Real ID enters the final stretch

States scramble for upgrades and overhauls as deadline looms

Although implementation of the Real ID Act of 2005 has been stalled for many months while states await final regulations and funding, systems integrators and other technology companies say the law is driving upgrades in state motor vehicle departments.

States anticipate receiving Real ID regulations early this year to impose national requirements on collecting, storing, verifying and sharing personal information on driver's licenses. The Homeland Security Department submitted the rules to the Office of Management and Budget in November, and they should be released by February. DHS also released applications last month for $35 million in grants for the program, and Congress approved another $50 million.

The prospect of Real ID becoming operational soon appears to be spurring demand for state driver's license information technology modernizations, industry officials say.

For example, Missouri's Revenue Department awarded a $50 million contract to BearingPoint Inc. in October to design and deploy a new motor vehicle registration and driver's license system. The state uses more than 20 different IT systems with older technologies. About a dozen other state DMVs, including Kentucky, Massachusetts, New Jersey, North Carolina and Virginia, also are preparing to refresh their systems.

About five to eight states a year normally update their aging DMV systems, and that will probably increase to six to 12 states a year in 2008 and 2009 because of Real ID, said Harold Kocken, business solution manager at BearingPoint's national motor vehicle solutions group. The old technologies lack adequate software, hardware and employees to run them; often cannot be adapted; and must be replaced to meet new requirements such as customer service and Real ID, he said.

"The states will have to upgrade their systems to be Real ID compliant," said Susan Arthur, vice president of the state and local government division at EDS Corp. "The burst of activity is here."

SCHEDULE LAGS

Pent-up demand for replacing outdated motor vehicle IT systems coincides with planning to make Real ID a reality, and the goals are reinforcing each other.
However, it is still unclear how strong the trends will be given Real ID's lagging schedule thus far. Some states are still waiting for the final rules before taking action, said David Quam, director of federal relations at the National Governors Association.

"Everyone needs to know the rules before we can evaluate what is possible," Quam said. "And Real ID is still woefully underfunded. The grant money is far short of a down payment on the cost of $11 billion."

However, industry executives are hopeful. "States are aligning their upgrades with Real ID," said Jeremy Grant, senior vice president at Stanford Group Co., an investment research company. "Delays in Real ID have inhibited growth, but now that grants are coming out, it will free states to start meaningful planning."

Executives from EDS, Accenture Ltd., BearingPoint, Digimarc Corp., L-1 Identity Solutions Inc. and Unisys Corp. are tracking opportunities in state motor vehicle IT system upgrades worth about $500 million to $700 million in the next two years.

Even states in which lawmakers have voiced opposition to Real ID on grounds of privacy risks, high costs or possible identity theft have seen a practical need to enable compliance, said Doni Fordyce, executive vice president of corporate communications of L-1. Some states have passed laws opposing the program while simultaneously taking steps to comply with it.

State motor vehicle administrators approach Real ID in a pragmatic fashion because they realize that verifying and safeguarding personal information is part of their mandate, which aligns with the goals of Real ID, Kocken said. "In the last five years, there has been a shift to realize that identity and highway safety are intertwined, so the administrators are very interested in ensuring information security, accuracy and privacy."

As part of their upgrades, some states are installing IT programs not required under Real ID but intended to be adjuncts to it. For example, facial-recognition software is being used to match applicant photos against databases of existing license holders to weed out people who already hold licenses or are pretending to be someone else.

"Facial-recognition applications are very popular," said Andy Mallinger, senior director of product management at Digimarc. States also are enlisting privately run document authentication and verification services, he said.

"The states want to use facial application to see if the application is a new person or the same person applying under a different name. They have had problems with people coming in as 'proxies' for others," said Aman Sethi, vice president of the motor vehicle practice at Saber Corp., a solutions provider to states. EDS purchased Saber in November.

Alice Lipowicz (alipowicz@1105govinfo.com) is a staff writer at Washington Technology.

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