Senator launches probe into TSP contract

Concerned that millions of taxpayer and federal employee dollars were wasted, Sen. Susan Collins, R-Maine, Wednesday launched an inquiry into a failed contract to modernize the Thrift Savings Plan's computer system.

Collins, who chairs the Senate Governmental Affairs Committee, requested that the Federal Retirement Thrift Investment Board, which oversees the 401k-style plan, turn over all documents pertaining to a contract with Fairfax, Va.-based American Management Systems Inc. The senator asked for the documents by Aug. 29. Committee staff will wait to review those documents before determining if they will approach AMS with a similar request.

There's been no decision about whether the committee will hold a hearing on the matter. Collins is most interested in finding out what exactly caused the contract to drag on for four years, grow to three times the original cost and produce zero results, according to committee spokeswoman Andrea Hofelich.

"It is outrageous that a federal agency spent tens of millions of dollars in retirement savings on a system that it couldn't even use," said Collins. "That's an example of wasteful spending that should never be repeated."

"We will respond to the committee's request," said board spokesman Tom Trabucco.

AMS was hired in 1997 to modernize the TSP computer system and give federal employees greater flexibility in managing their retirement accounts. The $30 million project was supposed to be completed by May 2000. Deadlines were continually missed, however, and the work ran on for four years. Finally, in July 2001, the board fired AMS and sued the company for $350 million in damages. AMS filed a breach of contract suit. The two sides recently reached an out-of-court settlement in which TSP participants paid $36 million for the failed contract. That's in addition to the $33 million paid to the contractor that took over after AMS was fired.

Both sides blame the other for the failed contract. AMS officials claim that the board repeatedly changed the parameters of the contract. In its court filing two years ago, the company argued, "The board's failure to come to closure on its requirements and the resulting design created a 'moving target,' which in turn caused project schedule delays."

For its part, the board claimed that AMS misrepresented itself during the bidding process. Board officials were confident that AMS would be able to finish the job in the time allotted and on budget.

When he terminated the contract, the executive director of the board at the time, Roger Mehle, said, "It has become evident … that AMS is incapable of fulfilling its commitments. This appears to be a very different company from the one with which we contracted in 1997."

Collins' inquiry comes on the heels of a July House Government Reform Committee hearing which looked into problems employees are having accessing the new computer system. During the hearing, TSP Board Chairman Andrew Saul pledged to quickly iron out the wrinkles and get the system on track.

On Monday, TSP Board officials said they had made significant progress over the past several weeks in getting the system running.

Collins' inquiry will focus specifically on the contracting problems that plagued the AMS contract.