SAIC sacks 3 execs in wake of CityTime scandal probe

Science Applications International Inc. has fired three key executives for alleged failures of proper management during the CityTime kickback scheme in New York City.

In an Oct. 24 memo to all employees, SAIC CEO Walt Havenstein said, “The kind of behavior we have seen in CityTime is criminal and is an affront to everything SAIC stands for as a company.”

“That's why the actions of those involved are so appalling to me and to all of us at the company,” he added.

The CityTime project, launched in 1998, was designed to update and streamline municipal employee records. But investigations by prosecutors, following a whistleblower’s tip, showed CityTime to be an international conspiracy with contractors earning kickbacks for inflated hours billed to the city. Two of those indicted have fled the country.

A comprehensive review of the CityTime program, including a review of management performance, concluded there were failures of management with respect to the program and that certain management changes are essential, Havenstein said.

“Consequently, Deborah Alderson, Defense Solutions Group president; John Lord, deputy group president; and Peter Dube, general manager of the Enterprise and Mission Solutions Business Unit, have been removed from their positions and are no longer with the company,” the memo said.

On an interim basis, Thomas Baybrook, general manager of the Defense and Maritime Solutions Business Unit, will act as group president; and Rick Reynolds, currently deputy general manager of the Enterprise and Mission Solutions Business Unit, will serve as general manager of that business unit.

New York Mayor Michael Bloomberg has called for SAIC to repay the city more than $600 million spent on the project.

In his memo to employees Havenstein said, “SAIC developed and delivered the customized, one-of-a-kind workforce management system that is CityTime covering 163,000 city employees. It is fully implemented, delivering results, and saving time and money for New York City today.”

At least 11 people have been indicted so far, including Carl Bell, the project’s main systems engineer.

Bell was fired by SAIC in January. He pled guilty in June and in a plea agreement with federal prosecutors is cooperating with the ongoing investigation.

SAIC project manager Gerard Denault was indicted in June.

Havenstein said SAIC is aware of no evidence that the three executives who were fired had any personal involvement in the fraud, “and while each has made valuable contributions to SAIC, we must maintain the highest standards for all of our employees and for our industry, beginning with our management team.”

Havenstein said SAIC’s response includes “building vigorous safeguards against such behavior in the future.”

Among the safeguards, the company has hired the Gibson Dunn law firm to undertake a thorough review of key SAIC policies and practices and to recommend changes that will strengthen the culture of ethics, accountability, and compliance.

In addition, he said, the special committee of the board overseeing the company's response has engaged Guidepost Solutions, led by its chairman, Bart Schwartz, a former chief of the Criminal Division of the U.S. Attorney's office in New York City, to undertake its own review and monitor SAIC’s efforts in response to this matter.

SAIC Inc., of McLean, Va., ranks No. 6 on Washington Technology’s 2011 Top 100 list of the largest federal government contractors.