Mayor's Unwise Cracks

We have been commenting on the mayor's lame, "through the cracks," response to the CityTime scandal-and as more evidence piles up here, lameness is a rather too, well, lame characterization of the managerial nonfeasance at play in this fiasco. The NY Times has the latest: "Last week, federal prosecutors sketched out what they said was an $80 million scheme to defraud a giant information technology project to automate the payroll system for New York City employees. The participants in the fraud essentially stole the money for their own enrichment, billing the city for work they did not do, the prosecutors charged. But some city officials had huge concerns as far back as 2003 about the integrity of the project, whose costs have ballooned by hundreds of millions of dollars."

As it turns out, the city overseer back in 2003 was raising the alarm about the serious over-billing: "In a scathing letter made available on Monday through a state Freedom of Information Law request, the city official in charge of overseeing the project, known as CityTime, accused the company that designed CityTime, SAIC, of repeatedly delaying the project in order to get paid more, failing to hew to basic industry standards and rewriting contracts on its own. The official even predicted, sarcastically, that SAIC would try, in a year’s time, to charge the city “8,000 hours” for shoddy work."

So, what happened? Where did Richard Valchich's letter go? After all, he was the executive director of the Office of Payroll Administration: "The letter, dated Feb. 19, 2003, offers a devastating critique of the company, and raises questions about the city monitors of the project — the mayor’s and comptroller’s offices. And the consultants hired to ensure quality control, it appears, were doing very little of it."

But it wasn't until this year that anyone started to see a problem with what was going on-and it was Comptroller Liu who finally intervened: "A spokeswoman for the city comptroller, John C. Liu, whose audit this year highlighted some of the issues that eventually surfaced in the federal indictment, said Monday that the letter reinforced his concerns about SAIC. In September, Mr. Liu announced that he was withholding $32 million to SAIC until June, contingent on its full and timely completion of the CityTime project."

What was Bill Thompson doing when the scandal was brewing? Juan Gonzales follows up here: "A certain level of professionalism and compliance with acceptable industry standard practices is expected of a contractor responsible for the execution of a $100m[illion]+ project," Valcich said. He further noted that SAIC had increased costs of some hardware by 400%. SAIC's "commitment to quality is almost non-existent and is reflected from the top down," Valcich wrote. He added the city had spent "approximately $35 million on CityTime and does not have a tangible system to show for it." A more damning assessment is hard to imagine - but in all the City Council oversight hearings about CityTime the past few years, no one at OPA or City Hall ever mentioned the Valcich letter."

Perhaps it got lost in the Bermuda Triangle. But why did Valcich retire in 2004? Was this a natural act, or was he pushed out? After all, his replacement Joel Bondy was certainly not cut from the same cloth as Valchich: "SAIC spokeswoman Laura Luke acknowledged yesterday that the Valcich letter revealed "deficiencies" in the CityTime program. She insisted that her firm "worked closely with the city on assessing and fixing the problems." The company rolled out a new system in 2005 and the "city told us we were working well together," Luke said. One of the main things that happened was that Valcich resigned as director of OPA in 2004 and was replaced by Joel Bondy. Bondy was then a consultant on CityTime for Spherion Inc., the firm tasked to certify the quality of all CityTime contractors. Spherion paid Bondy $307,000 the year before he moved to OPA, payroll records show. Soon after Bondy arrived, the cost overruns on CityTime spiraled even higher."

For his part, Mayor Mike has yet to even learn how to fake contrition-as DP reports: "Well, let me just start out by saying, I just want to be perfectly clear that we just have zero tolerance, absolutely zero tolerance, for any kind of corruption whatsoever, which is why our administration has the best record, I think, on corruption of any administration in this city's history."

Sure, and aside from that little Teapot Dome scandal, the Harding administration was squeaky clean. Kidding aside, the mayor needs to man up on this-it was no minor indiscretion. Hundreds of millions were stolen, even while cost over runs should have alerted even the most somnolent of watchdogs. We'll give Gonzales the last word: "So when Bloomberg says that CityTime was just something that fell through the cracks, someone should tell him to read the Valcich letter."