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SAIC Settles CityTime Case For $500.4 Million

samzenpus posted more than 2 years ago | from the show-me-the-money dept.

Crime 51

First time accepted submitter arnott writes "Science Applications International Corp. said that it will pay $500.4 million in restitution and penalties under a settlement over its CityTime program with New York City. From the article: 'Two former SAIC employees have been charged with conspiring to defraud New York, and New York Mayor Michael R. Bloomberg (I) has called on the company to reimburse the city for the more than $600 million it spent on the program over an 11-year period.'"

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great (0)

okooolo (1372815) | more than 2 years ago | (#39375137)

and just like that my faith in humanity has been restored.

Re:great (0)

Anonymous Coward | more than 2 years ago | (#39375309)

So who will be the one to keep all that money?
I can hardly believe that the money will be spent for other projects or the citizens of NYC.

Re:great (4, Informative)

WrongSizeGlass (838941) | more than 2 years ago | (#39375337)

So who will be the one to keep all that money?
I can hardly believe that the money will be spent for other projects or the citizens of NYC.

It's money they've already spent and it will be returned to the coffers of NYC. The next NYC budget proposal [nyc.gov] is for more than $68 billion. I'm sure they'll find a way to spend it.

Re:great (4, Informative)

Woogiemonger (628172) | more than 2 years ago | (#39375637)

It's money they've already spent and it will be returned to the coffers of NYC.

http://newsandinsight.thomsonreuters.com/Securities/News/2012/03_-_March/SAIC_to_pay_NY_City_$500_mln_in_fraud_case/

"SAIC agreed to pay $370.4 million in restitution to the city, as well as a penalty of $130 million, according to a deferred prosecution agreement made public on Wednesday. The city will get $96 million of the penalty, with the rest going to the federal government."

So that would be $466 million total, but..

"In addition, New York City will not have to pay about $40 million of the bills it was charged."

So all in all, the judgement nets NYC $506 million.

Re:great (0)

datavirtue (1104259) | more than 2 years ago | (#39375683)

Nice little scam. Float your buddies 600 million, let them invest it for ten years and then "sue" them for the base amount. I'll take that deal any day.

Re:great (1)

Anonymous Coward | more than 2 years ago | (#39376431)

The bigger scam is that SAIC sub-contracted the project out to TechnoDyne LLC and paid them $400M. TechoDyno executives Reddy and Padma Allen a married couple were naturalized American citizens from India. Padma Allen, at least, was a businesswoman of some standing: a medical doctor by training, she attended a White House briefing in December on minority business issues, and she was named one of Ernst & Young’s entrepreneurs of the year in New Jersey in 2010. However, the New York Times said, the couple has apparently fled to India as the fraud was being uncovered "and their whereabouts are unknown to federal authorities."

Re:great (3, Insightful)

Doc Ruby (173196) | more than 2 years ago | (#39375677)

Humanity? This is faith in the courts. If SAIC had been convicted instead of merely agreeing to keep a little more than it originally contracted, it could have lost much of the government contracts that are over 80% of its very big business.

The court told SAIC that its gamble here didn't pay off, but it didn't lose anything either. Try it again with a different city, a different court, and the law of averages (or bribery) could give you a 5:1 payoff!

Re:great (1)

okooolo (1372815) | more than 2 years ago | (#39375747)

Admittedly I have no experience with city contracts and living in a different country I don't know much about american government's procurement process but it seems to me that all their deals will be put under a microscope from now on. I wouldn't be surprised if they lost their government contracts anyway, regardless of the fine. Fact that an actual huge multinational corporation has actually been found guilty is what gives me hope.

Re:great (3, Informative)

Registered Coward v2 (447531) | more than 2 years ago | (#39375803)

Admittedly I have no experience with city contracts and living in a different country I don't know much about american government's procurement process but it seems to me that all their deals will be put under a microscope from now on. I wouldn't be surprised if they lost their government contracts anyway, regardless of the fine. Fact that an actual huge multinational corporation has actually been found guilty is what gives me hope.

