GAO raises red flags on retirement systems modernization

The Office of Personnel Management’s new retirement systems will be ready to begin processing benefits for an initial group of federal employees by the end of the month, OPM has said. However, a new report from the Government Accountability Office casts doubt about whether OPM will make that deadline.

The Retirement Systems Modernization program, a $421.6 million effort to offer online retirement benefits services, is progressing well along many lines, according to GAO auditors. However, initial tests of a major software component have identified numerous problems that may not be easily fixed in time to meet OPM’s deadline for starting to use the new systems, GAO reported.

Hewitt Associates won a 10-year, $290 million performance-based contract in 2006 to process federal employee retirement benefits. Accenture received a $40 million contract for business transformation and information technology services as part of the modernization program.

In the new report, GAO auditors expressed concerns about OPM’s plans to institute a compressed testing schedule to deal with a backlog of system defects that must be resolved before the agency can begin using the new systems.

GAO had other program management concerns. OPM raised its cost estimate for the program from $371.2 million to $421.6 million, but the agency couldn’t provide auditors with a satisfactory explanation for the revised estimate. GAO also called attention to what it said was OPM’s faulty use of earned value management, a project management technique that federal agencies are required to use to avoid major project cost overruns, schedule delays and performance shortfalls. GAO found that OPM frequently revised its baseline for measuring progress so that the project appeared to be achieving its cost, schedule and performance goals when it was not.

OPM Director Linda Springer responded to the report by saying the agency is taking steps to address GAO’s recommendations. She noted that OPM’s most senior executives are engaged in managing the modernization project.

The retirement systems modernization program has been among Springer’s foremost priorities since she took office in 2005. She has described the program as necessary for modernizing an antiquated paper-based system and providing more accurate and timely retirement benefits to more than 1 million current and former federal employees who have not yet retired. For years, the agency has stored federal retirement benefits documents inside a mountain in Boyers, Pa.

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