[Senate Hearing 112-518]
[From the U.S. Government Publishing Office]






                                                        S. Hrg. 112-518

   FEDERAL RETIREMENT PROCESSING: ENSURING PROPER AND TIMELY PAYMENTS

=======================================================================

                                HEARING

                               before the

                  OVERSIGHT OF GOVERNMENT MANAGEMENT,
                     THE FEDERAL WORKFORCE, AND THE
                   DISTRICT OF COLUMBIA SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                            FEBRUARY 1, 2012

                               __________

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

       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs








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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  JERRY MORAN, Kansas

                  Michael L. Alexander, Staff Director
               Nicholas A. Rossi, Minority Staff Director
                  Trina Driessnack Tyrer, Chief Clerk
            Joyce Ward, Publications Clerk and GPO Detailee


  OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE, AND THE 
                   DISTRICT OF COLUMBIA SUBCOMMITTEE

                   DANIEL K. AKAKA, Hawaii, Chairman
CARL LEVIN, Michigan                 RON JOHNSON, Wisconsin
MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
MARK BEGICH, Alaska                  JERRY MORAN, Kansas

                Lisa M. Powell, Majority Staff Director
                        Christine West, Counsel
               Rachel R. Weaver, Minority Staff Director
                Sean Kennedy, Professional Staff Member
                      Aaron H. Woolf, Chief Clerk









                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Akaka................................................     1
    Senator Johnson..............................................     2
    Senator Warner...............................................     3
Prepared statement:
    Senator Akaka................................................    39

                               WITNESSES
                      Wednesday, February 1, 2012

Hon. John Berry, Director, U.S. Office of Personnel Management...     5
Hon. Patrick E. McFarland, Inspector General, U.S. Office of 
  Personnel Management...........................................     8
Valerie C. Melvin, Director of Information Management and 
  Technology Resource Issues, U.S. Government Accountability 
  Office.........................................................     9
Joseph A. Beaudoin, President, National Active and Retired 
  Federal Employees Association..................................    28
George Nesterczuk, President, Nestercsuk and Associates..........    29

                     Alphabetical List of Witnesses

Beaudoin, Joseph A.:
    Testimony....................................................    28
    Prepared statement...........................................    69
Berry, Hon. John:
    Testimony....................................................     5
    Prepared statement...........................................    41
McFarland, Hon. Patrick E.:
    Testimony....................................................     8
    Prepared statement...........................................    45
Melvin, Valerie C.:
    Testimony....................................................     9
    Prepared statement...........................................    54
Nesterczuk, George:
    Testimony....................................................    29
    Prepared statement...........................................    73

                                APPENDIX

Questions and Responses for the Record from:
    Mr. Berry....................................................    79
    Mr. McFarland................................................    89
    Ms. Melvin...................................................    93
Background.......................................................    96
Chart referenced by Senator Warner...............................   103

 
   FEDERAL RETIREMENT PROCESSING: ENSURING PROPER AND TIMELY PAYMENTS

                              ----------                              


                      WEDNESDAY, FEBRUARY 1, 2012

                                 U.S. Senate,      
              Subcommittee on Oversight of Government      
                     Management, the Federal Workforce,    
                            and the District of Columbia,  
                      of the Committee on Homeland Security
                                        and Governmental Affairs,  
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:31 p.m., in 
Room 342, Dirksen Senate Office Building, Hon. Daniel K. Akaka, 
Chairman of the Subcommittee, presiding.
    Present: Senators Akaka, and Johnson.
    Also present: Senator Warner.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. This hearing of the Subcommittee on 
Oversight of Government Management (OGM), the Federal 
Workforce, and the District of Columbia will come to order.
    Aloha and welcome, everyone. Thank you for being here for 
today's hearing, which will focus on processing Federal 
retirements. I just want to clarify that it will not address 
Federal retirement benefits or the status of the Civil Service 
Disability Fund.
    Discussing the administration of Federal retirement 
benefits is timely and important. Recent news articles have 
told us stories of people waiting months on end for retirement 
benefits while millions of dollars are improperly paid to 
annuitants who have passed away. That is the kind of publicity 
the Office of Personnel Management (OPM) has had, but it is 
changing. This is not the type of Federal Government that will 
regain the faith of the American public and is not a government 
living up to the potential that I know it has.
    As the Federal Government's human resource agency, the 
Office of Personnel Management (OPM) administers retirement 
benefits for roughly 2.5 million Federal retirees and processes 
approximately 100,000 new claims each year. OPM uses a system 
that is mostly paper-based. Over the past 24 years, the agency 
has embarked on a number of information technology (IT) 
projects to automate retirement processing, most of which were 
contracted out to private companies at that time. Each one 
failed after millions of dollars and years of development were 
poured into them. The Government Accountability Office (GAO) 
found that management weaknesses like poor contracting 
oversight were the source of OPM's troubles. I look forward to 
hearing more about how the agency will improve its management 
of IT projects and how it will approach the need to modernize 
in the future.
    Failed IT contracts are at the root of OPM's current 
challenges. OPM reduced its retirement staff significantly 
through attrition from 2005 to 2009 in anticipation of an 
automated system that never materialized. The result is a 
backlog of over 48,000 claims that the agency is struggling to 
address.
    To recapture some of its lost processing capacity, OPM 
plans to hire 56 new adjudicators. According to OPM, the 
average wait for a full annuity is 5 months, and people quickly 
receive interim payments that are approximately 80 percent of 
what their final annuity is later determined to be.
    Although those statistics are not good, as Members of 
Congress, we all hear stories from retirees who have even worse 
experiences. News articles and constituent calls describe a 
system where people wait up to one year to receive full 
benefits while living off a small percentage of their final 
annuity.
    Today, I hope to gain a better understanding of how OPM 
will eliminate the backlog. In the meantime, it must make sure 
no one waits this long and that interim pay is more accurate, 
even for those with complex retirement applications. I know 
there has been improvement made and we will hear some of that 
today.
    Another common concern from recent retirees is poor 
customer service. I understand that OPM's new strategic plan 
addresses this. I look forward to hearing more about how the 
plan creates more efficient retirement processes and increases 
the effectiveness of its customer service.
    In this era of financial constraints, every effort must be 
made to safeguard our tax dollars. I am troubled by the 
improper payment recommendations from the Inspector General 
(IG) that date back to 2005. They highlight inadequate internal 
controls to detect and prevent waste. This has resulted in some 
$600 million being paid to deceased annuitants over the past 5 
years. While these large improper payments are unacceptable, 
they are well under one percent of the agency's total annuity 
payments.
    OPM has also made progress on implementing the Inspector 
General's recommendations; it reduced the number of improper 
payments made in the last year, and recovered most of the 
payments. However, OPM must do even more to prevent this sort 
of waste from happening, and I am sure we will hear some of 
those improvements.
    I appreciate our witnesses' dedication to improving the 
Federal retirement system, particularly Director Berry, whose 
willingness to be held accountable and his resolve to reform 
broken processes are encouraging. I look forward to hearing 
from him and our other witnesses as we try to find solutions to 
these important issues.
    I am pleased that the Subcommittee's Ranking Member, 
Senator Ron Johnson, is here today and I am going to call on 
him for his opening statement. Senator Johnson.

              OPENING STATEMENT OF SENATOR JOHNSON

    Senator Johnson. Thanks, Mr. Chairman and aloha. That is 
always fun to say.
    Senator Akaka. Aloha.
    Senator Johnson. I would like to thank the witnesses for 
coming on this beautiful, almost Hawaiian-like weather day 
here. I am looking forward to your testimony.
    Mr. Chairman, I think you have stated the case pretty well 
so I do not think I need to repeat too much, other than just to 
basically say what I am going to be interested in hearing is 
what we can do to improve the system, obviously. I do not quite 
understand what is so difficult about computerizing the system, 
so we are going to want to get into that.
    And I will certainly want to question why we would want to 
put on additional individuals. Just as I do the math, if you 
take a look at the number of people that are basically 
retiring, divide it by the number of people, my calculations 
come up with about three applications, or about three per day 
per individual, which does not seem like a particularly onerous 
workload, and so I am going to want to find out what is so 
complex about determining eligibility in these cases.
    Mr. Chairman, as you mentioned, $600 million paid to 
deceased individuals over the last 5 years, we are certainly 
going to want to explore how that can happen, and probably even 
more important, how can we prevent it in the future.
    I know you said that this is not necessarily going to be 
about the level of pay and benefits, but there have been a 
couple of studies released just recently talking about the 
level of Federal pay in relationship to the private sector and 
I think that is something we may want to discuss a little bit, 
as long as we have Mr. Berry here, because I think it is 
extremely important in a period and time where we are running, 
last year, $1.3 trillion a year deficits, this year projected 
over a trillion dollars. I think we are all in agreement, we do 
not want to underpay individual who work for the Federal 
Government or any public sector employee, but we simply cannot 
afford to overpay them. So I think we need to take a look at 
that and those types of studies that benchmark Federal pay and 
benefits with the private sector are, I think, just extremely 
important and, I think, valid, because after all, it is the 
taxpayers that do pay the taxes to pay the salaries. I think it 
is just something that is very important.
    Again, with that, I want to again thank the witnesses and 
look forward to your testimony.
    Senator Akaka. Thank you very much, Senator Johnson.
    I am pleased to welcome Senator Mark Warner as a guest of 
the Subcommittee. Although Senator Warner is not a Member of 
the Subcommittee, he represents a large number of Federal 
workers and has been engaged on these issues. Senator Warner, 
will you please begin with your statement.

              OPENING STATEMENT OF SENATOR WARNER

    Senator Warner. Aloha, Mr. Chairman----
    Senator Akaka. Aloha.
    Senator Warner [continuing]. And let me thank you and 
Ranking Member Johnson for the courtesy to let me sit up here 
and, again, be part of this very important hearing. I just want 
to take a couple minutes because I do want to get to the 
witnesses.
    But as you mentioned, I have 140,000 retirees in Virginia 
and we have some pretty upset folks. We have members from my 
staff here who receive the calls of frustrated retired Federal 
workers on a daily basis. Mr. Chairman, I wish the returns were 
just--the delay were only 12 months. Literally, just today, we 
worked on a case where a Federal retiree had waited 17 months 
to get their retirement benefits. Now, next month, she is going 
to get $50,000, but she has had to wait 17 months to get those 
benefits that were due to her.
    It is not just Virginia. We actually had somebody, a 
Colorado retiree who was getting 50 percent of her benefits. I 
wish that the retirees who were waiting this extended period of 
time were getting 80 percent. We are finding many getting zero 
or 50 percent. This woman was getting 50 percent for 12 months. 
She finally got so frustrated with the bureaucracy, got in her 
car and drove here demanding answers. Now, that is just not the 
level of customer service, government service. It accentuates 
all of the kind of worst images of Federal Government 
performance.
    I have a series. I am going to skip a couple of my charts 
because they are going to infringe on the Chair, but Mr. Berry, 
I have read your plan and I know this is not a new problem. OPM 
has been grappling with this issue since 1987. And I think the 
Chairman pointed out some of the earlier efforts to try to 
upgrade, and I share Senator Johnson's concern of why we cannot 
seem to get the IT on this right. But, candidly, if your plan 
is that it is going to take 18 months to get the wait time down 
to 60 days, I just do not think that is acceptable, not just 
for my retirees, but it should not be the level of service we 
expect from our government.
    So I hope that we will see a priority for those who have 
been on the backlog the longest, kind of get their cases 
resolved first. I do believe--the Chairman mentioned the OPM 
Web site says it takes 18 weeks to resolve a case. We have 
seen, and I will get into this in questions, other areas of 
government where there have been wait times where there have 
been SWAT teams put in and at least you can get some kind of 
ability to check on the status of your processing.
    And echoing what Senator Johnson said, it seems like OPM's 
processes are very outdated with paper, and I concur with 
Senator Johnson that it is three to four applications a day. 
Well, the Navy does 6 to 7 a day. I hope we will get some 
explanation of why the Navy--and again, you have bigger 
numbers.
    And also, having met with our friends from the National 
Active and Retired Federal Employees (NARFE) and others, I know 
that part of the challenge is going to be how you get the 
materials from all the other agencies and how we hold a hammer 
to all those other agencies on reporting the data to you, and 
we have some ideas on that.
    And finally, because I cannot pass up without at least one 
chart, OPM's Fiscal Year 2011 Retirement Services' budget was 
over $91 billion and they processed 80,356 claims. So just 
doing basic math, that shows the average cost to process each 
claim was $1,134.38. Now, as a former Governor, I thought, 
well, let me check someplace else. So I called our retirement 
system. And let me acknowledge, the Virginia Retirement System 
(VRS), is much smaller than the Federal level, but they do have 
600,000 beneficiaries. They pay out $3.2 billion a year. VRS 
says it costs, on an average, $115 to process each retirement 
claim and VRS processes initial payments in 37 days.
    So whether it is the Navy or whether it is some of our 
State systems, Mr. Chairman, I really appreciate you holding 
this hearing, because this is not the level of service or the 
level of cost structure that I think our Federal retirees 
deserve, and candidly, as Senator Johnson mentioned, the 
taxpayers deserve. So thank you for including me this morning, 
Mr. Chairman.
    Senator Akaka. Thank you very much, Senator Warner.
    Now, I would like to welcome our first panel of witnesses 
to the Subcommittee. The Honorable John Berry is the Director 
of the Office of Personnel Management. The Honorable Patrick 
McFarland is the Inspector General of the Office of Personnel 
Management. And Ms. Valerie Melvin is the Director of 
Information Management and Technology Resource Issues at the 
U.S. Government Accountability Office.
    It is the custom of the Subcommittee to swear in all 
witnesses at this time and I ask you to please stand and raise 
your right hand. Do you swear that the testimony you are about 
to give before the Subcommittee is the truth, the whole truth, 
and nothing but the truth, so help you, God?
    Mr. Berry. I do.
    Mr. McFarland. I do.
    Ms. Melvin. I do.
    Senator Akaka. Thank you. Let the record note that the 
witnesses answered in the affirmative.
    Mr. Berry, will you please proceed with your statement.

