor to help the department establish telecommunications
inventories.  As part of this effort, the contractor (1) prepared a
plan for conducting inventories departmentwide and (2) initiated a
pilot project to conduct a physical inventory of telecommunications
equipment at six sites for two USDA agencies in the Washington, D.C.,
area.  At just these six sites, the contractor found the USDA offices
were being billed more than $200,000 annually for inactive lines,
active lines not in use, and lines that could not be identified. 
However, the department did not implement the contractor's plan and
did not act to ensure that all unneeded or unused services were
eliminated. 

Although the contractor's plan was not implemented, USDA has taken
other actions to begin collecting inventory information. 
Specifically, in connection with efforts now underway to test USDA's
reengineered telecommunications management processes and address Year
2000 readiness,\9 the CIO's office told USDA agencies to have their
telecommunications inventories completed by July 1998.  Until USDA
establishes inventories and fully tests and implements improved
telecommunications management processes departmentwide, USDA cannot
ensure that unnecessary or unused services have been discontinued. 


--------------------
\9 This involves taking necessary steps to ensure that information
technology accurately processes date and time data (including
calculating, comparing, and sequencing) from, into, and between the
20th and 21st centuries. 


      TERMINATION OF SERVICES AT
      CLOSED USDA OFFICES IS NOT
      ASSURED
---------------------------------------------------------- Letter :4.5

In 1995, we also recommended that USDA establish and implement
procedures necessary to ensure that all unneeded telecommunications
services are terminated at offices that close or relocate.  Since
passage of the Federal Crop Insurance Reform and Department of
Agriculture Reorganization Act of 1994,\10

USDA has closed or relocated about 1,300 field offices and plans to
close or relocate hundreds more in the next few years.  Effective
procedures are essential to precluding payments for services at
offices after they have been closed or relocated. 

While the CIO's office revised the department's telecommunications
policy in March 1996 to require USDA agencies and offices to ensure
the termination of telecommunications services at offices that close
or relocate, CIO officials said that they did not monitor agencies'
compliance with this policy.  Accordingly, USDA does not know whether
the policy had been implemented throughout the department. 
Telecommunications managers at two USDA agencies we spoke with said
that they had not done reviews of billing records to ensure that
telecommunications services were terminated for all of their offices
that had closed or relocated.  In fact, cases have been identified by
USDA in which the department continued to incur service charges at
agency offices that had closed or relocated.  For example, one USDA
agency told us that the department continued to pay a total of about
$90,000 for vendor-provided services for an office in Florida that
had been closed since 1984.  After identifying this case, the agency
telecommunications manager terminated the service in October 1997 and
sought reimbursement from the vendor for some of these charges. 


--------------------
\10 Public Law 103-354, 108 Stat.  3178. 


   USDA CONTINUES TO PAY FOR
   REDUNDANT FTS 2000 SERVICES
------------------------------------------------------------ Letter :5

In 1995, we also reported that USDA was missing millions of dollars
in savings because the department had not consolidated and optimized
FTS 2000 telecommunications services where there were opportunities
to do so.\11 Such savings opportunities existed because, over the
years, hundreds of field office sites across the department had
obtained and continued to use separate, and often times redundant,
telecommunications services at office sites where multiple USDA
agencies are located within the same building or geographic area. 
Therefore, we recommended that USDA identify and act on opportunities
to consolidate and optimize FTS 2000 telecommunications services and
preclude departmental agencies and offices from obtaining and using
redundant services. 

USDA agreed with our recommendation and began a departmentwide
initiative, called Initiative 6, that used a network analysis tool\12
to identify instances in which USDA agencies and offices located in
the same building could consolidate and optimize FTS 2000
telecommunications services for savings.  By November 1995, USDA
agencies and offices had been provided with 775 specific
opportunities to eliminate FTS 2000 redundant services. 

USDA eliminated about $3.2 million in redundant FTS 2000 services
under this effort but took no action on nearly half of the Initiative
6 cost-savings opportunities and terminated the initiative.  The
CIO's office later reactivated Initiative 6 after we began our review
and, once again, identified additional opportunities for savings. 
However, CIO officials told us that they were not actively following
up on these because new priorities, such as the need for USDA
agencies to ensure Year 2000 compliance, were consuming most of the
agencies' information technology staff resources. 

