Scream Savers
Technology is saving taxpayers time and money

Vacuum Tubes and Carbon Paper

Government is a latecomer to the information revolution. While corporate employees were using the latest high-tech tools, government employees were still using carbon paper. Because of complicated procurement procedures, even the computers government uses are often obsolete. The Federal Aviation Administration (FAA), for example, is still struggling to control air traffic with 30-year-old equipment dependent upon vacuum tubes.

Things got so bad that Congress passed a law exempting FAA from all the procurement rules. This is allowing FAA to work with industry to replace this obsolete air traffic control equipment with new video displays and computers.

It's been a different story in industry. Business discovered early on that access to information allows employees to work smarter. This has contributed to an enormous increase in innovation, productivity, and energy in corporations worldwide. Business has been able to reach new customers and markets and to develop a whole generation of new products -- products that are customized to individual needs and delivered electronically.

Making Information Technology Pay

The potential payoff from information technology is huge, but not automatic. The private sector has made effective use of technology by following three principles:
  • Don't automate the old process; reengineer. The new technologies bring on new possibilities, like putting services on the World Wide Web and letting customers get them when they want.
  • Buy a little, test a little, fix a little. A key difference between federal and private-sector information technology purchases is that the private sector buys things more quickly and in more manageable units. Government often tries to buy huge systems. These systems take so long to acquire that the technology and the managers have both changed before anything is delivered.
  • Buy commercial. Commercial products and services provide wide variety and capability, and new ones are added every day. It almost always makes sense to sacrifice the "bells and whistles" to buy something that costs less and has been thoroughly tested.

Reinvention Zone Interview

Swiping Stamps

Consider the case of Jack Radzikowski, head of the Federal Financial Systems Branch, Office of Management and Budget (OMB), and former director of the Vice President's EBT Task Force. He has unleashed information technology to save money and cut fraud in the food stamp program.

Q:How does the food stamp program work?
A: About 9.5 million households receive food stamps totaling $24 billion per year. The federal government prints this "private money" and ships it under armed guard to regional centers. Then it goes to the states, and they distribute it to families. After use, it has to be collected, counted and re-counted, and finally burned. All this costs over $70 million a year.

There's also fraud. Coupon books are sold on the street for half of their face value, and sometimes that money is used to buy illegal drugs.

Otherwise, food stamps work great.

Q:What does the Electronic Benefits Transfer (EBT)program change?
A: Just about everything. Eligible households receive an EBT card. It looks like a credit card. The EBT card is "swiped" through the same point of service (POS) machine at the food store that takes credit and debit cards. The whole transaction is recorded instantaneously. There is limited potential for fraud.

Q:How did the EBT revolution begin?
A: First, the private sector and states created an EBT Council composed of the major stakeholders in the POS system: the banking system, the state benefits people, and the grocery store associations. They helped make the key decision -- the EBT system would be compatible with private-sector POS standards.

Then, individual states or multi-state "buying clubs" put EBT contracts out for bid to banking and other transaction systems. The "buying clubs" share services, creating higher volumes to drive down costs.

Q:And now?
A: In the summer of 1997, seven states have fully operational EBT systems. Fifteen more states have partial systems, and all the rest are in the process of acquiring a card issuer. Our goal is to cut costs and reduce fraud. We expect to have all the states on EBT by the end of 1999.

Q:What about food stores without POS?
A: We are convinced that if food stamp program recipients use only EBT cards, then stores who want their business will get wired for POS. So EBT is encouraging the "wiring of America." By the way, EBT users will look like any other consumer using a card at a POS machine. That is an enormous plus.

Q:What are your cost data so far?
A: Monthly costs per EBT card user are hovering around $1 versus $3 to $4 in the food stamp system. If more benefit programs are provided on EBT cards -- like social security, veterans, railroad retirement, and state benefit programs -- we could save somewhere between $200 million and a quarter billion dollars a year, every year. And at last state and federal benefit programs will be able to monitor cash flow on a daily basis and track where their dollars are going.

In addition, the EBT card might serve as an account for indigent people without a bank, providing a safe way to receive funds and benefits.

Q:Is EBT a federal system?
A: EBT is not a federal system. The federal government sends the benefit dollars electronically to the states, and that's about it. The states contract with a card issuer who designs and distributes the EBT card. In addition, the states decide what other benefits it will provide in addition to food stamps.

