Congressional Justifications for 1998 Budget Estimates

Working Capital Fund

The Working Capital Fund (WCF) is authorized by Section 7(f) of the Department of Housing and Urban Development (HUD) Act of 1965 (Stat. 670). Centralized information technology services are provided through this activity to all elements of the Department on a cost reimbursable basis. WCF budget activity is summarized below, followed by a more detailed discussion of information technology requirements.

I. Investment Financing

II. IT Budget Overview

The fiscal year 1998 current estimate primarily reflects an on-going increase in the demand for information technology services both from the Department itself and from the HUD's business partners. The Department increasingly relies upon accessing the information systems and using communications to do business with the Department. While the Office of Information Technology has provided information services to all of its customers, the strategic focus on HUD as a unified business enterprise has intensified the critical importance of information technology investments in supporting core business processes as well as business innovation such as the Customer Service Desktop System and the Place-Based System projects. HUD's information technology investment portfolio continues to address and resolve high-risk financial and information systems and related material weaknesses.

The Office of Information Technology identifies the technologies which best support the Department's mission and business requirements and proactively works with its customers to bring these technologies into the workplace, to support the delivery and management of HUD programs, and to leverage business process improvements which will support the Department's customers and partners. A strategic planning process has been implemented with the draft HUD Information Strategy Plan (ISP) as a foundation. HUD capital planning policies and procedures will be incorporated by the HUD Chief Information Officer and the Technology Investment Board during the fiscal year 1999 IT budget formulation cycle.

Recognizing the integral role that information technology has in programs and program operations, the Federal Housing Administration Fund, beginning in fiscal year 1998, will fund most of the information technology services required by the Office of Housing. No services for the Office of Housing will be funded from the Department's Salaries and Expenses fund.

The steady overall increase in funding for information technology reflects the reality of what will occur in a Department that is committed to achieving significant reinvention and downsizing. To ensure that the Department's services continue to be made available to its clients during this transition, strategic application of Information Technology will be necessary to provide both interim and long term solutions to support and enable the Department.

In fiscal year 1998, several current systems projects will be expanded to support HUD investment strategies based on the ISP. The most important project is the Year 2000 Compliance Program. Other systems projects include: a Customer Service Desktop System; a Place-Based System which integrates geographically based program information from many HUD information systems; and planning for a Grants Management System which will integrate and consolidate program information for improved management of HUD grant programs. Investments such as these in information technology will result in major gains in efficiency and reductions in operating costs as legacy systems are retired.

Specifically, the fiscal year 1998 estimate reflects an increase of $40,205 thousand which will be allocated to several system investment projects. These investment projects include:

• - $24 million increase for full funding of the Year 2000 Compliance Program project;
• - $14 million increase for the re-engineering of the FHA insurance management business area;
• - $1 million increase for a Customer Service Desktop System and Place-based System; and
• - $1 million increase for Grants Management System planning and re-engineering.
The fiscal year 1998 Budget request for infrastructure investment projects is comparable to the fiscal year 1997 funding level.

The information services of the Department are consolidated under the Chief Information Officer in the Office of Information Technology (IT), a component of the Office of Administration in Headquarters. IT provides information services to the entire Department on a reimbursable basis through the WCF.

A. Obligations by Object Class

The following table shows actual obligations for fiscal year 1996 and estimated obligations for fiscal years 1997-1998 for the Working Capital Fund by object class:

	Actual 1996	Budget Estimate 1997	Current Estimate 1997	Estimate 1998	Increase + Decrease- 1998 vs 1997
	(Dollars in Thousands)
Personal Services	$21,000	$22,000	$22,000	$23,000	+$1,000
Travel & Transport, of Persons	1,000	1,000	1,000	1,000	0
Rent, Communications and Util.	45,000	53,000	53,000	50,000	-3,000
Other Services	94,000	126,000	126,000	169,000	+44,000
Supplies and Materials	5,000	3,000	3,000	1,000	-2,000
Furniture and Equipment	32,000	15,000	15,000	15,000	0
Total	198,000	219,000	219,000	259,000	+40,000

The need to fully fund HUD's IT Investment Portfolio has increasingly outstripped current funding sources and suggests the need to continue to identify program funds which can be applied to approved IT investment projects.

