When chairman and co-founder Charles Rossotti left in 1997 to become IRS commissioner, "everything fell apart,'' said one former employee who spoke on the condition of anonymity because he still works in the IT industry. "It became well known that AMS came in, and prices would go outrageously high because we were far behind. It was just kind of standard practice.''
The result was a cascade of delays, cost overruns and software failures. An AMS tax system prototype for Fairfax County produced some wrong addresses and erroneous taxes. In Mississippi, state officials won a $474 million jury verdict against AMS in 2000 for failing to deliver a new tax software system.
"They did not provide us one working piece of software after almost six years,'' recalled Ed Buelow Jr., the state's former revenue commissioner. "There were hundreds of errors. Nothing worked.'' Mississippi and AMS ultimately agreed on a $185 million settlement.
Former AMS executives defended the company's performance, saying its occasional failures were outweighed by successes on hundreds of other contracts. "We did some super things,'' Brands said. "Yeah, we stubbed our toe once or twice, but we grew and we were profitable.''
He blamed the firm's former clients for failing to properly install its systems and attributed the Mississippi problems to "some relatively minor issues with some software.''
Perhaps the biggest federal failure was the project for the Federal Retirement Thrift Investment Board, which manages the 401(k) accounts of 4.6 million former and current federal employees. With about $100 billion in investments at the time, it was one of the world's largest defined-contribution benefit plans.
In 1997, AMS signed a $30 million contract to update the board's archaic computer system. Four years later, with projected costs rising to $90 million, AMS was terminated. The company never delivered a workable system, according to a report by the Senate Committee on Governmental Affairs.