Major Management Challenges and Program Risks: Social Security
Administration (Letter Report, 01/01/99, GAO/OCG-99-20).

As part of its Performance and Accountability Series, GAO provided
information on the major management challenges and program risks facing
the Social Security Administration (SSA).

GAO noted that: (1) the most critical overarching issue facing SSA is
the long-term solvency of the Social Security system; (2) since SSA
assumed responsibility in 1974 for the SSI program, SSA officials have
been challenged to serve the diverse needs of program recipients while
still protecting the program's overall financial health and integrity;
(3) while SSA paid over $73 billion in 1998 in cash benefits to nearly
11 million Disability Insurance (DI) and SSI blind and disabled
beneficiaries (including DI spouses and dependents), SSA's complex
process for determining whether an individual qualifies for a disability
benefit--the disability claims process--has been plagued by a number of
long-standing weaknesses; (4) to cope with increased workload
demands--caused, in part, by the forthcoming retirement of the baby boom
generation--SSA is counting on its effective use of technology to allow
the agency to serve the increasing numbers of applicants and
beneficiaries with fewer staff; (5) SSA has made progress in addressing
the overarching issue of Social Security's solvency; (6) despite this
progress, SSA must take further steps to meet the serious challenges it
faces; and (7) with regard to progress concerning specific management
challenges, SSA recently issued a report on SSI management.

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

 REPORTNUM:  OCG-99-20
     TITLE:  Major Management Challenges and Program Risks: Social 
             Security Administration
      DATE:  01/01/99
   SUBJECT:  Federal social security programs
             Disability benefits
             Risk management
             Accountability
             Financial management
             Information resources management
             Eligibility determinations
             Systems conversions
             Claims processing
             Performance measures
IDENTIFIER:  Old Age Survivors and Disability Insurance Program
             Social Security Disability Insurance Program
             Supplemental Security Income Program
             Social Security Program
             Y2K
             Performance and Accountability Series 1999
             
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Cover
================================================================ COVER


Performance and Accountability Series

January 1999

MAJOR MANAGEMENT CHALLENGES AND
PROGRAM RISKS - SOCIAL SECURITY
ADMINISTRATION

GAO/OCG-99-20

SSA Challenges


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

  DDS - Disability Determination Service
  DI - Disability Insurance
  IWS/LAN - Intelligent Workstation/Local Area Network
  OASI - Old Age and Survivors Insurance
  OMB - Office of Management and Budget
  SSA - Social Security Administration
  SSI - Supplemental Security Income

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



January 1999

The President of the Senate
The Speaker of the House of Representatives

This report addresses the major performance and management challenges
that have limited the effectiveness of the Social Security
Administration (SSA).  It also addresses corrective actions that SSA
has taken or initiated on these challenges and further actions that
are needed. 

SSA has made progress on a number of fronts, most notably on the
overarching issue of playing a stronger leadership role in the policy
debate regarding Social Security's solvency.  The agency has recently
strengthened its capacity for carrying out needed policy analysis,
evaluation, and research.  SSA has also taken actions to address
challenges related to the Year 2000 computing crisis.  Yet further
steps are necessary to meet the serious management challenges it
still faces.  Of most importance, the agency must address
long-standing problems in the Supplemental Security Income (SSI)
program, which remains on GAO's high-risk list.  Although SSA has
recently developed detailed goals for improving the management of
SSI, the agency must take actions to address the root causes of its
management and performance weaknesses and ensure sustained management
oversight and attention. 

This report is part of a special series entitled the Performance and
Accountability Series:  Major Management Challenges and Program
Risks.  The series contains separate reports on 20 agencies--one on
each of the cabinet departments and on most major independent
agencies as well as the U.S.  Postal Service.  The series also
includes a governmentwide report that draws from the agency-specific
reports to identify the performance and management challenges
requiring attention across the federal government.  As a companion
volume to this series, GAO is issuing an update to those government
operations and programs that its work has identified as "high risk"
because of their greater vulnerabilities to waste, fraud, abuse, and
mismanagement.  High-risk government operations are also identified
and discussed in detail in the appropriate performance and
accountability series agency reports. 