They technically have not been found guilty of anything. had they been tried and found guilty, then they could have been barred from receiving new contracts but a settlement doesn't do that. At best some agencies may look at this and have second thoughts; but even so it may be tough, under the FAR (Fed Acquisition Regs)*, to not award them a contract on which they are the qualified low bidder simply because of the NYC settlement.

More than likely it will have little, if any, impact on SAIC's ability to win contracts. Oteh regencies will probably chalk it up to the typical implementation spat when a s/w project has problems.

* If you really want a sense of how Byzantine the FARs are; drop by the Defense Acquisition Portal https://dap.dau.mil/Pages/Default.aspx [dau.mil]

Re:great (0)

Anonymous Coward | more than 2 years ago | (#39377799)

Not to mention that large companies like this will just partner with a small business (minority owned is even better) in order to get in on more contracts. SAIC once called itself the Blackwater of Gov't IT Support so you get an idea of how they operate.

Re:great (1)

kid_wonder (21480) | more than 2 years ago | (#39380181)

...I don't know much about american government's procurement process but it seems to me that all their deals will be put under a microscope from now on....

That is soooooo cute.

Let me learn you on the american government process:
1. Cheat the government
2. Get found guilty
3. Make campaign contributions, to ensure contracts keep getting sent your way
4. PROFIT!

Re:great (2)

Joce640k (829181) | more than 2 years ago | (#39375705)

and just like that my faith in humanity has been restored.

Only after the threat of jail time for the bosses...and only for one company out of the many thousands that have stolen public money lately.

James (-1)

James8811 (2596807) | more than 2 years ago | (#39375175)

Mine also..

Another quality SAIC project... (2, Insightful)

Anonymous Coward | more than 2 years ago | (#39375361)

having had experience with SAIC in the past - one wonders how they remain in business when most of the projects turn out to be crap and have to be redone?

Re:Another quality SAIC project... (5, Interesting)

fuzzyfuzzyfungus (1223518) | more than 2 years ago | (#39375489)

SAIC is a highly evolved obligate parasite of government.

As with many highly evolved parasites, many capabilities are either vestigial or entirely absent; but the apparatus used to find, latch on to, and suck nutrients from, the host has been optimized to an impressive degree.

Re:Another quality SAIC project... (1)

Anonymous Coward | more than 2 years ago | (#39375813)

You make one major mistake. SAIC is a Small Array of Independent Companies, which sometimes bid against each other. This causes great confusion for everyone involved. There are reasonable companies inside SAIC, and parasites inside SAIC. However, to characterize SAIC as anyhting other than a C-corp, falsely assumes a monolithic organization.

Something nice about SAIC (1)

mapkinase (958129) | more than 2 years ago | (#39375647)

They hosted nice free user group on GUI design in their building 12 years ago.

Other than that it's a very big corporation with links to the military industrial complex.

Re:Another quality SAIC project... (1)

Doc Ruby (173196) | more than 2 years ago | (#39375687)

SAIC is a CIA asset [google.com] .

Re:Another quality SAIC project... (1)

Joce640k (829181) | more than 2 years ago | (#39375709)

having had experience with SAIC in the past - one wonders how they remain in business

Simple: Wining and dining of the government officials with the cheque books.

Re:Another quality SAIC project... (3, Informative)

Anonymous Coward | more than 2 years ago | (#39375801)

This is an idiotic sweeping generalization. You had trouble on one contract therefore the 45,000 employees must all be useless and their billions in projects all have to be redone. Give me a break. There have been tremendous successes from literally genius minds in the company providing tech to the government not seen anywhere on the planet. I know, because I was there.

I worked for SAIC for 15 years. As they went public, the the management sold the soul of the company to centralize like the other huge contractors (Lockheed, NG, etc) and it killed off the culture.

There was a time when it was an entrepreneurial collection of small competing groups that focused on using really smart people to provide solutions. The company's reputation with the government was sterling for decades.

Then there was Trilogy, Greek Olympics, CityTime, and various data loss incidents. Combined with the IPO a few years back the company really stumbled.

That's why I quit.

