oversight

OPM Retirement Modernization: Progress Has Been Hindered by Longstanding Information Technology Management Weaknesses

Published by the Government Accountability Office on 2012-02-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                              United States Government Accountability Office

GAO                           Testimony
                              Before the Subcommittee on Oversight of Government
                              Management, the Federal Workforce, and the District of
                              Columbia, Committee on Homeland Security and
                              Governmental Affairs, U.S. Senate

                              OPM RETIREMENT
For Release on Delivery
Expected at 2:30 p.m. EST
Wednesday, February 1, 2012

                              MODERNIZATION
                              Progress Has Been
                              Hindered by Longstanding
                              Information Technology
                              Management Weaknesses
                              Statement of Valerie C. Melvin, Director
                              Information Management and Technology
                                Resources Issues




GAO-12-430T
                                                 February 2012

                                                 OPM RETIREMENT MODERNIZATION
                                                 Progress Has Been Hindered by Longstanding
                                                 Information Technology Management Weaknesses
Highlights of GAO-12-430T, a testimony
before the Subcommittee on Oversight of
Government Management, the Federal
Workforce, and the District of Columbia,
Committee on Homeland Security and
Governmental Affairs, U.S. Senate

Why GAO Did This Study                           What GAO Found
The Office of Personnel Management               In a series of reviews, GAO found that OPM’s retirement modernization efforts
(OPM) is the central human resources             were hindered by weaknesses in key management practices that are essential to
agency for the federal government                successful IT modernization projects. For example, in 2005, GAO made
and, as such, is responsible for                 recommendations to address weaknesses in the following areas:
ensuring that the government has an
effective civilian workforce. As part of         •   Project management: While OPM had defined major components of its
its mission, OPM defines recruiting and              retirement modernization effort, it had not identified the dependencies among
hiring processes and procedures;                     them, increasing the risk that delays in one activity could have unforeseen
provides federal employees with                      impacts on the progress of others.
various benefits, such as health                 •   Risk management: OPM did not have a process for identifying and tracking
benefits; and administers the                        project risks and mitigation strategies on a regular basis. Thus, OPM lacked
retirement program for federal                       a mechanism to address potential problems that could adversely impact the
employees. OPM’s use of information                  cost, schedule, and quality of the modernization effort.
technology (IT) is critical in carrying out      •   Organizational change management: OPM had not adequately prepared
its responsibilities; in fiscal year 2011
                                                     its staff for changes to job responsibilities resulting from the modernization by
the agency invested $79 million in IT
                                                     developing a detailed transition plan. This could lead to confusion about roles
systems and services. For over 2
decades, OPM has been attempting to
                                                     and responsibilities and hinder effective system implementation.
modernize its federal employee                   In 2008, as OPM was on the verge of deploying an automated retirement
retirement process by automating                 processing system, GAO reported deficiencies in and made recommendations to
paper-based processes and replacing              address additional management capabilities:
antiquated information systems.
However, these efforts have been                 •   Testing: The results of tests 1 month prior to the deployment of a major
unsuccessful, and OPM canceled its                   system component revealed that it had not performed as intended. These
most recent large-scale retirement                   defects, along with a compressed testing schedule, increased the risk that
modernization effort in February 2011.               the system would not work as intended upon deployment.
GAO was asked to summarize its work              •   Cost estimating: The cost estimate OPM developed was not fully reliable.
on challenges OPM has faced in                       This meant that the agency did not have a sound basis for formulating
attempting to modernize the federal                  budgets or developing a program baseline.
employee retirement process. To do               •   Progress reporting: The baseline against which OPM was measuring the
this, GAO relied on previously                       progress of the program did not reflect the full scope of the project; this
published work in addition to reviewing              increased the risk that variances from planned performance would not be
OPM’s recent plan for retirement                     detected.
services.
                                                 In 2009, GAO reported that OPM continued to have deficiencies in its cost
What GAO Recommends                              estimating, progress reporting, and testing practices and made recommendations
                                                 to address these deficiencies, as well as additional weaknesses in the planning
GAO is not making new                            and oversight of the modernization effort. OPM agreed with these
recommendations at this time. GAO
                                                 recommendations and began to address them, but the agency terminated the
has previously made numerous
                                                 modernization effort in February 2011.
recommendations to address IT
management challenges OPM has                    More recently, in January 2012, OPM released a new plan to improve retirement
faced in carrying out its retirement             processing that aims at targeted, incremental improvements rather than a large-
modernization efforts. Fully addressing          scale modernization. Specifically, OPM plans to hire new claims-processing staff,
these challenges remains key to the              take steps to identify potential process improvements, and work with other
success of OPM’s efforts.                        agencies to improve data quality. Further, OPM intends to make IT
                                                 improvements that allow retirees to access and update their accounts and
View GAO-12-430T. For more information,
contact Valerie C. Melvin at (202) 512-6304 or
                                                 automate the retirement application process. However, the plan reflects a less
melvinv@gao.gov.                                 ambitious retirement processing timeliness goal and does not address improving
                                                 or eliminating the legacy systems that support retirement processing.
                                                                                          United States Government Accountability Office
             Chairman Akaka, Ranking Member Johnson, and Members of the
             Subcommittee:

             Thank you for inviting me to participate in today’s hearing on the Office of
             Personnel Management’s (OPM) efforts to manage the system that is
             crucial to the processing of federal employee retirement benefits. The use
             of information technology is integral to carrying out this important
             responsibility; for over two decades, OPM has been attempting to
             modernize the retirement process by automating paper-based processes
             and replacing antiquated information systems. However, the agency has
             experienced challenges in managing its modernization initiatives. Reports
             that we issued in 2005, 2008, and 2009 on the agency’s efforts toward
             planning and implementing a modernized retirement system highlighted a
             long history of undertaking retirement modernization projects that have
             not yielded the intended outcomes. At your request, my testimony today
             summarizes the history of OPM’s retirement modernization efforts and the
             findings from our reports on challenges the agency has faced in
             managing these efforts. 1

             The information in my testimony is based on our previous work at OPM.
             We also obtained and reviewed the agency’s recent plan for improving
             retirement services. We performed our work in support of this testimony
             during January 2012. All work on which this testimony is based was
             conducted in accordance with generally accepted government auditing
             standards.


             As the central human resources agency for the federal government, OPM
Background   is tasked with ensuring that the government has an effective civilian
             workforce. To carry out this mission, OPM delivers human resources
             products and services including policies and procedures for recruiting and
             hiring, provides health and training benefit programs, and administers the


             1
              GAO, Office of Personnel Management: Retirement Modernization Planning and
             Management Shortcomings Need to Be Addressed, GAO-09-529 (Washington, D.C.: Apr.
             21, 2009); Office of Personnel Management: Improvements Needed to Ensure Successful
             Retirement Systems Modernization, GAO-08-345 (Washington, D.C.: Jan. 31, 2008);
             Comments on the Office of Personnel Management’s February 20, 2008 Report to
             Congress Regarding the Retirement Systems Modernization, GAO-08-576R (Washington,
             D.C.: Mar. 28, 2008); and Office of Personnel Management: Retirement Systems
             Modernization Program Faces Numerous Challenges, GAO-05-237 (Washington, D.C.:
             Feb. 28, 2005).




             Page 1                                     GAO-12-430T OPM Retirement Modernization
                         retirement program for federal employees. According to the agency,
                         approximately 2.7 million active federal employees and nearly 2.5 million
                         retired federal employees rely on its services. 2 The agency’s March 2008
                         analysis of federal employment retirement data estimates that nearly 1
                         million active federal employees will be eligible to retire and almost
                         600,000 will most likely retire by 2016. 3

                         According to OPM, the retirement program serves current and former
                         federal employees by providing (1) tools and options for retirement
                         planning and (2) retirement compensation. Two defined-benefit retirement
                         plans that provide retirement, disability, and survivor benefits to federal
                         employees are administered by the agency. The first plan, the Civil
                         Service Retirement System (CSRS), provides retirement benefits for most
                         federal employees hired before 1984. The second plan, the Federal
                         Employees Retirement System (FERS), covers most employees hired in
                         or after 1984 and provides benefits that include Social Security and a
                         defined contribution system. 4