The performance and accountability series was done at the request of
the Majority Leader of the House of Representatives, Dick Armey; the
Chairman of the House Government Reform Committee, Dan Burton; the
Chairman of the House Budget Committee, John Kasich; the Chairman of
the Senate Committee on Governmental Affairs, Fred Thompson; the
Chairman of the Senate Budget Committee, Pete Domenici; and Senator
Larry Craig.  The series was subsequently cosponsored by the Ranking
Minority Member of the House Government Reform Committee, Henry A. 
Waxman; the Ranking Minority Member, Subcommittee on Government
Management, Information, and Technology, House Government Reform
Committee, Dennis J.  Kucinich; Senator Joseph I.  Lieberman; and
Senator Carl Levin. 

Copies of this report series are being sent to the President, the
congressional leadership, all other Members of the Congress, the
Director of the Office of Management and Budget, the Commissioner of
Social Security, and the heads of other major departments and
agencies. 

David M.  Walker
Comptroller General of
the United States


OVERVIEW
=========================================================== Appendix 0

The Social Security Administration's (SSA) 1998 expenditures of $408
billion constitute over one-fourth of total federal disbursements. 
When SSA became an independent agency in March 1995, it gained a new
measure of control over its resources as well as the authority to
address various performance and management challenges it faces in
administering the agency's three major programs:  the Old Age and
Survivors Insurance (OASI) program, the Disability Insurance (DI)
program, and the Supplemental Security Income (SSI) program. 
Combined, these programs touch nearly every American family.  The
OASI and DI programs together are commonly known as "Social
Security," providing benefits financed through payroll taxes paid by
workers and their employers and self-employed people to retired and
disabled workers and their dependents and survivors.  SSI provides
assistance to needy aged, blind, or disabled people and is financed
from general tax revenues. 

THE CHALLENGES

The most critical overarching issue facing SSA is the long-term
solvency of the Social Security system.  The Social Security Trust
Funds are forecast to be depleted by 2032 and are projected to be in
a progressively negative cash-flow position by 2013.  While the
financing problem is not immediate, analysts agree that it should be
addressed soon to mitigate the impacts of any changes that are made. 
In the past, we have called on SSA to assume a stronger leadership
role in this policy debate by strengthening its capacity for carrying
out needed policy analysis, evaluation, and research.  In this
connection, SSA has initiated an active public education effort to
improve the public's awareness of the system's long-term solvency
difficulties.  Beyond this critical overarching issue, SSA faces a
number of specific management challenges. 


      LONG-STANDING SSI ISSUES
      REQUIRE MORE ACTIVE
      MANAGEMENT AND OVERSIGHT
------------------------------------------------------- Appendix 0:0.1

Since SSA assumed responsibility in 1974 for the SSI program, SSA
officials have been challenged to serve the diverse needs of program
recipients while still protecting the program's overall financial
health and integrity.  Long-standing challenges--such as program
abuses and mismanagement, increasing SSI overpayments, and SSA's
inability to recover outstanding SSI debt--have continued,
contributing to recent congressional criticism of SSA's ability to
effectively manage SSI and ensure program integrity.  Recently, we
reported that SSI difficulties are attributable to two underlying
causes:  an organizational culture that places greater priority on
processing and paying claims than on controlling program expenditures
and a management approach characterized by SSA's reluctance to
fulfill its policy development and planning role in advance of major
program crises. 


      DISABILITY PROGRAMS NEED
      REDESIGNING AND MORE FOCUS
      ON RETURN TO WORK
------------------------------------------------------- Appendix 0:0.2

While SSA paid over $73 billion in 1998 in cash benefits to nearly 11
million DI and SSI blind and disabled beneficiaries (including DI
spouses and dependents), SSA's complex process for determining
whether an individual qualifies for a disability benefit--the
disability claims process--has been plagued by a number of
long-standing weaknesses.  On the basis of our ongoing review of
SSA's disability claims process redesign effort, we have found that
SSA has not been able to keep its redesign activities on schedule or
demonstrate that its proposed changes will significantly improve its
claims process.  In addition, SSA has placed little priority on
helping eligible disability program claimants move off the disability
rolls and return to work.  The lengthy disability determination
process encourages applicants to emphasize their inabilities--not
their abilities--and beneficiaries receive little encouragement to
use rehabilitative services. 


