	Background

As the central human resources agency for the federal government, OPM  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  retirement program for federal employees. Federal Employee Retirement Application Processing Is Complex

OPM and employing agencies’ human resources and payroll offices are  responsible for processing federal employees’ retirement applications. OPM Has a Long History of Unsuccessful Retirement Modernization Initiatives

Recognizing the need to modernize its retirement processing, in the late  1980s OPM began initiatives that were aimed at automating its antiquated  paper-based processes. In mid-1996, OPM terminated the  program. OPM’s Unsuccessful Retirement Modernization Efforts Were Plagued by IT Management Weaknesses

OPM’s efforts to modernize its retirement system were hindered by  weaknesses in several key IT management disciplines. For example, in reporting on RSM in February 2005, we noted  weaknesses in project management, risk management, and  organizational change management. Although OPM  had defined major retirement modernization project components, it  had not defined the dependencies among them. By not identifying critical dependencies  among project components, OPM increased the risk that unforeseen  delays in one activity could hinder progress in other activities. 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. Lacking  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. Without having  and implementing such a plan, effective implementation of new  systems could be hindered by confusion about user roles and  responsibilities. 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. 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. Fundamental to reliable  EVM is the development of a baseline against which variances are  calculated. 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). We recommended that the Director of OPM conduct effective system  tests prior to system deployment and improve program cost estimation  and progress reporting. In April 2009, we again reported on OPM’s retirement modernization,  noting that the agency still remained far from achieving the modernized   Specifically, we  retirement processing capabilities that it had planned.noted that significant weaknesses continued to exist in the areas of cost  estimating, progress reporting, and testing, while also noting two  additional weaknesses related to planning and oversight. 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. OPM Has Reported Taking Actions to Improve Retirement Processing

In mid-January 2012, OPM released a plan to undertake targeted,  incremental improvements to retirement processing rather than a large- scale modernization, which described planned actions in four areas: hiring and training 56 new staff to adjudicate retirement claims and 20  additional staff to support the claims process; establishing higher production standards and identifying potential working with other agencies to improve the accuracy and  completeness of the data they provide to OPM for use in retirement  processing; and  improving the department’s IT by pursuing a long-term data flow  strategy, exploring short-term strategies to leverage work performed  by other agencies, and reviewing and upgrading systems used by  retirement services. These efforts include providing retirees with the ability to view the status of their cases  through OPM’s web-based application, Services Online; developing the capability to accept electronic data that are transferred  from one of the seven federal payroll processing centers; enhancing its internal web-based application, Data Viewer, to allow 11  other agencies to view retirement case packets; upgrading its data storage capacity and production printer; sponsoring a challenge, in cooperation with the National Aeronautics  and Space Administration, for developers to create a system with  accounting tools for processing service credits; updating reporting guides to include processes for sending electronic  retirement data to OPM; and planning an initiative to develop an automated retirement case  management system to replace the agency’s existing document and  case control system in fiscal year 2014. Although the Associate Director for  Retirement Services stated that investing in IT is important for improving  the efficiency of retirement claims processing, the agency has not yet  planned for improving or replacing the remaining legacy systems that  support retirement processing. For over two decades, the agency’s  retirement modernization efforts were plagued by weaknesses in  management capabilities that are critical to the success of such  endeavors.
Why GAO Did This Study

OPM is the central human resources agency for the federal government and, as such, is responsible for ensuring that the government has an effective civilian workforce. As part of its mission, OPM defines recruiting and hiring processes and procedures; provides federal employees with various benefits, such as health benefits; and administers the retirement program for federal employees. OPM's use of IT is critical in carrying out its responsibilities; in fiscal year 2013 the agency plans to invest about $85 million in IT systems and services. For over two decades, OPM has been attempting to modernize its federal employee retirement process by automating paper-based processes and replacing antiquated information systems. However, these efforts have been unsuccessful, and the agency canceled its most recent large-scale retirement modernization effort in February 2011.
GAO was asked to summarize its work on challenges OPM has faced in attempting to modernize the federal employee retirement process and to describe the agency's recent reported actions to improve its retirement processing. To do this, GAO generally relied on previously published work.

What GAO Found

In a series of reviews, GAO found that the Office of Personnel Management's (OPM) retirement modernization efforts were hindered by weaknesses in key management practices that are essential to successful information technology (IT) modernization projects. For example, in 2005, GAO made recommendations to address weaknesses in the following areas:
Project management: While OPM had defined major components of its retirement modernization effort, it had not identified the dependencies among them, increasing the risk that delays in one activity could have unforeseen impacts on the progress of others.
Risk management: OPM did not have a process for identifying and tracking project risks and mitigation strategies on a regular basis. Thus, it lacked a mechanism to address potential problems that could adversely impact the cost, schedule, and quality of the modernization effort.
Organizational change management: OPM had not adequately prepared its staff for changes to job responsibilities resulting from the modernization by developing a detailed transition plan. This could lead to confusion about roles and responsibilities and hinder effective system implementation.
In 2008, as OPM was on the verge of deploying an automated retirement processing system, GAO reported deficiencies in and made recommendations to address additional management capabilities:
Testing: The results of tests 1 month prior to the deployment of a major system component revealed that it had not performed as intended. These defects, along with a compressed testing schedule, increased the risk that the system would not work as intended upon deployment.
Cost estimating: The cost estimate OPM developed was not fully reliable. This meant that the agency did not have a sound basis for formulating budgets or developing a program baseline.
Progress reporting: The baseline against which OPM was measuring the progress of the program did not reflect the full scope of the project; this increased the risk that variances from planned performance would not be detected.
In 2009, GAO reported that OPM continued to have deficiencies in its cost estimating, progress reporting, and testing practices and made recommendations to address these and other weaknesses in the planning and oversight of the modernization effort. OPM agreed with these recommendations and began to address them, but, in February 2011, it terminated the modernization effort.
In January 2012, OPM released a plan to improve retirement processing that aimed at targeted, incremental improvements rather than a large-scale modernization. Toward this end, OPM has reported hiring new claims-processing staff, taking steps to identify potential process improvements, and working with other agencies to improve data quality. Further, the agency reported making IT improvements that allow retirees to view the status of their accounts and automating parts of the retirement application process. However, the plan reflects a less ambitious goal for retirement processing timeliness and does not address improving or replacing the legacy systems that support retirement processing.

What GAO Recommends

GAO is not making new recommendations at this time. GAO has previously made numerous recommendations to address IT management challenges that OPM has faced in carrying out its retirement modernization efforts. Fully addressing these challenges remains key to the success of OPM's efforts.