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BACK TO THE BASICS: IS OPM MEETING ITS

MISSION?

HEARING

BEFORE THE

SUBCOMMITTEE ON FEDERAL WORKFORCE,

U.S. POSTAL SERVICE AND LABOR POLICY

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

NOVEMBER 15, 2011

Serial No. 112–123

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.fdsys.gov

http://www.house.gov/reform
(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director

SUBCOMMITTEE ON FEDERAL WORKFORCE, U.S. POSTAL SERVICE AND LABOR

POLICY

DENNIS A. ROSS, Florida, Chairman

JUSTIN AMASH, Michigan, Vice Chairman

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

TREY GOWDY, South Carolina

STEPHEN F. LYNCH, Massachusetts,

Ranking Minority Member

ELEANOR HOLMES NORTON, District of

Columbia

GERALD E. CONNOLLY, Virginia

DANNY K. DAVIS, Illinois
(III)

C O N T E N T S

Page

Hearing held on November 15, 2011 ...................................................................... 1

Statement of:

Berry, John, Director, Office of Personnel Management, accompanied by

Matthew Perry, Chief Information Officer, Office of Personnel Management ............................................................................................................... 5

McFarland, Patrick E., Inspector General, U.S. Office of Personnel Management, accompanied by Jeffrey Cole, Deputy Assistant Inspector

General for Audits, U.S. Office of Personnel Management; Pasquale

M. Tamburrino, Jr., Deputy Assistant Secretary of Defense for Civilian

Personnel Policy, U.S. Department of Defense; Valerie C. Melvin, Director, Information Management and Human Capital Issues, U.S. Government Accountability Office; Patrick W. Manzo, executive vice president,

Global Customer Service and chief privacy officer, Monster Worldwide,

Inc., accompanied by Mark Conway, senior vice president and chief

information officer, Monster Worldwide, Inc. ............................................. 29

Manzo, Patrick W. ..................................................................................... 64

McFarland, Patrick E. ............................................................................... 29

Melvin, Valerie C. ...................................................................................... 50

Tamburrino, Pasquale M., Jr., ................................................................. 37

Letters, statements, etc., submitted for the record by:

Berry, John, Director, Office of Personnel Management, prepared statement of ........................................................................................................... 8

Connolly, Hon. Gerald E., a Representative in Congress from the State

of Virginia, prepared statement of .............................................................. 86

Manzo, Patrick W., executive vice president, Global Customer Service

and chief privacy officer, Monster Worldwide, Inc., prepared statement

of ..................................................................................................................... 66

McFarland, Patrick E., Inspector General, U.S. Office of Personnel Management, prepared statement of .................................................................. 31

Melvin, Valerie C., Director, Information Management and Human Capital Issues, U.S. Government Accountability Office, prepared statement

of ..................................................................................................................... 52

Ross, Hon. Dennis A., a Representative in Congress from the State of

Florida, prepared statement of .................................................................... 3

Tamburrino, Pasquale M., Jr., Deputy Assistant Secretary of Defense

for Civilian Personnel Policy, U.S. Department of Defense, prepared

statement of ................................................................................................... 39

(1)

BACK TO THE BASICS: IS OPM MEETING ITS

MISSION?

TUESDAY, NOVEMBER 15, 2011

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON FEDERAL WORKFORCE, U.S. POSTAL

SERVICE AND LABOR POLICY, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 9:30 a.m. in room

2154, Rayburn House Office Building, Hon. Dennis A. Ross (chairman of the subcommittee), presiding.

Present: Representatives Ross, Amash, Mack, Walberg, Gowdy,

Lynch, Connolly and Davis.

Staff present: Ali Ahmad, communications advisor; Will L.

Boyington, staff assistant; Sharon Casey, senior assistant clerk;

Adam P. Fromm; director of Member services and committee operations; Linda Good, chief clerk; Jennifer Hemingway, senior professional staff member; Mitchell S. Kominsky, counsel; Mark D.

Marin, director of oversight; James Robertson, professional staff

member; Laura L. Rush, deputy chief clerk; Peter Warren, legislative policy director; Jaron Bourke, minority director of administration; Kevin Corbin, minority deputy clerk; and William Miles, minority professional staff member.

Mr. ROSS. The Subcommittee on Federal Workforce, U.S. Postal

Service and Labor Policy will come to order.

Today’s hearing is entitled, ‘‘Back to the Basics: Is OPM Meeting

Its Mission?’’ Before we begin, I would like to start off with reading

the mission statement of the Oversight Committee.

It is the tradition of this subcommittee to begin with the Oversight and Government Reform Committee’s Mission Statement.

We exist to secure two fundamental principles. First, Americans

have a right to know that the money Washington takes from them

is well spent. Second, Americans deserve an efficient, effective government that works for them.

Our duty on the Oversight and Government Reform Committee

is to protect these rights. Our solemn responsibility is to hold government accountable to taxpayers because taxpayers have a right

to know what they get from their government.

We will work tirelessly in partnership with citizen watchdogs to

deliver the facts to the American people and bring genuine reform

to the Federal bureaucracy. This is the mission of the Oversight

and Government Reform Committee.

I will begin with my opening statement. Since 1987, the U.S. Office of Personnel Management, OPM, has sought to modernize its
2

retirement planning system. Almost a quarter of a century later,

the system averages $120 million per year in payments to deceased

individuals while Federal retirees are subject to a paper-based

process that often involves transfer of their files by truck up the

Pennsylvania Turnpike for processing.

Despite a backlog of 60,000 claims, OPM examiners are expected

to process only three and a half claims per day. At the end of the

employment spectrum, the launch of USA Jobs 3.0 has left many

job seekers frustrated, a sentiment at odds with OPM’s promise of

doing as well or better than the private sector company the Department took over several years ago. Having spent 18 months and $6 million to develop, Director

Berry recently acknowledged the duly launched online employment

system went into a death spiral and admitted that OPM’s IT Department underestimated both the system and the software challenges.

Since taking over the online employment site, OPM has increased its fee to Federal agencies using the site for employment

postings. Technical problems continue to plague the Web site, in

other words, taxpayers are now paying for a system that does not

work, costs more and takes business away from the private sector.

This raises questions about OPM’s decision to craft an in-house

system, given its poor history of information systems development.

Combined, these management challenges raise questions about

OPM’s priorities. With a Federal work force size of approximately

2.8 million people, the Office of Personnel Management is tasked

with recruiting, retaining and honoring a world class work force for

the American people. Unfortunately, OPM’s track record as of late

calls into question its ability to resolve its hiring and retirement

claims in order to meet its core mission.

Today’s hearing will examine OPM’s efforts to modernize the

Federal Government’s hiring and retirEMENT claims system. Continued reliance on paper-based retirement system and technical

problems plague the recent launch of USA Jobs 3.0 raise questions

regarding OPM’s ability to utilize the information and technology

necessary to support individuals at the beginning and end of the

job cycle.

I thank the witnesses for appearing hear today and look forward

to your testimony.

[The prepared statement of Hon. Dennis A. Ross follows:]
3
4

Mr. ROSS. I now recognize the distinguished Member from Massachusetts and the ranking member, Mr. Lynch, for his opening

statement.

Mr. LYNCH. Thank you, Mr. Chairman. It is good to be with you.

First of all, I would like to welcome Director Berry and Mr. Perry

and thank them for their willingness to come before this subcommittee to help us with our work.

Today’s hearing is entitled Back to the Basics: Is OPM Meeting

Its Mission? It will examine efforts by the Office of Personnel Management to address challenges in its information technology networks. Notably, this hearing stems from continuing reports of design and operational setbacks faced by OPM in the implementation

and administration of USA Jobs 3.0 and also problems in the retirement system.

USA Jobs 3.0 is the latest iteration of the Federal Government’s

official job search Web site. We should remember why the performance of this project was in-sourced in the first place. Government

workers could do the job for less than the private sector had been

doing and the private sector contractor was unable to prevent serious breaches in data security. As well, there were concerns about

the proprietary technology that was being used and its ability to

be flexible meeting future needs.

Regrettably, the launch of USA Jobs 3.0 has not occurred without incident, as the has chairman noted. Within its first week of

ongoing live coverage, the USA Jobs Web site was slowed down by

technical problems including log-in difficulties, extended load times

and faulty searches. Throughout the past month, USA Jobs has received an estimated 40,000 help desk complaints. USA Jobs 3.0

only went live last month and the OPM Inspector General has yet

to even begin auditing the roll out of USA Jobs 3.0.

Were these problems simply the initial shortcomings or part of

a longer term, systemic problem? I think it is probably too early

to determine but the early indications are not good. One thing is

already clear, however. To the credit of Director Berry, OPM has

implemented a series of improvements designed to address these

and other user concerns.

In addition to enhancing bandwidth capacity in order to accommodate nearly 700,000 visitors per day, OPM has installed additional customer service personnel and resources as well as increased its efforts to educate users on the transition to the revamped USA Jobs Web site.

Moreover, in consultation with the Office of the Federal Chief Information Officer and private sector computer technology firms,

OPM has also brought in a team of specialists with the goal of addressing both short term and long term issues with USA Jobs.

Today’s hearing will also examine OPM’s capabilities in the area

of Federal retirement claims. This is an area of particular concern

because we have an expected 100,000 retirees. We also have in the

works the possible early retirement of maybe as many as 120,000

postal employees, so it is a perfect storm. We need to make sure

that we have a system that can accommodate that volume.

Unlike the USA Jobs 3.0 rollout, the issue of the retirement logjam goes all the way back to the mid-1980’s. Computerization of

older Federal employee records and automation of retirement
5

claims are worthy goals if they also help to address concerns over

levels of interim pay, improper payments to deceased annuitants,

as the chairman has pointed out, and the inordinate amount of

time some Federal workers have had to wait to receive what is

owed to them after years of dedicated service.

OPM has already spent hundreds of millions of dollars on private

sector contractors, but those efforts have failed to deliver. I sincerely hope that what we learn here today is not a precursor of

challenges that lay ahead as Federal agencies are forced to do more

with a lot less.

Mr. Chairman, I thank you for holding this very important hearing. I certainly hope we can finally get to the bottom of some of

these problems given the impressive list of witnesses appearing before us today.

I yield back.

Mr. ROSS. Thank you, Mr. Lynch.

Members may have 7 days to submit opening statements and extraneous material for the record.

We will now welcome our first panel of witnesses. We have with

us the Honorable John Berry, Director, Office of Personnel Management. He is accompanied today by Mr. Matthew Perry, OPM’s

Chief Information Officer.

Pursuant to committee rules, if you would all stand and be

sworn. Raise your right hands.

[Witnesses sworn.]

Mr. ROSS. Let the record reflect that all the witnesses answered

in the affirmative.

I will now recognize the Honorable Mr. Berry for his opening

statement and request that you limit your testimony to 5 minutes.

As your entire written statement of course is in the record.

Mr. Berry.

STATEMENT OF JOHN BERRY, DIRECTOR, OFFICE OF PERSONNEL MANAGEMENT, ACCOMPANIED BY MATTHEW

PERRY, CHIEF INFORMATION OFFICER, OFFICE OF PERSONNEL MANAGEMENT

Mr. BERRY. Chairman Ross, Ranking Member Lynch, thank you

very much for the honor of appearing before you today to discuss

how OPM is accomplishing its core functions.

