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Privatization Gone Wild

For years, DC 37 has issued calls for oversight of New York City's thousands of expensive outside contracts. A recent debacle with the city's computerized time-keeping program has again proved the council right.

By Gonzalo Baeza
DC 37 Exec. Dir. Lillian Roberts calls for New York City Mayor Michael Bloomberg to stop contracting out vital public services.
DC 37 Exec. Dir. Lillian Roberts calls for New York City Mayor Michael Bloomberg to stop contracting out vital public services. (Photo Credit: Clarence Elie-Rivera)

Just Say No 

For years, DC 37 has issued calls for oversight of New York City's thousands of expensive outside contracts. A recent debacle with the city's computerized time-keeping program has again proved the council right.

By Gonzalo Baeza

Privatization proponents want us to believe contractors provide better services than government employees - that they are more "efficient" and cost less to taxpayers.

What they say is a myth. Just look at New York City, where a highly touted project to computerize city employee time sheets became a seemingly endless fountain of waste and fraud.

Billed by the city's website as "a secure, web-based time and attendance system for the 80 mayoral and other agencies of the city of New York," the project known as CityTime proved to be anything but. In December, federal prosecutors in Manhattan charged consultants working on CityTime with an $80 million fraud scheme dating back to 2005. Prosecutors charge that the contractors made the city pay expensive contracts to businesses under their control, and redirected some of the money for personal gain through shell companies, doctored timesheets and overseas bank accounts.

In all, New York taxpayers have spent $728 million on CityTime. The project's original price tag was $63 million and it was supposed to be finished in 2004.

As city Controller John Liu said, "This further underscores the need to more closely monitor expensive outside consultant contracts." Had New York City Mayor Michael Bloomberg heeded DC 37's repeated calls for oversight of the 18,000 outside contracts - many of them no-bid - the city might have saved more than $80 million.

"The city has squandered millions of taxpayers' dollars on CityTime, along with thousands of other contracts, which have drained city resources causing a financial crisis that has caused layoffs, cuts in vital public services and the imposition of a host of fees and fines," DC 37 Exec. Dir. Lillian Roberts said.

A Trail of Waste

The indictment has uncovered a vast network of contractors and subcontractors making a killing off what was sold to taxpayers as a model program to prevent fraud. The city already froze payments to lead contractor Science Applications International Corp. (SAIC) in September, while four consultants from two other firms, DA Solutions and PrimeView, were charged with fraud and money laundering.

Worse, a letter made public by The New York Times shows how the city official in charge of overseeing CityTime had expressed concerns about the ballooning costs of the project as early as 2003. Accusing SAIC of deliberately delaying the project in order to get more money, Richard R. Valcich, executive director of the city's Office of Payroll Administration at the time, stated that the company had "repeatedly been late on virtually every deliverable" and "guilty of producing deliverables far below acceptable standards."

The indictment also raises questions on how the Office of Payroll Administration failed to monitor the project under Valcich's successor, Joel Bondy. Before taking over the payroll administration office in 2004, Bondy worked as a subcontractor on the CityTime project for Spherion, a company which, according to The New York Daily News, was hired "to keep an eye on SAIC." Spherion first came onto the project in 2001 and the company has been paid more than $49 million for its services.

The CityTime scandal has opened up a can of worms all across New York, uncovering newer irregularities and casting aspersions on other city and state contracts. In January, Liu's office rejected a $286 million contract request for a project to establish two 911 emergency call center systems. The contract was awarded to Hewlett-Packard in 2005 at a projected cost of $380 million. Six years later, one of the centers is still not fully operational and the project's overall cost has mushroomed to $666 million.

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