Evaluation of the expanded off-line electronic benefits transfer system in Ohio moving to a statewide EBT system using smart cards for food stamps : interim report.

              USDA
United States
Department of
Agriculture
Food and
Nutrition
Service
Office of
Analysis,
Nutrition, and
Evaluation
Evaluation of the Expanded
Off-Line Electronic Benefits
Transfer System in Ohio
Moving to a Statewide
EBT System Using Smart
Cards for Food Stamps
Interim Report
ft
USDA
Unit.d States
Dapartmamt of
Agriculture
Food and
Consumer
Service
3101 Park
Center Drive
Alexandria, VA
22302-1500
Evaluation of the Expanded Off-Line EBT System in Ohio:
Moving to a Statewide EBT System Using Smart Cards for Food
Stamps
Enclosed is a copy of Evaluation ofthe Expanded Off-Line EBT System
in Ohio: Moving to a Statewide EBT System Using Smart Cards for
Food Stamps).
This report examines the early stages of converting a small
demonstration of an off-line EBT system (smart cards) to a Statewide
system. It describes how the system works, the process undertaken
by the State of Ohio and its EBT vendor to design, develop, and test
the EBT system, early implementation experiences, and the cost of
system design and implementation.
If you have questions about the content of this report or need additional
copies, please contact the following:
Office of Analysis and Evaluation
Food and Consumer Service
3101 Park Center Drive
Alexandria, Virginia 22302
Phone (703) 305-2133
ENCLOSURE
j£
Abt Associates Inc.
Evaluation of the
Expanded Off-Line
EBT System in
Ohio
55 Wheeler Street
Cambridge, Massachusetts
02138-1168
617 492-7100 telephone
617 492-5219facsimile
Hampdcn Square, Suite 600
4800 Montgomery Lane
Bethcsda, Maryland
20814-5341
301 913-0500 telephone
301 652-361 % facsimile
640 North LaSalle Street
Suite 400
Chicago, Illinois
60610-3781
312 867-4000 telephone
312 867-4200 facsimile
Moving to a
Statewide EBT
System Using
Smart Cards for
Food Stamps
FNS 53-3198-4-022
March 1999
Prepared for
Jenny Genser
USDA/FNS/OANE
3101 Park Center Drive
Alexandria, Virginia 22302
Prepared by
Paul Elwood
John Kirlin
Seth Cooper
Sandra Nolden
Christopher Logan. Abt Associates
Eugene Costa
Cheryl Owens, Phoenix Planning &
Evaluation
M-
Acknowledgments
On behalf of the authors, I would like to thank the many individuals at the Ohio Department of Human
Services (ODHS), the EBT vendors, and at FNS who assisted us in the preparation of this report.
Within ODHS, special thanks go to Mr. David Schwartz, the project director for the Direction Card"4
system. Mr. John Scaggs and Ms. Elinor Kohler of ODHS also assisted with our data collection efforts.
We would also like to thank those county staffwho provided information on county implementation
efforts. There are too many staff to enumerate them all here, but we would especially like to express our
gratitude to Janet Converse of the Montgomery County Department of Human Services (CDHS), K'Anna
Black of the Miami CDHS, Linda O'Neal of the Clark CDHS, Charlotte Rangi of the Greene CDHS, and
David Erbaugh of the Preble CDHS. These EBT coordinators were quite willing and gracious to spend
time with us and explain the EBT implementation process during our site visits and follow-up telephone
calls.
A team led by Citicorp Services, Inc. (Citibank) is responsible for the design, development,
implementation and operation of the Direction Card"* system. The Citibank project director is Mr Marc
Abramson, and he is assisted by Ms. Lucy Roberts. Both were quite willing to work with us n we
endeavored to leam how the system operates and how it is being implemented. Other members of the
Citibank team who have been equally helpful to us are Mr. Charles Feicht and Mr. Joseph McCorkhill of
Century Technologies, Inc. (CENTECH), and Mr. John Bianco of Stored Value Systems (SVS).
At FNS, I would like to thank Ms. Joyce Kohler, who is FNS' EBT liaison for the State of Ohio. She
helped us considerably in our efforts to understand the relationship between FNS and ODHS iis the state
embarked on this ambitious project. Most especially, however, I wish to thank Ms. Jenny Gervser, who
serves as the FNS project officer for the evaluation of the Direction Card9** system. Ms. Gender has
provided thoughtful guidance and considerable support to this evaluation. I would also like to thank
those staff, past and present, within the FNS Office of Analysis and Evaluation who reviewed the draft of
this report and provided many useful comments and suggestions. These reviewers include Mr. Steven
Carlson, Ms. Julie Kresge, Ms. Margaret Andrews, and Ms. Carol Olander.
Finally, I wish to thank the other members of the evaluation's project team who contributed to this report.
The project's technical reviewer is Mr. Chris Hamilton, and Ms. Carissa Climaco provided analytic
support Ms. Susan Byers Paxson produced this report and its graphics. I am also indebted to the
support provided by Mr. Eugene Costa and his staff from Phoenix Planning & Evaluation, subcontractor
to Abt Associates on this evaluation.
John Kirlin
Project Director
Abt Associates Inc.
Contents
Executive Summary 1
Chapter 1: Introduction 7
1.1 Evaluation Objectives 7
1.2 On-Line and Off-Line EBT Systems 8
1.3 Previous Off-Line EBT Demonstrations 9
1.4 The Ohio Direction Card** System 10
1.5 Report Organization 11
Chapter 2: System Description and Operation 13
2.1 Introduction 13
2.2 Organizations 13
The Ohio Department of Human Services 13
County Departments of Human Services 13
The Citibank Team 14
The Food and Nutrition Service, USDA 14
2.3 Overview of the Direction Card"" System 14
Smart Cards 15
System Processor Host Computer 15
State Recipient Information System 17
Card Management System 17
POS Equipment 17
Telecommunications Facilities 18
2.4 Operations Overview 19
Card Issuance and Training 19
Benefit Issuance and Collection 21
Benefit Redemption 23
Manual Transactions 23
Retailer Settlement 24
2.5 Differences Between the Direction Card9** and PayEase Card Systems 25
Equipment 25
Operational Improvements 26
Reporting 27
Security 28
Chapter 3: System Design and Development 31
3.1 Introduction 31
3.2 Contract Procurement 31
3.3 System Design 33
System Design Activities 34
Detailed System Design Document 38
3.4 System Development 40
3.5 System Testing 41
Abt Associates Inc.
/
Contents
Test Plans 42
Acceptance Test 43
Chapter 4: Design and Development Costs 45
4.1 Introduction 45
4.2 Research Design and Data Sources 45
4.3 Overview of Design and Development Costs 47
4.4 Vendor Design and Development Costs 48
Citibank 49
Century Technologies, Inc 49
Stored Value Systems 50
4.5 Ohio Department of Human Services Design and Development Costs 50
4.6 County Design and Development Costs 51
4.7 Comparison of Design and Development Costs to the Pilot 52
Chapter 5: System Implementation 55
5.1 Introduction 55
5.2 Sequencing of System Implementation 56
5.3 Implementation Plan 58
5.4 Retailer Conversion Activities 60
5.5 County Conversion Activities 61
5.6 Recipient Conversion Activities 64
5.7 Implementation Problems 67
Software Problems 67
Hardware Problems 68
Chapter 6: Current System Operations 69
6.1 Introduction 69
6.2 Benefit Issuance and Collection Activities 70
6.3 Benefit Use 71
6.4 Settlement 73
6.5 Card Deployment 74
6.6 Customer Service 75
6.7 Conclusion 78
Appendix A: Glossary 79
Contents AM Associates Inc.
/
List of Exhibits
Exhibit 1 • 1: Key Events in Design, Development, and Implementation of the Direction Card**
System II
Exhibit 2-1: Direction Card"* Transaction Types 16
Exhibit 2-2: Card Authorization Form 20
Exhibit 2-3: ACO/FCO Authorization Form 22
Exhibit 3-1: Key Procurement and Contract Events 32
Exhibit 3-2: Key System Design and Development Events 34
Exhibit 3-3: Proposed Changes to System Design 35
Exhibit 4-1: Total Design and Development Costs 47
Exhibit 4-2: Total Design and Development Costs, by Cost Category 48
Exhibit 4-3: Vendor Design and Development Costs 48
Exhibit 4-4: Vendor Design and Development Costs, by Cost Category 49
Exhibit 4-5: ODHS Design and Development Costs 51
Exhibit 4-6: ODHS Design and Development Costs, by Cost Category 51
Exhibit 5-1: County Clusters to Be Converted to EBT 57
Exhibit 5-2: Counties Converted to Off-Line EBT 58
Exhibit5-3: Number of Active EBT Cases, by Month and County 64
Exhibit 5-4: Number of Active EBT Cases Statewide 65
Exhibit 6-1: EBT Food Stamp Cases, by County 69
Exhibit 6-2: Benefit Issuance and Collection - May 1998 71
Exhibit 6-3: Issuance Collection Activities at County and Retailer Locations - June 1998 72
Exhibit 6-4: Average Value of Purchase Transactions, April 1997 - June 1998 73
Exhibit 6-5: Average Value of Retailer Settlement Transactions, April 1997 - June 1998 74
Exhibit 6-6: Card Deployment - June 1998 75
Exhibit 6-7: Number of Recipient Calls Received, October 1997 - June 1998 76
Exhibit 6-8: Number of Retailer Calls Received, October 1997- June 1998 77
Exhibit 6-9: Recipient Calls - June 1998 78
AM Associates Inc.
//
Contents iii
Executive Summary
To explore the suitability of off-line electronic benefits transfer (EBT) as an alternative to paper issuance
and on-line EBT issuance systems, the U.S. Department of Agriculture's Food and Nutrition Service
(FNS) has supported the Ohio Department of Human Services (ODHS) in expanding off-line EBT
issuance to all Food Stamp Program (FSP) recipients in the state. A pilot project in Dayton, Ohio and a
demonstration of a combined W1C-EBT off-line system in Wyoming have clearly established the
technical feasibility of off-line EBT for FSP benefit issuance Both the Ohio and Wyoming pilot
projects, however, were small in scale, and both incurred higher administrative costs than the paper
coupon issuance systems they replaced.
Now nearing the latter stage of statewide implementation, the Ohio Direction Card8*" system will provide
FSP benefits to about 300,000 households in 88 counties when it is fully operational in August 1999.
This report describes how the new Direction Card8* system works; the process undertaken by ODHS and
its EBT vendor to design, develop, and test the system; early implementation experiences; and the cost of
system design and development. The evaluation's final report will compare the ongoing administrative
costs of system operations and system levels of benefit loss and diversion to those of on-line EBT
systems and the Dayton pilot, as well as provide an estimate of system implementation costs.
Off-line Versus On-line EBT Systems
The most distinguishing feature of the Direction Card3" system is that it is an off-line EBT system.
Nearly all EBT systems operating in the country today are on-line systems that work very much like bank
debit card systems. That is, recipients are issued magnetic stripe EBT cards that are used at food store
point-of'-sale (POS) terminals to access their FSP benefits. At the checkout counter, the recipient enters
his or her personal identification number (PIN) in the terminal to authorize EBT payment of the food
stamp purchase. The terminal immediately uses a telecommunications network to connect to the EBT
system's host computer, which maintains a special EBT account for the recipient. If the PIN is verified
and benefits remaining in the account are sufficient to cover the requested purchase, the transaction is
authorized and the recipient's remaining balance is reduced by the amount of the sale. The retailer is
reimbursed at the end of the day during system "settlement," which leads to an electronic transfer of
funds from an EBT account maintained at the U.S. Treasury to the retailer's depository institution
In contrast, an off-line EBT system maintains current information about a recipient s remaining balance
within the card itself Both Ohio and Wyoming use "smart cards," plastic cards the size ofa credit or
debit card, but which have a microprocessor and memory chip embedded within the card. These elements
allow the card to store information and to perform a range of mathematical calculations and logic checks.
This functionality allows all EBT transaction processing to be conducted within and between the POS
terminal and EBT card; there is no need to immediately contact the system's host computer for PIN
verification or remaining balance information, thereby speeding up the checkout process and eliminating
system downtime due to telecommunications problems. During system settlement, information about the
day's EBT purchases is transmitted over a telecommunications network to the host computer, which then
initiates reimbursement to the retailer as in an on-line system.
AM Associates Inc. Executive Summary
Another important distinction between on-line and off-line EBT systems is that, because off-line systems
use cards with greater data storage capacity than magnetic stripe cards, the potential exists to expand off-line
systems to include a wider range of applications than on-line systems. The Wyoming off-line EBT
system serves the Special Supplemental Food Program for Women. Infants, and Children (WIC) as well
as the FSP, and some states are proposing to use smart cards to cany health data. The Ohio Department
of Health and FNS currently are considering whether to add WIC to die Direction Card81* system.
