	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. Specifically, OPM noted that:  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. However, following attempts over more than  two decades, the agency has not yet been successful in achieving the  modernized retirement system that it envisioned. IT Management Weaknesses Have Contributed to OPM’s Unsuccessful Retirement Modernization Efforts

OPM’s efforts to modernize its retirement system have been hindered by  weaknesses in several key IT management disciplines. 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. Although OPM  had defined major retirement modernization project components, it  had not defined the dependencies among them. 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. 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. 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. 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. 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. 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 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. 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. OPM Has a New Plan to Improve Retirement Processing

In mid-January 2012, OPM released a new plan that describes the  agency’s intention to improve retirement processing through actions that  include 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  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. 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.
Why GAO Did This Study

The Office of Personnel Management (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. OPMs use of information technology (IT) is critical in carrying out its responsibilities; in fiscal year 2011 the agency invested $79 million in IT systems and services. For over 2 decades, OPM has been attempting to modernize its federal employeeretirement process by automating paper-based processes and replacing antiquated information systems. However, these efforts have been unsuccessful, and OPM 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. To do this, GAO relied on previously published work in addition to reviewing OPMs recent plan for retirement services.

What GAO Found

In a series of reviews, GAO found that OPMs retirement modernization efforts were hindered by weaknesses in key management practices that are essential to successful 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, OPM 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 deficiencies, as well as additional weaknesses in the planning and oversight of the modernization effort. OPM agreed with these recommendations and began to address them, but the agency terminated the modernization effort in February 2011.
More recently, in January 2012, OPM released a new plan to improve retirement processing that aims at targeted, incremental improvements rather than a largescale modernization. Specifically, OPM plans to hire new claims-processing staff, take steps to identify potential process improvements, and work with other agencies to improve data quality. Further, OPM intends to make IT improvements that allow retirees to access and update their accounts and automate the retirement application process. However, the plan reflects a less ambitious retirement processing timeliness goal and does not address improving or eliminating 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 OPM has faced in carrying out its retirement modernization efforts. Fully addressing these challenges remains key to the success of OPMs efforts.