Mayor Bloomberg Demands SAIC Pay Back $600 Million In Cost Overruns For NYC Computer System

Over the years, we've chronicled a number of absolutely ridiculous over-budget computer systems for government agencies. My favorite still remains the FBI computer system -- which was over budget by hundreds of millions of dollars, was useless at finding terrorists, was so bad that a contractor had to use some free internet tools to hack into the system just to get his work done, and was so confusing that a computer science professor who reviewed the system said he and some others thought of going on a crime spree the day the FBI switched over. That system was built by SAIC, and the FBI ended up scrapping it and starting from scratch. But, as far as I know, the FBI never asked SAIC for the $600 or so million in taxpayer money it spent on the system back.

Apparently, NYC Mayor Michael Bloomberg has had a similar experience with SAIC and the new computer system for NYC it's been building. But, Bloomberg is a businessman by trade, rather than a politician, so when a company charges you $600 million (way overbudget from the original $63 million), he knows that you ask for your money back. So that's what he's doing. He's demanding a $600 million refund from SAIC. Part of the issue is that, as with many of these type of projects, there appears to have been significant fraud involved:

The recent indictment of SAIC's leader project manager on the CityTime job, Gerard Denault, as well as the guilty plea to criminal charges made by SAIC systems engineer Carl Bell, who designed the software, are "extremely troubling and raise questions about SAIC's corporate responsibility and internal controls to prevent and combat fraud," he added. Denault and Bell were charged with were charged with taking kickbacks, wire fraud and money laundering.

Also recently indicted were Reddy and Padma Allen, a couple who head up New Jersey systems integrator TechnoDyne, which was SAIC's primary subcontractor on the CityTime project. Federal authorities allege that the Allens and others conducted an elaborate overbilling and kickback scheme that siphoned millions of dollars from the project.

Federal authorities have also contended that SAIC had received a whistleblower complaint about the project as far back as 2005, Bloomberg said in the letter. "It is unclear what SAIC did at that time to investigate these serious allegations."

I would imagine that SAIC has no interest in paying back $600 million, but it could make for an interesting lawsuit if Bloomberg decides to press the matter.

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