Attachment_10_-_BCV_Modernization_Assessment_2015_Report.pdf

Benefits Calculation and Valuation (BCV)

Modernization Assessment Recommendations Report

November 13, 2015

Developed By: Office of Benefits Administration (OBA) Office of Information Technology (OIT)

Version Number: Version 1.0

BCV Modernization Assessment Recommendations Report i

BCV Modernization Assessment Approval Form

In accordance with PBGC’s Common Architecture Methodology (PCAM) the Integrated Project Team (IPT) positioned BCV to:

1. Avoid becoming obsolete and align with PBGC’s approved technology;

2. Improve customer satisfaction, maintaining OBA’s core mission to ensure participants are paid and provide quality service;

3. Improve data integrity; and

4. Improve security by adhering to related PBGC and NIST guidance.

These objectives were achieved as a result of the support provided by the Executive Sponsors and Key Stakeholders.

Executive Sponsor Approval As the Executive sponsor for the aforementioned analysis, I accept the Recommendation Report as the final deliverable of the BCV Modernization Assessment effort. Recommendations should be considered for modernization implementation. Recommendations may cover or impact areas that I am not responsible for. For these recommendations, I will communicate them to the appropriate areas.

Accept

Cathleen Kronopolus, Chief of Benefits Administration Signature Date

Robert Scherer, Chief Information Officer Signature Date

Chief Enterprise Architect Approval As the Chief Enterprise Architect, I accept the Recommendations Report as the final deliverable of the BCV Modernization Assessment effort. I understand that the recommendations are to be considered in developing and maintaining the Target Architecture. I will seek the support of the Chief Information Officer (CIO), the CIO Leadership Team, Business/Executive Sponsor, and the Executive Management Committee for aligning Information Technology implementations with the Target Architecture.

John Larsen, Chief Enterprise Architect Signature Date ii

Revision History

Version Author Section Changed Summary of Changes Date

0.1 IPT All - Interim Release of the Draft

BCV Baseline Content

Initial draft of the Introduction and BCV Baseline sections

09/25/2015

1.0 IPT All – Version 1.0 of the BCV

Modernization Assessment Recommendations Report

Includes Target State content, including the Modernization Recommendations and High-Level Modernization Roadmap.

11/13/2015

Acknowledgments

The IPT would like to thank the Executive Sponsors, Key Stakeholders, and Subject Matter Expert (SME) Interviewees. Without their sharing of knowledge, the IPT would not have been able to attain this level of quality. The names of those who helped are in Appendix B – Contributors.

iii

TABLE OF CONTENTS

1 Executive Summary 2 Introduction

BCV Modernization Background & Vision Assessment Scope Expected Outcomes Integrated Project Team (IPT) Composition Assessment Overview

3 Baseline Analysis Approach Step 1: Gather Information

Document Review Subject Matter Expert (SME) Interviews

Step 2: Document and Aggregate Observations Interview Results Key Themes

Step 3: Establish Baseline Step 4: Validate with IPT

4 Baseline Architecture System Overview

Inputs Outputs: Reporting and Statements BCV Components Supporting Applications & Data Sources Internal Data Storage Interfaces

Contextual View Operational View Process View Baseline Architecture View

5 Baseline Gaps and Issues People-Related Gaps and Issues Process-Related Gaps and Issues Technology-Related Gaps and Issues

6 Prior BCVS Modernization Effort BCVS Modernization Phase 1 Overview Changes Since BCVS Modernization Phase 1 Stopped BCVS Modernization Phase 1 Gaps and Issues

People-Related Gaps and Issues Process-Related Gaps and Issues Technology-Related Gaps & Issues

7 Key PBGC Constraints and Challenges Governing Complexities Data Quality Frequency & Variety of Plans Trusteed iv

Volume of Legacy Plans Migration of Legacy Plans (Data, Logic, & Testing) Tool Longevity COTS Marketplace

8 Target Analysis Approach Step 1: Identify Target State Business Requirements Step 2: Develop Target State & High-Level Modernization Recommendations Step 3: Define High-Level Modernization Roadmap Step 4: Review & Validate Target State & High-Level Roadmap Step 5: Finalize & Socialize BCV Target State Artifacts Artifact Line of Sight

9 Modernization Recommendations and Target Architecture Modernization Recommendations

Recommendation A: Create a secure, unified web-based portal to access and manage all BCV functionality

Recommendation B: Use a modernized spreadsheet-based calculation approach for needed flexibility & continued ability to handle legacy plan files

Recommendation C: Use a single repository selected by DMD to store all source documentation and case documents in a central location

Recommendation D: Retire or relocate TRMD tools by incorporating their functionality into fully supported solutions for database building and BCV

Recommendation E: Create an actuarial formula library service to provide more examples and templates for plan calculations

Recommendation F: Establish or leverage a shared service for accessing BCV data to improve data sharing with other OBA and PBGC systems

Recommendation G: Enable online estimates for participants to increase customer satisfaction

Recommendation H: Simplify statement design capabilities by considering COTS products.

