Senator Announces TSP Investigation

Senator Susan Collins, (R-Maine), chair of the Senate Governmental Affairs Committee, requested that the Federal Retirement Thrift Investment Board, which oversees the 401(k)-style plan, turn over all documents pertaining to a contract with Fairfax, Virginia.-based American Management Systems (AMS) Inc., according to govexec.com.

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, committee spokeswoman Andrea Hofelich said, according to the govexec.com report (See  TSP Daily Valuation Launch Delayed – Again  ).

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, in addition to the $33 million paid to the contractor that took over after AMS was fired (See  Thrift Board Steps into the Ring with AMS ).

“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.”

AMS was hired in 1997 to modernize the TSP computer system with daily recordkeeping capability and give federal employees greater flexibility in managing their retirement accounts.

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 (See  TSP Still Grappling With High Call, Loan Volume ).

The $113-billion retirement fund covers federal and military employees and retirees and current and former congressional members.