Key Takeaways

  • Before its recent digitization, the US Office of Personnel Management (OPM) forced government employees and veterans to endure up to six-month waits for their pensions due to an entirely paper-based system.
  • Files for retirement cases were stored in “acres of file cabinets” within deep underground caverns, processed by hand in cubicles, a testament to antiquated systems.
  • The core problem wasn't just old technology, but a contracting model where vendors prioritized "securing government contracts" over the “delivery of quality product,” leading to years of failed attempts.
  • A small team, reportedly recruited by Airbnb founder Joe Gabbia, took matters into their own hands, firing the incumbent vendor and rebuilding the entire OPM retirement processing system from scratch.

The Six-Month Abyss and the Contractor's Grip

Imagine waiting half a year to get your pension after decades of service. That was the reality for US government employees and veterans, caught in the gears of the OPM's notorious paper-based retirement process. As John Coogan explained, “Up until now, the process for government employees and US veterans to retire and start receiving their pensions could take up to 6 months. This is because it's entirely paperbased and manual.”

This wasn't just a slow website. It was a physical, analog nightmare. Coogan painted a vivid picture: “In deep underground caverns blasted out of limestone. There were literally acres of file cabinets as far as the eye could see... Each case was handed was hand processed by case workers in cubicles deep underground.” This incredible inefficiency wasn't for lack of trying to modernize. For years, contractors had been brought in, promising digital salvation.

But these 'solutions' never arrived. Why? Coogan cuts to the chase: “The black pill was seeing the entire the terrible quality of the software and interaction with the contractors coming from Silicon Valley.” He's blunt about the root cause: “It's clear as the U OG USDS people explained to me a decade ago, the primary skill these vendors have is securing government contracts. It's a huge moat delivery of quality product be damned.”

Rebuilding from the Ground Up: A Founder's Lesson

The turning point came when a small team of engineers, reportedly assembled by Airbnb's Joe Gabbia, refused to accept the status quo. They witnessed firsthand the contractor merry-go-round, where securing the next check outweighed actually fixing the problem. They realized the external help wasn't just failing to deliver; it was actively preventing progress. So, they did what many founders often debate but rarely execute on such a scale: they took ownership.

Coogan recounts the decisive move: “We fired the vendor and took over the project... we soon realized we were going to have to rebuild the whole stack from scratch.” This wasn't a minor tweak; it was a full, ground-up reconstruction of a critical national system. This small, determined group didn't just digitize a process; they proved that internal talent, given true authority and a mandate to ship, could succeed where armies of well-funded contractors failed. They chose to build a working system over extending a dysfunctional relationship.

What to Do With This

This OPM story offers a sharp lesson for any founder. If a core business process is repeatedly failing despite significant investment in external vendors, it's time to interrogate their real incentive. Pull your last three contractor invoices and compare them against actual delivered value. If the output is consistently low-quality, despite the cost, consider whether their primary skill is delivery or simply securing your recurring spend. Don't be afraid to fire an underperforming 'expert' and empower an internal team to rebuild from scratch if it's mission-critical. The long-term cost of a functional, owned system often beats the perpetual drain of a broken outsourced one.