Selection of EBT Vendor
In February 1994, the ODHS issued a Request for Proposals (RFP) for the development, implementation,
and operation of a statewide off-line EBT system. Responses to the RFP were received in July 1994, and
Ohio awarded a contract to Citicorp Services, Inc. (Citibank) in September 1994. Work on system
design and development was delayed, however, by a legal conflict that arose after another bidder,
National City Processing Company (NPC), contended in court that the contract award process had been
flawed. The procurement problems were resolved in April 1996 when Citibank added Stored Value
Systems (SVS), a subsidiary ofNPC, as one of its subcontractors for the EBT project. SVS is
responsible for the design and development of the Direction CardaM system, transaction processing at the
system's host computer, retailer settlement, and operation of the EBT Customer Service Center.
Citibank's other major subcontractor, Century Technologies, Inc. (CENTECH), is responsible for
installing EBT equipment at retail and county office locations and training retailer and county staff in
how to use the system.
The problems with the procurement process delayed the start of the design and development phase, but
the resolution vastly simplified the design and development process by allowing Citibank to build its
EBT system directly on the existing PayEase EBT system that NPC had developed for the Dayton pilot
As a result, the vendors were able to proceed with system development activities concurrently with the
system design effort.
System Design
Although its basic design is quite similar to the predecessor PayEase EBT system, the Direction Card*1
system does contain a number of enhancements. The most significant is that the system takes advantage
of a new generation of smart cards and POS terminals to improve system security. Using a smart card
with more processing capacity than the one used in the PayEase sys'-em, the system's designers have
moved critical security operations from the POS terminal to the smart card itself. This change was
needed because ODHS required that retailers in the Direction Card9* system be allowed to integrate EBT
processing into their existing POS systems, if desired. (To date, however, none have done so because of
the expense involved.) The Direction Card9" terminals also can accept new software downloads via the
telecommunications network from the system's host computer. This greatly facilitates the introduction of
system upgrades.
In the PayEase system, retailers received a "negative file" during dairy settlement. The file contained
records of all EBT cards reported as lost, stolen or damaged and prevented these cards from being
accepted at the POS terminal. Due to the larger size of the statewide Direction Card8* system, smaller
stores (i.e., those with only one POS terminal) now receive a regional negative file. (Multi-lane stores are
Executive Summary A*Associates Inc.
equipped with a personal computer with memory and processing capacity capable of handling a large,
statewide negative file) With regionalization, the negative file sent to a particular single-lane store
includes only those cards reported as lost, stolen or damaged by recipients in the same or nearby counties
If recipients from outside the retailer's region attempt to use their EBT card at the store, the transaction
must be authorized by a phone call to EBT Customer Service.
Another added feature of the Direction Card8" system is that, in those counties serving at least 10,000
FSP recipients, county workers can use a special administrative terminal to access the EBT host directly
to perform certain EBT functions (e.g., review transaction history for a recipient; obtain authorization to
replace a lost, stolen or damaged card). In the Pay-Ease system, county staff had to call Customer Service
to perform these functions.
System Development and Testing
Even though much of the software required for the Direction Card3" system had already been developed
for the PayEase system, the changes in system design and equipment noted above required additional
development effort. With a new smart card with increased functionality, the card's internal operations
had to be programmed Similarly, software programs had to be developed for the system's new POS
terminals.
The host computer's software had to be changed to accommodate some of the new security features of
the Direction Card8* system. One major change was that store refunds and other "value-adding"
transactions could no longer be written directly to the card. Instead, in order to protect the system from
potential fraud and error, all value-adding transactions are sent to the host computer for verification and
later downloading to the recipient's card. Other security-related changes include adding sequential host
reference counters (HRCs) to all value-adding transactions and adding an industry-standard message
authentication code (MAC) to all POS transactions
Other system development activities included: preparation of training materials and procedures for
county staff, retailers, and recipients; preparation of user manuals for county staff and retailers;
development of standard retailer EBT participation agreements; and development of procedures for
installing EBT equipment at retail and county office locations.
System development efforts took place in the summer and fall of 1996 FNS, the system vendor, and
ODHS then prepared for a three-day test of the system in December Due to the extensive testing and
operational experience with the predecessor PayEase system, the test of the Direction Card"* system
focused on those aspects of the system which had been changed Only minor problems were noted during
the test, and FNS formally approved the system on December 17, 1996.
The cost to design, develop and test the Direction Card** system is estimated at $2.4 million This figure
represents the incremental costs of designing and developing the statewide system and does not include
the system design and development costs of the pilot system (which were of approximately the same
magnitude.) The sheer size of the Ohio caseload, and the administrative fragmentation that accompanies
a county-administered FSP. has required the development of complex logistical systems to support
system rollout. As a result, about 60 percent of the $2.4 million in development costs was incurred by
CENTECH
AM Associates Inc. Exacutiva Summary
System Implementation
The overall success of the design and development effort was evident in the smooth transition to the new
system in January 1997. Households and retailers that had participated in the pilot Pay Ease system in
Montgomery County were the first to convert to the Direction Card*' system. Then, in August 1997,
Montgomery County staff began to convert remaining food stamp recipients from outside the pilot area
to EBT. The county's entire FSP caseload was converted to EBT by January 1998.
Beginning in the summer of 1997. Citibank and its subcontractors began to convert other counties in the
southwestern portion of Ohio. The first step was typically an EBT information meeting for county
retailers, during which time CENTECH representatives and ODHS staff explained the new system and
addressed technical and programmatic questions. CENTECH then mailed information packages to all
FSP-authorized retailers in a county, together with retailer POS agreements. Once a retailer returned a
signed agreement, SVS established an EBT account on the host system for the retailer, and CENTECH
shipped EBT equipment to the store. A CENTECH crew then installed the equipment. Finally,
CENTECH staff visited the store (or its regional or corporate office) to train its employees on how to use
the new system.
At approximately the same time within each county, CENTECH staff contacted the county DHS office
and scheduled a date for a site visit. The site visit included a one-hour presentation, a video describing
the Direction Card9** system, and a demonstration of the off-line EBT equipment. CENTECH staff also
determined the office's wiring and equipment needs during the site visit. Thereafter, CENTECH ordered
and installed the EBT equipment and trained county staff in all EBT functions for which they were
responsible, including card issuance and recipient training.
By June 1998, conversion was complete or underway in 19 counties, including Hamilton County in which
Cincinnati is located. In the period between January 1997 and June 1998, the system issued
approximately $76.0 million of food stamp benefits in nearly 537,000 transactions. There were
approximately 48,000 food stamp cases on the system in June, representing about IS percent of the
statewide caseload.
System Operations
The first 18 months of system operations have been relatively free of problems. Some county staff have
had difficulty with their EBT equipment, however, and a pervasive problem during recipient training has
been absenteeism, with many counties reporting that only one-quarter to one-half of their FSP recipients
show up for their initial appointments to receive training and their Direction Cards'". County staff and
system operators also identified a significant problem with the HRC sequencing of value-adding
transactions. In certain situations, problems with the assignment of the counter prevented clients from
accessing an end-of-month supplemental benefit until the next month's regular benefit had been accessed
This problem, which was serious but affected a limited number of recipients, was corrected in September
1998
Executive Summary AM Associates mc.
Next Steps
Since information about implementation experiences was collected for this report, conversion activities
have continued in Ohio. In July 1998, county staff in Franklin County (Columbus) and Cuyahoga
County (Cleveland) began converting recipients to EBT. Together with Montgomery County, three of
the state's largest metropolitan areas are now fully converted or well on their way toward EBT
conversion. Retailer and county conversion activities are expected to be completed throughout the state
by August 1999, with recipient conversion continuing into early 2000.
As noted earlier, the state and FNS are considering whether to add a WIC demonstration to the Direction
Card8" system. The state also plans to pilot test the addition of its Temporary Assistance for Needy
Families (TANF) program to EBT in 1999. Either of these additions would represent a significant
change for the system. Adding TANF would make the Direction Card3*1 system more similar to multi-program
EBT systems implemented in other states with on-line systems. IfWIC is added, the state will
be taking advantage of the increased multi-program functionality offered by a smart-card based, off-line
EBT system.
One of the primary goals of the evaluation is to determine the FSP costs of operating a statewide, off-line
EBT system and to compare these costs to statewide on-line EBT systems. Another goal is to document
the process of system implementation and system operations, and problems encountered, so that FNS and
other states will have more information upon which to base future decisions about EBT system choice.
Thus, the next two years will be important for the Direction Card8" system as the evaluation monitors
system implementation, system operations, administrative costs, and the impact of possible changes in
programs served on operations and cost. The evaluation's final report, scheduled for release in mid-
2001, will address these significant issues.
Abt Associate* Inc. Executive Summary
t MPT* pmrar?
Chapter 1
Introduction
In 1994, the Food and Nutrition Service (FNS) of the U.S. Department of Agriculture authorized
expansion of a pilot electronic benefits transfer (EBT) system operating in Dayton, Ohio. The pilot
system was the first EBT system to employ off-line technology to deliver program benefits in the Food
Stamp Program (FSP). As described later in this chapter, "off-line" EBT systems differ from "on-line"
systems in several important ways. FNS authorized the expansion so that the technical and cost
feasibility of a large-scale, off-line EBT system could be tested.
1.1 Evaluation Objectives
FNS awarded a contract to Abt Associates Inc. in September 1994 to evaluate the expanded EBT
system.1 The evaluation has the following four objectives
1) Describe any additional development, the implementation, and operation of the off-'.ine EBT
system as it expands beyond the pilot site.
2) Quantify and compare the administrative costs of the expanded off-line EBT system with
those of the pilot EBT demonstration in Ohio, with an off-line EBT demonstration in
Wyoming, and with other on-line EBT systems.
3) Quantify and compare losses and diversions of the expanded off-line EBT system with those
of the pilot demonstration and with other on-line EBT systems.
4) Assess the conditions under which a statewide, off-line EBT system is most likely to achieve
cost-neutrality and cost effectiveness.
The Ohio Department ofHuman Services (ODHS) is currently in the last year of a three-year rollout of
the expanded EBT system, which it calls the Direction Card** system This report addresses the first
objective above by describing the new system and the process that ODHS and its EBT vendors followed
to develop and implement the Direction Card"*'system The report also presents estimates of the costs
incurred to design and develop the new system. The evaluation's remaining objectives will be addressed
in its final report, which will be prepared after the system is rolled out and operating throughout the
state.2
1 Contract »53-319S-4-022. Evaluation of Expanded OfT-Line EBT (Ohio)
2 The scheduled release date for the evaluation'* final report is the summer of 2001
/EtEmSESmtM Chapter 1: Introduction
1.2 On-Line and Off-Line EBT Systems
FNS has been fostering the development and use of on-line EBT systems since the early 1980s. An on-line
EBT system works very much like debit card (also called bank card or ATM card) systems offered
by financial institutions. The food stamp recipient is issued a plastic card that has a magnetic stripe
affixed to the back of the card A limited amount of information about the recipient and the card is
encoded on the stripe; typically this information includes the recipient's name, a unique card number, a
unique EBT account number related to the card (which is known as the primary account number, or
PAN), and the recipient's personal identification number (PIN), which is encrypted for security purposes.
The EBT account linked to the card and recipient is established by the EBT system processor All FSP
issuance amounts are posted to this electronic account
When the recipient uses the EBT card to buy food at a program-authorized retailer, the PIN must be
entered into a special EBT terminal at the point of sale (POS) to verify the recipient's identify. The
requested food stamp purchase amount is then key entered into the EBT terminal, and a message is sent
immediately to the EBT system's host computer over a regular or dedicated telephone line The host
computer verifies that the correct PIN has been entered and checks to sec if the recipient's EBT account
has enough funds to cover the requested purchase amount. If it does, then the purchase transaction is
authorized and the amount is debited from the recipient's account balance. Later in the day, the retailer is
reimbursed for all EBT transactions during system "settlement," when an electronic funds transfer is used
to move funds from the EBT vendor's account at a financial institution to the retailer's financial
institution. The retailer's financial institution then credits the retailer's account for the prior day's
transactions.
An off-line EBT system differs from an on-line system in several ways. First, current information about
the recipient's balance of food stamp benefits is maintained in the EBT card itself rather than at the
system's host computer Because the card's data storage requirements in an off-line system are greater
than can be provided with a magnetic stripe card, a different card technology is needed. The most
commonly used technology is the "smart card," which has a microprocessor and memory chip embedded
in the plastic. When the recipient uses the smart card to buy groceries, the EBT card is inserted into the
EBT terminal and the PIN is entered. Software within the terminal and card perform a PIN verification.
