Detailed Information on the
Financial Management Service Collections Assessment

Program Code 10002232
Program Title Financial Management Service Collections
Department Name Department of the Treasury
Agency/Bureau Name Financial Management Service
Program Type(s) Direct Federal Program
Assessment Year 2004
Assessment Rating Effective
Assessment Section Scores
Section Score
Program Purpose & Design 100%
Strategic Planning 88%
Program Management 100%
Program Results/Accountability 87%
Program Funding Level
(in millions)
FY2007 $17
FY2008 $17
FY2009 $21

Ongoing Program Improvement Plans

Year Began Improvement Plan Status Comments

FMS is working on an implementation strategy to promote the use of electronic collections programs. This strategy involves working with program agencies on an agreement to convert their paper-based collections to electronic funds transfer. Some agencies have been reluctant to sign these agreements due to other agency priorities; however, FMS will continue to push this effort. FMS will soon select new agents to support new systems and programs that are crucial in our efforts to convert from paper to electronic transactions and to streamline and modernize our collection and cash management program. FMS is on track to increase volume of electronic payments through EFTPS by 10% in FY08. In FY09, EFTPS will launch a web services interface that will allow financial institutions to integrate existing online banking websites directly into EFTPS--approximately 1300 institutions have expressed interest in building an interface which will help institutions move taxpayers from paying over-the-counter, to an existing online banking mechanism. FMS will also be conducting research among estimated tax payers, who make up the largest segment of paper lockbox transactions, to determine messaging opportunities to convert those transactions to electronic. FMS completed the EFTPS pilot program with Illinois. The results were evaluated and metrics were not met. As a result, FMS will not proceed. FMS is in the middle of a Financial Agent Selection Process (FASP) to choose a new Financial Agent to operate, maintain and engage in limited development of ECP and to develop a new Mail Channel application. Selection of a new financial agent is expected by the end of FY 2008. Conversion of remaining 27 cashflows (principally 16 Passport Services and 5 National Archive cashflows) will take place by the end of 2008. FMS will continue working with a number of Federal agencies, including the Departments of Education and the Department of Transportation, to move their paper based cash flows to Pay.gov. By the end of the calendar year, FMS will convert ACH debit lockboxes to Pay.gov. FMS is also beginning work to convert PreAuthorized Debit collection programs, functionality and customers to Pay.gov. FMS is currently selecting a Financial Agent to assume responsibility for supporting the OTC channel and integrating the PCC OTC & TGAnet applications into a single comprehensive OTC Channel application. In addition to the transition of current operations and system development responsibilities to the new Financial Agent, FMS is in the process of converting targeted agencies to TGAnet and PCC OTC.

Action taken, but not completed FMS works with Federal agencies to eliminate the paper checks it receives by converting them into electronic transactions. FMS will work with Federal agencies on an automated system designed to eliminate the paper deposit ticket which accompanies over-the-counter deposits by Federal agencies at financial institutions. FMS partnered with Customs and Border Protection (CBP), converting CBP's Automated Commercial Environment System and its $20 billion of annual collections to Pay.gov.

Completed Program Improvement Plans

Year Began Improvement Plan Status Comments

Provide 2006 funding at the same level as in 2005. Operate within budgetary resources.

Completed FMS has continued to maintain a relatively flat salary and expenses budget for the collections program.

Program Performance Measures

Term Type  
Long-term Outcome

Measure: Percentage of the dollar amount of Federal collections made electronically.

Explanation:Supports FMS Strategic Goal #2: "Provide timely collection of Fed Gov't receipts, at the lowest cost, through an all electronic Treasury."

Year Target Actual
2002 80% 79%
2003 80% 80%
2004 81% 81%
2005 82% 79%
2006 83% 79%
2007 80% 79%
2008 79%
2009 80%
2010 82%
2011 84%
2012 84%
Annual Outcome

Measure: Percentage of the dollar amount of Federal collections made electronically.

Explanation:Supports FMS Strategic Goal #2: "Provide timely collection of Fed Gov't receipts, at the lowest cost, through an all electronic Treasury."

Year Target Actual
2002 80% 79%
2003 80% 80%
2004 81% 81%
2005 82% 79%
2006 83%
2007 84%
Annual Output

Measure: Dollar amount of collections processed through Pay.gov governmentwide Internet collections portal

Explanation:Activity in Pay.gov serves as proxy for determining the amount of cash and check transactions that have been displaced by Internet transactions. Note: This measure is only tracked internally for management purposes.

