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

In response to a congressional request, GAO reviewed the Social Security Administration's (SSA) two contracts with the Paradyne Corporation for improving the SSA data communications network. The SSA terminal replacement contract with Paradyne was the largest in SSA history. The first contract, valued at about $115 million, required Paradyne to install leased terminals in SSA offices nationwide for records management. The second sole-source contract award, valued at more than $2.5 million, called for Paradyne to enhance the data transmission capabilities of its terminals. This contract was terminated for the convenience of the government. GAO found that management weaknesses caused the acquisition of a data communications system that did not begin to meet contractual performance requirements until 2 years after contract award. Furthermore, the system is still experiencing a high-equipment failure rate. A 1982 purchase of some leased terminals and the sole-source award demonstrated inherent flaws in the systems procurement management structure of the agency, such as: (1) internal control deficiencies resulting from a realignment of the responsible SSA office; and (2) inadequate oversight of the procurement by the Department of Health and Human Services (HHS). Until corrected, these problems will continue to threaten the integrity of the SSA systems procurement process. These problems will affect a proposed purchase of the remaining leased Paradyne terminals and an upcoming acquisition of new terminals.

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