Once the PIN is verified, the store clerk enters the requested food stamp purchase amount into the EBT
terminal This information is passed to the smart card, which compares the requested purchase amount to
the balance information stored in the card. If the remaining balance is sufficient to cover the planned
purchase, the transaction is authorized and the remaining balance is reduced by the amount of the
purchase. No phone call to the host computer is needed to authorize the purchase transaction. Instead,
the EBT terminal (or a small computer linked to all the EBT terminals in a store) dials into the system
host computer once a day to transmit information about the day's EBT transactions. The host computer
uses this information to initiate system settlement so the retailer can be reimbursed for the day's
transactions. The information also is used to maintain a "shadow" EBT balance for each recipient. This
shadow balance, which does not reflect purchases made during the day until retailers upload their daily
files to the host computer, is used to restore benefits to a recipient if his or her EBT card becomes lost,
stolen or damaged.
Chapter 1: Introduction Abt Associates Inc.
1.3 Previous Off-Line EBT Demonstrations
The expansion of the off-line EBT system in Ohio is taking place in the context of two prior off-line EBT
demonstrations for FNS. The first is the EBT pilot demonstration in Dayton, Ohio. In 1990, FNS
awarded a contract to National City Processing Company (NPC) to design, develop, implement, and
operate a demonstration off-line EBT system in Dayton. The purpose of the demonstration was to test
the technical and financial feasibility of using off-line EBT technology for delivering food stamp benefits
Seventeen months later, in February 1992, food stamp recipients began using the system. By June 1992,
the off-line EBT system, called "Pay Ease." was fully operational and delivering food stamp benefits to
over 10.000 recipient households.
An evaluation of the Dayton EBT pilot concluded that the Pay Ease system was technically viable and
that, compared to paper benefit issuance, it reduced recipient, food retailer, and financial institution costs
to participate in the FSP. The PayEase system also reduced levels of benefit loss and diversion, again
compared to the paper issuance system. The administrative cost of the PayEase system, however, was
nearly triple the cost of the paper issuance system it replaced Nevertheless, the evaluation concluded
that a potential for significant cost reductions existed, especially in a statewide system where economies
of scale could be realized.3
In 1991. the State of Wyoming conducted a small pilot test of a smart card-based, off-line EBT system
delivering benefits for the Special Supplemental Food Program for Women, Infants and Children (WIC).
In 1993. with support and funding from FNS, Wyoming initiated a larger EBT demonstration involving
both the WIC and FSP programs. Wyoming selected NPC to design and develop the "PayWest" system.
The system, which was implemented in the spring of 1995, serves all WIC and FSP clients in Natrona
County (Casper), and also serves all WIC clients in six other Wyoming counties. The fundamental
difference between the PayWest system in Wyoming and the PayEase system in Ohio arises from
differences between the WIC and FSP programs. Although FSP benefits are dollar denominated and can
be spent on any food stamp-eligible food items in program-authorized stores, WIC benefits are a
prescription for a specific list and quantity of food items. Thus, unlike the food stamp PayEase system in
Ohio, the PayWest system has to compare the specific items being purchased against the WIC
participant's food prescription. Information about the food prescription is loaded and stored on the
PayWest smart card.
The evaluation of the Wyoming EBT demonstration concluded that the PayWest system was technically
feasible and that its reliability matched that of early EBT demonstrations of on-line systems. It offered
more customer services than the paper system it replaced, especially for WIC clients, and program
participants almost universally viewed the EBT system as a more convenient, secure, and dignified way
to deliver benefits than either WIC checks or food stamp coupons. It was, however, considerably more
expensive to operate than the paper delivery systems it replaced. The evaluation concluded that several
Gary L. Glickman el ai. Evaluation ofthe Off-Line Electronic Benefits Transfer Demonstration: Summary ofFindings.
Rockville. MD: Phoenix Planning & Evaluation. Ltd.. May 1994
Abt Associates Inc. Chapter 1: Introduction
factors, including operating the system on a larger scale, could dramatically reduce system operating
costs.4
1.4 The Ohio Direction Card8*4 System
Based on its experience with the PayEase system in Dayton, the Ohio Department of Human Services
(ODHS) became "convinced of the efficiency and cost effectiveness of off-line technology, as well as its
acceptability to recipients, retailers, and financial institutions"5 ODHS therefore decided that it wanted
to implement a statewide EBT system using off-line technology. The expanded system initially would
issue food stamp benefits, although there was also interest in adding other programs to the system,
including W!C and cash benefit programs.
In February 1994, ODHS issued a Request for Proposals (RFP) for the development, implementation and
operation of a statewide, off-line EBT system. ODHS awarded the EBT contract to Citicorp Services,
Inc (Citibank) on September 20,1995, and contract work began October 30. A suit seeking an
injunction against the award was filed soon thereafter, however, and a lengthy period of legal activities
and negotiations ensued. Citibank ultimately submitted a revised proposal with a new set of
subcontractors, which was acceptable to all parties, and contract work resumed in July 1996. Seven
months later, on January 1,1997, recipients in Dayton converted to the new Direction Card** system.
Since that time, the new system has been rolled out throughout the rest of Montgomery County and in a
number of other Ohio counties. Exhibit 1-1 presents key dates for the process of designing, developing,
and implementing the statewide EBT system in Ohio.
1.5 Report Organization
This report has several objectives. The first is to describe how the new Direction Card** system works.
To this end. Chapter Two describes the Direction Card"" system and identifies those areas in which the
new system differs in design and operation from the pilot PayEase system. The report also documents
the process by which the Direction Card** system was designed and developed, which is the subject of
Chapter Three. Chapter Four presents the results of an analysis of the costs of designing and developing
the Direction Card** system. Chapter Five documents the process of implementing the system, both in
Montgomery County where the pilot system operated, and in other counties where EBT is a totally new
method for delivering FSP benefits. (No information on implementation costs is presented herein
because implementation efforts will not be completed until late I999.)6 Finally, Chapter Six describes
system operations in June 1998, providing a "snapshot" of system characteristics in the second year of
the three-year process of statewide implementation A glossary of acronyms and technical terms is
included as an appendix.
4 William Hamilton el al. Costs and Impacts ofthe Wyoming Smartcard EBTSystem. Cambridge. MA: Abt Associates Inc
May 1997.
J < >hio Department of Human Services. Food Sump Electronic Benefits Transfer System RFP. February 28. 1994. p. 3.
6 The evaluation's final report will provide estimates of implementation costs, as well as ongoing operating costs and levels of
benefit loss and diversion within the Direction Card*" system. These estimates will be compared to those for the pilot PayEase
system and for on-line EBT systems.
10 Chapter 1: Introduction AM Associates Inc.
Exhibit 1-1
Kay Events in Design, Development, and Implementation of the Direction Card9** System
September 1990
February 1992
July 1993
February 1994
July 1994
September 1995
October 1995
January 1996
April 1996
June 1996
July 1996
October 1996
December 1996
January 1997
September 1997
FNS awards NPC a contract to design, develop, implement, and operate a
demonstration off-line EBT system in Dayton, Ohio.
First recipients converted to pilot PayEase EBT system.
ODHS submits to FNS a Planning Advanced Planning Document (PAPD) for
statewide rollout of off-line EBT.
ODHS issues RFP for the development, implementation and operation of the
Ohio Electronic Benefit Transfer Food Stamp benefits distribution system.
Citibank submits its proposal to the RFP.
ODHS signs EBT contract with Citibank.
NPC files suit against ODHS and Citibank.
Initial kick-off meeting for the Ohio EBT project.
Judge rules in favor of NPC, directs Ohio to re-solicit cost proposals from
Citibank and NPC.
Citibank submits revised Final Proposal with NPC as a subcontractor.
Ohio approves revised proposal.
Second kick-off meeting for the Ohio EBT project.
Citibank submits final version of Detailed System Design Document.
Citibank team begins three-day acceptance test of EBT system.
FNS approves Direction Card8* system.
Direction Card3*" system begins operations.
Expansion begins in Montgomery County
AM Associates Inc. Chapter 1: Introduction 11
K
Chapter 2
System Description and Operation
2.1 Introduction
The Direction Card9" program represents the first statewide initiative to use smart cards for off-line EBT
applications. This program builds on the state's EBT pilot project, known as the PayEase system, that
was used to deliver FSP benefits to a segment of the food stamp population in Montgomery County.'
Once completed, the Direction Card"* system will provide access to food stamp benefits for over
300,000 households across all 88 counties in Ohio.
2.2 Organizations
The design, development, implementation, and operation of the Direction Card"* system for the delivery
of food stamp benefits involved the coordination of several public and private organizations. Their
principal roles and responsibilities are outlined below.
The Ohio Department of Human Services
The ODHS administers the federally-funded FSP, serving all households who meet the eligibility criteria
based on income and household size. The ODHS administers the contract with the EBT service
provider—Citicorp Services, Inc. (Citibank)—and assumes all contract management functions. In this
capacity it serves to assure that the system being developed satisfies the requirements outlined in its RFP
and contract. Its data center operates and maintains the state's integrated public assistance system
(known as the Client Registry Information System - Enhanced, or CRIS-E) that interfaces with the EBT
service provider's computer system on a dairy and monthly basis to effect the transfer of issuance data
and other information necessary to operate the EBT system.
County Departments of Human Services
In Ohio, the 88 County Departments ofHuman Services (CDHS) assume direct responsibility for FSP
administration. Five different operational areas within each CDHS are affected by EBT The five areas
are:
• Caseworkers, who determine recipient eligibility during certifications and recertifications
Caseworkers gather data from recipients during the eligibility process to help establish a
record on the EBT system and to authorize issuance of an initial Direction Card9*"
The PayEase EBT system became operational in March 1992 and delivered food stamp benefits to a segment ofthe food
stamp population in Montgomery County. The demonstration was split into five distinct phases, lasting over 30 months.
Design ofthe system began in September 1990. and development was complete by December 1991. The system began
operations in March 1992. with all recipients in the demonstration area converted by June 1992. This project ran through
December 31.1996 before converting to the Direction Card*" system
AM Associate* Inc. Chapter 2: System Description and Operation 13
• The Fiscal Control Office, or FCO, which performs all terminal-based transactions that
update the Direction Card9** or the EBT host computer, including card issuance and card
replacement.
• The Assistance Control Office, or ACO, which provides EBT training to recipients and
assists them with account balance problems. The ACO also provides authorization to the
FCO to replace cards and performs administrative actions that would change a balance on a
recipient's card.
• The Cashier Office, which handles the process of converting EBT balances to food stamp
coupons when recipients move to an area not served by the Direction Card9" system.
• The Accounting Office, which is responsible for the security and accountabiliiy of the
inventory of smart cards maintained in the office. In some counties this may be handled by
die FCO supervisor.
The Citibank Team
The Citibank team consists of Citibank and its subcontractors, Stored Value Systems, Inc. (SVS) and
Century Technologies, Inc. (CENTECH).2 Citibank, as the prime contractor, serves as the project
manager and is responsible for providing the state with EBT services in accordance with its contract.
SVS is primarily responsible for the design, development and integration of all software and hardware for
system operations, including the EBT host system, retailer POS terminals, and the card management
system (CMS) in each CDHS office. SVS is also responsible for the actual operation of the EBT host
system, customer service for both retailers and recipients, retailer settlement services, all communications
facilities, and the generation of all fiscal and management reports. CENTECH is primarily responsible
for all contacts with retailers, including initial visits, sign-up, equipment installation and servicing, and
training; and contact with each CDHS office, including installation and servicing of CMS and POS
equipment, training of workers in each operational area, and supplying card inventory.
Trie Food and Nutrition Sarvica, USDA
FNS is the federal agency charged with the administration of the FSP nationally. Through its local field
offices, FNS authorizes retailers to participate in the FSP and, when necessary, withdraws such
authorization. FNS provides store authorization numbers and other retailer information to the Citibank
team for entry into the EBT system.
2.3 Overview of the Direction Card3** System
The Direction Card9" system comprises six main components that interact to provide recipients with
their food stamp benefits, including the provision of the monthly FSP allotment, the capture and
2 SVS. a wholly-owned subsidiary of NPC, was created at about the same time that Citibank added NPC to its EBT project
team.
14 Chapter 2: System Description and Operation AM Associates Inc.
processing of EBT transactions, and the reimbursement of participating retailers. These six components
are:
• recipients' smart cards
• the system processor's host computer
• the state's recipient information system (CRIS-E)
• the card management system (CMS) at county offices
• retailer points-sale (POS) equipment; and
• telecommunications facilities.
Together, these six components support a number of different types of EBT transactions. Some of these
transactions involve credits or debits to retailer and recipient accounts, whereas others provide
information without any change in value to retailer or recipient accounts. To facilitate later discussion of
system design and operations, these transaction types are defined in Exhibit 2-1.J In the discussion that
follows, "staged" transactions are those that either provide a credit to the recipients Direction Card3* or
cannot be completed immediately because the EBT terminal is not working (or both). When a staged
transaction is initiated at a retailer's location, the credit is not apphed immediately to the card. Instead,
information is passed to the host computer, which then downloads the credit to selected retail locations
and the recipients CDHS for subsequent collection by the recipient.