Recommendation I: Improve the security posture of BCV by containing data within the security boundary, implementing appropriate access controls, improving encryption, and eliminating obsolete technology without affecting usability or performance

Recommendation J: Log system events, including, but not limited to logging access and changes to plan/participant data, calculation logic, and outputs/reports generation, to provide an audit trail

Recommendation K: Expand reporting capability to support potential replacement of listings, automatic case memo generation, and ad-hoc reporting

Recommendation L: Provide a centralized, secure database with versioning for plan and participant data to eliminate issues with distributed databases and data synchronization

Recommendation M: Use proven Agile development methodology to plan and develop the New BCV, with appropriately-sized phases, engaging end users and increasing transparency. . 59

Recommendation N: Expand existing training to educate users on new functionality and enhance actuarial training program to improve and standardize programming skills and approaches v

Recommendation O: Ensure that all components of BCV are in compliance with the PBGC Technical Reference Model (TRM), Enterprise Target Architecture (ETA), and the EA standards to support maintainability, scalability, reusability, and supportability

Recommendation P: Use a loosely coupled architecture to ensure components can be easily replaced on an on-going basis without large re-engineering efforts

Recommendation Q: Identify a single accountable party from OBA to manage and champion the BCV modernization effort, ensuring that the necessary resources are devoted to this effort and maintained over time

Recommendation R: Standardize and/or automate benefit statements, listings, and other outputs, where possible, to gain additional efficiencies New BCV Target Architecture Diagram New BCV Target Architecture Components

Presentation Layer: Web Portal Interface and MyPBA Application Layer: Database Building, and Calculation and Valuation Data Access Layer: Data Service Data Storage Layer: Centralized BCV Database Reports and Outputs Layer

Benefits of the Target Architecture 10 High-Level Modernization Roadmap

Planning Phase Phase 1: Centralize Database Phase 2: Leo and Calculation Engine Phase 3: Web Re-Calculation and Self-Service Estimates Phase 4: New Statement Tool Phase 5: Advanced Reporting and Review Mechanism Implementation Considerations and Next Steps

11 Appendix A – BCV Artifact Inventory 12 Appendix B – Contributors 13 Appendix C – SME Interview Questionnaire 14 Appendix D – Baseline Technical Stack 15 Appendix E– As-Is Process Diagrams

Database Building Valuation Programing Valuation Processing Closeout Post-Valuation Administration

16 Appendix F – Baseline Architecture Line Definitions 17 Appendix G – BCVS Modernization Components 18 Appendix H – BCV Modernization Strategic Alignment 19 Appendix I – BCV Target Architecture Line Definitions 20 Appendix J – Modernization Roadmap Component Definitions 21 Appendix K – Modernization Approach for TRMD (Formerly OASD) Tools 22 Appendix L – High-Level BCV Modernization Requirements Matrix vi

TABLE OF FIGURES

Figure 1: BCV Modernization Assessment Timeline Figure 2: BCV Modernization Assessment IPT Figure 3: BCV Modernization Assessment Overview Figure 4: BCV Baseline Analysis Process Flow Figure 5: SME Interview Process Figure 6: SME Interviewees Figure 7: Interview Responses by Category Figure 8: Interview Responses by Key Theme Figure 9: BCV Context Diagram Figure 10: BCV Operational View Diagram Figure 11: BCV Process View Figure 12: BCV Baseline Architecture View Diagram Figure 13: Gap Assessment Categories Figure 14: BCV Baseline Architecture View Diagram with Technology Gap Callouts Figure 15: BCV Target Analysis Process Flow Figure 16: Assessment Artifacts Line of Sight Figure 17: Recommended BCV Calculation Approach Figure 18: Calculation Engine Approach – Estimated LOE Comparison Figure 19: New BCV Target Architecture Figure 20: High-level Modernization Roadmap Figure 21: New BCV Phase 1 Interim Architecture Diagram Figure 22: Current BCV Database Building Processes Figure 23: Current BCV Valuation Programming Processes Figure 24: Current BCV Valuation Processing Processes Figure 25: Current BCV Closeout Processes Figure 26: Current Post-Valuation Administration Processes vii

TABLE OF TABLES

Table 1: Guiding Principles Table 2: BCV Recommendations Table 3: Rules Engine Potential Benefits vs. Spreadsheet-Based Mitigation Table 4: BCV Functions and Benefits Table 5: BCV Artifact Inventory Table 6: Baseline Technical Stack Table 7: Baseline Architecture Line Definitions Table 8: BCV Target Architecture Line Definitions Table 9: Modernization Roadmap Component Definitions Table 10: Modernization Approach for TRMD (Formerly OASD) Tools Table 11: High-Level BCV Modernization Requirements Matrix

1 Executive Summary

IPT Recommendations for the Target State

A/1: Create a secure, unified web-based portal to access and manage all BCV functionality.

B/2: Use a modernized spreadsheet-based calculation approach for needed flexibility & continued ability to handle legacy plan files.

C/3: Use a single repository selected by DMD to store all source documentation and case documents in a central location.

D/4: Retire or relocate TRMD (previously OASD) tools by incorporating their functionality into fully supported solutions for database building and BCV.

E/5: Create an actuarial formula library service to provide more examples and templates for plan calculations.

F/6: Establish or leverage a shared service for accessing BCV data to improve data sharing with other OBA and PBGC systems.

G/7: Enable online estimates for participants to increase customer satisfaction.

