FOR IMMEDIATE RELEASE|
FRIDAY, JUNE 20, 2003
TDD (202) 514-1888
AMERICAN MANAGEMENT SYSTEMS REACHES SETTLEMENT WITH U.S.
IN FEDERAL RETIREMENT THRIFT INVESTMENT BOARD CASE
WASHINGTON, D.C. - American Management Systems, Inc. (AMS) and the United States have resolved their disputes arising out of AMS's 1997 contract to deliver an automated record-keeping system to the Federal Retirement Thrift Investment Board (FRTIB), the Justice Department announced today. The system was intended to improve the Board's services to the participants and beneficiaries of the Thrift Savings Fund, which contains the retirement fund of millions of active and retired federal employees.
Under the settlement, the Fairfax, Virginia-based firm will pay $15 million to the Thrift Savings Plan. The Board agreed to modify its contract with AMS to provide $10 million to AMS, in exchange for the past delivery of various services under the 1997 contract. The settlement, which will pay a net amount of $5 million to the Thrift Savings Plan, resolves allegations that AMS violated the False Claims Act and the common law in submitting claims for payment to the Board.
The settlement represents a global resolution of two separate lawsuits, both of which will now be dismissed. One suit, filed by the Board against the company in the federal court in Washington, D.C. on July 17, 2001, alleged that AMS defrauded and breached its contract with FRTIB. The suit was dismissed on November 30, 2001 on jurisdictional grounds and an appeal to the United States Court of Appeals for the District of Columbia Circuit was pending at the time the settlement was reached.
The Board's complaint in that case contained allegations that AMS misrepresented the costs that FRTIB would incur under the contract, misrepresented its own proficiency in customizing the relevant software to meet the Board's needs and engaged in a bait-and-switch tactic concerning the personnel who would be assigned to the project. These and other allegations that the United States raised in the settlement agreement with AMS were resolved as a result of that agreement.
Also resolved as a result of the settlement agreement was a separate action that AMS filed on October 10, 2001 against the United States in the U.S. Court of Federal Claims seeking a declaration that the Board's July 2001 termination of the contract for default was improper.