The six main components of the Direction Card** are described below.
Smart Cards
Each FSP recipient in the state will be provided with a smart card that is used to access their benefits at
authorized retailers.4 This card, named the Direction Card9", contains an embedded microprocessor chip
that interacts with retailer POS systems when recipients shop. The card maintains the recipient's current
benefit balance and information on the ten most recent transactions in which the card was used (e.g.,
purchase, balance inquiry, refund). In addition to the embedded chip, the blue and white Direction
Card9" contains the state-approved logo and design graphics, the required regulatory disclosure
statements on the back of the card, and a laser-engraved personal account number (PAN).
System Processor Host Computer
The EBT host computer is located at the SVS facility in Louisville, Kentucky. It consists of four "fault-tolerant"
processors; such processors include internal back-up of all critical components to ensure
continuous processing capability Additional processors will be added, as necessary, during the statewide
rollout to satisfy performance standards for central file processing. (This system also supports the
Wyoming EBT system.) There is also a two-processor backup system located at SVS' customer service
center facility in El Paso, Texas. The EBT host system is dedicated to EBT functionality, including
3 The descriptions for these transactions arc adopted from the Direction Card1" reference manual supplied by Citibank to
retailers participating in the system.
4 The card being used for the statewide rollout ofEBT is the PayFlex purse card manufactured by Schlumberger. Inc. The
I'ayFlex card has 1 kilobyte of data storage that can have multiple purses and allows for enhanced security functionality
AtrtAaioela—Inc. Chapter* System Description and Operation "li
Exhibit 2-1
Direction Card*1 Transaction Types
Terminal sign-on and sign-off, which allow cashiers to log on and log off the EBT terminal in their
checkout lane.
Food stamp purchase, which is used when a food stamp client wants to use his or her food stamp
EBT benefits to pay for program-eligible food Hems.
Food stamp purchase rovarsai, which gives the cashier the ability to negate, with the client
present an incorrect amount on a just-completed purchase transaction.
Food stamp refund, which is a staged transaction to be used when a food stamp client returns
items originally purchased with food stamps. It requires a manager password.
Food stamp refund reversal, which is used to negate a just-completed food stamp refund
transaction. It is used when the value of the refund transaction was incorrect.
Balance inquiry, which allows recipients to determine the amount of food stamp benefits remaining
on the card.
Food stamp manual purchase, which stages a debit for the purchase amount to be subtracted
from the recipient's EBT card at a later date. It is to be used only when the EBT terminal is not
working. Recipients are limited to one manual purchase transaction not to exceed $50 outstanding
at any given time.
Food stamp manual refund, which stages a credit for the amount of the refund to be added to the
recipient's card. It is to be used only when the EBT terminal is not working.
Forced credit, which stages a credit to the recipient's card if the recipient is accidentally
overcharged.
Delivery d*btt, which debts the recipient's Direction Card3" for the amount of the sale. It is used by
retailers who do not have EBT terminals (e.g., route vendors who deliver milk or produce directly to a
recipient's home).
The descriptions for these transactions are adopted from the Direction Card*** reference manual -upplied by Citibank to
retailers participating in the system.
For security purposes, some transactions (e.g.. refunds and all manual transactions) require the intervention ofthe manager
through entry ofa manager's password. Purchase and refund reversals require that the transaction being reversed be the last
transaction posted to the card, the Lst transaction performed at the POS terminal, and that the retailer has not yet settled for
the day.
initial account setup of recipient information from CR1S-E and the CMS, receipt of issuance-related data
from CRIS-E and its delivery to recipient-selected issuance collection locations. Direction Card9"
updating, retailer settlement, downloading of data to retailer systems and the CMS. customer service, and
reporting.
16 Chapter 2: System Description and Operation AM Associates Inc.
State Recipient Information System
CRIS-E is the state's integrated public assistance system. It determines eligibility and then calculates
benefits for all state and federal public assistance programs for which a recipient is eligible, based on the
information entered by caseworkers in each CDHS office. On a daily and monthly basis, CRIS-E
provides the necessary data to the CMS and the EBT host system to support card issuance and to provide
recipients with their benefit allotments.
Card Management System
The CMS consists of one personal computer (PC) and one Datacard POS terminal. The system resides
in the FCO in each CDHS office and is primarily used to issue Direction Cards9** to recipients. Clerk-level
activities using the CMS include card issuance and replacement, card unlock, changing a recipient's
personal identification number (PIN), converting card balances to coupons (when the recipient is
present), re-presentation debits, and delivery debits.5 CMS functions requiring greater security and
supervisory action include dealing with forgotten PINs, converting card balances to coupons (when the
recipient is not present), return of benefits, dairy settlement, changing a recipient's number, reviewing
manual debits, card recycling, disposition of returned or damaged cards, and card inventory and control.
The CMS provides on-line access to necessary information in CRIS-E and has dial-up access to the EBT
host. At the end of each day, all information entered into the CMS is uploaded to the EBT host.
POS Equipment
Retailers participating in the Ohio EBT system are provided with DataCard POS equipment capable of
accepting the Direction Card8**. The POS terminal equipment configuration deployed at retailer sites is
different for each of three types of retailers: single-lane stores, multi-lane stores, and route vendors.6
Single-lane retailers receive one DataCard 580 terminal, a VeriFone P2S0 printer, and a pedestal mount
to hold the terminal. The DataCard 680 is a "stand-alone" terminal consisting of a built-in modem for
communication to the EBT host during daily settlement, 2 megabytes ofmemory for database and
transaction file storage, a display, a magnetic stripe and smart card reader, and a keyboard.
Multi-lane retailers are provided with a local area network-based POS configuration. The in-lane
configuration consists of a DataCard 48S POS terminal, a VeriFone P250 printer, and a pedestal mount.
Multi-lane retailers also receive one terminal controller (a personal computer) and one network interface
5 If a retailer processes a manual purchase transaction for an amount that is subsequently discovered to be greater than the
recipient's remaining balance, then the retailer is liable for the excess amount. The retailer, however, can "re-present" the
transaction in following months after additional benefits have been added to the recipient's card. This is done by mailing a
re-presentation form to EBT Customer Service, which forwards the form to the appropriate CDHS office for evaluation. If
approved, the CDHS office processes a re-presentation transaction, which leads to a retailer credit and a staged debit to the
recipient's card. Program rules state that up to $50 may be deducted from the recipient's EBT account in the first month
(SIO if the recipient receives less than $50 per month). Thereafter, the maximum deduction is $10 or 10 percent ofthe
regular recurring allotment, whichever is greater.
6 See FNS regulations at 7 CFR 274.12(gX4X") for the regulatory requirements related to EBT POS terminal equipment.
AM Associates Inc. Chapter 2: System Description and Operation ~~17
controller for each 30 lanes of installed POS equipment Like the DataCard 680. the Datacard 485
contains a display, a magnetic stripe and smart card reader, and a keyboard. All databases, transaction
files, and the modem for communicating with the EBT host reside in the PC. In addition, a balance
inquiry device is provided to all multi-lane retailers redeeming over $30,000 a month in food stamp
benefits to allow recipients to verify the food stamp balance on their Direction Card** prior to shopping.
Route vendors deliver milk, produce, or other food items directly to customers' homes, and hence cannot
use a regular POS terminal. They therefore receive one DataCard 680 POS terminal, along with two
battery packs to power the terminal. The terminal is programmed to provide the same functionality as is
present in a single-lane retailer site, except for receipt printing capability In lieu of a printed receipt, the
terminal displays the necessary information for preparation of a manual receipt.
In August 1998, the Citibank Team began to deploy DataCard "Jigsaw" terminals instead of the
DataCard terminals described above. The Jigsaw terminal provides the same functionality as the older
models, but is smaller and sturdier.
Because of retailers' concerns regarding scarce counter space in the checkout lanes, and to facilitate a
more efficient checkout process, an "integrated" solution is also available to retailers in lieu of the Ohio
EBT system's "stand-beside" POS configurations (DataCard 680 or 485). The integrated solution
allows retailers to modify their existing POS systems, which can accept credit cards and debit bank cards,
to accept the off-line Direction Card"*. This approach requires retailers to attach a PIN-pad and a smart
card reader to either their in-lane debit/credit terminals or their electronic cash registers (ECRs). The
integrated solution also requires each retailer to decide whether to eliminate or keep the EBT store
controller personal computer. If this is eliminated, the retailer is responsible for maintaining the
programs and files that currently reside on the EBT store controller and establishing the data transfers
between the controller and the PIN-pad and smart card reader. If the EBT store controller is maintained,
the retailer is only responsible for routing the messages from the PIN-pad and smart card reader to the
EBT store controller.
Regardless of the approach they take, retailers that choose an integrated solution need to modify their
existing systems' software. A detailed specification is available to retailers to assist them in identifying
the necessary modifications To date, no retailers have selected the integrated solution approach.
Telecommunication* Facilities
The EBT system's host computer exchanges data via telecommunications facilities with several
organizations: ODHS' CRIS-E system, the card management system at each CDHS office, FNS, the
system's concentrator bank (to support automated clearinghouse settlement), and participating retailers.
SVS uses a shared CompuServe network to support the required communications with these
organizations. The EBT host computer accesses this network through four dedicated communications
lines to CompuServe: each line can handle up to 56 kilobytes of data per second (kbps)
A dedicated 56 kbps line is used to support the large batch data transfers between the EBT host and the
CRIS-E system. Each day, the EBT system transmits transaction data to CRIS-E and receives issuance
information for recipients.
18 Chapter 2: System Description and Operation Ant Associates Inc.
At least once a day, the host computer establishes a direct connection to each participating retailer and
CDHS office. In single-lane retailer stores, where data transfer requirements are much smaller, the
modems built into the DataCard terminals handle up to 2400 bytes of data per second The back-room
PCS provided to multi-lane retailers use a 14.4 kbps modem. For both single-lane and multi-lane
retailers, regular telephone lines are used to transfer data back and forth to the host during dairy
settlement.
The PC-based CMS in each CDHS office uses a 14.4 kbps modem to transfer information to the EBT
host over the CompuServe network. Additionally, in the larger CDHS offices, terminals in the ACO are
equipped to access the EBT host system on-line via CompuServe private dial.
In order to obtain up-to-date information on the authorization status of FSP retailers, SVS and
CENTECri use a dial-up telephone line to FNS' Minneapolis data center to access the Retailer EBT Data
Exchange xREDE) ./stem The system identifies both authorized retailers in EBT states and retailers in
adjacent, non-EBT states that have received FNS' permission to accept food stamp EBT benefits.
Finally, the EBT host routes retailer settlement data via a dial-up line to NPC's host computer, which in
turn transfers the data to National City Bank in Columbus (the system's concentrator bank) for
origination of automated clearinghouse (ACH) credits to retailers' depository institutions. This routing
of data through NPC allows the use of an existing private T-l data network to transfer the data from
NPC to National City Bank.
2.4 Operations Overview
Card Issuance and Training
Once a recipient has been certified or recertified by a caseworker, the recipient is provided with a card
authorization form indicating the recipient's name, recipient ID number, and other information (see
Exhibit 2-2). If the recipient has not previously been issued a card, then the recipient is instructed to go
to the FCO area.7 There the FCO worker, using the CMS, identifies the recipient via the password
identification information that is contained in the CRJS-E system. If the recipient is positively identified,
the worker will automatically transfer the necessary information in CRIS-E into the CMS and proceed
with card issuance.
7 A recipient who was bang recertified and already had a card from a previous certification would be directed to the ACO
There, the ACO would verify that the recipient reincinbcied his or her PIN and that the card was still operational
Abt Associates Inc. Chapter 2: System Description and Operation " ~19
Exhibit 2-2
Card Authorization Form
CARD AUTHOMZATION FORM
AabtMctCrMfNMK l.ripLilNwtw DM*
CueNwIir Fnil tfnif Cilyij ftyti VOTMMSSN
Approved AppOor* (_o caoaft) *
s ID (•»dMf»—«M ID expired)
Aaprovad ApptcaM orMplM Duplicate Usue Fee J
Name « Care NuaawCkaaje (acri—jr if nliilD—wlw)
Prior Narac
PriorCOM I
Uafc/Work«r'»
Artiria<n CSLO FacPaU Reed By
Investor's Aaaatfc*rlzfttiwtj
(aaplraH n»
S
ltitlalia|-| %.■■■■ > DMt KadptaMVorfflcatfM
Diana* By DtftbMri ID Bwil.a- By (ncloli.fr »!!■■)
WELCOME TO DIRECTION CARD
(MT l»a*r*a,CtaMaaafirj»tfar&a»etf
sjrUm for tuuMaf food
I CM*.