   TESTIMONY OF HON. JOHN BERRY,\1\ DIRECTOR, U.S. OFFICE OF 
                      PERSONNEL MANAGEMENT

    Mr. Berry. Chairman Akaka and Ranking Member Johnson and 
Senator Warner, thank you for the opportunity to be here with 
you today.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Berry appears in the appendix on 
page 41.
---------------------------------------------------------------------------
    I share your frustration. The current delays in our 
retirement processing are unacceptable. Eliminating the current 
backlog is my highest priority for 2012. It is the agency's 
goal to eliminate this backlog within 18 months from January, 
as we issued the new strategic plan, and provide retirees with 
their full annuity payments within 60 days of their retirement 
by July 2013 in all but the most complex of cases. We are going 
to do everything in our power to do this faster and put 
everything on it we can to move that needle further, but I also 
do not want to mislead this Subcommittee as to the challenge 
before us.
    To accomplish this, we have developed a strategic plan 
which relies on four central pillars: People, productivity and 
process improvement, partnering with agencies, and partial 
progressive information technology improvements. It may be too 
early to tell, but I believe that our efforts are starting to 
bear fruit. Between the staffing changes, process improvements, 
a greater sense of urgency, and some of the other reforms I 
will discuss, we processed nearly 20 percent more cases this 
January than we did last January.
    Every January, we receive our largest number of incoming 
retirement cases, and as expected in the plan, with the 
addition of 21,000 new cases last month, the current backlog 
now stands at 62,000 cases. To ensure transparency and focus, 
we will be reporting this number, our total backlog, to both 
you and the House Committees on a monthly basis on the fifth 
day of every month, in other words, giving us that so that we 
can accurately report those numbers to you. We will also be 
using them as our benchmark to drive reforms with our people.
    Let me talk about our people. Our Retirement Processing 
Division has been understaffed. Historically, what happened was 
after four failed attempts at IT modernization, just before I 
arrived, the budget was adjusted and positions were left vacant 
or reduced under the presumption that a retirement automated 
system would be online to handle the process. So what OPM did 4 
years ago was to draw down their staff, unacceptably, without 
ensuring that the IT solution was in place. What has happened, 
obviously, since, is with that lower staff, frozen budgets, we 
have not been able to rebuild to provide for the staffing of 
this that I would like.
    What we have put in place is through efficiencies and tight 
management within our budget, we have recognized we have just 
got to get the people back to where we were. Last year, we put 
40 more legal administrative specialists on this case. I have 
readjusted our budget this year and will be adding another 40 
along with another 20 customer service representatives. Taken 
together, with last year and this year, this will put us back 
where we were 4 years ago. I should say, of those 56 new hires, 
all have been selected. Thirty have been hired and are already 
beginning their training.
    To improve the retirement process, the U.S. Navy Lean/Six-
Sigma Team from Crane, Indiana, the Naval Surface Warfare 
Center (NSWC), has been with us, three visits to our retirement 
operation, and they have given us wonderful advice and 
recommendations. We are already beginning to implement those 
recommendations.
    And, as I mentioned, the transparency of reporting on a 
benchmark, not only to our employees and our managers, but to 
the public and to the Congress on a monthly basis, will make 
sure our feet are held to the fire.
    Along with our internal efforts, the agency is also working 
in partnership with the Chief Human Capital Officers Council 
(CHCO), and all of our agency partners, like the Postal 
Service, who submit records to us for processing. Many of those 
records come in now in an incomplete status, and one of our 
longest lag times is assembling the paperwork so that we can 
accurately adjudicate the case.
    As we are going to discuss, we want to avoid improper 
payments, as well, and so we have to be careful to have a 
complete file before we can make that final adjudication. But 
we are working on improving that.
    And I am happy to say, I just met this week with the 
Postmaster General and they have agreed, along with the 
Department of Defense (DOD), to pilot an initiative with us 
where they can automate and send us complete cases. If they can 
do that, that is going to be of phenomenal assistance.
    Additionally, the plan recognizes that further automation 
is absolutely vital to our success. We are exploring both 
short-term, medium-term, and long-term solutions that will 
learn from the past mistakes that our agency has endured on 
this issue. But we have a great Chief Information Officer 
(CIO). Underneath him, we have hired a new Chief Technology 
Officer (CTO). He comes to us, David Bowen, from the Federal 
Aviation Administration (FAA). He is going to be leading our 
coordinating effort on this to ensure that we can deliver 
small, bite-size automated efforts that will significantly 
increase our processing ability and capabilities and accuracy--
the time and the accuracy--and do it in a smart, fast way. We 
will be looking to the private sector to join with us. We will 
be looking to some of our own employees. But obviously, we need 
to do as much as we can as fast as we can in this area.
    We are also going to increase the interim payments, and to 
the maximum extent possible under the law and come as close to 
the line, recognizing we have to be very careful not to go over 
that line where we might have improper payments. But we are 
going to do everything we can to maximize interim payments for 
people who are stuck until we can get this backlog behind us.
    Finally, there has been some publicity regarding the 
Inspector General's Office report on dealing with payments made 
to annuitants who are now deceased. OPM regards any overpayment 
as unacceptable. But as noted by the Inspector General, I am 
proud that our improper payment rate is extraordinarily low. It 
is less than two-tenths of one percent. Now, we have 
implemented 10 of the 14 recommendations by the Inspector 
General. I have promised Patrick that we will quickly implement 
the remaining four.
    But also, this is such an important issue, and we do not 
want to lose sight of this, because it is incredibly critical 
that we not fall into improper payments because we are dealing 
with large amounts of money. So even a small percentage is an 
unacceptable amount. I have agreed to work with Patrick, and 
over the next 6 weeks we will introduce an amendment to this 
strategic plan, an additional strategic plan that is going to 
show how both of us together are going to fix improper payments 
until we can get it down to zero. So we are not just going to 
rest on completing the past 14 recommendations. We are going to 
have a plan going forward that we will develop together that we 
can give to you within 6 weeks that will, again, hold our feet 
to the fire on resolving improper payments going forward.
    Last, I would like to point out that of the $600 million of 
the improper payments that was reported in the IG report, over 
$500 million of it has already been recovered through our 
efforts working hand-in-glove with the Inspector General. Now, 
we are not going to rest until the remaining $100 million is in 
hand, but again, that is--we are going to continue to keep 
focus, energy, and attention on this until this problem is 
licked.
    With that, I thank you very much for the opportunity to 
testify and be with you today and look forward to your 
questions.
    Senator Akaka. Thank you very much, Director Berry.
    Mr. McFarland, will you please proceed with your statement.

 TESTIMONY OF PATRICK E. MCFARLAND,\1\ INSPECTOR GENERAL, U.S. 
                 OFFICE OF PERSONNEL MANAGEMENT

    Mr. McFarland. Good afternoon, Chairman Akaka, Ranking 
Member Johnson, Senator Warner, and Members of the 
Subcommittee. My name is Patrick McFarland. I am the Inspector 
General of the Office of Personnel Management. Thank you for 
inviting me to testify at today's hearing about OPM's 
processing of retirement payments.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. McFarland appears in the appendix 
on page 45.
---------------------------------------------------------------------------
    Today, I will touch on two tasks performed by OPM's 
Retirement Services Office: The processing of retirement claims 
and the identification and prevention of improper payments to 
deceased annuitants.
    Earlier this month, OPM unveiled a new strategic plan to 
address the current backlog in processing retirement claims. 
This plan is a big step in the right direction. Based upon our 
initial review of the strategic plan, we asked OPM about 
various details not presented in the plan as of yet. For 
example, we would like to see interim milestones that would 
allow OPM to track its progress toward eliminating the backlog 
in 18 months. Furthermore, we want to be sure there is a 
commitment to revisit the plan periodically to make 
modifications as necessary.
    We also have concerns regarding the scaling back of the 
accuracy review process. This will obviously result in a higher 
risk of error in the processing of retirement claims. We would 
like to see how OPM plans to address the higher degree of risk 
for improperly paying annuities.
    While I am pleased that OPM is aggressively addressing the 
retirement claims backlog, I would like to reemphasize my 
concerns regarding OPM's pattern of making improper payments to 
deceased annuitants, requiring the expenditure of significant 
resources to recover these monies. Resources would be better 
spent identifying and, more importantly, preventing improper 
payments from being made. The identification and removal of 
even a handful of deceased annuitants from the annuity roles 
will more than pay for the time and expense incurred by OPM in 
any prevention efforts.
    We have been working closely with OPM on this issue for 
over 6 years, and while improvements have certainly been 
achieved, systemic problems remain. As Director Berry agrees, 
improper payments to deceased annuitants can be remedied only 
by a comprehensive reform effort. To this end, he has committed 
to developing a strategic plan to address this problem, similar 
to the one OPM has just issued regarding the retirement claims 
backlog.
    I would like to briefly update you using information 
provided to us by OPM on the agency's progress in implementing 
some of the recommendations contained in our most recent 
report, issued in September 2011. First, OPM continues to 
conduct an annual computer match between the OPM retirement 
annuity roles and the Social Security Death Master File. 
Performing this match allows OPM to identify deaths that were 
not included in the weekly file of deaths reported by the 
Social Security Administration (SSA). In 2009 and 2010 alone, 
these annual matches identified over 1,000 deaths that were 
previously unknown to OPM. The agency is currently conducting 
its third consecutive annual match and it is approximately 85 
percent complete.
    Second, OPM is analyzing IRS Forms 1099-R mailed to 
annuitants that were returned to the agency as undeliverable. 
These are important documents that annuitants need to file for 
their annual tax returns. OPM is currently reviewing the 
undeliverable Forms 1099-R mailed out in January 2010. To our 
knowledge, OPM has only reviewed a small percentage of the 
33,000 returned forms. Moreover, the agency has not begun 
reviewing the undeliverable forms mailed in January 2011 and 
will soon begin receiving undeliverable forms mailed in January 
2012. This severe backlog requires immediate attention and OPM 
must develop a coordinated strategy to address it.
    Third, OPM should develop a permanent working group of 
retirement program subject matter experts to focus on improving 
the retirement program's integrity. Those who wish to defraud 
the government will continue to develop new ways to do so. 
Therefore, OPM must also constantly seek to improve and adapt 
to this increasingly automated world. Having a permanent 
working group dedicated to the identification and prevention of 
improper payments is necessary to protecting the integrity of 
the retirement trust funds.
    As OPM moves forward to address these concerns through the 
development of a comprehensive strategic plan, we believe that 
the Improper Payments Elimination and Recovery Act of 2010 
(IPERA) would provide OPM with useful guidance. Among other 
things, IPERA requires agencies to conduct risk assessments, 
publish corrective plans, and publish and meet annual reduction 
targets. IPERA should act as a guidepost for OPM's new 
strategic plan.
    In closing, as OPM tackles the retirement claims processing 
backlog, I believe that it must also develop a plan to address 
the egregious long-term improper payments with which the agency 
currently struggles. Over the past 6 years, we have watched as 
the agency has adopted new measures to combat improper 
payments. However, these measures were not consistently pursued 
and the efforts eventually stalled.
    Despite this, I am confident that Director Berry's 
enthusiastic commitment to eliminating egregious long-term 
improper payments will result in an effective and sustainable 
identification and prevention policy.
    Thank you for inviting me.
    Senator Akaka. Thank you very much for your statement, Mr. 
McFarland.
    Ms. Melvin, will you please proceed with your statement.

