New TSP computer system hits another delay

A new computer system that would give federal employees more control over their 401k-style Thrift Savings Plan accounts won't debut in November as scheduled, the TSP board announced Friday.

The delay is the sixth time in two and a half years that the system's launch has fallen behind. This time, the delay was blamed on testing that found the new system couldn't handle large numbers of TSP transactions at once. TSP officials issued a statement saying a new launch date has not been set.

"Evaluation of approaches to achieve the requisite increase in the system's processing speed is now under way, but sufficient progress has not yet been made in this effort to permit the establishment of a new schedule for system implementation," the TSP statement said. "In the interim, the board will continue to use its current well-proven monthly valued system."

When the new system is completed, TSP officials say it will allow for daily valuation of accounts and daily processing of transactions, much as private sector 401k programs do. Currently, the value of TSP accounts is updated monthly rather than daily, and some transactions take several weeks to process.

The new system would also show account balances in shares as well as dollars, offer more ways for participants to withdraw money and provide online service for loans and withdrawals.

The TSP board hired Fairfax, Va.-based American Management Systems to modernize the TSP computer system in 1997. After four years, four missed deadlines and a tripling of the cost estimate for the system, the TSP board fired AMS. The board and AMS are locked in a legal battle over the failed contract and the $50 million that the board paid to AMS.

The board in July 2001 handed the contract over to Alexandria, Va.-based Materials, Communication & Computers Inc., which has led a team of subcontractors to develop the system for about $22 million. The TSP board had previously announced that the new contractor's system would be up and running in September of this year. In August, the board announced a delay until November.