Stucknation: Quality Assurance Not Very Reassuring
Tuesday, December 28, 2010 - 06:00 AM
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A decade ago, the FBI announced plans to upgrade its IT systems and create a computer-based case management system. The so-called "Trilogy" project was subcontracted out to defense giant Science Applications International Corporation (SAIC).
By 2005, it was a red-faced FBI Director Robert Mueller in front of a Congressional oversight committee explaining how the FBI had blown a half billion dollars over five years — and didn't have much to show for it.
In his testimony, Mueller blamed the well-connected defense giant, whose board includes former military and Pentagon types. For its part, SAIC insisted it had delivered as required, and that it gave taxpayers value for their dollars despite ever-changing FBI needs.
But the Government Accountability Office reported when it came to overseeing the details of the contract, the FBI was missing in action. GAO wrote that the FBI relied "exclusively on contractors to account" for the Trilogy assets that had been purchased by taxpayers. The G-men subbed out technical oversight and could not locate millions of dollars in computer components it had purchased.
In a parallel universe, toward the end of the Giuliani era, New York City was hyping an early version of "CityTime," the payroll miracle software. It was going to revolutionize New York City's municipal payroll process with the wonders of biometrics to keep tabs on municipal employees.
Its boosters said for a mere $63 million investment, the city could save $66 million annually in reduced waste and fraud. And with an annual $30 billion payroll, there was, and is, a lot at stake.
As it happens, the very software that was to deliver all this ended up costing well over $700 million and still counting. The website for the city's Office of Payroll Administration, the agency responsible for the rollout of CityTime, claims that 58 of the 80 agencies now have the system in place. But among those marked "partial" are the big departments that have some of the most complex payroll coding: the NYPD, FDNY, Department of Sanitation, and Corrections.
This was no innocent cost overrun. According to federal prosecutors and the city’s Department of Investigation, CityTime was the front for a daring $80 million fraud, executed in broad daylight, that allegedly benefited a half dozen people – all of whom have now been criminally charged.
The probe continues.
Since 2000, CityTime's primary contractor has been – you guessed it – Scientific Applications International Corporation. So far, the fraud prosecutors found was not with directly with SAIC. Instead, it was tied to the use of "quality assurance" contractors and a small army of subject matter experts meant to insure the city was getting what it paid for from SAIC.
That's right, the City subcontracted out "quality assurance." And tens of millions of dollars of hard-to-come-by pay taxpayer money was lost. Federal and local prosecutors say it went to a band of alleged fraudsters with taste for expensive cars and bank accounts in Latvia.
Ultimately, it appears the city lost track of the nitty-gritty of the process on its CityTime roll out — just like the FBI did with its Trilogy oversight a few years earlier.
Along the way, as reported by the Daily News's Juan Gonzalez last week, there were civil servants who tried to do their job. There was Richard Valcich, head of the Office of Payroll Administration, who back in 2003 wrote a letter to SAIC, taking them to task for being chronically late, unilaterally changing the terms of the contract, and jacking up prices some four-fold.
SAIC says it responded proactively. "A year after the February 2003 letter, the City told us we were working well together," said a SAIC statement.
In the immediate aftermath of the recent charging of the CityTime six by prosecutors, Mayor Michael Bloomberg and City Comptroller John Liu suspended without pay Joel Bondy, who since 2004 had run the Office of Payroll Administration – the agency responsible for CityTime.
It was Bondy who, as late as December of 2009, testified before Councilwoman Leticia James's Contracts Committee that the "quality assurance" subcontractors, one of whom was just indicted, "had proven" themselves to be "highly capable."
What they were actually "capable" of, according to the US Attorney's charging papers, was creating shell consultancy companies and eluding the city's Vendex system, which is supposed to flag potential self-dealing and conflicts of interest.
So if the "quality assurance" is compromised, who is to blame? Back in March of this year even Mayor Bloomberg, the ultimate manager, wasn't clear who the point person on CityTime was.
He conceded to reporters the CityTime project had been a "disaster" and then spontaneously asked former Deputy Mayor for Operations Ed Skyler if he wanted to update curious reporters about CityTime. It had never been in Skyler's portfolio — which was always jammed with real gems like the never-ending search for World Trade Center human remains.
Ultimately the Office of Payroll Administration is watched over by an unpaid Committee of two: a representative of the City Comptroller and, acting on the Mayor’s behalf, Mark Page, in his capacity as Director of the Office of Management and Budget.
Page first joined the city in 1978 as Deputy Counsel at OMB. The NYU Law School graduate has been a committed public servant for decades.
But maybe he missed something on CityTime. And maybe it was for a reason. The City's Green Book indicates that Page has several other roles beyond OMB. And while most of them are ex officio, his obligations run the gamut: the City's Educational Construction Fund; the Housing Development Corporation; the Residential Mortgage Insurance Corporation; chairing the NYC Transitional Finance Authority; sitting on the Voter Assistance Commission; the Municipal Water Finance Authority, and last but certainly not least, the MTA.