USDA also began tracking agency purchases of FTS 2000 services.  As
part of the department's moratorium on information technology
investments, established by the Deputy Secretary in November 1996,
the CIO's office began reviewing individual agency requests for new
telecommunications services and equipment to help ensure that
opportunities to share resources among agencies and offices are
considered before telecommunications services are acquired.  The
CIO's office also created a new centralized management structure for
ordering FTS 2000 telecommunications services to help eliminate
agency purchases of redundant services.  Under these new procedures,
which are still being implemented, USDA has reduced the number of
individuals throughout the department who are authorized to purchase
new telecommunications services and equipment by about 77 percent
from 332 to 75 and has required agencies to forecast their planned
telecommunications purchases in advance to identify opportunities for
savings. 


--------------------
\11 GAO/AIMD-95-97, April 24, 1995. 

\12 An automated tool developed by USDA to analyze telecommunications
configurations at specified locations and, on the basis of actual
traffic, tariffs, and rates, determine where services can be combined
for volume discounts and where more cost-effective telecommunications
arrangements can be selected. 


   NETWORKS STILL NOT PLANNED IN
   SUPPORT OF INFORMATION AND
   RESOURCE SHARING NEEDS
------------------------------------------------------------ Letter :6

In September 1995, we reported that USDA had hundreds of stovepipe
networks and systems, built by its agencies, that hinder information
sharing.\13 This situation evolved over time because USDA allowed its
agencies to build their own separate stovepipe networks.  Even though
the department had often acknowledged that it had a pressing need to
overcome this problem, we found that USDA agencies continued to spend
hundreds of millions of dollars to develop redundant networks that
could not interoperate and could not share information.  We
recommended in 1995 that USDA determine the interagency information
sharing requirements necessary to effectively carry out the
department's crosscutting programs and plan networks in support of
information and resource sharing needs. 

Despite some initial efforts to develop a draft information systems
technology architecture, USDA has not yet identified business data
needs and information sharing requirements for the department.  The
Clinger-Cohen Act of 1996 requires agency CIOs to develop, maintain,
and facilitate integrated information systems architectures for
evolving or maintaining existing information technology and acquiring
new information technology to achieve the agency's strategic goals
and information resources management goals.\14 An effective systems
architecture should be derived by systematically and thoroughly
analyzing and defining agencies' target operating environments,
including business functions, information needs and flows across
functions, and system characteristics required to support these
information needs and flows. 

However, according to a contractor's January 1998 assessment, USDA's
initial architecture does not identify many of the kinds and/or types
of data used in the department and does not provide a clear
foundation for a seamless flow of information and interoperability
among all agency systems that produce, use, and exchange information. 
According to the CIO's office, work is still underway to capture data
on information flows and needs and this work will not be completed
until September 1999. 

Concurrent with this ongoing work to identify data requirements, the
CIO's office has begun evaluating USDA's current network structure. 
As a first step, the CIO's office used a contractor's network design
tool to identify or map, for the first time, the department's
existing data networks so that redundancies may be eliminated and
economies may be gained.  When this work is complete in June 1998,
project officials said the CIO will begin considering design
alternatives for migrating to a departmentwide enterprise network\15
that is intended to satisfy the connectivity needs of USDA
information technology systems, processes, and users.  However, USDA
does not plan to have completed its work identifying business data
and information sharing requirements by that time.  USDA officials
stated that while the department does not now and may never fully
understand its business requirements, it can nonetheless design its
new departmentwide enterprise network. 

By moving forward on an enterprise network without completing an
architecture that defines USDA's business data and information
sharing requirements, USDA runs the risk of investing in a network
that may not fully support its strategic business/program and
operational needs.  As we have reported in the past, agencies have
experienced significant problems and cost increases by trying to
design and build information and network systems without a systems
architecture that defines business needs.  For example, we found that
incompatibilities among air traffic control systems cost the Federal
Aviation Administration (FAA) $38 million to fix because it began
building these systems without completing a systems architecture that
defined requirements and standards governing information and data
structures and communications.\16 In another case, after the Internal
Revenue Service (IRS) spent $3 billion attempting to modernize its
tax systems without adequately defining its business needs in a
systems architecture, it was unable to demonstrate benefits
commensurate with these costs and had to restructure its
modernization effort.\17


--------------------
\13 GAO/AIMD-95-203, September 22, 1995. 

