NYC Comptroller John C. Liu's Remarks on City Time Scandal

Below are remarks by New York City Comptroller John C. Liu at a news conference on Wednesday, May 25, 4:30 p.m. regarding the CityTime project:

“Earlier this afternoon, my office was provided with a letter written to the Executive Director of the Financial Information Services Agency (FISA) by Science Applications International Corporation (SAIC), the prime contractor on the CityTime project. We were informed that SAIC had terminated their senior project manager who led the CityTime project.

“The name of that employee is Gerard Denault.

“SAIC has determined that Mr. Denault violated SAIC’s policies and standards with respect to timekeeping practices while working on CityTime. He routinely billed hours to the CityTime project that he did not in fact work.

“By their own admission, this latest development now implicates, for the first time in this scandal, SAIC. The very company entrusted by our City to build a timekeeping system for NYC employees has grossly mismanaged their own time keeping, and in the process over charged the city for sums of money – still to be determined.

“SAIC now says they will now refund $2,470,522 to the city coffers for the time Mr. Denault billed to hard working NYC taxpayers.

“A few moments ago I sent a letter to the Mayor because I believe we need to work together.

“I am asking him to join me in calling on the Department of Investigation along with all other relevant authorities to conduct a comprehensive review of other possible violations by SAIC, and I am proposing that the City withhold any future payments to SAIC pending the outcome of the investigations.

“This is a sad day for the New York City taxpayer.

“With the proposed budget cuts looming, we at least need to tightly manage expensive outside consultants.

“The public’s trust in government must be bolstered, and I am committed to working with the Mayor to do just that.”

Below is the full text of the letter sent to Mayor Bloomberg on May 25, 2011.

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May 25, 2011

Honorable Michael R. Bloomberg

Mayor

City Hall

New York, NY 10007

Re: Science Application International Corporation (SAIC)

Dear Mayor Bloomberg:

Today, we were informed by SAIC that they have terminated their project manager for CityTime. SAIC cited the project manager’s violation of SAIC’s policies and standards, specifically with regard to his time billed to the City of New York. Because SAIC cannot accurately calculate the amount that should have been billed to the City, SAIC will reimburse the City for this individual’s billed services. This repayment amounts to $2,470,522.

To date, the alleged fraud relating to CityTime has only involved subcontractors. This latest development now implicates the prime contractor and compels a comprehensive review of SAIC’s billings to the City, in particular, SAIC employees whose time was billed to the CityTime project.

I am directing my representative on the OPA board to introduce a resolution on the points below, and ask that your representative support the resolution:

• The Department of Investigation, along with all other relevant authorities, conduct a comprehensive review of other possible timekeeping violations; and
• The City withholds any outstanding payments to SAIC pending the outcome of the investigations.

I believe the above actions are necessary and as always, I am available to discuss any of these issues with you. Thank you.

Sincerely,

John C. Liu

View letter from SAIC to FISA: http://www.comptroller.nyc.gov/press/pdfs/SAIC-FISA-5-2011.pdf

Hearing on Bloomberg's 911 Fix Raises More Questions - WNYC

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The City Council scrutinized one facet of the Bloomberg Administration's 911 rehab Tuesday, a week after residents filed at least two wrongful death suits alleging loved ones died during the December blizzard in part because of a dysfunctional 911 system and extensive delays in EMS response time.

The hearing, which included three Council Committees, all with jurisdiction, was billed as an update on the Administration's controversial Unified Call Taking System instituted back in 2009.

Lieutenant James McGowan, with the Uniformed Fire Officers, told the council panel that the system -- in which NYPD 911 operators handle the call intake on FDNY assignments then pass on essential information via computer under the new protocol -- regularly generated the wrong addresses and incomplete job sheets.

"I get at least 11 of these a day," said McGowan, referring to the forms the FDNY had to create to keep track of the defective referrals generated by UTC.

The Bloomberg Administration's point-man on the $2 billion 911 rehab project, Skip Funk, was not present at the meeting. So it was just the uniforms on the line of fire with NYPD 911 point-man Deputy Chief Charles Dowd doing his best to keep his testimony confined to the narrow topic the Council had originally scheduled.

Deputy Chief Dowd defended the shift to Unified Call Taking as efficient. But he went around and around with Fire Committee Chair Elizabeth Crowley over whether the UTC was actually adding time to fire responses. He conceded his 911 operators might take as up to two minutes assembling the facts before relaying the call to the FDNY. He said he had no numbers on what the average time his 911 operators were taking.

The Bloomberg Administration starts the official response time clock only after the FDNY gets the call -- excluding the 911 intake time, which the unions argue has gotten longer under UTC. Uniformed Firefighters President Stephen Cassidy called that "Enron accounting."

Response times have become highly politicized. The city has known since September 11, 2001, that its emergency call system's Achilles heel was handling massive call volumes. And as recently as the December 26, 2011, blizzard, callers got busy signals and long waits.

NYPD Deputy Chief Charles Dowd told City Council members the new software the City is testing also has problems and is vulnerable to high volume.

