INPUT Government Technology Market Blog

Office of Personnel Management: RetireEZ does not live up to its name
Posted on: June 3, 2008 | Posted By: Vajira Ranaviraja
Related Categories: Procurement, Contract Awards, Federal

The Office of Personnel Management issued a press release on May 29, 2008 stating that they have suspended a portion of the so-called RetireEZ contract. The contract was awarded to Hewitt Associates for Retirement Systems Modernization (RSM) on May 3, 2006 to the tune of $290M over 10 years. OPM issued a Stop Work Order and a Show Cause Notice to Hewitt Associates with a 10 day response period.

According to Federal Acquisition Regulation (FAR) Part 42.1303, Hewitt Associates response will be reviewed to determine which of the following three options will be pursued:

  1. Contract termination
  2. Cancel the stop-work order (requires the same approvals as issuing the order)
  3. Extend the response period if the government agrees more time is needed

Can OPM afford to terminate the contract?

Of the three main components of the RetireEZ program, only the calculation engine is affected by the stop work order, the other two components (data conversion and change management) will continue being developed. It is unlikely the OPM will cancel the Hewitt contract. The Government is committed to this much needed modernization project and it is estimated that termination will be used as a last resort.

In addition, RSM has the support of the FY2009 Exhibit 300 Business Case and a positive assessment by the Government Accountability Office (GAO). The Exhibit 300 documents call it "a strategic objective." In a recent assessment, the GAO recognized the importance of implementing this program despite concerns earlier this year about meeting the first planned increment.

According to GAO Report titled OPM Improvements Needed to Ensure Successful Retirement Systems Modernization:"To its credit, OPM has undertaken the RSM program to expedite retirement processing for civilian federal employees and the agency reported that it has met key program goals. Further, the agency has improved its management processes for selecting contractors, defining system and security requirements, managing risks, planning organizational change, and providing program executive oversight. Nevertheless, much remains to be accomplished before the program is effectively positioned to deploy its first planned increment of new technology..."

Business goes on

The current concern over the RSM program seems limited to Hewitt Associates. Accenture, who is providing business transformation and information technology support services and products for the initiative is continuing contract execution. The Accenture contract was awarded in May, 2006 for a total ceiling value of $40M.

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The rollout of the first phase of RetireEZ, to 26,000 employees, was announced in late February. On May 29, OPM blew the whistle on the contractor, saying that, for the calculator part of the contract, only five out of 61 functions were successful. Also, $27 million was budgeted for the calculator effort, and $21 million had already been paid. I have two questions:
- What on earth could have been delivered that was worth $21 million?
- If the calculator did not work, just what has been happening with the 26,000 employees in the rollout?

Have we been sold a bill of goods?
# Posted By Robert Benson | 6/13/08 5:26 PM
The first stage of RetireEZ was launched for 26,000 Federal employees on February 28, 2008 as you mentioned a follow up Press Release from OPM states "OPM is building on this successful beginning for RetireEZ and will periodically migrate remaining functionality into the system when fully tested. Work also continues in support of adding agencies in Wave 2 and beyond, as well as the continued automation and cleansing of employee records." This was not a full implementation of RetireEZ, and the legacy system is still up and running, and not all functionality has been transfered over to RetireEZ.

To your other question, there has been debate regarding what was delivered or developed for $21M. We may have to wait for Hewitt's response to OPM. The RSM system is a needed e-Government initiative, if anything this will hopefully ensure the rest of RetireEZ stays on track, and more bad press isn't developed for this very visible program.
# Posted By Vajira Ranaviraja | 6/17/08 3:57 PM
Exactly how much do you know about the Federal Retirement System? You choose to "cherry pick" from reports rather that publish the whole truth.

