NYC's Computer-System Cash-Dump Disaster

New York City threw away a mountain of cash over a new computer system. Now, finally, someone is going to pay.

He rejected a new $286 million contract request from the Bloomberg administration and demanded a review. The central issue, he charged, was that, similar to CityTime, the project allows a kind of open-ended spending.

"This type of vague budgeting formula allows outside consultants to bill on an hourly basis and collect exorbitant fees, as in the case of the CityTime project," Liu said. "The program was troubled by findings of poor management and less than satisfactory oversight by the original vendor."

The history of CityTime goes back to 1996 and the Giuliani administration. The goal was to computerize the city's payroll system, which covers close to 160,000 workers. After another bidder dropped out, the contract was awarded to MCI Systemhouse. After two years, Systemhouse came up with a thick, heavily detailed, and comprehensive technical plan, or "scope of work," for the project, and estimated that it would cost $63 million and take five years.

In other words, it wasn't like someone just came up with the $63 million budget on a cocktail napkin. A great deal of thought and work went into it.

The proposal contained detailed deadlines that made clear the contractor felt it was possible to complete the job in five years, plus lists of thousands of pieces of high-tech equipment that needed to be purchased and dozens of deadlines listed in 30-day increments.

Even at $63 million, the contract provided fairly lavish pay rates for the contractors: more than $300 an hour for top managers, more than $200 per hour for mid-level people. Even the word processors would get $80 an hour. (A percentage is, of course, kicked to the company.)

Even taking the cost of inflation into account, if the project took 10 years, the finished product still should have cost only about $84.5 million.

Moreover, the contract contained a key provision that levied money damages for missed deadlines—a standard incentive that was irresponsibly eliminated a few years later.

But Systemhouse was bought by WorldCom and dropped the project, transferring its CityTime unit to a new firm, Paradigm 4.

In 2000, the city decided to add new elements to the plan, chiefly switching to a system with one central Internet server, rather than a separate server in each agency. The second of a dozen contract amendments increased the budget to $73 million.

The following year, the city hired Mazer's firm, Spherion, to do something called "quality assurance"—essentially to keep an eye on the project. That contract started at a cost of $3.4 million. Since then, it has been changed a dozen times and has ballooned to $51 million. As the Mazer indictment suggests, not only were they not watching the contractor, no one was watching the watchers.

For some reason, the contract was changed after five months to drop a requirement that Spherion examine and approve each piece of the project. As a result, the last record of such a review dates back to 2001, the comptroller's audit says.

Spherion was also supposed to supply regular summaries of the project's progress. The comptroller could not find any such summaries after 2001.

About a year later, the role of project manager was added to Spherion's contract. That meant that the auditor was now also involved in managing the project, according to the 2010 comptroller's audit—a clear conflict of interest.

By the time Mayor Bloomberg was elected, Paradigm 4 was out of the picture and SAIC had taken over the project. When the contractors changed, critics have said, the council should have had a chance to review it. There was no such review. SAIC was selected without competitive bidding.

And in a critical, and ultimately unfortunate, move, the contract was changed from one that levied penalties for failure to hit milestones to a more open-ended method of monthly payments based on hours worked. Ironically, the move was supposed to "streamline" the process. It caused the opposite effect, giving the contractor no incentive to make deadlines.

SAIC has won many millions in government contracts over the years, but it has also racked up its share of fines. In 1995, the company paid a $2.5 million fine for defrauding the government over a computer system for jet fighters. In 1998, the company paid a $1.1 million fine to the Defense Department.

A group of former employees accused the firm of retaliating against them for complaining about questionable billing practices on another job.

In January 2002, perhaps true to form, SAIC officials had the brilliant idea of trying to hire the city official overseeing them, Richard Valcich. In a letter uncovered from the city comptroller's office, Valcich expressed his dismay at the overture, published reports said.

Valcich said he was sorry "if I seemed rude and abruptly shortened your discussion on a future post city-employment position with SAIC." He added: "It is inappropriate to discuss any post employment with a company that I do business with."

By November 2002, another amendment made more changes to the project, and the approved cost rose again from $115 million.

Meanwhile, things between Valcich and SAIC weren't going so well. In what should have been an enormous red flag to the comptroller and the mayor, Valcich slammed SAIC's job performance in a February 19, 2003, letter released by the comptroller's office.

« Previous Page
 |
 
1
 
2
 
3
 
4
 
5
 
All
 
Next Page »
 
My Voice Nation Help
25 comments
NowThenZen
NowThenZen

ty for this Article, Mr. Rayman. A very similar monstor project happened in Los Angeles (LAUSD payroll system) but that project only cost 300 Million, not almost a Billion.

