$26 Million More Seized in New York City CityTime Scandal

The New York City CityTime payroll-system development fraud scandal continues to amaze. According to news reports like this one in the New York Daily News, $26 million has been seized by the NYC Department of Investigation (DoI) and federal prosecutors from dozens of bank accounts from the six alleged perpetrators of the $80 million fraud.

The original cost estimate for the CityTime project when it began was roughly $68 million.

Some $1 million was seized from the defendants at the time of their arrest.

In related news, also published in the New York Daily News, the prime contractor Science Applications International Corp., was hit last week with a federal subpoena for its CityTime records. The Daily News says that the feds want to know how so much money could be stolen without the prime contractor noticing.

Good question. A place to start looking is at the incentives - like contract pass-through "management fees" - that encourage companies not to notice signs of any wrong doing. especially when the money spigot is turned wide open.

I wonder whether the New York City is going to ask for SAIC to return the money paid it to manage its subcontractors who allegedly defrauded the city?

In other fallout from the scandal, NYC Controller John Liu has also rejected a $286 million contract request from the Department of Information Technology and Telecommunications (DoITT) for the implementation of the Emergency Communications Transformation Program (ECTP), citing:

"... several outstanding questions. Some of the issues are similar to problems encountered with the CityTime project, such as:

  • Time and expense billing arrangement, which does not encourage timely and efficient completion;
  • Multiple layers of subcontractors, including quality assurance consultants;
  • Significant cost overruns: original budget of $380 million now increased to $666 million and counting."   

This is the third major project that has been negatively affected because of the CityTime scandal, the other two being the termination of a $40 million upgrade to the Department of Sanitation's computer systems, and the $118 million upgrade of the radio systems of the Metropolitan Transportation Authority. SAIC held the contracts for both projects.

Finally, there was a very long and detailed story about the CityTime fiasco in the Village Voice today. It is definitely worth a read if you want to see how to truly risk mismanage an IT project. 

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Risk Factor

IEEE Spectrum's risk analysis blog, featuring daily news, updates and analysis on computing and IT projects, software and systems failures, successes and innovations, security threats, and more.

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Willie D. Jones
 
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