How m Acctu Yarn rWJaaaJ Bi.tfiu?
Al *c Direction Card office yoa will be girer your
PireaiooCardiadfriiai««««lwwio«iciL
Note: VTMOOMTpicka*] Card.
Card office oa or before I
te oar Mack boa
Yow pate irim 1111 fluWh|
rial ^
01-083-99
20 Chapter 2: System Description and Operation
The worker removes a Direction Card*" from inventory, updates the inventory control log. and inserts the
card into the card reader input/output (I/O) device, which is attached to the CMS. The I/O device reads
the card automatically and adds the card number to the recipient set-up information. The recipient selects
and inputs a five-digit PIN. The system requires double entry of the PIN before it is written to the card *
Upon completion of PIN selection, the FCO worker helps the recipient identify a maximum of three
authorized retailer locations at which the recipient can collect food stamp benefits by having them posted
to the card. TheFCOworket then enters these selections into the CMS The CMS automatically selects
the local CDHS office as the fourth location at which the recipient can collect food stamp benefits9 Each
evening, the information contained on the CMS is transferred to the EBT host system over the
CompuServe network.
The card replacement procedure is similar to new card issuance, although a card replacement
authorization form (Exhibit 2-3) must be completed by an ACO worker Once the form is complete, the
recipient goes to the FCO area, and an FCO worker follows the card replacement procedures
New EBT clients receive training during the card issuance visit on how to use the EBT system. During
training, which lasts about one hour and is conducted by ACO personnel, recipients attend a classroom
session, watch a video, and obtain "hands-on" experience by completing a practice exercise using actual
POS equipment.
Benefit Issuance and Collection
Each day, Ohio's CR1S-E system transfers FSP issuance information for individual recipients to the EBT
host The host processes the issuance information and readies it for downloading to the recipient's
CDHS offices and those retailer locations selected by the recipient for benefit collection. Supplemental
benefits are downloaded during the next dairy settlement process, whereas regular recurring benefits are
held by the host until the assigned issuance date. (Recurring monthly benefits are staggered for collection
by recipients over the first five to 15 calendar days of each month, depending on county.)
During the retailer's daily settlement of its POS system, a two-way exchange of data occurs between the
retailer and the EBT host. EBT transaction data are uploaded from the retailer's system to the host, and
the EBT host downloads issuance records and other staged transaction for recipient collection. Staged
transactions include refunds, purchase reversals, re-presentation debits, and manual transactions
processed by retailers for purchases, forced credits, and delivery debits. "Negative files" are also
downloaded to retailers during the settlement process. Negative files contain the primary account number
(PAN) of damaged, lost, stolen, or suspect cards, and are used to prevent transactions with these cards
until the negative flag has been removed.
R The card issuance process writes an encrypted PIN to the card's memory using a data encryption standard (DBS) process
9 Although the system allows a recipient to go to any one of four locations to collect each month's FSP allotment, controls are
in place to ensure that any given allotment is posted to the card only once As the benefit amount is written to the card, a
sequential code known as the host reference counter (HRC) is updated in the card's memory This code prevents multiple
access to the same allotment
AM Associates Inc. Chapter 2: System Description and Operation ~21
Exhibit 2-3
ACO/FCO Authorization Form
OHIO DIRECTION ACO/FCO AUTHORIZATION FORM
Recipient Name: Data:
CARD REPLACr ilEMT:
Carr
Autt- R
CkC !
Case No
No Of Rap. Cards:
Oata of Block
COUPON CONVERSION
Recipient Preeent
Card*
Card Bal:
Amount:
Auth*
Ck Digit:
COMMENTS:
COUPON CONVERSION
Recipient Not Present Last Trana Date
Card*:
Card Bal:
FCO Provides
Amount
Autt>0:
CkOajK
RETURN OF BENEFITS
Card*:
Card Bal:
Amount:
Auth0:
Ck Digit:
NEG FLAG REMOVAL
Card*.
AuthDh
Ck Digit
ACO Signature:
ELPASO Approves
Distribution: Original - ACO
Copy-FCO
MCOHS#107-C (REV. 6-97)
22 Chapter 2: System Description and Operation Abt Associate* Inc.
Benefits may be "collected" (i.e., written to the card at the recipient's selected issuance site location) and
become available to recipients on a specified benefit availability date. Benefits are added automatically
to the card when the recipient performs any transaction at the POS terminal, such as a balance inquiry or
purchase transaction.10 All benefits must be collected by the last day of a benefit month, although the
benefits do not have to be used during the benefit month. That is, once posted to the card, unused
benefits can be carried over from one month to the next.
The EBT host also downloads the issuance and staged transaction files to each CDHS office as the
offices perform their daily settlements. Recipients can collect benefits at the CDHS office as well as at
selected retailer sites. Recipients might elect to collect their benefits at the CDHS office if they have
other business there. Also, benefit issuances may be available sooner at the CDHS office than at selected
retailers because benefit issuances are not downloaded to retailers until the retailer initiates settlement at
the end of the day.
Benefit Redemption
Food stamp benefits are redeemed through the execution of EBT purchase transactions. The recipient
inserts the card into the POS terminal and enters a PIN. Upon a successful PIN verification, the POS
terminal displays the recipient's FSP balance on the card. The cashier rings the grocery order, and at the
conclusion of the transaction, the cashier enters the food stamp purchase amount. The POS terminal
displays the purchase amount for the recipient to validate. The recipient validates a correct total by
pressing the "yes" key on the keypad. If the "no" key is pressed, a new purchase amount must be entered
by the cashier and the recipient must again validate the transaction. Both an EBT receipt and a cash
register receipt are provided to the customer. The EBT receipt indicates the beginning card balance, the
purchase amount, and the ending card balance.'' Because the system uses smart card technology, the
transaction is recorded both on the recipient's smart card and on the retailer's system. Each recipient's
smart card retains a transaction history comprised of the last ten transactions executed, and the retailer's
system retains all POS transactions in memory until retailer settlement occurs. At settlement, the
transaction data are uploaded from the retailer to the EBT host. The account balance for each recipient is
maintained on the EBT host and on the Direction Card3**. Therefore, with the off-line system, there are
two balances for each recipient: a card balance and a EBT host-derived balance. The host-derived
balance, however, will not reflect transactions performed since retailer settlement.
Manual Transactions
Retailers can perform manual transactions for recipients when the store is experiencing system or
equipment problems. Manual transactions differ from regular transactions because the Direction Card9*"
is not used. Instead, the store calls EBT Customer Service to request approval for the transaction; the
retailer provides the recipient name, PAN, purchase amount, store number, and the type of manual
10 It may appear that the off-line EBT system design places greater demand on recipients than an on-line system because the
recipient must go to a collection location to have benefits loaded onto the card. (In *n on-line system, benefits are
automatically posted to the recipient's account maintained by the host computer.) These benefits, however, are loaded onto
the card during transactions that recipients would perform anyway
11 The receipt will also reflect any automatically posted activity, such as issuances, other staged credits (e.g.. refunds), and
staged debits for manual transactions in calculating the ending card balance
AM Associates Inc. Chapter 2: System Description and Operation 23
transaction12 to the Customer Service agent. Customer Service enters the transaction information into the
EBT host. The system checks the negative file, the host-derived balance, and any outstanding manual
transactions for the card. If the transaction is approved, based on the host-derived balance, the EBT host
assigns the transaction an authorization number, provides a check digit (a number generated through a
mathematical algorithm that is used to verify that the underlying information was entered into the system
correctly), and places the transaction in a pending file The Customer Service agent provides the
authorization number to the store cashier, who completes a manual transaction receipt. The recipient
signs the receipt, and the retailer provides one copy to the recipient and keeps the other copy.
When the system becomes available, the information from the manual purchase receipt must be entered
into the retailer's POS system. The entry of the manual transaction information into the system requires
the use of the manager's password. The one exception is for delivery debits, which are used to
accommodate the inclusion of certain special types of retailers, such as "meals on wheels'" and certain
food cooperatives, without providing a special mobile terminal. Because these retailers do not have EBT
equipment, they provide their receipts to the CDHS, and the transaction information is entered into the
system by the FCO
Retailers receive credit for manual purchases and delivery debits after the EBT host receives an
acknowledgment that the transaction has been written to the recipient's card. Manual refunds and forced
credits are "settled" from a retailer's settlement on the day they are entered into the POS system.
Retailer Settlement
The process for reimbursing retailers for food stamp redemptions begins with the retailer's daily
settlement with the EBT host. The retailer chooses a convenient time for performing the end-of-day
settlement transaction. Retailers can activate settlement each day, but many retailers choose automatic
daily settlement, with settlement initiated automatically at a specific time each day When retailers settle,
the POS system accesses the EBT host. All POS transactions conducted at the store since the last
settlement are uploaded to the EBT host, and the negative files, issuance records, and other data are
downloaded to the retailer. Upon receipt of the retailer settlement data, the EBT host verifies that the
retailer identification is valid and that the detail records in the batch equal the totals in the header and
trailer records. The host also assigns a settlement reference number that is unique to the retailer and to
the batch. A confirmation receipt indicating a successful settlement is printed at the retailer terminal.
The receipt includes the retailer name, address, and phone number; the settlement amount; and the
settlement reference number. Successfully performing end-of-day settlement clears all transaction data
from the retailer's system.
The Federal Reserve system maintains an automated clearinghouse (ACH) network for handling
electronic funds transfers between member banks, and this network is used to reimburse retailers for the
net total of their daily EBT settlement. After the Direction Card9" system settles with each retailer at the
end of the day, the EBT host prepares an ACH file with records indicating each retailer's depository
institution and the amount of funds to be deposited to the retailer's account. SVS sends this ACH file to
National City Bank—Columbus (NCB). which serves as the system's concentrator bank. In both on-line
12 Codes are used to identify four types of manual transaction: purchases, refunds, forced credits, and delivery debits
24 Chapter 2: System Description and Operation Abt Associates Inc.
and off-line EBT systems, the "concentrator" bank must be a member of the ACH network. The
concentrator bank serves as an intermediary in the settlement process, temporarily providing funds for
transfer to retailers' accounts and then being reimbursed from an EBT account maintained at the U. S.
Treasury
NCB sends the file to the ACH network. The network debits NCB's account at its Federal Reserve Bank
for the total value of the daily settlement and transfers funds to each retailer's depository institution. The
off-set for the transfer of funds from NCB to the retailers' receiving depository institution will be a credit
to NCB's federal reserve account. The credit results from a request made each day to the Automated
Standard Application for Payments (ASAP) system operated by the Department of Treasury. The ASAP
system verifies that funds are available through the state's EBT letter of credit. Once the availability of
funds is confirmed, the Department of Treasury sends the ACH credit entry to NCB's account at the
Federal Reserve Bank, completing the reimbursement process.
2.5 Differences Between the Direction Card9" and PayEase Card
Systems
The Direction Card9*" system is built directly on the PayEase system. The differences between the two
systems represent a set of incremental improvements to the PayEase system. Several of the changes were
identified during the PayEase pilot operations, and some were partially implemented or tested prior to the
start of the Direction Card^'s statewide rollout. Other changes resulted directly from the specifications
issued in the state's RFP for a statewide EBT system. Taken together, the changes are designed to
provide a more efficient, effective, and secure system.
The basic differences between the Direction Card9** and PayEase systems can be grouped into four main
areas: equipment, operational improvements, reporting, and security. The main changes within each of
the four areas are summarized below.
Equipment
New smart card. The Direction Card8*" system uses the PayFlex smart card from
Schlumberger. This card replaces the Schlumberger ME2000 card used for the PayEase
system. The PayFlex smart card was selected because it provides the range of features
needed to be compliant with EMV standards,13 the capability to establish several "electronic
purses"14 for use with multiple benefit programs, and the ability to provide for an increased
level of security over value-adding transactions. (For instance, the chip within the PayFlex
card can be programmed to perform the security functions that were previously performed by
the POS software during the PayEase pilot.)
I "S Europay. Master Card and Visa (EMV) have jointly defined a set of standards for use of smart cards in payment systems
See "EMV 96. Integrated Circuit card Specification for Payment Systems." May 31.1998
14 An electronic purse is an application in a card where value can be stored
AM Associates Inc. Chapter 2: System Description and Operation 25
Host system upgrade. In order to meet the processing and performance standards
requirements of a statewide EBT system, the EBT host system was upgraded to Tandem's
Himalaya family of systems, with K2002 RISC-based processors replacing the Tandem
CLX Model 800 processor used for the PayEase system. The system will initially have four
processors: additional processors will be added as needed during the rollout.
POS terminal equipment. The PayEase pilot used a POS configuration based on retrofitted
VeriFone equipment. Significant software development was required to enable the system to
exchange data with the smart card reader. During the pilot, a multi-lane DataCard 485 POS
platform was tested and implemented in several large stores. The application was then
adapted to a single-lane configuration using the DataCard 680, and tested in one store. The
DataCard POS platform operated successfully and is being used in all retailer locations for
the statewide Direction Card** system.
