Examination of Witnesses (Questions 960
WEDNESDAY 24 MAY 2000
960. Yes. Let us go on to the digital signature
applications. I must admit not to understanding a great deal of
this, but the digital signature is the means by which something
is authenticated. You have a system in Virginia. Can I establish
two things? Who actually drives that? Is it driven by the private
(Mr Upson) We have a law in Virginia that actually
came out of ourWe are fortunate to have a Science and Technology
Committee in the House of Delegates that developed what is now
a standard for electronics and is considering a law that says,
in Virginia, if two things are satisfied: if the integrity of
the document is guaranteed, if we guarantee that, and we can guarantee
that the signatory is the signatory, then an electronic document
is as legally binding as a written document. The responsibility
for that rests withor we will haverests with the
Secretary of Technology for the Virginia Government, for this
reason. We do not want citizens to have to give one digital signature
for D&B, another for tax, another for a boat licence, another
for housing permits, what have you. We want to have a common environment,
for a couple of reasons. One, it is easy for the citizen and,
two, if there is some kind of security problem or technology evolution,
the biggest threat to the security of our data is going to be
that we have too many systems in government. So we are trying
to centralise co-ordination using a model where we bring stakeholders
in. It is the best way. We have to have standards so the responsibility
for it rests with the Secretary.
961. Then that digital signature is unique to
that person? How widely is that then accepted in the United States
(Mr Upson) Digital signatures run the spectrum. I
think we all use them every day in terms of an ATM machine.
(Mr Upson) The question I think you are asking is,
when you get to documents, then is there a notion of a public
key infrastructure, which I think is very exciting: the idea of
being able to put in a password. Log into the internet, execute
a transaction, put in a password and have my own key that only
I know that verifies it, encrypts the data and someone on the
other end can de-encryptor whatever the word is -and literally
you control the information. It is one of our pilot projects.
How pervasive is it? It is not pervasive at all. It is the next
generation. One of the issues I addressed to the Federal Government
the other day is that the Federal Government is doing pilots all
over, different kinds, and I think my point was that is a mistake.
We are trying to do them along the same scale. Washington State
in the United States is probably the most advanced. I would love
to say we are. We look to them as a model and we are putting out
a procurement for digital signatures and authentication authorities
and so on, but that is the next generation. But we all use them
today. It is a digital signature when you execute your driver's
963. And it is a Virginia digital signature
at the moment, anyway?
(Mr Upson) Yes.
964. The second thing really is that you refer
to stakeholders. Could I just ask you to take an example of some
stakeholders who you believe have benefited significantly from
the changes which you have wrought?
(Mr Upson) If I may, because my job not only is the
CIO for the State, but also the person responsible for policy
for business and research development and education, so you are
asking me a broader question.
965. A rather broader question.
(Mr Upson) I can tell you, inside government it is
happening all over. Let me tell you some stakeholders who have
directly benefited because that is really concerning citizens.
Higher education: we have 16 universities: the University of Virginia,
William and Mary, Virginia Tech, a number of them. They do not
work together. They have started working together. One of the
other commissions we have formed is the notion of stakeholder-driven
government for technology is literally the universities will tell
you themselves that they have benefited greatly in terms of, one,
consolidation of their administrative operations which they are
doing. That is the government side. But in terms of research and
development, in consolidating what we do, now that they are working
togetherin bio-technology. We have the University of Virginia
and Virginia Tech working together, working with George Mason
University, creating a collaborative environment, looking at government
as an enterprise and education as an enterprise. We are able to
attract more interest, more research dollars, participation by
the business community, business community stakeholders that have
benefited: every technology company in Virginia will tell yousome
of them herethat the legal framework we put in place benefits
them greatly. In terms of setting up the rules, having a default
set of rules for digital products; in terms of creating an advanced
awareness of Virginia's modern horse fields and tobacco farms.
The Governor of Virginia came back, and I introduced him, and
I said that once, and he said, "There is nothing wrong with
horse fields and tobacco farms." But it is not our economy
now. For us it happened in seven years.
Lord Faulkner of Worcester
966. Good afternoon. I enjoyed your paper which
I thought was very interesting. I want to ask you about the electronic
government implementation initiative, and your reference to crossing
traditional programme and agency boundaries. Have you found that
this cross-agency funding has been met with much resistance and,
if so, how do you overcome it?
(Mr Upson) Cross-agency funding? It has all been an
experiment for us. The evolution of the COTS Council, is now two
years old or almost two years old. The first meeting, I mean,
everyone there was We got this new Secretary and it was,
"We are not going to give up our turf". And now, it
is the most collaborative system of leaders. Any COTS recommendationit
is not me, really. You know, I drive my chair, but every month
that Council reviews projects over $1 million -our technology
progress. We have discussions on whether there is repetition and
whether we can consolidate. By the way, there is a project review
that comes through my office. I have the authority to approve
or disapprove any technology project over $1 million. I literally
take that to the COTS Council and ask what they think, and let
them force the discussions of savings and cross-collaboration,
and it is working very well. The interesting issue I had this
year was with our own legislature. They had concerns that the
COTS Council was really just my tool, to do what I wanted it.