Year Target Actual
2003 $5.0 billion $3.8 billion
2004 $10.0 billion $3.8 billion
2005 $12.0 billion $6.0 billion
2006 $15.0 billion $29.5 billion
2007 $30.0 billion $37.94 billion
2008 $40.0 billion
2009 $43.0 billion
2010 $44.0 billion
Annual Efficiency

Measure: Unit cost to process a Federal revenue collection transaction.

Explanation:The cost data is captured through an activity-based costing process. The unit cost is the calculated ratio of total direct and indirect costs over total governmentwide collection transactions.

Year Target Actual
2004 Baseline $1.40
2005 $1.40 $1.20
2006 $1.37 $1.10
2007 $1.33 $1.19
2008 $1.30
2009 $1.27
2010 $1.25
Annual Outcome

Measure: Percentage of Federal agency customers indicating an overall service rating of satisfactory or better.

Explanation:Note: This measure is only tracked internally for management purposes.

Year Target Actual
2005 80% 80%
2006 81% 80%
2007 81% 88%
2008 85%
2009 87%
2010 88%

Questions/Answers (Detailed Assessment)

Section 1 - Program Purpose & Design
Number Question Answer Score

Is the program purpose clear?

Explanation: The purpose of the Financial Management Service's (FMS) Collection Program is to provide a central, governmentwide service to all Federal agencies to collect, deposit, and account for Federal revenue. It provides a means for individuals and organizations, including citizens, businesses, state and local governments, nonprofits, foreign governments and individuals, and other entities, to remit funds to the Government.

Evidence: This program has existed since the formation of the Government, and its mission has remained unchanged for over 200 years. Its activities are authorized in the Consitution. Article I, Section 8, authorizes Congress to "collect taxes, duties, imposts, and excises," and Article I, Section 9, requires an "account of receipts...of public money."

YES 20%

Does the program address a specific and existing problem, interest or need?

Explanation: The Collections Program addresses the fundamental governmental functions of revenue collection and management of public money. It supports every other Federal program that requires or authorizes the collection of taxes, duties, fees, fines, sales, leases, loan repayments, donations, and other types of revenue.

Evidence: The Government could not function without a Collections Program. Every Federal entity that must deposit funds into the U.S. Treasury, including the General Fund, trust funds, and other funds, participates in the program. In FY 2003, the Collections Program processed $2.3 trillon on behalf of Federal agencies.

YES 20%

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: The Collections Program is a centralized, consolidated governmentwide service with one national infrastructure operated by a network of commercial financial institutions and Federal Reserve Banks designated by FMS. By statute, no other Federal program or activity may duplicate its functions in handling public money. No other level of government, state or local, is authorized or capable of executing its functions for the U.S. Treasury and Federal agencies.

Evidence: All Federal Government revenue from all sources is deposited in accounts maintained by FMS and flows through collection systems that comprise the Collections Program. All student loan repayments collected by the Department of Education, to take just one example, flow through FMS's collection banks, and the FMS Cash-Link system concentrates such collections from the banks into the main Treasury account. All officials and agents of the Federal Government must deposit money in accordance with the Collections Program (See e.g., 31 USC § 3301(a), 31 USC 3302 (b) and (c)(1)). Only FMS has authority to designate the financial and fiscal agents of the Treasury which can receive and hold public money (See e.g., 31 USC § 3303 and 12 USC § 391).

YES 20%

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The Collections Program is a world class service that has evolved over many decades. It leverages the commercial banking system, through a network of 400 primary financial institutions, and 10,000 Treasury Tax and Loan depositaries, acting as financial agents of the United States, and the Federal Reserve System, through all 12 Federal Reserve Banks acting as fiscal agents of the United States. Through these instrumentalities, it continually makes available to Federal agencies state-of-the-art financial technology and services to support their programs. The FMS systems that support the services, such as the CA$H-LINK II deposit reporting and cash concentration system, and the Electronic Federal Tax Payment System (EFTPS), are recognized by banks and other national governments as the best in the world.