I am proud of the role that we have played in the historic eight

Presidential actions on human resources. The percentage hiring of

our veterans and disabled veterans is the highest it has ever been.

Our hiring reforms have both shortened the time to hire and made

it easier for applicants, the resume being the basis now.

Our Merit System, Audit and Compliance Division annually conducts over 220 audits just this year alone that safeguard our merit

system principles and hold agencies accountable for effective HR

practices. We now process 90 percent of security clearance investigations, over 2 million a year, in 40 days or fewer, having eliminated all backlogs and taken this issue off the Government Accountability Office high risk list this year.

Finally, we continue to strengthen both our CIO and our Retirement Divisions and before the end of this month, a new detailee

will be joining OPM to assist Matt as our new Chief Technology Of-
6

ficer. They will enhance and centralize our IT operations with Matt

at OPM and provide new leadership for USA Jobs 3.0 going forward.

In January 2010, the Chief Human Capital Officer’s Council

unanimously recommended, after months of study, to design a hybrid USA Jobs system, not an in-house system, a hybrid system

where the government will protect applicant data and own the code

for a central portal that has an open architecture to it to allow for

greater private sector competition to foster enhancements. This

marries what believe is an essential core governmental function

with the strength of our private sector.

During our transition from USA Jobs 2.0 to 3.0, we successfully

transferred 22 million resumes and documents and over 6,000 open

job announcements, but we also made mistakes. We underestimated demand, we lacked agility and we did not resolve applicant

issues as quickly as we should have. Immediately visitors flocked

to the site, peaking at almost 45 million page searches in 1 day.

This exceeded our highest estimates and at times, 100 percent of

our bandwidth.

In response, we have added 10 virtual servers, fine tuned load

distribution and added content delivery support from a trusted private sector vendor. With the site now operating at about 10 percent

of capacity, this issue has been resolved.

Second, passwords had to be reset for all of the users. This was

our largest issue among the over 54,000 help desk request tickets.

To address this, we redeployed help desk resources from other

OPM program areas.

Third, our location-based search tables, though extensive, need

tweaking. By expanding these tables, we have largely resolved this

issue and continue to refine the tables based on user feedback and

proactive analysis, again in partnership with Microsoft, the company provider for our server.

Our team, with advisors from the private sector and across government, continues to work around the clock to resolve issues and

refine our search tools. All USA Job metrics continue to make

steady forward progress. Since the launch, nearly 17.5 million

users have visited the site, submitted over 1.2 million applications

and created or edited nearly 700,000 resumes.

Our help desk tickets, from a peak of 4,000 a day, yesterday were

below 400 which we would consider an average load for a system

of this size. Our Facebook posts, in their first week, as you can

imagine, were significant in volume, yesterday, were down to 11

posts total.

On retirement, $100 million and four failed attempts over 20

years have all met with failure. The most recent ended just before

I took office, not only without solutions but sadly, also with reductions in retirement staff that was presumptuously made before the

system was launched and then ultimately terminated.

Using lessons learned from the canceled retirement system’s

modernization, we have created a proof of concept that would allow

retirees and HR professionals to submit their data electronically.

We have had to make do with fewer staff and reduced budgets. Despite that, I am prioritizing this issue and within our resources and

moving and shifting resources around last year to hire 35 new legal
7

administrative specialists, we will be hiring additional this year to

be ready hopefully for this onslaught that Mr. Lynch has mentioned.

We are also taking steps to use our existing staff more efficiently.

For example, we have assigned all FERS non-disability retirement

claims to our staff in Boyers, Pennsylvania and focusing our D.C.

team on the backlog and disability claims. Today, a Navy Lean six

sigma team is specializing in process improvements and is at work

in Boyers with our team. We are working with other agencies to

reinsure the completeness of records that we receive so we can

move faster in processing claims.

To mitigate existing delays, we have enhanced our interim pay

process. Retirees now over 90 percent are approved to receive interim payments within a week of their application. It is my goal

that the steps we are taking will address our backlog within 18

months and fulfill our commitment to Federal retirees with more

timely processing.

Members of the committee, thank you for having me here today

and I am happy to answer any questions.

[The prepared statement of Mr. Berry follows:]
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Mr. ROSS. Thank you, Director Berry.

I will recognize myself for the first round of questions.

I am reminded of an economics professor I had in college who

said self-sufficiency breeds inefficiency. I think when we start doing

certain functions in-house, there are not the resources and we become somewhat inefficient. Just because the Federal Government

has a motor pool doesn’t mean they have to manufacture the automobiles.

To that end, I would ask Director Berry why did you decide to

bring USA Jobs in-house?

Mr. BERRY. This was an issue under great study. We had a contractor with a private carrier, a 5-year contract that was going to

expire. Knowing that was coming, this contract was paid for by fees

that are paid by each agency across the Federal Government into

a revolving fund that we manage on their behalf.

Mr. ROSS. That private contractor was Monster?

Mr. BERRY. Yes, sir. They managed the USA Jobs 2.0 site for the

past 5 years. We created a working group of the Chief Human Capital Officers Council because that is the group that has to pay for

whatever decision was going to be made, to study in-depth this

issue. That working group came back with the recommendation to

create a hybrid solution, again not an in-house solution.

Mr. ROSS. That recommendation was made as a result of the fact

that the private sector contractor was not doing it efficiently or effectively or was there a conclusion they could do it better?

Mr. BERRY. No, sir. Let me give you the four reasons they made,

that the working group provided.

The first was they thought for the central warehousing system,

it was important that we would be able to own the code and the

data. What happens over a 5-year contract, which is natural, is you

get good data in the first 2 years, but any tweak you want to make

throughout, you have to pay to increase or to change. In this vibrant time, we wanted to make upgrades faster and quicker, so

owning the code was one of the first decisions the work group decided was important for that central warehouse function.

Mr. ROSS. Don’t you think that should have been negotiated in

a contract renewal?

Mr. BERRY. It would, but the contract renewal being 5 years, and

anything during the interim would have to be supplements to the

contract which would cost the taxpayer more. By owning the code,

as we have proven over the past 3 weeks, we have been able on

a weekly basis to update the code without having to incur cost

working with our partner, a private sector partner. Microsoft is the

provider of our server currently, so we are working with the private

sector.

The other three things just very quickly of what the working

group decided they wanted to protect the sensitive information of

applicants. They had contracted a study with a third party private

sector company, Booz Allen Hamilton, that did a vulnerability assessment of the Monster product. They determined there were two

security concerns. One that resumes were commingled with both

public sector and private sector resumes commingled, and two,

there was a medium level risk of alternate data centers being colocated in the same geographical area.
16

Mr. ROSS. Those were anticipated risks? They actually happened?

Mr. BERRY. Yes. The security breaches that happened at Monster

are a matter of public record. I want to make clear, none of the

issues that we faced in our first week were the results of Monster,

they were our in-house problems. The working group was considering the 2009 and 2007 security breaches that occurred when

Monster was the provider for 2.0. Security was one of the issues

the working group considered.

The other two just very quickly was they wanted to enhance

search capability and then fourth have an open architecture, have

the government protect the resumes but build it in a way that any

private sector provider could come in and plug into it to use their

product, keeping in mind the resume sort of warehouse is only $6

million. The private sector providers that compete around that, is

well over $100 million of business, so where the action is on those

private sector enhancements that plug in to it.

Those were the four reasons the working group considered in

bringing in this hybrid solution that was part in-house, part open

architecture to allow for greater competition.

Mr. ROSS. When you talk about your partnership or working with

Microsoft, you didn’t partner their assistance in development of

USA Jobs, did you, it was actually post launch when you started

to bring them in?

Mr. BERRY. No, their product is the main server. We acquired

that.

Mr. ROSS. There was not any working relationship in advance of

the launch of USA Jobs with Microsoft, was there?

Mr. BERRY. Yes, but they added additional staff to us when we

ran into the problems. In other words, they stood behind their

product. It is a good, solid product.

Mr. ROSS. You indicated to the Washington Post that if you knew

now what you knew then, you would do things differently. What

would you do differently?

Mr. BERRY. I think the key thing we did was we focused a lot

of our testing efforts on the private sector back end users and the

agencies. We did not focus enough on the applicant user experience. If I had that to do over, I clearly would have spent more time

on applicant testing.

Mr. ROSS. Do you have a market research department or somebody that will go out and consult with the end user as to what they

anticipate and expect from the service?

Mr. BERRY. No, sir, but what we do do is survey our users on

a regular basis as well as using all of the traditional tools that the

Internet now allows.

Mr. ROSS. Do you have a research and development department

that you invest to make sure you are staying on the cutting edge

of technology?

Mr. BERRY. No, sir. We partner with the private sector to accomplish that cutting edge.

Mr. ROSS. Did you partner in the development of USA Jobs 3.0?

Mr. BERRY. Absolutely.

Mr. ROSS. As a result, it crashed?
17

Mr. BERRY. Like I say, the first week is not something I was

happy about but what I am here to say is we have recovered from

that. As many people know, whether private sector or public,

launching complicated, large systems like this sometimes have

bumpy starts. We had a very bumpy start. I apologize for that and

I believe we have put the right team in place and we have made

the right judgment calls since then to recover from it.

Mr. ROSS. How much do you charge agencies to use USA Jobs?

Mr. BERRY. The cost for the entire product line, for providing the

central warehouse, the budget is $12 million a year. That is what

agencies were paying in 2008 when Monster was providing the

service; it is what agencies are paying now. There has been no increase.

Mr. ROSS. There has not been any increase?

Mr. BERRY. What we did in 2 years while the working group was

working to decide what to do, we rebated funds. When you have

a revolving fund, you accumulate some to handle a new project. We

were accumulating funds but we had too much so we rebated them

to the agencies. We went from $12 million to $10 million for 2

years, 2008 was $12 million, 2010 was $10 million and we are back

to $12 million now in 2011 and it will stay at $12 million. There

is no increase other than we provided the agencies that rebate

while we were not designing the new system.

Mr. ROSS. My time is up. We will probably do another round.

I will now recognize the ranking member, the distinguished gentleman from Massachusetts, Mr. Lynch, for 5 minutes.

Mr. LYNCH. Thank you, Mr. Chairman.

Director Berry, it is good to see you again. I wish it was under

different circumstances. I wish we were talking about something

going right but that is the nature of this.

I was here in 2007 and I do remember back then when Monster

was running this program. As I remember it, we had 146,000 Federal employees who had their information stolen when Monster ran

the program. They had their personal identity information

accessed, there was a cyber attack on the site, so that was one of

the reasons we initially supported the idea of coming in-house to

make sure we could protect the identities and information we have

on our employees.

The folks that are complaining about you after the first month,

this site went live a month ago and it is a huge site, like you say,

700,000 people accessing it every single day, it is a big operation

so I have a little more patience than I guess some of my colleagues,

I guess, but not much more.

