Social Security Administration's Management of Its Data Communications Contracts With Paradyne Corporation

Testimony was given on the Social Security Administration's (SSA) efforts to replace its data communications terminals through a contract awarded to Paradyne Corporation in 1981. GAO found numerous inadequacies in the SSA development and management of this and a follow-on contract with the corporation. These management weaknesses, combined with organizational deficiencies, inadequate General Services Administration (GSA) involvement, and insufficient Department of Health and Human Services (HHS) oversight, resulted in SSA acquiring a system which did not begin to meet contractual system performance requirements on a consistent basis until April 1983 and which still exhibits an above-normal level of equipment failures. These weaknesses jeopardize future systems procurements. In addition, the SSA recommendation to buy leased Paradyne terminals contains questionable assumptions regarding their performance and use. GAO also found that a structural realignment of the SSA Office of Systems has weakened internal controls over the data communications procurement process. GAO has recommended that the Secretary of HHS provide for greater depth and scope in technical reviews of data communications acquisition proposals, review the SSA systems organizational structure, make adjustments to provide for better separation of functions within the procurement process, limit further delegations of procurement authority from GSA until the SSA systems procurement process is sufficiently strengthened, not purchase the remaining Paradyne equipment until equipment failures have been reduced and the agency has a clearer idea of what further use to make of the equipment, and ensure that the poor procurement practices used on the Paradyne acquisitions are not repeated. Finally, GAO recommended that HHS actively monitor all phases of ongoing and future SSA procurement actions requiring HHS approval and the SSA reconsideration of whether to buy the remaining leased Paradyne equipment.