Evidence: The design of the program is sufficiently robust and flexible to allow it to support every Federal agency and program that collects revenue. It supports a revenue flow that averages over $9 billion every business day. To date, the program has never lost funds on deposit anywhere in the world, or in-transit from depositories to the Treasury. The historical efficiency and effectiveness of the program are such that in FY 2004 the Administration sought and Congress granted a permanent and indefinite appropriation to compensate financial institutions that provide services under the program. McKinsey & Co. has done two reports in the last two years, one on the FMS Enterprise Architecture and the other on the Treasury Tax and Loan program, both of which validate the effectiveness of the overall Collections Program as well as the technical architecture that FMS has devised to ensure efficiency in the future.

YES 20%

Is the program effectively targeted, so that resources will reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: Due to the scale and scope of the global governmental activities that the Collections Program supports, its design is driven by the need to allow any person or business to deliver a payment to any Federal agency. The Collections Program supports every receipt channel, including mail, phone and voice response, Internet, over-the-counter, and bank networks, as well as every tender mechanism, including cash, check, credit card, debit card, wire transfer, and electronic funds transfers (EFT) through the automated clearinghouse (ACH). The program also has systems to process all related remittance information, including tax forms, and deliver it to the responsible Federal agency.

Evidence: In FY 2003, the Collections Program processed all Federal revenue under all Federal programs, totaling $2.3 trillion. The program includes a group of mechanisms to support IRS tax collections, including IRS lockboxes, Federal Tax Deposit (FTD) coupons, the Electronic Federal Tax Payment System, and IRS Treasury General Accounts (TGAs), and a set of products to support all other agencies in the general government, including among others lockboxes, TGAs, the Fedwire Deposit System, the Plastic Card Network, Pay.gov, and a variety of EFT credit and debit systems. Through this suite of products, the program allows all individuals and organizations, regardless of location or means, to transact with any Federal agency. FMS staff who administer the Collections Program meet daily with Federal agency finance offices to ensure proper support for the collection needs of every Federal program.

YES 20%
Section 1 - Program Purpose & Design Score 100%
Section 2 - Strategic Planning
Number Question Answer Score

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The strategic goal of the Collections Program is to process Government receipts through an "all-electronic Treasury." Two long-term performance measures have been established to evaluate this goal: (1) the percentage of dollars collected electronically (outcome), and (2) the percentage of revenue transactions executed electronically (output). These performance measures also embody our tactical efforts to reduce errors and exceptions in deposits, since the single most important factor in reducing errors and exceptions is to move from paper to electronic collections.

Evidence: Goal #2 of the FMS Strategic Plan states that the Collections Program must "provide for the timely collection of Federal Government receipts, at the lowest cost, through an all-electronic Treasury." Appendix A of the Strategic Plan includes the two long-term performance measures. In addition, the Strategic Plan includes underlying objectives, strategies, and action plans for meeting the Goal and the performance targets. The "percentage of dollars collected electronically" outcome measure best captures the critical need for the more efficient and effective electronic systems of collection.

YES 12%

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: The targets that FMS has set for the Collections Program are that 90 percent of the dollar amount of all Federal collections will be made electronically, and 60 percent of all Federal collection transactions will be made electronically, by 2010. These ambitious targets are accompanied by appropriate timeframes.

Evidence: In FY 2003, 80 percent of the dollars and 36 percent of the transactions were processed electronically. The long-term targets aim to cut the dollar amount of paper collections by 50 percent, and to cut the number of transactions exectued via paper by 38 percent, over the next 6 years. These targets are ambitious because they entail changing the financial habits of over 6 million small businesses and even more individuals who prefer to make payments via checks or cash and who resist government initiatives or requirements to use more efficient mechanisms. (See the FY 2003 Performance and Accountability Report.)

YES 12%

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: The Collections Program has two annual performance measures that tie directly to the long-term goals: (1) the percentage of dollars collected electronically for the fiscal year, and (2) the amount of revenue processed through Pay.gov, FMS's Internet collection portal. The first annual measure mirrors the long-term measure, and the second annual measure serves as a proxy for determining the amount of currency and check collections that have been displaced by Internet transactions. In addition, the Collections Program also includes annual performance measures on the cost of the Electronic Federal Tax Payment System, the largest component of the Collections Program, and on the satisfaction of Federal agency customers.