Federal Employee         OPM and employing agencies’ human resources and payroll offices are
Retirement Application   responsible for processing federal employees’ retirement applications.
Processing Is Complex    The process begins when an employee submits a paper retirement
                         application to his or her employer’s human resources office and is
                         completed when the individual begins receiving regular monthly benefit
                         payments (as illustrated in fig. 1).




                         2
                         OPM, Fiscal Year 2010 Annual Performance Report (January 2011).
                         3
                          OPM, An Analysis of Federal Employee Retirement Data: Predicting Future Retirements
                         and Examining Factors Relevant to Retiring from the Federal Service (March 2008).
                         4
                          The Social Security Administration is responsible for administering Social Security, and
                         the Federal Retirement Thrift Investment Board administers the defined-contribution
                         system known as the Thrift Savings Plan. Defined-benefit plans calculate benefit amounts
                         in advance of retirement based on factors such as salary level and years of service, and
                         defined-contribution plans calculate benefit amounts based on how the amount is invested
                         by the employee and employer.




                         Page 2                                        GAO-12-430T OPM Retirement Modernization
Figure 1: Simplified View of Retirement Application Process




                                         Once an employee submits an application, the human resources office
                                         provides retirement counseling services to the employee and augments
                                         the retirement application with additional paperwork, such as a separation
                                         form that finalizes the date the employee will retire. Then the agency
                                         provides the retirement package to the employee’s payroll office. After the
                                         employee separates for retirement, the payroll office is responsible for
                                         reviewing the documents for correct signatures and information, making
                                         sure that all required forms have been submitted, and adding any
                                         additional paperwork that will be necessary for processing the retirement
                                         package. Once the payroll office has finalized the paperwork, the
                                         retirement package is mailed to OPM to continue the retirement process.
                                         Payroll offices are required to submit the package to OPM within 30 days
                                         of the retiree’s separation date.

                                         Upon receipt of the retirement package, OPM calculates an interim
                                         payment based on information provided by the employing agency. The
                                         interim payments are partial payments that typically provide retirees with


                                         Page 3                                 GAO-12-430T OPM Retirement Modernization
80 percent of the total monthly benefit they will eventually receive. 5 OPM
then starts the process of analyzing the retirement application and
associated paperwork to determine the total monthly benefit amount to
which the retiree is entitled. This process includes collecting additional
information from the employing agency’s human resources and payroll
offices or from the retiree to ensure that all necessary data are available
before calculating benefits. After OPM completes its review and
authorizes payment, the retiree begins receiving 100 percent of the
monthly retirement benefit payments. OPM then stores the paper
retirement folder at the Retirement Operations Center in Boyers,
Pennsylvania.

The agency recently reported that the average time to process a new
retirement claim is 156 days. According to the Deputy Associate Director
for the Center of Retirement and Insurance Services, about 200
employees are directly involved in processing the approximately 100,000
retirement applications OPM receives annually. Retirement processing
includes functions such as determining retirement eligibility, inputting data
into benefit calculators, and providing customer service. The agency uses
over 500 different procedures, laws, and regulations, which are
documented on the agency’s internal website, to process retirement
applications. For example, the site contains memorandums that outline
new procedures for handling special retirement applications, such as
those for disability or court orders. Further, OPM’s retirement processing
involves the use of over 80 information systems that have approximately
400 interfaces with other internal and external systems. For instance, 26
internal systems interface with the Department of the Treasury to provide,
among other things, information regarding the total amount of benefit
payments to which an employee is entitled.

OPM has reported that a greater retirement processing workload is
expected due to an anticipated increase in the number of retirement
applications over the next decade, although current retirement processing
operations are at full capacity. Further, the agency has identified several
factors that limit its ability to process retirement benefits in an efficient and
timely manner. Specifically, OPM noted that:



5
 OPM reported in November 2008 that it has made improvements to this process and is
currently providing retirees with interim payments that are about 90 percent of the monthly
payment which they are entitled.