Q:Any final comments?
A: Just one. I want to thank the private sector for designing such a wonderful, cost-effective public-sector benefits distribution system.I'm only partly kidding. They were smart enough to design the optimum transaction system in the heat of the marketplace. We were smart enough to see POS could provide something beyond credit or debit services.

We were both smart enough to see that we could and should work together in partnership.

Tales From the Reinvention Zone

Beating Computer Swords into Corporate Shares
Sandia National Laboratories in Albuquerque has partnered with Goodyear to design safer tires.

Sandia National Laboratories, a part of the Department of Energy, designs and tests nuclear weapons using a computer. Obviously, that takes a world-class computer. Sandia's computer is 300 times faster than IBM's "Deep Blue," the chess champion.

Goodyear is the only remaining U.S.-owned original equipment tire manufacturer. In 1992, Loren Miller, Goodyear's director of performance modeling, read a Sandia research paper on computer modeling. Intrigued, he called Sandia.

Miller was astonished. "Sandia's computer can model all kinds of conditions for nuclear weapons -- rain, heat, freezing, collisions, and so on. These same things happen to tires. In fact, modeling tire performance is one of the most challenging problems in computational physics. We got together, and Sandia found the job tough enough to be interesting."

Having proved "tough enough," Goodyear began collaborating with Sandia. "Sandia-based models have changed the way we design and test. Tires perform on the test track exactly as the computer predicted. This could really reduce the time and money required to design and test tires," says Miller.

"Sandia has started similar research partnerships with other corporations for a total of $42 million in 1997, and we hope to exceed $100 million by 2000," says Dan Hartley, Sandia's Vice President for Partnership. Other Department of Energy labs, including Los Alamos, are also applying their highly sophisticated computer and engineering skills in joint research projects with the private sector.

Businesses can now obtain most government information from a single source.

A common complaint about government is that people have to go door to door to door for the information they need. For business the problem was acute: 40 different agencies regulate or provide services to business. The Small Business Administration, with the help of a number of agencies, came up with a solution.

Business now has a new one-stop electronic department store: the U.S. Business Advisor at on the World Wide Web. Originally shown by President Clinton at the White House Conference on Small Business in 1995, this product was designed and redesigned based on reactions from business people who tried it. They loved the idea of one electronic stop, but wanted to change just about everything else. So we did.

The new advisor, released this spring, lets businesses search 106,000 federal World Wide Web addresses for information by typing in simple English questions. The advisor answers in seconds with key passages highlighted.

The site provides answers to commonly asked questions on topics including payroll, taxes, exports, labor, employment, business software, benefits, and venture capital. It offers the capacity to download most forms related to business. It also links the user to specific federal agency home pages. For example, the Small Business Administration put its fast-track loan applications online to be filled out and submitted electronically.

The U.S. Business Advisor levels the playing field by giving small firms the same access to government information and contracts as a major corporation with its large resources. It is an invaluable time- and cost-saving tool for all companies.

Over 400,000 companies used the service in its first two months of operation. Eighty-nine percent said the U.S. Business Advisor "makes it easier for us to do business with the government."

Online, Not In Line

There is finally an easy way to find federal statistics -- without having to know in advance which department produces the data.

FedStats is another window into the federal government -- in this case into the wealth of statistical information the government collects. The Web site ( uses the Internet's powerful link and search capabilities to bring users information from some 70 federal agencies.

The service features an A-to-Z index, a keyword search capability, and a "Fastfacts" link, as well as a host of data listed by topic, region, program, and department. It also links up to sources of international statistics.

Sally Katzen, head of the Office of Information and Regulatory Affairs, described FedStats' significance this way: "Today a high school student in Boise, Idaho, has better access to federal statistics than top officials in Washington had five years ago."

Miracles at MEDLINE

The National Institutes of Health (NIH) free Medline service -- -- is invaluable to physicians and patients.

In June 1997, Vice President Gore announced free online access to the NIH/National Library of Medicine's MEDLINE, the world's largest source of published medical information. Previously, users had to register and pay to search these important online research archives.

Even when it was a for-fee service, Medline created miracles:

  • A Maryland woman who'd had several miscarriages consulted MEDLINE, found a treatment, and carried a baby successfully to term.
  • A Virginia couple's six-month search of medical literature resulted in treatment for their son's rare inherited disease -- a search that became famous in the movie Lorenzo's Oil.

