AMS, thrift board both faulted for failed system
A failed attempt to develop an electronic record keeping system for the federal Thrift Savings Plan wasted about $36 million in federal retirement assets, according to the investigation results released today by the Senate Governmental Affairs Committee.
In a letter sent today to Federal Retirement Thrift Investment Board Chairman Andrew Saul, Sens. Susan Collins (R-Maine) and Joseph Lieberman (D-Conn.) said both contractor American Management Systems Inc. and the Thrift Investment Board were to blame for the project failure.
“While it is clear that AMS failed to produce a workable system and repeatedly missed its own deadlines and cost estimates, the board should have taken more steps early on to prevent this failure and to protect plan participants and beneficiaries from paying the tab,” the senators wrote. Collins is chairwoman of the committee, and Lieberman is its ranking member.
The Thrift Savings Plan is a retirement savings plan, similar to a 401(k) plan, for civilian and military government employees. It is the largest defined contribution plan in the world, serving 3 million people and holding $113 billion in assets, according to the Thrift Investment Board.
The new record-keeping system was meant to give federal employees and retirees online access to their retirement accounts, and help TSP employees better track the retirement contributions of federal employees. The Thrift Investment Board contracted with Fairfax, Va.-based AMS to build the system.
AMS worked on the project under a four-year, $29.7 million contract, but after four years and $65 million in spending, the system didn’t work.
Committee staff spent months investigating AMS’ failure to build the system, and the role the Thrift Investment Board played in that failure, according to Collins and Lieberman. The staff interviewed Thrift Investment Board and AMS staffs, reviewed thousands of documents produced by both parties, and studied reports prepared by outside observers.
The senators found:
-- Much of the time and money the board spent on the project from 1998 to 2001 was wasted. To pay for the contract, $36 million was taken out of the retirement accounts of TSP plan participants and their beneficiaries.
-- AMS deviated significantly from the original system design, and that caused repeated delays and cost overruns. The TSP board did not recognize these changes, and therefore could not prevent them.
-- The TSP board and AMS did not assign enough staff to the project.
Collins and Lieberman recommended that qualified staff be assigned to oversee similar projects in the future, that independent experts be consulted to prevent the TSP board from becoming too dependent on one contractor; and that the board improve its risk management and contract management.
to access the committee’s letter.
The Federal Retirement Thrift Investment Board fired AMS and hired Matcom International Corp. of Alexandria, Va., to build a new system. Matcom built the system in 18 months for $33 million, and it went live in June 2003. The Matcom system was beset with paperwork backlogs and technical glitches in its early months, but those problems were fixed last fall, according to TSP staff.
The same month that Matcom’s system went live, AMS settled a $350 million lawsuit for fraud and breach of contract brought by the Thrift Investment Board. The settlement brought TSP plan participants $5 million.
Matcom was bought by SI International Inc. in January. On May 3, AMS’ assets were divided between CGI Group Inc. and CACI International Inc.
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