Page 4                                         GAO-12-430T OPM Retirement Modernization
                            •   current processes are paper-based and manually intensive, resulting
                                in a higher number of errors and delays in providing benefit payments;
                            •   the high costs, limited capabilities, and other problems with the
                                existing information systems and processes pose increasing risks to
                                the accuracy of benefit payments;
                            •   current manual capabilities restrict customer service;
                            •   federal employees have limited access to retirement records, making
                                planning for retirement difficult; and
                            •   attracting qualified personnel to operate and maintain the antiquated
                                retirement systems, which have about 3 million lines of custom
                                programming, is challenging. 6



OPM Has a Long History of   Recognizing the need to modernize its retirement processing, in the late
Unsuccessful Retirement     1980s OPM began initiatives that were aimed at automating its antiquated
Modernization Initiatives   paper-based processes. Initial modernization visions called for developing
                            an integrated system and automated processes to provide prompt and
                            complete benefit payments. However, following attempts over more than
                            two decades, the agency has not yet been successful in achieving the
                            modernized retirement system that it envisioned.

                            In early 1987, OPM began a program called the FERS Automated
                            Processing System. However, after 8 years of planning, the agency
                            decided to reevaluate the program, and the Office of Management and
                            Budget requested an independent review of the program that identified
                            various management weaknesses. The independent review suggested
                            areas for improvement and recommended terminating the program if
                            immediate action was not taken. In mid-1996, OPM terminated the
                            program.

                            In 1997, OPM began planning a second modernization initiative, called
                            the Retirement Systems Modernization (RSM) program. The agency
                            originally intended to structure the program as an acquisition of
                            commercially available hardware and software that would be modified in-
                            house to meet its needs. From 1997 to 2001, OPM developed plans and
                            analyses and began developing business and security requirements for
                            the program. However, in June 2001, it decided to change the direction of
                            the retirement modernization initiative.


                            6
                            GAO-09-529.




                            Page 5                                GAO-12-430T OPM Retirement Modernization
                        In late 2001, retaining the name RSM, the agency embarked upon its
                        third initiative to modernize the retirement process and examined the
                        possibility of privately sourced technologies and tools. Toward this end,
                        the agency determined that contracting was a viable alternative and, in
                        2006, awarded three contracts for the automation of the retirement
                        process, to include the conversion of paper records to electronic files and
                        consulting services to redesign its retirement operations.

                        In February 2008, OPM renamed the program RetireEZ and deployed an
                        automated retirement processing system. However, by May 2008 the
                        agency determined that the system was not working as expected and
                        suspended system operation. In October 2008, after 5 months of
                        attempting to address quality issues, the agency terminated the contract
                        for the system. In November 2008, OPM began restructuring the program
                        and reported that its efforts to modernize retirement processing would
                        continue. However, after several years of trying to revitalize the program,
                        the agency terminated the retirement system modernization in February
                        2011.


                        OPM’s efforts to modernize its retirement system have been hindered by
IT Management           weaknesses in several key IT management disciplines. Our experience
Weaknesses Have         with major modernization initiatives has shown that having sound
                        management capabilities is essential to achieving successful outcomes.
Contributed to OPM’s    Among others, these capabilities include project management, risk
Unsuccessful            management, organizational change management, system testing, cost
Retirement              estimating, progress reporting, planning, and oversight. However, we
                        found that many of the capabilities in these areas were not sufficiently
Modernization Efforts   developed. For example, in reporting on RSM in February 2005, we noted
                        weaknesses in key management capabilities, such as project
                        management, risk management, and organizational change
                        management. 7


                        •   Project management is the process for planning and managing all
                            project-related activities, including defining how project components
                            are interrelated. Effective project management allows the
                            performance, cost, and schedule of the overall project to be measured



                        7
                        GAO-05-237.




                        Page 6                                 GAO-12-430T OPM Retirement Modernization
    and controlled in comparison to planned objectives. Although OPM
    had defined major retirement modernization project components, it
    had not defined the dependencies among them. Specifically, the
    agency had not identified critical tasks and their impact on the
    completion of other tasks. By not identifying critical dependencies
    among retirement modernization components, OPM increased the risk
    that unforeseen delays in one activity could hinder progress in other
    activities.