  TESTIMONY OF VALERIE C. MELVIN,\1\ DIRECTOR OF INFORMATION 
  MANAGEMENT AND TECHNOLOGY RESOURCES ISSUES, U.S. GOVERNMENT 
                     ACCOUNTABILITY OFFICE

    Ms. Melvin. Good afternoon, Mr. Chairman, Ranking Member 
Johnson, Senator Warner, and Members of the Subcommittee. Thank 
you for inviting me to testify at today's hearing on OPM's 
efforts to manage the system that is crucial to the processing 
of Federal employee retirement benefits.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Melvin appears in the appendix on 
page 54.
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    The use of information technology is integral to carrying 
out this important responsibility, and for over two decades, 
the agency attempted to modernize the retirement process by 
automating paper-based processes and replacing its antiquated 
information systems. However, as you are aware, its efforts 
were largely unsuccessful. Reports that we issued in 2005, 
2008, and 2009 on the agency's efforts toward planning and 
implementing a modernized system highlighted a long history of 
undertaking projects that did not yield the intended outcomes. 
At your request, my testimony today summarizes our findings on 
these efforts and the challenges OPM has faced in managing 
them.
    Overall, our studies found that OPM was hindered by 
weaknesses in a number of important management disciplines that 
are essential to successful IT modernizations. These includes 
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 risks 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 numerous 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 one 
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 risks 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. And 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 the system's 
operation and began restructuring the modernization 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 systems contract and it lacked a fully 
functioning oversight body to monitor its modernization 
projects.
    OPM agreed with all of our recommendations and took steps 
toward addressing them. Ultimately, however, it terminated the 
Retirement Modernization Program in February 2011. The agency 
subsequently stated that it did not plan to undertake another 
large-scale modernization effort, as Director Berry has alluded 
to.
    In mid-January, OPM released a new plan describing its 
intention to improve retirement processing through targeted 
incremental actions, such as hiring new staff and working with 
agencies to improve data quality. The plan also identifies 
intended IT improvements to automate the retirement application 
process. However, it does not address how the agency intends to 
modify the many legacy systems that currently support the 
retirement process.
    Moreover, even as it implements this plan, it is essential 
that OPM fully address the deficiencies and institutionalize 
the IT management capabilities highlighted in our studies. 
Without doing so, the agency will not be effectively positioned 
to ensure the success of any future retirement modernization 
projects that it pursues.
    This concludes a summary of my statement and I look forward 
to responding to your questions.
    Senator Akaka. Thank you very much, Ms. Melvin, for your 
statement.
    Director Berry, you testified that Retirement Services 
staff was reduced significantly through attrition and 
anticipation of an automated system that never materialized. 
Please explain the impact this had on the agency's ability to 
keep pace with retirement claims as well as why you believe it 
is necessary to rebuild Retirement Services' staff.
    Mr. Berry. Mr. Chairman, I think as you have heard, and let 
me just say, I agree with all of the points that GAO has made 
as well as our Inspector General, so there is no disagreement 
in terms of my viewpoint and their testimony.
    When we talk about some of the legacy systems that GAO 
mentioned, some of the pieces that we are dealing with in terms 
of automation still use COBOL, to give you a sense of what we 
are trying to manage, improve, and enhance. I have challenged 
our people saying, look, we have just got to take those systems 
and calculators that are critical to the functioning of this 
system and get them brought into the 21st century. And so that 
is one of the things that Dave Bowen and our CIO and our CTO 
are going to be dramatically working on, and I can promise you 
they are going to be applying the lessons the GAO has flagged 
for us in terms of having the oversight and the central quality 
control through the CIO's shop and operation to guarantee that 
we do not repeat the mistakes and the four failed IT attempts 
of the past.
    But, Mr. Chairman, also, right now, I have to be honest 
with you. Not all of the data that comes to us from all of the 
agencies across the Federal Government comes to us in an 
automated form. We are still managing thousands of pieces--
millions of pieces of paper on an annual basis. Some 
information is automated and we are working hard to try to get 
to a place where all of the incoming information will be 
automated. But we are still in a paper and pencil world without 
the IT solution to address what is a real increase in 
retirements and backlogs.
    Our Postal Service draw-down has increased the demand. The 
buyouts of agencies, and as agencies tighten their belts, we 
know we are going to have increases in retirements coming in. 
This January alone was higher than last January, so we are 
starting to see some of that.
    I do not have the IT solution to address it, and so for at 
least the time being, and this is one, Mr. Johnson, I would 
agree with you, the preference would be if we could grab an 
automated IT solution. But for the short-term, one does not 
exist. And so I have increasing numbers and less people. I just 
need to get the bodies back, get them trained to get us through 
the next few years until we can get more IT solutions up and 
running that will be accurate and improve the service to handle 
the volume loads.
    I would agree with both your opening statements, that we 
have to be smarter in how we do IT so that we do not have to 
look for this forever. But for the foreseeable future, we are 
dealing with a paper and pencil process and that is why I am 
hiring more people and doing it within a frozen budget.
    Senator Akaka. Thank you, Mr. Berry.
    Mr. McFarland, you testified that you believe OPM is on the 
right track with hiring additional retirement staff. Please 
elaborate on why you believe additional staff is necessary to 
make progress on the claims backlog and improper payments.
    Mr. McFarland. Mr. Chairman, I think, without question, 
that the planned hiring of these specific people for these jobs 
is absolutely necessary. I think that for OPM at this point, 
after so many years, to have to acknowledge that there are so 
many claims in arrears is just--it is just a sad situation when 
that has to happen. And so I know that, without any hesitation, 
that when this new plan that the Director has talked about is 
put into effect, it should make all the difference in the 
world. But it will only make all the difference in the world if 
the leadership maintains it at a level that requires everyday 
discussions. It cannot be something that just ends up hanging 
on a wall: ``This is our vision and this is our mission.'' And 
I do not anticipate that this will happen at all. But I think 
it is very necessary to hire these people to try and catch up 
with the problem at hand.
    Senator Akaka. Thank you very much.
    Mr. Berry. Mr. Chairman.
    Senator Akaka. Yes, Director Berry.
    Mr. Berry. Could I just add to that, with your indulgence, 
if I could, and I agree with Patrick. To ensure that we keep 
focus on this, not only will I be involved, but I have created 
three key leaders to watch this on a daily basis. I have a 
Chief Operating Officer who is a career senior executive in our 
organization that I have created and he is going to be leading 
this effort with my Deputy Chief of Staff, who is a political 
appointee but is one of the sharpest young men I have ever 
worked with, and my Associate Director, who is sitting directly 
behind me, is Ken Zawodny, and he is my new leader on this.
    He is the director in charge of my retirement operation. I 
brought him from my Investigative Services Unit after we 
brought in new leadership and then they were stolen away from 
me. We now have a leader who, I believe, is going to really 
move the needle. And on Investigative Services, you will 
remember, Mr. Chairman and Mr. Johnson, from the hearing where 
we were removed from the GAO High-Risk List for processing 
background investigations and meeting the 40-day standard that 
was set under the law ahead of schedule and on budget. Ken was 
part of the team that helped us to meet that success. And so 
when I looked for who to put in charge of this who could lead 
this as a career day-to-day leader, I grabbed Ken from the 
Federal Investigative Services Division (FISD) and brought him 
over to help us in this effort.
    So we do have the Chief Operating Officer, my Deputy Chief 
of Staff, and Ken on a day-to-day basis, and then I am watching 
this, like I say, as my highest priority. So I just want to 
give you that organizational sense of how we are dogging this.
    Senator Akaka. Thank you. Mr. McFarland.
    Mr. McFarland. Mr. Chairman, if I might, I would like to 
mention just a couple of things that might add a little more 
clarification to the effort at hand.
    I have recently become an ardent reader of Ms. Melvin's 
work regarding OPM. I have read GAO's work over a few times, 
and I would say, without question, they have done a terrific 
job of identifying the problems. If their work is not used as a 
guidepost, that would be a real mistake in my estimation.
    But let me just point out something--not to make an excuse 
for OPM because that is not what my job is about, to make 
excuses--but I do want it to be a level playing field for all 
to understand. In fact, Ms. Melvin mentioned this in a previous 
testimony, talking about the processing of a claim--in order to 
process a claim, OPM must determine eligibility, calculate the 
annuity, and provide customer service. Now, there are many 
other things involved, of course, but on the surface, that 
sounds like a pretty easy fix.
    But in order to do this, the Retirement Services Division 
has to comply with over 500 different procedures, laws, and 
regulations. They use over 80 different information systems 
that interface with approximately 400 other internal and 
external systems. They work with antiquated equipment that have 
about three million lines of custom programming. Now, up until 
a few hours ago, I did not know what custom programming was, 
but three million lines means three million lines of code. This 
means that the retirement IT systems are very carefully and 
specifically customized to the government's needs. It also 
means that it is very hard to fix something because you have to 
locate the one line of code out of those three million lines.
    And I know Ms. Melvin could speak more to the technical 
aspects, but what I would like to add to this, if I may, as OPM 
continues to refine its reforms to the retirement claims 
processing procedures, OPM must take specific steps to ensure 
that this processing system will last far into the future. This 
is very similar to the steps that must be taken when developing 
any new IT system or project.
    The first step is investment management--simply ensuring 
that adequate funding is available throughout the project.
    Next, requirements management--documenting and maintaining 
all business processes requirements--basically, the rules of 
the system.
    Third, testing--ensuring that all of the requirements have 
been properly tested.
    Fourth, project oversight--establishing executive 
sponsorship through an executive steering committee, such as 
the Office of Inspector General (OIG), GAO or the Office of 
Management and Budget (OMB).
    Fifth, risk management--identifying, tracking, and 
mitigating risks to the project throughout the life cycle.
    And, finally, information security. The system's security 
has to be planned at the beginning of the process to ensure 
that it is included at all stages of the development process, 
all the way to the end of the work.
    So I just mention this so that there is a better 
understanding of what OPM must do. There are an awful lot of 
people doing Retirement Services work, something like close to 
800 people in that division, and about 290 in the actual part 
that do the processing. But that is a lot of people. This is a 
complicated situation. But I do think that it can be overcome 
and it will not be that long before this overage is canceled 
out.
    Senator Akaka. Thank you both very much for your responses.
    Let me call on Senator Johnson for his questions.
    Senator Johnson. Thank you, Mr. Chairman.
    Director Berry, while I have you here, before I hop into 
the computer system, we may be bringing up the Postal bill here 
in the next couple weeks. In Section 102 of that bill, there is 
a provision that would provide service years of credit for 
Postal employees, phantom average salaries. We did request from 
OPM some information in terms of what that would cost, and 
there were actually ranges. It was intended to be capped at 
$25,000, but your agency provided us information in an e-mail 
that showed that those awards could be as high as $280,000 per 
employee.
    We also got an e-mail from your agency stating your 
opposition to granting those types of phantom average salary 
credits in any kind of a retirement buyout. I just kind of want 
to get you on the record. That is your position? It would be a 
very bad precedent being set is, I think, what your agency 
thought?
    Mr. Berry. Yes, sir. And I have not been fully briefed in 
great detail on the issue, but my staff tells me that it is our 
policy and we are in agreement with you on the phantom 
payments.
    Senator Johnson. OK. Well, I appreciate that. Let us delve 
into computer systems. Mr. McFarland, you are quoting in terms 
of the number of systems involved. I used to actually program 
FORTRAN. I used the card decks. It is somewhat jaw dropping 
that the Federal Government is that antiquated. Is the 
retirement system of the Federal Government that vastly 
different than private sector retirement plans, that in some 
way, shape, or form, we cannot modify computer systems used in 
the private sector to handle the Federal Government, as well? I 
mean, is it just that different? Or maybe that would be for Ms. 
Melvin.
    Ms. Melvin. We have not looked at the retirement system 
relative to what the private sector has done, but what I would 
say is that the types of concerns that we saw overall relative 
to managing the Retirement Modernization Initiative are the 
types of concerns that are prevalent at many other agencies, 
but they can be overcome if the essential management 
capabilities are in place.
    From the standpoint of the technology itself, certainly, 
there are complications when you are dealing with very old code 
and you are dealing with many systems and the hundreds of 
interfaces that are involved with OPM's systems. Across the 20-
plus years, I do not believe that it would be impossible for 
them to overcome that and develop a system.
    However, as has been alluded to in my statement as well as 
in the statements of the others, the deficit in the IT 
management capability is very extreme at OPM, at least from 
what we saw through our work. The types of recommendations that 
we made are recommendations that collectively need to be 
addressed in an institutionalized way at the agency, I think it 
is very commendable that Director Berry has taken ownership of 
the problem and has recognized the severity of it. I think it 
is also important that he talk to the need to involve others, a 
Chief Technology Officer, for example. Those types of figures 
are going to play a critical role from a leadership perspective 
to try to help get a culture in place at OPM where they can 
start to, first of all, assess their capabilities and try to 
move forward in understanding what their needs are, developing 
a clear vision of what that is, and then working toward that 
through a defined and concrete plan of action that would take 
them there.
    Senator Johnson. Yes, Director Berry. Go ahead.
    Mr. Berry. Senator, if I could, you would think with having 
basically two core systems, the Civil Service Retirement System 
(CSRS), which was the old Civil Service retirement, a defined 
benefit, pretty straightforward calculation, now about 15 
percent of our workforce is under that. We walked away from 
that back in 1984 and reformed it and created the new Federal 
Employment Retirement System, which sort of has a three-legged 
stool approach to it--Social Security, a Thrift Savings Plan, 
and a much smaller defined benefit portion. Those are the two 
core lanes, if you will, that we have to operate in.
    When the private sector--the last automation attempt came 
in, they had an off-the-shelf system that they thought, well, 
this was similar to the lanes that they were operating in. But 
what they encountered when they came in--the Inspector General 
mentioned 500 rules and modifications in law and regulation 
over the years that have accumulated, things like a different 
law enforcement officer pay calculation, a different 
firefighter calculation, an air traffic controller calculation, 
part-time service calculations, different doctor/dentist/
surgeon calculations. You could go on and on and on with those 
lists of what those 500 calculations are.
    And what they found was they could not modify the off-the-
shelf system to accommodate all of these unique variables that 
exist in the Federal process. And so that is why in looking at 
the learned experience from that most recent--they took that 
behind the barn and shot it just before I walked in the door. 
So lessons learned. I read that file the first month on the job 
and said, we are not repeating this. We are not going to try to 
automate the whole thing. It is just too complicated.
    And so that is what motivated my system to look at my 
approach of this, pieces that make sense that we can control. 
There will be private sector solutions to a lot of these pieces 
and we will be able to bring them on a lot faster with a more 
easy application of GAO's principles than we will if we try to 
do it all at once.
    Senator Johnson. Was it ever considered, taking these off-
the-shelf systems and putting them down at the agency level so 
