Client Identification and Benefits System Update

The Community and Neighbourhood Services Committee recommends the adoption of the confidential report (May 14, 1999) from the Commissioner of Community and Neighbourhood Services, entitled "Client Identification and Benefits System Update", which was forwarded to all Members of Council under confidential cover.

The Community and Neighbourhood Services Committee submits the following report (April28, 1999) from the Commissioner of Community and Neighbourhood Services:

Purpose:

To outline the Client Identification and Benefits System (CIBS) vendor selection process leading up to, and the terms of reference of, the project initiated by the former Metropolitan Corporation, to review the 1997 agreement with Citibank Canada (hereafter Citibank) for development and operation of CIBS, and to provide an update on the current status of the project.

Financial Implications:

Financial implications are indeterminate at this time.

Recommendation:

It is recommended that this report be received for information.

Background:

(I)Overview:

The Social Services Division pursued a comprehensive strategy to improve client service and to increase the integrity of the social assistance delivery system throughout the 1990s. CIBS represented one of several initiatives aimed at modernizing this system. Other initiatives primarily addressed "front-end" social assistance processes - from initial capture of application information to verification of eligibility and calculation of entitlement.

CIBS was intended to integrate and automate other key activities required for effective delivery of social services in Toronto. These included: client identification through the use of an encrypted biometric client identifier¹, more efficient automated disbursement of both cash and non-cash benefits using an Automated Teller Machine (ATM)/bank card, and improved automated financial monitoring and tracking. (¹ A "biometric" identifier uniquely distinguishes an individual from all others. Examples of biometric technologies incude finger scanning, hand geometry, and digitized facial photographs.)

It was anticipated that these components would function together to enhance the delivery system at three levels. At the enrolment stage, the biometric identifier was expected to offer increased system security by ensuring that a person could not enrol under multiple identities and thereby receive duplicate benefits. Automating the delivery of cash and non-cash benefits would streamline benefits disbursement and substantially reduce manually intensive business processes. In addition, client benefit cards would provide clients with easy access to their benefits: funds would be available through bank machines and Point of Sale locations. Finally, CIBS was intended to provide the Division with an integrated financial monitoring and tracking system with the capacity to generate on a regular and timely basis an integrated picture of benefits usage and related payments.

What was truly innovative about CIBS was that it had the potential to combine leading-edge technologies in an integrated way. There was substantial evidence that the development of such a system would generate certain significant advantages for both clients and for the effective and efficient delivery of services by the Division. Among the key anticipated benefits were enhanced client service, increased productivity, potentially substantial program savings, improved client access to services, and increased system integrity. These benefits were well beyond those that could be obtained by implementing the individual technologies involved independently. At the same time, CIBS was seen to offer a high degree of system flexibility and versatility. A detailed discussion of CIBS, including a description of potential benefits and an elaboration of the sound financial case for proceeding, is contained in a number of reports to Metropolitan Council (see Metro Human Services Committee, Clause No. 1 of Report No. 8, 1996 and Metro Human Services Committee, ClauseNo.1 of Report No. 8, 1997).

Staff undertook a comprehensive examination of overall savings related to the implementation of CIBS. Program savings resulting from increased levels of system integrity provided by CIBS, based on a projected caseload reduction of 3 percent, a conservative estimate drawn from experiences in other jurisdictions, were estimated, as were direct savings and cost avoidance attributable to administrative improvements achieved through CIBS

Based on caseload levels of approximately 92,000 cases in the Spring 1997, and 80/20 Provincial/Municipal cost-sharing, total annual savings of $27.7 million gross, $7.2 million net were projected.

The average annual cost of implementing and operating CIBS was estimated to be $3.32 million ($16.6 million over the five-year contract period). This was based on a monthly rate of $1.84 per active case, or a minimum of 36,800 per month, for the operation of the biometric and non-cash components of CIBS. In addition, for the operation of the cash component of the system, Citibank was to be paid a $2.50 per month fee for each client having access to a CIBS cash account. It was projected that CIBS would pay for itself in two to two and a half years, depending on caseload size. In addition to per case costs, the contract contained a provision to amortize the $1.5 million U.S. costs related to the Division's purchase of necessary hardware and software.

CIBS was intended to be a central part of the Division's core strategic objective: to develop a modern, responsive and efficient social services delivery system which both meets the needs of Toronto's most vulnerable residents, and ensures the integrity of the social assistance program. This could best be accomplished through the innovative application of new technologies.