I do want to ask you a couple of things. About resources over at

OPM, I know you have some good people over there and you are

working hard but I know you picked up additional responsibilities

under the Affordable Care Act, so I see all this work being put on

that agency. I don’t see any more resources. If I recall correctly,

under the Affordable Care Act, you are responsible for setting up

all these exchanges that all these folks in America are going to go

online and try to access the State health insurance options. You are

responsible for doing all that without much more resources than

you have now.
18

You have a backlog of 60,000 on retirements, folks that worked

their whole lives for the government and want to retire now. You

have 60,000 of those folks waiting to retire. We can’t process them

fast enough. We don’t have enough people to process that information. We are looking at early enhanced or expedited retirements at

the Postal Service that could amount to 120,000. We have NASA

retirements and are cutting that down. We have the Government

Accountability Office, retirements there; we have the Defense Department including the Air Force and Army, major major retirement programs going on there.

I see this whole tidal wave of work heading toward you. I am just

concerned that you don’t have the resources to deal with this. It

troubles me greatly. What I see I see a lot more of these hearings.

I think we will spend a lot more time on these hearings as the volume of work overwhelms you.

I am not faulting you. I am not saying you are not working fast

enough or hard enough. I just think the volume of work is overwhelming. You say you are going to hire 35 new folks to process

retirement claims. I just did the math on that and that is an additional 40,000 to 50,000 a year but you have probably five times

that much that is brand new on top of the work you are doing already.

How are we going to do this? What do you need for resources

over there to meet the challenges that are coming toward you? I

say this as a friend and as someone who wants you to succeed, not

only on behalf of the folks on the job Web site but also hard working retirees who worked their whole lives and now are being given

interim retirement because we can’t process their applications to

retire. These folks want to retire, they have retired and are waiting

out there month after month and their applications for retirement

have not been approved. It is a terrible situation and we have to

get our arms around this.

I know you have a paper process for a lot of these employees, but my goodness, we spent $100 million over the last 20 years and still

have this same broken system. We have to have a sustainable system, the right technology, the right information, the right people

to get this thing done. This is just a nightmare. What do you need

over there to get this thing done?

Mr. BERRY. As you know, I have to defend the President’s budget

and our resources, like many across government, are on the decline. We are trying to do more with less. We are trying to increase

our efficiency to do so.

I am proud of our team in many areas. When you look at for example the preexisting condition health plan, the exchange that

needed to be stood up, we are providing options for people with preexisting conditions in 23 States and the District of Columbia and

doing it at 0.08 percent overhead. We did that and stood that up

in 60 days and launched it. It has been well received by those

States and the people in those States.

We have solid people, we have solid teams, but there is no question that as you mentioned we are facing a potential increase, a

significant increase in our retirements. We are noticing them actually starting this month. Normally, the wave increase does not

start until January. It has started for us this year in October. As
19

agencies are looking and increasing their buyouts and other options

to tighten their belts, it is increasing our retirement pressure.

One option I could propose that the Senate is considering in one

of the bills under consideration there is as agencies do buyouts,

they would also make a payment to us to help us cover the cost

of processing that retirement and hiring temporary staff so we

could handle some of this backlog bulge, the balloon, if you will,

that we are facing. That would be one assistance from the Congress

that would be greatly appreciated.

Efficiency improvements also are important such as the Navy

Lean Six Sigma team that is working with our people today. I cannot testify to the details of why we wasted so much money over the

past 20 years or the details of what happened there because it was

before my watch but I can tell you, I think the process could be

more streamlined and we could do a more efficient job. That is why

by working with this Navy team, we are trying to make the process

as straightforward and simple as we can.

My hope is if we can get it simple, then you can automate pieces

of it. The last attempt failed because they tried to automate everything and some retirements are extraordinarily complicated, as you

can imagine. When you are disabled, you have different reserve

service and different theaters of war with different retirement calculations for different days they were in service in different regions

of the world, etc.

There would be a standard retiree, someone who spent their career at one agency, didn’t have all those complicating factors. Let

us identify those and automate that piece and then move forward.

We need to automate this in bite-sized chunks that we can deliver

successes to you, the Congress and the taxpayer.

Mr. LYNCH. Thank you, Mr. Chairman.

Mr. ROSS. I now recognize the gentleman from Florida, Mr.

Mack, for 5 minutes.

Mr. MACK. Thank you very much, Mr. Chairman. Thank you for

holding this hearing. I think it is an important topic.

Before I go on with my questions, I just want to relieve you of

some of the pressure you think you are going to feel down the road.

You won’t have to deal with the Affordable Care Act. It is unconstitutional. Either the courts will find it unconstitutional or in the

next Congress, we will repeal it and the next President will sign

that repeal. You can rest assured that you won’t have to deal with

that piece of the puzzle.

It was interesting listening to the conversation today. One of the

things that keeps striking me is why in the world would you put

in place something that would take what the private sector can

do—more affordable, more agility? You think you are under pressure, how about the free market pressure? If these companies don’t

perform, they go out of business. If you don’t perform, you come to

Washington, you ask for more money and you try to make changes.

The pressures in the private world are much greater than any

pressure you might be feeling within the agency.

Why would the Federal Government develop products and offer

services that the private sector can do more efficiently and effectively with greater expertise and at a lower cost to the American

taxpayer? I have seen this in State government, I have seen this
20

here in Washington. It is almost like there is this mentality that

you can do it better when we know that private companies can do

it much better.

Mr. BERRY. First, let me be clear, this is not an attempt to create

a government solution. This is what the CHCO Council recommended and what we have moved forward on. This is a hybrid

solution.

Mr. MACK. I hear you say hybrid, so just because you buy Microsoft servers doesn’t make it a hybrid system. I am sorry. I know

you want to paint this as a hybrid system, but this is something

you have taken in-house and you are developing in-house when

there are private companies who can do this more efficiently, more

effectively, more secure than what you are offering.

The Federal Government has a hard time keeping secrets. Don’t

take my word for it, just look at WikiLeaks. The idea that somehow

we can feel secure that you all have created a system that is going

to be secure.

Mr. BERRY. Sir, we do have a system that is very secure, a Level

IV security that provides all of the background investigations including all of those for the Department of Defense that we manage

at our Boyers facility in Pennsylvania. It is one of the most secure

IT Web sites run in partnership—again, it is another hybrid model.

Mr. MACK. I don’t think the people feel that secure knowing that

you are holding all their information.

To get back to this private sector issue, why would you think you

can do it better when the forces in the private sector are much

stronger?

Mr. BERRY. The core decision was, as in any discussion when the

government undertakes these systems, to define what are core government responsibilities and what are core private sector responsibilities. In this case, protecting the personal information, the resumes, of applicants for Federal jobs was a core governmental responsibility.

Mr. MACK. The private sector cannot do that?

Mr. BERRY. The issues that the private sector encountered over

the past 5 years are a matter of public record. You can see that

they were compromised. It is not a guarantee the security is going

to be protected.

Mr. MACK. The Federal Government hasn’t been compromised in

its ability to keep secrets?

Mr. BERRY. Cyber security is an issue we both wrestle with.

Mr. MACK. What I have heard is you are going to need more

money to keep up with it. Your track record so far on this is not

very good. Let me ask you this. Do you directly require or otherwise force Federal agencies to use the tools and products that OPM

develops?

Mr. BERRY. No, sir.

Mr. MACK. Are agencies penalized on their performance if they

do not use the tools and products?

Mr. BERRY. No, sir.

Mr. MACK. What steps are you taking to ensure agencies don’t

feel compelled to use your products?

Mr. BERRY. Any products we are providing are done through a

competition and agencies are not forced. The reason why I said this
21

was taken to the Chief Human Capital Officers Council was it had

to be adopted by the Council. The Council has to agree to make the

payments of the system. I do not have taxing authority on these

agencies. They are either voluntarily choosing us through a competitive process or in this case, making a decision on creating this

approach, which we undertook, and making the assessments necessary to fund the product. There has been no increase. We were

at $12 million in 2008; we are at $12 million now; and it will be

$12 million next year. There is no increase in terms of cost to this

system.

Mr. MACK. Mr. Chairman, my time has expired, but I applaud

you for taking on this issue because I hear what the gentleman is

saying but I question whether or not this idea that government can

do it better than the private sector is a valid one.

Mr. ROSS. Thank you. The gentleman yields back.

I will now recognize the gentleman from Illinois, Mr. Davis, for

5 minutes.

Mr. DAVIS. Thank you very much, Mr. Chairman, and let me

thank both the witnesses for being here.

Mr. Director, in both you and Mr. McFarland’s written testimony, suggested that most of the improper payments to deceased

annuitants are usually recovered. Mr. McFarland noted that most

of these payments are the result of a retiree passing away just before the payment is made for that month or because there is a

delay by the person’s family in reporting the death. You also talk

about fraud deliberately perpetrated by decedent’s family members.

My questions are can OPM control or prevent these things from

happening and does this mean that there will, in all likelihood, always be a certain amount of overpayment that we would then have

to try to recover?

Mr. BERRY. Mr. Davis, thank you for that question.

First, I think it is important to point out that we are in complete

agreement with the recommendations that the Inspector General

has made regarding this issue and as he mentioned, have implemented 10 of the 14 recommendations and have recovered of the

$500 million that was identified all but $113 million. We are in the

process of pursuing that final $113 million right now.

We take this very seriously. Fraud has to be followed through

but it is important to point out that this is either one-fifth or twofifths of 1 percent is the amount that has been identified that we

are dealing with. It is critically important and we are not going to

tolerate any. Our goal is zero. I also want to point out that it is

a percentage rate that any credit card company, any major fund

manager at that rate is doing a pretty darned good job, but again,

our goal is zero.

We are rapidly implementing the final recommendations that are

still open. The reason they haven’t been closed already is one of

them requires us to work with the banking community, so we are

working through the Treasury Department and the banking community. In fact, maybe this committee could even help in that regard because if we could have easier electronic data transfers between banks who are helping us with these deposits, we could identify these fraudulent activities even faster, but we are implementing them.
22

Mr. DAVIS. I do agree that two-fifths of 1 percent is two-fifths of

1 percent and it is money and it does reflect error but I also think

that it is a pretty good record in comparison to what we know

about this business and the approach to it.

I understand that OPM will be performing computer matching

between OPM’s retirement annuity role and the Social Security

death master file annually and checking on retirees over 90 years

old every other year. Given the resources at your disposal, would

it be possible to conduct the computer matching on a monthly basis

and check with older retirees every quarter or perhaps 6 months?

Mr. BERRY. Mr. Davis, that is a great idea and it is one we are

working on doing and trying to automate it so that we can do that

on a regularized basis to identify and flag where we are having

problems or issues in that regard. The answer is yes, absolutely.

We are working with Social Security and we want to work with

Treasury and financial institutions to do that in an automated way

so we can get that number to zero.

Mr. DAVIS. Do you think it will actually give you the results that

you are seeking and that really works for you?

Mr. BERRY. We have to be careful because what we are talking

about is fraud. There are bad people in the world who we will fix

one way and catch them one way and bad people will invent another, so our goal is zero and we need to be ever vigilant on this.