you would have fewer of those variables?
    Mr. Berry. The problem, Senator, is that--and this is one 
of the reasons we have problems sometimes in getting a complete 
file to just make the adjudication--once we have a complete 
file, it is ours to process it and it is not days or weeks. It 
is getting that file complete.
    And so what each agency would then face if you devolved it 
to each agency is most Federal employees are moving around 
during the course of their career. They have military service. 
They have National Guard service. They might have worked for 
the Postal Service. They might have part-time service. And they 
will have it with multiple agencies. And there is not--all of 
the paperwork for that service lies with those original 
agencies, it does not build a file that follows the employee as 
they go unless if they are--Federal employees who are savvy do. 
They maintain their file. And for those, we are able to rebuild 
a file very quickly or make sure it is complete.
    But otherwise, we need to go back and, before we can 
adjudicate it, make sure we can verify that service. And 
sometimes people's memories will be foggy the farther back you 
go and they will think that was full-time service when in 
reality it was part-time service, and the credit is different 
and we have to verify that before making that determination.
    Senator Johnson. I am beginning to understand your 
quandary. [Laughter.]
    Senator Akaka. Thank you very much, Senator Johnson.
    Let me call on Senator Warner for questions.
    Senator Warner. Thank you, Mr. Chairman, and I appreciate 
your responses.
    I guess I want to kind of pick up where Senator Johnson 
left off, and let me thank you for your willingness that you 
will report back to this Subcommittee and to all of us on a 
monthly basis what the wait period is. I would simply question 
whether at this point that you cannot finalize your 
calculations until you get the data from all the corresponding 
agencies. I have a chart\1\ here, I believe, that shows 2011, 
June 10, 2011, that shows that the error rate at the Department 
of State is 50 percent, EPA is in the 40s, the Judiciary is at 
33, the Library of Congress is in the mid-30s. I think the 
Federal Government average is about 20 percent. Can we get that 
monthly report of the error rate from all of these various 
departments who are reporting in to you?
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    \1\ The chart referenced by Senator Warner appears in the appendix 
on page 103.
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    Mr. Berry. Senator, what I can tell you is what we are 
trying to do, right now, those error rates are just an annual 
snapshot, and what we do is we take it when it is at the 
slowest part of the year in terms of when we are getting the 
fewest cases in so that I can take people off. Right now, I 
have had an ``all hands on deck'' mentality of if you can 
handle cases or help in the processing of cases or field calls 
so that you can free up time for adjudicators to handle cases, 
I have everybody focused on cases.
    And so what I have challenged my people to do, and the 
Chief Human Capital Officers Council, has volunteered to help 
us on this. This has not been one where--they know they are 
part of the problem and so they have promised to help us. We 
are going to try to figure--one of the Navy Six-Sigma reforms 
was to build a processing team that will prioritize and sort of 
triage your cases as they come in and to immediately identify 
right there if the file is not complete and identify where that 
is from so that we can then develop a monthly report on it.
    Senator Warner. Well, one of the things--the reason why I 
asked----
    Mr. Berry. So we want to do that. Our goal is to do that. 
Well, that is one of the reasons why I asked. I do not have it 
now, so I do not want to promise you something that I cannot 
commit until we get this--we are putting that in place now, and 
as soon as I get it, I am happy to share it.
    Senator Warner. Well, I guess what I would hope would be 
that with your monthly report, and if we had a report on the 
error rate from each of the departments, we might ask our 
friends in the media to publish that on a monthly basis, as 
well. We do have a lot of Federal employees here. My 
understanding is there was a similar effort made when there was 
a backlog in the early 1990s, that this helped generate some 
internal pressure to get folks just hired.
    Because one of the things that you may need to come back to 
us with is something that says, if you have continual laggards 
in parts of the government getting you these materials, well, 
at the end of the day, it is your responsibility but you have 
to have some ability to have a hammer on these agencies and 
departments that are not getting you the data in a timely 
manner.
    Mr. Berry. I appreciate that, Senator, and we agree. It has 
to be--it is one of the four pillars----
    Senator Warner. All right. So you are going to get us 
monthly reports in terms of your lag time right now. When do 
you think, working with your CHCO group, you can get us error 
rates for each of the agencies? Do you think within 90 days?
    Mr. Berry. If we could get you back for the record on that, 
because what I have asked is once the Navy Six-Sigma process, 
once we get that team up and we can see----
    Senator Warner. It would seem to me that within 90 days, we 
ought to be able----
    Mr. Berry. Yes, I would hope that, sir----
    Senator Warner. Now, can we move again to the next item. 
The one concern I had in reviewing your plan is that, and if 
Senator Johnson and my calculations are wrong, please correct 
me for the record, but if OPM is processing about three to four 
cases a day, others seem to be doing--we have some data that 
shows double that, if you are at a cost basis at about $1,100 
to process, Virginia is at $137--a simpler system, I would be 
the first to grant, but there are people that move around State 
systems, as well--in your goal beyond simply running this 
timeline down so the backlog is taken care of, I would hope you 
would have goals, as well, to look at what standards for 
processing would be in equivalent organizations, State 
Governments, elsewhere, other parts of the Federal Government, 
and how you can drive that per claim processing cost down.
    Mr. Berry. If I could, Senator, the correct comparison, in 
other words, an apples-to-apples comparison, Virginia-to-us, 
our per claims cost is $108. So we are in the ballpark where 
Virginia is right now.
    Now, the whole budget, in other words, does not go toward 
claims processing. There are pieces of it, the court ordered 
benefits section, the training components, we do not score that 
toward that cost. And so when we have asked for legislative 
help from you when agencies are having a significant buyout, 
like the Postal Service, and you have been very helpful to us 
in that regard, that they would reimburse to us the cost of 
this so that we could make sure we could keep the staffing up, 
that is the rate we would be charging them, is the $108 rate, 
which would be comparable. So I think we are in the ballpark 
there, but we will keep a close eye on it.
    Senator Warner. I do not want to exceed my time. I will not 
be invited back. Just two quick other points I want to raise, 
and not being a member of the Subcommittee, this may have 
already been provided to the Subcommittee, but we all know we 
have this bulge of Federal workers who are in the realm of 
retirement age----
    Mr. Berry. Yes.
    Senator Warner [continuing]. Over the next 5 to 8 years. We 
talked about this when you first came in. Do you have 
projections--I appreciate the focus, although, again, I would 
not--18 months down to 60 days, an 18-month period to get to 60 
days. I would love to see improvement there. But do you have 
projections going forward over the next 5 years what your 
staffing needs will be, and while I understand that the Retire 
EZ system, $200 million, pretty much flushed down the toilet, 
prior to your time, but did not work out.
    I would hope that you would be able, not just this backlog, 
but this is going to be an ongoing problem as we get through 
the bulge in the snake of all these Federal employees 
retiring--that you would have lined out some kind of 3-to 5-
year plan on how you would move an IT system in.
    And my last point here on this would be perhaps the analogy 
to private sector IT systems may not be accurate, but I have to 
believe there may be certain State IT systems or even other 
country IT systems that have some of the complexities the 
Federal Government would have.
    Mr. Berry. Senator, you are right on, and we will be--the 
Chief Technology Officer and our Chief Information Officer, 
they will be the ones that I have tasked to provide the 
addendum to this--this strategic plan is going to be a living 
document, and I think it is important that it does so that we 
can do this.
    To answer your first question, the strategic plan does 
estimate what we would project for at least the next 2 years in 
terms of retirements, and so far [knocks on wood] we are on 
target. The 20,000 increase--I heard the gasps in the room--was 
in the plan. So we projected that in the plan. What I hope is 
that is the peak and from here down we will be able to, with 
all of the efforts that we have been able to draw, that 20 
percent increase in productivity, I have hired the people but 
they have just started training. So none of those extra bodies 
have actually been thrown at this yet to produce.
    So the productivity improvements have just been through the 
Six-Sigma and some of our own creativity from our unions and 
working in partnership with them and our people on the front 
line of, hey, this is a smarter way of doing it. And when 
somebody has a good idea, as long as it increases the standard 
I have used, if it makes it faster and maintains accuracy, go 
for it.
    Senator Warner. I am not trying to take extra time, but you 
have a goal of getting productivity above three to four claims 
a day?
    Mr. Berry. Absolutely, sir.
    Senator Warner. What is your goal?
    Mr. Berry. Well, I do not want to--we were the first ones 
to put in place a performance standard, and that performance 
standard was just put in place last April, which is that one 
that you talk about of three a day. The three a day, though it 
sounds like it is not significant, you have to understand, 
probably 30 percent of their time is now handling customer 
service calls and another 30 percent in getting cases drawn 
together.
    I want to use our legal administrative specialists for case 
adjudication. And so we are growing the customer specialists to 
handle customer service and I am creating teams of other people 
to make sure the files are complete so that now--that standard 
was developed when only essentially 30, 40 percent of their 
time was being used on actual case adjudication. As we are able 
to peel those off and get those other elements stood up, we are 
going to revisit those standards. They are within management's 
rights.
    And so as we feel it is fair to adjust and to move those 
standards up, we will. But I want to make sure we--right now, 
we have a wonderful partnership. Our employees get this. Our 
union members are as embarrassed by this backlog and take it to 
heart personally. They know we want to honor the service of 
Federal employees and retirees. They are sick that people with 
disability have to wait as long as they do. So they are driving 
at this as hard as we are. This is not a case where I have 
intransigent employees. They are working on this.
    But just so you know we are taking this seriously, I have 
over a dozen people on Performance Improvement Plans right now, 
and if they do not shape up, we will be removing them. In other 
words, we are going to dog this with those standards and we are 
going to be lifting those standards and we are going to be 
enforcing those standards. So that we can reach these targets.
    But this plan lays out a pretty aggressive plan. I am going 
to try to push it even faster, as you have said, because I 
would love to get it done faster than 18 months. But I also do 
not want to mislead the Subcommittee. Within a frozen budget 
level, and I have probably moved about as much money and 
tightened as I can in other places that I can do right now, so 
I do not have a lot more to throw right now. So we have to do 
it smart, as well.
    Senator Warner. Thank you, Mr. Chairman. I appreciate your 
courtesy.
    Senator Akaka. Thank you, Senator Warner.
    Director Berry, OPM has set an ambitious 18-month goal to 
reduce processing time to an average of 60 days. The current 
average stands at 156 days. Given the challenges we have heard 
about today, please explain why you feel this goal is 
attainable.
    Mr. Berry. Well, I think within constrained budgets, and 
keeping in mind for Fiscal Year 2012, the current budget right 
now, just to give you a sense of our constraint, the 
President's budget request was for $232 million for our agency 
and we received, and I understand the deficit we are wrestling 
with and we have to share our pain with everyone else, but we 
were held at $211 million, which is a hard freeze from the year 
before.
    So you can see moving these resources, I have had a 20 
percent increase in the past 2 years of what I have been able 
to pull from other parts of my agency to put on retirement to 
try to address this situation. So I take it very seriously, Mr. 
Chairman, and will continue. Like I said, it is my highest 
priority.
    But I also do not want to mislead the Subcommittee. I do 
not have a magic wand. This is hard work. This is paper and 
pencil processing. The first IT task we have to do is just 
replace those antiquated systems. If those systems fail right 
now with the code that the IG mentioned it will blow a hole in 
my strategic plan. I have to be honest. And so we have to get 
those upgraded. We have to get them brought into the modern era 
and the private sector is going to help us on that.
    So that is going to be--all of these elements of this plan, 
I believe, will address this, the four pillars, which are 
getting more people, getting them trained as fast as we can, 
and getting them on the front line.
    The basic training, just to give you a sense of the 
complexity of this, for someone to begin to process with a 
mentor looking over their shoulders takes 3 months to get them 
to that point. It is 6 months before they are doing it without 
the mentor there and a year before they can really handle the 
full panoply of cases. One of the things we have looked at is 
could we just go out and hire a temporary contractor, short-
term help that could come in and help us. But many of the 
contractors we have worked on who are familiar with our 
situation and the complexity of it know that it is going to 
take them about the same time to get the people trained and up 
and running. So they cannot make that investment for an 18-
month period or a short-term period.
    So people, technology, working with the agencies, and 
getting IT fixes in place. Those four pillars, I think, Mr. 
Chairman, are every angle of attack that we need to make on 
this issue and we are going to go at all four of them equal 
energy and see if we can move the needle. I think we can.
    Senator Akaka. Thank you.
    Ms. Melvin, you testified that OPM's strategic plan does 
not address its dependence on legacy systems. What methods can 
OPM use to evaluate its legacy systems and determine how they 
should fit into its reform strategy?
    Ms. Melvin. The approach that we would advocate would be 
for OPM to step back and take a look overall at what its 
current operating State is in terms of information technology 
that supports its retirement processing. So it involves getting 
an up-front understanding of what all of its systems are and 
then from that point moving forward to really make a decision 
on how it can process going from there.
    In terms of a plan that we look for, we think that there is 
a lot more that OPM can do to establish a concrete plan, an 
approach, if you will, for addressing its information 
technology. Looking at the IT systems that are there, 
understanding all of the interfaces, for example, all of the 
different aspects that go into that is critical to that plan.
    We would like to see a plan, however, that is built on them 
having an understanding of what their current state is and that 
is driven by that vision that he speaks of in terms of moving 
forward to having a modernized automated process. But in doing 
that, what we would look for is for them to have a very solid 
description of program scope that would look at all of those 
systems, that would take into consideration all of the 
processes that would have to be considered as they design a 
system, the actual implementation strategy that would, again, 
be built upon what they are trying to move toward, the ``to 
be,'' if you will. A lot of it is built around understanding 
their architecture, the IT architecture that they have to have 
in place to support this modernization effort.
    And then from there, it moves into understanding the lines 
of responsibility and authority and make sure that they have 
the critical management officials in place to oversee this 
effort and to move forward.
    A big concern that we had was the lack of oversight that 
has pervaded the efforts that they had undertaken. I think 
having the critical oversight of all of these processes as they 
move forward is going to be key to them being able to figure 
out how to move from those legacy systems into a process that 
is more modernized.
    Senator Akaka. Thank you.
    Director Berry, under my Non-Foreign Area Act, employees in 
Hawaii, Alaska, and the Territories who retire between 2010 and 
2012 may treat part of their Cost of Living Adjustment (COLA) 
as locality pay----
    Mr. Berry. Yes, sir.
    Senator Akaka [continuing]. For retirement calculations. 
Some people expect a surge of retirements from these areas in 
late 2012. What steps is OPM taking to make sure it is ready 
for this and other retirement surges so these employees will 
not face additional delays?
    Mr. Berry. Mr. Chairman, thank you, and we are well aware 
of that COLA calculation and recalculation under the reforms 
and the law that you and the Congress have put into place and 
we have been working very hard with outreach to all of the 
agencies who have the responsibility, for example, to manage 
the actual buy-back of the deposits that need to be made for 
some of the annuitants. We have done an extensive outreach 
effort to assist agencies and will continue to provide 
