All News

Back to the drawing board

OPM moving on without one RetireEZ vendor.

Federal News Network Staff

October 17, 2008 7:27 am

3 min read

By Max Cacas
FederalNewsRadio

The Office of Personnel Management (OPM) says it is moving ahead with development of the next-generation RetireEZ retirement system modernization, but without one of its key vendors, Hewitt Associates of Lincolnshire, Illinois.

Ron Flom, OPM’s Senior Procurement Executive and Associate Director for Management Services, says it was his call, and the call of one of his contracting officers, to terminate the ten-year, $290 million dollar contract. The reason? A statement from OPM says that Hewitt, “failed to deliver a functioning retirement calculation engine”, one of the more visual and controversial aspects of the modernization project.

Flom says poor performance by Hewitt, dating back to this past Spring, was the straw that broke the camel’s back.

I know there’s been a lot of interest in the press since the decision on May 28th to stop work. We followed that up the next day with a show cause notice to Hewitt. We’ve been working with Hewitt Associates since that day to try to get them back on track, and to try to get them to fix those deficiencies in our show cause notice.

Flom went on to say that as recently as last week, Hewitt’s test calculator failed to achieve the minimum 95% pass rate stipulated in the contract, for the 354 test cases submitted to the program, achieving only a 33% pass rate.

Flom says OPM expects Hewitt to return certain equipment and property connected to the project which is U.S. Government property. OPM may also be able to eventually recover the $21 million paid so far to Hewitt.

Hewitt also has the right, under the contract, to an appeal of the ruling by the Civilian Board of Contract Appeals within 90 days. They may also bypass that board, and instead file suit directly in the U.S. Court of Federal Claims within one year.

Indeed, an appeal may be in the cards for Hewitt, based on the response provided to FederalNewsRadio via e-mail from Hewitt Associates:

OPM’s decision today to terminate the contract by default is very disappointing. We have delivered on our contractual commitments and taken extra steps to try to ensure the success of the project despite serious program management deficiencies on the part of OPM. We will vigorously challenge OPM’s attempt to terminate this contract for default and are confident in our position. OPM has failed to deliver on its contractual requirements and commitments. Ultimately, OPM’s decision is not in the best interest of the more than five million federal employees and retirees the system would have served, or the taxpayers who ultimately fund this initiative.

OPM now has to go back to the drawing board regarding the retirement calculator portion of the RetireEZ modernization project. Flom says that any large company – IBM, Oracle, SAP, among others – with an “enterprise recourse planning system” could be potential bidders for the re-procured RetireEZ calculator.

Acknowledging that his decision might still be subject to an appeal, and even possible litigation down the road, Ron Flom was asked to offer his perspective of what went wrong with the Hewitt contract.

Hewitt had a commercial product that worked very well in a commercial environment. They knew there would be some customization because of the nuances of the federal government retirement system. I think they underestimated how much change would be required.

Finally, OPM says it is important to note that the two other legs of the RetireEZ program: converting more than a million paper retirement documents now being stored in a Pennsylvania cave into electronic data for a database, and a top to bottom review of the agency’s retirement policies and procedures – continue to show good progress, and those parts of RetireEZ are continuing to be developed with the help of different vendors.

——
On the Web:

OPM – OPM Will Continue RetireEZ Progress Without Hewitt (press release)

Hewitt Associates – http://www.hewittassociates.com