We work very closely with our Inspector General to maintain that

vigilance, but I think it would be naive to say people won’t be able

to invent other ways that we will have to stay current with. This

is one we can never take our eye off the ball, Mr. Davis. I agree

with you $1 is too much if it is lost through fraud.

Mr. DAVIS. Thank you very much. Thank you, Mr. Chairman.

My father always told us wherever there is a will, there is a way

and bad people will always be looking for the way.

Thank you for your efforts and thank you for your work.

Mr. BERRY. Thank you, Mr. Davis.

Mr. ROSS. Thank you, Mr. Davis.

We will go another round. A couple of questions before I get into

the retirement processing.

It is my understanding that in USA Jobs 3.0, you did consult

with private industry in advance?

Mr. BERRY. Keep in mind that back end of house is all private

sector.

Mr. ROSS. Specifically private information technology companies,

did you consult with them prior to the launch of 3.0?

Mr. BERRY. Mr. Perry, my CIO who was involved can answer

that more accurately.

Mr. PERRY. The answer is yes, we sat down with private companies. We also talked with companies such as Google and so forth

even after post-launch. Going back to Director Berry’s comment on

Microsoft, as you know, most times you deal with a third party

vendor. In the case of USA Jobs 3.0, we dealt with a third party

vendor which was certified by Microsoft throughout the whole process. They are still onboard today. We also supplemented with

Microsoft corporate.

Mr. ROSS. Are you still working with Monster? Did you have

them on contract as well throughout this whole process?
23

Mr. PERRY. They are still on contract through the end of this

month and it is also a bridge contract if we wanted to extend it,

if we needed to do so for data transfer.

Mr. ROSS. Have they been providing any consultant services with

regard to USA Jobs 3.0 or any services whatsoever?

Mr. PERRY. No. They have been very, very supportive, particularly with the data transfer. We had some issues and they helped

us work through all those issues to get the compliance we needed.

Mr. ROSS. Thank you, Mr. Perry.

Director Berry, to go to the other side of this coin, the processing

of the retirement claims, this is the tough one, three and a half

claims a day; 60,000 behind; $120 million in annual payments that

have been misappropriated. The average processing time for a case

is 133 days. If there ever was a case for automation, this is it.

More importantly, it also seems like, while it may be complex

and involve a lot of agencies, the system, the infrastructure by

which claims processing is done for retirement systems, there

ought to be a system already in place at least in the private sector

or somewhere else, so why reinvent the wheel when that wheel

turns out to be a square wheel not moving you along very fast?

Have you looked at other options?

Mr. BERRY. There has been a lot written on the last attempt to

take a private sector solution off the shelf and implement it in the

last administration. Not to point any fingers, it was terminated, so

there have been attempts.

Mr. ROSS. But it is antiquated.

Mr. BERRY. We have looked at that and looked at the lessons

learned.

Mr. ROSS. Transporting by way of truck all these applications,

scanning out to be used.

Mr. BERRY. You are absolutely right. That is something we are

doing. We are scanning documents and we are working with agencies. Mr. Perry, the CIO, has done to his credit, one at least bright

spot, working in our retirement unit, has worked with the agencies

to provide more electronic transfer of the data files in the first

place.

Mr. ROSS. Do you have a business plan in place to bring it up

to date and a deadline on which to bring it up to date?

Mr. BERRY. Not in full yet, sir.

Mr. ROSS. You should do that, shouldn’t you?

Mr. BERRY. Absolutely.

Mr. ROSS. You are the only game in town for these retirees. It

is difficult for them, I imagine, having to wait and not know when

their retirement checks are going to come in, but I would think also

from a business perspective, because I think this is essentially a

business function, you should have in place a business plan as to

how to bring the 60,000 backload up to par and how to automate

it so that this is avoidable. I would hope that is being done.

Mr. BERRY. It is, sir, and part of that is getting that process refinement and the Lean Six Sigma team’s results. Once that is in

place, we are looking at all the three elements of this, additional

resources, which I am going to do within our budget; move resources around prioritizing this knowing it is so critical we will be

ready to handle these issues.
24

Improve the efficiency, you are right, 3.5 is not acceptable, but

keep in mind that is an average. Some cases are very simple. We

are going to break that down. In the past, we have only looked at

an annual number but we will bring that to a monthly number to

increase the accountability and break them into the type of cases

so we can really dog and track where we are having problems and

incentivize for true, outstanding performers who are going above

and beyond, I am happy to pay them. It is a lot cheaper to give

a bonus for that progress.

Mr. ROSS. My concern, to allude to what Mr. Lynch talked about,

we may be having many hearings on this unless there seems to be

some indication that there is going to be resolution of this problem.

Resolution means challenging yourselves to meet a deadline. Plans

become goals when you give them deadlines. I guess what I am

asking are there any deadlines in place to bring this up to date so

that we don’t have this problem?

Mr. BERRY. We will have to you in the very near future the plan

you are discussing. I look forward to coming back and going

through that in great deal with you. We have to tackle this from

a multitude of angles. One is what you mentioned, we have to automate certain parts of this.

Rather than try to automate all of it, if we can automate the

easiest pieces, one of the things we would like to look at is an innovation grant program. The VA has had great success with this. You

identify the problem, you put it out on the internet with a cash

award.

Mr. ROSS. To incentivize.

Mr. BERRY. To incentivize it. Private sector, everybody can respond to that, individuals can respond to it and we can grab the

best idea. We are looking at literally every approach we can take

to have innovation on this problem. Where we are now is not acceptable.

Mr. ROSS. I agree.

Director, my time is up. The distinguished gentleman from Massachusetts, Mr. Lynch, is recognized for 5 minutes.

Mr. LYNCH. Thank you again, Mr. Chairman.

Director Berry, I know in the private sector when we have a situation like this where you have a huge volume of work, it is pretty

standard that companies will reach out and bring back some of

their recent retirees. I know you have had a wave of retirements

from the very people who approve these applications. These folks

are well trained, have been doing this for 20 or 30 years, they know

the system inside and out and now we are short of people.

We have tried to address this issue before where we can call back

some people just until we get rid of this backlog. Since they are already retired, we will just put them back out on retirement again.

It is a very efficient way to do it. They are already cleared for security reasons, they are already familiar with the system. It would

seem that would be the easiest way to move some of these applications.

Mr. BERRY. Mr. Lynch, it is a great idea and it is one we are pursuing and working with retirees that we might be able to bring

back to do just that. The other thing we are doing is, in talking

with my head of retirement services, I made it clear this has to be
25

all hands on deck. We need to look at anybody who has ever processed cases. They might have moved on to a different project or a

different responsibility. Until we get this backlog under control,

they have to go back to doing cases.

As I said, all hands have to look at that and even the Director

of Retirement Services. I said, you may not be able to process a

case yourself, but you can fill in the missing pages from the agency,

get them online and get those papers delivered so the person who

knows it can do it. Everybody has to be involved in fixing this. We

have to get this backlog down, we have to get this to a more reasonable time.

The one bright spot is our accuracy is holding. Even with the

delay, we are running at a 96 to 97 percent accuracy rate which

we regularly test, for all processing. I have told people our goal is

simple. We want accurate service, faster service and I don’t want

backlogs. We have to do that with good customer service.

Mr. LYNCH. Where are we actually doing this work? Physically,

where are we doing it?

Mr. BERRY. Two places, primarily in Boyers, Pennsylvania which

is western Pennsylvania north of Pittsburgh and we also have the

operation for the disability claims here in Washington, DC, and the

retirement operation here.

Mr. LYNCH. How many folks do we folks do we have engaged in

doing this work in Boyers? Do you have a figure on that?

Mr. BERRY. If I could get you the exact figure for the record, we

will give you the exact break out of both work forces in both places.

Mr. LYNCH. Here is what I am getting at. This is a mess and it

can’t continue. It looks like it is going to get worse, so rather than

have that happen, we have to get involved. This committee has to

get involved; this subcommittee has to get involved. We may have

to go out to Boyers and actually figure out what the heck is going

on there and figure out what needs to be fixed because if work does

not get done between hearings, it is just endless.

I would like to get right into the weeds and figure this whole

thing out. I know you and other branches were laying off people at

the IRS. These are qualified employees who have great accounting

backgrounds and probably have all the necessary tools to do this

type of processing.

Rather than lay them off, we could bring them over to this side

to use their skills and abilities to help us with this problem. This

cannot continue. This cannot continue. This is an embarrassment.

We have 60,000 people waiting to retire, to get their applications

retired and it is going to get a lot worse. This is a log jam that is

just going to grow and grow and grow. We have to get our arms

around this thing.

We are trying to help. Maybe with the turnover in folks, we

haven’t really addressed this problem. We are just sort of whistling

through the graveyard here and we need to make this a priority

and get the thing done.

Once it is on an even keel where we can do these things within

30 days, I think the system will run itself, but right now, we have

an unsustainable system. We need to figure it out.

Mr. BERRY. Mr. Lynch, I know the committee’s time is precious

or the committee staff from both sides, I would welcome to join
26

with us as we peel through this onion and come up with our business plan strategy on how we can fix this.

You are exactly right. When you go back to the resource question, it is perplexing to me that someone would reduce all the retirement staff under the presumption that a new system was going

to work and then have the system fail. We never put back those

staff and we continue today, after 31⁄2 years, to wrestle trying to

dig out from that hole.

We hired 40, we lost 5. They fell out through the hiring and

training process, so we have 35 that we are putting on the front

lines. We have to bring on another 40 because as you rightly mentioned, we get 9,600 cases in a month, process about 7,700 a

month. That is a shortfall of 1,900. With the backlog, that is going

to continue to worsen until we can get those numbers right. It is

a combination. I don’t want to say it is all resources; it has to also

be efficiency. We have to drive our employees to be better and

smarter and provide them the training to do that. Some of it is resources and we are going to be stepping up as best we can.

Mr. LYNCH. Thank you, Mr. Director. I appreciate that.

Mr. ROSS. Thank you. The gentleman from Minnesota, Mr.

Walberg, is recognized for 5 minutes—Michigan.

Mr. WALBERG. We are all coal country but I am glad to be from

Michigan.

I apologize for not being here until this point in time, so I would

be delighted to yield any time back to the chairman if he has further questions.

Mr. Berry, I would like to follow up on what I have read, the research we have done on the subject and ask you, do you stand by

your decision to make USA Jobs a hybrid system?

Mr. BERRY. Yes, sir.

Mr. WALBERG. Even with the challenges, the backlog and all of

the frustrations and the sense that we are going backward?

Mr. BERRY. Clearly, as I admitted in the testimony, we could

have done better and I sure wish we had the first week to be different, but where we are now, pick any metric you want, they are

all moving in the right direction. Our help desk tickets are down

from 4,000 to less than 400 yesterday which for a system of this

size, 700,000 contacts a day is a normal usage help desk contact

base. We are projecting that going forward with just normal questions of how do I change my password and etc.

In terms of applications, agencies being able to successfully post

their jobs, applicants successfully file their resumes and compete

for jobs, we are rapidly approaching over 1 million resumes.

Mr. WALBERG. We would not be better off back using a contract

with the private sector?