I realised I had not done a good enough job with the legislature,
and the COTS Council came in, and we are now funding a major project
to operate the technology and standardise the technology on every
desk-top in the Virginia government. It is called Seat Management.
Part of the new government implementation plan will require every
agency to submit a plan on how they are going to comply with it.
We have a few challenges coming up. We are about to consolidate
some major administrative travel expense, and procurement and
leave systems. You know, it makes no sense that in the state government
or the Federal government we should have agencies all doing their
own leave system, or their own travel system. I might give you
an example of that. I think you will get cooperation because I
think you have the management structure, but I told the Governor.
I said, "You know, I hate to say this, Governor"and
I hate also to admit it on record herebut I said, "when
I fly it is United Airlines or American and one is a little bit
more expensive. I am going for frequent flyer miles." And
I said, "I think it is happening all over government, and
there is no system in place to curb it. We can put parameters
in the electronic system that require all of us very simply and
easily to do that." And so those are the kinds of things.
We have to come up with some savings in the next two years anyway.
Those are the kind of things we are going to need. You can strike
that if you want!
967. I was going to suggest, maybe the government
can tax you on the frequent flyer miles. Can I just ask you one
other question. You say bandwidthfast, accessible and inexpensiveis
essential to providing the service for the citizens. Why do you
say that broadband width really is a critical factor as opposed
(Mr Upson) Let us talk about government and outside
government too. It is critical. If we are going to really use
the internet to execute transactions and to conduct commerce,
whether it is an engineering project or just text transfers, people
have to be able to have access to technology, have to have speed
and they have to have the ability to carry the information quickly.
We believe that is as fundamental as buildings used to be one
hundred years ago for business. We have put in place But
again, here is the challenge, I think. History has shown us that
every networkcanals, railroads and highwaysall had
prosperity where the network was built. Our opportunity and our
challenge is that this network can be anywhere, and it can be
everywhere, but right now it is concentrated. In the United States
it is concentrated in Silicon Valley and research triangles and
urban centres, Northern Virginia, New York, Austin, Texas. How
do we get it to rural parts of the state? How do we get time to
serve populations? We have used state government to be a negotiator,
and use its power as a buyer too, to negotiate a contract between
telephone communications companies. There was a whole poker-playing
component of it, I think. What we did was achieve the only state-wide
contract that will allow businesses of all sizes anywhere in the
state, on demand, to get high bandwidth communication services
at enterprise rates, state-wide rates. What do all the businesses
know about? So what? They have a pipe. The other challenge is,
what do main street businesses do with it? One of my agenciesit
is a unique hybrid, a private/public agency called the Centre
for Innovative Technologywe are sponsoring work-shops all
over the state, six of them later this year, and they will probably
will continual. We are going to bring hundreds of businesses together,
main stream businesses with e-stream businesses, and let them
interact in a disciplined environment where we show companies
how to use the bandwidth, how to use the network, for both their
back room administrative operations and their business-to-business
and business-to-customer transactions. I found, by the way, your
comment about internet companies not making money yetthat
bottom that fell out is in Virginia. We have 7,000 or 8,000 of
those companies, so we are very familiar with it. That is the
challenge, taking the communications technology and intersecting
it ultimately everywherethat is what we are doing.
Chairman: We have some questions on the stovepipe
mentality, but I think you have covered those already in answering
the previous questions. Lord Paul would like to ask some questions
968. Mr Secretary, your testimony first of all
is so good that the question-asking has become very easy.
(Mr Upson) Thank you.
969. You say that according to some soon-to-be-released
study conducted by the American Electronics Association, Virginia's
high technology industry added 50,000 jobs to its economic base
between 1993 and 1998. What sort of jobs are these and were there
other types of jobs which you lost, and how did you manage to
create so many skilled workers?
(Mr Upson) How did we manage to create jobs?
970. To find so many skilled workers?
(Mr Upson) Skilled workers? Caroline is telling meshe
is my Assistant Secretarythat the American Electronics
Association's study is on line now, and it is available.
(Ms Boyd) It was released last week.
(Mr Upson) Can I step back to Virginia just a little
bit. In 1980 we had very little technology but that was the year,
and that was the period, that desk top computers hit the world.
And the biggest buyer in the world was Uncle Sam, and we had the
best proximity to Uncle Sam, and we also had the lowest taxes
and the most friendly regulatory environment in the United States.
