Thrift board admits faults in failed system

The chairman of the Federal Retirement Thrift Investment Board has agreed with a congressional oversight committee that found the board and contractor American Management Systems Inc. responsible for the failed implementation of an electronic record keeping system for the federal Thrift Savings Plan.

"The board members, the executive director and the senior staff of the agency have all carefully reviewed your letter. Indeed, no factual discrepancies were identified. Be assured the board and agency accept your committee's findings, as well as the recommendations presented," board chairman Andrew Saul wrote to Sen. Susan Collins (R-Maine), chairwoman of the Senate Governmental Affairs Committee, and ranking member Sen. Joseph Lieberman (D-Conn.).

The committee released the July 16 letter today.

The Thrift Savings Plan is a retirement savings plan, similar to a 401(k), for civilian and military government employees. It is the largest defined contribution plan in the world, serving 3 million people and holding $113 billion in assets, according to the Thrift Investment Board.

AMS worked for four years to develop the new record-keeping system, but after spending $65 million, the system didn't work. AMS was fired, and Matcom International Corp. of Alexandria, Va., was hired to build a new system. Matcom built the system in 18 months for $33 million. It went live in June 2003.

Committee staff investigating the AMS project failure found that $36 million was wasted when it was taken from Thrift Savings Plan accounts to pay for the AMS contract.

The committee also said that while AMS missed deadlines and its own cost estimates, the board should have taken steps earlier to prevent the project failure.

The committee recommended:

  • Qualified staff should be assigned to oversee similar projects in the future.

  • Independent experts should be consulted to prevent the TSP board from becoming too dependent on one contractor.

  • The board needs to improve its risk management and contract management.

In his letter, Saul said the board members "spent countless hours satisfying ourselves that the [Matcom-built] system could function properly."

He said all but one of the board members took their positions after the AMS project failure.

Saul also highlighted the value of private-sector firms and public-sector veterans in getting a job done right.

For example, Saul said, the board relied on a career federal executive to implement the Matcom system, while it relied on private-sector firms in several areas, including the provision of toll-free telephone service for TSP participants.

"When we learned that an early estimate from a government source regarding the cost of toll-free telephone service for participants was prohibitive, we urged agency staff to keep searching for a more cost-effective approach," Saul wrote. "They succeeded in obtaining one from the private sector, and that new toll-free service is now available to participants."

Matcom was bought by SI International Inc. in January. On May 3, AMS' assets were divided between CGI Group Inc. and CACI International Inc.

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