of the Special Management Improvement Initiative. This information described the nature of the problems, resource commitments, and specific goals for evaluating performance, including milestones and production and improvement objectives.

We are now in the process of developing more detailed workplans which will build on the information submitted to OMB and show how we will accomplish each program improvement identified in the agreement.

Question. Should the $13 million and 77 FTE's for the Special Management Improvement Initiative not be approved by the Congress, what contingency plans has the Board prepared to make operational improvements?

Answer. Before the Special Management Improvement Initiative began to take shape in mid-1990, the RRB was in the process of addressing many operational improvement issues. If the funding for the Special Management Improvement Fund is not approved, we will still continue to work toward achieving the needed improvements with the more limited resources available. However, without the additional resources being proposed by the Administration, it would take much longer to make improvements. For example, the following table illustrates the impact the additional resources would have on reducing cases backlogged in our railroad retirement program.

Question. The Board has had the same Medicare carrier since 1966. This contract has never been competitively bid. During fiscal year 1990, the cost paid to the carrier was $21 million; that cost rose to $23 million in fiscal year 1991. A recent HHS-OIG study stated that the government would save considerable funding and staff resources were HCFA to take over the management of this contract. What action is the Board taking as a result of that recommendation?

Answer. The Board's Office of Inspector General has undertaken a detailed review of the HHS study and will be reporting its findings to the Board Members in the very near future. The Board Members have also instructed agency staff to analyze the process of

competitive bidding for the contract so that it can move forward once a decision is reached.

DUAL BENEFITS

Question. Last year, the Board's estimates for the Dual Benefits Payments Account changed numerous times from the date of the budget submission until such time as the fiscal year 1991 appropriation was enacted. You are requesting $315,000,000 in fiscal year 1992 for dual benefits.

Is that amount sufficient for these payments in fiscal year 1992? If not, why has the estimate changed?

Answer. The $315,000,000 requested by the Administration was based on the RRB's best estimate of vested dual benefit payments for fiscal year 1992. The estimate was based on projections by our Chief Actuary, but the exact dollar amount required during the year will depend on mortalities, new awards, and other variables that cannot be precisely determined at the beginning of the year. In the past, an additional margin of 2 percent was therefore appropriated by Congress for the uncertainties associated with estimates and projections. An additional variable for fiscal year 1992 results from our subsequent analysis of a number of beneficiaries who were not paid vested dual benefits to which they were entitled in past years. While we are processing these cases in fiscal year 1991, additional payments will be required in fiscal year 1992. The $315,000,000 estimate does not reflect paying any of these cases in fiscal year 1992.

Additionally, the Labor Member believes that, providing for the 2 percent margin would require an appropriation of $322,000,000 to ensure no reduction in benefits resulting from under funding of the dual benefit account. Furthermore, the $322,000,000 estimate does not reflect any of the cases resulting from our subsequent analysis of beneficiaries who were not paid dual benefits to which they were entitled in past years. Our Chief Actuary advises that a total of $328,000,000 would provide sufficient funding for all dual benefit payments made during fiscal year 1992.

MAINFRAME ACQUISITION

Question. In fiscal year 1991, funding was provided to the Board for the acquisition of a mainframe computer. It is my understanding that the Board has been negotiating to obtain a computer that has been declared surplus. Where are those negotiations and what is the estimated cost of that acquisition?

Answer. The RRB has submitted requests to the General Services Administration (GSA) to obtain one of four computer mainframes declared surplus by other Federal agencies. The estimated acquisition costs of these computers are between $5 million and $6 million. We have provided GSA officials all of the information that they have requested. On April 5, 1991, GSA informed us that they assigned 2 of the 4 available excess computers to another Federal agency, but no decision has yet been made on the disposition of the remaining 2 surplus mainframes.

Question. In the event the negotiations for the procurement of the mainframe through the surplus property route fall through, what

is your backup plan mainframe?

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where do you stand on procurement of the

Answer. In the event we do not acquire a surplus computer, we vill acquire a new computer through the competitive acquisition process. Competitive proposals were submitted to the RRB by April 8, 1991, and technical and cost evaluations are being made. If we acquire a new computer through this process, we expect the procurement to be completed and the computer installed during July

1991.

Question. What steps has the Board taken to comply with the language included in the fiscal year 1991 Appropriations Act that the funding for the purchase of the mainframe and related contract services will only be available upon the delegation of procurement authority from GSA to the Board?

Answer. The Board is complying with the fiscal year 1991 appropriations language. On July 27, 1990, GSA approved the delegation of procurement authority to the Board for acquiring the mainframe computer. On August 19, 1990, GSA informed us that the computer procurement would be subject to GSA compliance review, and we are reporting to GSA as required.

EQUIPMENT PURCHASES

Question. The budget indicates that the Board will be purchasing an additional 77 personal computers in fiscal year 1991 and 175 in fiscal year 1992. Are any of these equipment purchases coming out of the Special Management Improvement Fund?

Answer. The Special Management Improvement Fund will not be used to fund any fiscal year 1991 expenditures. In fiscal year 1992, we have earmarked $21,000 from the improvement fund to purchase 4 personal computers.

