[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
            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


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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland, 
JOHN L. MICA, Florida                    Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida              JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

                   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         STEPHEN F. LYNCH, Massachusetts, 
    Chairman                             Ranking Minority Member
JIM JORDAN, Ohio                     ELEANOR HOLMES NORTON, District of 
JASON CHAFFETZ, Utah                     Columbia
CONNIE MACK, Florida                 GERALD E. CONNOLLY, Virginia
TIM WALBERG, Michigan                DANNY K. DAVIS, Illinois
TREY GOWDY, South Carolina


                            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


            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 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:]

    [GRAPHIC] [TIFF OMITTED] T3617.001
    
    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 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 Officer. 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 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 co-located in the same 
geographical area.
    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?
    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.
    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 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 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 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 two-fifths 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.
    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?
    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.
    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 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 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 3\1/2\ 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 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.
    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. 
Valerie 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 
concerns 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.
    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 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, 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 
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 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 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.
    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?
    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 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.
    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 re-evaluate 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.
    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 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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