Social Security Administration: Subcommittee Questions Concerning Efforts to Automate the Disability Claims Process

Published by the Government Accountability Office on 2003-09-05.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States General Accounting Office
Washington, D.C. 20548

                                    September 5, 2003

                                    The Honorable E. Clay Shaw, Jr.
                                    Chairman, Subcommittee on Social Security
                                    Committee on Ways and Means
                                    House of Representatives

                                    Subject:    Social Security Administration: Subcommittee Questions
                                                Concerning Efforts to Automate the Disability Claims Process

                                    Dear Mr. Chairman:

                                    This letter responds to your August 12, 2003, request that we provide
                                    answers to questions relating to our July 24, 2003, testimony.1 In that
                                    testimony, we discussed the risks that the Social Security Administration
                                    (SSA) faces in its efforts to automate its disability claims process. Your
                                    questions, along with our responses, follow.

                                    1. The Social Security Administration (SSA) has indicated that the
                                       agency could potentially save $1 billion, at an estimated cost of
                                       approximately $900 million, by implementing an electronic
                                       disability folder. In your opinion, does the $900 million cost of this
                                       project appear to be a reasonable estimate? Is the $1 billion in
                                       savings a reasonable estimate? Is there a possibility that the cost of
                                       the project could balloon?

                                    Our work to date on SSA’s February 2003 cost-benefit analysis raises
                                    concerns that SSA may have underestimated its accelerated electronic
                                    disability (AeDib) system costs. For example, the cost-benefit analysis did
                                    not fully consider the costs associated with certain critical information
                                    technology infrastructure elements supporting the nationwide rollout, such
                                    as scanning and imaging by the outsourced vendor, telecommunications,
                                    disaster recovery, and on-site retention and destruction of source
                                    documents, such as medical records. Because SSA has not yet fully
                                    estimated these costs, we are unclear about their magnitude.

                                     U.S. General Accounting Office, Electronic Disability Claims Processing: Social Security
                                    Administration’s Accelerated Strategy Faces Significant Risks, GAO-03-984T
                                    (Washington, D.C.: July 24, 2003).

                                    Page 1                                    GAO-03-1113R SSA Electronic Disability System
We are also concerned that the corresponding benefits cited in SSA’s cost-
benefit analysis may be overstated. Specifically, our review found that
certain assumptions used in the analysis could be too optimistic. For
example, SSA estimated benefits based on an assumption that state
Disability Determination Services (DDS) would receive 30 percent of all
medical evidence in electronic form by 2004. However, state DDS officials
with whom we spoke contend that their offices currently receive about 11
percent or less of medical evidence electronically, and disagree with the 30-
percent assumption.

As to whether the costs of AeDib could balloon, the possibility of cost
increases exists for any project the size and magnitude of AeDib. As
mentioned previously, the existing estimates do not include certain costs,
such as some costs for outsourced scanning and imaging and the cost of
disaster recovery. Including these could add to SSA’s overall cost estimate.
Our work analyzing the costs and benefits of AeDib is ongoing; the final
results will be included in our report to be issued to you later this year.

2. According to your testimony, the SSA has developed a risk
   management plan, but is still without a comprehensive assessment of
   risk that could affect the electronic disability folder. Can you explain
   the difference between the risk management plan and a
   comprehensive assessment of risks? How does their risk management
   plan fall short of what GAO recommends? Why is this plan so

A risk management plan provides guidance to project management teams
and requires them to proactively identify facts and circumstances that
could increase the probability of failing to meet project commitments, and
take steps to prevent this from occurring.2 A comprehensive assessment of
risks, which is completed according to the risk management plan, is the
process of identifying risks with a high probability and cost of failure, and
developing strategies for mitigating those risks.3

 U.S. General Accounting Office, Information Technology: Greater Use of Best Practices
Can Reduce Risks in Acquiring Defense Health Care System, GAO-02-345 (Washington,
D.C.: September 26, 2002).
 Social Security Administration, SSA AeDib Risk Management Plan, Version 2.01
(Baltimore, MD, January 21, 2003).