training.
    We have done benefit administration letters to all of the 
H.R. agencies, to each of the Federal agencies, to help them 
and assist them in determining these calculations. We have done 
onsite training in the locations where the majority of these 
annuitants are located. As we recently completed a training in 
Hawaii, which I, sadly, could not attend. The training that we 
have also done for agency benefit officers at the 2010 Benefits 
Conference and the Fall Festival of Training, which happened in 
2011, is another opportunity for us. But we are going to stay 
on this. And finally, we have done a payroll presentation to 
the Shared Service Center Advisory Council meeting, which has 
to manage those calculations for those--the buy-backs under the 
law that you recently put in place.
    So I think, sir, we have it well in hand. I also know that 
one of the leaders who understands the complexity of this 
issue, you were very kind to allow me to bring onto our staff, 
Thomas Richards, he helps dog this issue internally at OPM to 
make sure that we meet all the deadlines under the law that you 
have created here.
    Senator Akaka. Thank you very much.
    Senator Johnson, do you have questions?
    Senator Johnson. Thank you, Mr. Chairman.
    Director Berry, are there any simple cases?
    Mr. Berry. Yes. Thank goodness, there are.
    Senator Johnson. You mentioned a word I was going to bring 
up, triage.
    Mr. Berry. Yes.
    Senator Johnson. In that triage process--again, I am glad 
you are looking at some Six-Sigma processes, as well, process 
improvement--is part of that effort not only just splitting out 
the complex cases but really taking a look at the simple ones 
and move those faster? In other words, do some of your cases 
move through very quickly or are they all stacked up and first 
in, first out process?
    Mr. Berry. No. We do have a triage for a disability case, 
for someone who has a terminal illness or is fighting a serious 
disability illness and has pretty clear issues. We work very 
closely with Social Security and the Department of Labor to 
expedite those cases and try to bring those to the forefront. 
So, absolutely, we do take triage seriously.
    But we also, through the Six-Sigma process, are identifying 
those cases where somebody has worked at one agency. They are 
in one system. We have a complete file. We can get it done in 3 
hours. So we are tiering those down and assigning those simpler 
cases to those more junior employees and our more senior 
employees who are more familiar with the complexity of those 
individual complexities of those 500 rules that they need to 
understand and apply, we can use those more senior 
adjudicators, the Legal Administrative Specialists (LASs), to 
handle those.
    So the Six-Sigma process has really been helpful in terms 
of helping us define that and to create that front-end process 
which we were not doing before. So it has been a great reform 
and one which, I think when we look at that 20 percent increase 
in productivity, I cannot give you an exact of what percentage 
of that is due to that, but that is one example of something we 
have been able to just get running with.
    Senator Johnson. The two areas of complexity you talked 
about, certainly the people moving around to different 
agencies, which I can see could be pretty difficult, having 
different jobs under different contracts with different 
calculations, I mean, again, that is just growing geometrically 
in terms of complexity. Do the retirees themselves--can they 
take on some of the responsibility for getting information? Are 
you trying to create some systems there in terms of data 
entries so that they can actually feel empowered to help 
themselves speed the process along?
    Mr. Berry. Absolutely, Senator Johnson. The people who know 
their service best are our retirees and we encourage and are 
working with the Chief Human Capital Officers Council and our 
agencies as well as all of the employee associations and our 
union partners and management associations. As people are 
thinking about retiring right now, we encourage them, 6 months 
out--most people know that they are approaching retirement. 
They are thinking about it. Even if you are just thinking about 
it, make sure your paperwork is up to date. Go to your H.R. 
office and look at your file and see what is missing and see if 
they have that. And if not, you can help that H.R. officer by 
saying, what? You might not know this, but when I was in 
college, I worked part-time at the Postal Service and I should 
get credit for that. Well, they are not going to know that. 
That annuitant is going to know that and they can help, then, 
to go to the Postal Service to identify the paperwork so that 
we can have a complete file.
    So we are asking our annuitants to help us in this regard, 
and anything they can do to make sure--like I say, if we have a 
complete file, the processing time, we will be able to blow by 
that 60-day standard. I would love to get to a 30-day standard. 
But I also know we have to have realism as we try to tackle 
this backlog. And so to the extent we can get help from our 
annuitants, I would be very grateful for it.
    Senator Johnson. Well, is that a standard part of the exit 
process or the termination process?
    Mr. Berry. In some agencies--it is not standard across the 
government, no. Some agencies do a better job. Some annuitants 
or employees do a better job as they are approaching 
retirement. And some folks wait until the very end. And so we 
have to be ready to handle all of that. But working with the 
CHCO Council, I think we are going to be able to really 
significantly--those audit, the annual audit picture you had--
and I want to, in fairness to some of the agencies that were 
mentioned, because that audit is not a scientific sample. We 
are drawing cases as best we can.
    For example, OPM under that audit, to be full disclosure, 
we have a 50 percent error rate under that, but it was premised 
on two cases, one of which was incomplete, therefore the 50 
percent error rate. So you can see how that audit has not been 
done accurately, and so one of the things we are working with 
the Navy Six-Sigma process on is refining that so we can get a 
really good monthly snapshot and know who is really holding up 
the line here by bringing in incomplete files.
    And the CHCO Council has agreed to hold each other's feet 
to the fire and monthly share the data amongst each other so 
there will be peer pressure. But I will also, as soon as we get 
that, be able to make that available to the Subcommittee, as 
well.
    Senator Johnson. As part of this process, and really, as 
just part of the Office of Personnel Management, is there any 
effort underway at all to take a look at all these labor 
contracts, take a look at all of these different calculations 
and try and begin the standardization process?
    Mr. Berry. None of those calculations are as the result 
of--at least none that I am aware of are the result of any 
bargaining. They are all set in law. So they have all been 
adjustments or results that the Congress has enacted. And so 
Federal employees do not bargain over pay, so that--nor over 
their retirement benefits. So none of this variability that we 
are talking about----
    Senator Johnson. So the question would be, would that be a 
recommendation you could make to Congress, then, to standardize 
these things?
    Mr. Berry. It is something we would love to work with the 
Subcommittee on as a longer-term project, of how we might be 
able to standardize and reform some of that complexity in the 
system. Some of it goes back over 100 years and we are still 
responsible----
    Senator Johnson. OK. You have a receptive audience right 
here.
    Mr. Berry. Yes.
    Senator Johnson. Let us talk about some good news. I heard 
that of the $600 million payment to dead people, $500 million 
has been recovered. Can you just tell us how that happened and 
maybe it can serve as an example for other areas.
    Mr. Berry. Well, it is through a lot of hard work and it is 
through the good work of our Inspector General's Office. They 
identified some great reforms that we could do by using Social 
Security lists and cross-checking and doing mailings using 
1099, so our people just implementing those reforms. And then 
we have been able to recover much of those resources.
    But we can still do better, and that is why I think having 
a strategic plan of looking over the horizon, how can we be 
smarter and how are we going to do that together with our 
Inspector General's team. They have an outstanding group of 
people and I want to give a hats off to Patrick for raising 
this issue and dogging it, and my commitment is we will stay on 
it to do it.
    Senator Johnson. I am just amazed you recovered $500 
million. Now, were those checks just sitting there and you had 
to basically void them out, or did you actually have to go to 
people and say, you owe us X?
    Mr. Berry. Some of it is people are not aware. They have 
been receiving a check, and you are the son or you are the 
surviving spouse and you thought that they had elected for the 
annuitant survivor plan when, in fact, they did not. And so, 
therefore, as the spouse, you are not entitled to that check. 
And so they are not aware that--for example, they presumed that 
it happened. And it often is not until you approach and you 
say, I am sorry, but you can no longer receive this payment. 
Oftentimes, they are not even aware that they were improperly 
receiving it.
    But many of it, some of it--there is some percentage of it 
that is fraud and we have to go after those people very hard 
because that is illegal. But it is a very complicated issue. It 
is multifaceted. And I think what Patrick has designed and what 
we want to work on in the strategic plan is we have to attack 
this from all the angles, not just one, and that is why I 
think--why developing a good strategic plan on this will do a 
good job, but I should defer to Patrick.
    Mr. McFarland. I thought this might be of interest. It is 
nice sometimes in a situation like this to put a face on the 
issue. Most of the retirement fraud is fraud of opportunity. It 
is convenient for the family member or a friend or someone who 
is associated with the person that died to keep the checks 
coming so that they do not put themselves in an awkward 
position of having to tell the truth. They just keep accepting 
the checks.
    Here is a very interesting story that I think is worth 
reading. We do encounter cases of elder abuse. For example, we 
found a retired Federal employee and military veteran who was 
evicted from a series of nursing homes for non-payment while 
his son was stealing $47,000 in retirement and VA benefits from 
their joint bank account. This gentleman was transferred to 
four different nursing homes in under 2 years with his son 
simply dropping him off at the next nursing home to avoid 
making payments. The defendant wrote only two checks for the 
nursing home care. He stopped payment on one and wrote the 
other on a closed checking account.
    The defendant pled guilty to theft and was sentenced to 19 
years, unfortunately, of just probation and restitution of 
$47,000. OPM received back $36,000 and the remainder was 
returned to VA. So there is just a panoply of these cases out 
there that we work with.
    Senator Johnson. Thank you very much.
    Senator Warner. Mr. Chairman, could I get two quick 
questions and then I will not take any more time?
    One was on the question Senator Johnson raised, the issue 
of providing future retirees with kind of a checklist. I just 
wonder if that could be at least standardized, gotten out. If 
you have a 156-day average wait list and yet you can say, if 
you get all your data in a timely manner, the wait list is some 
smaller percentage of that and if members could write out, as 
well, I mean----
    Mr. Berry. It is a great idea, Senator. I know the Chairman 
takes financial literacy training very seriously, and so we can 
make sure. I think our Web site has it now, sort of a checklist 
for people, if you are thinking of retiring, what to gather. 
But we need to--if we do not have it as standardized and as 
simple----
    Senator Warner. And proactively sending it out----
    Mr. Berry. Absolutely.
    Senator Warner [continuing]. And also indicating how long 
the potential wait is.
    Mr. Berry. Yes.
    Senator Warner. The only other question I would ask, and 
again, I really thank the Chair and the Ranking Member for 
having the courtesy to have me come by, I did hear as I was 
trying to get briefed up on the challenge of how long it is to 
train new personnel on this issue. I know on the second panel 
we are going to have some representatives from NARFE. Do you 
have any capability of bringing back recently retired OPM 
personnel that have this expertise already on some kind of SWAT 
team?
    Mr. Berry. Yes, sir. In fact, I think, is it No. 8? We have 
recently brought back as reemployed annuitants people who had 
retired from our retirement processing who we knew were 
outstanding producers. They knew how to do cases. They did them 
accurately. Their accuracy rate was very well. So we went and 
asked them, would you come back and help us? And so eight took 
us up on that and they are now at work. And so part of that 20 
percent productivity increase is they have been on the front 
lines here in the past month, and we are going to keep them 
there as long as we legally can to keep producing. They are 
part of that people solution.
    And so it is a great idea, Senator. What we have said is we 
will keep looking for people who are accurate and they had a 
good record with us. If they would like to come back, we would 
love to welcome them back to help.
    Senator Warner. Thank you, Mr. Chairman.
    Senator Akaka. Thank you very much, Senator Warner. I thank 
you so much for your responses. Without question, it shows that 
we will be improving the programs further for the future and 
that there are plans in place. Of course, we wish you well in 
reworking those retirement systems and to do it as quickly as 
you can. So I want to say thank you so much to all of you for 
your responses.
    But before I dismiss you, let me ask you a question Mr. 
McFarland. You noted the absence of annual recovery targets in 
OPM's reclamation strategy, but also acknowledged the 
difficulty in setting a target given the complexity of the 
recovery process. My question to you is, what specific steps 
would you recommend OPM to take in order to set a feasible 
annual target?
    Mr. McFarland. Well, I think what I would suggest would be 
pretty much in line with what I said earlier, and it comes 
right back to leadership from the top. Now, I am not just 
speaking of John, of course. I am speaking of somebody who is 
really going to take charge of something and determine through 
that process--a project manager, so to speak--and determine 
through that process what would be a viable target.
    I cannot say at this point because I do not know, but I 
think that if we have someone at the top who is dogging this 
thing to the point where everybody has to answer up in an 
extremely accountable way, then that will create the tone that 
is needed in order to make these things work. The strategic 
plan is, like I said before, a big step forward, but unless we 
have the people, and the funding to get the people for that 
project, it is not going to go anywhere. I truly believe that 
it just takes a lot of support from the top and it cannot 
waiver. It has to be there indefinitely.
    Senator Akaka. Thank you very much.
    I am going to ask each of you, in case you have any 
additional statements to make, that you make them now before we 
dismiss the first panel. Director Berry.
    Mr. Berry. Mr. Chairman, you have been very generous with 
your time today. You have my promise that we will stay on this 
and we will dog this plan to make sure that it continues to 
follow the trajectory which we hope is going to be even faster. 
So thank you, sir, for the opportunity to be with you today.
    Senator Akaka. Thank you. Anyone else?
    Mr. McFarland. Mr. Chairman, I would like to just mention 
something regarding what was talked about earlier. From the 
standpoint of the person preparing to retire they need to get 
their paperwork moving so that it will help the system as far 
as responsiveness. But my point is that I would like to see--
and this might possibly be a recommendation from our office 
down the road--I would like to see that, let us say today all 
of the backlog was cleared up. I would like to see a situation 
where not just the retiree shows initiative, but also have the 
office at each agency show initiative and look in their files, 
determine who probably will be retiring, and who may have 
indicated retirement. They should show some initiative and get 
started on the paperwork, and not just rely totally on the 
retiree.
    Senator Akaka. Thank you.
    Mr. McFarland. Thank you.
    Senator Akaka. Ms. Melvin.
    Ms. Melvin. Yes. Chairman Akaka, I would encourage 
continued oversight such as the hearing that is being held 
today and other mechanisms through requiring OPM to report, 
similar to some of the things that they have suggested. I would 
also hold OPM to developing timelines and measures of progress. 
I think that is critical to anything that they have to do going 
forward, whether it is the information technology component or 
the personnel component. Having clearly defined timelines and 
measures for accomplishing the goals and the activities that 
they have set about to do is going to be critical to ensuring 
that there is accountability for them to get there.
    Senator Akaka. Well, I want to thank the panel for your 
testimonies and your responses. At this time, there are no 
further questions for this panel.
    I would like to now welcome our second panel of witnesses. 
[Pause.]
    Welcome to our second panel. Good to see you again here. 
Mr. Joseph Beaudoin is President of the National Active and 
Retired Federal Employees Association, and Mr. George 
Nesterczuk is President of Nesterczuk and Associates.
    It is the custom of the Subcommittee to swear in all 
witnesses, so will you please stand and raise your right hand. 
Do you swear that the testimony you are about to give this 
Subcommittee is the truth, the whole truth, and nothing but the 
truth, so help you, God?
    Mr. Beaudoin. I do.
    Mr. Nesterczuk. I do.
    Senator Akaka. Thank you. Let the record note that 
affirmative answers were given.
    I want to thank you so much for being here and would like 
to call on Mr. Beaudoin for your statement. Please proceed.