H/8: Simplify and improve statement design capabilities by considering COTS products.

I/9: Improve the security posture of BCV by containing data within the security boundary, implementing appropriate access controls, improving encryption, and eliminating obsolete technology without affecting usability or performance.

J/10: Log system events, including, but not limited to logging access and changes to plan/participant data, calculation logic, and outputs/reports generation, to provide an audit trail.

K/11: Expand reporting capability to support potential replacement of listings, automatic case memo generation, and ad-hoc reporting.

L/12: Provide a centralized, secure database with versioning for plan and participant data to eliminate issues with distributed databases and data synchronization.

M/13: Use proven Agile development methodology to plan and develop the New BCV, with appropriately-sized phases, engaging end users and increasing transparency.

N/14: Expand existing training to educate users on new functionality and enhance actuarial training program to improve and standardize programming skills and approaches.

O/15: Ensure that all components of BCV are in compliance with the PBGC Technical Reference Model (TRM), Enterprise Target Architecture (ETA), and the EA standards to support maintainability, scalability, reusability, and supportability.

P/16: Use a loosely coupled architecture to ensure components can be easily replaced on an on-going basis without large re-engineering efforts.

Q/17: Identify a single accountable party from OBA to manage and champion the BCV modernization effort, ensuring that the necessary resources are devoted to this effort and maintained over time.

R/18: Standardize and/or automate benefit statements, listings, and other outputs, where possible, to gain additional efficiencies.

About This BCV Modernization Assessment

As part of the ongoing Development, Modernization, and Enhancement (DME) Planning Project, a cross-functional IPT comprised of SMEs from OBA and OIT conducted a Benefits Calculation and Valuation (BCV) Modernization Assessment and High-Level Planning Effort to formulate an optimal approach for BCV modernization, by analyzing the current state, recommending a target state, and developing a high-level roadmap to achieve the target state.

Gaps and Issues Identified in the Current State

Technology-Related Gaps and Issues

• Information Security is deficient across BCV, including insufficient security and controls around Personally Identifiable Information (PII).

• Tracing data back to its original source is manually accomplished in Leo without direct links to source documents.

• There is minimal standardization of programming across cases, allowing for varying approaches to creating calculations and introducing opportunities for error.

• Statement design is viewed as cumbersome and excessively time-consuming.

• BCV is a complex suite of client-based applications and tools with limited integration; a number of these tools are not “officially” supported by IT Infrastructure Operations Department (ITIOD).

• The current technology stack is mostly obsolete and no longer supported by software vendors.

• Current technology does not support making BET/BSRS programs available for use by participants for online estimates.

People- and Process- Related Gaps and Issues

• Actuaries have varying programming skills and training, resulting in varying and occasionally inefficient calculation programs and statement design approaches.

• End-users recognize the need for modernization, but there is some reluctance to change due to the experiences of past modernization efforts.

• Technology/Risk Management Division (TRMD) tools (formerly known as OASD tools) were created to address unmet user needs, but do not follow the ITSLCM process.

• The separate database building processes between benefits determination and administration create data duplication and synchronization issues, and duplicate labor-intensive efforts.

• Not all incoming data from plan administrators gets archived.

• Different groups have varying opinions about how much detail should appear in statements and worksheets.

• Creating the output for listings is viewed as potentially unnecessary.

• Case Memos are manually created, but include many details from databases that could be automatically generated.

• Selection of samples for calculation and statement testing is inconsistent.

2 Introduction The Pension Benefit Guaranty Corporation (PBGC) is a Federal government agency established under Title IV of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, 29 USC § § 1301- 1461 (ERISA sections 4001-4402). PBGC’s mission is to encourage the continuation and maintenance of private-sector defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep the insurance premiums at a minimum.1 Through its single-employer and multiemployer programs, PBGC protects the pensions of approximately 31 million workers and retirees in more than 22 thousand pension plans. Under section 4022(b) of ERISA, these pension plans ensure a specified monthly retirement benefit, usually based on salary or a stated dollar amount and years of service.

PBGC relies on Information Technology (IT) to accomplish its work, whether it is preserving pensions, collecting premiums, paying benefits, responding to Discovery and FOIA requests, communicating with each other, or managing records and documents. The right application of IT can enable PBGC to deliver its mission better, faster, more accurately and efficiently. To ensure that IT is successful in its goal of supporting PBGC, the Office of Benefits Administration (OBA) is charged with managing the Benefits Calculation and Valuation (BCV) programs and projects.

BCV is a group of software components used by OBA to determine benefits for participants, beneficiaries and alternate payees. BCV is used by OBA staff to calculate actual retirement benefits, to determine corporate liabilities for the pension plans that PBGC trustees, and to generate benefit calculation statements for communicating benefit entitlements to PBGC participants. BCV calculations are essential in determining eligibility and correct benefit amounts for participants, beneficiaries, and alternate payees entering pay status and serve as liability data for corporate financial statements, and thus support the agency’s mission of protecting the retirement incomes of American workers in defined benefit pension plans.

Currently, benefit administration systems, including BCV, support thousands of participants and manage billions of dollars in assets using aging systems. Challenges resulting from supporting aging and obsolete technology have the potential to impact OBA’s ability to satisfy its core mission, ensuring that participants are paid and providing quality service, and present potential data integrity and security concerns.

