NYC BigTime CityTime Fraud Charges Ripples On

Back in March, I blogged about New York City's CityTime project which according to New York City's Office of Payroll Administration (OPA): ..."is a secure, web-based time and attendance system for the 80 Mayoral and other Agencies of the City of New York."

The project was initiated in 1998 at an estimated cost of $63 - 68 million, with the latest cost to complete being $722 million; some $670 million of that amount is slated for the defense contractor SAIC (Science Applications International Corp) for the system's development and management. The CityTime project was said to be only one-third complete in March of this year; it is now targeted for completion by June 2011.

Back in March, Mayor Michael Bloomberg called the project "a disaster." Now, apparently, he thinks it was an inevitability - though not, I assume, the rampant fraud that has been allegedly uncovered.

For on the 15th of December, the US Attorney Preet Bharara, Southern District of New York, charged  "four consultants to the New York City Office of Payroll Administration ... for operating a fraudulent scheme that led to the misappropriation of more than $80 million in New York City funds allocated for an information technology project known as 'CityTime.' "

Three of the four consultants were also charged - along with one of the consultant's wife and mother - with using a network of shell corporations to launder the proceeds of the fraud. This one consultant, along with his wife and mother, are charged with embezzling some $25 million by themselves, the US Attorney's press release said (here in PDF).

The consultants' various lawyers say they are innocent of all the charges.

The consultants worked for a company called Spherion Staffing Services, which was to monitor the work of SAIC; Spherion was responsible for "quality assurance" on the project.

As a result of the arrests, New York City has suspended further payments to Spherion pending an audit.

The executive director of OPA, Joel Bondy, was then suspended without pay but shortly thereafter resigned his position. Mr. Bondy wrote glowing letters about the quality assurance work of Spherion, where he once worked. He also supposedly had ties to at least one of the consultants charged.

In March, OPA General Counsel Valerie Himelewski said that accusations at the time of flawed CityTime contract oversight were "completely false" - I wonder how much crow she ate for her holiday dinner this past weekend.

SAIC has also been smacked as a result of its CityTime contract management and oversight - or lack thereof. The City of New York decided to terminate a $40 million contract with SAIC to upgrade the Department of Sanitation's computer systems, one day after New York State Comptroller Thomas DiNapoli Tuesday canceled SAIC's $118 million contract to upgrade the radio systems of the Metropolitan Transportation Authority.

Comptroller DiNapoli in his press release said that

"SAIC's role in the CityTime scandal in New York City remains unclear. There are indictments and very serious concerns about vendors involved on that project. In short, there are too many unanswered questions and too many public dollars at risk for this contract to go forward. New York can't afford another scandal like CityTime. I won't let the Transit Authority put $118 million on the table without the right kind of protections."

Mayor Bloomberg, in the wake of the charges, admitted that the project had slipped "through the cracks," but seemed to imply that it was just one of those things that happen in a city as large and complex as New York. 

Further digging his own public relations hole deeper, Mayor Bloomberg then later tried to clarify the situation and place CityTime's problems in their proper perspective:

"Every big software project that I know, like the air-traffic controller system...these projects are so big, so complex. Maybe you can't do projects this big, but, anyways, this one we need desperately."

The Mayor certainly does like comparing his CityTime payroll project to air traffic control system developments. Maybe Mayor Bloomberg would have been better to relate CityTime to the FBI's Virtual Case File System fiasco which SAIC also was responsible for developing.

The Mayor still claims that:

"For all the problems with it, [CityTime] will save us money once it gets going."

Whether CityTime will ever break-even - and the costs of the investigations and prosecutions should be added as part of the project's ultimate bill -  that is another matter.

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