Federal Computers: Is System Haywire?

By RALPH VARTABEDIAN

Dec. 8, 1996 12 AM PT

TIMES STAFF WRITER

WASHINGTON —

After pumping $300 billion into computer systems in the last two decades, the federal government has compiled a record of failure that has jeopardized the nation’s welfare, eroded public safety and squandered untold billions of dollars.

While most of America is rushing headlong into 21st century information technology, much of the government is operating with computers designed and built when Studebaker was making cars. The government’s 1960s-era computer systems--as well as those from the 1970s and 1980s--are generally antiquated, unreliable, inefficient, error-prone and expensive.

At a time when many Americans communicate by e-mail, government agencies fly magnetic tapes around the country. At a time when microprocessor designs are updated every six months, the government uses computers with vacuum tubes. At a time when corporations can deliver a product overnight to a customer across the nation, the government can take six months to execute a simple administrative task.

Every taxpayer pays a share of the price for the government’s outdated technology. But some individuals, such as Cathy Sandez of Fontana, Calif., are random victims.

Sandez, who has multiple sclerosis, was denied Social Security disability benefits for four years because the agency’s computer had misplaced her earnings records. As a result, she lost her home and car and accumulated $60,000 in medical debts.

Sandez is not the only poor soul wandering in the Social Security Administration’s electronic lost and found. Altogether, the agency’s computers are unable to match $234 billion in wages to the individuals who earned them, according to an internal agency report obtained by The Times. And the Social Security Administration is widely regarded as one of the best federal agencies at information technology and computer modernization.

The scope of the government’s failure to adopt modern technology is poorly understood because it is so big and so spread out. Spawned by convoluted federal regulations and poor planning, the failure has over the last two decades extended to virtually every federal agency, court and office of Congress.

Although senior government leaders acknowledge that their information technology has gone badly off track, there are indeed areas of excellence. In battle management at the Pentagon, aerodynamic simulation at NASA and nuclear bomb design at federal labs, the government has demonstrated it can develop leading-edge systems.

Information technology often tests the mettle of private corporations as well, but on balance the government’s record stands out as poor, particularly in business systems that affect the public at large.

The consequences range from minor irritation to outright devastation. Services that the public expects to receive are not delivered or are performed incompetently. Government agencies depend on clerks to perform administrative tasks that private businesses have automated.

Lack of modern technology can make getting a reservation for a hotel or a campground at a national park a frustration. It allows millions of tax cheats to escape detection, thereby raising taxes for everybody else. It hamstrings federal law enforcement agencies in tracking down the 400,000 fugitives who prowl the streets and in stopping the influx of narcotics across the border.

At the extreme, public safety is jeopardized and lives are at risk. At least three airliner accidents may have been prevented had the Federal Aviation Administration not fallen behind schedule in planned modernization of air traffic control equipment, experts say. Poor weather forecasts during the 1993 Mississippi River floods, blamed in part on outdated National Weather Service technology, left some communities exposed to avoidable death and destruction.

In the broadest sense, the failures have undermined the federal government’s role as a provider of public services.

Few aspects of government have shaped public perception more in the last two decades than federal inefficiencies that result from not having modern information technology. Software codes and silicon chips determine in large part how well the government spends its $1.6-trillion annual budget.

“A lot of the cause of the public’s lack of confidence in the government is the inability of the government to perform,” said Steven Kelman, a Harvard University professor on leave, who is spearheading the Clinton administration’s reform efforts as administrator for federal procurement policy.

He says the political movement to reduce the federal government--to reassign some tasks to states and others to the private sector--reflects the public’s frustration in its day-to-day contacts with the government.

Kelman admits that, judged by his own contacts with the Internal Revenue Service and the State Department’s passport office, some agencies’ ability to operate in the modern era is “really pathetic.”

The problem is certainly not a lack of resources. By its own estimates, the government spends $27 billion annually on information technology, more than double the amount it spent 10 years ago. The Electronic Industries Assn. puts the figure even higher--about $32 billion annually, with an additional $14 billion for information technology embedded in weapons systems.

