Modernized retirement system on the way

After another company was fired from the project, Materials, Communication and Computers Inc. will deliver the modernized Thrift Savings Plan (TSP) retirement recordkeeping system on schedule and within budget. The system will be ready for testing in July and for an official launch Sept. 16.

At the same time, the Office of Personnel Management, with the help of American Management Systems Inc. — the company fired from the TSP project — could outsource 750 jobs in the Retirement and Insurance Service, another part of the federal retirement system.

The TSP is the U.S. government's equivalent of a 401(k) retirement savings plan. As of April 20, nearly 2.9 million federal civilian employees and uniformed services members held accounts.

The American Federation of Government Employees (AFGE) charges that the chaotic history of the TSP project spells trouble for OPM if it hands over the administration of the Retirement and Insurance Service to AMS.

"It's not clear whether the federal employees who are now performing that work in a perfectly reliable way will have an opportunity to compete to defend their jobs," said Jacque Simon, AFGE public policy director. "We think the disastrous performance of the contractor on [the] TSP [project] should give OPM pause."

Earlier this year, OPM hired AMS "to determine whether or not there was some potential here" to outsource RIS jobs, said Mike Orenstein, an OPM spokesman. "The contractor came back with the word that, yes, there is some potential."

The jobs would include claims adjudication, the maintenance of retirement information and annuity rolls, and mail and file services, Orenstein said. A formal request for information will go out this summer.

"I want to make it very, very clear that nothing has been decided," he added.

The TSP's new $20 million recordkeeping system will offer participants an array of improved services, including daily transaction processing, the Federal Retirement Thrift Investment Board announced May 17.

"The big benefits of the new system, from the standpoint of participants, are not only improved options for the deposit of loans and withdrawals, but also having disbursement made more often — throughout the month rather than monthly," said Tom Trabucco, spokesman for the board.

In 1997, the board hired AMS to modernize the plan's computer system. The new recordkeeping system was to go online in May 2000 at a cost of $30 million. By the beginning of 2001, however, the operational date for the system had been pushed back at least four times, and AMS was estimating the final cost at nearly $90 million, according to the board.

The board fired AMS July 17, 2001, and a few days later hired Materials, Communication and Computers, of Alexandria, Va., to complete the project.

After the board fired AMS, it filed suit in federal district court seeking $350 million in damages. The district court threw out the lawsuit in December 2001, saying the board didn't have the right to sue on its own behalf, but the board has appealed that ruling to the U.S. Court of Appeals for the District of Columbia Circuit.