From another Ars article: "It would be incorrect to say that these older systems (especially the COBOL code) couldn't be updated to support encryption, however

From another Ars article: "It would be incorrect to say that these older systems (especially the COBOL code) couldn't be updated to support encryption, however. There are numerous software libraries that can be used to integrate encryption schemes into older applications, including libraries from PKWare. Other government agencies and financial institutions already utilize such software, according to Matt Little, VP of Product Development at PKWare. The problem is that, as DHS Assistant Secretary for Cybersecurity Andy Ozment noted during his testimony, OPM didn't have the kind of authentication infrastructure in place for its major applications to take advantage of encryption in the first place. Encryption, he said, would "not have helped in this case."