On February 15, 2017, the Federal Deposit Insurance Corporation (FDIC) Office of Inspector General (OIG) issued an audit report regarding the status of the FDIC’s Failed Bank Data Services (FBDS) Project. The FBDS project established a new contract and system for maintaining records of failed financial institutions that the FDIC obtains as receiver. Maintaining such records is critically important, as various internal and external parties, including outside counsel, use them to support investigations, litigation, tax administration, and asset sales. The report assessed the status of the project, including progress and costs in relation to goals, budgets, and milestones; factors contributing to the project's progress; and outstanding risks that must be addressed.
While the FDIC had a number of significant achievements associated with the FBDS project, we found that the project had not met key milestones and costs exceeded estimates. Specifically, there was a delay in implementing certain system capabilities and transitioning data from the prior contractor’s system to the FBDS system. The transition-related schedule delays caused the FDIC to extend the prior contract several times into 2016—beyond the initially anticipated contract expiration date. As a result of those extensions, and other challenges, the FDIC absorbed about $14.6 million more in transition-related costs than had been estimated. Overall, total transition-related costs remained less than what was originally projected when the FDIC Board of Directors approved the project.
We identified three factors contributing to the project’s current status. Specifically, FDIC personnel did not fully understand the project’s scope and requirements, did not establish clear expectations for the project in contract documents, and did not implement a project management framework to guide and structure project activities. FDIC personnel identified other factors that impacted the project’s delays, including technical challenges and the unanticipated failure of a large, complex financial institution.
Our office made seven recommendations to strengthen FBDS governance, project management, and contract oversight to reduce FBDS project-related risks going forward. FDIC management concurred with our recommendations and described planned actions.