OPM’s mission is to ensure that the federal government has an effective civilian workforce. In this regard, one of the agency’s major human resources tasks is to manage and administer the retirement program for federal employees. According to the agency, the program serves federal employees by providing (1) retirement compensation and (2) tools and options for retirement planning. OPM’s Center for Retirement and Insurance Services administers the two defined benefit retirement plans that provide retirement, disability, and survivor benefits to federal employees. The first plan, the Civil Service Retirement System (CSRS), provides retirement benefits for most federal employees hired before 1984. The second plan, the Federal Employees Retirement System (FERS), covers most employees hired in or after 1984 and provides benefits that include Social Security and a defined contribution system. According to OPM, there are approximately 2.9 million active federal employees and nearly 2.5 million retired federal employees. The agency’s March 2008 analysis of federal employment retirement data estimates that nearly 1 million active federal employees will be eligible to retire and almost 600,000 will most likely retire by 2016. Figure 1 summarizes the estimated number of employees eligible and likely to retire. OPM and employing agencies’ human resources and payroll offices are responsible for processing federal employees’ retirement applications. The process begins when an employee submits a paper retirement application to his or her employer’s human resources office and is completed when the individual begins receiving regular monthly benefit payments (as illustrated in fig. 2). Once an employee submits an application, the employing agency’s human resources office provides retirement counseling services to the employee and augments the retirement application with additional paperwork, such as a separation form that finalizes the date the employee will retire. Then the agency provides the retirement package to the employee’s payroll office. After the employee separates for retirement, the payroll office is responsible for reviewing the documents for correct signatures and information, making sure that all required forms have been submitted, and adding any additional paperwork that will be necessary for processing the retirement package. Once the payroll office has finalized the paperwork, the retirement package is mailed to OPM to continue the retirement process. Payroll offices are expected to submit the package to OPM within 30 days of the retiree’s separation date. Upon receipt of the retirement package, OPM calculates an interim payment based on information provided by the employing agency. The interim payments are partial payments that typically provide retirees with 80 percent of the total monthly benefit they will eventually receive. OPM then starts the process of analyzing the retirement application and associated paperwork to determine the total monthly benefit amount to which the retiree is entitled. This process includes collecting additional information from the employing agency’s human resources and payroll offices or from the retiree to ensure that all necessary data are available before calculating benefits. After OPM completes its review and authorizes payment, the retiree begins receiving 100 percent of the monthly retirement benefit payments. OPM then stores the paper retirement folder at the Retirement Operations Center in Boyers, Pennsylvania. According to the agency’s 2008 performance report, the average processing time from the date OPM receives the initial application to the time the retiree receives a full payment is 42 days. According to the Deputy Associate Director for the Center of Retirement and Insurance Services, about 200 employees are directly involved in processing the approximately 100,000 retirement applications OPM receives annually. This processing includes functions such as determining retirement eligibility, inputting data into benefit calculators, and providing customer service. The agency uses over 500 different procedures, laws, and regulations, which are documented on the agency’s internal Web site, to process retirement applications. For example, the site contains memorandums that outline new procedures for handling special retirement applications, such as those for disability or court orders. Further, OPM’s retirement processing involves the use of over 80 information systems that have approximately 400 interfaces with other internal and external systems. For instance, 26 internal systems interface with the Department of the Treasury to provide, among other things, information regarding the total amount of benefit payments to which an employee is entitled. OPM has stated that the federal employee retirement process currently does not provide prompt and complete benefit payments upon retirement, and that customer service expectations for more timely payments are increasing. The agency also reports that a greater workload is expected due to an anticipated increase in the number of retirement applications over the next decade, yet current retirement processing operations are at full capacity. Further, the agency has identified several factors that limit its ability to process retirement benefits in an efficient and timely manner. Specifically, it noted that current processes are paper-based and manually intensive, resulting in a higher number of errors and delays in providing benefit payments; the high costs, limited capabilities, and other problems with the existing information systems and processes pose increasing risks to the accuracy of benefit payments; current manual capabilities restrict customer service; federal employees have limited access to their