BCV Modernization Background & Vision There is a breadth of existing documentation related to prior BCV assessment and modernization attempts. Significant analysis was conducted to determine the most recent modernization approach for BCV, but the resulting BCVS modernization effort was put on hold due to challenges with implementation. Updates are still required to position BCV to avoid becoming obsolete, align with PBGC’s approved technologies, and continue to meet participant needs.

OBA intends to modernize its BCV system to obtain data integrity and security, a unified database, an updated technology platform, and improved customer communication. OBA envisions a modernized BCV system to include:

1 ERISA Section 4002(a)(2); 29U.S.C. § 1302(a)(2).

1. A centralized database to consolidate individual case-specific data bases, secure BCV data, provide auditability, and improve reporting.

2. A high degree of flexibility in programming to ensure adaptability to new and changing business requirements, supporting the longevity and durability of the solution and associated logic.

3. Web interfaces for internal users and external customers to perform authorized functions which include performing valuation and calculation programming; producing benefit calculations and estimates; performing data entry, validation, reconciliation, and verification;

performing system administration; and producing standard reports.

4. The ability to interface with other OBA information systems used for case management, benefit payment, customer communication, and system security, leveraging authoritative data sources to avoid data duplication and synchronization.

5. A path for migrating PBGC’s current inventory of plan valuations, which includes over 3,000 plans stored in individual Microsoft Access databases with corresponding Microsoft Excel spreadsheets, to the modernized system so that all trusteed plans can take advantage of the modernized BCV functionality.

6. Implementation of the modernized BCV system will occur without a major impact on OBA production so that participants in newly-trusteed and existing cases will continue to receive timely, accurate benefit payments and good customer service.

With this vision in mind, Executives approved the ongoing BCV Development, Modernization, and Enhancements (DME) planning project in March 2015.

Assessment Scope As part of the ongoing DME Planning project, this BCV Modernization Assessment and High-Level Planning Effort was kicked off on June 15, 2015, to formulate an optimal approach for BCV modernization, by analyzing the current state, recommending a target state, and developing a high-level roadmap to achieve the target state. To accomplish this, the IPT tailored PBGC’s Business Needs Analysis (BNA) Standard to meet the particular needs of this effort.

PBGC’s BNA Standard documents the acceptable approach for performing business needs analyses within the Corporation, combining federal best practices with lessons learned from prior PBGC project and program IT planning activities. The Standard assures that a business need or performance gap is considered in the enterprise context and aligns with OMB’s recommendation to perform analysis before selecting and/or implementing a solution. It also allows for flexible scope of the analyzed area and customizable set of requested artifacts.

The key activities and artifacts within the scope of this five-month effort are depicted in Figure 1: BCV Modernization Assessment Timeline, below.

Figure 1: BCV Modernization Assessment Timeline

The scope of this analysis is limited to the following BCV components and tools:2

BCV Components:

• Actuarial Calculation Toolkit (ACT):

o Runtime, o Design, o ValTool, o DOPT Report System (DRS)

• Archive (Access and Utility)

• ATPBGC Add-in

• Automated Data Transfer Utility (ADT)

• Payment Adjustment Calculation System

(PACS)

• PACS (Batch)

Technology/Risk Management Division (TRMD) Tools (Formerly Known as OASD Tools):

• AggMax Tool

• Leo

• Net Present Value Factors (NPVF)

Calculator

• Plan Closing

• Plan Download

• Pre-Trusteeship Data Viewer (PDV)

• Software Closeout

• ValPatch

• Conversion Project for Optional

Forms of Annuity (OFA) Tool

The following activities were identified to be conducted within the scope of this Assessment:

• Establish IPT to act as an advisory and decision-making body and ensure that impacted organizations are represented.

• Conduct SME interviews and review existing documentation to gain a holistic understanding of BCV and to validate lessons learned from the prior modernization approaches.

• Develop a BCV Baseline to document current BCV processes and requirements, how BCV fits into OBA’s mission, and how it works with other OBA systems to achieve that mission.

2 BCV RFI Responses Exec Update, 12/03/2014.

• Identify key gaps, issues, and opportunities for refinement and conduct market research on available solutions and corresponding capabilities.

• Develop a BCV Modernization Assessment Recommendations Report to document the BCV Baseline and Target Architecture.

• Develop a BCV Modernization High-Level Roadmap to represent a sequenced path to modernizing BCV.

• Develop an Executive Briefing to highlight key findings, recommendations, and next steps.

Expected Outcomes The expected outcomes of this assessment include the following deliverables:

• A BCV Modernization Assessment Recommendations Report to document the BCV Baseline and Target Architectures;

• A BCV Modernization High-Level Roadmap to represent a sequenced path to modernizing BCV;

and

• An Executive Briefing to socialize key findings, recommendations, and next steps.

Through interviews with key stakeholders, the following additional desired outcomes were also identified:

• Assess prior BCV-related analyses and modernization efforts to determine the best approach to move forward.

• Document the unique needs and complexities associated with PBGC’s benefits calculation and valuation processes.

• Improve understanding of why the Benefit Calculation and Valuation Solution (BCVS) Phase 1 effort was put on hold and where work stood at the time.

