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.

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.

Reader Comments

Mon, Oct 7, 2013 Interested Observer

SAIC Alumnus-Your claim of monitoring the project from 1998-2003 is quite interesting considering that SAIC didn't even have the contract until 2000. Maybe SAIC was such a nice company that it monitored projects ran by other companies. Also, it's Group "President" which was what real SAIC'ers called them--not "Group Managers." Otherwise a pretty good and believable comment.

Thu, Sep 26, 2013 saic alumnus San Diego

I was on the SAIC independent corporate review team that monitored this project from 1998 to 2003. Problems started when Dr. Beyster the founder of SAIC, retired. He was a strong proponent of having a top-level independent corporate watchdog group monitor high-risk contracts such as this. Mr. Dalhlberg, the new CEO, immediately abolished this independent audit group and directed that the top managers in the direct management chain monitor and audit their own programs for reasons of "efficiency". Effectively it allowed no independent oversight of CityTime. The fox was now guarding the chicken coop. The responsible Group Manager was so happy the contract expanded from $63M to $700M , which resulted in her getting large bonuses, that she never questioned that this increase could be fraudulent; she just watched the money roll in. After the scandal broke, she and her Deputy were fired for their lack of management oversight.

Fri, Jan 11, 2013 Divorced from SAIC Off The Grid

I was hired by SAIC and worked in my job 12 years with Kudos from up and down the line until one day I reported something SAIC didn't want to deal with and did nothing about except give me a layoff notice. In hindsite they did me a favor. I dumped all their stock and have been unemployed for over a year. I will never again work for one of the beltway bandits. As for SAIC, From the CEO on down they preach integrity, honesty, do the right think etc. but it isn't so inside the house. Can you say RAT SHIP. Jump Forrest Jump!

Fri, Oct 28, 2011

SAIC should also fire Havenstein and the rest of the execs since he and the rest of the execs are "management". Management makes the big bucks when the little people do all the work so why should they not get fired when the little people do something wrong?

Wed, Oct 26, 2011 SAIC ALUMNI

As a former long time employee of SAIC, it greatly saddens to me to hear about this development. SAIC has stood for honesty and ethical behavior for over 40 years. It's sad to see the damage a few unethical are doing to that record.

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