Beyond the sound financial case for proceeding, it was also envisaged that the delivery foundation established by CIBS would give the Division unprecedented flexibility in the administration of program benefits, with the ability to adapt to a wide range of changes that have subsequently been enacted by senior levels of government, including the introduction of the Ontario Works Act (O.W.A.) and the transfer of the Family Benefits sole support caseload to Toronto.

(II)Vendor Selection Process:

For the reasons enumerated above, the Social Services Division issued a Request for Proposals (RFP) for development of CIBS in 1994. The RFP sought solutions that incorporated the best available technology, provided demonstrable and significant increases in efficiency and effectiveness, and offered the highest available levels of privacy protection.

A number of proposals were subsequently received in response to the RFP. At the Division's request, a project team was formed, drawing on expertise from across the Corporation. This team was comprised of staff from the Legal, Corporate, Human Resources, and Finance Departments, the Corporate Access and Privacy Office, and the Community Services Department's Social Development and Management Services Division. Its role was to provide technical expertise in a range of areas, including structuring the negotiations process, analyzing financial proposals, evaluating technologies and providing specialized legal services.

To provide oversight for the vendor selection process, a political Steering Committee comprised of four Metro Councillors appointed by Metropolitan Council, along with representatives from the Social Services Division, Metro Treasury , Corporate Services and Metro Legal, was formed. In addition, an Executive Secretariat comprised of senior staff from the above Departments and Audit was struck to provide direction to the project team and to make recommendations to the Steering Group.

A two-phase evaluation process was initiated. In Phase I, all proposals were reviewed to ensure adherence to mandatory requirements identified in the RFP. A short list of viable submissions was subsequently compiled. At this point, the Division reported to Metropolitan Council on the status of the evaluation, and obtained approval to proceed with Phase II.

In Phase II, the project team was divided into five separate sub-teams representing all aspects of Metro's business and technology environment to provide the necessary expertise to assess proposals under more than 90 criteria covering six areas: business fit, technical fit, implement ability, value, proponent viability and privacy requirements. Specific scores were assigned by each sub-team and considered by the Evaluation Team. An Audit Team had full access to the detailed scores and accompanying documentation.

On the basis of the results of this evaluation process, three viable consortia were identified, and a preferred proponent selected. With Metropolitan Council authorization, in June 1996, Division staff initiated negotiations with the preferred proponent. However, suitable financial terms were not reached, and following direction from the political Steering Committee, negotiations continued with the two remaining consortia. Revised proposals were developed, and best and final offers submitted by these vendors. Subsequently, based on this review, the Steering Committee accepted the Department's recommendation to seek Council approval to negotiate with Citibank.

Citibank was chosen on the basis of substantial experience in the operation of electronic benefits transfer systems in nearly 30 jurisdictions in the United States. Citibank assured the Division that its existing products could be modified to address the Divisions's business needs and that its organization had the expertise and resources to complete this modification. Citibank also committed itself to work with the Division to expedite the design and development to meet the Division's needs, and promised under the terms of the Agreement to comply with all applicable legislation.

In June 1997, the Metropolitan Council granted the Community Services Department the authority to negotiate a contract with Citibank Canada to design and develop CIBS. The following section provides an overview of the Agreement reached with Citibank.

(III)Agreement with Citibank:

In order to protect Metro's interests, and minimize its financial exposure during the development process, the Division established a set of conditions that any negotiated agreement would have to meet. These included two primary components:

(a)absence of any up-front expenditures by Metro; and

(b)an overall cost commensurate with the benefits expected.

An independent expert was engaged to assist the Division in the negotiations with Citibank, as were appropriate corporate staff, notably staff from the Metro Legal Department. Agreement with Citibank was reached in August of 1997.

As per this Agreement, Citibank was responsible for the design, development and implementation of the CIBS, which was to consist of a biometric identifier, a bank card for disbursement of both cash and non-cash benefits and automated tracking of benefits. Metro provided input to Citibank so that it could execute its responsibilities under the Agreement.

The financial terms of the Agreement stipulated that payments to Citibank were to be made on a per case-per month basis. In keeping with the condition that no up-front expenditures would be required by Metro, payments were not to commence until two months following the start of a successful pilot, or when 20,000 cases had been enrolled, whichever came first.

As a means of affording the appropriate protection for both parties, this Agreement clearly specifies the terms under which either party can terminate, or seek termination of, said Agreement. There are several circumstances under which the City can unilaterally terminate the Agreement. However, the only condition under which Citibank can unilaterally end the Agreement would be the introduction of adverse legislation that would prevent it from providing services required under the Agreement. All or any part of the Agreement can be terminated by mutual written agreement of the parties.

