Perdido 03

Perdido 03

Sunday, March 27, 2011

NY Times: Bloomberg, Thompson Let Outside Consultants Steal Millions In CityTime Project

The Times has done a major article on how the CityTime mess came to be.

Bloomberg Budget Director Mark Page, former City Controller Bill Thompson,and the Mayor of Money himself are the villains of the piece.

Since the paywall is going up at the Times tomorrow morning, here is the article in full:

Behind Troubled City Payroll Project, Lax Oversight and One Powerful Insider

This article is by David W. Chen, Serge F. Kovaleski and John Eligon.

It was supposed to create an efficient system that would be the envy of mayors everywhere, bringing new accountability to city government and cracking down on public workers who tried to pad their paychecks with undeserved overtime.

But the payroll automation project, known as CityTime, has instead become a major embarrassment for the Bloomberg administration, first ballooning to $700 million and then resulting in federal criminal charges and multiple investigations that could dog the mayor for years.

Last week, Deputy Mayor Stephen Goldsmith declared what had become obvious: the city cannot rely on outside consultants to monitor multimillion-dollar technology contracts, which it had done with CityTime. He added that the city would create a new office inside City Hall to do so.

An examination of the events that led to the CityTime scandal reveals lax oversight, mismanagement and a basic failure to control costs.

It also showed that much of the fervent drive to install the system could be traced to the determination of one powerful administration insider: the budget director, Mark Page.

Mr. Page, 62, a numbers cruncher who had become frustrated and distrustful of city workers, saw the new system as a way to address the chronic and costly problem of police officers’ and firefighters’ receiving more overtime at the end of their careers to increase their pensions.

He also wanted to limit litigation, now estimated at several million dollars a year, from employees who claimed, under the Fair Labor Standards Act, that they were being shortchanged in their paychecks.

Mr. Page, a lawyer, had little familiarity with technology, but he believed CityTime would curb timekeeping abuses and save the city tens of millions annually. So, wielding his power over agency budgets, he persuaded reluctant commissioners to adopt CityTime. And, brushing aside criticism, he insisted year after year that the project was inching closer to completion.

“Nobody was enthusiastic about CityTime,” said one former high-ranking Bloomberg administration official who, like most people interviewed, insisted on anonymity because the investigation was continuing. “Our take was that CityTime was long and troubled, but that it had a champion, and that champion was Mark Page.”

While Mr. Page pushed, few others inside City Hall paid attention. The mayor shares supervision over the agency that awarded the contract, the Office of Payroll Administration, with the comptroller. But William C. Thompson Jr., who was comptroller from 2002 to 2009, never met the head of the payroll agency. Nor did he audit CityTime, despite a crescendo of grumblings.

Only recently did Councilwoman Letitia James of Brooklyn, a Thompson ally and former chairwoman of the contracts committee, learn about the comptroller’s role. So the combination of Mr. Page’s being “very defensive” about CityTime and Mr. Thompson’s being “asleep at the switch” contributed to a “perfect storm,” she said.

“It was like a joint custody case where no one was monitoring whether the child was doing their homework,” she said.

Mr. Page declined, through a mayoral spokesman, to be interviewed. But during a recent budget hearing, he became visibly agitated when Ms. James suggested that he had a “romantic” view of CityTime that was oblivious to its financial and legal problems.

“I don’t quite know, if you characterize my defending it as romantic, what you would characterize your own attitude towards that and other projects as,” he said.

Mr. Page strongly defended CityTime, saying that “the implementation process has been going actually extremely well” and that the system would provide “major value to all of us as an underlying foundation to managing this place efficiently.” And he contended that CityTime was being unfairly maligned by the scandal.

“I’m not aware that that indictment is addressing the quality of the system — whether it works, is serviceable and is useful to New York City,” he said.

Mr. Bloomberg, too, remains bullish on CityTime, despite the criminal case.

“CityTime, when you write the history of it down the road, will have saved enormous amounts of money for the City,” Mr. Bloomberg told reporters recently. “It would be great if you could have done it more efficiently, more reliably, faster, cheaper — and I don’t know whether that’s possible. I don’t know of any big software project that doesn’t have lots of problems.”

Mr. Thompson declined to be interviewed. But a former high-ranking aide said the comptroller’s office raised, on at least five occasions, concerns over costs in meetings with Mr. Page, as well as with others working for Mr. Bloomberg.

“Should he have raised his voice more, and more publicly?” the aide said of Mr. Thompson. “This was a peripheral issue.”