B. Staffing

	Actual 1996	Current Estimate 1997	Estimate 1998	Estimate 1999
	(Dollars in Thousands)
Total Full-Time Perment Appointments, EOY	289	290	288	300
Full-time Equivalents (FTE)	301	350	330	330

C. Services

For each information service, there is a service defined as a measure of the amount of a service provided to a customer. Prices are established annually for these services, and Departmental customers are provided monthly with a Statement of Services which presents the charges made for the amount of service used.

1. Systems Engineering - Measure: Staff hours. In general, direct labor hours worked on a specific systems project usually related to a specific application system and customer.
2. Servers - Measure: Central Processing Unit (CPU) time in hours. Central processing unit time in hours is a standard usage measure of transaction and job resource usage.
3. Server Storage - Measure: Kilotrack months. The direct measure is mass storage track days; that is, the use of a track (approximately one megabyte) for 1 day. For reporting purposes, the number of track days is divided by 30,000 to obtain kilotrack months.
4. Communications - Measure: Cost. Communications costs are suballocated by customer and system in proportion to the server charges for CPU hours and kilotrack months. Local area network (LAN) and voice communications costs are included in the total.
5. Desktop Workstation Support - Measure: Desktop Workstations Installed. HUD supports the installation and maintenance of local area networks including workstation hardware, HUDWare II, communications, and all peripheral equipment under the standard HUD configuration. HUD charges a desktop workstation fee to each user to support the installation and maintenance of workstation software including electronic mail and word processing under the standard HUD configuration.
   
   

The following table shows actual fiscal year 1996 and estimated fiscal years 1997 and 1998 service indicators:

	Actual 1996	Estimate 1997	Estimate 1998
	(Dollars in Thousands)
Systems Engineering Staff Hours	726,000	748,000	823,000
Server CPU Hours	163,000	168,000	185,000
Server Storage Kilotrack Months	1,245,000	1,282,000	1,410,000
Communications Cost	$21,755,000	$22,408,000	$24,649,000
Desktop Workstation Support and Installed Units	11,628	11,133	10,000

D. Performance Measures

The Government Performance & Results Act (GPRA) requires a strategic plan for the Department with performance measures to maintain progress toward strategic plan achievement. Performance measurement information in the form of activity costing will begin to be linked to budget reporting. The Information Technology Management Reform Act (ITMRA) requires performance measures for the Department's information technology program. In addition to the service units described above, examples of HUD performance measures are provided below.

• - A Departmentwide Information Strategy Plan (ISP) has been finalized. The plan includes programmatic performance measures linked directly to information technology funding decisions. Also, the HUD ISP consolidates individual ISP's which include objective-bas�tcome� me measures of performance, and the results of business process engineering efforts.
• - Customer satisfaction survey data collected on an on-going basis, identifying satisfaction with a variety of IT products and services.
• - An automated database of information on IT problems experienced by customers that is analyzed in a number of different ways on an on-going basis allowing us to measure performance of IT products and services on an on-going basis.
• - A large number of technical IT operations performance data that helps the Department measure the performance of an IT systems integration contractor.   
  

The process of reinventing HUD began in 1993. The Department, which invests in such community assets as housing, job and business development, and opportunities for children and families, is an integral part of the President's promise to streamline the Government. This effort will fundamentally transform the Department into a responsive, problem-solving, provider of flexible housing, community resources, and economic development opportunities. For HUD to be effective in carrying out its mission, it must continue to address and resolve long-standing systematic and program specific problems that point to serious gaps in its basic management and financial systems. Further, the Department is keenly aware of past data problems in certain HUD programs and systems which are listed as high risk. Implementation of the Department's major management improvement initiative to integrate HUD's financial systems is a critical element in improving financial management within the Department.

The Departmental Information Technology (IT) goals and initiatives provide the general framework for information technology strategic and capital investment planning. This approach enables HUD to pursue the information strategies required for the successful implementation of the Department's mission, goals and guiding principles of public service during the restructuring efforts.

A. Investment planning with HUD's information strategy plan

From fiscal years 1992 to 1996, HUD prepared 10 Information Strategy Plans (ISPs) at the administrative and program area level. In fiscal year 1995, HUD developed the HUD Information Architecture, a framework for identifying and managing HUD's strategic information needs, by consolidating the first four ISPs to be completed. In fiscal year 1996, HUD developed a draft Departmental ISP, aimed at identifying and ranking strategic technology investments on the basis of their link to the strategic, Departmental priorities. In fiscal year 1997, the draft Departmental ISP will be updated with field input.

