WNYC's Bob Hennelly is an award-winning investigative journalist. While at WNYC he has reported on a wide gamut of major public policy questions ranging from immigration and homeland security to power outages and utility mergers.
Stung by IT Capers, City 'Insources' Union Talent
Friday, March 25, 2011
For years, local unions have complained that outsourced contracts for the city's technology needs lacked oversight and wasted taxpayer money.
But it wasn't the union protests nor Councilwoman Letitia James' prescient description years before of just how vulnerable the city had become to multi-million dollar sub-contractor fraudsters that provided the "aha" moment for the Bloomberg Administration.
It was the indictment of several IT contractors for allegedly ripping off the troubled Citytime payroll contract to the tune of $80 million dollars that prompted some introspection within the Bloomberg Administration. Adding insult to injury were alleged vast sums deposited out of the country to Latvian bank accounts.
To be fair, a wide range of government agencies throughout the country from the FBI to local municipal governments have all been plagued by IT contracts that mushroom out of control and never seem to deliver as promised.
Deputy Mayor Stephen Goldsmith says now the city will rely on its Department of Information Technology and Telecommunications for the kind of quality assurance it once subbed out.
"I think that the points some of the unions made that too much of our work is outside is true, and in this case with the IT contracts, we are going to establish a very high-level program management office," pledges Goldsmith.
The review of contractors included the Citytime project--where the projected cost went from under $70 million to over $700 million dollars--as well as the city's long delayed and over-budget emergency communications upgrade.
In a sitdown with WNYC, Goldsmith didn't sugarcoat his findings. He said that under the current arrangement, the contracting companies had way too much leverage over their customer, the City of New York.
"I think the bigger problem is they become the City. Right? We lose control of the scope, and we lose control of the price, and we need to bring more of the management on our side of the table."
Goldsmith says under his insourcing strategy, city workers will handle quality assurance and more hands-on project management and the city will save money while improving the quality of the work.
District 37 President Lillian Roberts welcomed the findings.
"It's a beginning, and I am happy for the workers who have been sitting there totally demoralized, as they certainly will feel better," says Roberts.
Roberts, whose union represents well over a third of the city's workforce - which numbers around 300,000 - has focused like a lazer on the proliferation of outside contracts she says now exceed 17,000 and are worth 10 billion dollars.
The Bloomberg Adminiatration agrees that the city's IT contracts are in the billions, but they say Roberts numbers also includes billions in social service contracts.
Whatever the actual dollar value of the IT contracts, both labor and management agree that if executed as described, Goldsmith's approach of empowering the city workforce will save hundreds of millions of taxpayers dollars while improving the final product.
"Every penny we can get we may be able to save the hours in the library and do something for the homeless and the people who really need it,"says Roberts.
No doubt part of the City's new "can-do" attitude is the direct result of the appointment of new DOITT Commissioner Carole Post a little over a year ago.
Post is the first woman to lead the agency since it was created in 1994 by then-Mayor Rudy Giuliani. Before coming to DOITT, Post was the Director of Agency Services in the Mayor's Office of Operations.
Last month the city's new approach was very much in evidence when Post, Mayor Bloomberg and Deputy Mayor Goldsmith opened a new 18,000-square foot data center at Metrotech in Brooklyn.
Post lead a team of City employee IT experts who set the stage for the integration of the IT operations for 19 city agencies, with another 40 to come in the next five years.
Dubbed the Citywide IT Infrastructure Services (CITIServ), the strategy reduces the city's overall IT footprint, cuts energy usage, improves data security and opens up the possibility of new cross-agency collaboration.
Goldsmith's commitment to insourcing comes as the Bloomberg Administration and the city's union begin pivotal contract talks. This will be the mayor's last shot at finding common ground with the unions in his quest to bring the city workforce into the 21st century.
Richard Steier is the Editor of the Chief, a union paper that covers the ups and downs of public employment in New York City and state. He says the potential of the city's workforce to pull something off like the Metrotech IT integration should come as no surprise.
"These are people who are trained in the field," says Steier. "You've got other people who are skilled professionals who are capable of doing this work."
Steier says Goldsmith's shift shows the Bloomberg Administration actually learned from the costly embarassment of Citytime.
"There is no longer that attitude that the private sector knows best because they are in it to make a profit," says Steier. He says some of the huge contractor cost overruns are the legacy of old fashioned quid pro quo arrangements.
"In the past, you would have situations where it got farmed out in part because mayors looked to private contractors in terms of making contributions to their campaigns," he said. "In the case of this mayor, that isn't an issue."
Steier says it will all come done to how Goldsmith's pledge to "insource" actually rolls out. High profile announcements are one thing, actual transformation and workforce empowerment something else.