      NEW TECHNOLOGY REQUIRED TO
      COPE WITH FUTURE WORKLOAD
      DEMANDS
------------------------------------------------------- Appendix 0:0.3

To cope with increased workload demands--caused, in part, by the
forthcoming retirement of the baby boom generation--SSA is counting
on its effective use of technology to allow the agency to serve the
increasing numbers of applicants and beneficiaries with fewer staff. 
However, concerns have been raised about the implementation of new
computer equipment, which is intended to play a major role in SSA's
redesigned work processes and in better serving a larger beneficiary
population.  SSA must also continue to improve its internal controls
over stored information system data. 

PROGRESS AND NEXT STEPS

SSA has made progress in addressing the overarching issue of Social
Security's solvency.  In August 1998, the agency announced the
creation of the position of Deputy Commissioner for Policy to serve
as the principal adviser to the Commissioner of Social Security on
major policy issues.  The incumbent will also be responsible for
major activities in the areas of strategic policy planning; policy
research and evaluation; statistical programs; and overall policy
development and analysis, including analysis focusing on Social
Security's solvency.  SSA has also taken actions that address
challenges related to the Year 2000 computing crisis.  SSA made
important early progress in assessing and renovating systems critical
to preventing the disruption of benefits and has come to be regarded
as a federal leader in addressing these issues. 

With regard to progress concerning specific management challenges,
SSA recently issued a report on SSI management.  In this report, SSA
discusses the need to take aggressive action to improve overall
payment accuracy, increase continuing disability reviews, combat
program fraud, and improve debt collection.  The report also
establishes SSA's goals to measure the anticipated yearly impact of
planned initiatives in each of these areas.  The agency now intends
to begin planning on how it will implement these goals in its
day-to-day operations.  In addition, SSA has informed us that new
software development processes have been implemented and that all
agency software development activities will be using these processes
by June 2000. 

Despite this progress, SSA must take further steps to meet the
serious challenges it faces.  For example, SSA has yet to make
significant improvements to its disability claims process and
continues to experience delays in testing and implementing
initiatives to redesign the process.  As a result, long-standing
process weaknesses and inefficiencies remain and claimants likely
will continue to wait a long time for a final decision on their
eligibility.  With regard to the SSI program, which remains on GAO's
high-risk list, SSA must produce and use research information on the
program, be more responsive in suggesting legislative changes, and
improve payment controls and debt collection activities.  Absent
these improvements, SSI overpayments and outstanding debt will
continue to undermine the financial integrity of the program. 

In our opinion, progress is being made to address certain management
issues because of the involvement of high-level agency officials. 
Given the long-standing nature of the challenges SSA faces and their
far-reaching implications, the agency needs to continue to assert
strong leadership, spell out its expectations, and subsequently
marshall agency resources to translate SSA's plans into timely
action.  To effect meaningful change, SSA must address the root
causes of its management and performance weaknesses and ensure
sustained management oversight and attention. 


MAJOR PERFORMANCE AND MANAGEMENT
ISSUES
=========================================================== Appendix 1

The major management and performance issues confronting SSA officials
are complex, in part, because they are closely linked to profound
changes in our country.  The baby boom generation is nearing
retirement age, people are living longer, and technology and its
applications are changing rapidly.  At the same time, the public is
expecting greater program integrity from government agencies, even
though resources are constrained.  While SSA has taken corrective
action over the years to address management and performance
difficulties, we have identified several areas where concerns remain: 
management and oversight weaknesses in the high-risk SSI program,
SSA's disability programs' systemwide difficulties, and concerns with
a new computer network designed to help alleviate future SSA workload
demands.  Unless continued management oversight and attention are
provided and corrective action is taken in these areas, the future
effectiveness of SSA programs will be limited. 

LONG-STANDING SSI ISSUES REQUIRE
MORE ACTIVE MANAGEMENT AND
OVERSIGHT

Reports by the media and oversight agencies have highlighted SSI
program abuses and mismanagement, increases in SSI overpayments, and
SSA's inability to adequately recover outstanding SSI debt.  These
issues have spurred congressional criticism of SSA's ability to
effectively manage SSI workloads.  In February 1997, we designated
SSI a high-risk program because of its susceptibility to fraud,
waste, and abuse and insufficient management oversight of the
program.  To a great extent, SSA's inability to address its most
significant long-standing SSI program weaknesses is attributable to
two underlying causes:  (1) an organizational culture that places a
greater priority on processing and paying claims than on controlling
program expenditures and (2) a management approach characterized by
SSA's reluctance to fulfill its policy development and planning role
in advance of major program crises. 