\14 Public Law 104-106, section 5125, 110 Stat.  684 (1996). 

\15 Enterprise network is defined as a unified, standards-based
telecommunications infrastructure that serves all organizations of
the department. 

\16 Air Traffic Control:  Complete and Enforced Architecture Needed
for FAA Systems Modernization (GAO/AIMD-97-30, February 3, 1997). 

\17 Tax Systems Modernization:  Management and Technical Weaknesses
Must Be Corrected If Modernization Is To Succeed (GAO/AIMD-95-156,
July 26, 1995); Tax Systems Modernization:  Actions Underway But IRS
Has Not Yet Corrected Management and Technical Weaknesses
(GAO/AIMD-96-106, June 7, 1996); and Tax Systems Modernization: 
Blueprint Is a Good Start But Not Yet Sufficiently Complete to Build
or Acquire Systems (GAO/AIMD/GGD-98-54, February 24, 1998). 


   TELEPHONE ABUSE CORRECTED AT
   USDA HEADQUARTERS, BUT
   DEPARTMENTWIDE RISKS HAVE NOT
   BEEN ADDRESSED
------------------------------------------------------------ Letter :7

In April 1996, we reported that USDA lacked adequate controls for
ensuring that its telephones were properly used.\18 As a result, the
department, which spends tens of millions of dollars each year on
commercial telecommunications services, had experienced hundreds of
cases of telephone abuse in the Washington, D.C., area and was at
risk of further abuse and fraud.  We recommended that USDA determine
its risk of and vulnerability to telephone fraud, waste, and abuse
departmentwide and develop and expeditiously implement an appropriate
plan with cost-effective controls to mitigate these risks.  In the
interim, we recommended that the department identify and implement
cost-effective actions to minimize USDA's exposure to telephone
abuse. 

Following our report, USDA identified telephone abuse at the
department as a material management control weakness in its fiscal
year 1996 FMFIA report, and took a number of positive steps to reduce
telephone abuse in USDA's Washington, D.C., headquarters offices. 
For example, in October 1996, USDA began blocking collect calls in
all of its Washington, D.C., area offices, and the hundreds of
inappropriate collect calls from individuals in correctional
institutions have been significantly reduced.  Also, the CIO's office
implemented procedures for obtaining and reviewing the local
carrier's monthly telephone bill for the Washington, D.C., area to
identify questionable long distance calls as well as other
potentially inappropriate charges.  After taking these actions, USDA
reported in its fiscal year 1997 FMFIA report that corrective actions
on telephone abuse were completed. 

However, the department has not determined the risk of and
vulnerability to telephone fraud, waste, and abuse departmentwide as
we recommended, nor has it developed and implemented an appropriate
plan with cost-effective controls to mitigate these risks.  The CIO
official responsible for telecommunications operations told us no
further action was taken on our recommendation because USDA believed
that the risks of departmentwide telephone abuse and fraud would be
better addressed by implementation of the department's reengineered
telecommunications management processes, which will allow agencies
and offices to review and verify telephone billing information. 
However, as discussed earlier, work on this project is not complete
and full implementation of the reengineered processes is not expected
before September 1999.  Therefore, until that time, USDA agencies and
offices outside of the Washington, D.C., area remain at risk for
telephone abuse and fraud. 


--------------------
\18 GAO/AIMD-96-59, April 16, 1996. 


   USDA LACKS AN EFFECTIVE ACTION
   PLAN FOR RESOLVING ITS
   TELECOMMUNICATIONS MANAGEMENT
   WEAKNESSES
------------------------------------------------------------ Letter :8

Although USDA agreed with our 1995 report on the need to resolve its
telecommunications management weaknesses and has identified millions
in potential savings, it lacks an effective action plan for
implementing these necessary improvements.  Specifically, USDA has
not established a plan that (1) assigns clear responsibility and
accountability for initiatives intended to correct the department's
telecommunications management weaknesses, (2) coordinates and
integrates these initiatives, (3) sets priorities, time frames, and
milestones for their completion, (4) establishes procedures for
monitoring activities to ensure they are carried out, and (5)
allocates necessary resources. 