Page 2                                    GAO-03-1113R SSA Electronic Disability System
Based on our work to date, we do not have concerns about SSA’s risk
management plan, which was developed in accordance with our own and
Office of Management and Budget (OMB) guidance. However, as
mentioned in our testimony, we were concerned that SSA had not
completed a subsequent comprehensive risk assessment. SSA officials
agreed with the need for a comprehensive risk assessment, and since our
testimony, the agency has provided us with detailed risk assessments for
four of the five AeDib projects—the Electronic Disability Collect System,
the Document Management Architecture, a DDS systems migration and
electronic folder interface, and Internet disability applications. SSA has not
yet provided us with a time frame for completing the remaining risk
assessment for its Hearings and Appeals case processing management

A risk management plan is an essential tool used to guide the development
of a comprehensive assessment of risks and mitigation strategies. A
comprehensive risk assessment is equally critical. Both tools can help SSA
avoid potential problems before they manifest themselves in cost,
schedule, and performance shortfalls.

3. The GAO has identified a number of areas where the SSA could
   improve. For instance, the agency needs to develop risk assessment
   tools and could take additional measures to involve key stakeholders
   in the systems development process. Is there any indication that the
   SSA is acting on your recommendations?

SSA has acknowledged our concerns relative to the areas of improvement
we identified in our testimony, and has taken some action to address them.
However, more work remains to fully address these issues.

Specifically, we expressed the need for SSA to perform a comprehensive
risk assessment to identify project risks and establish mitigation strategies
for them. As noted in our response to question 2, SSA recently provided us
with detailed risk assessments for four of the five AeDib projects, but has
not yet provided a detailed assessment of risks for its remaining project.

We also commented on the need for SSA to perform end-to-end testing
prior to implementation, to ensure that the system it is developing will
perform as intended. To date, SSA has not yet finalized its test and
evaluation strategy. Therefore, it is unclear whether SSA intends to include
end-to-end testing.

Page 3                               GAO-03-1113R SSA Electronic Disability System
Finally, we commented on the need for SSA to resolve stakeholder
concerns to ensure program acceptance and use, and take additional steps
to consult with the medical community. SSA acknowledged the importance
of ensuring sound relations with stakeholders and the need to take
additional actions, where necessary, to ensure that all stakeholder
concerns have been adequately addressed. SSA also stated that additional
steps would be taken to keep stakeholders involved in the initiative, and
that plans were being made for a meeting with state DDS representatives to
discuss the AeDib initiative. However, SSA has not yet provided us with a
copy of its communications plan for dealing with stakeholder issues,
including its plans for consultation with the medical community.

As part of our ongoing work, we will continue to monitor SSA’s progress in
addressing these issues.

4. The SSA has worked 11 years now to implement an electronic
   disability folder. The automation project started in 1992 as the
   Modernized Disability System (later renamed the Reengineered
   Disability System). After this project failed in 1999, the SSA
   immediately began work on the accelerated electronic disability
   initiative. Why is this project so difficult for the agency to complete?
   Has the SSA learned from its mistakes along the way?

Software development is one of the riskiest areas of systems development.4
We have reported that SSA’s software development efforts have been
problematic and plagued with delays because SSA has not consistently
followed sound practices in developing systems designed to automate its
disability claims process; thus, it has experienced numerous software
development problems over the past 11 years. For example, in September
1996 we reported that software development problems had delayed the
scheduled implementation of the Reengineered Disability System (RDS) by
more than 2 years.5 An assessment of the development activity revealed a
number of factors as having contributed to that delay, including (1) using
programmers with insufficient experience, (2) using software development

 U.S. General Accounting Office, Social Security Administration: Information Technology
Challenges Facing the Commissioner, GAO/T-AIMD-98-109 (Washington, D.C.: March 12,
 U.S. General Accounting Office, Social Security Administration: Effective Leadership
Needed to Meet Daunting Challenges, GAO/HEHS-96-196 (Washington, D.C.: September 12,

Page 4                                   GAO-03-1113R SSA Electronic Disability System
tools that did not perform effectively, and (3) establishing initial software
development schedules that were too optimistic. We reported again, in
June 1998, that SSA had encountered performance problems during its RDS
pilot tests.6 In response to these performance problems, SSA delayed its
plans for expanding the pilot to other offices, and obtained a contractor to
independently evaluate and recommend options for proceeding with the

SSA’s contractor reported that RDS software had defects that would
diminish the case-processing rate at DDS sites, and that SSA had not been
timely in addressing software defects. For example, 90 software problems
identified by SSA staff remained unresolved for more than 120 days. As a
result, the contractor recommended that SSA discontinue the RDS
initiative and focus on an alternative solution involving the use of an
electronic folder to replace the paper-based case folder in the disability
determination process.