•   Risk management entails identifying potential problems before they
    occur. Risks should be identified as early as possible, analyzed,
    mitigated, and tracked to closure. OPM officials acknowledged that
    they did not have a process for identifying and tracking retirement
    modernization project risks and mitigation strategies on a regular
    basis but stated that the agency’s project management consultant
    would assist it in implementing a risk management process. Without
    such a process, OPM did not have a mechanism to address potential
    problems that could adversely impact the cost, schedule, and quality
    of the retirement modernization project.

•   Organizational change management includes preparing users for the
    changes to how their work will be performed as a result of a new
    system implementation. Effective organizational change management
    includes plans to prepare users for impacts the new system might
    have on their roles and responsibilities, and a process to manage
    those changes. Although OPM officials stated that change
    management posed a substantial challenge to the success of
    retirement modernization, they had not developed a detailed plan to
    help users transition to different job responsibilities. Without having
    and implementing such a plan, confusion about user roles and
    responsibilities could have hindered effective implementation of new
    retirement systems.

We recommended that the Director of OPM ensure that the retirement
modernization program office expeditiously establish processes for
effective project management, risk management, and organizational
change management. In response, the agency initiated steps toward
establishing management processes for retirement modernization and
demonstrated activities to address our recommendations.




Page 7                                 GAO-12-430T OPM Retirement Modernization
We subsequently reported on OPM’s retirement modernization again in
January 2008, as the agency was on the verge of deploying a new
automated retirement processing system. 8 We noted weaknesses in
additional key management capabilities, including system testing, cost
estimating, and progress reporting.

•   Effective testing is an essential activity of any project that includes
    system development. Generally, the purpose of testing is to identify
    defects or problems in meeting defined system requirements or
    satisfying system user needs. At the time of our review, 1 month
    before OPM planned to deploy a major system component, test
    results showed that the component had not performed as intended.
    We warned that until actual test results indicated improvement in the
    system, OPM risked deploying technology that would not accurately
    calculate retirement benefits. Although the agency planned to perform
    additional tests to verify that the system would work as intended, the
    schedule for conducting these tests became compressed from 5
    months to 2-1/2 months, with several tests to be performed
    concurrently rather than in sequence. The agency identified a lack of
    testing resources, including the availability of subject matter experts,
    and the need for further system development, as contributing to the
    delay of planned tests and the need for concurrent testing. The high
    degree of concurrent testing that OPM planned to meet its February
    2008 deployment schedule increased the risk that the agency would
    not have the resources or time to verify that the planned system
    worked as expected.

•   Cost estimating represents the identification of individual project cost
    elements, using established methods and valid data to estimate future
    costs. The establishment of a reliable cost estimate is important for
    developing a project budget and having a sound basis for measuring
    performance, including comparing the actual and planned costs of
    project activities. Although OPM developed a retirement
    modernization cost estimate, the estimate was not supported by the
    documentation that is fundamental to a reliable cost estimate. Without
    a reliable cost estimate, OPM did not have a sound basis for
    formulating retirement modernization budgets or for developing the
    cost baseline that is necessary for measuring and predicting project
    performance.



8
GAO-08-345.




Page 8                                 GAO-12-430T OPM Retirement Modernization
•   Earned value management (EVM) is a tool for measuring program
    progress by comparing the value of work accomplished with the
    amount of work expected to be accomplished. Fundamental to reliable
    EVM is the development of a baseline against which variances are
    calculated. OPM used EVM to measure and report monthly
    performance of the retirement modernization system. The reported
    results provided a favorable view of project performance over time
    because the variances indicated the project was progressing almost
    exactly as planned. However, this view of project performance was
    not reliable because the baseline on which it was based did not reflect
    the full scope of the project, had not been validated, and was unstable
    (i.e., subject to frequent changes). This EVM approach in effect
    ensured that material variances from planned project performance
    would not be identified and that the state of the project would not be
    reliably reported.