Our work confirms that there is a persistent tendency to view the SSI
program in much the same way as SSA's OASI and DI programs--where
emphasis is placed on quickly processing claims for individuals with
an earned right to benefits--rather than as a welfare program, where
additional income and asset verifications are necessary.  During
fiscal year 1998, for example, current and former recipients owed SSA
more than $3.3 billion, including $1.2 billion in newly detected
overpayments for the year.  Based on prior experience, SSA is likely
to collect less than 15 percent of the outstanding debt in a given
year.  SSA's culture has contributed to the lack of priority placed
on recovering overpayments once they are identified.  This has been
evidenced by SSA's traditional reluctance to use overpayment recovery
tools currently available and aggressively pursue additional tools
when warranted, including tax refund offsets, credit bureau
reporting, collection agencies, and interest levies on outstanding
debt owed. 

Recently, SSA has taken a number of actions to improve the financial
integrity of the SSI program.  For example, SSA is expanding its use
of on-line data maintained by state Disability Determination Services
(DDS) to better verify recipient financial information and prevent
program overpayments.  (SSA funds 54 state DDSs to process disability
applications and conduct continuing disability reviews in accordance
with SSA policies and procedures.) SSA also sought statutory
authority in the last session of the Congress to use credit bureaus,
private collection agencies, interest levies, and other ways to
recover more SSI overpayments.  Reversing the trends in SSI program
performance will, however, require sustained management attention to
issues of program direction and a change in SSA's organizational
culture. 

We believe SSA should take a leadership role in identifying program
weaknesses before they reach crisis levels and in developing
comprehensive plans and strategies to address those weaknesses. 
However, SSA's approach has historically been reactive in nature,
resulting in missed opportunities to address critical SSI policy
issues.  Our work shows that SSA has been reluctant to use its
research and policy development capabilities to assess the effects of
demographic changes in the SSI population and legislative and
court-mandated program changes.  In addition, SSA has often hesitated
in initiating changes in internal policy to address identified
weaknesses or suggesting changes to laws governing SSI.  For example,
in the recent congressional debate surrounding SSI eligibility for
children, SSA did not develop and communicate timely information to
the Congress on the effects of prior legislative and court-mandated
changes.  SSA also did not develop its own proposals for revising
childhood eligibility policies, despite possessing years of data
documenting explosive growth in childhood SSI rolls, changes in the
types of impairments qualifying for benefits, and allegations that
the program was being abused. 

SSA has often viewed itself as an implementer of program policies
rather than as a leader in formulating a policy vision. 
Consequently, SSA did not address, before the issues reached crisis
levels, criticisms surrounding the rapid growth in the number of drug
addicts and alcoholics qualifying for SSI benefits and reports of
program abuses by recipients.  In addition, SSA has not developed
options for revising policies for determining SSI-recipient living
arrangements, despite acknowledging for many years that this program
area is highly error-prone, open to manipulation by recipients, and a
source of considerable SSI overpayment.  Although SSA has developed
an agencywide strategic plan and an annual performance plan, as
required by the Government Performance and Results Act of 1993, these
plans still do not adequately focus on the specific needs and unique
characteristics of the SSI program and its recipient population. 
Instead, SSA's planning efforts have resulted in general goals and
objectives for SSA as a whole. 

SSA has acknowledged the need to play a more active policy
development role and is currently in the process of restructuring its
research and policy components to better address these concerns.  In
this regard, SSA has made conducting effective policy development,
research, and program evaluation a key agency goal, with attention to
the SSI program being an important element of this goal.  Additional
staffing resources are being obtained by the newly created SSA Office
of Policy.  Consequently, SSA should be better positioned to develop
policy alternatives in the SSI program. 

