The Social Security Administration's mishandling of a contract award of $115 million for modernizing its data processing was "one of the worst cases of contract award and administration" ever examined by the House Government Operations Committee, a committee report charges.
The contract award was so botched it actually set back by three or four years the federal agency's attempts to achieve a critically needed modernization, according to the study.
The report, which is expected to be made public today, recommends that the Social Security Administration move immediately to suspend its contract with the Paradyne Corp. of Largo, Fla., and begin proceedings to bar the company from receiving further government contracts.
Paradyne has been accused by the Securities and Exchange Commission of using fraud and deceit -- including passing off another firm's equipment as its own in a demonstration -- to obtain the SSA contract.
The report on the results of a committee investigation focuses principally on what it characterizes as SSA's mishandling of the attempt to get the data processing equipment it badly needed. Later, the SSA reacted with puzzling indifference to the SEC's charges of fraud and subsequent troubles surrounding the contract, according to the report.
"Even when confronted with major performance problems for at least two-and-a-half years after the contract was awarded, SSA management failed to take the necessary steps to protect the government's interest," according to the report. "To the detriment of the public, SSA management ignored cries from its local field offices that the Paradyne equipment was seriously disrupting essential services.
"Finally, SSA virtually abandoned its management responsibilities by leaving it up to the contractor to record and report how well its own equipment was operating," the report asserts. "In effect, SSA effectively relinquished control of the critical computer project to the contractor."
Paradyne Senior Vice President George Pressly disagreed with the report's assertions. He said the company will contest "very strongly" any attempt to suspend its contract with the SSA or to bar it from government contracting.
Pressly said the SSA had set high standards for the data processing equipment that Paradyne supplied, requiring it to be operational 98 percent of the time. "We have consistently been available over 98 percent of the time, so we're performing," he said. He also denied that Paradyne had set back the modernization effort.
Social Security spokesman Jim Brown said he could not comment on the report, which agency officials had not seen, or on aspects of the continuing investigations by the SEC and the Inspector General. "If you want to talk about the SSA system modernization plan, which has begun its third year, there has been a tremendous improvement in the way we deal with the public," he said.
Brown said the agency now issues Social Security cards more rapidly and has begun catching up on posting earnings that are used to compute benefits. "There's been a lot of improvement," he said. As to the Paradyne contract, "because of the investigations going on, the most I can say is that the Paradyne equipment has lived up to the contractual requirement."
Among the report's findings were that the system proposed by Paradyne was not in existence at the time the company bid for the contract, although the request was for already-operating, "off-the-shelf" systems rather than developmental projects.
The report also found that "although Paradyne has installed at least 25 versions of its system in SSA offices, the terminals have been plagued with serious operating difficulties." It also faulted the SSA for failing to "safeguard sensitive data vital to ongoing investigations regarding the Paradyne contract," including four instances in which essential documentation and files are missing or have been destroyed.