Much of the money, however, goes to nurse existing equipment rather than replace outdated systems. New equipment and software account for less than one-fourth of total information technology spending.

Why so much has gone so wrong for so long could fill an encyclopedia.

Some federal agencies have attempted computer modernization so complex that it has taken as long as 15 years to complete. The systems are obsolete from the moment they are turned on.

Others have embarked on multimillion-dollar modernization efforts so poorly planned that they are destined to fail, according to General Accounting Office experts. Then, when they start over again, they are even further behind technologically.

The government has been hampered by cumbersome procurement regulations. By the time agencies seeking new computers jump through the necessary hoops, the computers are not so new anymore.

Political appointees come and go, typically in a few years; they focus on short-term goals and pay scant attention to technology modernization. That job is left to the career Civil Service, but the best career executives in technology flee the government, lured by higher pay and fewer frustrations in the private sector.

“It is a sorry litany of errors that would not be tolerated in private business,” said Paul A. Strassmann, an author and former chief information officer at Xerox Corp., Kraft Foods Inc., General Foods and the Defense Department. “You are talking about big bucks and a big monster.”

Burdened by a long legacy of bad management practices and poor organization, agencies frequently respond by throwing computers at their problems, failing to rethink how they operate so that technology can make a difference, Strassmann said. The problem is compounded by political interference when Congress and labor unions attempt to protect patronage jobs and block major reorganizations.

“There are many sad stories,” said Linda Renfro, president of Lockheed Martin Information Support Services, one of the government’s largest information technology suppliers. “In fact, there are more sad stories than good stories.”

Social Security

The Social Security Administration shows the extremes of information technology success and failure throughout the federal government.

The agency has won plaudits in recent years for its customer-friendly operations and for its robust online data-retrieval system. In an examination of the quality of toll-free customer-service operations, the agency was recently ranked first, outperforming L.L. Bean, the catalog-shopping company.

But beneath the surface, agency critics say, it is concealing some serious problems. Indeed, the SSA recently disclosed to The Times that a software glitch had resulted in 700,000 retirees being shortchanged $850 million, a far worse problem than expected when the issue first surfaced two years ago. The agency has promised to rectify the problem as quickly as possible, but it may take a year or more.

The problem affecting Sandez, the Fontana woman with multiple sclerosis, involves employers’ wage reports that the agency cannot match with individuals in its computer files.

After she became disabled in 1992 and was no longer able to work, the agency told her it had no record that she had ever earned any money or paid Social Security.

In fact, she had worked two full-time jobs, as a laboratory technician and a real estate broker--earning nearly $100,000 a year along with her husband, a truck driver. For reasons that are still unclear, her records were mistakenly squirreled away in what the agency calls its “suspense file,” sort of an electronic lost and found.

The agency rejected Sandez’s applications for disability benefits three times before discovering its errors earlier this year. Even then, it refused to make full restitution, and Sandez has been forced to appeal in court.

“I feel as though the government was responsible for ruining a good part of my life,” Sandez, a mother of three, said recently from her hospital bed. “We are struggling on a month-to-month basis, where I should not have to. It is my own money. I paid into Social Security.”

Rep. George E. Brown Jr. (D-San Bernardino) has quietly spearheaded efforts to determine why the SSA is not moving to resolve the $234 billion in unmatched earnings. Brown says the agency is making little effort to fix the problem, based on what he calls the mistaken assumption that illegal immigrants with phony Social Security numbers are causing the snafu.

The internal agency report, issued in September, failed to identify the causes of the problem. The report found that about 1.5% of annual earnings reported to Social Security end up in the suspense file because the Social Security number and the name submitted with individual earnings do not correspond with the agency’s electronic files. (Retiree benefits are computed from their lifetime earnings history kept on file at the agency’s computer complex in suburban Baltimore.)

Although the number of mismatched wage reports is declining, the dollar amount has increased sharply in recent years.