TESTIMONY OF JOSEPH A. BEAUDOIN,\1\ PRESIDENT, NATIONAL ACTIVE 
           AND RETIRED FEDERAL EMPLOYEES ASSOCIATION

    Mr. Beaudoin. Mahalo, Chairman Akaka and Members of the 
Subcommittee. Thank you for inviting me to testify on behalf of 
the 4.6 million Federal workers and annuitants represented by 
the National Active and Retired Federal Employees Association 
where I have the privilege of serving as President. I 
appreciate the opportunity to discuss Federal retirement 
annuity processing.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Beaudoin appears in the appendix 
on page 69.
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    We have received hundreds of calls from our members, most 
of them from outside the Washington metropolitan area, 
complaining that interim payments are too low, that they are 
waiting too long to receive their full annuity payments, and 
that they are unable to get through to OPM to check the status 
of their annuity. Our members have sent us e-mails attesting to 
their long delays.
    For example, in the past 2 weeks, Jennifer Ortiz told us, 
``I retired on December 31, 2010, and received my first full 
annuity payment on September 1, 2011. Up until then, I was 
receiving interim payments of $17 per month.''
    John Tolleris told us, ``I retired from the U.S. Treasury 
Department (DOT) on May 31, 2011, after 32\1/2\ years of 
service. While OPM started paying my interim pension promptly 
on July 1, it still has not yet adjudicated my pension case and 
I am currently receiving about 65 percent of the monthly 
payment my agency had estimated. I am now expecting to receive 
my eighth 'diet' annuity payment next month with no indication 
of when I will ever receive my full monthly payment or ever-
growing back payment.''
    Craig Boehne told us, ``I retired from the FAA on May 31, 
2011. I continue to receive partial interim checks at about 55 
to 60 percent gross of what I am entitled.''
    OPM confirms the problem that our members are experiencing, 
recognizing that Federal employees face unacceptable delays in 
receiving retirement benefits after years of honorable service 
to the Nation. As of December 31, 2011, there was a backlog of 
48,375 claims, and the average time to process a claim was 156 
days, or a little over 5 months.
    We commend OPM for so honestly recognizing the problem and 
for developing a strategic plan to solve it. This hearing 
provides an important opportunity to assess whether that plan 
is sufficient to achieve its goals, and if not, to determine 
what else OPM, agencies, or Congress can do to ensure that it 
is.
    This task is urgent. The effect of such long delays on new 
Federal retirees is obviously serious. They must make do while 
waiting to receive the full amount they have earned. The wait 
is too long and the uncertainty is too much, particularly in 
the current economy.
    In addition to causing individuals personal pain and 
inconvenience, the delays also have an impact on local 
communities. More than 85 percent of Federal retirees live 
outside of the Washington, DC. area. They live in every 
American community.
    We are hopeful that OPM's plan reduces delays. Of course, 
even the best laid plans can go awry. Thus, implementation will 
be essential to its success. Qualified new employees must be 
hired and trained quickly. Higher production standards must be 
enforced. And temporary mandatory overtime must be implemented. 
Also, there must be an enforceable way to ensure that agencies 
provide timely information to OPM.
    Our members frequently complain not only that they have not 
yet received their full annuity payments, but they cannot 
easily check the status of their claims. It is unclear whether 
OPM's new plan will provide better customer service to retirees 
that simply want to check the status of their claim. What is 
the volume of calls into OPM? Are there enough people answering 
the phones to handle that volume? It may be that there are 
simply too many calls for too few people. If that is the case, 
OPM should look for other ways to provide retirees with status 
updates. For example, OPM may want to consider providing 
retirees the ability to check their status online.
    Federal employees who have worked for years in public 
service deserve to receive their retirement income they have 
earned in a timely manner. OPM recognizes that delays in 
receiving retirement payments are unacceptable. OPM has a new 
plan to solve the problem and we hope it works, but we must see 
results and we must see them soon. The task is too urgent and 
the problem is too big not to.
    Thank you for the opportunity to testify and I would be 
happy to answer any questions you may have.
    Senator Akaka. Thank you very much, Mr. Beaudoin.
    Mr. Nesterczuk, please proceed with your testimony.