Re:Another quality SAIC project... (1)

Anonymous Coward | more than 2 years ago | (#39375851)

I was there when before they went public, and they were already sleaze-balls.

Unfortunately I didn't see anything that I was certain was illegal or dishonest, but they sure as hell knew where the line was and danced on it.

Re:Another quality SAIC project... (0)

Anonymous Coward | more than 2 years ago | (#39376059)

Like you, I was there pre- and post-public. My impression was that like any other big defense contractor, in some places staff and management were some of the brightest and most dedicated people you'd ever have the privilege to work with, and in others it was everything bad about defense contracting--empire-building, incestuous relationships with retired officers, revolving-door lobbying, etc.

Re:Another quality SAIC project... (0)

Anonymous Coward | more than 2 years ago | (#39378017)

Same here: both before and after. While I was lower down and didn't see the deal making side of things, I certainly got shafted by them as a worker. Lots of promises but few ever kept. I've worked for half a dozen contract companies over the last 25 years and they're about the worst, at least with the division I dealt with.

Haha (-1)

Anonymous Coward | more than 2 years ago | (#39375385)

This sounds like something Baquack Obamailure would do! :)

Re:Haha (-1, Flamebait)

Doc Ruby (173196) | more than 2 years ago | (#39375693)

Except that it's Obama's Federal attorney [nypost.com] who got the money back. It's Republican Bloomberg who helped SAIC rob it.

You Republicans have a very limited playbook: commit a crime, and blame the Democrat who catches you. It's a mental disease.

Re:Haha (1)

Zak3056 (69287) | more than 2 years ago | (#39376625)

Except that it's Obama's Federal attorney [nypost.com] who got the money back. It's Republican Bloomberg who helped SAIC rob it.

You Republicans have a very limited playbook: commit a crime, and blame the Democrat who catches you. It's a mental disease.

Calling Bloomberg a Republican isn't exactly accurate... until 2001, he was a Democrat. Then he switched to the Republican party--until he declared himself an Independent in 2007. I think it's fair to simply call him a corrupt, opportunistic scumbag. Of course, this is true of most politicians.

Re:Haha (2)

mcgrew (92797) | more than 2 years ago | (#39379939)

Except that it's Obama's Federal attorney [nypost.com] who got the money back. It's Republican Bloomberg who helped SAIC rob it.

Modding him flamebait pretty much proves his point. Jesus, guys, wtf is wrong with you?

Now waste some mod points on me so you'll not have so many left to mod down other informative comments. You won't hurt my karma.

Re:Haha (1)

Doc Ruby (173196) | more than 2 years ago | (#39398055)

They're probably trollmodding me because of

Republicans have a very limited playbook: commit a crime, and blame the Democrat who catches you. It's a mental disease.

... proving my point. Thanks for noticing.

As for karma, I've been trollmodded literally thousands of times on Slashdot for well over a decade now. There have been whole armies of trollmods, organized globally to attack me - I've seen their websites and IRCs (not dedicated to me, but I had my high slot in their rotation). Who cares? They're the ones with the mental disease. I'm the one with time to waste posting the truth.

Re:Haha (1)

mcgrew (92797) | more than 2 years ago | (#39413015)

Odd that my comment quoting and defending your was modded informative while your original comment was downmodded. I was hoping someone with points would mod yours up, but at least I got your point seen.

I miss the old metamoderation, modding someone "troll" or "flamebait" when you disagreed with them kept you from getting more points. It doesn't seem that way now.

Grrrr! (-1)

Anonymous Coward | more than 2 years ago | (#39375487)

I can't hold anymore!

.4 (0)

Anonymous Coward | more than 2 years ago | (#39375585)

The .4 was very important.

Re:.4 (1)

beachcoder (2281630) | more than 2 years ago | (#39375887)

Legal fees?

Re:.4 (0)

Anonymous Coward | more than 2 years ago | (#39376865)

The .3 was for the calculator they needed to buy for this task... .1 was for pencils to the lawyers..

