Problems plague retirement system

Agency, contractors work to eliminate paperwork backlog

Lou Ray, Matcom's president and chief executive officer, said problems with the Thrift Savings Plan system's processing software were tying up the mainframe, but significant improvements are made every two to three days.

Henrik G. de Gyor

Tom Wolf, 34, quit his U.S. Postal Service mail-sorting job May 22 after 10 years. Then his start as a casino blackjack dealer was delayed five weeks. To save his West Allis, Wis., home from foreclosure, Wolf applied to withdraw his retirement money from the Thrift Savings Plan, a retirement fund, similar to a 401(k) plan, for civilian and military government employees.

At first, Wolf's withdrawal was delayed because TSP didn't receive notification of his resignation from the Postal Service until June 18. Then Wolf was told he needed to fill out a new withdrawal form. He still hasn't received notice about the form change, which TSP representatives said they mailed.

Then he was told TSP had not received the new form he'd sent by certified mail. On July 9, he was told TSP had received the paperwork, but Wolf is still waiting for his check. He has spent countless hours on the phone with TSP workers, each time getting different answers to his queries.

"It's been a little over two months now," Wolf said July 25. "Under the old system, it would've been done in 30 days. The way they've handled this situation has driven me absolutely bonkers."

Wolf's check may not come anytime soon. It will take three to four weeks before the new computer system for managing TSP is cleaned up, said Andrew Saul, chairman of the Federal Retirement Thrift Investment Board, at a July 24 congressional hearing.

The problem is twofold: A massive paperwork backlog was created with conversion to the new system, and unexpected system slowdowns have lengthened the amount of time it takes to process that paperwork, as well as new transactions, according to officials involved with development of the new system.

Nevertheless, federal officials testifying July 24 before the House Committee on Government Reform stood behind prime contractor Matcom International Corp. and the new system it developed, saying technology glitches are being corrected, and the paperwork backlog is being eliminated. System speed is improving daily, they said.

"We believe this system is a good system," Saul said.

He said that about 170 bugs have been identified, but they are "nothing that is going to take the system down. As we eliminate them, I think you are going to find everything speeds up."

The system launched June 16, 23 months after Alexandria, Va.-based Matcom took over the troubled project. The Federal Retirement Thrift Investment Board hired Matcom after firing American Management Systems Inc., which had worked on the project for four years without launching it. Matcom's contract is worth about $26 million, according to the board.

Matcom's system brought the Thrift Savings Plan into the 21st century, said Gary Amelio, executive director of the Federal Retirement Thrift Investment Board. It is the largest defined contribution plan in the world, serving 3 million people and holding $113 billion in assets.

The system is designed to process employee transactions and value the five TSP retirement funds daily, rather than monthly. It also reports account balances in shares as well as dollars and offers a greater number of withdrawal options. For the first time, it allows plan participants to apply online for loans from their retirement accounts.

The new features made it impossible to use the old system to back up the new one when slowdowns were identified, said Lou Ray, Matcom's president and chief executive officer, in an interview.

"The old system processed transactions once a month; the new system processes transactions every day. Once you start processing loans against yesterday's balance as opposed to the end of the month, there is no way to do that on the old system," he said.

The board spent $6.5 million testing the system to ensure it would work when it went live, Saul said. Its performance has been slow, but it has not gone down.

When the system first went live, it processed 100,000 transactions a day, Ray said. After improvements, it processed 813,000 transactions on July 21. The old system processed as many as 500,000 transactions only on one day of its life, Amelio said. Now it can handle 60,000 transactions per hour, 10,000 more than it was designed for.

Ray said problems with the system's processing software were tying up the mainframe, but significant improvements are made every two to three days. The board has also added two Web servers to help speed processing time, bringing the number of Web servers dedicated to the system to four.

Still, users have been frustrated by long waits to log on and complete transactions. Currently, they are advised to avoid using the system during peak hours, from 8 a.m. to 4 p.m.

"What good is a Web site providing access to $113 billion in plan assets when you have to log on at three in the morning?" asked Rep. Tom Davis, R-Va., chairman of the committee, who acknowledged "the enormity and complexity of the project."

In some cases, users have been unable to conduct transactions online at all, according to members of Congress who reported myriad calls from constituents upset by online delays, as well as their inability to get help by phone or mail from the National Finance Center in New Orleans.

The center, run by the Agriculture Department, uses the Matcom system to process transactions received by mail and provides telephone customer service.

Rep. Chris Van Hollen, D-Md., reported receiving eight to 10 constituent letters daily about the new system, including one from a retired Marine colonel who was trying to save his home from foreclosure but, like Wolf, could not get his withdrawal application processed.

Part of the problem is a backlog of 70,000 paper-based loan and withdrawal transactions that resulted with the move to the new system, according to Federal Retirement Thrift Investment Board officials. Loan applicants whose paperwork was not processed before the system went live had to fill out a new form that had the data required by the new system. That meant their applications took longer than usual to process.

The backlog should be eliminated within a month, Saul said. All new loan applications should be processed within 10 days, the industry standard, according to Amelio.

Contractor employees at two sites, Matcom's facility in Fair Oaks, Va., and subcontractor SunGard Data Systems Inc. in Birmingham, Ala., are helping clear the backlog by doing manual data entry, along with additional staff reassigned to the task at the National Finance Center, according to Amelio and Saul.

Tom Trabucco, spokesman for the Thrift Savings Plan, said the additional data-entry staff was put on the job about three weeks after the system went live.

"We probably waited a week too long to set up those backup sites," Saul said. "For the most part, I do not think this is a technology problem. We got buried by a massive amount of data entry that came in during the conversion process. The human way, that's where we have failed."

If he could do anything differently, Ray said he would study how paper-based transactions would be processed during the conversion and recommend to the board how they could be done most efficiently.

"I think we would have looked further than we had to look in terms of the overall system, who is doing transactions when and where," he said. "Making the system run is our responsibility. I don't think we did as well as we could have in anticipating problems past our borders."

In addition to SunGard, Matcom's subcontractors include Centech Group Inc., Computer Sciences Corp., Keane Inc.'s Federal Systems unit and Savantage Financial Services Inc.

Matcom employs more than 600 people and had $70 million in revenue in fiscal 2003.

Staff Writer Gail Repsher Emery can be reached at gemery@postnewsweektech.com.

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