THE BLOG

We Paid Dead People Using Paper, Pencil and a Whole Lot of Spit

12/02/2011 11:26 am ET | Updated Feb 01, 2012

Hide your wallet and suspend all reason, because here he comes again.

Expect Office of Personnel Management Director John Berry to make the rounds on Capitol Hill this month, hat in hand, begging for more dollars and resources to fix his agency's two-decades long inability to modernize the Federal Employees Retirement System.

Nevermind that he pledged to Congress last month that OPM would make any necessary fixes within its existing budget.

Nevermind that OPM has spent $100 million taxpayer dollars over the past 20 years trying to create a solution and failed each time.

Nevermind that OPM has zero credibility in its handling of automated IT solutions or managing the Federal Employees Retirement System.

Nevermind that OPM has already more than doubled the size of its workforce over the past decade through the controversial practice of intragovernmental funds transfers.

Nevermind the facts. Berry's on his way to ask for the Washington staples of mo' cash and mo' bodies.

"Until we get an IT solution in place, we can't kid ourselves," Berry recently told a Congressional oversight panel. "This is a paper-pencil process, and it's going to take more people."

It's what Washington does best: throw more money and people at a problem that simply can't be solved that way.

Pencil, Paper, Spit, and Gas Up the Vans

Want to know how the system currently works? According to documents and testimony from that recent Congressional oversight hearing, not very well.

Imagine, if you will, that your system has a backlog of 60,000 federal employees waiting to retire but can't because each OPM employee assigned to the retirement system processes approximately 3½ claims each day with an average processing time of 133 days per claim.

Imagine those 3½ claims are simply an average. "Some people are working harder and doing more," Berry told Congress. Yes, Director Berry, but that means that if it's an average, some people are doing less. If someone is going above and beyond by processing seven claims a day that means you have another employee somewhere processing zero.

Imagine that your backlog of cases is growing. OPM receives approximately 9,600 new retirement cases each month. And while it processes 7,700 cases, that means each month the number of unprocessed cases grow by roughly 2,000 -- doubling the backlog of cases to 120,000 by 2014.

Now imagine a Federal Employees Retirement System and an OPM method of processing claims that involves lots of No. 2 pencils, people with green eye shades, a healthy dose of saliva and spit, plus two white panel vans.

Imagine a system of document sharing that involves a driver of a one white panel van leaving Boyers, Pa., each night to meet the driver of another white panel van on its way from Washington, meeting somewhere in the middle, exchanging vans and driving the pending retirement and other official personnel documents, full of sensitive employee personal information, on to their destinations in Boyers and D.C.

It's a lot to imagine, unless you're in a Dickens novel or the Twilight Zone.

These are employees who want to retire but can't because someone at OPM can't write fast enough, or their pencil isn't sharp enough, or they have to keep printing out more forms to write on, or because someone has to gas up the van.

And if you didn't need more evidence of the Federal Employees Retirement System's antiquated processes, try resetting your account password.

Upon submitting your request via email, you get this automated response:

"Upon review of your inquiry and providing that we have all the required information, we will process your PIN/PASSWORD request. You should receive the PIN/PASSWORD by mail within 7 - 10 business days."

Let's try to understand this.

At a time when passwords from sensitive bank accounts and 401(k) accounts to retail accounts or just about any other account can be reset within minutes by email with the proper process and security questions, the federal government requires 7-to-10 business days, an employee to stuff the envelope and work up the saliva to seal it, and the U.S. Postal Service to deliver it.

And how about that security system? A paper envelope firmly sealed with spit. And maybe it gets delivered accurately. You'll know if you haven't received the envelope in two weeks. If not, just submit another email request to start the process all over again.

It might as well be 1911 instead of 2011.

How is it possible to defend funding a system like this with U.S. taxpayer dollars given our nation's current financial state?

And this is before you get to OPM's management of the pension fund itself.

Earlier this year, the U.S. Postal Service announced it would stop making payments to the defined benefit portion of the Federal Employee Retirement System after its Office of Inspector General estimated that OPM had taken $142 billion more than it should have from USPS coffers for the trust fund.

The U.S. Postal Service -- on the brink of bankruptcy -- put together proposals to alter the way it contributed to retiree annuity and employee health benefits. The USPS has lost approximately $20 billion over the past five years and is on track to lose another $6 billion in 2011, so cash flow became important.

OPM's response to USPS: Pound sand. To change the way the USPS contributes to the trust fund "would have a lasting negative effect upon the retirement programs and trust funds and have little, if any, positive impact upon the USPS's ultimate long-term profitability," it said.

A subsequent GAO report found that changes in the USPS share of responsibility for the trust fund and benefits would provide short-term relief from budget pressures. And while it wouldn't itself change any long-term financial outlook for the service, it could buy the USPS time to look for alternatives.

The Calculator That Wouldn't Work

To simply suggest, that more money and more people will take care of this problem is short-sighted and kicks the can down the road regarding the larger issue of arcane, antiquated technology, inefficiency, questionable security, and insurmountable backlogs.

