Office of Personnel Management:

Retirement Systems Modernization Program Faces Numerous Challenges

GAO-05-237: Published: Feb 28, 2005. Publicly Released: Feb 28, 2005.

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The Office of Personnel Management (OPM) manages the systems that process retirement benefits for most federal civilian employees. In fiscal year 2003, over 198,000 claims were processed and over $50 billion in benefits was paid through OPM's retirement systems. OPM is trying to modernize these systems through a program called Retirement Systems Modernization (RSM). The conference report accompanying the fiscal year 2004 OPM appropriations act directed us to review the management of and challenges facing RSM. Specifically, our objectives were to determine (1) the current status of and plans for OPM's RSM program and (2) the challenges OPM faces in successfully managing the program.

The Office of Personnel Management (OPM) is in the midst of an effort known as Retirement Systems Modernization (RSM). OPM's goals, through this program, are to improve customer service, reduce calculation errors, and reduce the amount of paper-based and manual processing. OPM expects RSM's total cost to be about $294 million from fiscal year 1997 to fiscal year 2008, when the agency expects to have most of RSM implemented and integrated. As currently envisioned, RSM comprises four major components: licensed technology for pension benefits administration, data conversion of paper files and development of electronic processes for capture and storage of data, coverage determination and other applications, and foundation and infrastructure elements. GAO's experience with major systems acquisitions such as RSM has shown that having sound systems acquisition, change management, and investment management processes in place increases the likelihood of the acquisitions meeting cost and schedule estimates as well as performance requirements. However, GAO found that many of the processes in these areas for RSM are not sufficiently developed, are still under development, or are planned for future development. For example, OPM lacks needed processes for developing and managing requirements, planning and managing project activities, managing risks, and providing sound information to investment decision makers. Without these processes in place, RSM is at increased risk of not being developed and delivered on time and within budget and falling short of promised capabilities.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: Before awarding a contract for the defined benefit technology portion of RSM, the director of OPM should ensure that the RSM program office conducts a detailed validation of OPM's previously developed requirements, including examining each requirement to determine whether it is mandatory or optional for the system. OPM should then use this analysis during contract negotiations to ensure the best value in awarding the contract.

    Agency Affected: Office of Personnel Management

    Status: Closed - Implemented

    Comments: OPM completed an analysis that validated requirements and identified them as mandatory or optional. OPM officials asserted that they used their analysis of validated requirements during negotiation of the defined benefit technology solution contract.

    Recommendation: Before awarding a contract for the defined benefit technology portion of RSM, the director of OPM should ensure that the RSM program office develops project management processes for tracking cost, schedule, and performance progress on RSM components against planned objectives.

    Agency Affected: Office of Personnel Management

    Status: Closed - Implemented

    Comments: OPM has implemented an agency-wide earned value management system to use in project management and the RSM program office has begun conducting monthly project management reviews to track cost, schedule, and performance against planned objectives.

    Recommendation: The director of OPM should ensure that the RSM program office expeditiously develops an acquisition strategy that includes deliverables and milestones throughout the entire project life cycle, addresses issues related to the transition of the licensed technology to a fully operational state, and addresses all major elements of RSM.

    Agency Affected: Office of Personnel Management

    Status: Closed - Implemented

    Comments: OPM developed an integrated master schedule that includes life cycle deliverables and milestones throughout the RSM life cycle and established a program management plan that addressed all major elements of RSM, including retirement data capture and conversion, defined benefits technology solution acquisition, business transformation, and system integration.

    Recommendation: The director of OPM should ensure that the RSM program office expeditiously develops an acquisition strategy for the data conversion portion of RSM that addresses interdependencies with the licensed technology portion of RSM.

    Agency Affected: Office of Personnel Management

    Status: Closed - Implemented

    Comments: OPM developed an acquisition strategy that addresses interdependencies between the data conversion and defined benefit licensed technology portions of its RSM project. For example, the strategy recognizes the need for the contractor that is developing the defined benefit licensed technology solution to have access to captured and converted retirement data during development and testing of the solution.

    Recommendation: The director of OPM should ensure that the RSM program office expeditiously develops a list of critical interdependencies among the tasks in different portions of RSM.

    Agency Affected: Office of Personnel Management

    Status: Closed - Implemented

    Comments: OPM developed an integrated master schedule based on the work activities that comprise the RSM program and interdependencies between the activities. The schedule resides in an automated tool that includes the capability to identify work activities that are on the critical path to program completion.

    Recommendation: The director of OPM should ensure that the RSM program office expeditiously implements a comprehensive risk management program including identification, tracking, and updating of programwide risks, and conducts routine discussions of risk mitigation activities with senior management.

    Agency Affected: Office of Personnel Management

    Status: Closed - Implemented

    Comments: RSM has established a risk management database of RSM program risks. This database is being used for identifying, tracking, updating, and mitigating risks that are discussed in monthly program management reviews.

    Recommendation: The director of OPM should ensure that the RSM program office expeditiously updates change management plans to reflect the current acquisition approach. The plans should identify and address the tasks and associated milestones needed to prepare users for the impact of the system on their roles and responsibilities.

    Agency Affected: Office of Personnel Management

    Status: Closed - Implemented

    Comments: OPM updated its change management plans to reflect the current acquisition approach for RSM and included the identification of tasks and associated milestones needed to prepare OPM users for the impact of the system.

    Recommendation: The director of OPM should ensure that the RSM program office expeditiously develops a comprehensive governance structure that includes documented processes guiding the executive steering committee's activities.

    Agency Affected: Office of Personnel Management

    Status: Closed - Implemented

    Comments: OPM has taken several steps to improve RSM governance, including revising and approving an executive steering committee charter and developing a program management plan that describes processes for guiding the committee's activities.

    Recommendation: The director of OPM should ensure that the RSM program office expeditiously develops a detailed security plan and a set of security requirements for the licensed technology and data conversion portions of RSM.

    Agency Affected: Office of Personnel Management

    Status: Closed - Implemented

    Comments: OPM developed a program security plan and requirements for the licensed technology and data conversion portions of RSM.

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