The report casts blame all around: on the agency for failing to staunch the ever-growing size of the suspense file, and on individual workers and on employers for reporting improper names or mistaken Social Security numbers.

Phil Gambino, a Social Security spokesman, notes that the suspense file represents 0.5% of the $44 trillion properly posted to individual accounts since 1937. “The agency goes to great extremes to not place items into suspense,” he said.

He denies Brown’s charge that the agency takes a lax view of the problem, adding that it goes through 13 steps to examine wage reports that do not initially match before sending them to the suspense file.

But an agency insider who requested anonymity said the SSA is doing little to rectify the decades of accumulated mismatches that, like time bombs, are ready to blow up in the faces of hundreds of thousands of new applicants for benefits. A large number of the cases involve women who changed their names when they married and citizens who have Asian and Latino surnames.

“It makes me sick that for all these years we have allowed people to sit there and not get the benefits they deserve,” the executive said. “We don’t have the ability to face up to this problem.”

The impact is particularly acute in California, which accounts for 35% of the mismatched earnings, according to the report. It does not attempt to explain why, though the state’s big service and agriculture industries are related to the problem.

Air Safety

Few agencies have greater daily impact on public welfare and safety than the Federal Aviation Administration, which also has one of the longest and most costly records of computer failure in the government.

The FAA began its planned $2.5-billion modernization of the air traffic control system in 1981, shortly after President Reagan fired 11,000 striking air traffic controllers. The price tag grew to more than $7 billion, and large portions of the program were canceled at a cost of hundreds of millions of dollars.

Today, much of the 1960s-era equipment is still in use, some of it using vacuum tubes so outdated that replacements must be imported from Poland. The equipment is subject to frequent breakdowns that are eroding controllers’ morale and effectiveness, according to Mike McNally, executive vice president of the National Air Traffic Controllers Assn.

Last year, for instance, the air route center in Oakland simultaneously experienced a computer outage that left radar screens blank and a telecommunications failure that left phones dead, McNally said. Controllers ran out to their cars and grabbed cellular phones to call nearby control centers to report the last known locations of the planes under their control, he said. Major outages hit FAA facilities about 12 times per year, he added, and serious outages are increasing.

Buttressing its need for modern technology, the FAA is managing 35% more traffic than in 1981 with 14,400 controllers, 2,000 fewer than were on the job that year, McNally said. “There is technology that can enhance safety,” he added.

After cutting the ranks of its own technicians in half, the agency is increasingly turning to private electronic service contractors to maintain old equipment, according to Jack Johnson, president of the Professional Airways System Specialists, the union that represents technicians.

Johnson said the FAA was following the same course as Valujet, which it grounded earlier this year after it concluded that its excess use of outside contractors had jeopardized safety. “It is directly analogous,” he said. “The FAA is losing its in-house expertise.”

FAA officials, while acknowledging that the modernization went badly in the past, say the program is moving along well under a revised schedule. Starting in late 1997, controllers will finally get new display screens, which were part of the plan in 1981.

“The agency is confident that it has adequate resources to meet current airspace needs,” an FAA official said. “The FAA has plans underway to increase the work force by 500 in fiscal 1997 to meet future needs.”

FAA officials insist that the existing system is safe, noting that near-midair-collision reports have declined. They add that no accident has been caused by its old equipment. But the question of whether new equipment may have averted disasters is a far different issue that is seldom examined.

Air safety experts say at least three accidents in recent years could have been prevented had the FAA modernized its ground and weather radar systems as originally scheduled.

Those accidents were the 1990 collision of two Northwest Airlines jets on a Detroit runway, the collision of a USAir 737 with a Skywest commuter plane at Los Angeles International Airport in 1991 and the crash of a USAir DC-9 in a thunderstorm near Charlotte, N.C., in 1994.

Although the National Transportation Safety Board blamed human error for the accidents, its reports also noted that improved ground control and weather radar that had been scheduled for installation was late.

