Public Employee Press

Dept. of Investigation blasts city contracting practices

A recent report by the Dept. of Investigation slammed the city's procurement practices, charging that a lack of oversight allowed for the corruption and waste of hundreds of millions of dollars in the contracted-out CityTime automated payroll project in which eight consultants have been convicted of fraud.

The report, released July 25, studied the Bloomberg administration's CityTime fiasco to recommend improvements in city management of large information technology contracts.

CityTime was originally budgeted for $63 million, but the costs mushroomed to $700 million in a "massive fraud, kickback and money laundering scheme," said DOI. Beyond criminality, the study found that "CityTime was flawed from the outset because of the failure to implement proper management safeguards to prevent substantial cost overruns and delays and to detect the enormous fraud against the taxpayers,"

For years, DC 37 Executive Director Lillian Roberts raised the union's concerns about the vast waste in CityTime and other contracted-out work in a series of white paper reports.

"This report represents a very positive step by the de Blasio administration," said DC 37 Associate Director Henry Garrido, who heads the union's project on contracting out and municipal revenue.

"The city spends over $10 billion a year on contracts," said Roberts. "Clearly, it must implement tighter controls and oversight. We are also pleased the de Blasio administration has shown a greater willingness than the previous administration to keep work in-house."

The report cites reasons for the city's failure to prevent massive cost overruns and widespread fraud, including poor executive oversight, weak cost controls, inadequate screening of contractors and subcontractors for conflicts of interest and possible fraud, and not holding contractors accountable for meeting timetables.

Robert Ajaye, president of Electronic Data Processing Personnel Local 2627, whose members now run the CityTime automated timekeeping system, said the report vindicates the union's long-standing position that the city should rely more on civil servants for information technology work. "IT work is very challenging, and the institutional memory of our members helps ensure that the job gets done efficiently," he said.

The report recommends that the city conduct background checks on consultants in large technology projects and require contractors to disclose any subcontractors paid $100,000 or more. In the CityTime project, the lead contractors funneled millions of dollars in fraudulent work to subcontractors.

The DOI report calls for the city to impose penalties for contractors' work delays and cost overruns and develop a plan to prevent waste when projects are concluded and put under the control of municipal workers. "The city often loses a lot of money when contractors leave behind a shoddy track record or negotiate expensive maintenance agreements for work that could be done by civil servants," Ajaye said.

"City IT employees average about $80,000 a year, whereas consultants average close to $200,000," Ajaye said. "The incompetence of padding of the books by the CityTime consultants demonstrates the value of city employees. We do the job more efficiently, and we are honest and don't have any secret financial agenda. As civil servants, we are dedicated to serving the city and happy to stay on the job 25 to 30 years."

— Gregory N. Heires