• Highlight what has changed since the prior modernization effort and what can be done to ensure the success of this effort.

• Work with end-users to design a target state solution that is up-to-date, maintainable, and produces accurate results.

• Define a conservative, fact-based, and implementable approach to ensure continued calculation of participant benefits.

• Support the BCV Modernization Vision and serve as an input to the upcoming BCV DME Project.

Identification of these desired outcomes helped to tailor the assessment process. Ultimately, these outcomes were addressed through a combination of baseline and target state artifacts and IPT Work Sessions.

Integrated Project Team (IPT) Composition An extensive IPT was established to represent all of the organizations significantly impacted by this effort. Figure 2: BCV Modernization Assessment IPT, below, depicts the IPT members, their organizations, and a high-level summary of their key responsibilities.

Figure 2: BCV Modernization Assessment IPT

Check-in meetings with key stakeholders were facilitated throughout the process to ensure continued buy-in, engagement, and alignment to the overall BCV vision. Additionally, all IPT members were responsible for briefing key stakeholders and disseminating information to their respective organizations to ensure transparency.

Assessment Overview Figure 3: BCV Modernization Assessment Overview, below, depicts a high-level overview of the BCV modernization assessment. The left side of the figure highlights many of the key inputs that informed the analysis process. The review of these inputs is discussed in more detail in Section 3.1: Step 1: Gather Information. The gray box in the center of the graphic summarizes the key analysis activities associated with this effort. Key outputs and artifacts developed as an output of these analysis activities are highlighted on the right side of the graphic. This depicts how the baseline artifacts helped us to derive the target state artifacts, which will serve as an input to the upcoming BCV DME Project. The BCV Baseline activities and artifacts are further elaborated on in Section 3: Baseline Analysis Approach. The BCV Target State activities and artifacts are highlighted in Section 8: Target Analysis Approach.

Figure 3: BCV Modernization Assessment Overview

3 Baseline Analysis Approach The IPT established a four-step approach to capture and analyze the BCV baseline, or current state, as depicted in Figure 4: BCV Baseline Analysis Process Flow, below.

Figure 4: BCV Baseline Analysis Process Flow

The key activities performed by the IPT within each phase of this approach are summarized below and elaborated in the subsequent sections. During Step 1 – Gather Information, the IPT conducted the following activities:

• Collected and reviewed relevant documentation (existing PBGC documentation, federal mandates, industry guidance);

• Conducted Subject Matter Expert (SME) interviews;

• Captured interview notes and validated transcripts with interviewees; and

• Reviewed EA, Security, and other Agency standards & best practices.

After this initial information gathering effort, the IPT performed the following activities in Step 2 – Document and Aggregate Observations:

• Developed an Artifact Inventory to log the location and description of documents reviewed;

• Documented interview responses in the BCV Interview Response Matrix; and

• Categorized responses to help facilitate analysis (analysis category, key theme, requirement type, etc.).

The IPT used the data collected and aggregated in Steps 1 and 2 to complete the following activities associated with Step 3 – Establish a BCV Baseline:

• Documented the BCV Baseline Architecture through a number of views; and

• Documented gaps associated with the current state of BCV and the prior modernization effort.

In Step 4 – Validate with IPT, an IPT Work Session was facilitated to complete the following activities:

• Review & Validate Discovery Observations & Key Themes;

• Review & Validate Current State Gaps & Opportunities for Improvement; and

• Review & Validate BCVS Phase 1 Gaps & Opportunities for Improvement.

The following sub-sections provide detailed insight into the team’s approach, which ultimately formed the basis of this assessment.

Step 1: Gather Information During Step 1 – Gather Information, the IPT performed documentation reviews and conducted SME interviews to support their understanding of the BCV Baseline.

Document Review A thorough review of existing BCV materials was conducted to gain an understanding of how BCV fits into OBA’s mission, how it works with other OBA systems to achieve that mission, and to document components of the BCV Baseline.

The IPT Support Team reviewed 43 documents, including:

• Previous analyses and modernization attempts (e.g., BCV-related artifacts from prior assessment efforts, previous modernization attempts, Segment Architectures);

• Existing program and system documentation (e.g., requirements documents, design documents, user procedures, including those from the 2011 BCVS Modernization Phase 1 attempt);

• 2012 Memo to put BCVS Phase 1 on Hold;

• Documents related to the Integrated Present Value of Future Benefits (IPVFB) DME Approach; and

• Market research and best practices (e.g., commercial off-the-shelf (COTS) components, previous

Requests for Information (RFIs).

For a complete list and content summary of the documents, see Appendix A – BCV Artifact Inventory.

Subject Matter Expert (SME) Interviews SME interviews were conducted to collect knowledge of BCV functions, processes, and gaps, and to gather insights and lessons learned from previous modernization efforts. Key Stakeholders and IPT members validated the initial list of SMEs to interview during the BCV Modernization Assessment IPT Kickoff Meeting and added additional SMEs in the following weeks. A standard 77-question questionnaire was used as the basis for each interview, but was customized to ask pertinent questions relevant to the expertise of each SME. The full questionnaire is available in Appendix C – SME Interview Questionnaire. The high-level SME interview process is depicted in Figure 5: SME Interview Process, below.