 TESTIMONY OF GEORGE NESTERCZUK,\1\ PRESIDENT, NESTERCZUK AND 
                           ASSOCIATES

    Mr. Nesterczuk. Thank you, Senator Akaka, and good 
afternoon. I appreciate the opportunity to testify on the 
processing of Federal retirement applications by OPM, an issue 
that unfortunately is getting to be of increasing concern to 
more and more Federal employees.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Nesterczuk appears in the 
appendix on page 73.
---------------------------------------------------------------------------
    I prepared a longer statement for the record. I will speak 
from an abbreviated version.
    Retirement benefits are an integral part of the Federal 
employee compensation package. The prevalent systems are the 
Civil Service Retirement System and the Federal Employee 
Retirement System (FERS). They are funded from the Civil 
Service Retirement and Disability Fund (CSRDF). It is a trust 
fund administered by OPM.
    In 1983, when the unfunded liabilities in the CSRDF had 
soared to over $500 billion, Congress closed the CSRS to new 
entrants with the hope that starting a new system would 
simplify the process. FERS was established in 1986 and opened 
to new employees in 1987. FERS employees are enrolled in the 
Social Security system, a benefit generally not available to 
CSRS employees.
    These steps significantly slowed the growth of the unfunded 
liability of the trust funds but did nothing to actually reduce 
it. Today, the unfunded liability has grown to over $800 
billion, by some accounting methods, much larger if you use 
dynamic scoring. FERS is fully funded. However, even though 
FERS is fully funded, the CSRDF has had to survive on borrowed 
money to meet its cash-flow requirements since the 1960s.
    Employee payroll deductions together with agency 
contributions provide about $30 billion of cash receipts 
annually, but this sum is dwarfed by payments to annuitants and 
survivors totaling nearly $70 billion per year. This perpetual 
reliance on the general fund rather than the trust fund has 
kept the spotlight of controversy on the Federal Retirement 
System.
    OPM services nearly 2.5 million annuitants and survivors, 
with operating costs of over $90 million per year drawn 
primarily on the trust fund. OPM, as the bridge to continued 
compensation, has an obligation to provide full and timely 
annuity payments. OPM maintains annuitant records and 
administers the exercise of various benefit options. The agency 
is also responsible for maintaining the integrity of payments 
by preventing fraud and abuse of the system.
    It is impossible to achieve these goals without up-to-date 
information technology and properly functioning information 
management systems. Past leadership at OPM has recognized this, 
and over the years, undertaken succeeding Retirement System 
Modernization (RSM), efforts, with varying degrees of success 
and failure.
    Mr. Chairman, you asked me to address efforts to reform 
retirement processing, management of the resources, and any 
recommendations to improve claims processing. I will take these 
in turn.
    For the sake of brevity, I will skip the early reform 
efforts and begin with RSM in 1997 that had intended to reduce 
the amount of paper in the process. Around this time, 
commercial vendors had developed a number of systems that could 
potentially be modified for use in the Federal sector and RSM 
envisioned relying on such commercially available products.
    With Internet usage exploding, the notion of online 
management of employee benefits programs took RSM in a yet new 
direction. About 10 years ago, OPM expanded RSM, began to 
consider outsourcing the modernization effort. In 2006, the 
agency awarded contracts to automate retirement processing, 
convert paper records to digital files, and give employees the 
ability to file for retirement online, a concept dubbed Retire 
EZ. It certainly was not.
    By 2008, OPM found it necessary to cancel the effort, and 
the 10-year, $290 million RSM contract was terminated. By that 
time, OPM had spent over $30 million in various failed 
modernization efforts during the previous decade. No doubt, 
some benefits have accrued to OPM from these expenditures, but 
considering the growing backlog of claims, it is hard to tell 
what those might be.
    What is disappointing is the current administration's 
apparent abandonment of full-scale modernization. Despite 
shortcomings and failures in past efforts, OPM did recognize 
the need to modernize a process too heavily dependent on 
paperwork. Today, you and I can file complicated tax returns 
online, purchase most any kind of product or commodity online, 
and execute complex financial transactions in our investment 
portfolios. Is filing a retirement application really more 
complicated than filing a tax return that meets the 
requirements of thousands of pages of tax rules and 
regulations? I do not think so.
    It was not until January of this year that OPM Director 
Berry produced a strategic plan for Retirement Services. With a 
retirement claims backlog at over 48,000 claims--much higher I 
heard earlier--the Director proposes to throw money and bodies 
at the problem. The agency is proposing to hire 76 new people 
to toss at its mountain of claims. These new hires will require 
extensive training. It will be months, according to Director 
Berry himself, before they can fully shoulder their burden.
    In addition, OPM proposes to expand the use of overtime. 
Upgrading IT capabilities are thrown into the mix almost as an 
afterthought. Director Berry missed a clear opportunity to 
reassure the Federal community that a wholesale restructuring 
would be forthcoming.
    The current lack of leadership on Retirement System 
Modernization has left agencies to fend for themselves. Given 
past failures at OPM, this is not necessarily a bad outcome, 
but it certainly leaves one to wonder how $95 million of 
operating expenses per year for retirement operations are 
prioritized and allocated, which brings me to the second issue 
you asked me to discuss: resource management.
    In light of the retirement claims backlog, serious 
questions arise about management of resources and agency 
priorities. In the strategic plan for Retirement Services, the 
Director concludes that, quote, ``The retirement claims backlog 
developed over a number of years and for a number of reasons.'' 
If that is the case, then the problem should have been attended 
to as a priority back in 2009 and not allowed to fester until 
now.
    As an aside, I would point out that in the 1990s, in the 
Clinton Administration, with the significant downsizings, over 
4 years, 400,000 Federal employees were reduced from the 
payroll. Overwhelmingly, those were retirements. Retirements 
were running at 80,000 per year in those times, twice the 
normal routine. And yet we did not have the buildup of these 
kinds of backlogs under those stresses.
    And if the backlog--getting back to my script--if the 
backlog is of more recent vintage, then the problem reflects 
directly on leadership. In either instance, OPM resources were 
not properly allocated to manage a core agency function, and it 
has been since my involvement at OPM for over 30 years. After 
all, OPM has been forecasting a retirement tsunami since 2006, 
so no surprises.
    In 2009, Director Berry needed to double-down on technology 
when RSM needed his attention. He instead allowed the looming 
problem of retirement claims to deteriorate and now proposes to 
grow OPM's payroll and spend more on overtime. The Director 
chose to double-down on labor rather than technology. Whose 
interests are better served with that management decision?
    Now, some suggestions for improvement, some of which I have 
already heard or are being taken up, which is a good thing.
    In the long term, I do believe that full automation of 
retirement processing should remain the highest priority for 
OPM. The original intent of RSM, to rely on commercially 
available technologies, is a sound strategy and it should 
receive renewed consideration.
    In the short term, I concur with OPM's partnering with 
agencies and I would enhance the role of the agencies in pre-
processing retirement claims. I would upgrade the skills of 
employee benefit officers in the agencies--they work very 
closely with OPM today--particularly in the larger agencies 
that produce the bulk of retirees. It seems like a no-brainer 
to me.
    Further, I would have OPM fund the acquisition of competing 
commercial technologies at these agencies to serve as a 
comparison test bed to evaluate which are more accurate and 
more effective. OPM should accept retirement claim calculations 
for predefined classes of annuitants from such agencies, accept 
them as final calculations.
    For example, employees retiring with unreduced benefits 
from an agency with which they spent their entire careers would 
generally have very simplified applications. OPM could perform 
statistical samples, detailed reviews of randomly selected 
agency produced claims, as a means of maintaining the integrity 
of the process and provide whatever corrective measures the 
agencies might need on a subsequent basis.
    Difficult claims would be identified much sooner in the 
retirement process and employees themselves would have 
opportunities to resolve some of those problems while still 
employed and while still having access to their agency claim 
processor rather than a telephone answering device.
    Further, I would put more emphasis on technology 
development for FERS because that constituency will be retiring 
in greater numbers in the next few years, while CSRS employees 
will decline significantly in number over the next 5 to 10 
years. While the CSRS cases may possibly have more complex 
employment histories, they do tend to have much easier benefit 
calculations.
    Finally, I would urge Congress to maintain close oversight 
over OPM's claim processing until such time as the backlog has 
been reduced to an acceptable number of claims. It is only 
congressional scrutiny that has forced OPM to take action in 
the current instance. Congress should consider requiring OPM to 
file monthly progress reports on backlog reduction, applicable 
performance standards, productivity metrics, use of overtime 
dollars, and the like. High-level attention and keeping the 
agency focused on its priority is what it will take to fix this 
problem.
    Thank you for your attention. I would be happy to respond 
to any questions you may have.
    Senator Akaka. Thank you very much, Mr. Nesterczuk. Your 
full statement will be included in the record.
    Mr. Nesterczuk. Thank you.
    Senator Akaka. Mr. Beaudoin, when your members leave 
Federal service, do they feel that they receive sufficient 
information about what to expect during the retirement process?
    Mr. Beaudoin. The answer to that is no, sir. We at one time 
advocated that pre-retirement seminars should be given, the 
employees should attend them to find out about their benefits 
and about all of this information. The agencies, of course, 
have reduced all of that because of the budget constraints and 
the answer is no.
    Senator Akaka. Mr. Beaudoin, as you know, Mr. McFarland 
testified about a need for increased communication with 
annuitants to prevent improper payments due to unreported 
deaths or changes to personnel information. My question for you 
is, do you have recommendations for education or assistance 
your members might find useful so that they know how to update 
OPM and the Social Security Administration (SSA) about life 
changes?
    Mr. Beaudoin. Sir, we in NARFE have a retirement benefits 
section that deals mainly with that issue and with OPM, and 
every day, we receive hundreds of calls from members and 
annuitants because they cannot contact OPM. The lines are busy. 
There is no way for them to go on electronically to get 
information. It is the backlog and the inability to contact OPM 
to get information that is causing a lot of the problem. Of 
course, the whole problem that we are here to talk about is the 
backlog in even getting their annuities. But once they get 
them, they cannot get through to OPM because there is nobody 
there to answer the lines.
    Senator Akaka. Mr. Nesterczuk, you recommended allowing 
people to begin their retirement applications while they are 
still active employees. Please elaborate on how you think this 
should be done and why you think it would speed up the process.
    Mr. Nesterczuk. I think just having publicized the delays 
and the difficulties that employees and retirees are facing 
with the system as is has alerted the employees, or potential 
retirees, to the processing problems that could face them. Just 
knowing 2 to 3 months before you are going to retire that 
kicking in an application form will start the process of 
amassing the information necessary to clear you at exit should 
provide enough incentive for them to get involved.
    It is not always the fault of the person you are speaking 
to. There are--if you have had a history where you left an 
agency 10 or 15 years prior to your retirement, the files in 
that agency could most likely be in archives halfway across the 
country. You need to place a request to get that stuff 
activated and back out. That is weeks. That is not days. That 
is weeks before the physical files are actually placed in front 
of the processor. So it is not OPM's fault necessarily nor your 
H.R. office. It is the system that we operate in.
    And I think employees need to be made aware of that. If you 
have worked in one agency for 20, 30 years and the record is 
continuous, that is not an issue. But if you have a broken 
employment record, then you need to know that it will take 
weeks to reconstruct that. OPM will not finalize anything until 
they see hard proof. Your H.R. office could provide the 
information, but OPM will not clear that until they see the 
hard proof. So you have to get that information rolling before 
you are ready to go.
    And, of course, the employees have the greatest vested 
interest to see that happen and they can dog the process. They 
will have more time to call that archive operation and make 
sure that their files have been cut loose rather than the H.R. 
person that may be dealing with 50 or 60 cases at the time. So 