We recommended that the Director of OPM address these deficiencies
by, among other things, conducting effective system tests prior to system
deployment, in addition to improving program cost estimation and
progress reporting. In response to our report, OPM stated that it
concurred with our recommendations and stated that it would take steps
to address the weakness we identified. Nevertheless, OPM deployed a
limited initial version of the modernized retirement system in February
2008. After unsuccessful efforts to address system quality issues, the
agency suspended system operation, terminated the system contract,
and began restructuring the modernization effort.

In April 2009, we again reported on OPM’s retirement modernization,
noting that the agency still remained far from achieving the modernized
retirement processing capabilities that it had planned. 9 Specifically, we
noted that significant weaknesses continued to exist in three key
management areas that we had previously identified—cost estimating,
progress reporting, and testing—while also noting two additional
weaknesses related to planning and oversight.

•   Despite agreeing with our January 2008 recommendation that OPM
    develop a revised retirement modernization cost estimate, the agency
    had not completed initial steps for developing a new cost estimate by



9
GAO-09-529.




Page 9                                 GAO-12-430T OPM Retirement Modernization
    the time we reported again in April 2009. At that time, we reported that
    the agency had not yet fully defined the estimate’s purpose,
    developed an estimating plan, or defined the project’s characteristics.
    By not completing these steps, OPM increased the risk that it would
    produce an unreliable estimate and not have a sound basis for
    measuring project performance and formulating retirement
    modernization budgets.

•   Although it agreed with our January 2008 recommendation to
    establish a basis for effective EVM, OPM had not completed key
    steps as of the time of our April 2009 report. Specifically, despite
    planning to begin reporting on the retirement project’s progress using
    EVM, the agency was not prepared to do so because initial steps,
    including the development of a reliable cost estimate and the
    validation of a baseline, had not been completed. Engaging in EVM
    reporting without first performing these fundamental steps could have
    again rendered the agency’s assessments unreliable.

•   As previously discussed, effective testing is an essential component
    of any project that includes developing systems. To be effectively
    managed, testing should be planned and conducted in a structured
    and disciplined fashion. Beginning the test planning process in the
    early stages of a project life cycle can reduce rework later. Early test
    planning in coordination with requirements development can provide
    major benefits. For example, planning for test activities during the
    development of requirements may reduce the number of defects
    identified later and the costs related to requirements rework or change
    requests. OPM’s need to compress its testing schedule and conduct
    tests concurrently, as we reported in January 2008, illustrates the
    importance of planning test activities early in a project’s life cycle.
    However, at the time of our April 2009 report, the agency had not
    begun to plan test activities in coordination with developing its
    requirements for the system it was planning at that time.
    Consequently, OPM increased the risk that it would again deploy a
    system that did not satisfy user expectations and meet requirements.

•   Project management principles and effective practices emphasize the
    importance of having a plan that, among other things, incorporates all
    the critical areas of system development and is to be used as a
    means of determining what needs to be done, by whom, and when.
    Although OPM had developed a variety of informal documents and
    briefing slides that described retirement modernization activities, the
    agency did not have a complete plan that described how the program
    would proceed in the wake of its decision to terminate the system


Page 10                                GAO-12-430T OPM Retirement Modernization
    contract. As a result, we concluded that until the agency completed
    and used a plan that could guide its efforts, it would not be properly
    positioned to move forward with its restructured retirement
    modernization initiative.

