AMS was under contract with the Thrift Board to develop and implement a new recordkeeping system for the TSP. AMS said it intends to fight the suit.
The suit seeks $50 million in actual damages and $300 million in punitive damages for AMS’s alleged breach of contract and fraud in its relationship with the Board. The TSP’s assets of over $100 billion represent the investments of its 2.5 million participants.
The Board officially terminated its four-year relationship with AMS July 17. In January the Board asked AMS to establish a project completion date, at which point, the firm set a date for December 2001 which was later extended to January 2002. The Board decided to end its contract with AMS after the firm refused to confirm if it could actually make the January 2002 date.
The new recordkeeping system was supposed to be a customized product built around SunGard Employee Benefit System’s “OmniPlus,” a commercial-off-the-shelf (COTS) product. With AMS, OmniPlus was intended to permit the Board to adapt the administration of the TSP to the evolving legal and programmatic requirements affecting the TSP and defined contribution plans.
Additionally, the OmniPlus software was intended to support the implementation of two other TSP investment funds and some new benefits approved by Congress.
The completion of the project is now being left up to Materials, Communication & Computers Inc, (MATCOM) of Alexandria, Virginia. Under the terms of the agreement, MATCOM will complete the board’s conversion in one year for a cost not to exceed $20 million.
In a statement in its defense, AMS contested the Board’s allegations by saying that it remains fully committed to the successful completion of the new recordkeeping system for the TSP. The firm intends to vigorously fight the suit which the firm feels is intended to shift the focus from the Board’s own deficiencies in performance and contract breaches.
While AMS did not denounce the Board’s allegations that it was not able to meet its projected project completion dates, the firm alleges that one of the reasons for this was the Board’s indecision on the type of system it wanted.
“Implementation of a new 401(k) record-keeping system is an inherently complex undertaking,” reads an excerpt from the statement. “While the Board has expressed a desire to secure the benefits of a commercial system, it has been unwilling to live with the capabilities of the leading commercial systems. After more than three years, the Board still has not fully determined its system needs and frozen the design.”
Another reason for the firm’s inability to close the project according to the statement was the complexity of the TSP itself, AMS said. Besides this, AMS alleges in the statement that the Board did not follow the terms of the contract that would make them responsible for the outcome of the relationship.
– Nicole Halsey email@example.com