Social Security spent $300M on 'IT boondoggle'

Six years ago the Social Security Administration embarked on an aggressive plan to replace outdated computer systems overwhelmed by a growing flood of disability claims.
AP Wire
Jul 26, 2014


Nearly $300 million later, the new system is nowhere near ready and agency officials are struggling to salvage a project racked by delays and mismanagement, according to an internal report commissioned by the agency.

In 2008, Social Security said the project was about two to three years from completion. Five years later, it was still two to three years from being done, according to the report by McKinsey and Co., a management consulting firm.

Today, with the project still in the testing phase, the agency can't say when it will be completed or how much it will cost.

In the meantime, people filing for disability claims face long delays at nearly every step of the process — delays that were supposed to be reduced by the new processing system.

"The program has invested $288 million over six years, delivered limited functionality, and faced schedule delays as well as increasing stakeholder concerns," the report said.

As a result, agency leaders have decided to "reset" the program in an effort to save it, the report said. As part of that effort, Social Security brought in the outside consultants from McKinsey to figure out what went wrong.

They found a massive technology initiative with no one in charge — no single person responsible for completing the project. They issued their report in June, though it was not publicly released.

As part of McKinsey's recommendations, acting Social Security Commissioner Carolyn Colvin appointed Terrie Gruber to oversee the project last month. Gruber had been an assistant deputy commissioner.

"We asked for this, this independent look, and we weren't afraid to hear what the results are," Gruber said in an interview Wednesday. "We are absolutely committed to deliver this initiative and by implementing the recommendations we obtained independently, we think we have a very good prospect on doing just that."

The revelations come at an awkward time for Colvin. President Barack Obama nominated Colvin to a full six-year term in June, and she now faces confirmation by the Senate. Colvin was deputy commissioner for 3½ years before becoming acting commissioner in February 2013.

The House Oversight Committee is also looking into the program, and whether Social Security officials tried to bury the McKinsey report. In a letter to Colvin on Wednesday, committee leaders requested all documents and communications about the computer project since March 1.

The letter was signed by Rep. Darrell Issa, R-Calif., chairman of the Oversight committee, and Reps. Jim Jordan, R-Ohio, and James Lankford, R-Okla. They called the project "an IT boondoggle."

The troubled computer project is known at the Disability Case Processing System, or DCPS. It was supposed to replace 54 separate, antiquated computer systems used by state Social Security offices to process disability claims. As envisioned, workers across the country would be able to use the system to process claims and track them as benefits are awarded or denied, and claims are appealed.

But as of April, the system couldn't even process all new claims, let alone accurately track them as they wound their way through the system, the report said. In all, more than 380 problems were still outstanding, and users hadn't even started testing the ability of the system to handle applications from children.

"The DCPS project is adrift, the scope of the project is ambiguous, the project has been poorly executed, and the project's development lacks leadership," the three lawmakers said in their letter to Colvin.

Maryland-based Lockheed Martin was selected in 2011 as the prime contractor on the project. At the time, the company valued the contract at up to $200 million, according to a press release.

McKinsey's report does not specifically fault Lockheed but raises the possibility of changing vendors, and says Social Security officials need to better manage the project.

Gruber said Social Security will continue to work with Lockheed "to make sure that we are successful in the delivery of this program."

Steve Field, a spokesman for Lockheed Martin, would only say that the company is committed to delivering the program.

Nearly 11 million disabled workers, spouses and children get Social Security disability benefits. That's a 45 percent increase from a decade ago. The average monthly benefit for a disabled worker is $1,146.

The report comes as the disability program edges toward the brink of insolvency. The trust fund that supports Social Security's disability program is projected to run out of money in 2016. At that point, the system will collect only enough money in payroll taxes to pay 80 percent of benefits, triggering an automatic 20 percent cut in benefits.

Congress could redirect money from Social Security's much bigger retirement program to shore up the disability program, as it did in 1994. But that would worsen the finances of the retirement program, which is facing its own long-term financial problems.

Social Security disability claims are first processed through a network of field offices and state agencies called Disability Determination Services. There are 54 of these offices, and they all use different computer systems, Gruber said.

If your claim is rejected, you can ask the state agency to reconsider. If your claim is rejected again, you can appeal to an administrative law judge, who is employed by Social Security.

It takes more than 100 days, on average, to processing initial applications, according to agency data. The average processing time for a hearing before an administrative law judge is more than 400 days.

The new processing system is supposed to help alleviate some of these delays.