In another example, we reported in August 2001 on weaknesses regarding
SSA’s adherence to key software development procedures for several
projects, including its electronic disability system.7 We noted that SSA did
not consistently adhere to its software development procedures in the
areas of requirements management, software project planning, software
quality assurance, and software configuration management.

In our ongoing review, we have found that SSA has taken important steps
to mitigate past software development problems. It has generally
addressed its contractor’s recommendations aimed at automating its
disability claims process, and has generally been applying key software
process improvement practices to its development of AeDib projects, such
as developing plans to manage the projects, tracking and overseeing the
initiatives to measure progress, performing quality assurance reviews to
determine that the project is complying with its policies and procedures,
and performing configuration management activities. While continually
applying these software development practices is no guarantee of AeDib

 U.S. General Accounting Office, Social Security Administration: Technical and
Performance Challenges Threaten Progress of Modernization, GAO/AIMD-98-136
(Washington, D.C.: June 19, 1998).
 U.S. General Accounting Office, Information Technology Management: Social Security
Administration Practices Can Be Improved, GAO-01-961 (Washington, D.C.: August 21,

Page 5                                   GAO-03-1113R SSA Electronic Disability System
success, these practices nevertheless should improve SSA’s capability to
develop high-quality software in support of AeDib, thereby avoiding
mistakes experienced in the past.

Agency Comments and Our Evaluation

The Commissioner of Social Security provided comments on a draft of this
correspondence, which are reproduced in full as the attachment. In her
comments, the Commissioner offered clarifications to our responses to
questions 1 through 3.

Regarding question 1, the Commissioner said that we were incorrect in
stating that SSA’s cost-benefit analysis had not considered all costs of
certain critical IT infrastructure elements supporting the nationwide AeDib
rollout, and that, in fact, SSA had included the costs of scanning and
imaging by the outside vendor in its estimates.

We have revised our response to clarify that SSA’s cost-benefit analysis
considered some, but not all, of the key cost elements that could affect the
initiative. SSA’s February 2003 cost-benefit analysis noted, for example,
that the agency had not considered as part of its scanning and imaging
functions, the keying in of indexing information (for case folder
identification) by the outsourced scanning vendor, although this is deemed
critical to the implementation of SSA’s document management capability.
Further, during our review, SSA officials told us that certain costs
associated with the scanning and imaging functions were not expected to
be identified until the agency performed its pilot tests (now ongoing) for its
document management architecture.

The Commissioner added that other AeDib-related costs associated with
telecommunications, disaster recovery, and on-site retention and
destruction of source documents should more appropriately be accounted
for as part of the agency’s ongoing operations, and therefore were covered
in the agency’s regular infrastructure costs, rather than the AeDib cost
estimates. However, we disagree. OMB guidance states that cost-benefit
analyses should include comprehensive estimates of all direct and indirect
costs associated with a project.8 As such, a sound cost-benefit analysis for

 Office of Management and Budget Circular No. A-94 Revised (Transmittal Memo No. 64),
Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs, October 29,

Page 6                                    GAO-03-1113R SSA Electronic Disability System
AeDib will depend on SSA’s fully considering the project-related costs for
these critical elements supporting the development, operation, and
maintenance of the electronic disability system.

Further, the Commissioner expressed concern about the example that we
provided in noting that SSA’s estimate of AeDib benefits could be
overstated. Based on our interviews with SSA and state DDS
representatives, our response highlighted the possibility that AeDib
benefits could be overstated because of differences in SSA’s and the DDSs’
assumptions about the extent that medical evidence may be received
electronically. We are continuing to assess SSA’s cost-benefit analysis as
part of our ongoing review.

In commenting on our response to question 2, the Commissioner stated
that SSA had expected to receive draft risk assessments by June 30, 2003,
and either planned to or already had shared some of its risk assessments
with us. We have revised our response to reflect that SSA recently provided
us with detailed risk assessments for four of the five AeDib projects.

Finally, regarding question 3, the Commissioner stated that SSA had
provided us with information concerning stakeholder issues and the
agency’s plans for consulting with the medical community. She further
noted that outreach to the medical community was occurring. We are
encouraged that SSA is taking steps to ensure productive communications
with its key stakeholders and the medical community, and look forward to
reviewing documented evidence of the agency’s actions. To date, however,
we have not received the additional information on SSA’s plans for
addressing stakeholder issues or consulting with the medical community,
that the Commissioner mentions in her letter.