retirement records, making planning for retirement difficult; and attracting qualified personnel to operate and maintain the antiquated retirement systems, which have about 3 million lines of custom programming, is challenging. In the late 1980s, OPM recognized the need to automate and modernize its retirement processing and began retirement modernization initiatives that have continuously called for automating its antiquated paper-based processes. The agency’s previously established program management plans included the objectives of having timely and accurate retirement benefit payments and more efficient and flexible processes. For example, the agency’s plans call for processing retirement applications and providing retirees 100 percent of their monthly benefit payments the day it is due versus providing interim monthly payments. Its initial modernization vision called for providing prompt and complete benefit payments by developing an integrated system and automated processes. However, the agency has faced significant and long-standing challenges in doing so. In early 1987, OPM began a program called the FERS Automated Processing System (FAPS). However, after 8 years of planning, the agency decided it needed to reevaluate the program, and the Office of Management and Budget (OMB) requested that an independent board conduct a review to identify critical issues impeding progress and recommend ways to address the issues. The review identified various management weaknesses, including the lack of an established strategic plan, cost estimation methodologies, and baseline; improperly defined and ineffectively managed requirements; and no clear accountability for decision making and oversight. Accordingly, the board suggested areas for improvement and recommended terminating the program if immediate action was not taken. In mid-1996, OPM terminated the program. In 1997, OPM began planning a second modernization initiative, called the Retirement Systems Modernization (RSM) program. The agency originally intended to structure the program as an acquisition of commercially available hardware and software that would be modified in-house to meet its needs. From 1997 to 2001, OPM developed plans and analyses and began developing business and security requirements for the program. However, in June 2001, it decided to change the direction of the retirement modernization initiative. In late 2001, retaining the name RSM, the agency embarked upon its third initiative to modernize the retirement process and examined the possibility of privately sourced technologies and tools. To this end, OPM issued a request for information to obtain private sourcing options and determined that contracting was a viable alternative that would be cost efficient, less risky, and more likely to be completed on time and on budget. In 2006, the agency awarded three contracts for: (1) a commercially available, defined benefits technology solution (DBTS) to automate retirement processing; (2) services to convert paper records to electronic files; and (3) consulting services to support the redesign of its retirement operations. The contract for DBTS was awarded to Hewitt Associates, and the additional contracts to support the technology were awarded to Accenture Ltd. and Northrop Grumman Corporation, as reflected in table 1. OPM produced a December 2007 program management plan that, among other things, described capabilities the agency expected to implement as outcomes of retirement modernization. Among these capabilities, the agency expected to implement retirement benefit modeling and planning tools for active federal employees, a standardized retirement benefit calculation system, and a consolidated system to support all aspects of retirement processing. In February 2008, OPM renamed the program RetireEZ and deployed a limited initial version of DBTS. As the foundation of the modernization initiative, DBTS was to be a comprehensive technology solution that would provide capabilities to substantially automate retirement processing. This technology was to be provided by the contractor for a period of 10 years and was intended to provide, among other things, an integrated database with calculation functionality for retirement processing. In addition to calculating retirement benefit amounts, DBTS was intended to provide active and retired federal employees with self- service, Internet-based tools for accessing accounts, updating retirement records, submitting transactions, monitoring the status of claims, and forecasting retirement income. The technology was also expected to enhance customer service by providing OPM and agency personnel with the capability to access retirement information online. Further, the technology was expected to be integrated with OPM and federal agency electronic retirement records and processes. When fully implemented, the modernized program was expected to serve OPM retirement processing personnel, federal agency human resources and payroll offices, active federal employees, retirees, and the beneficiaries of retirees. According to the agency, in late February 2008, the DBTS was deployed with limited functionality to 26,000 federal employees serviced by the General Services Administration’s (GSA) payroll offices. In April 2008, OPM reported that 13 of the 37 retirement applications received from GSA’s payroll office had been processed through DBTS with manual intervention and provided the retirees 100 percent of their monthly benefits within 30 days from their retirement date. However, a month later, the agency determined that DBTS had not worked as expected and suspended system operation. In October 2008, after 5 months of attempting to address system quality issues, the agency terminated the contract.