In December 1997, the CIO issued a plan of action for resolving the
department's long-standing problems managing information technology. 
This plan, which was prepared in response to the Secretary's May 1997
request, discusses telecommunications as one of five major areas and
provides a general description of the goals and objectives of ongoing
initiatives to reengineer and improve departmentwide
telecommunications management and lists tasks associated with these
efforts. 

However, the plan does not adequately describe how needed corrective
actions will be implemented, nor does it specify clear time frames,
milestones, and resources associated with all these efforts. 
Specifically, while the plan lists tasks associated with the
telecommunications improvement initiatives, it does not describe how
USDA intends to carry out all these tasks.  For example, the plan
lists a project to consolidate and optimize telecommunications
services in the Washington, D.C., area to provide more effective and
economical telecommunications systems.  But the plan provides no
information describing the project's activities and how these
activities will need to be integrated with numerous other planned or
ongoing efforts to consolidate and optimize services, nor does it
discuss milestones, time frames, and resources necessary for carrying
them out. 

In addition, the CIO's action plan also does not designate a specific
senior-level official with overall, day-to-day responsibility,
authority, and accountability for managing and coordinating all of
the department's separate telecommunications initiatives.  Instead,
the plan generally assigns responsibility for tasks to the CIO's
office and other USDA agencies and offices, but does not identify
responsible individuals, provide them requisite authority, and make
them accountable for ensuring that these tasks are fully carried out. 
For example, while the CIO's Associate Director for
Telecommunications Services and Operations acknowledged having
responsibility within the CIO's office for many corrective actions,
this official said she did not have the overall authority necessary
to direct and coordinate departmentwide action on all
telecommunications improvements and cost-savings efforts.  Instead,
she could only attempt to get agencies and offices to act on such
efforts through a process of consensus-building.  Without an action
plan that establishes clear lines of responsibility, authority, and
accountability for directing and implementing departmentwide
telecommunications improvements, many of USDA's corrective actions
will likely not be fully implemented. 


   CONCLUSIONS
------------------------------------------------------------ Letter :9

After more than 2 years, USDA has not fully implemented our
recommendations.  It continues to miss identified opportunities to
achieve the total estimated $70 million in annual savings and cannot
ensure that telecommunications resources are cost-effectively managed
across the department.  It has undertaken some initiatives that have
saved several million dollars, but these initiatives are
uncoordinated, poorly managed, and do not address all of USDA's
telecommunications weaknesses.  Further, USDA has not established an
overall plan or strategy for directing and integrating these separate
improvement efforts and for ensuring that critical corrective actions
are cost-effectively and promptly implemented throughout the
department.  A major factor contributing to this situation is that no
one at USDA has been given overall responsibility, authority, and
accountability for doing so. 


   RECOMMENDATIONS
----------------------------------------------------------- Letter :10

We recommend that the Secretary of Agriculture direct that the CIO
complete and implement a departmentwide corrective action plan that
fully addresses all of our recommendations for resolving the
department's telecommunications management weaknesses and achieving
savings wherever possible.  In addition, we recommend that the
Secretary, in consultation with the CIO, assign a senior-level
official with day-to-day responsibility and requisite authority for
planning, managing, and overseeing implementation of this plan and
for ensuring that all telecommunications management improvements and
cost-savings activities are effectively and fully carried out.  We
further recommend that the Secretary of Agriculture direct the CIO to
periodically report to the Secretary on the department's progress (1)
implementing this corrective action plan and (2) achieving the
estimated $70 million in annual savings identified by the department. 


   AGENCY COMMENTS AND OUR
   EVALUATION
----------------------------------------------------------- Letter :11

USDA's CIO provided written comments on June 15, 1998, on a draft of
this report.  USDA's comments are summarized below and reproduced in
appendix II. 

USDA generally agreed with our findings, conclusions and
recommendations.  Specifically, USDA agreed that it has not fully
implemented recommendations in our previous reports aimed at
resolving the department's telecommunications management weaknesses
and agreed that the department can improve by placing greater
emphasis on planning and coordination of its telecommunications
program.  USDA also stated that the department has made real progress
in telecommunications management and has achieved significant
savings, but did not disagree that USDA continues to miss savings
opportunities and cannot ensure that telecommunications resources are
cost-effectively managed across the department. 

In its comments, USDA provided details on actions it is taking to
address telecommunications problems we identified, but did not
specifically state whether or how the department plans to implement
our recommendations.  In subsequent discussions with USDA, the Deputy
CIO stated that the department plans to fully address and implement
all our recommendations. 