SSA is also taking certain measures that it believes will strengthen
the integrity of the SSI program.  In this regard, SSA produced its
first SSI management report in October 1998, which discusses the need
to take aggressive action in four areas:  improving overall payment
accuracy, increasing continuing disability reviews, combating program
fraud, and improving debt collection.  The management report
established goals to measure the anticipated yearly impact of its
planned initiatives in each of these areas.  The agency now intends
to begin planning on how it will implement these goals in its
day-to-day operations.  Toward this end, each SSA component is
defining its specific role in these initiatives. 

To remove the SSI program from our high-risk list, however, SSA must
produce and use research information on the program, be more
responsive in suggesting legislative changes, and improve program
policies.  The agency should also continuously search for ways to
improve its payment controls and debt collection activities.  Until
additional progress is made in each of these areas, the SSI program
will maintain its high-risk designation. 


      KEY CONTACT
------------------------------------------------------- Appendix 1:0.1

Cynthia M.  Fagnoni, Director
Income Security Issues
Health, Education, and Human Services
 Division
(202) 512-7215
[email protected]

DISABILITY PROGRAMS NEED
REDESIGNING AND MORE FOCUS ON
RETURN TO WORK

In 1998, SSA paid $73.4 billion in cash benefits to 10.7 million DI
and SSI blind and disabled beneficiaries, including spouses and
dependents.  While SSA's disability claims process--used to determine
whether an individual qualifies for a disability benefit--is
time-consuming and expensive, the agency's efforts to redesign the
claims process have been disappointing, and SSA's disability
caseloads for its DI and SSI programs have grown significantly in the
past decade.  In addition, SSA has not developed a plan that
sufficiently addresses actions needed to help beneficiaries fully
develop their productive capacities.  Consequently, few people have
left the rolls to return to work. 


      DI AND SSI PROGRAMS NEED
      REDESIGNING
------------------------------------------------------- Appendix 1:0.2

SSA's complex disability claims process has been plagued by a number
of long-standing weaknesses.  In the early 1990s, SSA had difficulty
keeping up with a rapidly growing workload, and backlogs grew.  For
example, claimants frequently had to wait more than a year and a half
for a final decision.  Moveover, in fiscal year 1993, over one-third
of the applicants whose cases were denied at the initial level
appealed this decision, and two-thirds of these denials were
overturned. 

To manage the disability caseload growth, increase efficiency, and
improve service to its customers, SSA began a major effort in 1994 to
redesign the way it makes decisions related to its disability
programs.  The agency developed an ambitious plan for change that
included testing and implementing 26 key initiatives over a 6-year
period.  In December 1996, 2 years into the period, we reported that
SSA had made little progress testing and implementing the plan.  In
addition, we found that SSA expanded the scope of certain
initiatives, changed executive leadership for program redesign, and
risked losing stakeholder support.  In the report, we recommended
that SSA (1) focus on the initiatives most likely to reduce
claims-processing time and administrative costs and (2) combine those
initiatives in an integrated process and test them at a few sites
before full-scale implementation.  In February 1997, SSA issued a
scaled-down plan that focused on testing and implementing eight key
initiatives. 

Based on our ongoing work, SSA has yet to make significant progress
toward improving its disability claims process.  The agency continues
to experience delays in testing or implementing initiatives, with
some initiatives more than a year behind schedule.  More importantly,
though, test results for two key initiatives indicate that SSA's
efforts will not result in dramatic improvements in the efficiency
and quality of claims processing.  In addition, SSA has encountered
performance difficulties with the software it considers vital to
support the redesign effort.  On a more positive note, SSA is
currently conducting a test that combines a number of the initiatives
into an integrated process, and the early results for some
initiatives are more promising--although not as dramatic as
originally hoped for. 


      RETURN-TO-WORK EFFORTS NEED
      TO BE EMPHASIZED
------------------------------------------------------- Appendix 1:0.3

Today, more than ever, people with disabilities have new
opportunities to return to work, yet very few DI and SSI
beneficiaries do so.  New technologies and medical advances have
provided disabled individuals with greater independence and ability
to function.  Also, the Americans With Disabilities Act supports the
premise that people with disabilities can work and have the right to
work, and the Social Security Act calls for rehabilitating benefit
applicants to the maximum extent possible.  Yet only 1 in 500 DI
beneficiaries and few SSI beneficiaries have left the rolls to return
to work. 