CityTime keeps track of employee attendance and leave requests through a Web-based system. So far, 118,000 city workers use CityTime, and an additional 47,000 are expected to do so by June.

The project’s history dates to 1998, when the city awarded a competitive contract to a subsidiary of MCI for $63 million that was expected to take five years. Two years later, the contract landed in the hands of Science Applications International Corporation, or SAIC, a defense conglomerate.

That contractual handoff bypassed the normal competitive bidding process and is something city investigators are reviewing.

CityTime quickly became dubbed “Mark’s legacy project” after Mr. Page — a veteran bureaucrat and descendant of the financier J. P. Morgan — was appointed in 2002. A dour man respected for his mastery of numbers, Mr. Page had long been frustrated by myriad union timekeeping rules.

“He was like Ahab,” said one senior Bloomberg administration official, referring to Mr. Page’s obsession with the project.

One motivation, perhaps, was money. Under one proposal, if CityTime were sold to other governments, the city would receive $200,000, and additional fees per user. New York State and Illinois were among those approached, according to people involved in the discussions.

“There seems to be at least a decent possibility that this will be a system that can be used elsewhere,” Mr. Page said last June. But rather than using an existing system, Mr. Page wanted to start from scratch, partly because he did not trust the employee self-reporting aspect of other systems, officials said.

“He had legitimate things he was trying to go after, but you probably needed to separate those from managing a project, and that’s where it fell apart,” said one former high-ranking official. “There was a real blind eye. Why would you have the budget director overseeing this kind of project?”

One pivotal moment occurred in 2004, with the retirement of Richard R. Valcich, who, as the payroll office’s executive director, had accused SAIC of delaying the project to get paid more, and failing to meet industry standards. He was succeeded by Joel Bondy, who had been recommended by Mr. Page, according to several people.

Mr. Bondy’s enthusiasm for CityTime was startling: even when union officials and others complained about its delays and costs, he repeatedly urged the City Council to “take it the final 10 yards” and finish the job.

Mr. Bondy resigned in December. Mr. Bondy’s lawyer, Guy Petrillo, said he and his client had no comment.

Before working at the payroll agency, Mr. Bondy had worked for Spherion, which was hired in 2001 to provide quality-assurance over the CityTime contract. That contract has since been amended 11 times, inflating its value to more than $48 million from $3.4 million.

Spherion consultants are now at the heart of the criminal case. The accused ringleader was Mark Mazer, the Spherion consultant who had previously reported to Mr. Bondy in the mid-1990s, when they worked at the Administration for Children’s Services.

In 2005, SAIC overhauled CityTime’s design, and city officials had to decide whether to continue with the costly project. But according to an audit conducted last year by Comptroller John C. Liu, who replaced Mr. Thompson, “At a juncture when CityTime could have been terminated or possibly rebid,” the city relied too much on Spherion, which wanted to keep the contract going.

CityTime ultimately switched from being a fixed-price contract, in which a negotiated amount is paid for services delivered, to an hourly one. The cost then climbed to $628 million by 2009, from $224 million in 2006. Investigators say the hourly-wage arrangement, coupled with a lack of oversight, facilitated the corruption scheme.

As concerns grew about CityTime, the city resurrected a high-level technology review committee in 2006. There was talk of scrapping the project or replacing the contractor because, as one review participant put it, “it was obvious that it was not working.” But no minutes were kept, and the chairman of the review committee, former Deputy Mayor Robert C. Lieber, declined to comment. His memory, he said, was “fuzzy.”

A spokesman for the mayor’s office, Marc LaVorgna, said, “The fact that unfortunately gets lost is that the system we bought does in fact work and is the long-term solution to what was a monumental, decades-old problem for the city.”

Still, however the project performs technically will probably be overshadowed by its legal and financial difficulties. The industry standard for payroll or other automated projects is typically $200 to $1,000 per user. By contrast, CityTime’s cost per user is roughly $4,000. New York State, for example, is spending only $217 million to modernize its finance and accounting systems — a far more ambitious project — that will be used by 200,000 people.

“First it was Frankenstein,” said one consultant who warned officials about CityTime. “Now it’s Medusa.”

So the guys who think city workers steal money and are wasteful send business to outside consultants who steal money and are wasteful.

But they don't pay attention to any of this because these outside consultants are, you know, not city employees, so therefore they are as honest as the day is long.


When the mayor announces teacher layoffs in the next few weeks, he MUST be called to account for not only the CityTime mess but all the other outside consultant contracts he has handed out that have wasted BILLIONS.

Bloomberg says the city has to save money?

He can start with all these outside contracts.

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