Remote software download. The DataCard POS platform makes it possible to remotely
download new software releases for all POS terminals and the personal computers used in
multi-lane stores. This capability was tested and used in those stores that had the DataCard
POS platform installed during the PayEase pilot.
New balance inquiry terminal. In order to provide recipients with easy access to their card
balances, a separate stand-alone balance inquiry terminal was developed using a VeriFone
SC4S card reader/PIN device. This device can be placed anywhere within a retail
establishment
Operational Improvements
Elimination ofmanager cards. The PayEase pilot used a manager card to complete POS
functions requiring the added security of supervisory personnel intervention, e.g., refund or
manual transactions. This approach became somewhat problematic as the cards and PINs
were frequently lost and the cards sometimes failed, resulting in delays in the checkout lane.
The Direction Card"1 system eliminates the use of manager cards and instead uses manager
passwords. As many as ten manager passwords can be assigned by each retailer at any given
time.
Elimination ofduplicate card lock. Duplicate card lock prevents the issuing of multiple
cards to the same recipient. In the PayEase pilot, the EBT host was programmed to suspend
any card setup record received from the CMS if the recipient ID was already on the EBT
host and was associated with an active card. The second card was effectively "locked."
because no benefits would be directed to it. Benefits received by the EBT host from CRIS-E
would be directed to the card associated with the first setup rexxd. Any card that was
locked would be reported to customer service, which would then contact the CDHS office
that issued the second card.
Although effective in a confined pilot area, many believed that the existing process would
prove too cumbersome to manage once the state began to implement statewide, and
Chapter2: System Description and Operation AW Associates Inc.
recipients moved and changed households over a greater geographic area not tinder the
control of one CDHS office. Therefore, in the Direction Card** system, the EBT host was
modified to not lock the newly-issued card when an active one existed on the EBT host.
Instead, the EBT host automatically performs a card replacement transaction when a
duplicate card condition exists. This process transfers any remaining value to the new card
and blocks the previous card.
Regionalization ofnegativefile. The PayEase pilot sent all negative records to all retailers.
With the planned growth of the Direction Card"-1 system to statewide operations, it was
recognized that the size of the statewide negative file would probably exceed the memory
capabilities of the DataCard terminals used by single-lane retailers. The concept of
"regionalization" was therefore developed to minimize the size of the negative file needed at
single-lane locations.
Under regionalization, single-lane retailers receive a negative file that contains records of
blocked cards issued only to recipients at CDHS offices within the retailer's region. Regions
are defined as being, at a minimum, the retailer's current county plus the immediately
surrounding counties. Depending on the combined size of the caseload served by these
counties, additional counties at the edge of the region might be included as well.
A code designating the retailer's region is downloaded to single-lane terminals. In addition,
a cods indicating the recipient's county of residence is added to the memory within the
recipient's Direction Card"1. At the start of each EBT transaction at a single-lane retailer,
the POS terminal compares the retailer's region to the county code on the recipient's card. If
there is a match, the transaction continues processing. If there is not a match, the terminal
requests entry of an authorization number. The retailer must call Customer Service to
determine that the card is valid and to receive an authorization number. Once this number is
received and entered, the transaction can proceed.
As described in Chapter 5, the system began implementing the regionalization feature when
retailers in the Cleveland area began converting to EBT.
Forced dear batch. A "batch" is a group ofEBT transactions that has not been sent from
the retailer's POS system to the EBT host for settlement. The PayEase pilot allowed
retailers to clear their batches from their POS systems with the use of a manager card. To
eliminate an inadvertent erasure ofthe POS database prior to the completion of a successful
settlement, an authorization code from Customer Service is now required as part of the
process to initiate the clearing of a batch from the POS system.
On-line terminal access to the EBThost. To enhance the efficiency of ACO workers in
the larger county offices, these staff are being provided with on-line access to the EBT host.
AW Associates Inc. Chapter 2: System Description and Operation 27
Reporting
Security
On-line history. The availability of on-line transaction history was increased to 120 days
for statewide rollout. Only 90 days of history was available during the PayEase pilot.
Lost and stolen cards. A dairy report of lost and stolen cards was created that includes the
PAN, recipient number, reason code, date and time reported, and totals by reason. Prior to
this enhancement, county workers manually tracked cards reported as lost and stolen. In
addition, the EBT host will automatically provide the numbered replacement for a lost or
stolen card anytime an authorization is requested for a card replacement.
Stale-date notices. The Direction Card"* system includes the capability to establish a
dollar value parameter to determine which records are included in stale-date notices sent to
recipients. Both systems automatically generate stale-date notices for cards that have a
balance but have been inactive for 60 or 90 days. With the Direction Card9*" system the
state can set a threshold amount, below which a notice would not be sent to recipients.
POS card history. Under the new system, an additional field of information is being
recorded for each transaction maintained on the card, namely, the Category of Public
Assistance (COPA) designator. The Direction Card9*1 system must accommodate multiple
benefit programs, unlike the food stamp-only PayEase pilot. With a multi-program card, the
additional COPA information is necessary to allow recipients to identify what type of
benefits are being used for each transaction.
Additional use ofhey security. The PayEase pilot included a "key" encryption strategy for
all value-adding transactions that were generated by the EBT host and added to the card at
the POS.'5 Because the Direction Card"1 system will serve a much larger number of
recipients and retailers, system designers believed that two additional security measures were
merited. The first was to add a unique key to each card. This would ensure that, in the very
unlikely event that the key was "decoded" for one card, the entire system would not be in
jeopardy. The second was to add an industry-standard method of message authentication
(MAC)16 to POS transactions as they are created and stored on the retailer's POS system.
Special keys maintained on the cards would be used to create the MAC that would be
"decoded" when the transaction reached the EBT host.
Staging of purchase refunds andreversals. In the PayEase pilot, a recipient received
immediate credit (i.e., value added back to the card) for all purchase transactions that were
reversed and for refunds of all or part of a prior purchase. With the Direction Card***
15 A "key" in encryption is a data string that, when combined with a source of data and an algorithm, produces output that is
unreadable until it is decrypted
16 Message authentication refers to any method used to determine the source ofdata and whether the data was intentionally or
unintentionally altered during the transmission process.
Chapter 2: System Description and Operation AM Associates Inc
system, these transactions are still allowed, but they are not instantaneous. First, the
transactions are uploaded from the POS system to the EBT host and then downloaded to the
recipients' chosen issuance sites for posting to the card. This process allows for all value-adding
transactions to be verified by the EBT host and the card prior to its entry into the
EBT system. This change was added as an additional security measure that would be
necessary if retailers were to integrate their store cashier systems to interact directly with the
Direction Card8*. With integrated systems there would be no other method to prevent
retailers from adding value into the system.
AM Inc. Chapter 2: Syatam PaicripMon and Operation 29
30
i\|{ii; \rn\--
Chapter 3
System Design and Development
3.1 Introduction
As noted in die previous chapter, the Direction Card*1 EBT system differs somewhat from its
predecessor, the pilot PayEase system. Thus, before the state and vendors could begin statewide
expansion, they needed to modify the design of the existing EBT system and develop the new software.
This chapter discusses the activities involved in this design and development effort It is organized into
the following four sections:
• contract procurement;
• system design;
• system development; and
• system testing
•
3.2 Contract Procurement
The RFP for the off-line EBT project originally allocated a little over 14 months for system design and
development activities. With a planned contract start date of October 3, 1994, this meant that the EBT
vendor was to begin installing equipment in Montgomery County by carry December 1995 Recipient
conversion in Montgomery County was to begin by April 1996. A series of unexpected delays in the
procurement process, however, put the project about 18 months behind schedule, with recipient
conversion in Montgomery County starting in September 1997. A number of factors contributed to the
delay, including extensions to the due date for vendor proposals, delays in awarding the contract, and
delays caused by the lawsuit Exhibit 3-1 presents key milestones in the procurement process.
The initial procurement process itselftook about one year longer than expected. Ohio issued two
addenda to the RFP. which pushed the due date for vendors' proposals back about two months The first
addendum indicated that the Ohio Department of Health would be considering using the EBT system for
the delivery ofWIC benefits (although vendors did not need to make an immediate response), and that
EBT terminals deployed in retail stores had to be capable of performing third-party on-line functions as
wdi as off-line transactions. The second addendum clarified the process by which vendor proposals
would be evaluated. Even after proposals were received in Jury 1994, the process ofreviewing and
evaluating the proposals, and then negotiating a final contract, took until September 20,1995. Owing to
the novelty of the proposed off-line technology, the evaluation panel had numerous questions that had to
be addressed before a contractor could be selected.
The one-year delay created some concern due to the contract status of the pilot EBT system in
Montgomery County. FNS' contract with NPC for PayEase operations was origmaJJy scheduled to end
March 1,1993. When it was clear that ODHS wanted to continue pilot operations until a statewide
system could be procured, FNS agreed to extend its contract with NPC.
Inc. Chapter 3; System DesJQfi md Development
Exhibit 3-1
Kay Procurement and Contract Evanta
1993
March 1
November 1
1994
February 28
ApnM
May 12
June 27
Juty21
1995
January 1
January 17
Jutyl
September 20
October 27
November 9
1998
January 18
Apr* 25
June 17
September 3
December 17
1997
January 1
Original end date for PayEase demonstration FNS agrees to extend its contract with NPC by
eight months, with ODHS assuming responsibility for contract cost*
FNS extends contract with NPC by five months
ODHS issues RFP for development, implementation, and operation of the Ohio EBT system
FNS extends contract with NPC by nine months
ODHS issues RFP Addendum #1
ODHS issues RFP Addendum #2
Vendors submit their proposals to ODHS
FNS extends contract with NPC by six months
Citibank responds to ODHS clarification request
FNS extends contract with NPC for fifth and last time
ODHS signs EBT contract with Citibank
NPC files suit aganst Citibank and the state
Prefimmary hearing on NPC's legal action begins
Judge rules in favor of NPC, directs ONo to re-sofcat cost proposal from Citibank and NPC
Citibank submits revised Final Proposal, indudmg NPC as subcontractor
Ohio approves revised proposal
FNS contract with NPC expires Ohw contracts with NPC to continue piot operebons until
December 31, 1996
FNS approves Direction Card"1 system
Direction Card** system begins operations
After ODHS awarded the EBT contract to Citibank in September 1995, efforts to begin development of
the statewide EBT system slowed, and then stopped, due to a legal challenge to ODHS's contract award
to Citibank. On October 27,1995, just three days before the scheduled kick-off meeting for the Ohio
EBT project. NPC filed a lawsuit seeking a preliminary injunction to prevent Ohio from pursuing
development of a statewide EBT system with Citibank The basis of the suit was an fJhpjf that
Citibank's cost proposal had not been prepared strictly u, accordance with the requirements of the RFP,
32 Chapter 3: System Design snd Dwdopfnom ate.
making it difficult for the state to compare NPC's and Citibank's proposed costs. During a preliminary
hearing in November, the court found no grounds for issuing a temporary restraining order or a
preliminary injunction, but it did warn Citibank that any continued contract activity would be at its own
risk. Then, in January 1996, the court found in favor ofNPC and directed the state to re-solicit cost
proposals from Citibank and NPC.
A period of negotiations ensued between Citibank and a new subsidiary ofNPC, Stored Value Systems
(SVS). Citibank agreed to drop its plan to develop an off-line EBT system from scratch and to include
SVS as a subcontractor in its proposal to Ohio. Under this proposed contractual arrangement, SVS
would serve as processor for all EBT transactions, whereas Citibank would remain as prime contractor.
Century Technologies, Inc. (CENTECH), another subcontractor to Citibank, would be responsible for
deploying and maintaining POS devices at retailer locations and in county welfare offices
Citibank submitted its revised proposal to Ohio in April 19%, and Ohio approved the proposal on June
17,19%. A second kick-off meeting for the project was held on Jury 9 Thus, the lawsuit delayed the
start of contract activities by about eight months. During the entire procurement period (i.e., from March
1.1994 through September 3,19%), FNS extended its contract with NPC a total of five times The
State of Ohio then contracted with SVS to continue operating the pilot EBT system in Montgomery
County through the end of 19%, in order to provide time to design and develop the new Direction Card3*
system.