Over the past few years, we have issued a series of reports
recommending that SSA place a higher priority on helping DI and SSI
beneficiaries maximize their work potential.  The lengthy disability
determination process encourages applicants to emphasize their
inabilities--not their abilities--and beneficiaries receive little
encouragement to use rehabilitation services.  Also, work incentives
may not make it financially advantageous for people to work to their
full capacity. 

SSA has recently taken steps to expand the pool of vocational
rehabilitation providers and give providers greater incentives to
assist beneficiaries in obtaining employment.  Specifically, SSA has
(1) contracted with 389 public or private vocational rehabilitation
providers, (2) trained state agency staff on SSA work incentives and
reimbursement procedures, (3) positioned itself to contract with
state agencies to research ways to improve service integration for
beneficiaries attempting to return to work, and (4) made plans to
demonstrate the effectiveness of vouchers for beneficiaries to obtain
vocational rehabilitation services from public and private providers
reimbursed on the basis of employment outcomes.  These steps indicate
that SSA has placed greater priority on return to work.  However,
these efforts would have greater effect if cash and medical benefits
were structured to give beneficiaries greater impetus to use
vocational rehabilitation services and attempt work.  Providing
return-to-work assistance earlier in the decisionmaking process would
also strengthen SSA's efforts. 


      KEY CONTACT
------------------------------------------------------- Appendix 1:0.4

Cynthia M.  Fagnoni, Director
Income Security Issues
Health, Education, and Human Services
 Division
(202) 512-7215
[email protected]

NEW TECHNOLOGY REQUIRED TO COPE
WITH FUTURE WORKLOAD DEMANDS

With the retirement of the baby boom generation and individuals
living longer in retirement, SSA will soon be serving more and more
individuals.  At the same time, there will be fewer SSA personnel to
serve agency beneficiaries because of agency downsizing and expected
retirements of experienced managers and staff.  To help it handle
these future workload demands, SSA is counting on the effective use
of technology.  However, SSA has faced challenges in implementing a
crucial new computer system intended to support its redesigned work
processes and help better serve its beneficiaries.  The agency also
must address reported weaknesses in its information systems' internal
controls. 

SSA is currently in the process of redesigning its work processes and
modernizing its computer systems to better serve an increasing
beneficiary population and achieve improvements in productivity.  A
key aspect of the modernization effort is the agency's transition
from its current mainframe-based computer processing environment to a
client-server processing environment, in which its Intelligent
Workstation/Local Area Network (IWS/LAN) will serve as the basic
automation infrastructure.  SSA plans to install 56,500 workstations
and 1,742 local area networks in state DDSs and SSA's approximately
1,300 field offices throughout the country.  While SSA has made
considerable strides in implementing IWS/LAN, its contractor and some
state DDSs have raised issues that could threaten the overall success
of the initiative. 

In June 1998, we reported contractor concerns regarding the
availability of the workstations specified in the IWS/LAN contract,
raising questions as to whether they could continue to be acquired,
and identified network management and control issues that threatened
successful implementation of IWS/LAN in some state DDSs.  In
addition, we reported that SSA had not established critical practices
for measuring the contributions of IWS/LAN toward improving mission
performance. 

SSA's plans called for designing and developing a new generation of
software to operate on IWS/LAN to support redesigned work processes
in the client-server environment.  However, we noted in July 1998
that SSA, as a traditional mainframe-oriented agency, has lacked
experience in developing and using client-server software.  Although
SSA planned to fully implement improved software development
processes by June 2000, it continued to develop critical software
using the existing weak processes.  We also reported that SSA
encountered program weaknesses and delays in developing the first
major client-server software intended to operate on IWS/LAN.  These
weaknesses and delays were expected to affect both SSA's planned
schedule for proceeding with the second phase of the IWS/LAN
initiative and its assessment of the performance, cost, and benefits
of this software in supporting the redesigned disability process. 
According to SSA, however, new processes have been developed and all
agency software development activities will be using these processes
by June 2000. 