Jim Burnett, former chairman of the NTSB, said the Detroit and Los Angeles accidents could have been prevented with a new generation of ground radar equipment that was long delayed.

“The failure to implement advanced systems has caused accidents,” said Burnett, now a private aviation consultant and attorney. “It is related to the inability of the FAA to modernize its technology.”

C.O. Miller, former chief of the aviation safety bureau at the NTSB, said implicit in the Charlotte accident was the inability of existing FAA systems to get crucial weather information to the crew.

Newer systems scheduled for installation could have made a difference in Charlotte, but in many cases the FAA lacks even contemporary technology, let alone advanced technology, he said.

“The FAA has dragged its feet, whether you are talking about weather, wind shear, ground radar or anything else,” he said.

In the case of the LAX accident, airport managers had written repeatedly for 10 years to FAA officials in Washington, including just four days before the USAir-Skywest accident, asking that replacement of a failure-prone ground radar get top priority, according to the NTSB accident report.

A new generation of radar to help controllers track aircraft on the ground was behind schedule at the time of the accident. It was installed at LAX last year.

Neil Planzer, the FAA’s director for air traffic system requirements, flatly rejected the idea that faster progress in replacing computers and radars would have prevented accidents.

“Technology was not the cause in any of those accidents,” Planzer said. “It is still the human decisions that caused them. If I thought that adding a new computer would prevent a Charlotte accident, I would add a computer at every center.”

Planzer said blaming obsolete technology for aviation accidents is misleading and unfair. Today’s system, he said, can operate safely “with a radio and a map,” though at a degraded level of efficiency.

Even if Planzer is right, the toll on American consumers is high. Flight delays that were attributed to the antiquated air traffic control system rose 19% in the first nine months of 1996, compared to the same period in 1995, according to FAA data. Delays, which include only those 15 minutes or longer, are running at a rate of a quarter million per year.

The annual cost to the industry of air traffic control system delays--not including the value of the time lost by passengers--is $3.5 billion, according to Jack Ryan, vice president for air traffic issues at the Air Transport Assn.

Multitude of Sins

For every computer problem that is easy to see, there are others where the evidence is hidden and difficult to measure.

Diplomats at 250 U.S. embassies and other offices around the world, for example, write documents on an obsolete Wang word-processing system installed in the early 1980s and prone to failure.

In 1994, the Bureau of Near Eastern Affairs was preparing briefings for Secretary of State Warren Christopher for Middle East peace talks when its Wang system crashed and was out of commission for five out of 10 days before the negotiations, according to State Department officials.

Would Christopher have secured Middle East peace if the Wangs had not failed? Of course not, but the effectiveness of diplomats is clearly compromised when their information systems fail. After all, a senior career officer noted, diplomacy involves only two elements: information and people.

Despite that, senior diplomats seldom pay attention to anything so mundane as technology management.

“At State, the leaders could care less how the department is run,” the senior official said. The department’s highest-ranking executive for management is four levels down from Christopher.

Elsewhere in the government, instances abound of computer modernization gone awry:

* The FBI has fallen behind many state governments in building a modern system using computers to identify fingerprints. Although an automated FBI fingerprint identification system was first proposed in the early 1980s, a contract for the $520-million system was not awarded until this year. And while California and other states are moving toward storing and transmitting mug shots electronically, the FBI has not even started such a program.

* The National Weather Service is using a 26-year-old weather data processing system after stalling on a $4.6-billion modernization program. Although the public is getting more accurate forecasts thanks to improvements in meteorology, the old systems at 256 service centers “are deteriorating and approaching the end of their useful life,” according to a National Research Council report. “Parts are no longer in production and test equipment no longer available for these 1970-vintage computers and displays.” But one element of the modernized system, the Automated Surface Observing System, used at airports, has already come under sharp criticism for its frequent failures.

* The GAO warned several months ago that the Customs Service “risks wasting hundreds of millions of dollars” on a new computer system for trade and duty processing. The system was ordered before the agency had completed a major reorganization that could render parts of the new system obsolete.