Evidence: FMS's Congressional Budget Justification has included the annual performance measure on the percentage of dollars collected electronically since FY 1996. The performance measures on Pay.gov collections and customer satisfaction were introduced in the FY 2002 and FY 2005 justifications, respectively. The FY 2006 justification will include these three measures and a new performance measure on the overall cost effectiveness/efficiency of the Collections Program (which will replace the more limited cost measure for EFTPS).

YES 12%

Does the program have baselines and ambitious targets for its annual measures?

Explanation: Each year, FMS baselines its performance against the annual targets and sets new target amounts for the upcoming fiscal year. For FY 2004, the FMS target is that 81 percent of the dollar amount of Federal collections will be processed electronically, and that $10 billion will be collected through Pay.gov.

Evidence: In FY 2003, 80 percent of the dollar amount of Federal collections was made electronically. This 1 percent target increase for FY 2004, which represents approximately an additional $22 billion per year, keeps FMS on pace for its goal of reducing the dollar amount of paper collections by 50 percent by 2010. In FY 2003, Pay.gov processed $3.8 billion. The $10 billion target for FY 2004 more than doubles this amount. The FY 2005 FMS Congressional Budget Justification links actual performance to performance targets.

YES 12%

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: FMS must develop stronger policies and techniques to convince its customer Federal agencies, as well as some of its agent commercial banks, to eliminate paper-based collections, while respecting the rights of citizens and businesses to tender payment to the government in a variety of ways. There is sensitivity to requiring and/or offering incentives to citizens and businesses to pay the Government electronically and there are also legal and structural impediments that prevent partners from working toward the annual and long-term goals that need to be overcome.

Evidence: In the case of FMS's customer Federal agencies, some view the issue of paper vs. electronic collections as outside their responsibilities, and some have vested interests in maintaining the staff that help process paper collections. In the case of FMS's agent commercial banks, some can generate more revenue for processing paper transactions than electronic transactions, for a variety of reasons. In the case of Federal Tax Deposits, commercial banks may charge customers for making electronic payments to the Government, but regulation prohibits them from charging for paper payments (31 CFR 203), and Federal statutes and regulations provide that small businesses have the right to pay taxes via paper coupon. (See e.g., 26 USC § 6302; 64 Fed. Reg. 37675; 26 CFR § 31.6302-1(h)).

NO 0%

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: Numerous independent evaluations are conducted each year. The Treasury OIG and GAO conduct audits annually of major aspects of the Collections Program. In addition, the annual audit of FMS's financial statements includes an audit of the financial results of the governmentwide Collections Program (the so-called "Cash Audit"). Moreover, FMS requires the banks that administer its largest systems, including EFTPS, lockboxes, and the Plastic Card Network, to engage independent public accounting firms to assess their activities as financial agents of the United States. The systems administered by these particular banks process over 85% of the funds in the Collections Program. Finally, since 2002 Federal Reserve audit staff has been engaged to conduct full life cycle audits on all new collections systems managed by Federal Reserve Banks. These Federal Reserve audits are conducted full time, side by side with program staff, with monthly reports on any potential business, technical, legal, or financial risks.

Evidence: Collections Program activities are continually subject to audits by the Treasury OIG, GAO, Federal Reserve audit staff, and independent public accounting firms. In 2003, moreover, FMS conducted various "as needed" evaluations, including one by the Mitre Corporation and McKinsey & Co. of the entire program's architecture and that of its single largest component, the Electronic Federal Tax Payment System. Another analysis completed in 2003 was conducted by Northrup Grumman on the continuity plans for the FMS lockboxes that support IRS check collections. While some reviews have identified deficiencies in computer security, all reviews validate that the program is accomplishing its mission effectively and processes all Federal revenue timely and accurately.

YES 12%

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: FMS's budget is fully aligned with its program activities, including the Collections Program, and is directly tied to the purposes and strategic goals of the programs. The budget request includes amounts associated with the direct Federal FTE that support the program. Banking costs of the Collections Program are reported under FMS's permanent and indefinite appropriations to pay for financial and fiscal agent banks.

