OPM: Contractor's departure will not affect operations

Imperatis had been awarded a crucial contract to carry out the Shell modernization project for OPM. The firm has quit due to "financial distress," according to OPM.

Wikimedia image: U.S. Office of Personnel Management seal.

An Office of Personnel Management spokesman said a contractor's sudden departure from a key IT project earlier this month will have very little impact on the agency's operations. How well OPM responds to the contracting flap could help determine the trajectory of IT operations at an agency still haunted by past data breaches.

About a week ago, Imperatis, an Arlington, Va.-based contractor, abruptly walked off a project to overhaul OPM's IT infrastructure due to "financial distress," OPM Press Secretary Sam Schumach said.

The government learned of the company's intentions on May 6, and Imperatis employees didn't show up for work on May 9, at which point the contract was severed, according to Schumach's statement. The contract was awarded two years ago and was set to expire at the end of June.

Nextgov first reported on Imperatis quitting. The news broke the same day Sen. Claire McCaskill (D-Mo.) released a letter noting the firm's "troubled history with government contracting" and requesting more information on its default.

OPM had picked Imperatis to help carry out the Shell modernization project, which involves building infrastructure to house applications migrated from OPM's mainframe computers. OPM has been counting on the overhaul to boost IT security after a breach of agency systems exposed the personal information of at least 22 million people. Although planning for Shell began before the breach was made public, the project has been central to the agency's efforts to improve security after the breach.

Imperatis is not the only firm to have recently had an IT contract with OPM go awry. CyTech Services CEO Ben Cotton has alleged that OPM owes his firm nearly $800,000 for conducting scans of OPM hardware in the aftermath of the breach. OPM officials deny that charge.

In recent weeks, Imperatis spokespeople declined to comment to FCW on whether the company planned to continue its work on the Shell project. In a May 16 statement to FCW, Imperatis again said a confidentiality agreement limited its ability to comment but said the public record would eventually vindicate the company's work on the project.

"There is much more to the story than is currently being reported," Imperatis said in a statement distributed by Thomas Meriam, a New York-based lawyer who described himself as "outside corporate counsel" to Imperatis. "The company is confident that as and when the full facts are publicly available, they will completely contradict the mischaracterization of the company's performance being reported at this time."

Red flags

Funding for work on Shell has previously been a cause for concern for project insiders, according to documents obtained by FCW.

In four consecutive progress reports from July 31 to Sept. 3, 2015, that Imperatis prepared for OPM, "material funding for Shell" was rated as one of the program's high-risk issues. In the "mitigation strategy" column that succeeded that high-risk designation, the firm wrote: "Discuss potential for shifting labor dollars to materials."

The full cost and scope of the Shell project has been difficult for auditors and lawmakers to pin down.

OPM estimated the project would cost $93 million, according to former OPM Inspector General Patrick McFarland. However, he also said that estimate did not include the costliest phase of the project: the migration of systems to the Shell environment.

In addition, he has alleged that his organization did not learn of the full scope of the Shell project until it was nearly a year underway. In a September 2015 update to an audit, McFarland said the agency had yet to determine "the full scope and overall costs of the project."

OPM's leaders have also made inconsistent statements about the scope of the Imperatis contract. At a June 2015 hearing, then-OPM Director Katherine Archuleta said contracts for the third and fourth phases of the project had yet to be awarded. But in a Sept. 3 letter to the IG, Beth Cobert, Archuleta's successor, said Imperatis would be involved in all four phases of the Shell project, albeit not in latter-stage tasks such as systems modernization and "disposal of decommissioned equipment."

During Cobert's February confirmation hearing, McCaskill asked that OPM provide regular briefings on the Imperatis project.

"Corners may have needed to be cut" in the rush to patch agency systems after the breach, McCaskill said, but she told Cobert that she wanted to know if the Imperatis project is "going south," given the history of failed IT implementations at OPM.

Cobert said OPM was "committed to [making] sure that we are spending the IT dollars in a responsible way. We're working on spending them in a more modular way than has been done in the past, making sure that each element delivers results as it goes."

In her letter last week to Cobert, McCaskill declared herself "disturbed but not entirely surprised" by Imperatis' departure. She also said she was "concerned that Imperatis' default may now delay OPM's much-needed IT infrastructure and security fixes."

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