Mr. BERRY. I think from what we are seeing, this hybrid solution

I think was the right call by the Chief Human Capital Officers

Council. We had a bumpy start, but I think we have put in place

what needs to be done to make this work going forward. We will

obviously keep the committee fully abreast on where we stand with

our metrics but right now, we are moving in the right direction.

I think to go backward would waste an awful lot of resources and

put things into greater confusion. I think right now we are at a
27

place where if we continue our steady progress forward, both the

taxpayer, applicants and agencies will all be well served.

Mr. WALBERG. Thank you, Mr. Chairman. I yield back.

Mr. ROSS. The gentleman yields his time. Just to follow up, with regard to the retirement cases, the $120

million annually that is misappropriated by being paid incorrectly

or inadvertently to others, are you taking any immediate steps to

put a stop to that and if so, what are those steps?

Mr. BERRY. Yes, sir, and I think we go into that in great deal

in the written response. The IG made 14 recommendations. Ten of

them have been fully implemented and we are hard at work implementing the final four.

Mr. ROSS. Including verification?

Mr. BERRY. Doing the verification. Of the $120 million a year, he

mentions looking at a 5-year window a total of about $500 million

that we were wrestling with. We have been after recovering all of

that. We are down to the final $113 million of that $500 million.

As Mr. Davis said, we are not leaving any dollar stone unturned.

I want to point out this is not the result of misfeasance by the

agency. This is fraud, people breaking the law.

Mr. ROSS. They have to assert or affirm that they are alive?

Mr. BERRY. Yes. We want to catch them, we are after catching

them. We have done the automated comparisons with Social Security that the IG recommended. The last piece we are working on

is to work with the banking system so that we can have faster exchange on an automated basis that way because that will allow us

to identify the fraud faster and eliminate it quicker. We are hard

at work at it and I believe that is one we have a good record on.

Mr. ROSS. Thank you, Mr. Berry.

I now recognize the gentleman from Illinois, Mr. Davis, for 5

minutes.

Mr. DAVIS. Thank you, Mr. Chairman.

Director Berry, you testified that OPM plans to address the retirement claims backlog in 18 months. I believe there are currently

60,000 cases, I am told, in the backlog. Is that right?

Mr. BERRY. Yes, sir.

Mr. DAVIS. I also understand that OPM receives approximately

100,000 claims a year, not including early outs and buyouts. OPM

has had a backlog of cases for years and the agency has tried for

24 years to automate its retirement claims processing system. That

said, I also understand you have shifted resources to hire additional personnel, completed training of certified legal administrative specialists, started work on an online application and been

able to reduce average case processing times from 138 days last

year to 125 days this year, using existing staffing capabilities. Nevertheless, the problem still exists, is that correct?

Mr. BERRY. Yes, sir, and we still have a backlog that we have

to resolve.

Mr. DAVIS. Could you tell us how many total staff you now have

working on retirement claims?

Mr. BERRY. If I could, Mr. Davis, as Mr. Lynch requested, we will

give you an exact breakdown not only of the current staff but

where they work between our Pennsylvania operation and our D.C.

operation on retirement.
28

Mr. DAVIS. Do you think we will get to the point where we see

light at the end of the tunnel? It is obviously perplexing and we

have some distance to go. How do you project that we will end up?

Mr. BERRY. I think there are four key elements and they will be

the pillars in the chairman’s business plan that we are trying to

craft. Some of it is improving our process and that goes to the Lean

Six Sigma Team we discussed. Some of it goes to holding our accountability for our performance, improving our efficiency, having

our employees do more and more accurately. Some of it goes to resources that we have discussed with Mr. Lynch. Finally, some of

it goes to agency connectivity which we are trying to improve

through an automated basis.

Right now, about 20 percent of the cases that we get from the

agencies are incomplete. One of the reasons we can’t begin processing to adjudicate that claim is we are missing pieces of the file.

We have to go back and reconstruct it and that takes time. To the

extent we can work with agencies to resolve that and have retirees

work with their agency, if they have the luxury of knowing their

retirement is coming, to help make sure their file is complete and

accurate because that greatly expedites the time in which we can

process those claims.

I think those are the four pillars—better agency cooperation and

connectivity; better performance and accountability; better process,

doing the process simpler and smarter; and the right level of resources which is going to require us quite frankly to put more bodies on this. Until we have some of these IT solutions in place, we

cannot kid ourselves, this is a paper/pencil process. It is going to

take more people.

Mr. DAVIS. Let me appreciate everything that you are trying. Especially, I appreciate the last mentioned, in terms of the right level

of resources. I understand you just cannot get blood out of a turnip.

You can squeeze, you can tease it, you can do all that you can do,

but you still end up with turnip juice. As we go through this process of cutting and eliminating and trying to figure out how we approach budgeting and spending, I think if we want certain results,

in some instances we are going to have to bite the bullet, put the

resources in and then our expectations can be real in terms of what

we get.

Let me thank you for your efforts. I yield back, Mr. Chairman.

Mr. ROSS. Thank you. The gentleman yields.

We will conclude our first panel. Director Berry and Mr. Perry,

thank you both for being here. We look forward to continuing to

work with you hopefully to a satisfactory resolution.

Mr. BERRY. Mr. Chairman, thank you. It is an honor always to

be with you.

Mr. ROSS. Thank you.

We will take a brief recess for the clerks to prepare for the next

panel.

[Recess.]

Mr. ROSS. I am pleased to introduce the Honorable Patrick

McFarland, Inspector General, Office of Personnel Management,

accompanied by Mr. Jeffrey Cole, OPM’s Deputy Inspector General

for Audits. We also have Mr. Tamburrino, Deputy Assistant Secretary of Defense for Civilian Personnel Policy. We have Ms. Val-
29

erie Melvin, Director, Information Management and Human Capital Issues for the Government Accountability Office. We have Mr.

Patrick Manzo, executive vice president, Global Customer Service

and chief privacy officer, Monster Worldwide. We have Mr. Mark

Conway, senior vice president and chief information officer, Monster Worldwide.

Panelists, again pursuant to committee rules, if you would all

stand and be sworn. Raise your right hands.

[Witnesses sworn.]

Mr. ROSS. Let the record reflect that all the witnesses answered

in the affirmative.

I understand we have four statements, so I will ask you to limit

your opening statement to 5 minutes. Your written statement has

been entered into the record today.

With that, Mr. McFarland, I will recognize you for 5 minutes for

an opening statement.

STATEMENTS OF PATRICK E. MCFARLAND, INSPECTOR GENERAL, U.S. OFFICE OF PERSONNEL MANAGEMENT, ACCOMPANIED BY JEFFREY COLE, DEPUTY ASSISTANT INSPECTOR

GENERAL FOR AUDITS, U.S. OFFICE OF PERSONNEL MANAGEMENT; PASQUALE M. TAMBURRINO, JR., DEPUTY ASSISTANT SECRETARY OF DEFENSE FOR CIVILIAN PERSONNEL

POLICY, U.S DEPARTMENT OF DEFENSE; VALERIE C. MELVIN, DIRECTOR, INFORMATION MANAGEMENT AND HUMAN

CAPITAL ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; PATRICK W. MANZO, EXECUTIVE VICE PRESIDENT,

GLOBAL CUSTOMER SERVICE AND CHIEF PRIVACY OFFICER, MONSTER WORLDWIDE, INC., ACCOMPANIED BY MARK

CONWAY, SENIOR VICE PRESIDENT AND CHIEF INFORMATION OFFICER, MONSTER WORLDWIDE, INC.

STATEMENT OF PATRICK E. MCFARLAND

Mr. MCFARLAND. Good morning, Chairman Ross, Ranking Member Lynch, and members of the subcommittee.

My name is Patrick McFarland and I am the Inspector General

of the U.S. Office of Personnel Management. Thank you for inviting

me.

I will be discussing how OPM implements and utilizes IT policies

and systems on an agency-wide basis.

The first issue that must be examined is how OPM develops its

IT systems. Building an IT system must be done in a very deliberate, structured and methodical manner that takes budgeting, development and subsequent maintenance, testing, risk analysis and

security protections of the IT system into account.

Such processes are important because it is easier and much more

efficient to invest the time and resources necessary to develop the

right procedures to use going forward than it is to go back and fix

problems after they occur. In our estimation, OPM has encountered

difficulty in this area because it sometimes lacks the needed, dedicated expertise to properly oversee the development of agency IT

systems projects.

I know that the subcommittee is particularly interested in the recent in-house implementation of USA Jobs 3.0. We too have con-
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cerns but we have not yet had an opportunity to review OPM’s implementation process. Therefore, during the fiscal year, we intend

to conduct two audits of the USA Jobs system.

The first audit, for which we are already planning, will evaluate

whether appropriate IT security controls exist to minimize the risk

of security breaches. The second audit will review whether OPM

followed systems development life cycle procedures properly.

Another area of concern for us is OPM’s IT security governance.

While improvements have been made over the last year, OPM’s IT

security program still operates in a highly decentralized manner

that has proven to be ineffective. The CIO and OPM’s program offices share responsibility for IT security. In practice, this has

meant that the program offices manage most aspects of IT security

and the CIO provides mainly policy development and oversight.

This is problematic because OPM program offices tend to focus

their resources and efforts on operational issues and make IT security a secondary concern. Consequently, we continue to recommend

that the CIO be given the resources necessary to centralize the responsibility for the security of OPM IT systems.

I would like to remind the subcommittee that IT matters are neither the source of, nor the solution to, all of OPM’s problems related to its core functions. I am particularly troubled by OPM’s continuing pattern of making improper payments to deceased annuitants. Instead of spending resources on recovering those improperly paid funds, OPM should instead be focusing on preventing

these payments from being made in the first place.

My office issued reports in 2005, 2006, 2008, and 2011 to the

OPM directors that expressed concern and made recommendations

about how to prevent improper payments. A 2011 report noted that

improper payments to deceased annuitants had reached $120 million annually over the last 5 years. While only a portion of this

amount represents long-term improper payments, these payments

are the most problematic because our experience is that these improper payments usually cannot be recovered.

As an example, our report noted the case of an annuitant’s son

who continued to receive benefits until 2008, 37 years after his father’s death in 1971. The improper payment in this case exceeded

$515,000 and was reported to OPM only when the son died. None

of these funds could be recovered.

We have worked closely with the agency in working groups comprised of OIG staff and OPM program officials. This has resulted

in a number of recommendations, many of which OPM has implemented. However, such actions have proven to be only partial remedies to a systemic problem.

OPM must continue to adapt to an increasingly automated world.

We have been working with Director Berry to prevent these improper payments and will continue to do so in the future. We particularly appreciate his proactive support.

Thank you again for inviting me today and we would be happy

to answer any questions.

[The prepared statement of Mr. McFarland follows:]
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Mr. ROSS. Thank you, gentlemen.

Mr. Tamburrino, you are recognized for 5 minutes for an opening.

STATEMENT OF PASQUALE M. TAMBURRINO, JR.

Mr. TAMBURRINO. Chairman Ross, Ranking Member Lynch, and

members of the subcommittee, on behalf of the Secretary of Defense, Leon E. Panetta, thank you for inviting the Department of

Defense to appear at this hearing to discuss the U.S. Office of Personnel Management’s efforts to modernize the Federal Government’s hiring and retirement claims system.