Figure 5: SME Interview Process

The IPT conducted a total of 31 interviews that included 40 SMEs with varied levels of involvement in PBGC’s BCV program. Eighty percent (80%) of interviewees were business representatives, while twenty percent (20%) were IT or operational representatives. The majority of interviewees were business representatives, because the IPT wanted to ensure that all of the primary users and owners of the various BCV components were interviewed.

Figure 6: SME Interviewees

The interviewees represented 11 departments across PBGC, as shown in Figure 6: SME Interviewees, above. Interviewing a variety of individuals ensured a complete and full understanding of stakeholder needs and considerations related to the BCV Modernization effort.

Step 2: Document and Aggregate Observations In Step 2 – Document and Aggregate Observations, the IPT developed artifacts to record and analyze the information gathered in Step 1. An Artifact Inventory was constructed to log the location, description, and source of all documents reviewed. The Artifact Inventory provided a central location to track and access the many artifacts reviewed within the scope of this assessment.

In addition to existing documentation, SMEs provided critical input for conducting this assessment. All SME interviews were attended by at least two members of the IPT Support Team, including a main interviewer, to facilitate the interview, and a scribe interviewer, to capture a detailed transcript of the interview. Once each transcript was complete, it was sent back to the interviewee(s) for review and validation. Once the SMEs validated the accuracy of their interview transcripts, responses were aggregated in an Interview Response Matrix, as described below:

1. All charged statements were extracted from the transcripts and put into a master matrix. A charged statement is an opinion or judgment about how things work or could work better, as distinct from an objective explanation of the nature of an activity, role or tool.

2. Next, the charged statements were classified into four types: Vision Statements, Baseline Observations, Lessons Learned and Key Drivers.

3. Then, the IPT examined each of the classifications for thematic patterns and tallied the number of responses.

4. From these observations, the IPT distilled the responses into key themes or topic areas.

5. Finally, the IPT formulated a proper statement of the theme that encompassed the many variations expressed by interviewees for similar ideas (since different SMEs and stakeholders used different language to express similar observations.)

Interview Results As a result of the rigorous analytic process the IPT employed, the IPT achieved the following overall results:

• A total of 641 charged responses were extracted from the validated Interview Transcripts and aggregated in the Interview Response Matrix for further analysis.

• The majority of the interview responses were related to Lessons Learned (41%) associated with a prior modernization effort, followed closely by Baseline Observations (32%), primarily related to gaps and things that were working well in the current state.

The Interview Responses helped to identify Current State gaps and opportunities for improvement, which informed the Target State recommendations and design.

Figure 7: Interview Responses by Category

Key Themes Looking for patterns across all the SME interview responses, the IPT grouped related responses into ten Interview Assessment Key Themes or topic areas. The 10 Key Themes are inclusive of all 641 catalogued interview responses and are listed in order of response frequency, not priority.

Figure 8: Interview Responses by Key Theme, below, represents the number of interview responses mapped to each theme. Subsequent sections address each theme individually.

Figure 8: Interview Responses by Key Theme

The Interview Response Matrix can be sorted by Key Theme to review the specific SME Interview responses that helped to derive each of the high-level summary statements, below.

Theme 1: Calculation Flexibility vs. Standardization This theme collected responses regarding the need to balance any attempt to standardize calculations with the need for flexibility, and the challenges of any modernization based on the legacy databases and programming. In summary:

• Add-ins are working well to provide a balance between flexibility and standardization, but there is room for additional standardization and/or automation.

• Legacy plans are the greatest constraint on future modernization; the number of cases in trusteeship is greater than the number of expected new plans entering trusteeship.

• The valuation components of BCV are not good candidates for outsourcing, due to the unique needs and constraints of PBGC.

Theme 2: Development and Management Approach This theme gathered responses regarding the development methodology and management approach of past modernization efforts. In summary:

• Waterfall development contributed to management and communication issues in prior modernization efforts.

• Agile development should be considered to better engage business users and stakeholders, and is being used successfully in the current BCV Operations and Maintenance (O&M) and IPVFB DME efforts.

Theme 3: Database Building and Other TRMD (formerly OASD) Tools This theme grouped responses regarding database building activities and tools in support of calculations and valuations, and other TRMD tools. In summary:

• TRMD tools support critical BCV functionality, such as database building, but are not maintained in conformance with PBGC’s IT Solutions Life Cycle Management (ITSLCM) Framework, which leads to support challenges.

• Future modernization efforts need to include, and ultimately absorb, retire, or relocate each TRMD tool.

Theme 4: Decentralized Data This theme collected responses regarding the distribution of data across thousands of Microsoft Access databases. In summary:

• The thousands of existing databases present security and management challenges.

• Centralization would improve data security, management, auditability, and availability.

• Migration of data to a central database will be time consuming, because of the need for validation and manual migrations if issues arise.

Theme 5: Organizational Readiness for Change This theme gathered interview responses related to the skills of people, and the capability of the organization. In summary:

• End-users recognize the need for modernization, even though the current tool-set meets most of their needs.

• Recent management and organizational changes (i.e., ongoing OBA re-organization) also support modernization.

Theme 6: Benefit Statements and Listings This theme grouped responses related to the use of ACT-Design and Act-DRS tools to design and generate Benefit Statements and Listings. In summary:

• Programming/Designing Benefits Statements and Listings is cumbersome.