that is why I think it is a good idea, and as a matter of 
policy, OPM ought to encourage--the CHCO Council through 
issuances, through publications, the American Association of 
Retired Persons (AARP) can get involved. If you identify what 
are the stumbling blocks in the process and how employees can 
intervene on their own behalf, you will get them activated. It 
will serve everyone, OPM, the processors. It will serve 
everyone well to do that.
    Senator Akaka. Thank you very much for your response.
    Mr. Beaudoin, I would like to get your thoughts on this 
recommendation, as well. Do you think your members would 
benefit from beginning the retirement process while they are 
still in active service?
    Mr. Beaudoin. I do believe in that, because if they, as has 
been testified already, if they would start 3, 4, 5, 6 months 
before their retirement, we would not end up with the problems 
that we are presently having, and that is that right now, 23 
percent of all the claims are missing one or more records. 
Eleven percent are not even received within 30 days. And the 
problems with the agencies is that they do not have complete 
information, and as has been testified earlier, the individuals 
do. If the individuals would look at their records and say, as 
Mr. Berry did, oh, you are missing this portion of it, I think 
it would help to expedite the claims and we would not end up 
with 48,000-plus claims in the backlog.
    Senator Akaka. Yes, thank you. Senator Warner do you have 
questions?
    Senator Warner. Thank you, Mr. Chairman. I know you have 
been very generous with your time for me today and I really 
appreciate you willing to have me come over and participate as 
a member of your Subcommittee. I also really particularly 
appreciate you holding this hearing to bring this matter to the 
attention of your Subcommittee and the public.
    And I also want to thank my friends from NARFE. I have had 
a long journey with NARFE back to my times as Governor. Mr. 
Beaudoin, thank you for your testimony.
    I would ask--just two or three quick questions. One is, you 
made the point, and at least, I want to try to followup with 
Mr. Berry on this point, that it did not sound like there was 
really that standardized package and checklist of what you 
should pre-prepare. I agree with Mr. Nesterczuk that maybe we 
ought to start that process a little bit earlier. But even if 
you do not, you ought to at least make that checklist available 
on a standardized basis.
    And would it not seem to me, and you made the point that 
perhaps those pre-retirement seminars were cutoff because of 
budget constraints, but it would be interesting to see an 
analysis. If you do not end up getting the data and those are 
the claims that are taking much longer, the actual cost of 
processing that claim--I think I am going to press him on that 
$107 number. I think it is actually higher than that on some 
other data I have. But it would seem to me that we would save 
money in the long run if you went ahead and started this 
process earlier or if you reinstituted those pre-retirement 
seminars or at least put together a standardized checklist. 
Would you concur with that, or----
    Mr. Beaudoin. I would, Senator. I believe that information 
is vital. It is needed by the agencies. But part of the 
problem, also, is that the agencies are sending OPM incomplete 
data and there are no teeth in there, in that, so I am sending 
you incomplete data. Just send it back to me and I will try to 
fill in the blanks. No, we ought to hold those agencies, hold 
them accountable so that they make sure that when they send the 
information, they get it from the retiree or the employee at 
the time and then they send factual information to OPM.
    And I think we need to do that. Congress needs to make sure 
that they are held accountable, the agencies, that when they 
send the data to OPM, it is correct, it is complete, and it is 
timely, and maybe that will help reduce the backlog.
    Senator Warner. And, Mr. Chairman, one other thing. It 
would seem that if Mr. Berry is going to report on a regular 
basis the backlog, which now, I believe, is actually not at 
42,000, but one of the comments today, in the mid-60,000, and 
if we could get those reporting agencies, their error rates, 
and perhaps there might be some ways that this Subcommittee, 
and any assistance I could give, that would help give OPM some 
teeth to make sure that those other agencies that are reporting 
to OPM actually try to have that as a priority, as well. 
Perhaps the CHCO Council is one tool. But my understanding is, 
and you may recall, or others, that when there was this 
situation in the early 1990s, that simply publicizing the error 
rate from some of the agencies helped create some, at least, 
pressure in town on that item and we might want to return to 
it.
    One other question, and then I want to ask Mr. Nesterczuk 
one question, and then I will, again, not take too much time, 
but I was happy to hear Mr. Berry say that they have gone back 
out to some of our recently retired Federal employees that 
might be able to help fill in since there is this lag time on 
training. Have you been asked at NARFE to help put the word out 
to your members that there might be opportunities coming back 
at OPM if you want to re-up for a period of time to help us get 
through this backlog?
    Mr. Beaudoin. No, we have not. We would be happy to put the 
word out and to do that.
    But if I could mention one other thing, Senator, in OPM's 
plan, they have voluntary overtime. We believe that is the 
wrong approach. We have too many people waiting for their 
annuities, too many people that are not getting their full 
annuities. They are getting, as I mentioned earlier, 17 
percent, 23 percent, 50 percent, whereas even the one that you 
mentioned earlier today, the lady from Colorado, says, I cannot 
do anything. I cannot buy anything. I do not get any money. We 
need to do something.
    I would hope that Congress would step in and make it 
mandatory overtime for the OPM people to work an extra 20 hours 
a week until the backlog is gone. Once it is gone, then they 
can look into automation. They can look at all the rest of it. 
But that backlog has to be taken care of, and it has to be 
taken care of now.
    Senator Warner. In prior backlogs, there has been mandatory 
overtime--I thought you had said to me--was that the case?
    Mr. Beaudoin. It was a voluntary backlog--I mean, I am 
sorry, not the backlog, voluntary overtime----
    Senator Warner. Yes.
    Mr. Beaudoin [continuing]. But that the backlog has to be 
reduced, sir.
    Senator Warner. Mr. Nesterczuk, I concur with many of your 
comments that you made and do believe we need to move through 
to a more technology-based solution, not just an increased 
personnel solution. I guess my last question would simply be 
two-fold. One, are there other examples, perhaps not from the 
private sector because clearly with all the procedures and 
rules and regulations of the Federal Government, but comparison 
to other State systems or other national government systems, 
Canada, that might have a further along technological solution, 
No. 1.
    And No. 2, it seemed it was clear that the effort with 
Retire EZ did not work out that well. How do we make sure that 
as we go down this path again we do not make those same 
mistakes?
    Mr. Nesterczuk. I think in the case of your first question 
about other available comparative systems, I am not aware of. I 
cannot answer that question.
    I do believe OPM was primarily responsible for the failure 
of Retire EZ. If the contractor in making a delivery was 
surprised at what was not functioning properly in there, they 
clearly did not have the parameters properly stipulated. OPM I 
think more than probably, for certain--should have done their 
homework better in putting out the procurement competitively 
initially so that the contractors knew what they were really up 
against instead of what it is that they got that clearly did 
not meet the requirements of OPM, of their customers.
    So they need to go down--I would not necessarily have 
tossed out Retire EZ. I would have pared it down so that it 
would pick up at least part of the workload that OPM had, get 
something for your money out of that initial investment. 
Instead of expanding it, scale it back. The $290 million was 
spread over 10 years, so it is not like they lost the full 
amount. I believe it was something like $19, $20 million for 
the 2-year effort. But I would have gotten something out of 
that, out of the contractor, and focused them on some part of 
the effort to subsequently buildupon.
    I mean, I had been involved in system programming, FORTRAN 
programming in my day, including some fairly complicated 
systems, so I know that once you have done something, you have 
a beginning and then you can fix it and build on it, et cetera, 
expand. I suspect there was a lot of political scrutiny--a lot 
of public scrutiny and political pressure that came to bear on 
not delivering after 2 years' worth of expectations. Backlogs 
may have been building up already and so they just pulled the 
plug on it to try to clean the slate.
    I think, also, OPM needs to rethink its approach of 
managing the retirement system. This business of keeping 
everything in-house and close hold does not work anymore. 
Technology advances, evolves very quickly, and you are better 
off bringing in players from the outside as partners who keep 
up with that for you and then you just give them what it is 
that you want and let them worry about how to deliver. And that 
is probably today a much better business model to utilize. But 
that would require rethinking what parts of the retirement 
system they want to keep in-house and what to put out the door 
on a competitive basis and then just monitor the process, get 
feedback on errors, fix it, work with the contractors. And you 
do not have to get stuck with one. You can get several.
    Senator Warner. Well, let me thank both witnesses, and Mr. 
Chairman, again, thank you for the courtesy, and any way I can 
help you as we pursue this matter, count me in. Thank you, Mr. 
Chairman.
    Senator Akaka. Thank you very much, Senator Warner, for 
participating in this hearing.
    This is my final question and it is to both of you. What 
should OPM's No. 1 priority be for its retirement processing 
reforms? I would like to call on Mr. Nesterczuk to answer 
first, followed by Mr. Beaudoin. Mr. Nesterczuk.
    Mr. Nesterczuk. Well, I think initially, in the short term, 
I would rely on the agencies. I would change the rules for 
processing and delegate some authority to the agencies. OPM in 
the past has delegated various kinds of staffing authorities in 
terms of the ability to hire employees. They gave it away, gave 
up their own authorities to let other agencies in the process 
participate, become more efficient and speed up the hiring 
tremendously. I would push for that initially.
    Have OPM, instead of bringing all the folks in-house--that 
is their first step--simultaneously shove some of the work back 
out. They have very capable people in the agencies, especially 
the agencies like DOD that turn loose an awful lot of retirees. 
I would work with those agencies, partner up with them, 
authorize them to be the claims adjudicators, the finalizers, 
and just monitor their progress on it. That might offload 20, 
30 percent of the workload right off the get-go. So that would 
be what I would do in the short term as my immediate priority.
    And longer term, absolutely, stick with modernization. The 
future is not going to be with more claims processors. Thank 
you.
    Senator Akaka. Thank you, Mr. Nesterczuk. Mr. Beaudoin.
    Mr. Beaudoin. Yes, sir. I believe that the problem, as we 
all know, is the backlog. We have thousands of people that are 
inconvenienced, that do not have the pay to live on. Their 
lives are upset. The communities that they live in, they cannot 
even benefit from them. So I believe OPM needs to do everything 
they can to reduce that backlog.
    They need to, as has been testified, work with the agencies 
to demand that the information coming to them is accurate and 
complete the first time. They need to have people of not the 
administrative specialists but others answer the phone to free 
up the administrative specialists. They need to bring in 
overtime, mandatory overtime. They need to bring back retirees, 
more retirees.
    They need to be more automated so that anyone who wants to 
check their claim can do it online. This is--we are in the 21st 
century. They should be able to do things online. They should 
not have to go, as they said, with paper and pencil and 
telephone. No. Go on a computer. I can check my status. I can 
check my claim. But we are still operating in the 20th century. 
I am not even sure--maybe it is the 19th century. But they need 
to move ahead and I do not think they are doing it fast enough, 
sir. Thank you.
    Senator Akaka. Well, I want to thank you both. It was so 
good to hear things from your experience and the people that 
you represent. Your responses will certainly be taken under 
consideration here and we all look forward to improvement in 
the retirement system. There are many times when people like 
you who, I would say, are in the trenches, know the problem 
better than officials do, so we value your responses.
    I want to thank you very much for your testimonies and your 
responses. There are no further questions.
    In this time of shrinking budgets, many agencies are 
offering early retirement options. This could mean a wave of 
retirements will be added to what is already a sizable claims 
backlog. OPM must prioritize its resources, address 
shortcomings, and focus its attention on providing the level of 
service that retirees deserve.
    I want to again thank our witnesses for being here today. I 
believe that this hearing provided good insight into how 
Federal retirement processing can and must be improved. The 
hearing record will be open for one week for additional 
statements or questions from other Members of the Subcommittee.
    Again, thank you very much. Mahalo. This hearing is 
adjourned.
    [Whereupon, at 4:50 p.m., the Subcommittee was adjourned.]



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