3.3 System Design
Usually there are three distinct phases associated with moving from a paper benefit issuance system to an
EBT system: the design phase, the development phase (which includes system testing), and the
implementation phase. Although these phases are normally carried out more or less in succession, design
and development activities for Ohio's Direction Card*1* system were co-mingled for two reasons. First,
the pilot EBT system had already been designed and needed only a few design modifications before
statewide expansion. Second, the developer of the pilot system was part of the Citibank project team,
and the team had full access to software already developed for the pilot system
As described below, an EBT system's design phase encompasses two major tasks The first task is to
decide exactly how the system will meet the EBT functional requirements specified in FSP regulations
and the vendor's contract. The second is to prepare a "detailed system design document" to explain the
planned design to state and federal officials. Although other activities are often initiated during the
design phase to ensure completion before the system is implemented, they are not central to the design
process.1 Exhibit 3-2 identifies the critical design and development milestones
These other activities, which arc dwciiMcd later in the chapter, include development of various materials, including a system
implementation plan, tramng mairnail, and draft language for EBT contracts with retailers
AM Inc. Chapter 3: System Design and DOMMpMSM 33
Table 3-2
Key System Design and Development Events
July 1993
February 1994
September 1995
October 1995
June 1996
Jury 1996
August 1998
September 1996
October 1996
CMbenk submits tejsj vereion of Dstall d System Deeign Document
Second formal meeting with retailer group* to dHcuas system d—ign
FNS respond* with comments on draft Acceptance Test Plan
December 1996 Citibank team begms three-day acceptance test of EBT system
FNS approves Direction CardaM system
January 1997 Direction Card"- system begins operations
February 1997 Citibank submits the Direction Card- Rek Analyse Report
ODHS submits Planning Advanced Planning document to FNS
ODHS issues RFP for the Ohio EBT food stamp benefits distribution system
ODHS signs EBT contract with Citibank
Initial lock-off meeting for the Ohio EBT project
Ohio approves revised proposal
Second kick-off meeting for the Ohw EBT project (decussed planned changes to system)
County Advisory Board members observe demonstration of pilot system in Montgomery
County
County Advisory Board meets with ODHS and vendors to decuw planned system des*gn
Citibank submits draft Dstelad System Design Document
First formal meeting with retaier groups to decuss system design eeues
Citibank submits revised Dstaled System Design Document
Citibank team meets with Ohto and FNS to work through final questions regarolng system
System Design Activities
The RFP for the EBT project delineated die functional specifications for the planned system (i.e., what
the system had to do) as well as other design requirements, including required levels of system
performance, processing speeds, reliability, security, disaster preparedness, and client ease of use. Initial
design work on these requirements began as early as late 1995, when the original Citibank project team
met first with ODHS and then with retailers to discuss the planned EBT system These design activities
came to a hah on January 18,19%, however, when the court directed the state to re-solicit cost proposals
from Citibank and NPC.
Design efforts began again when representatives from Citibank, SVS, CENTECH, and ODHS met for
the project's second kick-off meeting on July 9,1996 The design task was now quite different than
before. Instead of designing and developing an off-line EBT system from scratch, the new Citibank team
34 Chapter 3: System Design and Development tee.
could base its efforts on the pilot system already developed by SVS. Although this clearly represented a
significant reduction in needed design effort, eight months had passed since the project's initial kick-off
meeting. The new system had to be developed, tested, and ready to process EBT transactions in less than
six months (i.e., by January 1,1997)
The Citibank team brought to the meeting a document describing both proposed general enhancements to
the pilot system and modifications requested by the RFP. (Some of the general enhancements had
already been implemented by SVS as part of the pilot.) Team members went through the proposed
changes one by one during the meeting, seeking agreement from ODHS and FNS representatives so that
work on the Detailed System Design Document could begin. Changes receiving the most attention are
listed in Exhibit 3-3.
Exhibit 3-3
Proposed Changes to System Design
Ekmmate the need tor a manager card to initiate special functions at retail outlets—use manager passwords
instead.
Adopted
'Regionalize" the system's negative file for single-lane retailers
Adopted
Ensure a recipients ability to obtain a transaction history at the store upon request
Adopted
Enable EBT cards to handle two PIN numbtrs so that a designated 'alternate shopper could use the card
Not adopted Citibank indicated thattfw FNS reque«t would not be poss** *the card was to conform
to industry standards adopted for smart card functionality and security
Eliminate immediate store refunds to a client's card
Adopted
Although not discussed much at the meeting, several new features of the system would entail significant
design and development effort. All of the Verifone POS terminals used during the pilot were to be
replaced with DataCard POS terminals, and the system would switch to new smart cards. These changes
were not simply equipment upgrades. The Verifone POS terminals handled much of the pilot system's
transaction processing and security functions Because the RFP for the new system required that retailers
be offered an "integrated" terminal solution if they wanted one terminal to handle both (off-line) EBT
and (on-line) commercial credit or debit operations, the EBT vendor would no longer have complete
control over terminals handling EBT transactions. For security reasons, the Citibank team therefore
needed to move processing and security functionality out of the terminal and into the card itself. The new
card manufactured by Schlumberger could handle this added functionality. Furthermore, it had the
capacity to maintain and process benefit information for more than one program, which was crucial in
light of ODHS' interest in ultimately adding other programs to the EBT system.
AM Inc. Chapter 3: System Design snef DcvdopfiMnt 35
Another issue discussed during the design phase was what came to be known as the "association/
disasaociation" issue. The basic point here was what to do if a food stamp household split into two
program-eligible households. Initial solutions offered by SVS and ODHS were considered to be too
convoluted Eventually, however, an agreed-upon process was adopted shortly before the system's
acceptance test. The new process required both software changes at the system's host computer and
procedural changes at the county office
Inputfrom County Advisory Board
After the initial EBT contract award to Citibank, ODHS formed a County Advisory Board to provide
input to the EBT planning and implementation process Montgomery County took the lead in organizing
the board, which includes representatives from six counties within the state.2 Board members met in
Montgomery County in July 1996 to observe a demonstration of the pilot EBT system. They then met
the following month with ODHS and the Citibank team to discuss the proposed design of the new
system Because most of the board members had no experience with EBT, much of the meeting was
spent clarifying how the Direction Card3** system would work. Although the more experienced
Montgomery County representative focused her attention on the proposed changes in system design,
ultimately there was little or no critical review or feedback from the Board on the proposed design.
Inputfrom Retailers
ODHS also sought input from several retail groups in Ohio, including the Ohio Grocers Association
(OGA), the Ohio Council of Retail Merchants, and key supermarket chains. Despite the success of the
off-line pilot, OGA and a number of retailers in.lialry tried to dissuade ODHS from pursuing an off-line
system for statewide expansion, arguing that on-line technologies were already proven and more
compatible with grocers' POS systems. Once the decision to go with an off-line system had been
adopted, however, the retailer groups worked with the state on system design, cost, and implementation
issues.
The main features of the planned design were presented to the retailer groups at an August 23,19%
meeting, following distribution of the draft Detailed System Design Document. The OGA s EBT Task
Force then responded with a document entitled "General Concerns and Positions." The task force
identified the following major concerns:
• The state and Citibank were trying to implement the system too quickly to allow OGA and
the retailer community sufficient time to review the system design, its operating rules, and
specifications for equipment configurations.
• There was little or no information available regarding when the system would be
implemented in different parts of the state
• No written procedures were available for how cross-border transactions would be handled
2 The six counties are Montgomery. Helmont. Cuyahoga, Franklin. Hamilton, and Henry
3« 3535751 Syalwn P—lflw and SwSpwaS AM Associates Inc.
• There was little or no information about plans for "retailer integration," which referred to
how off-line (EBT) and on-line (commercial debit and credit) functions would be integrated
into a single terminal.
• The state was not planning to pay for deploying POS equipment at all checkout lanes in
most multi-lane stores.
ODHS immediately responded with a letter addressing the retailer concerns. The letter noted that the
rushed schedule applied only to the conversion of retailers in Montgomery County to the new system.
Thereafter, more time would be available for retailers to review documents and provide comments. With
regard to cross-border shopping, the letter said that county offices would conduct surveys of recipients to
determine whether any out-of-state stores needed to be included in the system. The letter also said that
ODHS and Citibank would be offering retailers several options regarding transaction integration, but that
specific rules had not yet been developed. Finally, with respect to lane coverage, the letter indicated that
ODHS would be complying with FNS rules that tie the number of lanes to be equipped (at no cost to the
retailer) to the monthly level of food stamp redemptions at the store.
A second meeting with the retailer community took place in October 19%. Several of the retailers'
original concerns remained (e.g., lane coverage and integration of on-line and off-line functions), and
others were brought to the attention of ODHS. In particular, the new issues were:
• staging of purchase reversal refunds; and
• regional ization of negative file.
Retailers did not like the planned staging of refund credits to client accounts, because clients would not
have access to the refunded benefits for at least a day or two. Not only did this represent a potential loss
of sales to the store, it also meant mat store employees would likely be dealing with angry clients.1
Retailers also were concerned about plans to regionalize the system's negative file They worried that
checkout productivity would be reduced due to the need to call Customer Service when an out-of-region
client shopped at their store. ODHS1 response to retailers' concerns about the staging of purchase
reversals and the regionalization of negative files was to explain that security concerns necessitated the
adoption of these design features.
A third meeting with the OGA occurred late in January 1997 By this time most purely design issues had
been dealt with, so retailer concerns switched to issues relating to system implementation, including:
• Citibank's proposed retailer agreements;
• equipment footprints;
• service agreements; and
• costs associated with additional terminals and supplies.
For example, suppose a client with $47 of benefits in her EBT card attempted to buy $4.50 in groceries, but the store clerk
inadvertently keyed $45.00 as the EBT purchase amount. She would not be able to access the refunded benefits until they
were posted to her card at a selected store a day or two later.
AM Associates Inc. Chapter 3: System Design and Davatopmtmt 37
Retailers also were concerned that the off-line system left them vulnerable to losses related to manual
transactions. In an on-line EBT system, manual transactions are permitted when the store's EBT
terminal is not working or when communications with the host computer cannot be established. In these
situations the retailer has the option of calling customer service for manual authorization of the requested
transaction. If customer service can access the EBT database, the availability of sufficient funds in the
recipient's account can be checked and authorization provided. If customer service cannot access the
database, then the recipient's remaining balance is unknown and the store assumes the risk of not being
reimbursed if it proceeds with the transaction .*
In an off-line EBT system, in contrast, customer service does not know the recipient's current remaining
balance: that information is contained only in the recipient's EBT card. Therefore, if an EBT terminal is
not working, there is no way of knowing whether the recipient's remaining EBT balance is sufficient to
cover the intended purchase. For this reason the system limits manual transactions to $50, and retailers
assume full risk for not being reimbursed. It is the retailer's option of whether to process manual
transactions.
Manual transactions are likely to be needed less often in an off-line system than in an on-line system,
because an off-line system does not rely on communications with the host computer to gain authorization
Detailed System Design Document
A basic federal requirement for EBT systems is the preparation of a Detailed System Design Document.
The box below shows a summary of the Ohio RFP's requirements for system design documentation.
System design documentation will consist of two parts:
1 The Functional Description shall describe the operating environment of the
project, focusing on procedures and work flow. It shall address procedures,
a summary of improvements over the paper coupon issuance process, and
organizational, operational, and developmental impacts of an off-line EBT
project.
2. The System Specification shall address the design of system components,
ft shall identify the selected technology and include system performance
requirements, expected data accuracy and validity. It will identify data
elements, system interfaces, system security and the total system
component configuration.*
' RFP. pp. 64-65
4 If the retailer proceeds with the transaction and it is subsequently learned that the recipient's account did not have sufficient
funds to cover the transaction, the retailer may be able to collect funds in later months in a process known as "re-presentation
" In re-presentation, a limited amount of funds can be subtracted from a recipient's FSP allotment in later
months.
Chapter 3: System Design and Development AM Associates Inc.
Preparation and review of system design documents has often been problematic and time-consuming for
EBT vendors. One reason for these difficulties has been that vendors are reluctant to provide information
on the detailed specifications of their proprietary software, especially in a document that enters the public
domain. Another reason is the multiple layers of extensive review such documents receive. The detailed
information and extensive reviews have been necessary because system design documentation is used by
FNS to prepare for system testing, which is the point at which FNS certifies the operation of an EBT
system.
As in previous efforts to design EBT systems, final approval of Citibank's Detailed System Design
Document also proved difficult and time-consuming. According to document reviewers, the biggest
problem was a lack of sufficient detail on exactly how the system would operate. A cumbersome review
process, however, also contributed to delays in approving a final system design.
