Office of Personnel Management:

Improvements Needed to Ensure Successful Retirement Systems Modernization

GAO-08-345: Published: Jan 31, 2008. Publicly Released: Jan 31, 2008.

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Through its Retirement Systems Modernization (RSM) program, the Office of Personnel Management (OPM) is modernizing the paper intensive processes and antiquated information systems it uses to support the retirement of civilian federal employees. RSM is intended to deploy new or modified systems beginning in February 2008 to improve the efficiency and effectiveness of the agency's retirement program. GAO was asked to (1) determine whether OPM is effectively managing the RSM program to ensure that system components perform as intended and (2) evaluate the risks, cost, and progress of the RSM program. To meet these objectives, GAO analyzed program documentation against relevant plans, policies, and practices.

In executing the RSM program, OPM has improved its management processes for selecting contractors, defining system and security requirements, managing risks, planning organizational change, and providing program executive oversight. The agency also recently established performance targets for the improvements to retirement processing accuracy and timeliness that it expects the program to achieve and established an independent verification and validation capability. However, the agency's management of RSM in areas that are important to successful deployment of new systems has not ensured that system components will perform as intended. Specifically, initial test results do not provide assurance that a major system component will perform as intended. In addition, OPM's system testing schedule has been compressed, and upcoming tests are to be conducted concurrently, increasing the risk that the agency will not have sufficient resources or time for testing. Further, trends in identifying and resolving system defects indicate a growing backlog of problems to be resolved prior to deployment. Although OPM has established a risk management process that has identified program risks, the agency has not reliably estimated RSM's cost or reported progress. In particular, the reliability of the program's revised life-cycle cost estimate of $421.6 million is questionable because the agency could not support the estimate with a description of the system to be developed and a description of the methodology used to produce the estimate. Also, the agency's reporting of RSM progress--based on the satisfaction of established program goals and the calculation of variances from the planned cost and schedule--has not reflected the state of the program. With respect to goals, the agency reported that it had met its fiscal year 2007 goals, including completing the imaging of paper-based retirement records and beginning training. While OPM's reporting that it satisfied program goals provided a favorable view of progress, this view did not include program areas for which the agency had not established goals. With respect to program cost and schedule variances, OPM reported in October 2007 that the program was progressing almost exactly as planned. However, the agency's reported favorable view of program progress was not consistent with the state of the program.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: In March 2008, OPM acknowledged the need to increase the reliability of its retirement modernization program cost estimate. However, the agency had not implemented the recommendation at the time we conducted a follow up study that identified additional cost estimating weakness. In April 2009, we made a more expansive recommendation for OPM to address weakness in its retirement modernization cost estimate and estimating practices (GAO-09-529).

    Recommendation: To address the risks to OPM's deployment of new retirement system technology and improve the agency's ability to reliably report progress of the RSM program, the Director of the Office of Personnel Management should direct the RSM Executive Director to develop a revised RSM cost estimate that addresses the weaknesses identified in this briefing and task an independent verification and validation contractor with reviewing the process used to develop the estimate and assessing the reliability of the resulting estimate.

    Agency Affected: Office of Personnel Management

  2. Status: Closed - Not Implemented

    Comments: In January 2008, OPM acknowledged the need to resolve defects prior to deployment of its new retirement system. However, in February 2008, the agency deployed the system even though one urgent and twelve high priority defects had not been resolved. Further, the resolution (or not) of urgent and high priority defects was not subjected to independent verification and validation.

    Recommendation: To address the risks to OPM's deployment of new retirement system technology and improve the agency's ability to reliably report progress of the RSM program, the Director of the Office of Personnel Management should direct the RSM Executive Director to monitor and review defined benefits technology solution defects to ensure all urgent and high priority defects are resolved prior to system deployment and that the resolution of urgent and high priority defects is subjected to independent verification and validation.

    Agency Affected: Office of Personnel Management

  3. Status: Closed - Not Implemented

    Comments: OPM began taking steps to address this recommendation but the steps were insufficient or incomplete and did not effectively address the risks to deployment of the new retirement system. Specifically, the agency added testing resources, but the resources were not sufficient to ensure successful testing of system functionality. Additionally, OPM's approach to mitigating the risks inherent in concurrent system testing was limited to significantly reducing the scope of system functionality to be deployed. Further, test results did not verify that system components were performing as expected. Finally, while OPM subjected test activities and results to independent verification and validation (IV&V), it did not implement the IV&V recommendations. Subsequently, the retirement system that the agency deployed in February 2008 did not perform as intended. After months of unsuccessful efforts to improve system performance, the agency stopped work on a key system contract and terminated the contract in October 2008. Thus, OPM did not implement and is no longer in a position to implement this recommendation.

    Recommendation: To address the risks to OPM's deployment of new retirement system technology and improve the agency's ability to reliably report progress of the RSM program, the Director of the Office of Personnel Management should direct the RSM Executive Director to ensure that sufficient resources are provided to fully test functionality, actions for mitigating the risks inherent in concurrent testing are identified, test results verify that all system components perform as expected, and test activities and results are subjected to independent verification and validation.

    Agency Affected: Office of Personnel Management

  4. Status: Closed - Not Implemented

    Comments: In March 2008, OPM acknowledged the need to establish a basis for effective use of earned value management for its retirement modernization program. However, the agency had not implemented the recommendation at the time we conducted a follow up study that identified additional earned value management weaknesses. In April 2009, we made a more expansive recommendation for OPM to address weakness in its retirement modernization earned value management practices (GAO-09-529).

    Recommendation: To address the risks to OPM's deployment of new retirement system technology and improve the agency's ability to reliably report progress of the RSM program, the Director of the Office of Personnel Management should direct the RSM Executive Director to establish a basis for effective use of earned value management by validating the RSM performance measurement baseline through a program level integrated baseline review and task an independent verification and validation contractor with reviewing the process used to develop the baseline and assessing the reliability of the performance measurement baseline.

    Agency Affected: Office of Personnel Management

 

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