OPM, Hewitt settle RetireEZ dispute

The Office of Personnel Management and Hewitt Associates said today they have settled their contract dispute that centered on the firm’s benefits calculator for OPM’s modernized retirement management system, RetireEZ. OPM had valued the contract at $290 million over 10 years when it was awarded in 2006.

Neither party provided details of the provisions because they agreed to a confidentiality clause, an OPM spokesman said.

OPM has rescinded its October 2008 termination of the contract for default, said Amy Wulfestieg, a Hewitt spokeswoman, declining to comment further. The contract instead has been terminated by mutual agreement, she said.

OPM stopped its 10-year, $290 million contract with Hewitt because the retirement benefits calculator did not function correctly, the agency said last October. The benefits engine was a component of OPM’s RetireEZ system, designed to make the federal retirement process more automated, accurate and efficient. At the time, OPM said it had paid the contractor $21 million of the $27 million cost for development and delivery of the calculator.

OPM did not provide any definite plans for a benefits calculator for the system in the future.

“We’re looking at all our options. We will move on them at the appropriate time,” said Mike Orenstein, OPM’s spokesman. Other aspects of updating the agency's retirement system, such as cleansing, digitizing and scanning data for business process improvement, and which do not involve Hewitt, are proceeding, he said.

Hewitt said in October that it had delivered on its contractual commitments and taken extra steps to try to ensure the success of the project “despite serious program management deficiencies on the part of OPM.”  The company at the time said it would “vigorously” challenge OPM’s attempt to terminate the contract for default.

OPM awarded the contract in May 2006 to Hewitt to provide the technology for RetireEZ, including modifying its commercial benefits system, the Defined Benefit Technology Solution to comply with federal regulations. As planned, the system would have automatically calculated annuity checks for federal employees under different financial scenarios so they could determine the best time to retire, OPM has said.