NEWS ANALYSIS While we have received
a working system that
will advance our management
ability ... because the project
was apparently tainted by fraud
and kickback schemes, the city
must be made whole.
NEW YORK MAYOR MICHAEL BLOOMBERG (AT LEFT)
Bloomberg said the indictments and alleged criminal
activities are “extremely troubling and raise questions
about SAIC’s corporate responsibility and internal
controls to prevent and combat fraud.”
While Bloomberg acknowledged in his letter that
New York has “received a working system that will
advance our management ability,” he added that
“because the project was apparently tainted by fraud
and kickback schemes, the city must be made whole.”
Bloomberg said that SAIC must pay roughly
$600 million in compensation for the project and that it
should reimburse the city for “the cost of investigating
and remediating this matter.”
Those indicted include Gerard Denault, SAIC’s
lead project manager, and Reddy and Padma Allen of
New Jersey systems integrator TechnoDyne, SAIC’s
primary subcontractor for the New York job. The
Allens and others are alleged to have engaged in an
elaborate overbilling and kickback scheme.
TechnoDyne couldn’t be reached for comment.
SAIC systems engineer Carl Bell, who designed
the payroll software, has pleaded guilty to multiple
charges in connection with the project and has agreed
to cooperate with investigators.
Federal investigators also alleged that SAIC had
received whistleblower complaints about the project
as far back as 2005. According to Bloomberg, “It is
unclear what SAIC did at that time to investigate
these serious allegations.”
In a statement, SAIC said that it “understands and
shares the outrage expressed by the city at the fraud
alleged on the part of former employees and subcon-
tractors. These actions are an affront to everything
we stand for as a company.”
SAIC added that it’s “ready to discuss appropriate resolution of this
matter, considering the breadth of the fraud alleged and the fact that
SAIC delivered a system that the city said this week is working well.”
Michael Krigsman, CEO of IT consulting firm Asuret, agreed
that the city should pursue legal options to recover the money it
lost due to fraud, but he added that the project “likely suffers from
ambiguous lines of management responsibility that will make it
difficult to establish clear audit trails of legal liability.”
Some 163,000 workers now use the City Time system, com-
pared with 73,000 in September 2010, according to the New
York City comptroller’s office. u
Kanaracus is a reporter for the IDG News Service.
NYC Seeks $600M
Refund for IT Work
Mayor Bloomberg says SAIC should reimburse the
city for a payroll system project tainted by fraud
and kickback allegations. By Chris Kanaracus
CITING ALLEGED “fraud and kickback schemes,” New York Mayor Michael Bloomberg is demanding that systems integrator SAIC pay the city more than $600 million in reimbursements for a troubled I T project. In 2003, New York awarded SAIC a $63 million
contract to modernize the municipal payroll system. Over the
next several years, the cost of the project swelled almost tenfold
as work on the so-called City Time system stumbled along.
The problems prompted a sweeping federal probe that led to the
indictments earlier this year of SAIC employees and contractors in
connection with alleged kickback schemes, fraud and other crimes.