The HUD ISP information continues to be used to refine the Information Architecture, which subdivides into logical planning and business areas. Each of these planning areas will undergo additional review and validation before any area is proposed for an investment decision. The review and validation will include an analysis of the Information Architecture, field input to the ISP, and an assessment of HUD's information systems by the ISP Team. Finally, the Information Technology Capital Planning guidelines will be applied to each of these planning areas. They include:

• - Assistance management - issue and manage grants, subsidies, and other financial assistance;
• - Budget formulation and execution - develop, review, and approve budget element submissions and the administrative operating budget;
• - Building management - coordinate building operations, maintain facilities, and plan and design physical space;
• - Compliance and resolution - ensure the programs, operations, and partners comply with applicable laws, regulations, and policies;
• - Core financial management - monitor and promote sound fiscal management and the financial position of the Department;
• - Correspondence management - coordinate mail services and the management of responses to information requests, inquiries from the public and Congress;
• - Emergency management - respond to natural and man-made disasters affecting America's cities, communities, and the Department;
• - Human resources management - allocate, evaluate, develop, train, and support Department employees;
• - Insurance management - manage and consolidate housing insurance and asset activities;
• - Marketing management - coordinate, plan, and manage activities to communicate with and outreach to the public, program participants, and Department staff;
• - Partner relations management - obtain, support, and certify business partners;
• - Policy management - develop policy, procedures, and guideline�� �he �he act of assistance and guidance to internal and external customers;
• - Procurement and contracts - acquire materials, physical assets, and contractual services;
• - Program and product development - identify, define, and implement individual Departmental programs and products;
• - Safeguard management - protect housing projects, communities, and other Departmental services from crime and other unsafe conditions;
• - Training management - coordinate, develop, and instruct customers, partners, and employees; and
• - Travel management - oversee and coordinate Department required travel activities.
  
  

B. Investment portfolio ranking process

The evaluation and ranking of proposed IT investment projects is accomplished using one of the tools produced by the ISP project: a Strategic Ranking Mechanism (SRM). The SRM will be used again in fiscal year 1998 to evaluate and score projects against 14 specific ranking criteria, of which nine assess benefits and five measure risk mitigation or management characteristics of the projects. The 14 ranking criteria in HUD's SRM encompass all of the eight Information Technology Management Reform Act (ITMRA) decision criteria.

HUD applies the ranking criteria, and scores all projects proposed for the IT Investment Portfolio, including operational, software development and maintenance, and infrastructure maintenance and improvement projects. The scoring is done, however, to support the strategic allocation of resources to IT investments at, or just prior to, the beginning of the fiscal year in which those resources will be used. In previous years, the ISP has not been completed early enough in the budget cycle to propose IT projects at the level of detail which would have allowed them to be scored during budget formulation cycles.

The Department plans to use information from the HUD ISP to identify, score, rank, and propose major IT projects as part of the fiscal year 1999 budget formulation process. This will establish a true long-range IT Capital planning process, tied to budget formulation cycles, within the Department. The major IT investment projects referenced in this budget justification have not been formally scored through the SRM. All of these projects, however, are in conformance with, and supported by, the HUD ISP; and all are parts of, or closely related to, continuing IT investments initiated prior to the enactment of ITMRA. Thus, all of the Department's proposed fiscal year 1998 IT investments have been, at least in part, subjected to the fiscal year 1997 SRM scoring process.

The HUD ISP and the SRM support a well established Departmental process for identifying, evaluating, ranking, selecting, and approving the HUD IT Investment Portfolio. The Department's Technology Investment Board (TIB), comprised of senior program managers and chaired by HUD's Chief Information Officer, uses the information provided by the HUD ISP and SRM evaluation process to select projects and funding levels to recommend for inclusion in the HUD IT Investment Portfolio. The TIB recommends the proposed IT Investment Portfolio to the executive-level Management Committee, chaired by the Deputy Secretary, for final approval. The Management Committee is also responsible for implementing the Department's management action plan.

The total requested funding for infrastructure project investments is $126 million.

