CityTime Fiasco: SAIC Has To Pay $500 Million, Faces Shareholders Lawsuit

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The company that botched the CityTime payroll project will pay the government $500 million to settle its liability for the $800 million debacle, federal prosecutors say. The city gets $466 million of that, and let's hope the Bloomberg administration does a better job with the money this time.

The company in question, Science Applications International Corp., was chosen by the city to produce a high tech payroll tracking system for the entire workforce. SAIC employees, consultants and city overseers not only wasted hundreds of millions of dollars in overcharges, but committed fraud and outright theft over a period of years. The ballooning cost of the project and discovery of widespread criminal activity raised questions about the Bloomberg administration's management of technology contracts.

The Voice's article on the fiasco, titled "The City's Cash Dump Disaster," is here.

In the settlement, the company also had to admit that it ignored claims by a whistleblower in 2005 that SAIC's project manager, Gerard Deneault, was receiving kickbacks from a subcontractor. Deneault was subsequently indicted on federal criminal charges.

Mayor Bloomberg called the settlement "an outright victory for the taxpayer." But he also went on to claim he's running "the cleanest administration in the city's history," something that's very much open to debate.

City Comptroller John Liu, who has troubles of his own, said the settlement "brings a measure of restitution to our taxpayers. CityTime epitomizes enormous waste enabled by a combination of woeful mismanagement and corrupt outside consultants." Liu went on to allege that the debacle was not an "isolated incident." (Liu is facing federal investigation for alleged hijinks in his campaign fundraising operation.)

Meanwhile, shareholders for the company partly responsible for the $800 million CityTime debacle have filed a class action lawsuit alleging that the firm violated federal securities laws.

The City of Westland, Mich. Police and Fire pension system filed the lawsuit, which names SAIC's former CEO Kenneth Dahlberg, its former CFO Mark Sopp, and Deneault as defendants.



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