Evidence: FMS's annual budget requests clearly indicate the full cost of achieving all performance goals. (See FMS's FY 2005 Congressional Budget Justification.) FMS can assess the year-over-year marginal costs of its major performance indicators ' the percentage of collection dollars and collection transactions processed electronically ' through its agency-wide activity based cost allocations for electronic and non-electronic collection activities, as well as for tax and non-tax collection activities. This data and other information is used as part of the budget deliberation process to project future strategic goals, performance measures, and targets.

YES 12%

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: The substantive strategic planning deficiency of the Collections Program, regarding partner commitment to the strategic program goals, is identified in Question 2.5 above. Upon renewal or rebidding of banking arrangements that support the Collections Program, a review is done to determine how to align the interests of banks, agencies, and remitters with the strategic goals of the program. In addition, the program's largest component, the Electronic Federal Tax Payment System, has a number of current initiatives to increase usage by the 6 million businesses, as well as the 10 million individuals submitting estimated filings, that continue to pay Federal taxes via paper.

Evidence: In 2003 and 2004, examples of steps taken to align the interests of FMS partners with Collections Program goals include: (1) rebidding of the General Lockbox collection network with a new structure that eliminates disincentives to electronic collections, (2) review of the Plastic Card collection network by an independent consultant prior to rebidding the service, and (3) hiring a commercial research and marketing firm to conduct qualitative and quantitative studies on businesses that remit tax payments via paper.

YES 12%
Section 2 - Strategic Planning Score 88%
Section 3 - Program Management
Number Question Answer Score

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: Performance information directly related to the key annual and long-term performance measures is collected on a daily, monthly, and quarterly basis, using a consistent methodology. The data is analyzed, reconciled, and distributed to program and senior management on a quarterly and annual basis to track the performance measures and set future metrics. For FY 2005, FMS is also implementing a customer satisfaction survey for its collections customers

Evidence: Commercial banks supporting the Collections Program report deposit information by collection system and settlement mechanism daily, and report overall account activity and submit account analysis statements of all transactions and costs monthly. Federal Reserve Banks report deposit information daily and report costs quarterly. The Collections Program staff produces the Total Collections Report on all transactions, by type and cost, on a quarterly and annual basis, using information provided by the agent banks and reconciled against information provided by key Federal agencies including IRS. In FY 2004, FMS deployed the new CA$H-LINK II deposit reporting system to automate the submission and validation of the monthly commercial bank reports. This system is also used to produce ad hoc collection activity reports for each Federal agency, from which agency specific collections strategies are developed in accordance with the performance measures. In FY 2002, FMS produced the governmentwide Collections Study to definitively baseline all Federal revenue programs.

YES 14%

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: FMS managers are held directly accountable for all program results. Commercial banks that support the program operate under service level agreements, with financial penalties, tied to performance standards.

Evidence: The specific annual performance and schedule targets for the Collections Program are included in the annual performance plans of FMS managers. Agreements with all commercial banks hold them financially liable for the timeliness, accuracy, and availability of deposits and related accounting information. In addition, the commercial banks that process checks (and tax forms) through the IRS lockboxes are held financially accountable through special performance measures on capacity and accuracy that apply during the March/April/May tax surge. The new agreement with the financial agent bank supporting EFTPS, the largest component of the collections program, includes incentive awards for eliminating paper transactions and penalties if electronic transactions miss volume targets.

YES 14%

Are funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: The Collections Program is funded through permanent and indefinite appropriations for banking costs, as well as an annual salaries and expenses account. The annual salaries and expenses account funds the staffing costs for the program and follows a predictable spending pattern largely driven by payroll costs. The permanent and indefinite appropriations are used only to pay financial agent commercial banks and fiscal agent Federal Reserve Banks that support the program. Through FY 2003, the commercial banks were paid via compensating balances of public money, and were switched to payments from a permanent and indefinite appropriation beginning in April 2004. The Federal Reserve Banks have been paid via a permanent and indefinite appropriation since FY 1998. The timing of obligations for banking costs is not germane given the permanent nature of the source of funds.

Evidence: Use of the permanent and indefinite appropriations (as well as the compensating balances) is restricted to paying only financial and fiscal agents, which in turn are restricted in role to providing only services related to deposits of public money, guaranteeing that all program funds are used only for the intended purpose. (See 12 USC §§ 391a and 5018 Note, Pub. Law No. 108-199, Div. F, Title II, § 218.) Compensation to financial agents is based only on services rendered for the actual revenue collected and deposited into the Treasury.

