Sunday, March 21, 2004

Huge firm not immune to disputes

But firm extols its 'dependability' and 'integrity'

By James McNair
The Cincinnati Enquirer

American Management Systems, which installed the ill-fated client tracking system for the Ohio Department of Job and Family Services, is a billion-dollar company with 6,500 employees.

Founded in 1970 by understudies of former Vietnam-era Defense Secretary Robert McNamara, the Fairfax, Va., company has provided consulting services to many federal agencies, 44 states, seven of the world's 10 biggest banks and eight of the world's 10 biggest telecommunications companies.

It has business alliances with major corporations such as IBM, Microsoft and Hewlett-Packard. And its work for the Defense Department and the Securities and Exchange Commission has won accolades for technology excellence.

In recent years, however, AMS has found itself embroiled in disputes over its performance.

• In June 2003, AMS and the Federal Retirement Thrift Investment Board settled a dispute arising from the agency's contention that AMS defrauded the government and breached a contract to deliver a computerized record-keeping system. AMS agreed to pay the agency $5 million.

• In May 2003, the Utah Auditor General's Office reported that a computer system developed by AMS generated less than one-fifth of a promised $20 million increase in tax collections. About $3.8 million was spent on the AMS system before it was abandoned.

• In 2001, AMS agreed to pay Fairfax County, Va., $8 million to settle claims that the company failed to upgrade the computer system for the county's personal property tax records.

• In 2000, a Mississippi jury ordered AMS to pay that state $474.5 million for botching the development of a system for tracking tax collections. AMS agreed to a post-trial settlement of $185 million.

AMS regards those cases as flukes.

"AMS has completed more than 5,000 successful engagements in the public and private sectors and stands by the dependability, quality and integrity of its service and systems," the company said in a statement. "It is our business philosophy that if we encounter a problem with an assignment, we thoroughly review the situation and move swiftly to take any necessary corrective actions."

Sometime this year, AMS will begin answering to a new owner. A Montreal company, CGI Group, announced March 11 that it has agreed to buy AMS for about $858 million.



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