"I can tell you, based on some of the testing we have seen, that the software is, is failing when we do high volume tests against it," he said.

For Councilwoman Gail Brewer that disclosure was only the latest in disappointments having to do with the project.

"The software is a problem, the contracts are a problem and delays obviously means money," Brewer said. "At least for three or four years we have been dealing with the same issues. It's like Silly Putty. We can never quite get out finger on it."

Earlier this year, City Comptroller John Liu blew the time-out whistle on one 911 related contract. He wrote a letter to Mayor Bloomberg and invoked the CityTime payroll contract scandal when referencing his concerns about phases of the 911 overhaul. Liu said parts of the $2 billion 911 fix are prone to poor project management, blown deadlines and cost overruns, with one phase ballooning from $380 million to $666 million dollars.

The Bloomberg Administration said it's spent only $650 million dollars so far. A spokesman insists the new system will be a vast improvement when complete.

The Council pledges another full blow oversight hearing on the whole project.

Six Charged in $80M 'CityTime' Rip-Off By Bruce Golding and David Seifman - NYPOST.com

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Four consultants to the city's problem-plagued payroll system were busted today on charges of ripping off more than $80 million in an elaborate fraud and kickback scheme.

The wife and mother of alleged ringleader Mark Mazer -- who has been paid $4.4 million to help oversee the costly CityTime project -- were also accused of helping launder proceeds of the five-year flimflam.

According to a complaint filed in Manhattan federal court, Mazer steered more than $76 million worth of bogus contracts to firms run by Dmitry Aronshtein, who is believed to be a relative, and Victor Natanzon.

Aronshtein and Natanzon then kicked back more than $24.5 million to a series of shell companies controlled by Mazer's wife, Svetlana, and his mother, Larisa Medzon, the complaint says.To cover up the fraud, the three of them, along with co-defendant Scott Berger, allegedly cooked up phony timesheets intended to justify the spending.

The Mazers allegedly used more than $3 million of their crooked cash to buy and renovate two homes, and also splurged on six late-model cars over the past two years.

Department of Investigations Commissioner Rose Gill Hearn -- whose office uncovered the massive scam -- called it a shame that "supposed experts hired and paid well to protect the city's interests were exposed as the fox guarding the hen house."

Manhattan U.S. Attorney Preet Bharara noted the irony of how "a project intended to prevent payroll waste, fraud, and abuse, was itself allegedly bilked in part by fraudulent timekeeping."

Mayor Bloomberg called it a "major fraud perpetrated on city taxpayers" over the past few years.

"As you know we have zero tolerance for any waste, fraud or abuse and there are no sacred cows in city government," he said.

Bloomberg said he directed Deputy Mayor Stephen Goldsmith to take direct oversight of CityTime.

"We have no tolerance for this whatsoever," he said. "And you can rest assured that we will do everything possible to insure that we get that money back and that the perpetrators are prosecuted to the fullest extent of the law."

City Councilman Letitia James (D-Brooklyn), one of the chief critics of the City Time contract, charged that the administration was asleep at the switch.

"I am shocked," she said. "Eighty million just disappeared and no one from the administration raised a question."

James pointed out that the stolen $80 million could have been used to prevent cuts to child care, senior services and firehouses.

She called on the MTA not to go forward with its $10 million contract with the main City Time consultant, SAIC.

James also said she's worried that other major city contractors aren't being scrutinized.

"This happened on the watch of the Bloomberg Administration," she said. "I am certain there are other consultant contracts that need to be monitored."

The chief official who should have paid closer attention is Joel Bondy, executive director of the Office of Payroll Administration, which was overseeing the contract.

Bonday had previously been employed by Spherion -- which happened to be the quality assurance consultant on the City Time project. Spherion already had the City Time contract before Bondy moved to the city payroll.

Bloomberg didn't answer a direct question about whether Bondy would still have his job when this is over, saying the investigation is continuing.

The City Time scandal provided ammunition for DC 37, the city's largest municipal union, to hammer home its claim that the city is wasting millions on private contractors at the expense of its members.

Callers to DC 37 hear a taped message saying: "Urge the city to cut private contractors, not city services."

City Comptroller John Liu called for an emergency meeting of the directors of the city Office of Payroll Administration.

"These charges will be another stain on the checkered history of the CityTime project. This further underscores the need to more closely monitor expensive outside consultant contracts," Liu said.

Earlier this year, Mayor Bloomberg called CityTime -- which is supposed to save money by consolidating and automating records of the hours clocked by city workers -- a "disaster."

The project was initially budgeted at $63 million when it was launched in 1998, but ballooning cost overruns have pushed its anticipated price tag to $722 million.

Meanwhile, only 35 percent of city workers are actually using it.

Mark Mazer, Aronshtein, Natazon and Berger each face 20 years in the slammer if convicted of wire fraud conspiracy.

In addition, everyone but Berger is charged with money laundering conspiracy, which also carries a maximum 20-year sentence.

All six defendants are expected in Manhattan federal court later today.