Public Employee Press

Part 1 in a series on contracting out
Citytime contract: 1,000% over budget

By DIANE S. WILLIAMS

DC 37 leaders blasted a 1,000 percent cost overrun on a computer contract — still unfinished after 12 years — that the city gave to former Giuliani officials with ties to the Bloomberg administration.

They testified Dec. 18 before the City Council Contracts Committee, which is investigating how the $63 million Citytime deal ballooned to $700 million as the city budget went into the red and the mayor laid off employees.

DC 37 Assistant Associate Director Henry Garrido told the committee the arrangement “was a clear example of the waste in contracting out by this administration.”

The committee, chaired by Council member Leticia James of Brooklyn, has been taking a closer look at Citytime and its cadre of highly paid contractors since Dec. 4, when Daily News columnist Juan Gonzalez exposed the crony-ridden arrangement.

The Citytime project to computerize the city’s timekeeping system began in 1998 for a proposed cost of $63 million dollars. Since then, Citytime costs have skyrocketed to over $700 million. In September, the mayor added another $140 million to the budget for a maintenance contract. Although one-quarter of city agencies are still not on the system, the project affects about 45,000 city employees.

Citytime is entirely managed and maintained by private contractors who take millions of dollars in profits from the city and pay over $300,000 a year each to more than 350 subcontractors and consultants.

James called the contract “outrageous” and pointed out that “all the contractors have an incestuous relationship. They all worked together for the city under Mayor Giuliani, retired and started businesses that employ each other on the city’s dime.”

The hearing revealed that Joel Bondy, who now runs the city Office of Payroll Administration, is a former business partner of Mitchell Goldstein, the $490,000 a year consultant with Spherion Corp., one of the lead contractors spearheading the Citytime project that Bondy supervises.

In the past decade, retired city technology chief Sal Salamone got millions as a Citytime contractor while his computer-giant clients — Sun Microsystems, Symantec, Keane Inc. and Intergraph — paid him $1.4 million for lobbying for additional contracts with the Bloomberg administration over the last four years, Gonzalez reported.

All failed to disclose to the city their connections to each other and their outside interests.

“Given the city’s deficit, we are extremely concerned. Just as troubling are the apparent conflicts of interest,” Garrido said. “The city would save money by contracting in more work and letting go of high-priced consultants.”

DC 37 believes the Bloomberg administration has violated various Procurement Policy Board rules in implementing Citytime. The city changed the scope of services in the original request for proposal from a modified “off the shelf” software system to a Web-based system, but failed to issue a new RFP that the city could renegotiate at substantially reduced costs. When contractor Paradigm IV failed to deliver on its commitment, Garrido said the city should have initiated default proceedings rather than simply assigning a new vendor, military contractor SAIC.

“The city again failed to issue an RFP and just handed over hundreds of millions of dollars to SAIC,” he added.

“Private computer consultants cannot police themselves,” Garrido said, “The existence of Spherion as a quality assurance monitor and The Gartner Group as a risk assessment manager of Citytime has not resulted in any savings. There is no accountability, and there are no evaluations of contractors or penalties assessed against vendors who do not deliver.”

DC 37 called on the city to employ the same common sense, transparent procedures applied by New York State and dozens of municipalities around the country. The union recently initiated a working group, chaired by state Sens. Eric Adams and Frank Padavan, to review all private contracts.

“The city has spent a tremendous amount of money on this project, but from inception there have been abuses of the award process,” testified Jon Forster, a Local 375 member. “What the city intended to recoup through savings from the Citytime program simply has not happened. This contract has been a massive giveaway.” The Contracts Committee asked the city’s Independent Budget Office for a formal investigation. Comptroller John Liu, who attended the hearing, promised to audit Citytime.

“We’ll continue to uncover whether graft or waste is involved,” James said. “My focus is saving taxpayers’ money so we don’t have to cut programs and lay off city workers, who can do the job for less.”