Labor takes step toward paperless benefits filing

The Labor Department recently awarded $6 million contracts to two vendors hired in a pilot program by the agency to develop a computer system that would allow employers to file their benefit plans electronically.

In September, Labor's Pension and Welfare Benefits Administration division will decide between the systems that National Computer Systems Inc. (NCS) and Wang Government Services create under these contracts. The winner will receive the final five-year contract to electronically process Form 5500s, the annual reports of employee benefit plans, said John Helms, director of information management at PWBA.

Currently, the forms are processed manually by the Internal Revenue Service at one of its three processing centers in Memphis, Tenn.; Atlanta; and Long Island, N.Y. PWBA then retrieves the data to keep a record of employee benefit plans, Helms said.

But that method will be replaced by the new Employee Retirement Income Security Act Filing Acceptance System, known as EFAST. It is expected to provide imaging and optical character recognition technology developed by either NCS or Wang, Helms said.

"We want both vendors to develop a system that would mirror processing at minimum volume, which is about 500 forms per day," Helms said.

The imaged-based EFAST control system will capture financial and other benefit-plan data from Form 5500s submitted by administrators annually, as required by the Employee Retirement Income Security Act and provisions of the Internal Revenue Code.

The information is used by federal regulatory agencies—such as Labor and the IRS—that administer various sections of the act, and the information is critical in protecting the benefit plans of nearly 200 million participants and beneficiaries.

The cost of processing these forms will plummet once the EFAST system replaces the manual labor currently used to process forms, Helms said, and the government and the vendor selected for the final job will split the profits 50/50. For example, if it takes $5 to process the forms manually but only $1 electronically, the remaining funds will be split down the middle, Helms said.

The winning vendor will be chosen based on the quality of its proposed solution, although price also will be a consideration, Helms said. The companies will demonstrate their EFAST systems this summer by conducting simulated tests.

So far, NCS is estimating the final job to cost $58 million, and Wang is predicting $78 million.

"I recognize that there appears to be a substantial difference in cost, but that doesn't mean anything yet," said John Flynn, senior vice president at Wang, who added that the estimated price could increase, decrease or remain the same. "Our intent is to meet the requirements of our customer's everyday need even during the peaks."

Vicki Amundson, the EFAST program vice president at NCS, said the pilot system that NCS is developing will process about 15 percent of the forms daily and will be upgraded if the company wins the final contract. "Our goal is to help the Department of Labor move to a paperless filing system," Amundson said.