USDA also raised several additional matters, none of which affect our
conclusions and recommendations and thus are not discussed here. 
These matters and our responses are discussed in appendix II. 


--------------------------------------------------------- Letter :11.1

As agreed with your office, unless you publicly announce the contents
of this report earlier, we will not distribute it until 30 days from
the date of this letter.  At that time we will send copies to the
Secretary of Agriculture; the Chairmen and Ranking Minority Members
of the Senate Committee on Governmental Affairs, the Senate and House
Committees on Appropriations, and the House Committee on Government
Reform and Oversight; the Director of the Office of Management and
Budget; and other interested parties.  Copies will also be made
available to others upon request. 

Please contact me at (202) 512-6408 if you or your staff have any
questions concerning this report.  I can also be reached by e-mail at
[email protected].  Major contributors to this report are
listed in appendix III. 

Sincerely yours,

Joel C.  Willemssen
Director, Civil Agencies Information Systems


OBJECTIVE, SCOPE, AND METHODOLOGY
=========================================================== Appendix I

Our objective was to determine what actions USDA has taken to address
the telecommunications management problems we identified in 1995 and
1996 and to what extent these problems have been resolved.  To
address our objective, we reviewed studies, reports, plans, and other
documentation describing USDA's actions to address our
recommendations for (1) correcting telecommunications management
weaknesses, (2) identifying and acting on opportunities to
consolidate and optimize FTS 2000 telecommunications services, (3)
planning networks in support of information and resource sharing
needs, and (4) resolving telephone abuse and fraud.  We also
interviewed CIO, CFO, and agency officials to confirm our
understanding of actions taken by the department and to identify
whether the actions were complete, underway, or planned.  We did not
independently verify the accuracy of USDA's overall
telecommunications costs or projected cost savings. 

To identify USDA's efforts to improve telecommunications management,
we examined departmental responses to our report recommendations,
USDA FMFIA and interagency task force reports, and reengineering and
other studies.  We also reviewed project plans, status reports, and
other documentation pertaining to telecommunications management
improvement initiatives to identify the status of these actions, and
we discussed plans for completing them with CIO, agency, and project
team officials who are responsible for carrying them out. 

We also reviewed other actions taken by USDA to address our
recommendations on specific telecommunications management problem
areas.  To assess the effectiveness of USDA efforts to disconnect
telecommunications services at closed offices, we discussed the
implementation of revised policy in this area with CIO officials and
reviewed procedures followed at two agencies that recently closed
offices.  In addition, we met with CIO, agency, and contractor
officials involved with USDA's 1996 inventory pilot and reviewed
project reports and other documentation to determine the results and
savings achieved.  We also discussed USDA's ongoing one-time audit
and procedures used for selecting and auditing billing invoices with
officials at USDA's National Finance Center.  To test the
thoroughness of the audit, we randomly selected several invoices and
discussed actions taken to verify billing data on these invoices with
the appropriate agency officials.  We also reviewed reports and
billing data associated with other cost-savings efforts to eliminate
unused FTS 2000 e-mail boxes and met with CIO and agency officials to
discuss current and future plans for establishing telecommunications
inventories. 

To assess efforts by USDA to consolidate and optimize FTS 2000
telecommunications services, we reviewed reports and examined billing
data showing the results of USDA's Initiative 6 project.  We also
discussed the overall results of this initiative with CIO and agency
officials.  We examined documentation and billing data associated
with USDA's recent effort to reactivate Initiative 6 and discussed
the status of efforts to achieve savings with CIO and agency
officials.  To assess departmental requirements to preclude agencies
from purchasing redundant FTS 2000 telecommunications services, we
reviewed procedures established by the department under the November
1996 moratorium and new centralized management structure for ordering
FTS 2000 services and discussed their impact on purchases of
redundant service with CIO officials. 

To assess USDA's efforts to plan integrated networks that address the
department's information and resource sharing needs, we reviewed
reports showing agency network purchases.  We also reviewed USDA's
information systems technology architecture and discussed it with CIO
officials to determine the extent to which the architecture defines
information sharing needs.  Finally, we reviewed the department's
plans for implementing an enterprise network, including the interim
results of a contractor's network design evaluation of
telecommunications traffic and performance, and discussed the extent
to which USDA's enterprise network plans address departmental
information and resource sharing needs. 

