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Mayor Bloomberg Demands Refund From CityTime Contractor

By DNAinfo Staff on June 29, 2011 5:02pm

A former city consultant allegedly ripped off the city while arranging internet connections for schools.
A former city consultant allegedly ripped off the city while arranging internet connections for schools.
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By Jill Colvin

DNAinfo Reporter/Producer

CITY HALL — Mayor Michael Bloomberg is demanding that CityTime's prime contractor refund the city $600 million in the wake of criminal charges related to the scandal-plagued payroll project.

The mayor sent a letter to Science Applications International Corporation Wednesday requesting a complete refund from the company, which was the main contractor responsible for overseeing the controversial payroll project, whose cost ballooned to more than $700 million.

The project, which was designed to streamline the city's payroll system, was initially supposed to cost just $63 million.

The letter comes after Gerard Denault, a former executive at SAIC, was indicted on various fraud and money laundering charges for allegedly taking kickbacks in exchange for steering millions of dollars to specific project subcontractors.

CityTime in action at the City Comptroller's office.
CityTime in action at the City Comptroller's office.
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DNAinfo/Jill Colvin

Charges have also been filed against Carl Bell, SAIC's Chief Systems Engineer, who oversaw all technical aspects of the project, the mayor said. Bell has pleaded guilty to multiple charges, according to the United States Attorney for the Southern District, who said that "virtually all of the $600 million that the City paid to SAIC for CityTime was tainted, directly or indirectly, by fraud."

In his letter to the company's CEO, the mayor described the charges as "extremely troubling" and said that in light of the allegations, the company should return the full amount the city paid, as well as reimburse the cost of investigation.

A company spokesman did not immediately return a request for comment.

SAIC has already promised to reimburse the city $2.4 million for all the work Denault had billed.

Marc LaVorgna, a spokesman for the mayor, had previously said the city would withhold "any and all payments" to SAIC pending the completion of an ongoing review by the Department of Investigation.

SAIC’s contract with the City expires on June 30, and would not be renewed, LaVorgna said.

During his weekly radio sit-down last Friday, the mayor appeared to defend CityTime, saying that many of the extra costs were legitimate and that the city had underestimated how complex a task it would be.

Still, he said "there was an unconscionable amount of fraud," and said the city "is going after it."