	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. In mid-1996, OPM terminated the program. IT Management Weaknesses Have Repeatedly Hindered OPM’s Retirement Modernization Efforts

OPM’s efforts to modernize its retirement system have been hindered by  weaknesses in several key project management disciplines. However, we  found that many of the capabilities in these areas were not sufficiently  developed. 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. Although OPM officials stated that change  management posed a substantial challenge to the success of  retirement modernization, they had not developed a detailed plan to  help users transition to different job responsibilities. We again reported on OPM’s retirement modernization 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. 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. Earned value management (EVM) is a tool for measuring program  progress by comparing the value of work accomplished with the  amount of work expected to be accomplished. 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. In response to our report, OPM stated that it  concurred with our recommendations and stated that it would take steps  to address the weakness we identified. Our April 2009 report made new recommendations that OPM address the  weaknesses in the retirement modernization project that we identified. Rather, the officials said the  agency intends to take targeted steps to improve retirement processing  that will include hiring and training approximately 100 new staff to help improve the  timeliness of processing retirement applications and responding to  retirement claims; demonstrating the capability to automate retirement applications; working with other agencies to improve the quality of electronic data  they transmit to OPM for use in retirement processing; and  improving OPM’s retirement services website to allow enhanced  communication. Even though the agency is now considering only modest efforts  to improve retirement processing, the development and institutionalization  of these management capabilities is key to the success of any future  retirement modernization or other IT initiative that OPM undertakes.
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 tasked with ensuring 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. The use of information technology (IT) is crucial in helping OPM to carry out its responsibilities, and 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 employee retirement process by automating paper-based processes and replacing antiquated information systems. However, these efforts have been unsuccessful, and OPM canceled its most recent retirement modernization effort in February 2011. GAO was asked to provide a statement summarizing its work on challenges OPM has faced in managing its efforts to modernize federal employee retirement processing. To do this, GAO relied on previously published work as well as a limited review of more recent documentation on OPM's retirement modernization activities.

What GAO Found

In a series of reviews, GAO found that OPM's efforts to modernize its retirement system have been hindered by weaknesses in several important management disciplines that are essential to successful IT modernization efforts. For example, in 2005, GAO made recommendations to address weaknesses in the following areas: (1) Project management. While OPM had defined major retirement modernization components, it had not identified the dependencies among them, increasing the risk that delays in one activity could hinder progress in others. (2) Risk management. OPM did not have a process for identifying and tracking project risks and mitigation strategies on a regular basis. This meant that OPM lacked a mechanism to address potential problems that could adversely impact the retirement modernization effort's cost, schedule, and quality. (3) Organizational change management. OPM had not developed a detailed plan to help users transition to different job responsibilities in response to the deployment of the new system, which could lead to confusion about roles and responsibilities, hindering effective system implementation. In 2008, as OPM was on the verge of deploying its automated retirement processing system, GAO reported deficiencies and made recommendations to improve key management capabilities in additional areas: (1) Testing. Test results 1 month prior to the deployment of a major system component showed that it had not performed as intended. The defects, along with a compressed testing schedule, increased the risk that the deployed system would not work as intended. (2) Cost estimating. The cost estimate OPM had developed was not supported by documentation necessary to its reliability. This meant that OPM did not have a sound basis for formulating budgets or developing a cost baseline for the program. (3) Earned value management, which is a tool for measuring program progress. The baseline against which OPM was measuring program progress did not reflect the full scope of the project, meaning that variances from planned performance would not be identified. In 2009, GAO reported that OPM continued to face challenges in cost estimating, earned value management, and testing and made recommendations to address these deficiencies as well as additional weaknesses in planning and overseeing the retirement modernization effort. Although OPM agreed with GAO's recommendations and had begun to address them, the agency terminated the retirement modernization effort in February 2011. The agency has since stated that it does not plan to undertake another large-scale retirement modernization, but instead plans targeted steps to improve retirement processing, such as hiring new staff and working to improve data quality. Nonetheless, the development and institutionalization of the capabilities GAO recommended to address these weaknesses remains key to the success of any future IT initiatives that OPM undertakes.

What GAO Recommends

GAO is not making new recommendations at this time. As noted, GAO has previously made numerous recommendations to address the challenges OPM has faced in carrying out its retirement modernization efforts.