* At the White House, a computer modernization program has stalled. Congress blocked funding this year for the new computer until the White House submits an overall plan for the modernization program, which the White House promised to deliver two years ago.

* The Department of Veterans Affairs has spent an estimated $294 million on modernizing inefficient computer systems since 1986 without, in many cases, showing any improvement in services to veterans. In 1990, for example, the VA took 151 days to process a typical benefits claim. By March 1996, the average time rose to 156 days.

* The Health Care Financing Administration, which runs the Medicare program, has mistakenly paid out more than $1 billion for services that were covered by other insurers, in large part because of inadequate computer cross-checking, according to a 1994 Senate report. Because of weak computer controls, outright fraud in all federal health programs is a much larger problem--an estimated $100 billion annually, according to the Senate report.

One common pitfall at these and other agencies is that they attempt to modernize their information technology in one giant leap with systems that can take 10 to 15 years for an outside contractor to develop.

“It flat out does not work,” said Robert A. Dornan, an analyst at Federal Sources Inc., a McLean, Va., market research firm. “The government would be hard pressed to show one example of such a system working.”

Defense Procurement

Ironically, the seeds of the computer revolution were planted by the federal government itself, starting in the 1940s and 1950s, when the Pentagon managed the development of high-speed computational systems that would help target weapons.

By the 1960s, federal agencies were leaping into information technology, often ordering equipment that was ahead of private industry. The effort has stalled since then, and many agencies still depend on systems that seemed so advanced in the 1960s.

While the Defense Department is given high marks for much of its technology work--particularly in the area of military command and control--it also has notable problems in its ordinary business systems, including those at the Defense Finance and Accounting Service.

The agency, operating in a decrepit, World War II-vintage military hangar near Columbus, Ohio, uses a 1968 computer system to track and pay out roughly $65 billion annually to defense contractors. A planned replacement will not be available until after 2000. Meanwhile, operations in the hangar involve a sea of paper, stored in boxes on the floor.

“It is a horrible place to do business,” acknowledged Richard Keevey, the agency’s director, who inherited the mess when he was hired from the New Jersey state government to drag the agency into the modern era.

GAO audits found that in 1993 the Columbus center paid out more than $592 million to defense firms that was later returned by the contractors because it was simply not owed. In 1996, another $184 million was paid mistakenly and later returned.

“The obvious question is whether there is more money out there they haven’t returned,” Keevey said. “Nobody can answer that question.”

Indeed, the agency made $21.8 billion in payments in a recent three-month period to defense contractors, even though it could not match the payments against invoices. Although Keevey says those were virtually all legitimate payments and represent a sharp reduction from the $51-billion level three years ago, they indicate weak accounting practices. He acknowledges that his operation cannot produce a clean financial statement that would stand up to an audit.

The agency is moving toward a system of checking invoices and accounting records before making payments to defense contractors, but that precaution has spawned yet another problem: late payments.

Under federal law, the Pentagon must pay interest on bills left unpaid for 30 days or more. As a result of the more lengthy accounting checks, the agency’s interest costs have more than doubled in the last two years to $14.4 million in fiscal 1996.

Emmett Paige Jr., assistant secretary of Defense and the department’s chief information officer, flatly rejects the suggestion that the Pentagon is technologically incompetent compared with the private sector.

“Hell no,” Paige said. “In general, we are ahead of the private sector.” But despite the Pentagon’s many successes, Paige acknowledged that the situation in Columbus “represents a failure.”

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About This Series

Beginning today, The Times begins a three-part series examining the long history of failure in the federal government’s information technology programs. Government operations generally depend on computers and software systems purchased in the 1960s that are badly antiquated by today’s standards and seriously undermine government efficiency.

TODAY: The $300-billion investment in information technology that has flopped, jeopardizing the nation’s welfare, eroding public safety and squandering untold billions of dollars. The problems extend to virtually every agency, court and the Congress.