In responding to these questions, we relied on past work and our ongoing
review of SSA’s efforts to automate its disability claims process. We
discussed our assessment of the cost-benefit analysis with SSA’s Office of
Disability Programs, Office of Systems, and Office of the Chief Information
Officer, and with the supporting contractor and key stakeholders. We
reviewed and analyzed the most recent agency documents associated with
SSA’s risk management efforts. We also discussed with officials in the
Office of Disability Programs SSA’s efforts to develop a strategy for
resolving stakeholder concerns, as well as a more aggressive approach for
consultation with the medical community. Finally, we reviewed and
analyzed SSA’s software process improvement documentation, as well as

Page 7                              GAO-03-1113R SSA Electronic Disability System
past assessments of the agency’s failed attempts to automate its disability
claims process to determine lessons learned, and whether SSA is avoiding
past software development problems. We conducted our work in
accordance with generally accepted government auditing standards, during
August 2003.

We are sending copies of this letter to the Honorable Jo Anne B. Barnhart,
Commissioner of Social Security, and other interested parties. Copies will
also be available at our Web site at www.gao.gov.

If you have any questions on matters discussed in this letter, please contact
me at (202) 512-6240 or Valerie Melvin, Assistant Director, at (202) 512-
6304. We can also be reached by E-mail at koontzl@gao.gov and
melvinv@gao.gov, respectively. Key contributors to this correspondence
include Michael A. Alexander, Tonia B. Brown, and Mary J. Dorsey.

Sincerely yours,

Linda D. Koontz
Director, Information Management Issues

Page 8                               GAO-03-1113R SSA Electronic Disability System

Comments from Social Security                                          Enco

              Page 9       GAO-03-1113R SSA Electronic Disability System
           Comments from Social Security

(310386)   Page 10                         GAO-03-1113R SSA Electronic Disability System
This is a work of the U.S. government and is not subject to copyright protection in the
United States. It may be reproduced and distributed in its entirety without further
permission from GAO. However, because this work may contain copyrighted images or
other material, permission from the copyright holder may be necessary if you wish to
reproduce this material separately.
                         The General Accounting Office, the audit, evaluation and investigative arm of
GAO’s Mission            Congress, exists to support Congress in meeting its constitutional
                         responsibilities and to help improve the performance and accountability of the
                         federal government for the American people. GAO examines the use of public
                         funds; evaluates federal programs and policies; and provides analyses,
                         recommendations, and other assistance to help Congress make informed
                         oversight, policy, and funding decisions. GAO’s commitment to good
                         government is reflected in its core values of accountability, integrity, and

                         The fastest and easiest way to obtain copies of GAO documents at no cost is
Obtaining Copies of      through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and full-
GAO Reports and          text files of current reports and testimony and an expanding archive of older
                         products. The Web site features a search engine to help you locate documents
Testimony                using key words and phrases. You can print these documents in their entirety,
                         including charts and other graphics.

                         Each day, GAO issues a list of newly released reports, testimony, and
                         correspondence. GAO posts this list, known as “Today’s Reports,” on its Web
                         site daily. The list contains links to the full-text document files. To have GAO e-
                         mail this list to you every afternoon, go to www.gao.gov and select “Subscribe to
                         e-mail alerts” under the “Order GAO Products” heading.

Order by Mail or Phone   The first copy of each printed report is free. Additional copies are $2 each. A
                         check or money order should be made out to the Superintendent of Documents.
                         GAO also accepts VISA and Mastercard. Orders for 100 or more copies mailed to
                         a single address are discounted 25 percent. Orders should be sent to:

                         U.S. General Accounting Office
                         441 G Street NW, Room LM
                         Washington, D.C. 20548

                         To order by Phone:    Voice:     (202) 512-6000
                                               TDD:       (202) 512-2537
                                               Fax:       (202) 512-6061

To Report Fraud,
                         Web site: www.gao.gov/fraudnet/fraudnet.htm
Waste, and Abuse in      E-mail: fraudnet@gao.gov
Federal Programs         Automated answering system: (800) 424-5454 or (202) 512-7470

                         Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800
Public Affairs           U.S. General Accounting Office, 441 G Street NW, Room 7149
                         Washington, D.C. 20548