It should be noted that if the City terminated the Agreement without cause, Citibank would be entitled to recover implementation and termination costs and expenses.

(IV)Metropolitan Council Direction:

In authorizing the Division to proceed with negotiations for the development CIBS, on two separate occasions Metropolitan Council directed the Division to address a number of issues (see Appendix1). The Division has complied with these directions, of which the primary ones are briefly discussed below. As directed, an independent security consultant was hired to ensure the system's technical invulnerability. Similarly, an expert evaluation was completed to ensure that clients' encrypted biometric information would be protected from unauthorized disclosure and abuse.

In response to Metropolitan Council's concerns, specific system design features were completed to ensure that:

(a)no biometric information would be encoded onto the benefits card;

(b)the benefits card would not contain a client picture;

(c)the biometric identifier would not be stored as an image; and

(d)all biometric records would be stored in a secured data base separate and distinct from personal client information.

As part of its efforts to communicate the benefits of CIBS to the community, and to obtain feedback on the project, consultations were undertaken with clients, staff and community groups, under the direction of an independent consultant. The results, which supported the broad directions proposed by the Division, were subsequently reported to Metropolitan Council in June 1997 (Metro Human Services Committee, Clause No. 1 of Report No. 8). As requested by that Council, a public presentation on the use of biometric technology, and its proposed use in CIBS, was made to the Human Service Committee.

Discussion:

System Design and Development:

Initially, the Division established a project team comprised of Metro staff with a dual mandate: to ensure that the terms of the Agreement were complied with, and to provide appropriate input to enable Citibank's completion of the design and development phases. A cross-corporate staff team continued to provide advice to the CIBS project team. In addition, a Project Steering Committee, comprised of senior Departmental and Citibank staff, was constituted to facilitate communication between the two organizations to ensure the prompt resolution of issues arising during the design and development phase.

These phases involved the integrated design and development of the following features:

(a)a cash disbursement system incorporating a bank card;

(b)creation of a non-cash disbursement system;

(c)design of a biometric system and final selection of associated hardware; and

(d)preparation for undertaking and testing a CIBS pilot, including an implementation plan.

From the outset, Divisional staff made every effort to support and assist with the development of an integrated identification and benefits disbursement system that met the Division's needs. These steps included:

(i)determining the Division's business requirements in order to expedite the progress of the project, and ensure that Citibank's design met the Division's needs;

(ii)providing constructive and detailed written feedback to Citibank throughout the design and development phases;

(iii)ensuring that CIBS addressed Provincial Information and Privacy Commission concerns related to the protection of privacy and security of information by brokering ongoing discussions among the Commission, the City and Citibank; and

(iv)providing Citibank, through the City's independent consultant, with specific expertise related the implementation of Electronic Banking Transfer systems in a Canadian context.

This level of co-operation with Citibank by Metro staff was provided on an ongoing basis consistent with the Division's commitment to the completion of the Project, and the development of a system design which met the Division's business requirements. Throughout the course of the Project, the Division committed the appropriate and necessary resources to ensure the success of the Project. These resources included Divisional staff, Corporate staff, and external experts engaged by the City. As per its Agreement with Citibank, neither the former Metro nor the City has made any payments to Citibank for the design or development of CIBS.

Current Status:

Design and development of CIBS has continued since the signing of the Agreement. However, there have been a number of delays which have extended the projected time frame for completion of the design and development phases, and the initiation of a CIBS pilot.

In mid-April, in a letter to the Commissioner of Community and Neighbourhood Services, Citibank indicated that it was "no longer able to continue negotiations with Metro (sic) for the design and implementation of the CIBS Project contemplated by our agreement dated August 15, 1997", and that "our relationship in respect of the CIBS Project is at end subject to a reservation of Citibank Canada's right to recover reasonable and fair compensation for the expenses incurred to date."

Citibank has been notified in a letter dated April 28, 1999, that the City's position is that Citibank's unilateral ending of the CIBS project constitutes the termination of the Agreement and amounts to a fundamental and actionable breach of contract. As noted previously, under the terms of the Agreement the sole condition whereby Citibank may initiate termination is that of Adverse Legislation; otherwise termination must be by Mutual Agreement or initiated by the City (as successor to the Metropolitan Corporation).