MONDAY: The Internal Revenue Service’s troubled attempts to modernize its computer systems, which have led to the expenditure of $4 billion with marginal results so far in the agency’s ability to track down tax cheats. Another organization, the Defense Mapping Agency, spent a decade to develop a $2.6-billion computer system that was obsolete by the time it was completed.

TUESDAY: The intensive effort to reform the system, which includes four major pieces of legislation enacted to streamline cumbersome federal regulations and raise the priority of information technology in the government.

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Glitches in the System

A sample of the federal government’s computer problems:

Internal Revenue Service

* Problem: Existing system largely based on paper submissions by taxpayers that must be manually inspected and then key-punched into mainframes that operate on 30-year-old software.

* Consequences: IRS is unable to enforce strict tax compliance, missing an estimated $170 billion in annual tax collections. Congress has sharply cut back the IRS budget for modernizing its computer system, saying the agency’s effort has been a failure so far even after spending $4 billion.

****

Defense Finance and Accounting Service

* Problem: Existing computer system used to pay out $65 billion annually to contractors dates back to 1968 and operates largely on the basis of paper invoices submitted by contractors.

* Consequences: Defense contractors received more than $800 million in payments that they didn’t deserve and had to return the money. Whether other overpayments were made and not returned is unknown.

****

Social Security Administration

* Problem: Computer system requires a match of the full name and Social Security number of individuals to post their contributions to retirement accounts. A mismatch in spelling, spacing or numbers can cause the contribution to be routed to a lost and found data bank, if clerks cannot fix the problem.

* Consequences: The Social Security Administration has $217.5 billion in contributions that it cannot track to individuals. Individuals must go through years of battles to get benefits for which they qualify and in some cases benefits are never paid to individuals.

****

Veterans Administration

* Problem: After years of suffering a reputation for being slow in paying disability benefits, the Veterans Administration invested $291 million in a new computer system to improve its response time.

* Consequences: Despite the investment in new technology, the agency actually increased the amount of time required to pay off a legitimate disability claim_going from 151 days in 1990 to 156 days in 1996.

****

Energy Department

* Problem: The agency has primary responsibility for tracking U.S. plutonium and uranium inventories, but its new computerized accounting system has been subject to serious software development and testing problems.

* Consequences: Although the Energy Department says it has full knowledge of the location of all U.S. nuclear materials, experts at the General Accounting Office say the accounting system has so many problems that the Energy Department cannot be sure of its accounting records.

****

National Weather Service

* Problem: The National Weather Service is using a 26-year-old weather data processing system that is deteriorating and without a ready supply of spare parts. A $4.6-billion program to modernize the weather service technology has stalled with serious problems, including defects in the Automated Surface Observing System.

* Consequences: Weather forecasts for the general public, agri-business and aviation are not as prompt or complete as would be the case with better technology. The service has been criticized for poor forecasts of the storms leading up to the destructive 1993 Mississippi River floods.

****

Federal Aviation Administration

* Problem: After failing to execute an ambitious modernization program for its air traffic control system, the agency is using 1960s-era computers and displays to handle an increasing amount of air traffic.

* Consequences: Although the old equipment has not caused any known accidents, experts say the more modern equipment would have prevented at least three major air disasters in recent years and would sharply reduce delays that cost the airline industry $3.5 billion annually.

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Where the Money Goes

In the 1960s, the federal government exerted massive influence in the computer industry, accounting for 62% of all computer sales. Today, the federal share of the computer market has dropped to just 3.5%. Still, the federal government as a whole represents the world’s largest single buyer of information technology. A breakdown of the government’s annual spending of more than $27 billion shows virtually every major government agency is a big computer spender:

Federal agency: Amount expected to be spent on computers in fiscal 1997, in billions

Health and Human Services: $2.50

Air Force: $2.45

Treasury Department: $2.07

Navy: $2.05

Army: $1.90

Transportation Department: $1.82

Energy Department: $1.53

National Aeronautics and Space Administration: $1.44

Agriculture Department: $1.39

Justice Department: $1.12

Veterans Administration: $.782