• The processes and procedures could be simplified to improve consistency and reduce the required level of effort.

Theme 7: Information Security This theme collected responses about the poor state of BCV Information Security. In summary:

• Information Security is severely deficient, including but not limited to:

o The lack of an enforced security boundary (data exists outside the PBGC network), o Distributed and weakly protected data, o Insufficient access controls, and o Obsolete technology.

• Security must be improved to reduce the risk of a data breach, while minimizing impacts to the performance and usability of the toolset.

Theme 8: Technological Limitations & Obsolescence This theme gathered responses regarding the sustainability of BCV technology. In summary:

• Almost the entire BCV technology stack is based on obsolete or unsupported technology.

• Replacing unsupported technology would improve security, supportability, and accessibility.

Theme 9: Archiving This theme grouped responses related to the archiving of plan source documents and Benefit Statement and Recalculation System (BSRS) programs. In summary:

• The current archiving process can lead to inconsistent/incomplete records stored and is limited by existing technology.

• Existing COTS tools could be leveraged to provide improved document archiving and collaboration capabilities (i.e., the selected Data Management Division (DMD) tool).

Theme 10: Auditability This theme collected responses regarding the lack of audit controls in several parts of the BCV process.

In general:

• Changes to data, formulas, and configurations are not sufficiently tracked, and data can’t be traced back to original source documents.

• Changes should be logged to demonstrate what changed, why, when, and by whom, minimizing inconsistencies and reducing the likelihood of audit findings.

Step 3: Establish Baseline In Step 3 – Establish Baseline, the IPT developed artifacts to represent the current state of BCV from an architectural perspective. These artifacts were created by reviewing existing documentation and participating in validation sessions with SMEs, and are included in the subsequent sections of this document:

• System Overview – Section 4.1.

• Contextual View – Section 4.2.

• Operational View – Section 4.3.

• Process View – Section 4.4.

• Baseline Architecture – Section 4.5.

These artifacts provide a construct to review the current state of BCV and allow for areas for improvement to be identified. In addition to representations of the baseline architecture, the IPT collected gaps identified in existing documentation and analyses, and observations from the interviews, into an aggregated collection of Gaps and Issues in the BCV Gaps Matrix. These gaps and issues are represented in Section 5: Baseline Gaps and Issues for the current state, and Section 6: Prior BCVS Modernization Effort for the prior BCVS modernization effort.

Step 4: Validate with IPT In Step 4 – Validate with IPT, a work session was conducted to validate the BCV Baseline, incorporate feedback, and begin identifying target state considerations. IPT members met for a two-hour long work session to review the developed key themes, baseline artifacts, and identified gaps and issues, and provided changes to the developed content. IPT members also began identifying target state considerations. IPT members were also given the opportunity to provide additional feedback after the work session, and the subsequent changes were documented in the IPT Feedback Tracker. Additionally, the IPT developed an Executive Briefing to assist with continued communication of the findings of the baseline assessment effort.

4 Baseline Architecture The current environment of BCV tools and services is provided below as a system overview including key inputs and outputs, system boundaries, tools, and applications. Additionally, the current state is expressed through a number of architectural views to provide strategic, business, and technical perspectives that will help inform the target state architecture. Those views are:

• The Contextual View;

• The Operational View;

• The Process View; and

• The Baseline Architecture View.

System Overview BCV is a collection of legacy systems that provide the capabilities for PBGC actuaries to determine participant benefits and calculate corporate liabilities for trusteed plans and for OBA staff to calculate actual retirement benefits for participants and beneficiaries going into pay status.3 The main component of BCV is the Actuarial Calculation Toolkit (ACT) system which primarily uses Microsoft (MS) Excel 2010 and the custom developed ATPBGC Excel Add-in as the benefit calculation engine and MS Access 2010 as the database to store plan and participant data.4 Currently, over 3,000 PBGC-trusteed plans are actively administered in the ACT system. The number of ACT plans continues to rise as OBA actuaries process plan valuations at a rate of about 120 per year.

Inputs There are four primary inputs used to calculate the pension benefits:

• Current and historical pension plan provisions and rules, some of which may be missing.

• Current and historical participant data, which are often incomplete necessitating the use of estimated data.5

• Plan assets and recovery data.

• PBGC regulations, practices, and policies that govern how benefit determinations are calculated under ERISA, which is needed to generate a final actuarial case report.

OBA uses these inputs for the following purposes:

• Benefit Estimates: are calculated using a Benefit Estimation Tool (BET) for (1) newly eligible retirees and (2) retirees already in pay status who are receiving benefits in excess of the PBGC limitations. Until a BET is available, actuaries do these estimates manually.

• Benefit Calculations: OBA staff calculate plan benefits and assets according to plan provisions and applicable PBGC limitations.

• Plan Valuations: OBA staff calculate the overall liability for the plan at the Date of Plan Termination (DOPT), which uses PBGC actuarial assumptions according to ERISA §4044.

• Benefit Determinations and Benefit Determination Letters (BDLs): which inform each participant or beneficiary of his/her PBGC benefit. OBA currently completes Benefit Determinations in the two to six month period after the plan valuation.