A free Medline is particularly valuable to smaller companies that previously had to limit their searches due to cost. They can now conduct wide-ranging medical literature searches, producing more innovation faster and at lower cost. But most of all, a free Medline enables individual citizens to take charge of their health.

Look For Medicare Under "H"

The General Services Administration is bringing common sense to the phone directory.

Americans turn to the blue pages 81 million times a year to look up a phone number for the federal government. Half the time they find it; the other half they give up in frustration. After all, who would guess that Medicare is listed under "H" -- for Department of Health and Human Services?

Working in partnership with Ameritech, Bell Atlantic, Pacific Telephone, and Sprint, the General Services Administration is making the blue pages more sensible. This consortium has already revamped the blue pages that serve 111 million Americans, with the rest to be fixed in the next year. The new blue pages are modeled after the yellow pages. They are arranged by service, not by organization, in big type and cross-referenced with fax numbers and Internet addresses.

No Inventory--Just Like Home Depot

Patients get fresher supplies faster.

When the Departments of Defense and Veterans Affairs wanted to streamline their practices for distributing pharmaceuticals and medical supplies, they didn't attempt to automate old process. They sent their managers to look at the commercial health care industry. They got an eyeful.

The health care industry used a just-in-time distribution system. It contracted with manufacturers and wholesale distributors to deliver products on demand. By contrast, the government had medical depots spread across the country. Central buyers ordered supplies for the depots, then a costly delivery system shipped stock to the users. Government workers hustled to make sure the oldest inventory was shipped -- unless its shelf life had run out, in which case they threw it out and shipped the newer stock.

Defense and VA both reengineered. They got rid of most of the depot system, replacing it with contracts that guarantee one-day delivery of medical items through local distributors, at government (i.e., low) prices. Hospitals order direct from the vendors electronically -- just like Home Depot does.

At Defense alone, inventory has been slashed, and costs have been cut by $680 million. Customer service has improved as well, with 166,000 items available compared to 15,000 in the old depot system.

"Our traditional system was too slow and too expensive. We took most of what we had learned about logistics over the past 20 years and threw it out the window. Then we did what made good business sense for our customers --relied on the U.S. industrial base," says Sally Bird, Deputy Director, Medical Materiel, Defense Personnel Support Center.

Says Milt Minor, National Director of Government Services, McKesson Health Systems, "This is a government/industry partnership that has helped Defense control health care costs while enhancing health care quality. It has assisted the military in redeploying its assets while improving its ability to respond to its patients' needs at a lower cost to the government."

Technology: Bite-sized

The "small is beautiful" philosophy will save taxpayers $1.8 billion.

In the past, when government needed new large information systems, it would spend years writing specifications and then contract for years of technology development. It was common for this process to cost billions of dollars. And in the end, agencies often ended up with hugely dysfunctional systems, or nothing at all. Finally the government is adopting the buy-a-little, test-a-little, fix-a-little approach.

The Defense Department has 48,000 buyers who handle procurement from 950 different sites. These buyers used to have 79 separate procurement information systems. Now Defense is replacing those systems with one commercial software product from American Management Systems (AMS) that runs on commercial PCs. The software is being tested at 100 sites. Based on the feedback gained from this first test, AMS will customize the software as needed. After a similar test at 300 more sites, AMS will tweak again and create the final version. Four years from now, all Defense buyers will be on one system, saving Defense some $1.8 billion in the next eight years.

Call London for 7 Cents a Minute

The government is saving money by buying telecommunication services commercially.

The General Services Administration is leveraging the buying power of the whole government to get its customer agencies the world's best prices for commercially available tele-communication services. On domestic long-distance voice calls the government is now paying 1.9 cents to 5.5 cents per minute -- 11.6 percent below the lowest commercial equivalent.

And GSA has broken new ground in buying international services, wireless services, and high-speed data services. For example, international long- distance calls to the United Kingdom have been cut from 30 cents a minute to 7 cents. GSA has negotiated commercial wireless rates 20 to 60 percent below best commercial rates, and for the first time has made service available anywhere in the country.

Businesses now can meet more government needs through their commercial offerings. Donald E. Scott of GTE Government Systems Corporation puts it this way: "The government is using its buying power and has stepped back from requiring unique features, which lets us do what we do best -- deliver commercial service."

Table of Contents ||| Chapter 6
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