Investigation spreads blame for mishandled TSP upgrade

The Federal Retirement Thrift Investment Board and an IT company share responsibility for substantial cost overruns and delays in a project intended to bring the retirement account records of government workers online by May 2000, Senate Governmental Affairs Committee leaders said Wednesday.

Serious communications breakdowns and staffing shortages contributed to the failure of American Management Systems to move Thrift Savings Plan records online by the original deadline, Sens. Susan Collins, R-Maine, and Joseph Lieberman, D-Conn., wrote in a July 7 letter to Andrew Saul, chairman of the TSP board. The failed contract, terminated in 2000, ended up costing plan participants $36 million, the senators said.

TSP participants paid another $33 million for Materials, Communications and Computers Inc. (Matcom) to complete the project in the wake of the AMS failure, the letter stated. The record system upgrade, started in 1997, should have cost a total of $29.7 million, according to an estimate prepared by the Government Accountability Office (formerly known as the General Accounting Office).

AMS spent $65 million over four years working on the project, according to the senators. Only $1 million worth of that work ended up having any value to Matcom when the company took over the project in early 2001, the letter noted.

The TSP board took AMS to court and reached a settlement of $5 million in June 2003. But the board ended up charging $36 million to TSP accounts to pay for the failure.

Despite the deductions, government workers in the plan "have yet to receive an adequate explanation of what happened and why," Collins and Lieberman said, adding that neither the TSP board nor AMS have accepted enough blame for the botched contract.

The senators based their criticisms on the results of an investigation in which committee staff members reviewed more than 35,000 messages exchanged between the TSP board and AMS.

AMS, which recently merged with CGI Virginia Corp., a subsidiary of CGI Group Inc., a technology services firm based in Montreal, Canada, is in the process of looking over Collins and Lieberman's letter. "Obviously we're never happy when our clients aren't completely satisfied," said Eileen Murphy, a spokeswoman for AMS-CGI.

The TSP board also is still in the process of reviewing the letter, said Tom Trabucco, a spokesman. The board "fully cooperated" with the committee's investigation, he added, declining to comment on actions the board might take in response to the letter.

Communications failures resulted in AMS wasting time customizing off-the- shelf software, according to the investigation. While some adaptation of the commercial product was necessary, AMS wrote more than a million lines of custom computer code.

TSP board members claimed they were "unaware that AMS was drafting that much code," and added that the company was "secretive" and refused to let them look at the code. In turn, AMS executives said the board asked for more than 450 "last-minute" design changes, resulting in cost overruns and delays.

Confusion over the contract terms "eventually created hostility," the senators noted. In one exchange, an AMS executive expressed frustration that the board had reopened 19 of 45 issues discussed at a past meeting. The contractor had been under the impression that they had been settled.

"This was not my agreement," a TSP board staff member wrote in reply to an e-mail from the AMS executive. "I would also appreciate a less combative tone."

In the next round of the exchange, he added: "If AMS had acted like a productive and professional organization at any time during this project, we wouldn't be where we are, and the client wouldn't have to be spending inordinate amounts of time trying to bail your [expletive deleted by investigators] out of this. So don't lecture me."

Compounding communication problems, both AMS and the TSP board failed to assign adequate staff to the project, the senators said. Some staff members lacked technical expertise and contract management skills, according to the letter. If the TSP board could not locate those skills in-house, the board should have considered hiring an outside consultant, the lawmakers said.

On future technology projects, the TSP board should seek advice from independent experts to avoid becoming too dependent on any contractor, Collins and Lieberman recommended. The board also must take precautions to ensure that participants do not end up paying for failures, the letter stated

The Governmental Affairs Committee is awaiting a response from the board before deciding what, if any, further action is needed, said spokeswoman Andrea Hofelich.

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