SVS had primary responsibility for preparing the Detailed System Design Document. The first draft of
the document was submitted by Citibank to ODHS on August 20, 19% (just in time for the previously
mentioned August 23 meeting with retailers). According to reviewers at ODHS, the document was too
much a restatement of the April 1996 proposal and lacked the detail—including flow charts—needed to
evaluate the planned system fully. Citibank then submitted a revised and—according to ODHS—much
improved document on September 13. A meeting in Columbus was convened on October 7,19% to go
over ODHS' and FNS' remaining comments on the system design. Most of the meeting centered on
detailed design questions posed by representatives from Booz*Allen and Hamilton.5 These questions
sought clarification on security issues (e.g., system use of passwords, separation of critical functions, use
and management of encryption keys) and communications protocols between terminals and the host
computer. By the end of the meeting, FNS and Booz*Allen seemed satisfied with the information they
had received. The final version of the document was submitted on October IS, 19%, and subsequently
approved by FNS and ODHS
Aside from the need for greater detail on planned system design and operations, several issues were
discussed during the document review process. One was ODHS' request that FNS waive the requirement
that all stores authorized to participate in the FSP be equipped with EBT terminals. Because of cost
considerations, ODHS did not want to deploy POS terminals in stores redeeming less than $100 in food
stamp sales per month. ODHS instead wanted these retailers to process manual transactions for their
limited number of food stamp sales. FNS rejected the request because, as described earlier customer
service has no way of knowing a recipient's current EBT balance when processing manual transactions in
an off-line EBT system. In addition, this cost-cutting feature was not in ODHS' negotiated contract with
Citibank. Adopting this policy would have reduced costs to the EBT vendor, but not the cost to the
government.
A second issue was the previously discussed problem about how store terminals could handle large
negative files. The regionalization of negative files was not poprJar with retailers or FNS because it
required single-lane retailers (whose POS terminals could not handle a statewide negative file) to phone
5 The consulting firm of Booz-AI len and Hamilton was under contract to FNS to help evaluate the technical and security
aspects of the Ohio EBT system
AM Associates Inc. Chapter 3: System Design and Development 39
for verification when recipients tried to shop outside their region. Despite these concerns, the final design
includes the ability to implement regionalization, if needed.6
A final issue was more fundamental Citibank and ODHS believed that some of FNS' and Booz«Allen's
comments on the Detailed System Design Document were too oriented towards on-line EBT systems.
They argued that off- and on-line EBT systems are sufficiently different that documentation requirements
for the two types of systems should not have to be identical. This debate continued into efforts to test the
system, as described later in this chapter.
3.4 System Development
As mentioned previously, the Citibank team was able to proceed with system development even while the
design process was occurring. The major software development tasks were:
• programming the new PayFlex smart card to perform the transaction processing functions
previously done in the POS terminal;
• writing software to create system files for use by FNS;7 and
• programming the new PayFlex card and the host computer to support Ihe addition of host
reference counters (HRCs).
The addition of HRCs added considerably to the complexity, and the security, of the system. HRCs
ensure that the both the card and the host processor process the same sequence of credit transactions, by
establishing a sequence number for each credit transaction and using that sequence number to calculate
the message authentication code (MAC) for that transaction. The card will not accept out-of-sequence
credit transactions, and only the host and the card have both the HRC and the encryption algorithm used
to calculate the MAC. The POS terminal does not have the capability to generate credit transactions; it
simply stores credit transactions generated by the host This makes it extremely difficult to add value to
the card without establishing an auditable trail on the host system In a major change from the
predecessor PayEase system, the Direction Card*11 relies on the card rather than terminal to perform these
secure message authentication functions.
The security features of the new system were documented in a key deliverable produced by the Citibank
EBT team, the Direction Card*1* Risk Analysis Plan. The risk analysis document discusses the potential
security risks to the system and how each is addressed by the Direction CardaM system design. The risk
analysis plan was submitted to ODHS in February 1997.
6 ()[)RSindCiUb«nkclccKlcd to impkment OK syi»eni'5refic«diz«Uonfc«hirem September 1998. when Cuyahoga County
(Cleveland) began converting recipients to EBT. By this point ihe system's negative file had grown too large for the data to
be stored in single-lane retailers' EBT terminals
7 All EBT processors are required to submit state-level files to FNS each month that detail all transactions processed during
the month FNS uies these date to identify potential instances of food stamp trafficking
40 Chapters: System PHlow and DavJopwint AM Associates me.
Also included under system development activities were several tasks that CENTECH performed as part
of preparation for roll out, many of which took the whole duration of the design and development phase.
These activities included:
development of the Implementation Plan (described in Chapter 5);
development of retailer agreements and a system for executing them;
development ofa procedural approach to conducting site surveys;
development ofa technical and procedural approach to installing equipment;
development of a technical and procedural approach to equipment maintenance;
development of the inventory control and distribution system for hardware and cards;
documenting these systems and approaches and training staff:
development of the County Training Manual and the procedures documented therein; and
development of the Retailer Training Manual and the procedures documented therein.
CENTECH had no previous experience in planning or preparing for a state-wide EBT rollout, so it had to
start "from scratch" in determining what needed to be done, how, and bow quickly. For this reason, these
system development efforts were more labor-intensive, and therefore more costly, than might otherwise
have been expected. Particularly time-consuming were the development and documentation of all the
technical and procedural approaches to support die installation and maintenance of equipment. In
addition, CENTECH prepared several iterations of both the County Training Manual and the Retailer
Training Manual in response to changes suggested by ODHS.
3.5 System Testing
Any new EBT system delivering food stamp benefits must be certified by FNS before it can be
implemented. This certification process hinges on the system's "acceptance test," which is usually a
multi-day event consisting of the following major components:
• An exercise of all system functions and allowable transactions, following a pre-arranged
script, with subsequent review of the system's management reports to ensure that all
transactions were correctly processed
• A period of "what-iT testing, during which time test participants try a series of unscripted
actions to make sure that the system correctly processes any attempted transaction or
activity.
• A "stress test" of the system, to ensure that telecommunication links and processing flows
can handle expected levels of system use under full implementation.
• A "live transaction" test, during which time limited food stamp benefits are posted to a small
number of client accounts, EBT cards are issued to the clients, the clients use their cards in a
few EBT-equipped stores to purchase groceries, and retailers' bank accounts are then
reimbursed for the EBT sales.
Inc. Chapter 3: System Design and DsvalopniMit 41
The acceptance test is usually preceded by a functional demonstration," which occurs after basic
development work has been completed. As noted earlier, however, FNS agreed to an ODHS request that
the requirement for a functional demonstration of the Direction Card3** system be waived due to the
similarity between the pilot and new EBT systems and the need for an accelerated design and
development schedule. FNS also agreed that the system's acceptance test could focus on the functional
differences between the old and new systems.
Tost Plans
Citibank, as the prime contractor to ODHS for the expanded system, had ultimate responsibility for
preparing the system's Acceptance Test Plan, and Citibank edited, formatted, and produced the final
document. SVS. however, took the lead in proposing the testing strategy, developing the test scripts, and
writing the majority of the document. SVS' task ofdeveloping the test plan was made easier due to the
fact that they were able to use as a model an existing Acceptance Test Plan developed for SVS* off-line
EBT system in Wyoming.
The Acceptance Test Plan shall include an acceptance test schedule, test
procedures, and test data for evaluating the project. It shad include the
methodology to be used to verify that the off-line EBT system operates in
accordance with Food Stamp Program and RFP specifications. The document
shall summarize all details necessary to operate the off-line system Inducing
system component configurations at each retailer.
RFP. p. ee.
The initial draft of the Acceptance Test Plan was submitted to FNS on October 18,1996, approximately
seven weeks before the scheduled start of the test FNS responded with its comments a week later. FNS
expressed concern over Citibank's request that all plans for what-if tests be submitted two weeks in
advance of the test, noting that it is often during the testing period itself that evaluators identify new
scenarios to be tested. FNS also requested additional test scenarios and scripts to cover system
functionality not addressed in the draft plan. Several of the requests dealt with system security, an issue
that became somewhat controversial during the testing period. After several iterations of revisions to the
test plan and subsequent comments, the final Acceptance Test Plan was distributed to test participants at
the beginning of the testing period.
The effects of the compressed design and development period were clearly evident as the parties prepared
for the December acceptance test. The test could not be delayed because transaction processing in
Montgomery County had to be converted to the new system before January 1,1997, the date when FNS'
contract with SVS for pilot operations was set to expire. At the same time, however. Citibank did not
have an approved Detailed System Design Document until November. The Citibank team was worried
about the lack of approval because any last-minute changes to system design would necessarily require a
change to test plans. As in most efforts to implement EBT systems, the time leading up to the acceptance
test became quite stressful for all parties.
42 Chapter 3: Syatam Daaign and Development AM Associates Inc.
Acceptance Test
The acceptance test of the Ohio EBT System took place at SVS' headquarters in Louisville. Kentucky-,
over a three-day period beginning December 9,1996. Representatives from ODHS. Citibank. SVS.
CENTECH. FNS. and Booz-Allen were in attendance ■ To test changes in the EBT card and transaction
processing flows. POS terminals were set up at SVS to represent a variety of system locations, including
a 12-lane retailer, several single-lane retailers, the Montgomery County Fiscal Control Office (FCO)
Card Management System (CMS), the county's Assistance Control Office (ACO) Issuance Terminal,
FNS, Customer Service, and the state CRIS-E Certification System.
Five "test teams." composed of three individuals per team, were selected to test various system functions.
Over the three days of testing, participants followed specific test scripts and testing procedures
established by SVS. After system initialization and setup on the first day, each day generally began with
a review of system reports on the previous day's activities. This was followed by scripted tests of
changed functionality within the system and then what-if testing. Stress testing of the host capacity for
large volumes of POS transactions was not done because off-lux systems do not authorize each
transaction at the host. Sizing for the host capacity for handling retailer batches, reconciliation, report
generation, and state file transmissions was discussed. The host was sized to handle 66 percent of the
total projected caseload, which was considered acceptable.9 Live testing is usually done for several cases
loaded with about $30.00 each. This demonstrates posting, debiting, and settlement operations. Live
testing was considered unnecessary because of the extensive and on-going operations of the Dayton pilot
and the lack of system changes in these functional areas
With respect to the what-if testing, representatives from Booz*A!' n had developed an extensive list of
what-if lest scenarios, m. y of which were hand-carried to the test. ODHS and SVS both reported that
not having these test scenarios prior to the test was a problem because SVS was not able to prepare the
system in the necessary manner. Also, although SVS had built time into the schedule for what-if testing,
they were not prepared for the large number of tests that Booz*Allen requested. Nevertheless, all testing
was completed within the three scheduled days.
One issue arose during the acceptance test relating to the security of the system. Booz*Allen and FNS
requested that certain security tests of the system be performed, especially in light of the fact that mam
security -related details of the system did not appear in the Detailed System Design Document. In
particular, Booz*Allen wanted more detailed information on communications protocols, the message
authentication codes (MACs) used in the EBT cards and back-room PCs in multi-lane stores, and
management of security keys.10 SVS and ODHS believed that it was not necessary to provide such
detailed information, especially because the pilot EBT system ha< experienced few security problems.
SVS was also concerned that, in order to respond fully to Booz-Allen's request for security testing and
review, SVS would have to divulge proprietary business information. Rather than providing this
* Representatives from Abt Associates Inc. and Phoenix Planning & Evaluation were also m attendance
9 There would be ample time to increase the capacity of the host, as needed, as the system was rolled out throughout the stale
on a county-by-county basis
10 Security keys are the loots used to manage encryption and de-encryption of protected data
AM Associates Inc. Chapter 3: System Design and Development 43
information. SVS proposed that Booz*Allen attempt to directly breech the security of the card and the
back-room PC."
In the end, Booz*Allen and SVS had extensive discussions about the security key management, MAting.
and encryption techniques used for the PC and other elements of the system, and SVS was not required to
provide code or documents revealing their proprietary data. Some tests were made to evaluate the
robustness of the security measures, and these were determined to be sufficient
In general, the acceptance test went quite well with only nine problems reported. Problems that occurred
during the test were reported on Acceptance Test Incident (ATI) reports and were assigned a priority of
between I and 4 (with I being the most serious and 4 being the least serious). Five of the nine problems
were categorized as level 3 ("minor functional deficiency") and four were categorized as level 4
(' cosmetic deficiency") All nine problems were corrected during the three days of the test A week after
the test. Booz*AHen recommended approval of the system to FNS
Although the test was deemed successful, Booz*Allen representatives said they would have preferred a
five-day test period, both to give more time for what-if testing and because some off-line system
functions require multiple days to completely process. They also would have preferred a two-week
period after the test to review and evaluate system reports. ODHS and Citibank stressed the need for a
timely approval, however, to allow conversion activities to proceed.
FNS formally approved the system on December 17,1996. This approval was contingent upon SVS'
successful resolution of all ATIs and presentation of proof thereof (regression script and results), as well
as making appropriate changes to resolve report discrepancies identified in the Booz*Allen report on the
acceptance test. These resolutions and changes were accomplished to the satisfaction of Booz*AHen and
FNS
11 The back-room PC is used for data storage and communications with the host computer It is configured without a monitor
or keyboard
Chapter 3: System D—hjn and Pcvsopwiant
Chapter 4
Design and Development Costs
4.1 I