Bungled 911 Call System Redo Cost Taxpayers Millions, Audit Finds

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One of the prime contractors selected to improve the city’s 911 call system overbilled taxpayers by as much as $163 million because of “severe mismanagement,” according to an audit by City Comptroller John Liu released Wednesday.

The city’s Department of Information Technology and Telecommunications bungled the contract with by Hewlett Packard, Liu said, causing the upgrade to incur as much as a $362 million cost overrun over the initial budget for the integration.
The comptroller’s report, based on a 15-month review, also found that the department allowed Hewlett Packard to “drastically mark up subcontractor bills resulting in questionable billing."

Liu said he referred the audit to the Manhattan District Attorney’s office.

He compared the cost overruns to the recent scandal over the city's payroll project, known as CityTime.

"Last week, the city received payment from the contractor who fleeced taxpayers in the CityTime project. We hope that similar restitution can come from what has unfortunately become CityTime 2," Liu said.

Liu had already included the amount in an earlier audit finding that the entire 911 re-design was going $1 billion over budget, but hadn't specified how much each contractor was liable for.

The Bloomberg administration said the audit was based "on a fundamental misunderstanding of the scope of HP's work as the system integrator."  

"Hewlett-Packard delivered additional functionality not originally contemplated by the contract," said Bruce Gaskey, director of the mayor's Office of Citywide Emergency Communications.

Hewlett-Packard said it is in the process of reviewing and analyzing the audit and checking the report's findings against HP's records. "To date, HP's work on the ECTP project has been delivered under the originally estimated budget of $380 million, and HP anticipates that when its scope of work is 100% complete at the completion of Phase 1 on June 30th, it will remain under the original budget," the company said in a statement.

As reports of problems with the project surfaced, city records show that Hewlett Packard  was spending six-figures to registered city lobbyists making the case for HP behind the scenes.  HP advocates at the time included Comptroller Liu's campaign spokesman George Arzt , who billed HP $15,000 between 2007 and 2008,  attorney Steven Polan and former Republican state legislator John Faso whose lobbying firm charged HP $167,000 for 17 months of procurement work. All three declined to comment.

Rahul Merchant, who  took over the Department of Information Technology and Telecommunications in April, was grilled about the 911 call system's cost overruns on Tuesday in front of the City Council. He said the complete overhaul of the 911 system would be done by its 2015 deadline.

“We have issues with the millions of dollars being paid out to consultants. And then those consultants hire sub-contractors and we never learn who these are,” said finance chair Domenic Recchia.

Merchant said the agency had 603 outside consultants that are paid about $50 million a year. The department also oversees another 294 consultants who work on technology-related projects at other city agencies.

Earlier this year, Liu's office reported the 911 re-design was $1 billion over budget and several years behind schedule. This latest audit offers a more detailed breakdown off costs related to the the phase of the project that was to integrate the NYPD, FDNY and EMS emergency call and dispatch systems.

A recently released consultant's report commissioned by the Bloomberg Administration after the 911 system's widespread failures during the December 2010 blizzard found years after the city had started its re-design the NYPD and FDNY still were not coordinating their plans to respond to a high call events like the blizzard.

Cindy Rodriguez contributed reporting.