YES 14%

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: The Collections Program uses a variety of procedures to promote efficiency and effectiveness, including competitive selection of financial agent banks, incentive payments for enabling electronic collections, and special bank designations to foster the use of emerging technology. In addition, the Collections Program is subject to a new IT architecture to regulate investment and program decisions.

Evidence: Governmentwide collections systems, as well as the major collection systems designed for IRS, are competively sourced to financial agent banks. Financial agent banks are compensated with incentive payments for enabling agency collections cash flows on the Pay.gov Internet collection system. The FMS Collections Architecture was documented in FY 2003 and includes an end-state IT system architecture with which all systems development must comply, as well as a rigorous governance process for new IT investments by FMS and its agent banks. All FMS collections systems have full certification and accreditation and comply with the most up to date FISMA guidance.

YES 14%

Does the program collaborate and coordinate effectively with related programs?

Explanation: The Collections Program supports every Federal agency and program in revenue collection. FMS enters into "participation agreements" with all Federal agencies to document coordination across programs, including cost and resource sharing. It requires collaboration at the program, technical, and management levels across the Government. It employs a variety of mechanisms to foster coordination, including joint planning, interagency agreements, direct technical integration, cost sharing, joint conferences and workshops, and joint marketing efforts. In addition, the Collections Program is directly integrated with FMS's Governmentwide Accounting (GWA) Program.

Evidence: Customer Federal agencies participate in the requirements documentation and selection panels of competitive bank designations. The Collections Program staff has liaisons to all major agencies to design and implement joint accounting, reporting, and operating procedures. With the IRS, (the largest Collections customer) FMS maintains joint executive management committees to set policy and allocate resources. Other large customers such, as the Bureau of Citizenship and Immigration Services, assign employees to work at FMS collections facilities to share operational responsibilities. Within FMS, the Collections Program coordinates with the GWA Program to provide receipts data for the Daily Treasury Statement, the Monthly Treasury Statement, and the Annual Financial Report of the US. This internal and external collaboration with related programs helps ensure that customers adopt the most efficient collection mechanisms, that costs are contained, and that the Collections Program produces more timely and useful electronic information.

YES 14%

Does the program use strong financial management practices?

Explanation: FMS has no material weaknesses from audits of its Collections Program. All systems meet statutory requirements on financial management and provide financial information timely and accurately to FMS and agencies governmentwide.

Evidence: FMS has consistently received a clean audit opinion on its schedules of non-entity governmentwide cash (FY 2002 through 2003), which includes funds processed for agencies under the Collections Program. FMS's Program Integrity Division conducts internal reviews of the Collections Program as required by FMFIA and FMS's Five Year Management Control Program. In FY 2004 Congress authorized a permanent and indefinite appropriation for banking costs associated with the Collections Program, demonstrating that it meets the highest governmental standards for control and administration of program funds.

YES 14%

Has the program taken meaningful steps to address its management deficiencies?

Explanation: FMS aggressively identifies and corrects deficiencies in the Collections Program through regular internal management reviews and reviews conducted by numerous independent parties.

Evidence: Over the last two fiscal years, FMS has developed a Collections Architecture to improve IT project management and investment, hired a professional research firm to conduct quantitative and qualitative analysis on the barriers to electronic tax collection, renegotiated its banking agreements for EFTPS leading to annual cost savings of 65 percent, instituted a Bank Review Office to enforce operations requirements at financial agent banks through unannounced reviews, entered into an agreement with Federal Reserve auditors to review FMS systems operated in Federal Reserve data centers, and engaged numerous third parties to conduct physical security reviews, American Institute of Certified Public Accountants Statement of Auditing Standards No. 70 (SAS 70) reviews, and IT security reviews of collection banks.

YES 14%
Section 3 - Program Management Score 100%
Section 4 - Program Results/Accountability
Number Question Answer Score

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: The Collections Program has demonstrated consistent progress towards its long-term performance goals on electronic collections outlined in the FMS Strategic Plan. In addition, FMS has taken concrete steps to upgrade its systems, its program governance, and its regulatory regime to foster further progress towards the goals. However, FMS must develop stronger policies and techniques to convince its partners (customer Federal agencies, as well as some of its agent commercial banks) to eliminate paper-based collections, while respecting the rights of citizens and businesses to tender payment to the government in a variety of ways.

