IG: Social Security Should’ve Considered Scrapping $300M IT Project

By the end of the year, the Social Security Administration plans to launch the first phase of a major new IT system designed to standardize the processing of disability applications.

The new “core” project, which is expected to roll out between next month and December, is the first step in a retooled blueprint for developing the Disability Case Processing System -- a troubled IT development project nearly six years and more than $300 million in the making.

SSA officials came up with the new plan after system development reached a crisis stage in the summer of 2014 and they decided to “reset” the project.

However, a recent inspector general report concludes, given the millions already sunk into the effort, the agency should’ve considered simply “discontinuing the project entirely” and sticking with the hodgepodge of legacy IT systems that currently process disability claims.

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As it stands now, SSA has invested more than $300 million in the project -- the equivalent of maintaining the current systems for more than nine years -- and “for which it appears the agency will receive little benefit,” the report stated.

After the 2014 reset, the agency hauled in the U.S. Digital Service, the White House’s team of tech troubleshooters, to consult on the project. As part of its analysis, SSA considered procuring commercial off-the-shelf software, but ultimately decided on building its own custom code.

The May 31 IG report, however, documents several stumbles during the project reset. The report says the agency’s “analysis of alternatives” was incomplete because officials only considered two options: buying commercial code or building their own.

“We believe it would have been prudent for SSA to fully analyze all alternatives for” the project “before investing additional resources into a new path,” the IG report concluded.

The history of shaky development on the case-management system goes all the way back to 2010. That year, SSA awarded a contract to begin developing a new consolidated case-processing system -- to replace a mishmash of various IT systems used by the agency and state disability offices -- to process claims.

By June 2014, the agency had already blown $288 million on the project which, by that point, had only rolled out in a struggling beta version at just three sites nationwide. An independent report raised doubts about the project, leading to blaring headlines about the multimillion “IT boondoggle” and the eventual reset.

The IG is also concerned SSA is not accurately accounting for the costs of the retooled approach, saying the agency’s cost estimates for the project didn’t take into account ongoing operational costs for the new system. The new system also won’t be able to process certain cases, such as continuing disability reviews -- meaning that some states that adopt SSA’s latest core offering will still have to use their old systems to continue to process them.

SSA estimates the first phase of the new system will cost between $90 million and $165 million.

In contrast to the IG’s misgivings, the Obama administration has made a big push on upgrading aging legacy federal IT systems. The president’s annual budget request proposed the creation of a $3.1 billion IT modernization fund to help pay for upgrades.

Just this week, U.S. Chief Information Officer Tony Scott said more than $3 billion worth of federal IT investments will reach the end-of-life stage at some point in the next three years.

And Social Security’s CIO, Rob Klopp, told FCW this week the agency is working on an IT modernization strategy akin to a “full-blown plan to basically rewrite everything.”