June 30, 2011, 12:40 PM —
Image: IDG News Service
New York Mayor Michael Bloomberg is demanding that systems integrator Science Applications International Corporation reimburse more than $600 million it was paid in connection with the troubled CityTime software project, a long-running effort to overhaul the city's payroll system.
"The City relied on the integrity of SAIC as one of the nation's leading technology application companies to execute the CityTime project within a reasonable amount of time and within budget given the system's size and complexity," Bloomberg wrote in a letter Wednesday to SAIC CEO Walter Havenstein.
CityTime was launched in 2003 at a budget of $63 million, but costs swelled dramatically as the project stumbled along for nearly a decade.
The recent indictment of SAIC's leader project manager on the CityTime job, Gerard Denault, as well as the guilty plea to criminal charges made by SAIC systems engineer Carl Bell, who designed the software, are "extremely troubling and raise questions about SAIC's corporate responsibility and internal controls to prevent and combat fraud," he added. Denault and Bell were charged with were charged with taking kickbacks, wire fraud and money laundering.
Also recently indicted were Reddy and Padma Allen, a couple who head up New Jersey systems integrator TechnoDyne, which was SAIC's primary subcontractor on the CityTime project. Federal authorities allege that the Allens and others conducted an elaborate overbilling and kickback scheme that siphoned millions of dollars from the project.
Federal authorities have also contended that SAIC had received a whistleblower complaint about the project as far back as 2005, Bloomberg said in the letter. "It is unclear what SAIC did at that time to investigate these serious allegations."
Although New York has "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," Bloomberg added.
SAIC should pay back the roughly $600 million as well as provide money for "the cost of investigating and remediating this matter," he wrote.