My testimony today includes background regarding DoD’s participation in the USA Jobs 3.0 project and the context for DoD’s decision to support that effort. I am also pleased to testify regarding

DoD’s retirement practice.

DoD is one of the world’s largest civilian employers with close to

1 million civil servants proudly supporting our warfighters. The

high volume of hiring actions that passes through DoD each year

underscores the importance of USA Jobs and its ability to improve

hiring time lines.

We processed approximately 245,000 civilian hiring actions in fiscal 2010 and 200,000 actions in fiscal 2011. These numbers include

transfers, promotions, reassignments and other actions. DoD has

made great strides in reforming the hiring process by reducing hiring timelines, streamlining the hiring process and focusing on efficient hiring practices.

We have embraced the President’s hiring reform initiatives and

successfully implemented measures to improve the applicant and

hiring manager experience attracting and obtaining top talent and

improving the hiring timelines.

In fiscal year 2009, DoD’s average time to complete a competitive

hire, the focus of the President’s mandate, was estimated at 155

days. In fiscal 2011, the reported average time line was 107 days,

a 31 percent reduction from 2009. We have improved our hiring

time lines in all categories. All the trend lines are moving in the

right direction with the time lines for all types of hires now standing at 72 days.

A key component of DoD’s hiring reform efforts is a focus on improving the enterprise automation that supports our hiring and

staffing processes. As OPM’s hiring reform initiatives began, the

Chief Human Capital Officers Council commissioned a study to improve the entire Federal hiring infrastructure, including USA Jobs.

DoD participated in that study and has been a full partner with

OPM throughout the USA Jobs 3.0 design and development process.

The issues experienced with deployment of USA Jobs are not unlike the complexity of the issues I have experienced as a major defense acquisition program executive. While we experience significant challenges at the start, DoD, in partnership with OPM, confronted these challenges quickly and effectively. Our hiring efforts

have not been hampered by the deployment of USA Jobs 3.0. Our

decision was and continues to be to stay the course with OPM as

our goal of consistently posting announcements with confidence to

reach high quality job seekers is being realized.
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Turning to the issue of retirement processing, in the mid-1990’s,

DoD began to consolidate benefits processing and all of our components by maximizing the use of automation and technology. We

currently have three regional benefits centers which perform processing for most of the DoD work force and collectively process approximately 24,000 retirements a year.

These centers are very successful due to the hard work of the regional benefit advisors and the front line human resource specialists providing service to our customers. Over the past several year,

DoD has consistently exceeded OPM’s aging of separation performance requirement with the timely processing of retirement claims.

While we acknowledge that some employees have experienced

delays in having their claims adjudicated, OPM is partnering with

DoD and other Federal agencies to transform business processes

for accurate and expeditious processing of retirement claims.

DoD is committed to sustaining our efforts to attracting the highest quality and caliber applicants, providing hiring managers a superior set of tools to meet their hiring needs and sustaining a flexible set of information technology tools that can be modernized as

needed.

We look forward to sustaining our partnership with OPM in this

regard. Thank you again for the opportunity to speak with you on

these important topics. I am pleased to take your questions.

[The prepared statement of Mr. Tamburrino follows:]
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Mr. ROSS. Thank you, Mr. Tamburrino.

Ms. Melvin, you are recognized for 5 minutes for an opening.

STATEMENT OF VALERIE C. MELVIN

Ms. MELVIN. Good morning, Mr. Chairman, Ranking Member

Lynch, and members of the subcommittee.

Thank you for inviting me to testify at today’s hearing on OPM’s

modernization of its hiring and retirement systems which, as you

have noted, are essential to ensuring an effective Federal work

force.

I will start by saying that we have not examined the USA Jobs

initiative that is being discussed today. However, we have previously issued several reports on OPM’s initiatives to modernize its

retirement processing capabilities and at your request, I will briefly

summarize our findings from those reports.

Over approximately two decades beginning in 1987, OPM attempted to modernize its Federal employee retirement process by

automating paper-based processes and replacing its antiquated information systems. However, its efforts were largely unsuccessful

as has been noted.

Our studies found that the agency was hindered by weaknesses

in a number of important management disciplines that are essential to successful IT modernization. These included project management, risk management and organizational change management.

For example, in reporting on the agency’s efforts in 2005, we noted

that while it had defined major retirement modernization system

components, OPM had not identified the deficiencies among them,

thus increasing the risk that delays in one project activity could

hinder progress in others.

OPM also did not have a process for identifying and tracking

project risk and mitigation strategies on a regular basis and it did

not have a plan that would help users transition to different job responsibilities after deployment of a new system. These deficiencies

existed over many years in which OPM planned, analyzed and redirected the program, but without delivering the modernized capabilities.

In 2008, as the agency was on the verge of deploying a system,

we raised other management concerns and offered recommendations for improvement. Specifically, test results 1 month prior to

deploying a major system component showed that it had not performed as intended. Also, defects and a compressed testing schedule increased the risk that the deployed system would not work as

planned.

Further, the cost estimate that OPM had developed was not supported by documentation needed to establish its reliability. Finally,

the baseline against which OPM was measuring program progress

did not reflect the full scope of the project, meaning that variances

from planned performance would not be identified.

OPM nonetheless deployed a limited version of the modernized

system in February 2008. However, the system did not work as expected and the agency suspended its operation and began restructuring the modernized program.

In April 2009, we again reported on the initiative, noting that

the agency still remained far from achieving the capabilities it had
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envisioned. Significant weaknesses continued to exist in the previously identified areas and we noted additional weaknesses as

well. Specifically, OPM lacked a plan describing how the program

would proceed after terminating the earlier system’s contract. It

lacked a fully functioning oversight body to monitor its modernization projects.

To its credit, OPM agreed with all of our recommendations and

it did take some steps toward addressing them. Ultimately, however, it terminated the retirement modernization program in February 2011. It has since stated that it does not plan to undertake

another large scale modernization effort. Instead, it plans to take

targeted steps to improve retirement processing such as hiring new

staff and working to improve data quality.

Even as it takes these more modest steps, however, it is essential

that OPM fully address the deficiencies and institutionalize the

management capabilities highlighted in our studies. Without doing

so, the agency will not be effectively positioned to ensure the success of any future retirement or other system modernization

projects that it pursues.

This concludes the summary of my statement. I look forward to

your questions.

[The prepared statement of Ms. Melvin follows:]
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Mr. ROSS. Thank you, Ms. Melvin.

Mr. Manzo, you are recognized for 5 minutes for an opening.

STATEMENT OF PATRICK MANZO

Mr. MANZO. Chairman Ross, Ranking Member Lynch, and members of the subcommittee, thank you for the opportunity to address

the quality and indisputable value that companies like Monster

bring to the online recruiting process.

My name is Patrick Manzo. With me is my colleague, Mark

Conway, Monster’s chief information officer.

Our national unemployment rate is 9 percent. In certain regions

and among veterans, that number is significantly higher. Putting

unemployed Americans back to work is our number one national

priority. To meet the challenge, we must create jobs and we must

fill them with the right people.

Even today many jobs in both the public and private sectors go

unfilled month after month. As you evaluate the Federal Government’s hiring system and its capability, do so by comparison with

the market. Best reach services reside in the public sector where

competitive pressure stimulates innovation and the cost of creating

new technology is spread over a broad customer base. This is certainly the case with our company.

Over the last several years, we have invested hundreds of millions of dollars to bring to market significant new technology and

to streamline the hiring process. Most employers conduct the bulk

of their recruiting activity online, leveraging the reach, tools and

efficiency that the Internet offers.

Monster employs over 2,000 people in the United States, we pioneered the business of digital recruiting in 1994, and today, we are

the only online recruitment provider able to serve customers on a

truly global basis. Our flagship site serves millions of job seekers

and tens of thousands of employers monthly with the most advanced set of tools in the industry. Every month job seekers conduct more than 100 million job searches, view more than 70 million

jobs and post hundreds of thousands of resumes.

An enterprise class online recruiting system like Monster’s must

have three key attributes: broad reach, precision search and a robust infrastructure. I will speak to each.

Reach is the ability to address and engage the right audience at

the right time. Every month, the Monster brand reaches a significant portion of the U.S. Internet population and is shown billions

of times across our networks and those of our partners. It is no accident. We invest in search engine optimization and search engine

marketing to extend our reach to key search engines where many

job seekers begin their search.

We have developed Apple IOS and android mobile device applications. We have created technology that allows us to syndicate a job

posting all over the Web thereby reaching passive candidates who

may not be actively seeking a new position or visiting job works.

We recently launched Beknown our professional network on

Facebook that allows users to connect with their professional contacts, grow their network and discover new career opportunities.

Reach is about achieving depth and breadth of all human diversity. For employers, reach broadens the talent pool. For seekers,
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greater volume and diversity of job postings provides an improved

chance of finding that next great opportunity. Without competent

search, however, this all adds up to a larger haystack.

Search is the paramount virtue of any online job resource and is

a necessary complement to reach. Most job search engines take an

old school approach, searching based on key words. They rely on

the skill of the seeker to guess the right key words. Even then, it

is likely that thousands of job postings will contain those key words

and therefore be a match.

To address these issues we invested over $100 million to launch

our new semantic search engine. We have taught our search engine

to understand the content and context of search queries. Rather

than searching for key words, semantic search understands the

meaning or concepts behind the words and the context in which

they appear. The benefit is more accurate, precise results, a better

ability to find the right candidate or job, the needle, if you will, in

the haystack.

The modern job search infrastructure must be stable, secure and

interoperate with other technology. Today’s job seekers expect site

availability 24 hours a day, 7 days a week. To provide this capability, Monster has three redundant data centers allowing the stop

rate at 99.999 percent up time or five nines availability.

Security is a key focus for Monster and an area where we have

made significant investments. The security of any system is the

function of the measures in place to protect the data, not whether

that data is located on a government computer system or a commercial computer system.

No security solution is bullet proof but we believe that our system of layered defenses, sophisticated technical measures, but also

human analysts provides industry leading security. Our customers

use many different technologies to access our services. To accommodate this integration, we offer a robust set of tools that tens of

thousands of customers use on a monthly basis to conduct millions

of monthly transactions with Monster.

To meet the challenges facing our country, our government must

have the right tools to hire citizens with the right skills for government service. There is significant innovation underway in the marketplace. We must ensure that the Federal Government is

leveraging the solutions that provide the best possible reach,

search capability and site infrastructure to acquire the best talent.

Thank you and I would be happy to answer any of your questions.

[The prepared statement of Mr. Manzo follows:]
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Mr. ROSS. Thank you, Mr. Manzo.

I will recognize myself for 5 minutes of questions.

Mr. Manzo, you heard Director Berry testify here earlier and my

concern was with the 5-year contract that existed between Monster

and OPM prior to USA Jobs 3.0. My biggest concern was flexibility.

It appeared as though, according to Director Berry, that there was

no flexibility to make modifications or to adapt to any changes. Is

that your understanding?

Mr. MANZO. That is not my understanding. I would like to ask

my colleague to speak to the details of that.

