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Social Security’s $300 Million IT Project Investigation: Bad News for Taxpayers

November 18, 2014

Washington, DC – Last week, Social Security Administration (SSA) Inspector General (IG) Patrick P. O’Carroll, Jr., released a further response to the June 2014 letter sent by Ways and Means Subcommittee on Social Security Chairman Sam Johnson (R-TX), requesting a full and immediate investigation into the SSA’s mismanagement and failed implementation of the $300 million Disability Case Processing System (DCPS).  This response follows a September 2014 Interim Report provided to Chairman Johnson, being released today.  In response to these reports, Chairman Johnson issued the following statement:

“The news is not good for taxpayers based on reports received so far regarding Social Security’s failed implementation of a new disability case processing system.  After spending close to $300 million, with efforts led by a team of multiple leaders using 46 vendors, Social Security spent almost $800,000 of hard-earned taxpayer dollars to pay an independent contractor to tell them they should have had one person in charge of the project.  Worse, no one was fired and taxpayers will not get any of their misspent money back.  It also raised questions about Social Security’s lack of transparency and more troubling efforts to possibly conceal information from the IG.  Going forward, I will continue to hold the Commissioner fully accountable as she takes steps to right this wrong for taxpayers.”

Results of a criminal investigation regarding the implementation of DCPS are still pending.  

The Interim Report found:

  • During nine briefings (May 2009 to March 2013), the SSA staff never indicated to the IG staff that DCPS was experiencing significant problems.

  • On March 7, 2014, the SSA first contacted the independent consultant, McKinsey & Company, to serve as an “honest broker” in performing an objective assessment of the DCPS program.  As of August 13, 2014, the SSA has paid McKinsey almost $800,000 of a $1.3 million contract.

  • SSA staff made all final decisions and had ultimate ownership of the end results.  However, the SSA contracted with Lockheed Martin to perform many DCPS activities.

  • State Disability Determination Services personnel, the end-users of DCPS, were not adequately involved throughout project development. 

  • Problems with DCPS resulted in part from the fact that multiple components shared responsibility, yet no one person was actually in charge. 

  • Taxpayer funds have mostly been expended to contractors, which the SSA should not have paid if the contractors failed to meet their responsibilities.  It is not expected that the SSA will attempt to or can recover funds spent.

The Congressional Response Report found:

  • The SSA has taken a number of steps to improve the management of the DCPS project including evaluating alternatives to the current effort, tasking a single accountable person and reorganizing staff, increasing user involvement, and strengthening vendor management. 

  • The report also found that the number of vendors involved in the DCPS project is 46, as compared to the 26 found in the Interim Report. 

  • The independent contractor’s contract is now valued at nearly $1.9 million, due to the need for continued work to ensure the DCPS stays on the right track. 

  • The SSA continues to spend taxpayer dollars on the DCPS project, while it evaluates a different approach, leading to more potential waste.

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