OPM Has a Long History of Unsuccessful Efforts to Modernize Retirement Processing

Recognizing the need to improve the efficiency and effectiveness of its  retirement claims processing, OPM has undertaken a number of  initiatives since 1987 that were aimed at modernizing its paper-intensive  processes and antiquated systems. In mid-1996, OPM terminated the  program. OPM’s Efforts to Modernize Retirement Processing Have Been Plagued by IT Management Weaknesses

Our prior reports noted that OPM’s efforts to modernize its retirement  system were hindered by weaknesses in 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. We reported again on OPM’s retirement modernization in January 2008,  as the agency was about to deploy a new automated retirement  processing system.management capabilities, including system testing, cost estimating, 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. However, meeting minutes indicated  that no discussion or action was taken to address these problems. OPM Plans to Acquire New Technology to Improve Retirement Processing

OPM’s Strategic Plan for Fiscal Years 2014-2018 includes a strategic  goal to “Ensure that Federal retirees receive timely, appropriate,  transparent, seamless, and accurate retirement benefits.” To achieve this  goal, the agency has set forth a strategy to improve the retirement claims  processing system by, among other things, investing in information  technology solutions, such as the acquisition of a case management  system. In addition, the agency’s February 2014 Strategic Information  Technology Plan articulated OPM’s vision of “transitioning the retirement  program to a paperless system that will truly honor a Federal employee’s  service by authorizing accurate retirement benefits on the day they are  due, answering customers’ questions in a timely manner, and promoting  self-service account maintenance.” The plan also reiterated the agency’s  intention to acquire a new case management system. Beyond acquisition of the case management system, the strategic IT plan  also describes other initiatives that are intended to incrementally improve  retirement claims processing. Our experience has shown that  challenges, such as those that have plagued the agency’s past efforts,  can successfully be overcome through using a more disciplined approach  to IT acquisition management. To help federal agencies, such as OPM, address the acquisition  challenges that they face, in 2011, we reported on nine common factors  critical to the success of IT acquisitions. The factors most  commonly identified include active engagement of stakeholders, program  staff with the necessary knowledge and skills, and senior department and  agency executive support for the program. These nine critical success  factors are consistent with leading industry practices for IT acquisitions. Finally, officials for five of the seven selected investments identified  having the end users test and validate the system components prior to  formal end user acceptance testing for deployment as critical to the  success of their program. Testing of functionality by end users  Use of the critical success factors described above can serve as a model  of best practices for all agencies as they plan and conduct their own IT  acquisitions. 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. Applying the information technology best practices we have  identified to OPM’s acquisition of a new case management system could  help the agency overcome its long history of unsuccessful retirement  modernization efforts. This is a work of the U.S. government and is not subject to copyright protection in the  United States.
Why GAO Did This Study

The use of IT is integral to OPM's ability to carry out its responsibilities in modernizing federal employee retirement claims processing. Since 1987, the agency has undertaken a number of initiatives that were aimed at modernizing its paper-intensive processes and antiquated systems, but that were unsuccessful.
GAO was asked to summarize findings from its previous reports on the challenges that OPM has faced in modernizing its retirement claims processing systems. The testimony also summarizes the agency's current plans to acquire new technology to improve the retirement process and key IT acquisition best practices that could serve as critical factors in the agency's successful accomplishment of its latest modernization efforts.
The information in this testimony is primarily based on GAO's previous work at OPM. GAO also reviewed the agency's plans and related information discussing current efforts to improve retirement processing systems. Additionally, the testimony highlights findings from GAO's previous report on critical success factors for major IT acquisitions. Work in support of this testimony was performed during November and December 2014.

What GAO Found

In a series of reviews, GAO found that the Office of Personnel Management's (OPM) efforts over two decades to modernize its processing of federal employee retirement applications were fraught with information technology (IT) management weaknesses. Specifically, in 2005, GAO made recommendations to address weaknesses in project, risk, and organizational change management. 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 weaknesses in system testing, cost estimating, and progress reporting. 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 agency's modernization effort. OPM began to address these recommendations; however, in February 2011, it terminated the modernization effort.
OPM's Strategic Plan for Fiscal Years 2014-2018 includes a goal to deliver retirement benefits to employees accurately, seamlessly, and on time. To achieve this goal, the agency has plans to acquire a new case management system and, ultimately, to transition to a paperless system that will authorize accurate retirement benefits on the day they are due. In addition, the agency plans other initiatives that are intended to incrementally improve retirement claims processing.
GAO has previously reported that its experience at other agencies has demonstrated that successfully overcoming challenges, such as those that have plagued OPM's past efforts, can best be achieved when critical success factors are applied. Nine common factors critical to the success of IT acquisitions are
Active engagement of senior officials with stakeholders.
Qualified and experienced program staff.
Support of senior department and agency executives.
Involvement of end users and stakeholders in the development of requirements.
Participation of end users in testing system functionality prior to formal end user acceptance testing.
Consistency and stability of government and contractor staff.
Prioritization of requirements by program staff.
Regular communication maintained between program officials and the prime contractor.
Sufficient funding.
These critical success factors can serve as a model of best practices that OPM could apply to enhance the likelihood that the incremental IT investments the agency now plans, including the acquisition of a new case management system, will be successfully achieved.

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.