AMS settles lawsuit

American Management Systems Inc. has settled a $350 million lawsuit brought by the Federal Retirement Thrift Investment Board, its former client.

Under terms of the agreement, the board will pay AMS $10 million for certain work it performed under the contract and for which payment remained outstanding. The board also agreed to a no-fault termination of the contract.

AMS of Fairfax, Va., will pay $15 million to the Thrift Savings Plan as partial reimbursement of the $31 million it received for other work it performed under the contract.

AMS had worked for four years to build a new computer system for managing the government's retirement system when the board fired the company and sued it for fraud and breach of contract in the U.S. District Court for the District of Columbia. The board's suit sought to recover actual damages of about $50 million and punitive damages of $300 million. The suit had been pending appeal on jurisdictional grounds.