Social Security Administration's Management of Its Contracts To Modernize Its Data Communications System

In response to a congressional request, testimony was presented concerning the Social Security Administration's (SSA) communications contracts with Paradyne Corporation. GAO provided information on: (1) the equipment as proposed, demonstrated, and delivered; (2) the system's performance; (3) the accuracy and completeness of an independent study of the contractor's performance; and (4) SSA knowledge of defects in the product. GAO found that while the contractor's proposal represented that certain equipment was in existence and operational, it had designed and constructed equipment which was not in its product line and available, as required by the solicitation. GAO found found that the products offered should have been considered prototypes in the proposal. In addition, GAO found that, during an operational capability demonstration, one of the pieces of equipment was not operational, but SSA accepted a technical presentation as satisfying the requirements. With regard to another piece of equipment, the contractor demonstrated equipment that was substantively different from that which it proposed without informing SSA. Therefore, its proposal should have been eliminated from consideration. Furthermore, the equipment was not functioning until after contract award. The equipment displayed serious defects during testing which carried over into field operations and continued for 2 years. In attempting to correct these problems, numerous modifications were made to the equipment. Because the equipment purchased provided no increase in the processing capability of the system it replaced, the contractor's performance resulted in a more than 3-year delay in field office automation. An independent study did find that the equipment is in compliance with the terms of the contract the majority of the time and when it is not, SSA takes appropriate steps to assess penalties. However, GAO noted that this study was compromised because the contractor used SSA calculations in its report without performing a complete analysis.