To assess USDA's efforts to address telephone abuse and fraud in the
Washington, D.C., area, we reviewed status reports, internal memos,
and other documentation describing actions implementing collect call
blocking and establishing billing review procedures.  We also
discussed these actions with CIO officials who monitor telephone
abuse in Washington, D.C., and reviewed documentation on the results
of these monitoring efforts to determine whether USDA actions were
effective in reducing improper collect calls from correctional
institutions and other forms of telephone abuse.  In addition, we
discussed the extent to which USDA had addressed the risks of
telephone abuse and fraud departmentwide with the CIO official
responsible for telecommunications operations. 

To confirm our understanding of USDA actions to address our
recommendations and resolve telecommunications management weaknesses,
we discussed the results of our work with USDA's CIO, as well as with
representatives from the CIO and CFO offices.  We performed our audit
work from August 1997 through April 1998, in accordance with
generally accepted government auditing standards.  Our work was done
at USDA headquarters in Washington, D.C.; USDA's National Finance
Center in New Orleans, Louisiana; and USDA Telecommunications
Services and Operations offices in Fort Collins, Colorado.  We also
met with contractor representatives who conducted the inventory pilot
in Annapolis, Maryland and we interviewed telecommunications
officials at two agency offices where telecommunications and network
planning activities are administered, which included the Animal and
Plant Health Inspection Service headquarters in Riverdale, Maryland,
and the Agricultural Research Service in Greenbelt, Maryland. 




(See figure in printed edition.)Appendix II
COMMENTS FROM THE DEPARTMENT OF
AGRICULTURE
=========================================================== Appendix I



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments on the Department of Agriculture's
letter dated June 15, 1998. 

GAO COMMENTS

1.  We modified the report as appropriate to more accurately reflect
the agency official's title. 

2.  Regarding the inventory pilot, USDA stated that the report does
not mention that one agency completed a more thorough analysis of the
lines and found that many of the lines identified by the contractor
as not in use or inactive were in fact needed for various agency
mission requirements.  Therefore, USDA stated that the $200,000 in
annual overbillings identified by the contractor may have been
overstated.  While we agree that there may have been cases where the
contractor's findings were overstated, USDA did not investigate many
of the overbillings identified by the contractor to determine the
total actual savings possible, nor did it act to ensure that all
unneeded or unused services were eliminated. 

3.  Our statement is accurate.  The department explains that it
gained valuable experience through Initiative 6, but does not dispute
the facts that USDA took no action on nearly half of the cost savings
opportunities identified under Initiative 6 and that the initiative
was terminated. 

4.  USDA agreed that it is desirable to develop an enterprise network
based on a comprehensive business architecture and contends that it
currently has a high-level business architecture in place that is
based on USDA's strategic plan and forms the basis for the definition
of requirements for an enterprise network.  USDA also strongly
believes that further development of the department's business
architecture and development of the enterprise network must continue
as a coordinated and integrated effort and, given that the current
telecommunications infrastructure is fragmented and expensive to
maintain, it does not make business sense to slow the pace of
developing an enterprise network.  Therefore, as the department moves
forward on its enterprise network, USDA stated that it intends to
update the architecture to include additional information on business
data needs and information sharing requirements and to reassess
telecommunications requirements as a matter of ongoing business
practice. 

USDA's position is inaccurate and misses the point of our
recommendation.  The department's current architecture is incomplete. 
For example, it does not identify many of the kinds and/or types of
data used in the department and does not provide a clear foundation
for a seamless flow of information and interoperability among all
agency systems that produce, use, and exchange information.  As a
result, it cannot provide an adequate basis for defining requirements
for an enterprise network.  By moving forward on an enterprise
network without completing the architecture, USDA risks repeating
past mistakes, i.e., investing in telecommunications that do not
effectively support the department's strategic business/program and
operational needs. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III

ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, WASHINGTON,
D.C. 

Stephen A.  Schwartz, Senior Assistant Director
Mark D.  Shaw, Assistant Director
Heather W.  McIntyre, Senior Information Systems Analyst
Michael P.  Fruitman, Communications Analyst

KANSAS CITY FIELD OFFICE

Troy G.  Hottovy, Senior Information Systems Analyst

*** End of document. ***