Lawmaker calls for competition on TSP administrative contract

The Thrift Savings Plan's relationship with the National Finance Center took another hit Monday when a lawmaker called for the agency's $52 million administrative services contract to be opened for competition.

"I have long been a proponent of competitive bidding," said Sen. Peter Fitzgerald, R-Ill., chairman of the subcommittee with oversight of the TSP. Fitzgerald called a hearing Monday to discuss the federal retirement savings program. "It is my view that the TSP could save significant funds if this contract were opened to competition, which would directly benefit the plan's 3.2 million participants."

During a meeting of the TSP board earlier this month, TSP officials sharply criticized the NFC's installation of a mainframe computer system that was designed to improve TSP customer service. The mainframe was scheduled to be installed by January, but that deadline has been pushed back to May or June. Thrift plan officials blame the delay on a lack of cooperation from the NFC. Some TSP board members suggested that their relationship with the finance center might be fatally flawed.

The NFC, an Agriculture Department agency based in New Orleans, operates several administrative facilities for the savings plan, including a call center and a mail-handling site. More than 400 NFC employees are assigned to TSP projects.

NFC Director Jerry Lohfink could not be reached for comment Monday. The Times-Picayune in New Orleans reported last week that Lohfink was scheduled to meet with TSP officials to discuss the dispute.

Thrift board chairman Andrew Saul testified that the savings plan is soliciting bids for a vendor to house the mainframe and conduct related software support. He said that much of the TSP's operations at the finance center could not be opened for bidding until recently, when the savings plan upgraded its recordkeeping system.

"The new system is much more transportable," Saul said.

Saul made a point of saying, however, that the TSP has enjoyed a historically good relationship with the finance center. He said that the board must keep administrative costs low, but also must "be careful with reliability and service."

TSP Executive Director Gary Amelio told lawmakers that as the savings plan has grown, the NFC has charged more for each TSP investor. In the early 1990s, Amelio said, the finance center charged about $6 per TSP member per year. The NFC now charges $18 per TSP member.

"Instead of getting an economy of scale, we're getting the reverse with the National Finance Center," Fitzgerald said.