Joey
Joey

Actually as is being reported there is scant evidence that a slowdown occured. It seems more like a Republican trying to scape goat the union to take the heat off of the mayor and the administrations obvious failure

Daily
Daily

All reporters are experts in system development, and new technologies? Did anybody try to compare the project this size in a private sector? Did anybody try to estimate; even at this cost, how long will it take for the system to pay back for itself in money saved? Did anybody ask why we need the system and why are the unions are so against it? The only objections came from a union of engineers and architects? Not the police or fireman, or even sanitation (the hard working people). Why don’t we ask MR. Gonzales why he was so interested in this project, as opposed to other issues, like union ordered slow-downs that put “tax payers” in grave danger? Is this political witch hunt? Who do unions support for the next mayor? Not any body aligned with the current mayor!

ASE
ASE

This is the cancer that has been eating away at America for years and why most city are in a financial mess. This is just pure robbery of taxpayers money from the top down. These aren't regular Joe Smoe businessmen. Do A check of their political contributions and see where it leads. These contracts are all political paybacks for contributions and support. Why were they only charged with embezzling 80 million? What about the rest of the money and interest. These guys will probably plead this out, get probation and repay a pittance of the money they got and move on to the political hookup to scam NYC or some other city again.What eats me up is that middle class New Yorkers blaming the unions for the city woes when clearly the city's money is being given away to all these politically connected cronies aka consultants that gets the salaries of 40-50 people. Gov Patterson was crucified as corrupt for getting free tickets to a freaking game but someone who works directly under the Mayors nose in involved in scamming 3/4 billion from the city and the mayor bears no responsibility?

Nunya
Nunya

the same sort of thing happened with the WTC Captive Insurance Fund. over 400 Million gone from the fund, 3 people were paid to the tune of about 45 thousand bucks, but when facing a Congressional board of inquiry, nobody knows what happened to the money. more Bloomberg cronism at work.

bvrhntr69
bvrhntr69

Kudos, these guys get rich and end up living in a "country club" prison at the taxpayers expense! Make them spend a real long time in a "real" prison just like everyone else and it will stop!

Miracle638
Miracle638

Mike Bloomberg is the new Boss Tweed in NYC. We elected a billionaire because we thought he was a good manager and above corruption. Oops! WRONG on both counts!

ibivi
ibivi

The same thing happened in my city. Millions went to a computer company way over what had been budgeted. Hearing conducted over how it happened. Various city officials were disgraced. The ultimate issue is that public money is not properly protected. Rather ironic given that city budgets are shrinking but somehow these frauds keep happening despite oversight mechanisms.

unsean
unsean

There's enough blame to go around, though the bulk of culpability belongs to the private sector; and yet everyone will probably talk about shrinking government, and its inefficiencies.

I get it, though look what happens when you leave the private sector to its own devices. You get fraud and other criminal offenses.

My cure for this is to stop pussy-footing around with these white-collar felons. Get rid of disparites between white collar and blue collar crimes.

This way, if you're at the helm of an Enron or some other private sector company and you engage in massive fraud, you should get life imprisonment ( in a 'regular' prison, not one of these 'country clubs' you hear so much about).

Suzannah Troy
Suzannah Troy

CityTime Mike Bloomberg's Crime and it started with Rudy. 80 mill is chump change when you look at the big picture. Read on....

Suzannah Troy
Suzannah Troy

The author is very vague which is not a good sign but I believe he is referring to this CNN iReport which is still up. http://ireport.cnn.com/docs/DO... CityTime is Mike Bloomberg's crime. I listen the reasons on my blog. I give you links to articles including The Washington Post that tells you about the SAIC providing their services like SAIC did and does for NYC gov with CityTime and the FBI had to scrap it because it was a failed system. Rudy brought in CityTime and SAIC. Rudy's deputy mayor Peter Power is the lobbyist pimp that tried to push through the SAIC MTA deal so do the math on why Mike is pushing SAIC on NYC gov and will be putting CityTime over the billion dollar mark....why or why? Read the Vanity Fair article on SAIC and them think about it.

Suzannah Troy
Suzannah Troy

The author is very vague which is not a good sign but I believe he is referring to this CNN iReport which is still up. http://ireport.cnn.com/docs/DO... CityTime is Mike Bloomberg's crime. I listen the reasons on my blog. I give you links to articles including The Washington Post that tells you about the SAIC providing their services like SAIC did and does for NYC gov with CityTime and the FBI had to scrap it because it was a failed system. Rudy brought in CityTime and SAIC. Rudy's deputy mayor Peter Power is the lobbyist pimp that tried to push through the SAIC MTA deal so do the math on why Mike is pushing SAIC on NYC gov and will be putting CityTime over the billion dollar mark....why or why? Read the Vanity Fair article on SAIC and them think about it.