So this suddenly broke through the eighties. When the internet
hit in 1993, we certainly one of the highest concentrations of
information service workers anywhere. The creation of jobs: suddenly
when the internet All those people doing government technology
work went out and started their own companies and literally the
jobs that were created were very entrepreneurial. Companies like
America-On-Line, that we all now think of as giants, were nothing
ten years ago. The jobs that were created? I will give you our
demographics. We have 12,800 technology companies in Virginia.
One in 8,000 of them is quadrupling in size every four years,
and 5,000 of them have under 9 employees. So the jobs are being
created. We have become a magnet for entrepreneurs really. I think
Silicon Valley is far more mature than we arewe called
ourselves "The Wild, Wild East". Everyone has a business
plan and everyone is going to change the worldand we have
some of those companies here today, by the way. We have a company
here that is opening an office in London that did not exist a
year ago. So there is an incredible lot of entrepreneurial skill.
971. There are a lot of youngsters behind you
showing a lot of interest.
(Mr Upson) And so I think we are trying to build on
the fact that we were blessed with an environment by, frankly,
happenstance and now we are trying to say we did some things well
by happenstance, and now we want to build an environment around
it to preserve it, and spread it across the state. But the kinds
of jobs? They are software development jobs; they are largely
software development. That is our competency. We are going to
do them competently. Web management, web conversionI call
it economic conversion jobs. We have another statistic to show
you. It says fourth in here, but we have the fourth highest wages
of any state. That is because of the stock options that people
Wages, by the way, they measure: the total compensation is salary
plus stock options that are exercised, and stock options are another
currency in Virginia. I do not know if that gets to your question
but actually it is an entrepreneurial environment, and I think
it is unmatched.
972. And the stock optionshow are they
feeling at the moment for the last couple of weeks?
(Mr Upson) Not as good as they did in March. I am
feeling a little better about not having them than I did.
973. Another question. Again, in your testimony
last February, that with the cooperation of the United States
Federal Trade Commission, the largest ever international law enforcement
project to fight fraud on the internet, 150 organisations in 28
countries, including seven Federal agencies, 49 state and local
consumer protection agencies, 34 Attorneys General, 39 Better
Business Bureaux -is this a continuing operation? Could it be
974. Is it a continuing operation, an on-going
(Mr Upson) I saw that question, and I thought "I
do not know the answer to it," so probably I should say that.
But I have to tell you this. I work with our Attorney General
very closely. I go back to the point that there are no precedents
for this new medium that is only seven years old. I hope that.
I have to believe that will be coming and I hold to that. But
I will tell you that there is an organisation called the National
Centre for Missing and Exploited Children. It is head-quartered
in Virginia. It is a national organisation. It has now gone international.
2200 kids are reported missing in the United States every day.
Until the internet, they had about 63% recovery rate, and a lot
of that has been parental abductions and things, but a lot of
it is not. With the internet that recovery rate has gone up to
90%. The challenge that I think law enforcement hasI talk
about computers over here and education over here.
The other issue is computers over here and crime fighting
over here. The challenge, I think, that law enforcement
has is you talk about lack of cooperation in a functioning government.
I do not know what it is like in Europe, but local police do not
necessarily talk to county police; state police do not
And all the way up. Then, of course, nobody likes the Federal
Government. But technology is starting to break that down and
in cybercrime it almost has to. We have had cooperation in Virginia,
across national borders, in catching child pornographers. There
is one case here, and there is another one, so it is a priority
in our state. That cooperation is inevitable and I hope that conference
continues. We have a meeting of State Attorneys General that I
spoke at just three weeks ago in Williamsburg. So I think that
cooperation is starting to occur at all levels.
975. My colleagues visited you two or three
weeks ago. This is before we had this wonderful "I love you"
on the internet. How has that affected you and your enforcement?
(Mr Upson) A good question. In fact, I think it points
to our COTS Council again. The minute that happenedwe heard
about the viruswe have now a reporter mechanism in the
Virginia Government that I put out. It said anyone that has gotten
anything: one, we put out the alert. Two, we put out the notice
that any instances should be sent through to my office so we can
manage it. Three, we immediately shut down all the state servers,
and of course got soundly criticised by some for not allowing
citizens to provide access into the government for 24 hours. But
by 10.30 the next morning we had patches in place, because we
had cooperation across government, and there was not a blip in
Virginia. We had only a few instances. We had no service disruption
other than that which we controlled.
976. It was not started by you, obviously!
(Mr Upson) No, no. I got scared enough, I tell you.
977. Thank you, Chairman, you are right, I think,
in saying that the stovepipe mentality has been touched on but
I would like to just add a supplementary to it. If there was a
stovepipe mentalityand I do not think it is unique to the
Commonwealth of VirginiaI would like to know how you incentivise
people to abandon their stovepipes? And what level of government
do you attack?
