Suit brews as TSP work proceeds

FRTIB's complaint against AMS

The board that oversees the Thrift Savings Plan has asked Congress to change a federal law so the board can refile a $350 million lawsuit against American Management Systems Inc. for failing to complete a computer modernization project.

Meanwhile, the company hired in July 2001 after the board terminated its relationship with AMS is on target to complete the project by the end of this year.

Early last month, a federal district court threw out the Federal Retirement Thrift Investment Board's lawsuit against AMS, saying the board didn't have the right to sue on its own. Only the Justice Department could sue on the board's behalf, the court found.

Sen. Ted Stevens (R-Alaska), ranking member on the Senate Appropriations Committee, is considering the board's request to sponsor a bill to amend the Federal Employees' Retirement System Act of 1986 so that executive director Roger Mehle can file the suit again, Mehle said at a board meeting Jan. 15.

AMS' failure to meet its contractual obligations to build a new recordkeeping system for the TSP "is the biggest threat to this organization since I first became associated with it in 1987," said Mehle, a former trial lawyer. "I want to take these people [AMS] back to court. I want to get them before a jury and let the chips fall where they may."

The board hired the Fairfax, Va.-based AMS in 1997 to modernize the TSP's computer system. The new system was to go online in May 2000, at a cost of $30 million. By the beginning of last year, however, the operational date for the system had been delayed at least four times and AMS was estimating the final cost at nearly $90 million, according to the board.

On July 17, the board fired AMS and a few days later hired Materials, Communication and Computers Inc. (MatCom) of Alexandria, Va., to complete the project.

MatCom's efforts to build the new system "are proceeding well," Mehle said. The company plans to use the same off-the-shelf software that AMS was using, he said, adding, "We have learned from MatCom that the customization needed for our [new] system is far, far less than the customization AMS told us was necessary."

For example, the number of lines of new software code AMS had written to add to the off-the-shelf product was greater than the total number of lines in the product itself, Mehle said.

He said he expects the new system to be operational in the "second half of this year."

An AMS spokesman said the company would have no comment on Mehle's statements.