Watchdog criticizes management of retirement systems upgrade

Management failures continue to endanger the Office of Personnel Management's efforts to move federal employees to an electronic retirement system, according to a new report from the Government Accountability Office.

"OPM's retirement modernization initiative is in transition from a program that was highly dependent on the success of a major contract that no longer exists, to a restructured program that has yet to be fully defined," GAO stated.

The personnel agency canceled a 10-year, $290 million agreement with Hewitt Associates in October 2008, because the contractor was unable to develop a workable retirement calculator and modeling program.

John Berry, OPM's new director, said in a written response to the report that he takes GAO's criticism seriously.

"I understand that one of my first and most important responsibilities is to get this program fixed and working so that the retirement experience for government employees is as simple and seamless as current technology allows," Berry said.

GAO found that OPM's standards for measuring the project's performance were inadequate and its estimates for how much development and deployment of the system would cost were unreliable.

Some of the problems could be traced to the failure of several internal oversight bodies to correct mistakes or demand better performance, according to the report. OPM's executive steering committee failed to hold formal meetings between January and October 2008, the time during which the agency decided to cancel the Hewitt contract. The agency's Investment Review Board did meet during that period and received reports on problems with cost estimates and performance measurements. But, GAO wrote, "Meeting minutes indicate that no discussion or action was taken to address these problems."

While both organizations have taken steps to become more involved, "these bodies did not exercise effective oversight in the past, which has allowed the aforementioned management weaknesses to persist," the report said. "Notably, OPM has not established guidance regarding how these entities are to engage with the program when corrective actions are needed."

Berry said the executive steering committee did not meet because officials had decided that program officers working on the retirement systems modernization project should report directly to the OPM chief. The Investment Review Board did not decide the direction of the program because of legal requirements that agency heads make capital investment decisions, he added. Berry noted that OPM's former acting director, Michael Hager, convened a high-level working group to examine the modernization process and supplement the other groups' efforts.

Berry said officials were working hard to produce appropriate cost estimates and performance metrics. He added OPM appointed a project manager and deputy project manager in November 2008 to oversee the retirement modernization efforts, and had reconvened the executive steering committee.

"The desire to achieve success within an overly ambitious time frame resulted in shortcuts that proved to be somewhat short-sighted," Berry wrote.