Mr. ROSS. Please, Mr. Conway.

Mr. CONWAY. During the course of the contract, we made numerous enhancements to USA Jobs working in conjunction with OPM.

One example is we redesigned and relaunched the site in January

2010 with a new look and feel, a new functionality for USA Jobs

working in conjunction with OPM.

Mr. ROSS. That was done as a renegotiation to the original contract?

Mr. CONWAY. That work was part of the base contract.

Mr. ROSS. So there was no change in cost to OPM as a result of

that?

Mr. CONWAY. No.

Mr. ROSS. It was all part and parcel of the intended agreement?

Mr. CONWAY. Correct.

Mr. ROSS. Mr. Manzo, do you have a market research department?

Mr. MANZO. We do have a research department.

Mr. ROSS. That would want to know what the end users are

seeking and how best to perform the service they are seeking?

Mr. MANZO. We do a lot of work in this regard. I can tell you

that we do regular market surveys of our customers, both employers and job seekers.

Mr. ROSS. That is important, isn’t it?

Mr. MANZO. That is how we know if we are doing a good job or

not.

Mr. ROSS. With regard to whether the resources you are using

are adequate, I would assume you have a research and development department as well?

Mr. MANZO. We have a Product and Technology Division that, as

I mentioned previously, we spend several hundred million dollars

a year in order to develop and bring the market new products and

to upgrade our site infrastructure.

Mr. ROSS. You can handle over, how many did you say, 100 million applicants?

Mr. MANZO. Every month, we will host about 14 or 15 million

unique visitors to our site. Those folks will conduct about 100 million searches, view about 70 million jobs and post hundreds of

thousands of resumes. These are monthly averages.

Mr. ROSS. Would it be safe to say that Monster.com is the largest

human resource applicant search engine out there?

Mr. MANZO. We believe, if you look at this from a global perspective, that we are the largest and most significant in the world.

Mr. ROSS. Leading up to the change to USA Jobs 3.0, Monster

was providing this service for OPM. Were there any problems at
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that time with the service you were providing, that you are aware

of?

Mr. MANZO. If you are asking during the period, I think we overall provided a service that served the Federal Government’s needs.

We are proud of the job that we did.

Mr. ROSS. You raised security as one of your significant points.

I think the security issues that have been raised by Members up

here are you may be susceptible to hacking whereas the Federal

Government isn’t, which I think is not necessarily correct. I also

understand that security breaches that occurred with Monster were

self reported and self corrected, is that correct?

Mr. MANZO. Mr. Chairman, I am glad you raised the issue. Director Berry is correct that those matters are matters of public record.

They are matters of public record in large part because we did a

lot to put them into the public eye. In each of those cases, we

proactively reached out to Federal Government agencies, in this

case, the Federal Trade Commission. We also spoke to law enforcement agencies, relevant State Attorneys General and we also spoke

proactively to our customers because we felt that it was important

and part of our obligation.

Security is important and I think we need to think about it and

keep it in the proper context. Just because data is on a government

computer system does not mean that it is safer than on a commercial computer system. I think there have been lots of public

breaches of government computer systems and underscore that

point.

What makes data safe or unsafe are the measures put in place

to protect that. We believe that a layered defense system is critical

and that involves both IT security steps, things like encryption,

making sure you using secure coding and development practices.

Mr. ROSS. Your security has taken great steps since these initial

breaches?

Mr. MANZO. I think we have learned from our mistakes. I think

those events, however painful, have helped us to become better and

understand more about the environment. It is something in which

we significantly invest and I think we advance our skills in this

area on a regular basis.

Mr. ROSS. I have one last question to you. Do you believe that

Monster.com can provide the service that is being demanded and

expected by those applying for Federal Government employment

better than and within budget of OPM’s current USA Jobs 3.0?

Mr. MANZO. We do believe that.

Mr. ROSS. Thank you.

Ms. Melvin, with regard to the retirement system, what steps

should OPM take at this point? They have discontinued their $100

million failure, three and a half claims per day is absolutely unacceptable. Do you have any recommendations they initially need to

take to try to automate this and reach a point where they can get

caught up and not have to worry about being so backlogged and inefficient?

Ms. MELVIN. First of all, I would start by saying I think it was

actually a good step for OPM to step away from the modernization

effort that it was undertaking. After 20 plus years, it obviously was
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not working and obviously indicated that there were underlying deficiencies in the approach they were taking.

Our biggest concern has been that OPM lacks an overall management structure, if you will, IT management capability in terms of

the fundamental tools or mechanisms for really planning and managing.

In the first panel, one of the points of discussion was about the

need for OPM to develop a plan for moving forward. I think that

is a critical step they have to take, but in saying they have to develop a plan, I think it is important that they also look at the mistakes of the past efforts they have had.

It is important to really be able to draw from those experiences

and incorporate that into whatever planning they undertake. It is

not just about planning the system itself and the different components that go into it. It is about understanding what their overall

needs are. A large part of that is in terms of the IT capability they

have from a human capital standpoint to really not only lead, but

to undertake that type of initiative going forward.

Mr. ROSS. Thank you.

I see my time is up. I will now recognize the gentleman from

Massachusetts, the ranking member, Mr. Lynch.

Mr. LYNCH. Thank you, Mr. Chairman.

I want to welcome Mr. Manzo. I understand he is a constituent

of mine. We are doing redistricting right now but at 1 p.m., Walpole will be back in my district.

Mr. MANZO. I am pleased to hear that.

Mr. LYNCH. That might not be a good thing from your standpoint

based on my concern around these contracts, but I certainly appreciate you and all our witnesses being here.

I have information and data on the Federal Employee Retirement System and the problems with the network with regard to

that program. The USA Jobs Web site has been live for 30 days

and my Inspector General, Ms. Melvin and Mr. McFarland, have

not had a chance to review that.

In sort of an equal opportunity criticism, that program has been

messed up since I think Ms. Melvin you said this was a 20 year

effort, so that would have gone back to the first George Bush administration right through Clinton, through George W. Bush and

continuing today with President Obama. There is equal opportunity

for criticism and that Federal Employee Retirement System has

not worked properly, so it is not a partisan criticism of Mr. Berry

who appeared earlier.

Mr. McFarland, I read with great interest your testimony today.

I wanted to talk about these folks that are deceased for 20 or 30

years and are still getting annuity checks, their loved ones are. As

Mr. Chairman has pointed out, at times this is about $120 million

a year but many of those are late notices. A person will pass away

and there will still be a few checks sent out. It might take 60 to

90 days for a person to notify the retirement system that there has

been a death in the family. Most of that gets back but you still

have a fairly significant number of people that are forging signatures for decades.

You filed a report and I think it has a lot of great points. I want

to ask you about some of those points. To stop these people from
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committing fraud against the retirement system by collecting the

checks of their deceased loved ones, you recommended computer

matching with Social Security’s death master file. If they are not

getting their social security and we know they are deceased, we

ought to be able to cross reference that with the Federal Employee

Retirement System. How is that working right now?

Mr. MCFARLAND. Right now, the process is ongoing. It has been

for quite a while as far as weekly batch checks.

Mr. LYNCH. Can the chairman and I get a report on how we are

doing on that? Because I want to know how many folks we uncover

by the cross matching process with Social Security’s death file.

Mr. MCFARLAND. Sure we can.

Mr. LYNCH. You also recommend increasing contact which I

guess you do a random contact process with a number of recipients

to try to elicit responses to find out who is alive and who isn’t, who

is legally receiving checks and who isn’t. How is that process going?

Mr. MCFARLAND. We recommended the over 90 process and the

over 100 process.

Mr. LYNCH. These are recipients who are over 90 or 100?

Mr. MCFARLAND. Yes, that is correct. That paid good dividends

for us.

Mr. LYNCH. Likely suspects, I guess.

Mr. MCFARLAND. Pardon me?

Mr. LYNCH. They are likely suspects, over 90 or 100.

Mr. MCFARLAND. The determination is to see if they are still living. That way we can get right to the heart of the matter.

Mr. LYNCH. Can the chairman and I get a report on that as well?

Mr. MCFARLAND. Absolutely.

Mr. LYNCH. That seems like something that might bear fruit.

You also recommended an analysis of undeliverable correspondence. You mail out something and it comes back, a 1099, is that

what you are doing?

Mr. MCFARLAND. Yes, 1099Rs, yes. When they come back, right

now there is a backlog of 33,000 that have been returned. The process to go through that is not being attained.

Mr. LYNCH. Is there any way we could use some resources from

the Post Office to sort of confirm that? Because 33,000 is a lot to

go through.

Mr. MCFARLAND. It is a lot to go through but I don’t know that

the Post Office is the answer in this particular case. I think clearly

the problem lies with the process in OPM.

Mr. LYNCH. Once we don’t get a response, once the mail comes

back, we don’t suspend, we just keep paying them?

Mr. MCFARLAND. Well, no. Sometimes they are suspended if we

have enough information but the first time back, if we receive a letter that comes back for that reason, then it is in a stockpile of

33,000.

Mr. LYNCH. Maybe we have to expedite the process for cutting

off those folks.

The last recommendation you made is cross checking with these

financial institutions where some of these checks are being deposited.

Mr. MCFARLAND. Yes.
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Mr. LYNCH. How is that going? Are there any roadblocks or obstructions to getting back that money or uncovering fraud?

Mr. MCFARLAND. There is no particular road block to getting it

back, let me just explain something that might give a very good

picture. The last report we did was intended.

Mr. LYNCH. This was 2011?

Mr. MCFARLAND. Yes. It was really intended to manage expectations. By that, I mean it was our way of telling the Director that

it is time to stop the piecemeal approach to this and to obtain the

proper amount of funding and subject matter experts, put them in

their own office and let them do this job.

What has happened for years is there will be an effort on the

program’s part to find this money, but it lacks so much because

their impetus is to get the check out which is fine, that is a big

part of the job, but there is very little inclination to work busily

to recover the funds. It has to be a new program area that is dedicated to that. That has come to us after so many attempts to piecemeal this thing together and it just isn’t working.

Mr. LYNCH. Mr. McFarland, thank you very much for your hard

work and your testimony and I appreciate the indulgence of the

chairman. Thank you.

Mr. ROSS. I now recognize the gentleman from Michigan, home

of the Detroit Tigers, Mr. Walberg, and I must admit, the Lions,

even with the last couple of games.

Mr. WALBERG. Thank you, Mr. Chairman.

Following up on the last few statements of Director Berry, I

would like to ask for comments from Mr. McFarland as well as Ms.

Melvin.

Director Berry stated that all metrics are moving in the right direction for USA Jobs 3.0. Do you agree, Mr. McFarland?

Mr. MCFARLAND. We haven’t had time to review the implementation. We are planning to do penetration testing, an audit group we

are bringing, a specialized group to do this, and then we are going

to do systems development life cycle review by ourselves. Once we

do that, we can answer your question, but right now, I cannot.

Mr. WALBERG. Ms. Melvin, are the metrics going in the right direction?

Ms. MELVIN. We too have not looked at USA Jobs. I would say,

however, that metrics are extremely important and it will be critical that there be metrics in place such as Mr. McFarland has indicated, but I couldn’t tell you at this point how effective the ones

they have are.