(Mr Upson) Part of it, I think, it gets backbecause
I was thinking about the incentives. We are doing something now,
so I will return to incentives in a second. But it does get to
the notion when you bring people that have the authority within
their organisation and give them a larger mission I cannot
tell you, the pride in the work force that implements that. In
terms of incentives, where we get people to participate? let us
start with out higher education. It is one of the particulars
we are looking at. Not only do we have 16 universities and 23
community colleges; they all have their own data centres. We have
probably seven Peoplesoft, and God knows how many Oracle contracts.
We are saying now, with one of our universities leading
I do not know what education is like here, but universities are
so like students. They want the money from the state, but no accountability
to the state. So they do not want the state telling them what
to do, and how to run their systems. We are saying, "Look,
we will build the data centre. We will give it to you. You all
cooperate. You will save millions of dollars That will not affect
your budget. You can have the money to do whatever, to educate
students." That is, I think, a real example. We are also
on another initiative which the Governor is putting out today,
in terms of reducing costs. Fifty per cent of the savings that
we realise by putting in these systems will go back and accrue
to the state, or to the respective agencies. So we are trying
to upgrade our data technology. We are trying to provide incentives,
but I do not think the incentives will work without a management
978. Just a quick one. As your successful businesses
in Virginia and as your government become more online, do you
have, or do you perceive, problems in increased social exclusion
in the lower income groups, accepting that whilst at school children
may all have computers, and when they leave school they may even
be given them, but do they have the ability to keep them up to
date and to keep in touch?
(Mr Upson) That is a very good question. It is probably
the top concern of our Governor today. We have a number of proposals.
Some did not get through the legislature, some we are trying to
fund anyway and we are working with the private sector on. And
talk about old versus new worldthis is it. Governor Gilmore
has proposals in his budget to provide internet to every communitycommunity
based internet access especially in poor areas. We have a comprehensive
programme to do this. The libraries, of course, were modernised,
but our point was that the populations we are trying reach do
not always go to the library. We have to put them in boys' and
girls' clubs, community centres, churches, senior citizens', homes.
Senior citizens, who have the most to gain from this, are not
going to go into a library and be embarrassed and try and learn
computers. They will do that in a senior citizen centre. We have
a whole programme and we are linking up with America's Promise
and a couple of other initiatives, matching state funds with Federal
funds and with private sector funds, to put internet access and
computer availability everywhere. In addition, the Governor has
proposedyou know, with welfare reform in the United States,
states have saved billions of dollars, I think in Virginia, we
have over $200 million in surplus funds because the welfare has
declined so much, public assistancewhat we have proposed
doing is using those funds, or a portion of those funds, to give
the poorest part of the population technology in a leased environment,
so it is always updated. It cannot be resold or anything else.
That met with resistance in our legislature because the thought
was, they should have more food or housing, and this is a luxury.
Our point is, it is not a luxury. So we are providing that line.
979. And do you believe that the availability,
when it comes, of interactive digital TV will it change the problem
dramatically or make it a great deal easier because these classes
may have more opportunity?
(Mr Upson) Interactive digital TV? My friend here
is the President and CEO of Consumer Electronics Association.
Digital TV, I believe, is going to be required on every television
(Mr Shapiro) The model, for United States purposes,
is on high definition television, which is very important for
video resolution, and the interactivity you are talking about
is mostly focused on the computer world. But you can have small
electronic devices, and as computer prices go down every year
the digital divide, as we call it, which answers your question,
will be addressed, primarily by falling prices and rapid availability.
Plus there is (inaudible) tax credits. We have proposed
in some states tax holidays for buying computers and that way
there is also a number school availability programmes for computer
as well. The major computer companies have also stepped forward
to provide computers for schools, and there is also a tremendous
programme for schools to get digital access through a tax credit
and there is a Federal Communications Commission.
(Mr Upson) We do not find that there is a great focus
on the programme. There are all these resources, but they are
not focused as well as perhaps they could be. We are trying to
do that in the state. The second interesting thing, I do not know
what it is like in the United Kingdom, but I tell you this. We
found in looking at the subscribers-to-cable TV, the highest-end
packagesthe ones that are $60 a month, that give you 74
movies and all thatare subscribed to by the lowest sector
of the population. They are the ones that spend the most money
on it. I found that interesting.
Viscount Brookeborough: Absolutely right, yes.
980. It is concluded, then. I promised that
we would bring the session to an end by 5 o'clock so that we can
take you for a cup of tea. For the record, again, on behalf of
the Committee and personally, I would like to express our most
grateful appreciation to you, Donald, and to Caroline, for all
that you have done to assist us with our deliberations. Thank
you very much indeed.
(Mr Upson) Thank you.
(Ms Boyd) It has been a privilege.