NYC Auditor Claims Fraud in $163M Overbilling for Emergency Call System

Last April, I blogged about the long-running problems with New York City’s attempts to modernize its 911 emergency call system. The latest effort, called the Emergency Communications Transformation Program (ECTP), began in 2005 at an estimated cost of $1.3 billion and a completion date of 2007 has ballooned into a $2.3 billion plus effort with a completion date of (hopefully) 2015.

A new audit report released by New York City Comptroller John Liu yesterday raised previous charges of incompetent project management to the level of potential fraud on the part of Hewlett-Packard, the original prime system integrator on the project.

Liu’s press release states that  “the contractor selected to streamline the City’s vital 911 call system was unqualified and so poorly monitored that it was able to overbill taxpayers by as much as $163 million.  Because of the severity of the findings and potential for fraud in both the vendor selection and billing processes, Comptroller Liu has referred the matter to the Manhattan District Attorney’s Office for further review.”

Echoing the earlier charges of incompetent, Liu also says that the cost of the system could rise another $362 million because the work required was poorly performed.

City officials as well as New York City Mayor Michael Bloomberg have vehemently repudiated the audit findings. According to the Comptroller’s Office, the audit is “premised on a fundamental misunderstanding of the scope of HP’s work as system integrator… This misunderstanding is also the basis of the audit’s unsupportable conclusion that the system integration work for ECTP ‘could be’ up to $362 million over budget.”

The Comptroller Office unsurprisingly “strongly disagree(s)” with the City’s objections. Similarly unsurprisingly, HP has had no comment so far on the accusations contained within the audit report.

Most disagreements like this can be put down to politics—in this case, the mayor is still smarting over the CityTime scandal that Liu helped bring to light, and for his part, Liu will likely be running for mayor next year and wants to be seen as a stalwart steward of the taxpayer's money—but it seems likely that there's yet another financial scandal looming here.

 

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