That Is a Lie About Bloomberg (5, Informative)

Doc Ruby (173196) | more than 2 years ago | (#39375671)

I live and work in NYC. The Washington Post might love kissing billionaire technocrat ass, but Bloomberg didn't get this money back. In fact Bloomberg is responsible for letting SAIC rob over $600M on this contract, all the way until the bitter end while Bloomberg defended SAIC and its "cost overruns". As he finally admitted last Summer [nydailynews.com] . It's the Federal prosecutor, Manhatttan US Attorney Preet Bharara, who clawed back this money. Though indeed even Bharara couldn't get it all back [nypost.com] : the ripoff claimed $652M, the court awarded $540M, and the city might get from $466-518M. Meanwhile Bloomberg whined that getting the $500M wasn't done "in a more pleasant way". (FWIW, when his bankster cops were macing women on public sidewalks last Summer, he had no complaint that it couldn't be done in a more pleasant way). Bloomberg says we now have a functioning system "at a very reasonable cost", because he's not including all the costs of recovering the money in court. He defended this ripoff until the bitter end, and continues to spin it.

Re:That Is a Lie About Bloomberg (2)

Attila Dimedici (1036002) | more than 2 years ago | (#39375703)

I was wondering about that. It really seemed inconsistent for Bloomberg to be a campaigner against companies defrauding the government.

Re:That Is a Lie About Bloomberg (0)

Anonymous Coward | more than 2 years ago | (#39379885)

Seems pretty normal for a politician and a business man. He was just saying whatever he needed to in order to get elected.

Re:That Is a Lie About Bloomberg (1)

sgt_doom (655561) | more than 2 years ago | (#39382397)

Exactly and thanks for your commentary. Fact is, Bloomberg is the same stooge who appointed former GE CEO, Jack Welch, to aid in the privatization of the NYC school system. And if SAIC screwed up their last two contracts, one at NSA, then another at the FBI, spending all their time just copying all their files, instead of what they were supposed to be doing, it begs the question as to what they were really doing with respect to NYC?????

Something is wrong here (3, Insightful)

zill (1690130) | more than 2 years ago | (#39375759)

From reuters: [thomsonreuters.com]

Critics say city employees could have done the work far less expensively. Bills spiraled out of control over the years, hitting $692 million, and city investigators brought federal prosecutors into the probe after uncovering payments routed through shell companies.

... SAIC agreed to pay $370.4 million in restitution to the city, as well as a penalty of $130 million, according to a deferred prosecution agreement made public on Wednesday. The city will get $96 million of the penalty, with the rest going to the federal government.

In addition, New York City will not have to pay about $40 million of the bills it was charged.

Let me see if I got this right:
-$692 million in bills +$40 million in canceled bills + $370.4 million in restitution + $(130-96) million in penalty payments = -$247.6 million

Shouldn't the restitution payment at least cover how much NYC originally paid?

Re:Something is wrong here (1)

Anonymous Coward | more than 2 years ago | (#39375919)

The city was being overcharged, that doesn't mean the legitimate charges become free labor.

Re:Something is wrong here (1)

zill (1690130) | more than 2 years ago | (#39376095)

My bad. I didn't realize the city actually received what they ordered. I mistakenly thought SAIC failed to delivered the software.

Re:Something is wrong here (1)

Anonymous Coward | more than 2 years ago | (#39377619)

Yes, the system was actually installed to prevent fraud by city employees that were having their buddies clock them in (while they presumably sip tea in the Hamptons). Biometrics are now required when clocking in/out which has saved NYC millions (and probably has a bunch of union types pissed!)

Unfortunately, it appears the team that installed the system was also stealing from the project in some convoluted fashion and now SAIC is paying the price financially along with some bloodletting within the company. If it weren't for a few bad apples, this could have been a great success story.

Re:Something is wrong here (0)

Anonymous Coward | more than 2 years ago | (#39378211)

And who are you trolling for? It doesn't take 10 years to develop such a system. It should have been an 18 month project, start-to-finish.

Re:Something is wrong here (1)

CByrd17 (987455) | more than 2 years ago | (#39384801)

They also got a working system that they are using today. Maybe you think they should get that for free, but you already mention the restitution, penalty, and debt cancellation.