3 The BCV Legacy Suite Requirements Document, 06/12/2015.

4 Actuarial Calculation Toolkit Manual.

5 There are dependencies between this and the subsequent bullet. Actuaries cannot calculate liabilities without benefits and also cannot calculated final termination benefits without calculating liabilities so as to determine funding in each priority category.

• Benefit Re-Calculations: after the Actuary finalizes plan benefits and liabilities, a recalculation tool allows administrative staff to calculate retirement benefit options for deferred participants at a requested retirement date.

Outputs: Reporting and Statements Within the BCV process, there are three main outputs or reports:

• Benefit Statement Output (PCL files) & Optional ValPatch to Electronic Automated Letter Generation System (eALG) / Customer Document Importer (CDI): outputs from the BCV are sent to eALG to generate correspondence sent to customers, including statements for Benefit Determination statements, and recalculation outputs. The BSRS program loaded to the Archive system is used by benefit administration staff to generate benefit calculations at termination and at actual retirement date. PBGC’s eALG is currently undergoing a redesign and will be replaced by the Customer Correspondence System (CCS). Currently, ValPatch is used with most output files to provide additional fields to letters and correspondence to eALG.

• Date of Plan Termination (DOPT) Report System (DRS): is a report writing module by which the actuary can design tables of customer data for inclusion in the Actuarial Case Report. Reports can be generated for all customers or a custom group of customers. Reports generated by this tool can be printed and saved as PDF. The report information is required for case review and for inclusion in the Actuarial Case Report.

• Automated Data Transfer Utility (ADT): is used to inspect the input database for missing and errant data, and outputs a MS Access database to the same directory that contains the pension plan’s original database. It is also used to output reports which include summary information, and data validation results which include description and consequence for each error, warning, and message identified. ADT prepares load files that contain valuation data that is loaded to Genesis through a load utility that is part of Spectrum. The IPVFB Supplemental Table load utility does not require the preparation of a load file as it reads the valuation database directly.

However, ADT does include data validations related to the data that gets loaded to the IPVFB Supplemental Table. ADT supports the software closeout process by validating data that is in the valuation database and loading benefit liabilities to the PBGC corporate database.

There are numerous other minor reports used internally within the BCV process, including AggMax and Spectrum reconciliation results within Leo. For example, AggMax is a utility used by Data Analysis and Administrative Services (DAAS) staff that runs a query against Genesis to see if any of the participants in the plan specified are members of another plan trusteed by the PBGC and if so generates a report of these participants for the actuary so he/she can verify whether the participant is affected by the AggMax limitation.

BCV Components BCV is comprised primarily of a number of client-based applications, and two web-based application components.6 The client applications consist of four main components containing eight modules:

• ACT (ValTool, DRS, Design and Runtime): A suite of tools used by actuaries to calculate and value benefits, produce Benefit Determination Benefit Statements, produce listings for the Actuarial Case Report, and develop BSRS/BET programs for use by benefit administration staff through Archive Access and ACT-Runtime.

6 The BCV Legacy Suite Requirements Document, 06/12/2015.

https://teams.pbgc.gov/Org/EAD/Shared%20Documents/2.0%20EA%20and%20Transition%20Strategy/Architectural%20Analysis/BCV%20Modernization%20Assessment/Background%20Material/BCV%20Legacy%20Suite%20-%20Requirements%20Document.docx

• ATPBGC Add-in (Microsoft Excel 2010/2013): An Excel add-in that provides PBGC custom actuarial functions for Excel. These functions are used by actuaries programming cases in the ACT system. The ATPBGC Add-in model consists of three DLLs (ACTFUN32.dll, NPVFV232.dll, and PIA32.dll) written in C++, a VBA module that wraps the DLLs so they can be called from Excel, and an MS Access database that contains data used in the calculations, such as mortality and interest rates tables.

• Automated Data Transfer (ADT) Utility: A Utility that inspects ACT plan databases for missing or errant data and generates reports based on the findings. Once the valuation is complete, the ADT Utility is used to create data extracts (CSV files) that are loaded into the Genesis database (PBGC’s database of record) using the Data Load Management module of the Spectrum application. Once the data is loaded into Genesis, it is available to other PBGC systems.

• Archive (Access and Utility): An application that stores and manages the permanent electronic case related files, including the benefit calculation spreadsheets, MS Access plan databases, benefit statement configuration(s) files, and other plan related files. Archive Utility module allows an authorized user to manage all files related to a plan. The Archive Access module allows users throughout OBA to access archived case files, including BSRS programs used to produce Benefit Statements and Benefit Recalculation(s)/Estimation(s).

BCV’s web-based applications consist of two components:

• Payment Administration Calculation System (PACS): The PACS application performs three main functions: Back Payment/Recoupment calculation; One Time Payment calculation; and Optional Benefit Forms. This functionality exists in a separate system because older BSRS programs lack the capability to calculation benefits in PBGC optional benefit forms, and because Spectrum’s capability handling interest for one time payments is insufficient. The Back Payment/Recoupment calculation determines if PBGC owes the participant a back payment or if they need to recoup money from the participant due to an over payment. Users enter plan-level and participant-level data into PACS with an option to calculate pre-termination liability or to include previous back payments. PACS also retrieves participant information from the Genesis database.