The Department's infrastructure will continue to make available new or revised technology to support information needs and to improve the linkages between HUD's mission, goals and objectives and program business and information strategies. The IT technical architecture will also identify and act upon targets for business process redesign.

The sound application of the Department's information technology to meet long-term needs is critical to the success of HUD's mission. The Department must have an information technology platform which will support streamlined and consolidated agency processes, which will allow expanded communication with Business Partners and the Public, and which is sufficiently flexible to accommodate shifts in agency workload. In order to meet these goals, the Department will need more powerful desktop computers, powerful and diverse server technology, and a flexible communications network.

A. Desktop Platform

These investments consist of several significant projects. The primary investment is to maintain existing office automation hardware and software services for HUD users. The HUD standard desktop platform consists of a workstation for every employee connected through a network of 190 file servers nationwide. The scope of this investment includes all operations, support, and maintenance of the Department's standard suite of office automation applications; desktop graphical user interface (GUI) environment (ar� I�) II); local area network standards; desktop/office standards; and test center operations. Operations and maintenance includes resolving user problems, performing preventive maintenance, processing software releases, and maintaining an inventory of hardware and software. Other investment projects include the Disabled Accommodation Program and support services for the Departmental workflow/imaging applications.

B. Servers

These investments consist of several significant projects. The primary investment is in the operation of the HUD Computer Center. This operation includes the staffing and lease and maintenance of equipment, software, and the facility required to support HUD's mainframe systems. Other proposed investments include Lotus Notes Servers and mid-range servers to support data warehousing and client server applications. Lotus Notes servers provide a client/server based environment for development and operation of client/server groupware applications. The benefits of Lotus Notes are well suited for collaborative teamwork functions; dissemination of reference materials; tracking applications; and automation workflow. The purchase of mid-range servers will support the Department's data consolidation efforts and will provide greater access to HUD information for employees and business partners.

C. Communications

These investments consist of several significant projects. The primary investment is in the operation of the nationwide HUD communications network. Other investments include intranet/internet services, upgrade of network bandwidth, E-Mail upgrades, mobile computing capability, and expansion of desktop videoconferencing capabilities. Upgrade of network bandwidth has enabled the Department to respond to increasing demands from the HUD user community for sharing of database information and remote access to database information. Additional bandwidth is also required to support desktop videoconferencing and is necessary for combining the Department's voice and data networks to save communications costs. Email upgrades will improve the speed and reliability of the Department's email system. Mobile computing supports the increasing need for HUD staff to access information systems from outside the standard HUD office environment. The expansion of desktop videoconferencing will improve the Department's ability to communicate internally and with business partners. It will also improve the delivery and decrease the cost of employee training.

The total requested funding for system project investments is $127 million.

The transformation of HUD has broadened the perspective with which system applications are engineered and re-engineered using the most advanced technologies. Are these systems and the information customer-based? Do the applications support the mission, values and work processes of the new right side up, community first cabinet agency and its decentralized, smaller work force? Do the applications recognize that the Department's partners are often the users of the information and the applications? This is the perspective used by the information Technology Investment Board as it makes recommendations to the Department's Management Committee to engineer and re-engineer the Department's system applications.

During the past few years, the Department has made great progress in developing state of the art systems applications as the program areas recognize the criticality of modern systems and accurate programmatic and financial information in the management and operation of the Department's programs. In fiscal year 1998, additional fundamental systems critical to the transformation of the Department will be implemented. Examples of critical systems projects to be included in the IT Investment Portfolio are described below.

A. Corrective/Adaptive Maintenance Projects

1. Year 2000

The Year 2000 project is central to protecting HUD customers from devastating results should certificates/vouchers not be produced, collections for insurance premiums not be accepted, disbursements not be payable, and entire processes not be operational due to Year 2000 problems. In addition, interfaces to critical business partners such as financial institutions, federal government agencies, and state agencies may be inaccessible. Failure to address at a minimum, HUD's mission critical systems could cause all the previous situations to occur. Being Year 2000 compliant means that HUD's business rules will be computed accurately before, during, and after January 1, 2000, regardless of whether the dates were received from the computer's operating platform, from a data repository, or from a software application.

