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Another privatization disaster: $370 million stolen in NYC

Remember this case the next time someone starts blabbing about how private industry always does things better than the government. Here's what happens when privatization runs amok. Even Republican Mayor Bloomberg calls his mistake a "disaster".

March 14, 2012, 11:26 am
Company in CityTime Payroll Scandal to Pay $500 Million

Updated 11:44 a.m. | The main contractor that ran the scandal-ridden CityTime automated payroll project for New York City will pay over $500 million to resolve a federal criminal investigation into its conduct, the federal authorities announced on Wednesday.

The contractor, Science Applications International Corporation, agreed to pay restitution to the city of $370 million and an additional penalty of $130 million for its role in what the United States attorney in Manhattan, Preet Bharara, has called a project “corrupted to its core by one of the largest and most brazen frauds ever committed against the City of New York.”

CityTime is a New York City payroll project that was meant to streamline employee timekeeping and crack down on public workers who tried to pad their paychecks with undeserved overtime. It instead became a major embarrassment for the Bloomberg administration, as lengthy delays and giant cost overruns were followed by investigations and federal criminal charges.

The project was run out of the Office of Payroll Administration in New York City, a hybrid agency of the mayor’s and comptroller’s offices, which has been criticized for its handling of the project. Mayor Michael R. Bloomberg has called the project a “disaster.” Consultants who were hired to oversee putting the project into effect have been paid nearly $50 million — $46 million more than they were initially supposed to receive.

In December 2010, federal prosecutors in Manhattan charged several CityTime consultants with an $80 million fraud scheme that began in 2005, accusing them of manipulating the city into paying out expensive contracts to businesses that they controlled, and then redirecting some of the money to enrich themselves. They even submitted false time sheets, the authorities said.
Beyond CityTime: Privatization’s Risks Involve More Than Money
Adrienne Day for City Limits | November 15, 2011 2:02 PM

It was a scandal so big, it pushed an IT deal into the headlines of New York City’s sexed-up tabloids: CityTime, a software system that was supposed to modernize the city’s payroll administration, turned out to be riddled with fraud.

A $63 million contract with Science Applications International Corp. (SAIC) that began in 1998 and was to be completed by 2003 had ballooned to at least $700 million and remained unfinished. But that was, in a way, the good news. The bad news was that at least some of the millions had allegedly been embezzled by the very people the Bloomberg administration trusted to oversee the work. Eleven people and one subcontractor, TechnoDyne, have so far been charged in the case, and two have fled the country with millions in allegedly stolen cash. Preet Bharara, the U.S. attorney for the Southern District of New York, called CityTime one of “the largest and most brazen frauds ever committed against the city of New York.”
Or, it could be seen as yet more government waste.
Who in the government was responsible for keeping this project on-time and on budget?

And how much money did he/she get in kickbacks from the contractor?
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