No wonder the city was so vulnerable to the "quality assurance" team.
And who was the representative from the city's Comptroller's office overseeing the Office of Payroll Administration during those years when CityTime's price tag exploded?
A call to former Comptroller Bill Thompson was not returned. A spokesman for the current Comptroller John Liu said I would have to file a formal FOIA request to find out. And so the process of quality assurance in New York City government continues.
Brian Lehrer will be discussing CityTime and NYC contracters Tuesday at 11:25.
As it happens, the very software that was to deliver all this ended up costing well over $700 million and still counting. The website for the city's Office of Payroll Administration, the agency responsible for the rollout of CityTime, claims that 58 of the 80 agencies now have the system in place. But among those marked "partial" are the big departments that have some of the most complex payroll coding: the NYPD, FDNY, Department of Sanitation, and Corrections.
This was no innocent cost overrun. According to federal prosecutors and the city’s Department of Investigation, CityTime was the front for a daring $80 million fraud, executed in broad daylight, that allegedly benefited a half dozen people – all of whom have now been criminally charged.
The probe continues.
Since 2000, CityTime's primary contractor has been – you guessed it – Scientific Applications International Corporation. So far, the fraud prosecutors found was not with directly with SAIC. Instead, it was tied to the use of "quality assurance" contractors and a small army of subject matter experts meant to insure the city was getting what it paid for from SAIC.
That's right, the City subcontracted out "quality assurance." And tens of millions of dollars of hard-to-come-by pay taxpayer money was lost. Federal and local prosecutors say it went to a band of alleged fraudsters with taste for expensive cars and bank accounts in Latvia.
Ultimately, it appears the city lost track of the nitty-gritty of the process on its CityTime roll out — just like the FBI did with its Trilogy oversight a few years earlier.
Along the way, as reported by the Daily News's Juan Gonzalez last week, there were civil servants who tried to do their job. There was Richard Valcich, head of the Office of Payroll Administration, who back in 2003 wrote a letter to SAIC, taking them to task for being chronically late, unilaterally changing the terms of the contract, and jacking up prices some four-fold.
SAIC says it responded proactively. "A year after the February 2003 letter, the City told us we were working well together," said a SAIC statement.
In the immediate aftermath of the recent charging of the CityTime six by prosecutors, Mayor Michael Bloomberg and City Comptroller John Liu suspended without pay Joel Bondy, who since 2004 had run the Office of Payroll Administration – the agency responsible for CityTime.
It was Bondy who, as late as December of 2009, testified before Councilwoman Leticia James's Contracts Committee that the "quality assurance" subcontractors, one of whom was just indicted, "had proven" themselves to be "highly capable."
What they were actually "capable" of, according to the US Attorney's charging papers, was creating shell consultancy companies and eluding the city's Vendex system, which is supposed to flag potential self-dealing and conflicts of interest.
So if the "quality assurance" is compromised, who is to blame? Back in March of this year even Mayor Bloomberg, the ultimate manager, wasn't clear who the point person on CityTime was.
He conceded to reporters the CityTime project had been a "disaster" and then spontaneously asked former Deputy Mayor for Operations Ed Skyler if he wanted to update curious reporters about CityTime. It had never been in Skyler's portfolio — which was always jammed with real gems like the never-ending search for World Trade Center human remains.
Ultimately the Office of Payroll Administration is watched over by an unpaid Committee of two: a representative of the City Comptroller and, acting on the Mayor’s behalf, Mark Page, in his capacity as Director of the Office of Management and Budget.
Page first joined the city in 1978 as Deputy Counsel at OMB. The NYU Law School graduate has been a committed public servant for decades.
But maybe he missed something on CityTime. And maybe it was for a reason. The City's Green Book indicates that Page has several other roles beyond OMB. And while most of them are ex officio, his obligations run the gamut: the City's Educational Construction Fund; the Housing Development Corporation; the Residential Mortgage Insurance Corporation; chairing the NYC Transitional Finance Authority; sitting on the Voter Assistance Commission; the Municipal Water Finance Authority, and last but certainly not least, the MTA.
No wonder the city was so vulnerable to the "quality assurance" team.
And who was the representative from the city's Comptroller's office overseeing the Office of Payroll Administration during those years when CityTime's price tag exploded?
A call to former Comptroller Bill Thompson was not returned. A spokesman for the current Comptroller John Liu said I would have to file a formal FOIA request to find out. And so the process of quality assurance in New York City government continues.
Brian Lehrer will be discussing CityTime and NYC contracters Tuesday at 11:25.
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Bob Hennelly
WNYC's Bob Hennelly is an award-winning investigative journalist. While at WNYC he has reported on a wide gamut of major public policy questions ranging from immigration and homeland security to power outages and utility mergers.
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