OPM slows retirement system work
- By Richard W. Walker
- May 30, 2008
The Office of Personnel Management has suspended work by Hewitt Associates on the agency’s retirement systems modernization project after the contractor allegedly failed to deliver critical pieces of the system on time.
OPM issued a show-cause notice to Hewitt May 29, giving the company 10 days to respond to performance issues OPM raised regarding Hewitt’s benefits-calculation engine.
Reginald Brown, OPM’s director of modernization, said the performance issues with Hewitt were related to misunderstandings over the special requirements needed for a government retirement system.
“I think that instead of engaging in a listening dialogue, [Hewitt officials] are hearing what we say without actually listening,” Brown said. “The technology itself is not extremely complicated.”
On May 30, OPM was scheduled to add 61 additional benefits-calculation functions to Wave 1, the first phase of the RetireEZ system, which covers about 26,000 employees at four agencies. But only four of those functions passed user-acceptance tests last week, said Linda Springer, director of OPM.
“We have a testing protocol here that included Hewitt people on-site working with us, so it’s not as if we just pushed the wrong buttons or didn’t know how to perform a test,” Springer said.
Ron Flom, OPM’s associate director of management services, chief human capital officer and chief acquisition officer, said Hewitt also failed to live up to its earned value management requirements in the contract, another part of the show-cause notice.
Hewitt disputed OPM’s complaints. In a written statement, company officials said: “We believe we have complied with our contractual obligations and remain committed to helping OPM meet its objective. We stand behind our system, have a clear plan for delivery and a strong commitment to service our clients.”
Hewitt promised to defend its case in detail in responding to the show-cause letter. “We expect to engage in a productive dialogue based on a full disclosure of the facts in this complex program,” officials wrote.
OPM awarded Hewitt a 10-year, $290 million life cycle contract in May 2006 to furnish the technology for RetireEZ. Hewitt is modifying OPM’s commercial system, the Defined Benefits Technology Solution, to comply with federal laws and regulations. The cost to buy and implement DBTS was $27 million, Springer said.
Flom said that if Hewitt fails to respond to the show-cause notice, he would have to begin termination of the contract for default.
“If they do respond, we will certainly evaluate their response,” Flom said. “There would be some discussions with Hewitt, and we would determine whether we were getting this program back on track or not.”
Springer said OPM will move ahead on the two other major elements of its retirement systems modernization effort, data conversion and business-process change management, neither of which involves Hewitt.
“We’re going to continue everything we’ve been doing except we won’t be using this calculation engine as part of the pause,” Springer said. “It will be done by the legacy method but using automated data.”
Progress on the other two components has already improved federal retirement processing, she said.
“We’ve got this third [component for which] we have an unfortunate pause, but we will move forward on this whether we do it with Hewitt, which would be one option, or with someone else,” she said. “We’ll come out of this pause and move forward. I have absolute confidence that that is the path ahead.”