RetireEZ or Retirement Systems Modernization was fatally flawed from the very beginning. This is the third attempt in the past 18 years to automate the retirement process. The computation of the retirement annuity is not a simple formula applied accross the spectrum of government employees. There are many exeptions to the process that an "off the shelf" program cannot handle. That is exactly what Hewitt tried to do with its program called "The Solution". Hewitt was not building a program from the ground up. They flaunted their success with AT&T. However, this is not AT&T.

At some point one has to go further than the agency polls who are trying to avert political embarassment. Linda Springer is a Bush appointee. She's trying to claim a win with this prioject. The managers running the RSM asked for more time before bringing the program on-line. Springer was determined to meet the project schedule in spite of the un-readiness of the program to compute annuities correctly. This obviously would look good on her resume as a win when she applies for that corporate position post Bush administration. Now she is in panic mode. There are many nay sayers at OPM, but if they choose to speak out, they are moved to a corner to suffer employee persona non grata.

Please print all of the OMB report or where it can be accessed. There are many interesting comments, a lot of them negative. From your quote it appears that OMB is excited about this project. Au contraire, they are a little suspect about the way the 350 million dollars are being spent.
# Posted By Marc Chagall | 6/23/08 12:06 PM
I was commenting on the information that has been publically released regarding RSM. Which appear to point toward the fact that RSM like most other large e-Government initiatives have had difficulties getting off the ground, on budget, and on time. This isn't anything new to anyone who follows Federal procurement. The GAO Report, which can now be accessed from a link in the blog, was published in January 2008 by the General Accounting Office (an independent Congressional Agency). According to GAO, OPM deserves both credit for meeting key program goals and improving is management processes as well as acknowledging “much remains to be accomplished” (see the above quote). Which was gathered from public information available regarding the RSM program. I’m hesitant to comment on behind the scene happenings at OPM. As I stated earlier, the RSM program is a needed e-government initiative, that once effectively executed, will provide valuable services to Civilian Federal Employees. We will have to wait and see how the issue with Hewitt, and any others that may be happening are handled.
# Posted By Vajira Ranaviraja | 6/23/08 2:23 PM
Well, it has been nearly a month since OPM gave the contractor 10 days to "show cause" as to what the contractor intended to do to straighten things out.

Has anybody heard anything further? Are we waiting for the other shoe to drop?
# Posted By Robert Benson | 6/23/08 6:27 PM
Well, here we are nearly two full months after the contractor was given ten days notice (May 29), and OPM is still negotiating. I am really disgusted with all of them!

The contractor cannot produce a calculator despite being paid $21 million, right? How about this: a fast, easy to use, and accurate suite of software programs for nine Federal benefits. It is quite thorough and up to date, and it is available right NOW, and the price is $0.0.

Check out www.fedbens.us
# Posted By Robert Benson | 7/25/08 9:31 AM
I recently ran into this update of the OPM/Hewitt situation on Federaltimes.com. " The Office of Personnel Management this week is giving Hewitt Associates what could be its last chance to prove it can deliver a working retirement annuity calculator.Hewitt and OPM will meet July 22 to discuss the future of the Retirement Systems Modernization, or RetireEZ, contract, which OPM put on hold May 28 after the retirement calculator failed nearly all of its tests.
If OPM remains unsatisfied after Tuesday’s meeting, it could cancel the contract and start over. But doing so could touch off lawsuits and a whole new bidding process that would only further delay the project.The software is intended to automatically calculate annuity checks for federal retirees and to allow employees to model various financial scenarios to help them plan their retirements.Top OPM officials told Federal Times on July 17 that Hewitt has twice failed to provide a satisfactory response to its stop-work order." The whole article is available at http://federaltimes.com/index.php?S=3634198
# Posted By Vajira Ranaviraja | 7/29/08 4:28 PM
It has been three months now since OPM issued the stop order to the contractor, and admitted that RetireEZ was not working.

What, if anything, has happened? Why the silence?

OPM paid $21 million to the contractor for the calculator that did not work. Are they (OPM) asking for the money to be returned?
# Posted By Robert Benson | 8/27/08 9:58 AM
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