TSP moves jobs out of New Orleans, into private sector

Hurricane Katrina has spurred an outsourcing of Thrift Savings Plan support functions to happen faster than originally planned, leaving only upper-tier policy and financial jobs filled by federal employees.

The National Finance Center, an Agriculture Department facility located in New Orleans, resigned its remaining duties for the TSP ahead of schedule because the hurricane left the facility understaffed and in poor physical shape.

The TSP board, which administers the $180 billion 401(k)-style retirement savings plan for millions of federal employees, announced Tuesday at a meeting that it granted SI International a sole-source, rushed contract to take over duties held by employees at the NFC as of June 9. The one-year contract was not subject to the normal competitive bidding process because of its emergency nature.

The board already has moved toward contracting out the roughly 500 positions that were once held by NFC staff, to save money. Fewer than 100 federal employees remain in TSP-related jobs at the NFC, many of them in accounting positions.

In the past, NFC employees also processed forms for options including rollovers and withdrawals, operated call centers to answer participant questions and coordinated the plan with agencies' payrolls.

"I am very much in a comfort zone that nothing will fall through the cracks," TSP Executive Director Gary Amelio said. "Our costs will go down … I think significantly."

In part because of the outsourcing, the plan's budget, which comes directly out of participants' investments, is shrinking. It has fallen from $101.5 million in fiscal 2004 to a projected $76.8 million for fiscal 2007.

Those costs, at around four basis points, are widely known to be the lowest among government-sponsored and privately run 401(k) plans.

"This is the last step in divorcing ourselves from the NFC," TSP Board Chairman Andrew Saul said. "It is hopefully getting a better product for our participants."

Saul said at the meeting that low administrative costs are especially important to investors when the markets are yielding smaller gains.

SI International already runs a call center in Clintwood, Va., that handles functions previously performed by the NFC.

TSP officials said the NFC's resignation sped up the privatization of the remaining work by at least a year. It also had the effect of increasing automated processes in the TSP, among them the processing of death benefits.

"When you put in a new process, you take a look at it," said Pamela-Jeanne Moran, director of TSP benefit services.

By the end of the week, the TSP Web site will be updated with new addresses and phone numbers and revised forms to reflect the change, officials said.