Guest
Guest

CityTime is full of nepotism. When you consider that Joel Bondy, Mark Mazer and others within SAIC and/or CityTime are either related to another employee at SAIC/CityTime,or previously worked within ACS, I wonder if perhaps ACS should be investigated, or at least their environment where this mindset seems to be from.

Cassidy
Cassidy

I worked in the purchasing department of a CUNY college for almost eight years. I was just the lowest on the totem pole and even I routinely spent tens of thousands of dollars a week -- while the college was alleging short finances, professors were being paid for trips here and there (oh yeah right those ubiquitous academic conferences all the time). Many strange things going on during that time. Contractors would bid late and we'd back-date because the dude was a friend of higher-ups. Et cetera. Fact of the matter is, everyone cheats, sooner or later. I was paid but worked only twenty minutes a day oftentimes, and just as often not at all. I would literally disappear for hours, sleeping in an unused, out-of-the-way classroom! I surfed the internet, chased girls, etc. But if it's any consolation, I was never given a raise in all of eight years. But that's fairly normal, all of it. My boss seemed to be involved in some hanky-panky of his own, too. We even had a stereotypical big-butt-big-breasted mamicita working despite speaking no English and not even knowing how to use a computer! The whole place was a trip. Everything was weird. So, in conclusion, everything is f-ed up and frankly, you take your chances as you may. This is the real world. At 39-going-on-88, I'm practically the diametrical opposite of what I used to be at 21 -- both for better and worse! Anyway, this kind of thing happens up and down and all around. It is what it is. Good that folks are busted, and big shots this time, too, but the money's gone, man. Hey, look, I'm even posting this from my new gig! It's crazy. But what am I to do? Can't get a legit job, a real career doing something meaningful. So I do b.s. work for a b.s. company in a b.s. field. Thank God I'm not paying taxes! Been homeless once in NYC but I'm too old for that crap now. Eight hundred bucks a week for forty-five-hour weeks with no benefits and no breaks can be tough on most anyone, especially in one of the most expensive cities in the world -- and believe me I ain't living it up, either, unless you consider a decent apartment in this day and age to be luxury! But why am I telling you all this -- especially since I'd already said "in conclusion" many, many sentences ago above? 'Cause the truth is, most of us would try to get money anyway we know how. Some folks are just plain greedy, while others like me feel like we have to be greedy. It's like a college slut who's gonna give it up anyway, so why not for you?? Somebody's gonna put it in her, you might as well too....

NotAWhistleBlower
NotAWhistleBlower

I am a legitimate software consultant. I do my best to stay away from big NYC projects - far too political, all about greed and fleecing the City. The Voice should ask for more info about similar projects. You'd have no shortage of really big, fraudulent projects. The system and those who work it are far worse than parasites. The Investigative area should be substantially increased in size, with bounties given for fraud uncovered, stopped, and successfully prosecuted.

Rachelhamilton
Rachelhamilton

Nyc Cash Dump

Arizona is no match for Nyc.

Identity Theft is another word for 'take the GED before you hurt someone'.

Some would cheat on the test.

Nyc has aplacement exam that is revamped every year. But ofcourse someone has toask what if the rate of Dropping-out exceeds the rate of getting to the 'placement exam'?

In that case, you'd have the age old question of what is Life and Death? What is Identity if not to get stolen and partied on? What is the point of Laws if not to get broken? Why say 'No To Drugs' when you have never tooken drugs before?

This takes up time and money.

Jibe913
Jibe913

Sadly, even as the real crooks are being brought before the public, city workers are still be demonized and City Hall is still claiming there is no money, pension costs are killing us, average NYers have to sacrifice, yada yada yada. NYC pension funds are SOLVENT but not for long if our great manager, the mayor, continues his business as usual.

Miracle638
Miracle638

Wasn't the reason the people elected Bloomberg that he was a rich buisnessman, able to "manage" the city AND above coruption?

ChiCom Justice
ChiCom Justice

bypass prison and execute them straighup like the ChiCom do, everyone else will really take notice...

Jdubois
Jdubois

And in the meantime, honest, hardworking drones are going to lose their jobs over this. No one in the comptroller's office, DOI, or City Hall has taken that into consideration. It's always the innocent who suffer (including taxpayers)

Alessandra
Alessandra

Well, all of this pales compared to the $8 trillion the Wall Street banks plundered from the Fed, according the Fed Audit Ron Paul and Bernie Sanders forced through Congress. We have been robbed blind again and again by the people in power, these plutocrats, who know no bounds and just demand more and more. Instead, unions and the poor are demonized and middle and working-class people suffer. No one wants another Tunisia to occur over here, but if the thieves just keep looting and laughing as they sail off on their yachts....

 
New York Concert Tickets
Loading...