I can say, however, it would be extremely important for them to

articulate specific metrics and be able to report on the success of

those metrics.

Mr. WALBERG. Mr. Manzo, any comments on that from your professional position?

Mr. MANZO. I am not in a position to assess or verify any metrics

that OPM may have related to the performance of USA Jobs. I cannot comment.

Mr. WALBERG. Let me ask you then, Mr. Manzo or Mr. Conway,

in your professional opinions, what should ideal private/public partnerships look like relating to the Federal Government IT?
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Mr. MANZO. I will take a stab at that. I think it is clear that best

of reach services reside in many cases, particularly in technical

areas, in the private marketplace. That is because there is significant commercial competition, much broader customer bases over

which to spread the cost of developing these new technologies.

What the government needs to do is figure out what is the best

technology and how do we apply this technology to get the best results for the lowest cost. Director Berry made the point that there

are certain things that are inherently governmental. We don’t

think that hosting the Federal Government’s hiring system falls

into that category. We think the private sector is imminently well

suited to do this job and do this job cost effectively, efficiently and

to provide significant continuing value going forward.

In terms of developing one of these systems and in terms of looking at the cost, we need to look not only at the cost to set it up

and run it, we need to look at the continuing research and development costs to make sure that system keeps pace with development

and new technologies that are available.

Mr. WALBERG. That is where the private sector comes in best?

Mr. MANZO. That would be our belief, yes.

Mr. WALBERG. Ms. Melvin, you state in your testimony that OPM

agreed with your recommendations on the retirement system. Yet

they did not implement those recommendations. Why didn’t they?

Ms. MELVIN. We actually had about 19 recommendations and

they were specific to the retirement system modernization. In fact,

they began to take actions. They agreed with all those recommendations and did begin to take some steps toward addressing

them. For example, in the 2005 timeframe of our study, we noted

some concerns with, for example, security planning and requirements. When we came back in 2008, we saw they had taken some

actions and that is one example.

However, the bigger concern we have is that the types of recommendations we made while they were driven by our work looking at the retirement system’s modernization and are recommendations that apply more broadly. I mentioned in my previous statement that it is important that they have underlying IT management capabilities and controls in place. Across the 19 or so recommendations we have made, they constitute fundamental aspects

of having strong IT management.

What we did not see was the capability of the agency to move

in the direction of actually getting a robust and institutionalized

management capability in place that would incorporate the various

aspects of IT management that we noted.

Mr. WALBERG. Again, any reason why they didn’t move fully in

the direction that you recommended?

Ms. MELVIN. That would actually be a question better posed to

OPM, but what I can say from our work was that we saw them trying. We did not see, however, necessarily the capability there in

terms of really having a strong understanding perhaps of what

some of the deficiencies were, the implications or significance of the

deficiencies.

Mr. WALBERG. I would assume that capability still isn’t there?

Ms. MELVIN. We haven’t been in since 2009 to look at it, but

across our followup work, we have seen they have attempted to
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make some changes. For example, when we were doing our work

in the 2008 timeframe and before, the chief information officer was

not a part of the overall efforts being made to put the retirement

system’s modernization in place. We saw that individual standing

on the outside, so to speak, of the process that was being undertaken.

When we were there in 2009, however, the current CIO was a

more active player. We did see them taking some steps to have

their oversight body more actively involved. I would be cautious because we have not looked and I would not want to imply that they

have a full capability at this point to move forward based on our

past work.

Mr. WALBERG. Thank you. I see my time has expired.

Mr. ROSS. Thank you, Mr. Walberg.

I will now recognize the gentleman from Illinois, Mr. Davis, for

5 minutes.

Mr. DAVIS. Thank you very much, Mr. Chairman.

As a result of budget cuts, many agencies have announced plans

to offer early retirement and buyouts to employees including the

Postal Service, NASA, the Internal Revenue Service, the Government Accountability Office and the Department of Defense and its

subcomponents such as the Army and the Air Force.

Mr. Tamburrino, could you tell us how many positions has the

Department of Defense offered for early outs and buyouts and how

many more early retirements and buyouts does the Department of

Defense anticipate offering in the next year?

Mr. TAMBURRINO. Thank you for that question. I will have to get

back to you with the exact numbers. All the components have the

authority. We can provide for the record what the actual take rate

is to date for fiscal year 2011 and what is planned for 2012. Most

of our uniformed services are trying to place people as opposed to

doing any more draconian action, and offer them as an alternative.

We will give you the specific numbers.

Mr. DAVIS. Mr. McFarland and Ms. Melvin, given what we know,

what impact do you think the early outs and buyouts would have

on OPM’s ability to reduce the retirement claims backlog?

Ms. MELVIN. Based on what I heard today, I would say any future increases in the retirement backlog would only stand to continue to make their effort much more difficult in terms of processing the claims they have.

Mr. MCFARLAND. I agree with that.

Mr. DAVIS. Would you think that OPM might need additional resources to handle the workload to clear these up?

Ms. MELVIN. My work has not looked at their programmatic

human capital resources. It has focused only on the information

technology aspects of what they have done, so I don’t have information to really provide a response that I think would be credible.

Mr. DAVIS. Mr. Tamburrino, let me ask you do you think that the

agencies themselves should pay for the activity to clear these up

or might there be some other way to get the resources?

Mr. TAMBURRINO. We share the concern for the delay in processing retirement. I have suggested to Director Berry some alternatives for how to do this. I look forward to talking with them

about that more.
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As far as a fee for service, that is not a cost sharing agreement

that was foreign to the Department of Defense. It was supported

by a customer service agreement as to what we could expect and

a level of performance that we could expect. I think the Department would engage in that conversation.

Mr. DAVIS. Thank you, Mr. Chairman. I yield back.

Mr. ROSS. Thank you.

The gentleman from Virginia, Mr. Connolly, is recognized for 5

minutes.

Mr. CONNOLLY. Thank you, Mr. Chairman.

Mr. McFarland some might be struck by the fact that the incoming administration in 2009 maybe made a decision more on theological grounds, in-sourcing is good, than on yes, but when we

weigh cost benefits, we might come to a different conclusion. Is it

fair to say that there was an a priori conviction of the administration coming into office that in-sourcing has a certain preference associated with it, from your point of view.

Mr. MCFARLAND. My point of view would simply be from newspapers and the prior administration obviously wanted to outsource

and it appears as if this administration wants to in-source. That

is the best I can answer that.

Mr. CONNOLLY. Do you have a point of view as the IG that one

is better than the other?

Mr. MCFARLAND. No, sir, I do not.

Mr. CONNOLLY. Would it be fair to say it is actually a false proposition that one is better than the other, that we have to look at

the merits?

Mr. MCFARLAND. I think definitely we should look at the merits.

Mr. CONNOLLY. Were there problems with the previous contract

with Monster that led the Office of Personnel Management to reevaluate the outsourcing of this contract?

Mr. MCFARLAND. Not that I am aware of as far as the USA Jobs.

Mr. CONNOLLY. Mr. Manzo and Mr. Conway, there were problems that you address, but were there problems cited by OPM

when they made the decision to bring the contract inside?

Mr. CONWAY. I am not aware of any problems cited by OPM

when the decision was made to bring it inside.

Mr. LYNCH. Would the gentleman yield?

Mr. CONNOLLY. Yes.

Mr. LYNCH. Wasn’t there a case where we had a security breach

of 1.6 million people, their information being hacked, including

about half a million Federal employees?

Mr. CONNOLLY. If I can add, reclaiming my time, Mr. Manzo,

that was sort of what I was getting at, and was that not sort of

a corruption of data in the sense that it was a mingling of this Federal employee file with something else?

Mr. MANZO. I would be pleased to answer that question. Congressman Lynch, first to respond to your question, yes, as you

noted, there was and is a matter of public record that there were

security incidents in 2007 and 2009.

Mr. LYNCH. In fairness, I want to say that your company did

come forward, did try to correct, did notify the consumer.

Mr. CONNOLLY. I will remind the gentleman he is on my time.

Mr. LYNCH. I yield back.
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Mr. MANZO. Yes, those events did happen and I would be happy

to go into excruciating detail with you about why that occurred and

what we learned from that.

Mr. CONNOLLY. Before you do, Mr. Conway, you just testified to

me that you were not aware of any problems.

Mr. CONWAY. To be specific, with regards to execution of the

project, delivering functionality, delivering the data and operation

of the site, I was not aware of any issues. That was not in reference

to any previous data security incidents. As we stated, those were

of public record and we were very clear in terms of being forthcoming with those incidents.

Mr. MANZO. Mr. Connolly, I would also add that I don’t think we

were given any reason when OPM announced.

Mr. CONNOLLY. That is what I was getting to, Mr. Manzo.

Mr. MANZO. It was essentially a black box decision to us.

Mr. CONNOLLY. They didn’t cite those past incidents as this is

reason for concern?

Mr. MANZO. They did not, to my knowledge, no.

Mr. CONNOLLY. Mr. McFarland.

Mr. MCFARLAND. May I add something? I assume your question,

was there a particular problem that influenced this administration?

Mr. CONNOLLY. Yes. Were there performance issues?

Mr. MCFARLAND. Other than what has been mentioned, the two

breaches that took place with Monster in 2007 and 2008, the first

breach was 126,000 resumes were compromised. By the same

token, I don’t think any social security numbers were compromised

in either 2007 or 2008. My point is I don’t know what bearing that

had on the decision.

Mr. CONNOLLY. Mr. McFarland, qualitatively, in your professional judgment, what is the difference between this site when it

was managed by the private sector and this site now that it is

managed in the public sector? Is there a qualitative difference that

you have observed?

Mr. MCFARLAND. Certainly not at this point, in a couple of

weeks, I haven’t observed any, no. I don’t know that I would be

qualified to answer that if I did study it.

Mr. CONNOLLY. If the chairman would indulge one more?

Mr. ROSS. Without objection.

Mr. CONNOLLY. Mr. Manzo and Mr. Conway, have you been

asked or have you offered any technical advice in the transition

from Monster managing it to OPM managing it?

Mr. MANZO. Yes, I know that our chief executive officer has spoken to Director Berry on numerous occasions and has made clear

to him that we will offer any technical assistance necessary in

order to make USA Jobs 3.0 stand up and that transition be successful.

Mr. CONNOLLY. I thank you.

Mr. Chairman, I would end by saying what always bothers me

about the subject of in-sourcing and out-sourcing is that there are

advocates on both sides who make this more a matter of theology

that one is inherently better normatively than the other. I think

that is a, false premise and b, a very dubious course for the Federal

Government to follow. We ought to look at the merits of the case
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in front of us and make an informed and pragmatic decision irrespective of our theological blinders.

With that, I yield back.

Mr. ROSS. Thank you, Mr. Connolly.

That should conclude our panel today. I thank all the panelists

for being here today.

With nothing further, this subcommittee stands adjourned.

[Whereupon, at 11:32 a.m., the subcommittee was adjourned.]

[The prepared statement of Hon. Gerald E. Connolly and additional information submitted for the hearing record follow:]
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