TSP board fires contractor

FRTIB's complaint against AMS

The board that oversees the Thrift Savings Plan ended a tumultuous relationship Tuesday by terminating its contract with American Management Systems Inc., the company hired in 1997 to modernize the federal retirement program's systems.

Beyond terminating the contract with AMS on July 17, the Federal Retirement Thrift Investment Board filed a $350 million lawsuit against the Fairfax, Va.-based firm, claiming breach of contract and fraud.

In rapid succession, however, the board awarded a $20 million, one-year contract to Materials, Communication and Computers Inc. (MatCom), Alexandria, Va., to fulfill "essentially the same project that AMS has been unable to complete," the board said.

The termination means that the long-delayed efforts to give federal workers electronic access to their retirement accounts has come to a screeching halt. The Thrift Savings Plan is the federal government's equivalent of a 401(k) retirement savings plan.

The termination occurred because AMS failed to comply with a January 2001 "cure letter," which laid out a requirement that AMS set an implementation schedule, the board said.

"The board's cure letter required that AMS, having adopted and abandoned four previous schedules, once and for all establish and meet a reasonable schedule for project completion," a release issued by the board July 18 said.

In March, AMS officials had set a December 2001 delivery date but later extended that to January 2002.

"Last week, however, it became apparent—as AMS refused the board's request for a schedule confirming the January delivery date—that AMS knew it could not make that date but would not admit it to the board," the board's statement said.

As the project's delays have mounted, so have the costs. Originally slated at $30 million, AMS's most recent estimate is nearly $90 million, the board said.

"It was our fondest desire that AMS would adhere to its fifth, most recent, schedule, and would complete the project under it, for which the board and AMS would negotiate a fair and reasonable payment," board executive director Roger Mehle said in the statement. "It has become evident, however, that AMS is incapable of fulfilling its commitments. This appears to be a very different company from the one with which we contracted in 1997."

AMS said that it would defend itself against the lawsuit vigorously and accused the board of attempting to "shift the focus from the board's own deficiencies in performance and contract breaches."

"Implementation of a new 401(k) recordkeeping system is an inherently complex undertaking," the company said in a statement issued late on July 17. "While the board has expressed a desire to secure the benefits of a commercial system, it has been unwilling to live with the capabilities of the leading commercial systems. After more than three years, the board still has not fully determined its system needs and frozen the design."

The company noted that it has developed more than 1.2 million lines of code -- five times the original estimate -- to meet what it called the board's "evolving requirements."

"AMS remains fully committed to the successful completion of the new recordkeeping system" for the Thrift Savings Plan, AMS officials said.

In addition, the board said new benefits announced last year will be made available to TSP participants through modifications to the board's current system performed by the Agriculture Department's National Finance Center.

Most of those modifications were completed as of May 1. The remaining large change, necessary to accommodate military personnel into the TSP program, will be completed by the NFC later this year, the board said.

About the Author

Christopher J. Dorobek is the co-anchor of Federal News Radio’s afternoon drive program, The Daily Debrief with Chris Dorobek and Amy Morris, and the founder, publisher and editor of the DorobekInsider.com, a leading blog for the Federal IT community.

Dorobek joined Federal News Radio in 2008 with 16 years of experience covering government issues with an emphasis on government information technology. Prior to joining Federal News Radio, Dorobek was editor-in-chief of Federal Computer Week, the leading news magazine for government IT decision-makers and the flagship of the 1105 Government Information Group portfolio of publications. As editor-in-chief, Dorobek served as a member of the senior leadership team at 1105 Government Information Group, providing daily editorial direction and management for FCW magazine, FCW.com, Government Health IT and its other editorial products.

Dorobek joined FCW in 2001 as a senior reporter and assumed increasing responsibilities, becoming managing editor and executive editor before being named editor-in-chief in 2006. Prior to joining FCW, Dorobek was a technology reporter at PlanetGov.com, one of the first online community centers for current and former government employees. He also spent five years at Government Computer News, another leading industry publication, covering a variety of federal IT-related issues.

Dorobek is a frequent speaker on issues involving the government IT industry, and has appeared as a frequent contributor to NewsChannel 8’s Federal News Today program. He began his career as a reporter at the Foster’s Daily Democrat, a daily newspaper in Dover, N.H. He is a graduate of the University of Southern California. He lives in Washington, DC.


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