During fiscal year 1997, the Year 2000 team is: performi Ye�� �ar 2000 impact analysis on all standard systems; establishing model practices and procedures; establishing and validating Year 2000 methodologies; obtaining Year 2000 compliant software and hardware environments, and renovating up to 20 percent of HUD's legacy system code to be Year 2000 compliant.

The continuation of the Year 2000 compliance project is expected to be the single largest project in the Department's fiscal year 1998 IT Investment Portfolio. The SRM correctly identifies the Year 2000 compliance project as critically important for the continued success of all other IT investments, thus the project receives very high scores in the benefits area. System and application programs contain 70 million lines of programming code which must be evaluated during the course of this project.

2. Other

Ongoing corrective/adaptive maintenance is required on the Department's portfolio of application systems including the FHA systems. Adequate corrective/adaptive maintenance will ensure that the processes currently provided to the Department will continue. The maintenance includes both system and end-user support. In this regard, it is essential the maintenance of critical applications and the information technology environment be sustained.

B. Perfective Maintenance and New Development Project Examples

1. Assistance Management

Assistance management supports all of HUD's grant and subsidy programs: Community Planning and Development, Public and Indian Housing, Fair Housing and Equal Opportunity and Housing. Subject to the results of planning and business area process re-engineering activities, this project will allow the Department to consolidate its existing assistance programs and the system will be integrated with HUDCAPS, the Department's accounting system. The integration with HUDCAPS will benefit grantees by allowing online disbursement requests and by providing financial data linked to grant activities and grantee performance.

2. Core Financial Management

In fiscal year 1998, the financial system integration efforts continue to address outstanding material weaknesses, ensure HUD compliance with OMB Circular A-127, JFMIP's Core Financial System Requirements, and support the financial management business area identified in the HUD ISP. Within the core financial management business area, work will continue on achieving many critical milestones in these projects including Tenant Rental Assistance Certification System, the Departmental Central Accounting and Program System (HUDCAPS) previously titled Agency and Administrative Accounting, and the FHA Mortgage Insurance System. Work is also proceeding on a Budget Formulation/Operating Plan System which will be the core budgeting system for the Department. The budget system will be integrated with the Department Central Accounting and Program System and the National Finance Center both of which have information critical to the budget processes.

3. Insurance Management

The primary project within insurance management is the FHA Mortgage Insurance System (FHAMIS) project. FHAMIS continues as an ongoing project that supports the requirements of Single Family, Multifamily, and Hospital Insurance Programs. FHAMIS will modernize and integrate FHA program information using a common data architecture.

4. Customer Service Desktop System

The Customer Service Desktop System project currently includes development/pilot implementation and assessment of two systems: (1) Customer Service Desktop System and (2) Place Based System. The Customer Service Desktop System project will change the way HUD Field Offices relate to the communities HUD serves. Routine labor intensive processes will be automated The Customer Service Desktop will aid Field Office personnel in providing better service to their customers with such tools as Frequently Asked Questions database, an Events Calendar application, an Information Exchange discussion database, an Office Calendar, as well as many others.

In response to a Secretary's initiative to establish a location-based data warehouse for HUD programs' investments, the Place Based System (PBS) was developed to respond to this strategic direction. This system creates a data warehouse that will ultimately benefit all HUD staff, HUD's business partners, and the public. The warehouse provides the capability to view program financial, project, property and political representation data from a geographic perspective. PBS contains 10 million records of HUD program data currently distributed in over 15 separate systems on both mainframe and LAN platforms.

The sound application of the Department's information resources to meet long-term needs is critical to the success of HUD's reinvention efforts. IT will continue to consistently apply capital investment planning and investment portfolio analyses and rankings to support information technology management and planning.

The Department will continue with projects to integrate its financial management systems. These systems are critical in the Department's efforts to improve financial management, provide more timely and accurate financial information, and comply with the provisions of OMB Circular A-127 and other government-wide requirements.

HUD will continue and increase its reliance on information technology to accomplish the agency's ambitious plans for reinvention and transformation. Continued investment in client/server technology, communications, and desktop workstations are central to the success of these plans. Current projects such as the HUD Customer Service Desktop System are dependent on the modern technical architecture planned for HUD. These reinvention projects, made possible by technology, will result in major gains in efficiency and major reductions in operating costs as scores of work processes are streamlined or eliminate.