SSA also needs to address deficiencies in its information systems'
internal controls.  A recent audit by an independent accounting firm
(which can be found in the Social Security Accountability Report for
Fiscal Year 1998) found, overall, (1) the agency's fiscal year 1998
financial statements to be fairly presented in all material respects
and (2) management's assertion that SSA's systems of accounting and
internal controls were in compliance with the internal control
objectives outlined in Office of Management and Budget (OMB) Bulletin
No.  98-08 to be fairly stated.  However, the audit also noted
continuing deficiencies in the design and operation of information
systems' internal controls.  These deficiencies raise concerns
regarding information protection (including access controls),
continuity of operations, and separation of duties. 

Specific information protection weaknesses were noted in SSA's local
area network, distributed systems, and mainframe computer security. 
The audit also noted that SSA remains vulnerable should a near-term
disaster occur because of deficiencies in components of its disaster
recovery plan and related testing of that plan.  In addition, the
audit noted instances of insufficient separation of duties,
particularly in the data operations and customer service staff
positions.  For example, the audit identified instances where field
office staff have the responsibility and capability to perform all
functions related to initiating and adjudicating claims. 
Additionally, some personnel in the data operations environment have
both security and operational responsibilities. 

The audit indicated that these weaknesses are significant departures
from certain requirements of OMB Circulars A-127, Financial
Management Systems, and A-130, Management of Federal Information
Resources.  As a result, the audit identified these weaknesses as
instances of substantial noncompliance with the federal financial
management systems requirements under the Federal Financial
Management Improvement Act of 1996.  The audit report suggested that
SSA assign a high priority to related corrective actions. 

While the audit acknowledged SSA's progress in resolving these
issues, it emphasized the importance of continuing corrective action. 
These weaknesses have exposed the agency and its computer systems to
external and internal intrusion, thus subjecting sensitive SSA
information to potential unauthorized access, modification, or
disclosure.  In addition, these weaknesses have increased the risk of
introducing errors or irregularities into data processing operations
and allowing some individuals to bypass critical controls, such as
authorization and supervisory review. 

As technological changes open doors to new ways of providing
services, SSA also faces difficult choices about how to provide
cost-effective, world-class service to its customers.  While SSA has
traditionally delivered a considerable amount of its service through
face-to-face contact in its network of field offices, other types of
service are becoming more popular.  The demand for SSA's 800-number
telephone service continues to grow, and SSA's surveys show that
callers prefer to use the telephone for more of their business.  In
our opinion, SSA needs to assess its existing service delivery
structure, including its network of field offices and teleservice
centers.  Based on its findings, SSA may need to restructure how it
does business to take advantage of new technologies and
cost-effectively meet changing customer preferences. 


      KEY CONTACTS
------------------------------------------------------- Appendix 1:0.5

Gloria L.  Jarmon, Director
Health, Education, and Human Services  Accounting and Financial
Management
 Issues
Accounting and Information Management
 Division
(202) 512-4476
[email protected]

Joel C.  Willemssen, Director
Civil Agencies Information Systems
Accounting and Information Management
 Division
(202) 512-6408
[email protected]


RELATED GAO PRODUCTS
=========================================================== Appendix 2

SSA PERFORMANCE AND MANAGEMENT
CHALLENGES

SSA's Management Challenges:  Strong Leadership Needed to Turn Plans
Into Timely, Meaningful Action (GAO/T-HEHS-98-113, Mar.  12, 1998). 

Social Security Administration:  Significant Challenges Await New
Commissioner (GAO/HEHS-97-53, Feb.  20, 1997). 

Social Security Administration:  Effective Leadership Needed to Meet
Daunting Challenges (GAO/HEHS-96-196, Sept.  12, 1996). 

Social Security Administration:  Leadership Challenges Accompany
Transition to an Independent Agency (GAO/HEHS-95-59, Feb.  15, 1995). 

SUPPLEMENTAL SECURITY INCOME
PROGRAM

Supplemental Security Income:  Action Needed on Long-Standing
Problems Affecting Program Integrity (GAO/HEHS-98-158, Sept.  14,
1998). 

Supplemental Security Income:  Opportunities Exist for Improving
Payment Accuracy (GAO/HEHS-98-75, Mar.  27, 1998). 

Supplemental Security Income:  Long-Standing Problems Put Program at
Risk for Fraud, Waste, and Abuse (GAO/T-HEHS-97-88, Mar.  4, 1997). 

High Risk Series:  An Overview (GAO/HR-97-1, Feb.  1997). 

