Gov’t Recoups Most Of Lost Payments
Mayor Michael R. Bloomberg and Department of Investigation Commissioner Rose Gill Hearn announced that Science Applications International Corporation (SAIC) will pay more than $500 million to the United States government in settlement of charges that SAIC engaged in fraud resulting in cost overruns to implement the city’s computerized timekeeping system, City- Time.
Of the $500 million payment, the U.S. government will remit $466 million to the city to compensate for its losses resulting from SAIC’s fraud and, as part of this settlement, SAIC has agreed to waive more than $40 million still owed by the city to SAIC in connection with the CityTime project.
Since 2000, when SAIC contracted by the city, the city has paid approximately $589 million to SAIC in connection with CityTime, and this settlement will compensate the city for the fraudulent overcharges associated with the project. In June, Bloomberg wrote to SAIC to request that the city, as the victim of a crime, be reimbursed for the entire cost of the project.
The settlement announced last Wednesday, Mar. 14, combined with funds already frozen or recouped, results in the city being reimbursed for most of the costs of the project.
“Today’s settlement is a major victory for taxpayers, and just as importantly, it is a major a victory for justice and public integrity,” said Bloomberg last Wednesday. “Our administration has zero tolerance for corruption and since day one we have focused on rooting out corruption and preventing it from occurring in the first place.
“After Commissioner Gill Hearn and her team began uncovering the fraud in the project, they contacted the U.S. Attorney’s office and together, they conducted a sweeping probe,” the mayor added. “I want to again sincerely thank our outstanding U.S. Attorney and his team and Commissioner Gill Hearn and her team for aggressively pursuing this case. In addition to recouping most of the costs of the project, we have built what we set out to create: a fully functioning, automated timekeeping system that will save taxpayers money. I also want to thank City Comptroller John Liu, who was an instrumental partner in getting the system on-line and completing the project.”
“This settlement starkly shows that when the city is victimized it will find the perpetrators and recoup its financial loss,” said Gill Hearn. “Lax oversight or disregard for warning signs of fraud are not the way for companies to do business in this city and will not be tolerated. I am pleased that DOI’s criminal investigation and partnership on this case with the U.S. Attorney’s Office for the Southern District of New York led to this result.”
The settlement resolves the city’s potential civil claims against SAIC for the above-described fraud and any potential criminal liability for the company.
This settlement was approved by the City’s Corporation Counsel and the New York City Comptroller’s Office, which is required to approve all settlements with the City, per City Charter.
The SAIC has been paid $589 million by the city for work on the CityTime project. Spherion has been paid $49 million and the initial vendors were paid $14 million for a total paid of $652 million by the city on the CityTime project
The U.S. Attorney’s Office and the Department of Investigation had already frozen or recovered more than $52 million of funds related to fraud in the project.