What amazes me about SAIC (3, Interesting)

MikeRT (947531) | more than 2 years ago | (#39375935)

Is that given their federal track record, why would NYC give them something like this? Their prior performance at the federal level looks like the killing fields of Cambodia done on a bank statement. They're an institutional argument of why cost alone should never be a factor in awarding a contract; bang-for-the-buck instead because the feds have almost without fail gotten exactly what they've paid for from this company.

Re:What amazes me about SAIC (1)

VTEngineer (1033634) | more than 2 years ago | (#39376201)

I don't think they are any worse then any other federal contractor. The entire defense industry is quite adroit at extracting funds from the govt. SAIC doesn't hold a candle to some other large entities in this regard. This incident was lack of oversight, but the fault lies with 2 corrupt employees. Individual criminal acts, not corporate malfeasance. That said, the entire parasitic industry needs to be severely limited for the benefit of the country. Value versus spending is way out of whack and the taxpayers are taking it in the shorts.

Re:What amazes me about SAIC (1)

Anonymous Coward | more than 2 years ago | (#39378803)

Having worked for SAIC and commercial companies (Microsoft, Qualcomm), I am not surprised in the slightest. Their management was entirely concerned with extracting the most cash from the government possible, with little or no regard for the actual work that was done. Engineers were regarded as unfortunate necessities to actually appear to perform some kind of work, while Sr VP's, VP's, and Associate VP's pontificated, and postured. Huge subcontracts were cut to people with questionable skills and dubious methods. The Virtual Case File System for the FBI was a critical national security system, and they produced absolutely nothing. had VCF been operational, the 9/11 attacks may have been prevented. I met their CTO once at an Ironman, where he waxed eloquently about his vacations and all the nice stuff he owned. I was with a REAL CTO, and he asked the guy, "Have you ever soldered a board? Written a lick of code? Actually worked on a design?" Totally lit into the dude, who stared back deer-in-the-headlights.

Re:What amazes me about SAIC (1)

elrous0 (869638) | more than 2 years ago | (#39380539)

Charismatic salesmen and well-funded lobbyists can work miracles.

$500.4M ??? (0)

Anonymous Coward | more than 2 years ago | (#39376033)

Let's see...

$0.4M in damages.

$500M in legal fees.

Sounds about right.

Heres how you save a few hundred million NYC... (0)

Anonymous Coward | more than 2 years ago | (#39378021)

Open source payroll and time management [timetrex.com] fully capable of handling large enterprise requirements.

Re:Heres how you save a few hundred million NYC... (0)

Anonymous Coward | more than 2 years ago | (#39378379)

Not to the convoluted rules, regulations, union labor agreements, etc. of every department of NYC. That place is a madhouse.

NYC is getting Quite the Bargin! (1)

Anonymous Coward | more than 2 years ago | (#39379073)

As someone who coded on the this project, (too low level to know about any theft or graft), I would say the city has gotten a real bargin. The big problem on the project is that the city is very complex and city workers are very poor at communicating that complexity into requirements. SAIC wasn't the first company to work on the project, a bunch of money was spent on the first few companies that did the work. The city had widely underestimated what it would take to make the product work, and how much the unions would push back against employees actually having to report when they showed up for work.

Important points
1. The system works pretty well, most articles about it do mention this.
2. The system handles time reporting for everything from office workers, to fireman. From regular 9-5 shifts to fireman 36hour stints. Unfortunately for NYC and its crazy union rules an off the self solution wasn't possible. Union contracts are very complex and the system handles paying people based on those contracts, which no one really understands.
3. The most important thing for city workers who I interviewed for requirements was the ability to lie about when they worked, how long they worked, weather they worked at all, and what they were doing during work. The system made this very hard, the unions made implementation very expensive. This isn't about judging people, it is just reality.
5. Big IT projects like this often fail, this is a reality in our business. SAIC despite the fraud, which should be punished, actually succeeded. And lots of really good work went into making that project successful.

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