Supplemental Security Income:  Administrative and Program Savings
Possible by Directly Accessing State Data (GAO/HEHS-96-163, Aug.  29,
1996). 

SOCIAL SECURITY DISABILITY
PROGRAMS

Social Security Disability:  SSA Must Hold Itself Accountable for
Continued Improvement in Decisionmaking (GAO/HEHS-97-102, Aug.  12,
1997). 

Social Security Disability:  Improving Return-to-Work Outcomes
Important, but Trade-offs and Challenges Exist (GAO/T-HEHS-97-186,
July 23, 1997). 

Social Security:  Disability Programs Lag in Promoting Return to Work
(GAO/HEHS-97-46, Mar.  17, 1997). 

SSA Disability Redesign:  Focus Needed on Initiatives Most Crucial to
Reducing Costs and Time (GAO/HEHS-97-20, Dec.  20, 1996). 

SSA Disability:  Program Redesign Necessary to Encourage Return to
Work (GAO/HEHS-96-62, Apr.  24, 1996). 

INFORMATION TECHNOLOGY

Information Security:  Serious Weaknesses Place Critical Federal
Operations and Assets at Risk (GAO/AIMD-98-92, Sept.  23, 1998). 

Social Security Administration:  Subcommittee Questions Concerning
Information Technology Challenges Facing the Commissioner
(GAO/AIMD-98-235R, July 10, 1998). 

Social Security Administration:  Technical and Performance Challenges
Threaten Progress of Modernization (GAO/AIMD-98-136, June 19, 1998). 

Year 2000 Computing Crisis:  Continuing Risks of Disruption to Social
Security, Medicare, and Treasury Programs (GAO/T-AIMD-98-161, May 7,
1998). 

Social Security Administration:  Significant Progress Made in Year
2000 Effort, but Key Risks Remain (GAO/AIMD-98-6, Oct.  22, 1997). 


PERFORMANCE AND ACCOUNTABILITY
SERIES
=========================================================== Appendix 3

Major Management Challenges and Program Risks:  A Governmentwide
Perspective (GAO/OCG-99-1)

Major Management Challenges and Program Risks:  Department of
Agriculture (GAO/OCG-99-2)

Major Management Challenges and Program Risks:  Department of
Commerce (GAO/OCG-99-3)

Major Management Challenges and Program Risks:  Department of Defense
(GAO/OCG-99-4)

Major Management Challenges and Program Risks:  Department of
Education (GAO/OCG-99-5)

Major Management Challenges and Program Risks:  Department of Energy
(GAO/OCG-99-6)

Major Management Challenges and Program Risks:  Department of Health
and Human Services (GAO/OCG-99-7)

Major Management Challenges and Program Risks:  Department of Housing
and Urban Development (GAO/OCG-99-8)

Major Management Challenges and Program Risks:  Department of the
Interior (GAO/OCG-99-9)

Major Management Challenges and Program Risks:  Department of Justice
(GAO/OCG-99-10)

Major Management Challenges and Program Risks:  Department of Labor
(GAO/OCG-99-11)

Major Management Challenges and Program Risks:  Department of State
(GAO/OCG-99-12)

Major Management Challenges and Program Risks:  Department of
Transportation (GAO/OCG-99-13)

Major Management Challenges and Program Risks:  Department of the
Treasury (GAO/OCG-99-14)

Major Management Challenges and Program Risks:  Department of
Veterans Affairs (GAO/OCG-99-15)

Major Management Challenges and Program Risks:  Agency for
International Development (GAO/OCG-99-16)

Major Management Challenges and Program Risks:  Environmental
Protection Agency (GAO/OCG-99-17)

Major Management Challenges and Program Risks:  National Aeronautics
and Space Administration (GAO/OCG-99-18)

Major Management Challenges and Program Risks:  Nuclear Regulatory
Commission (GAO/OCG-99-19)

Major Management Challenges and Program Risks:  Social Security
Administration (GAO/OCG-99-20)

Major Management Challenges and Program Risks:  U.S.  Postal Service
(GAO/OCG-99-21)

High-Risk Series:  An Update (GAO/HR-99-1)


The entire series of 21 performance and accountability reports and
the high-risk series update can be ordered by using the order number
GAO/OCG-99-22SET. 


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