This is truly frightening. Social Security is bankrupt and we want people to sign up on-line for disability? WOW

OBAMA (Barry Soetoreo or whatever or whomever you are) You won.

Game Over. Bring in the Mexicans.

We are officially skrewwed. I Hope our grand children like their new home.

We are so fortunate to have lived in prosperity.

retired DOC

I believe I saw some reports that had Mrs. Obuma's classmates getting 50% more than that for the ACA's computer system that still does not work well.


The fact is that under current law, the Social Security Trust Fund could run bone dry and you'd still get most of your benefits. You see, the Trust Fund is only a supplemental source of funding for Social Security. Most of your Social Security retirement and disability benefits are actually funded from taxes collected each pay period from current workers (That's the deduction for FICA taxes on your paycheck).

The bottom line: As long as workers are paying FICA taxes, there will be money to pay for Social Security benefits for retirees and their beneficiaries. If the cap on deductions was eliminated and the percentage rate for deductions was increased just even 2% Social Security would never go broke. That is if we would put people back to work rebuilding this country.


Sure - don't worry about the waste of $300 Million - you'll still get paid as long as current workers are coughing up money for your Social Security; don't worry about the Obama economy where the Labor Force Participation Rate is the lowest since Jimmy Carter, part time jobs are king and unemployment and Social Security Disability payments are skyrocketing (There's no deduction for FICA taxes on your unemployment or SSI disability checks).

Listen to good old skyking


There is no sense arguing with a fool.

Tri-cities realist

^^ my thoughts exactly.


From welfare to disability, the system was only be for people over 62 and the severely disabled, wasn't to long ago, it was pretty hard to get disability, now it,s for people that complain that their knee,s hurt and they are over weight, it called a medical condition, you know !!!!

Tri-cities realist

Exactly. According these less than right wing sources, we the American people are being scammed by those who either can't find work or don't want to.

Obviously we need to reform yet another govt program headed for insolvency. If you or I were to set up a Ponzi scheme, we go to jail, if the govt does it, it is hailed by the left as a huge success.


We don't need SS reform - we need a legislative action such as the one that Ronald Reagan and Tip O'Neil forged. Despite being adversaries, they were able to pass and sign the Social Security Reform of 1983 that increased SS coffers by over a trillion dollars, keeping it solvent until around 2033.

As for your NPR article link, I'm astounded that your take-away is that disability payments are being made to people who are scamming the system. Although I'm sure that's the case with some, it's hardly the case with the great majority.

And the topic of this article is the incredibly stupid situation where an expensive technology project - a much-needed proposal on the face of it - was allowed to falter and flail for years with little or no government oversight, no apparent reporting or accountability by the computer contractor, with no end game, deadlines or timelines, or budget constraints.

Tri-cities realist

Well if you can see the charts of unemployment and disability, it is pretty clear what is going on. The formerly unemployed have become disabled. And as you know, there is no end to disability payments.

I agree with you on this IT boondoggle, if the govt can't properly oversee a relatively small project, what makes you think they can with much larger projects?


The proportion of eligible workers applying for disability benefits also has doubled in the past 10 years, according to the SSA. Two main reasons are driving the increase, explains The National Association of Social Security Claimants’ Representatives. First, baby boomers are entering years in which they are more prone to disability. Second, women who began to work in greater numbers in the 1970s and 1980s are also now eligible for disability through Social Security for the first time.

However, changing demographics only partially explain the increase. Tad DeHaven, budget analyst at the Cato Institute, a libertarian think tank, explained that the recession played a major role in the growth in disability claims. “When you see unemployment rates rising, you see disability moving with it,” DeHaven noted.

In fact, states with the highest disability claims tend to have the highest poverty rates and the fewest jobs offering competitive wages. Seven of the 10 states with the most residents receiving disability have among the highest poverty rates in the country. The number of jobs in these states in manufacturing and retail, which tend to pay modest wages, are above the national average. Meanwhile, jobs in finance and professional occupations are scarce.

Read more: States With the Most Americans on Disability - 24/7 Wall St.

Michigan is #10. Coincidentally, most of the top 10 states for disability payments are Right-to-Work states; most are currently or chronically red states with conservative state legislatures.

Tri-cities realist

I think your 3rd reason is the major cause: when their unemployment runs out (or even before), people apply or are recruited to go on disability. If you look at the chart in the link I provided, it is quite clear that as unemployment benefits shrank, disability payments rose.


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