It's 2011. These processes are automated with private sector solutions implemented in government specifically to solve this problem. OPM consistently turns a blind eye to these solutions in favor of home grown, total control, in-house development - what it likes to call a "hybrid" system ("hybrid" because it uses private sector computer equipment and public sector everything else). Commercially available, federal-centric solutions with a proven track record are of no use to OPM. These practical, low-cost, and efficient alternatives fly in the face of OPM's goal of bigger budgets and more staff.

These private sector solutions can trim the three-hour-plus processing time of a single claim down to less than an hour.

Director Berry knows his agency, particularly after the spectacular technology failures of USAJOBS 3.0 and USA Staffing, cannot be trusted to come up with an in-house automated solution.

And in 2009, he killed OPM's most recent effort to modernize the Federal Employee Retirement System, a vendor-provided program called RetireEZ.

RetireEZ was a project whose goal had a very basic outcome. Essentially, it was an online calculator that allowed federal employees to project their pensions. By Berry's own admission they could never get the system to work properly after spending millions of taxpayer dollars.

A calculator. Wouldn't work.

You can calculate how much you owe in taxes on the IRS website, or your projected earnings from Social Security on its website. There are myriad sites where you can calculate mortgage loans, car loans, college loans, weight loss -- you can even go on websites and calculate the day you're most likely to die.

Calculators are widgets. Not the most complicated of technology, and they provide basic information. Nor do they typically cost millions of dollars to produce.

Mused FierceITGovernment, "This is a lesson for every agency about reaching too far in developing a project."

That sentiment has been reaffirmed several times in the past three years by the General Accounting Office.

The GAO has provided several reports on the state of OPM's IT management, looking at its 20-year record of IT failures, and finding that the agency simply doesn't have the basic understanding, the talent, or the capability to run large-scale IT systems -- whether they're in-house or working with an external vendor.

As it related to RetireEZ, OPM's fourth attempt either in-house or working with an external vendor to modernize federal retirement claims processing, GAO faulted OPM for not developing a "reliable cost estimate for the program." In fact, OPM's last revised total life-cycle cost estimate of the program was revised upward from $371 million to more than $420 million.

This finding by the GAO in 2009 foreshadowed OPM's problems with in-house operation of its antiquated USA Staffing system (and resulting crash in August) and the ill-fated and error-plagued launch USAJOBS 3.0 in October.

Then there is the revelation that under OPM's management, the federal retirement system paid $600 million to dead people over the past five years. An embarrassment to be sure, but more evidence that the bloated agency can neither implement a program nor effectively manage one.

OPM and government need to learn and practice the lessons learned by every successful private sector company: Do what you do best, and look to others for the rest.

The Real Cost of More People, More Money

At the recent Congressional oversight hearing, Rep. Stephen Lynch (D-Mass.) suggested to Director Berry that OPM bring recently retired federal employees with claims processing experience back into the workforce to handle the backlog.

While on its surface a seemingly sound idea, it may end up costing the taxpayer more in the long run.

How? Because each one of those employees will continue to receive their retirement annuity PLUS a new salary from OPM to process claims. It's called double-dipping. And often these former federal employees will command a higher salary because of their years of government experience.

For example, Kathy Dillaman, who retired from OPM in February after running the OPM's security clearance process (and not without controversy), was called out of retirement and given the title of special policy advisor to Director Berry. Not only does she receive her retirement annuity, her current annual pay of more than $179,000 matches that of Director Berry.

But bringing onboard new hires has yet to put a dent into the backlog. OPM has hired 35 people to assist with processing federal retirement claims, and Director Berry told Congress he plans to hire 40 more by rearranging the agency's current budget.

At the hearing Lynch questioned the director's arithmetic skills.

"I just did the math on that; that's an additional 40,000 to 50,000 a year," Lynch said. "But you've got about five times that much that is brand new on top of the work you're doing already."

But despite Rep. Dennis Ross (R-Fla.) warning Berry that he shouldn't expect Congress to fix the problem by giving OPM more money, Ross provided the director with an opening to do just that by challenging OPM to come up with a business plan with goals and deadlines to fix the Federal Employees Retirement System.

So when you see Director Berry coming your way, watch your wallet ... unless you really want to purchase more paper, more pencils, and more green eye shades.

The technology to fix the Federal Employees Retirement System isn't a pipe dream. It's ready to use, right now. It's time to solve this problem once and for all for federal employees, its retirees and the American taxpayer.

Linda E. Brooks Rix is co-CEO of Avue Technologies, which was founded in 1983 and pioneered the technology of smaller, better government. The company provides the public sector with integrated technology and service solutions that dramatically increase enterprise-wide visibility and management effectiveness, workforce productivity, and manager and worker satisfaction. In the fight against "business-as-usual" in Washington, Avue helps power "business-as-unusual." Avue is a privately held company headquartered in Tacoma, Wash., and with offices in Washington, D.C.