Evidence: Over the last five years, the percentage of the dollar amount of collections made electronically has increased from 72 percent to 80 percent, and over the last three years the percentage of collection transactions executed electronically has increased from 29 percent to 36 percent. FMS has deployed 4 new governmentwide systems to enable increases in electronic collections (the Internet Credit Card Collections system, Pay.gov, Paper Check Conversion, and the new Fedwire Deposit System), and added an Internet channel to EFTPS to foster electronic tax payments by small businesses and individuals. Numerous changes have been made to the regulations governing Federal EFT transactions (31 CFR 210) to allow for more electronic collections.


Does the program (including program partners) achieve its annual performance goals?

Explanation: Over the last 3 fiscal years, FMS has met most of the annual performance goals established in its 3 tracking categories for the Collections Program. In addition, FMS must continue to work with its program partners on policy and techniques to move toward the elimination of paper-based collections.

Evidence: FMS met its annual targets on the percentage of the dollar amount of collections made electronically in fiscal years 2001, 2002, and 2003, with percentages of 75 percent, 79 percent, and 80 percent respectively. This means that in FY 2003 $1.8 trillion out of $2.3 trillion in total revenue was processed electronically in the Collections Program. FMS met its $2 billion target for the amount of revenue collected over the Internet through Pay.gov in FY 2002. In FY 2003, FMS was under its $5 billion target for Pay.gov by $1.2 billion, but this performance shortfall represents only 0.05 percent of total revenue in the overall Collections Program. Changes implemented by FMS in FY 2004 will dramatically reduce the costs of EFTPS in the future.


Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: Over the last year, the Collections Program demonstrated tangible efficiency gains in cost effectiveness, outsourcing additional activities to financial and fiscal agents, and meeting schedule targets.

Evidence: FMS re-negotiated the EFTPS banking agreements to achieve a 65 percent reduction in annual costs while increasing the performance and reducing the overall risk of the system by moving from two banks to a single provider. FMS also successfully re-bid the governmentwide General Lockbox Network, which incorporates new mechanisms to increase competition between agent banks across the country. In addition, FMS deployed the Paper Check Conversion system, which allows agencies to convert collected checks into EFT debits, to 30 new agencies. FMS outsourced day-to-day operations for its 350 Treasury General Account (TGA) collection banks to the Federal Reserve Bank of St. Louis.

YES 20%

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The closest programs with similar purposes and goals are the collections activities of large state governments. However, meaningful head-to-head performance comparisons are difficult due to unique Federal laws, particularly on tax collections, as well as the unequalled scale and scope of the FMS Collections Program, which processes over $2 trillion through over 10,000 registered financial agent banks. Nevertheless, available data indicate that the FMS Collections Program compares favorably to that of state governments and the private sector.

Evidence: EFTPS is the state-of-the art model for tax collections, and over 30 state governments have contracted with FMS's two EFTPS providers to obtain the same service established at the Federal level. FMS's regulations on Federal use of EFT permit electronic transactions in more instances and with greater ease than allowed commercially under industry rules. For example, the banking industry recognizes FMS as the leader in promoting the use of "check conversion," or the process of converting a paper check into an electronic debit processed through the Automated Clearinghouse (ACH).

YES 20%

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: Program components have had numerous GAO, OIG, and independent third party reviews. All reviews validate the effectiveness of the program in timely and accurately processing over $2.3 trillion annually. The largest systems in the Collections Program are considered part of the critical infrastructure, and the program's proven day-to-day performance is essential to hundreds of other Federal programs and the operation of the Government as a whole.

Evidence: In the last 2 years, GAO has audited Pay.gov and IRS lockboxes, and the OIG has audited the Plastic Card Network and all collections systems that process personal citizen information. McKinsey, KPMG, PWC, Booz Allen, Mitre, First Annapolis, and Northrop Grumman have conducted various independent internal control reviews, IT reviews, continuity of operations reviews, and program reviews. All lockbox banks are required to conduct SAS 70 reviews annually. (SAS 70 reviews provide an independent auditor's opinion on the control objectives and control activities, including IT controls, for an external service organization, such as a bank or Internet hosting center.)

YES 20%
Section 4 - Program Results/Accountability Score 87%

Last updated: 09062008.2004SPR