Thrift lawsuit brews

FRTIB's complaint against AMS

The board that oversees the Thrift Savings Plan has asked Congress to change 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 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.

Additionally, Sen. Ted Stevens (R-Alaska), the 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."

AMS officials argued that the board was unwilling to accept the limitations of available technology. "After more than three years, the board still has not fully determined its system needs and frozen the design," AMS said in a statement July 18, 2001. AMS had no further comment on the latest developments.

Mehle urged members of the board to weigh in with Congress in favor of amending the law. "We've unleashed our whole political apparatus on this," said Vincent Sombrotto, chairman of the Employee Thrift Advisory Council and president of the National Association of Letter Carriers.

The board hired Fairfax, Va.-based AMS in 1997 to modernize the TSP's computer system. The new record-keeping 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 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 Inc. (MatCom) 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 used, 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 that 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.

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