Role of Lobbyists in CityTime Fraud : What did SAIC and Technodyne want ?

Keeping in mind that Mayor Bloomberg is skilled at funneling campaign money in many ways that go undetected and undisclosed, a skill he shares with Speaker Quinn, who still maintains her shady City Council slush fund. These experts at funneling and slushing money around in opaque structures and technicalities are the ones, who never detected the massive $600 million CityTime Fraud. Really ?

During the 3 terms of the Bloomberg administration, Mayor Michael Bloomberg and City Council Speaker Christine Quinn kept approving each year's city budget, which included all the approvals and sign-offs on the CityTime cost over-runs.

During the Bloomberg-Quinn administration, lobbyists for the primary CityTime contractors, Scientific Applications International Corporation and Technodyne, kept teams of expensive lobbyists on their payroll to do exactly what ? Were lobbyists being paid to prevent any government agency to investigate the 2003 Richard Valcich letter ?

2003 02 19 Richard Valcich Letter SAIC CityTime Corruption Scandal

In 2003, Mr. Valcich was the Executive Director of the Office of Payroll Administration. In his 6 page letter to SAIC, Mr. Valcich questioned the motivations behind SAIC's poor performance on the CityTime contract ; SAIC kept dragging out deadlines and delivering product that Mr. Valcich described as "below acceptable standards."

As of the time of the writing of Mr. Valcich's letter, New York City had spent $35 million thus far on the doomed CityTime project. Current cost estimates put the price tag at over $700 million, of which $600 million has been described as "fraud."

During all this time, though, the principal outsourced companies working on CityTime were dispatching teams of lobbyists, to keep the cost over-runs being paid, and maybe for other motives.... The newsroom of WNYC, the public radio station, cannot pinpoint the exact role of the shady CityTime lobbyists.

"What prosecutors have yet to publicly discuss is the role played by former city officials from both the Giuliani and Bloomberg administrations that acted as lobbyists on behalf of SAIC and subcontractors such as New Jersey-based Technodyne. ...

"The city's lobbying database shows a small army of former prominent city officials who did work for SAIC and Technodyne. Defense contractor SAIC has retained former City Comptroller Liz Holtzman, Peter Powers, who served as Mayor Giuliani's top deputy Mayor for operations, and Seth Kaye, who worked in both the Giuliani and Bloomberg administrations. Technodyne's lobbyists include former Bloomberg Department of Information Technology and Telecommunications Commissioner Gino Menchini and Agostino Cangemi, who also held key posts in both administrations.

"National Strategies, the lobbying firm that employs Menchini and Cangemi, says the firm had no role in CityTime and discontinued working "on general business procurement" for Technodyne as soon as the criminal allegations surfaced. (Another Technodyne lobbyist of record, Sal Salamone, was director of the Mayor’s Office of Computer Planning and has worked for SAIC.)"

No journalism outlet has yet to report the extent of lobbying by other CityTime subcontractors, such as Spherion and Gartner. If the lobbyists were trying to thwart any investigation into the $600 million CityTime fraud, would those lobbying activities rise to the level of obstruction of justice ?

SAIC CityTime Legal Discovery

Evidence, Documents, Response to Requests for Production : Growing Collection for Preetinder S. Bharara :

In addition to Suzannah B. Troy's detailed blog post about the criminal fraud involving the CityTime tech contract, check the following documents, which will be supplemented here from time to time :

2009 12 18 Joel Bondy CityTime Hearing Transcript

Waste-Abuse at the City of New York..an Insider Story - CNN iReport

2003 02 19 Richard Valcich Letter SAIC CityTime Corruption Scandal

SAIC SEC 8-K Date of Report : June 2, 2011

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________

FORM 8-K
__________________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): June 2, 2011
__________________________________

SAIC, Inc.
(Exact Name of Registrant as Specified in its Charter)
__________________________________

Exhibit 99.2

Regulation FD Disclosure

Timekeeping Contract with City of New York

Since 2000, the Company has performed under a systems development and implementation contract relating to an automated time and attendance and workforce management system (CityTime) for certain agencies of the City of New York (City). The Company has billed approximately $635 million under the contract through May 31, 2011. During fiscal 2011, the Company and the City entered into a contract amendment that provided for, among other things, modified performance requirements for the Company to complete the contract. The Company believes it has substantially completed its performance obligations under the amended contract and has outstanding receivables of approximately $40 million as of May 31, 2011, reflecting the amount owed by the City to the Company under the terms of the amended contract and prior amendments to the contract.

In the course of conducting an internal investigation of the CityTime program, the Company discovered that it could not validate all the time recorded to the contract by its CityTime program manager. As a consequence, the Company could not determine the extent to which any time may have been incorrectly overbilled to the City for this employee. The Company then informed the City on May 23, 2011 that it had terminated the employment of this employee and offered to voluntarily refund approximately $2.5 million, representing all of this employee’s time directly billed to the City. The Company recorded a liability of approximately $2.5 million as of April 30, 2011, associated with its offer to refund this amount.

The U.S. Attorney’s Office for the Southern District of New York is conducting a criminal investigation relating to the CityTime program. In December 2010, the U.S. Attorney’s Office filed a criminal complaint against six individuals who were employees of the quality assurance vendor that was under a direct contract with the New York City Office of Payroll Administration, or were principals of staffing firms that provided staff to the CityTime program as second-tier subcontractors to the Company, or were otherwise relatives of those individuals. On February 10, 2011, a federal grand jury indicted four of the individuals and added another individual defendant. On May 27, 2011, a criminal complaint was filed against the former Company employee whose time charges were subject to the refund offer. The complaint alleges that this former employee conspired to defraud the City into extending the duration of and overpaying for the CityTime project and personally received kickbacks totaling $5.6 million. It also alleges that he defrauded the Company by depriving it of his honest services, and charges him with money laundering to conceal proceeds of the fraudulent schemes. The Company is continuing to cooperate with the U.S. Attorney’s investigation but cannot predict its outcome.

Statements have been issued from the City’s Office of the Mayor and Office of the Comptroller indicating that the City’s Department of Investigation would conduct a more extensive investigation regarding the CityTime contract, and that the City would withhold payment of amounts owing to the Company until the investigation was complete. In addition, these statements have also indicated that the City intends to pursue the recovery of costs associated with the CityTime program that the City’s investigation reveals were improperly charged to the City. The City has not filed any claim against the Company or otherwise requested reimbursement or return of payments previously made to the Company and the Company has not recorded any liabilities relating to this contract other than the approximately $2.5 million it offered to refund. However, there is a reasonable possibility of additional exposure to loss that is not currently estimable if there is an adverse outcome. An adverse outcome of any of these investigations may result in non-payment of amounts owed to the Company, a demand for reimbursement of other amounts previously received by the Company under the contract, claims for additional damages, and/or fines and penalties, which could have a material adverse effect on the Company’s consolidated financial position, results of operations and cash flows.

Peter Powers

Peter Powers update : his company was a lobbyist for SAIC.

2011 06 29 Michael Bloomberg Letter Saic Citytime 600M Refund