COST OF MEDICARE

Question. Is the per unit cost of this contract above the national average paid out for other Medicare contractors?

Answer. The Travelers' total contract unit cost for fiscal year 1990 was $1.94 compared with a $2.03 national average, The Travelers' workload related unit cost for that year was $1.72 compared with a $1.56 national average. (These statistics are provided by the Travelers.)

The workload-related unit cost reflects costs in three areas: (1) processing claims, (2) conducting reviews and hearings, and (3) handling inquiries from beneficiaries and physicians, The contract unit cost includes the above activities, plus costs for (1) professional relations, (2) medical review/utilization review, (3) reviewing cases to determine whether Medicare should be a secondary payer, (4) contact with participating physicians, and (5) productivity investments.

Question. That is the average Medicare clais paid by your carrier as compared to other carriers nationwide?

Answer. In fiscal year 1990, The Travelers paid out an average benefit per claim of $64.09. The national average for all carriers that year was $76.75.

AUTOMATION

Question. The Board's budget justification states that the mainframe computer is operating at 100 percent capacity for 6 to 8 hours per day. Did the Board request computer support in the budget in past years in anticipation of the day 100 percent capacity would be reached?

Answer. Our current computer was purchased in 1985. At that time, based on workload forecasting, the RRB projected the computer's useful life would be 7 years. However, new legislation put substantial, unforecasted demands on our computer's capacity. The Railroad Unemployment Insurance and Retirement Improvement Act of 1988 (P.L. 100-647) required among other things (1) prepayment verification of claims for unemployment and sickness insurance benefits and (2) development of an experience rating system for our unemployment and sickness insurance program.

Detailed data gathering to determine what size computer would be needed to support our new automation approach and increased demand began in the Fall of 1988. Our planning resulted in the request for a new computer being included in our August 1989 submission of the fiscal year 1991 budget.

Capacity planning during the last 2 years has also allowed us to extend the useful life of our current computer. We developed data to project the need for increased direct access storage, main storage, and channels. These were installed in 1989 and 1990.

Question. Does the fiscal year 1992 budget include any funding to look at long-range plans for automation?

Answer. There are no funds requested in the fiscal year 1992 budget that are specifically identified for long-range automation planning. However, we are exploring the possibility of an outside vendor evaluating our current automation plans.

Question. What is the current status of your automation plan, what period does it cover and how often is the plan updated?

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Answer. A plan dealing mainly with the retirement program and tax accounting prepared by an internal automation planning group was approved in January 1990. A 5-year automation plan incorporating this as well as the unemployment program and office automation was produced in August 1990, covering fiscal years 1990 through 1994. An updated automation plan covering fiscal years 1991 through 1995 is now being evaluated, and we intend to update the automation plan annually to reflect changing conditions and current direction.

Question. Have you undertaken computer capacity studies of the RRB mainframe on an annual basis? What are those studies showing?

Answer. No, the RRB does not perform formal computer capacity studies on an annual basis. We do, however, monitor computer performance on a daily basis through the use of an on-line, realtime monitor (CMF, Comprehensive Management Facility). This

monitoring provides information necessary for projecting long-range computing requirements. It also provided data which enabled us to extend the useful life of our current computer by incrementally adding memory and channels.

We have asked our Director of Data Processing to provide us with an annual assessment of how our usage compares to the levels we projected in justifying the new computer.

Question. Is installation of the mainframe computer going to require outside contractor support, and if so, what is the projected cost of that support?

If we

Answer. The RRB will need $600,000 for contractor assistance to modify our data center to accept the new computer and to install the computer. We will need to modify the air conditioning, electrical wiring and physical layout of the data center. obtain a used computer, we will need an additional $100,000 for computer power units and $72,000 for potential software upgrades, transportation costs, and installation costs. We believe these costs represent all of the costs associated with the installation of the new mainframe computer.

Question. What steps are you taking to ensure that no increase in mainframe capacity will be needed for at least another 6 years?

Ansver. The RRB's current sizing study includes historical computer usage brought forward, and projections for (1) new systems development and (2) increased computer demand resulting from new systems being brought on-line during the next 5 years. If the RRB is successful in obtaining a used computer available through the GSA, that computer would support our projected computing requirements for 6 years.

Question. What contingency plans has the Board drawn up in relation to additional costs in computer hardware, software, or contracting assistance?

Ansver. We believe we have identified and budgeted for all costs associated with the procurement and installation of the new mainframe computer. However, since the computer will be installed late in fiscal year 1991, any unforecasted increases in computer hardware, software, or contracting assistance will be accommodated within the existing appropriation.

Question. What is the timetable for the implementation of this system and what type of mechanism will the Board employ to ensure a cost-effective implementation of the system?

Answer. The procurement timetable in the solicitation for the new computer calls for installation in July 1991. The timetable for acquiring a used computer through GSA's exchange sale program is dependent on the releasing agency.

To ensure a cost-effective implementation, the RRB will develop a detailed project tracking checklist. We will target installation for a weekend to avoid any impact on mainline RRB processing. In 1985, we installed our current mainframe computer. At the same time ve moved into our new data center. No service interruptions occurred. The Board remains committed to the goal of ur errated service.