Conclusion:

In summary, this report discusses the CIBS project, vendor selection process, key terms of the 1997 Agreement, Citibank Canada's recent communication announcing its unilateral withdrawal from the Project and the Division's response. Given the potential for litigation a more detailed discussion of salient issues related to the delays that have occurred in the project and the Division's position regarding Citibank's management of the project will be provided in a separate in camera report to Committee that will be forwarded to Community and Neighbourhood Services for its May 19, 1999 meeting. This report extensively documents the history of the Project, the Division's ongoing efforts to ensure the successful implementation of CIBS and makes recommendations with respect to actions that should be undertaken by appropriate City staff.

Contact Name:

Heather MacVicar,

General Manager,

Tel: 392-8952

--------

Appendix 1

Metro Council Amendments regarding CIBS:

The Metropolitan Council on June 19, 1996, amended this Clause [Report No. 8, Clause No. 1]:

(1)to provide that the encrypted biometric customer identifier not be shared with any other Departments, Agencies, Boards and Commissions, or any other level of government; and

(2) by adding thereto the following:

"It is further recommended that:

(1) Metropolitan Council:

(a)proceed with a biometric identifier component of the proposed Client Identification and Benefits System and request the Provincial Government to amend the General Welfare Assistance Act and/or regulations thereunder to authorize specifically the use of a biometric identifier as a mandatory requirement for the initial or continuing receipt of welfare assistance; and

(b)request the Federal Government to investigate the use of biometric technology for identification purposes; and

(2)the Commissioner of Corporate and Human Resources be requested to investigate the possibility of substituting biometric technology for the current security identification system utilized in Metro Hall and submit a report thereon to the Corporate Administration Committee.")

The Human Services Committee recommends:

(1)the adoption of the following joint report (April 29, 1996) from the Commissioner of Community Services and Commissioner of Corporate and Human Resources;

(2)that in all negotiations with the consortium led by Unisys Canada Inc.:

(a)the Commissioner of Community Services be requested to pursue alternative biometric identifiers and report thereon to the Human Services Committee; and

(b)the Metro position be guided by the benefit of giving caseworkers more time to give clients counsel and advice, pursuant to achieving an accurate, efficient card system for General Welfare Assistance;

(3) that the design of the Client Identification and Benefits System (C.I.B.S.) include the following elements:

(a)the encrypted biometric customer's identifier shall not be encoded onto a customer benefit card;

(b)an individual's unique identifier would be deleted from the C.I.B.S. within three months of the individual no longer receiving benefits;

(c)no photograph of the customer shall be on the customer benefit card;

(d)an individual's unique identifier shall be stored on a secured data base with no other personal information other than a file reference number;

(e)at no time shall C.I.B.S. store or take a photograph of a customer's fingerprints;

(f)a caseworker shall not have access to a customer's identifier; and

(g)any adult resident of Metropolitan Toronto can request their biometric identifier be added to C.I.B.S. for a period of up to one year;

(4)that Metro Community Services seek the opinion of current G.W.A. clients on their reaction to the proposal and alternative biometric identifiers;

(5)that the Commissioner of Community Services be requested to prepare a presentation for the public with regard to biometric technology, the date, time and location of such presentation to be announced well in advance, and be at the same time as consideration is given to the report requested in Recommendation No. (2)(a) above; and

(6)that the Commissioner of Community Services be requested to report to the Human Services Committee on the feasibility of a representative of the Information and Privacy Commissioner of Ontario providing a response as to what are acceptable and unacceptable forms of identification, including the proposed finger-scanning system, such report to be considered at the same time as the report requested in Recommendation No. (2)(a) above.

The Metropolitan Council on June 4, 1997, amended this Clause [Report No. 8, Clause No. 1] by adding thereto the following:

"It is further recommended that the Commissioner of Community Services be authorized to seek an independent expert opinion as to the proposed system's technological invulnerability from unauthorized use and report thereon to Metropolitan Council, through the Human Services Committee, as part of the report requested in Recommendation No.(5) embodied in the joint report dated April 24, 1997, from the Commissioner of Community Services and the Commissioner of Corporate and Human Resources."

The Human Services Committee recommends the adoption of the joint report dated April 24, 1997, from the Commissioner of Community Services and the Commissioner of Corporate and Human Resources, subject to amending Recommendation No. (2) to read as follows:

"(2)the Community Services Department be authorized to commence design, development and pilot phase implementation of CIBS immediately upon finalization of a contract with Citibank; and further that the pilot phase include a significant proportion of Metropolitan employees, Councillors, and social assistance recipients who volunteer to participate;".