•   Office of Management and Budget and GAO guidance call for
    agencies to ensure effective oversight of IT projects throughout all life-
    cycle phases. Critical to effective oversight are investment
    management boards made up of key executives who regularly track
    the progress of IT projects such as system acquisitions or
    modernizations. OPM’s Investment Review Board was established to
    ensure that major investments are on track by reviewing their
    progress and determining appropriate actions when investments
    encounter challenges. Despite meeting regularly and being provided
    with information that indicated problems with the retirement
    modernization, the board did not ensure that retirement modernization
    investments were on track, nor did it determine appropriate actions for
    course correction when needed. For example, from January 2007 to
    August 2008, the board met and was presented with reports that
    described problems the retirement modernization program was facing,
    such as the lack of an integrated master schedule and earned value
    data that did not reflect the “reality or current status” of the program.
    However, meeting minutes indicated that no discussion or action was
    taken to address these problems. According to a member of the
    board, OPM guidance regarding how the board is to communicate
    recommendations and needed corrective actions for investments it is
    responsible for overseeing had not been established. Without a fully
    functioning oversight body, OPM could not monitor the retirement
    modernization and make the course corrections that effective boards
    are intended to provide.

Our April 2009 report made new recommendations that OPM address the
weaknesses in the retirement modernization project that we identified.
Although the agency began taking steps to address them, the
recommendations were overtaken by the agency’s decision in February
2011 to terminate the retirement modernization project.




Page 11                                 GAO-12-430T OPM Retirement Modernization
                     In mid-January 2012, OPM released a new plan that describes the
OPM Has a New Plan   agency’s intention to improve retirement processing through actions that
to Improve           include
Retirement           •   hiring and training 56 new staff to adjudicate retirement claims and 20
Processing               additional staff to support the claims process;
                     •   establishing higher production standards and identifying potential
                         retirement process improvements; and
                     •   working with other agencies to improve the accuracy and
                         completeness of the data they provide to OPM for use in retirement
                         processing.

                     Additionally, OPM’s new plan identifies existing and planned IT
                     improvements to support the retirement process. Recognizing that its
                     previous, large-scale efforts to automate the retirement process have
                     failed, the agency characterizes its new plan as representing partial,
                     progressive IT improvements. These efforts include

                     •   providing retirees with the capability to access and update their
                         accounts to change addresses, banking information, and tax
                         exemptions and
                     •   planning to automate retirement applications and to automatically
                         collect retirement data from agencies’ payroll processing centers.

                     Under this approach, OPM expects to eliminate the agency’s retirement
                     processing backlog within 18 months and to accurately process 90
                     percent of its cases within 60 days. However, this goal represents a
                     substantial reduction from the agency’s fiscal year 2009 retirement
                     modernization goal to accurately process 99 percent of cases within 30
                     days. Moreover, the plan does not describe whether or how the agency
                     intends to modify or decommission the over 80 legacy systems that
                     support retirement processing.


                     In summary, despite OPM’s recognition of the need to improve the
                     timeliness and accuracy of retirement processing, the agency has thus far
                     been unsuccessful in several attempts to develop the capabilities it has
                     long sought. For over two decades, the agency’s retirement
                     modernization efforts have been plagued by weaknesses in management
                     capabilities that are critical to the success of such endeavors. Among the
                     management disciplines the agency has struggled with are project
                     management, risk management, organizational change management,



                     Page 12                                GAO-12-430T OPM Retirement Modernization
                  cost estimating, system testing, progress reporting, planning, and
                  oversight. Although the agency is now considering modest, incremental
                  efforts to improve retirement processing, the development and
                  institutionalization of the aforementioned management capabilities remain
                  important to OPM’s success in improving the delivery of retirement
                  services.

                  Mr. Chairman, this concludes my statement today. I would be pleased to
                  answer any questions that you or other members of the Subcommittee
                  may have.


                  If you have any questions concerning this statement, please contact
Contact and       Valerie C. Melvin, Director, Information Management and Technology
Acknowledgments   Resources Issues, at (202) 512-6304 or melvinv@gao.gov. Other
                  individuals who made key contributions include Mark T. Bird, Assistant
                  Director; Barbarol J. James; Lee A. McCracken; Teresa M. Neven; and
                  Robert L. Williams, Jr.




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                  Page 13                              GAO-12-430T OPM Retirement Modernization
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