SAIC: CityTime Kickbacks for Every Consultant Hour

SAIC CityTime subcontract steering allegedly rewarded two SAIC employees for every hour worked by consultants hired through the project’s main subcontractor, Technodyne. The criminal indictment described a private incentive to add people, increase billings and delay completion of New York City’s payroll project. If you knew who approved the staffing, which consultants actually worked or where the subcontractor’s money went, you could see a part of the arrangement that the city’s bill did not explain.

Science Applications International Corporation became CityTime’s lead contractor in 2000. The project was supposed to modernize timekeeping and payroll across city agencies. In its account of the criminal filings, the Justice Department described a chain running from SAIC’s program manager through Technodyne to additional consulting companies. This government IT fraud case reaches the people selecting, supervising and paying for the work.

SAIC CityTime Subcontract Steering

The indictment alleged that SAIC’s program manager and its New York chief systems engineer agreed to receive kickbacks for steering work to Technodyne. The criminal filings alleged that SAIC hired Technodyne as a single-source subcontractor at the program manager’s request. That put the company receiving the work in a position to reward the people directing it there.

The Justice Department’s account of the indictment spelled out the price: Technodyne and its principals allegedly agreed to pay each of the two SAIC employees $5 for every hour worked by every consultant hired by or through Technodyne on CityTime. The alleged contractor kickbacks grew with the consultant hours.

More hours. More personal income.

The later criminal filings alleged that Technodyne obtained over $325 million in revenue from the scheme, while the two SAIC employees obtained approximately $15 million in kickbacks. The hourly payment formula fed a much larger business.

A separate stream allegedly rewarded a consultant retained by the city to help manage the project. The criminal filings described that consultant steering work to D.A. Solutions and Prime View, subcontractors of Technodyne, in return for kickbacks. Those filings identified the consultant’s uncle as the person running D.A. Solutions.

We expect the people managing a public payroll project to get it finished. Prosecutors described a payment formula that rewarded them for stretching it out.

A Contract Change Put the City on the Hook

The indictment alleged that a change in CityTime’s pricing shifted responsibility for future cost overruns largely from SAIC to New York City. In 2005 or 2006, the program manager, the city-retained consultant and others allegedly caused the contract to move from fixed price to fixed price level of effort.

That change mattered to the alleged kickback arrangement. The Justice Department said the program manager used his authority at SAIC to hire consultants at inflated rates, delay implementation and approve unnecessary staffing increases. The people accused of profiting from additional consultant work also allegedly helped move the cost of overruns onto the city.

The staffing comparison is striking. At the end of 2005, fewer than 150 consultants worked on CityTime, and an internal SAIC report said staffing was adequate. By the end of 2007, the number exceeded 300, according to the government’s account of the indictment.

On CityTime, the alleged contract change put decisions about staffing and cost overruns in the hands of people accused of receiving the kickbacks. A staffing approval and a pricing amendment belonged in the same investigation.

According to the later criminal filings, the scheme helped drive CityTime’s cost from under $100 million to close to $700 million.

What Are the Indicators of Government Procurement Fraud?

In CityTime, the indictment identified inflated consultant rates, unnecessary staffing increases, delayed implementation and timesheets approved for work that had not been performed. It alleged that the city-retained consultant used his authority in the city’s project oversight to approve timesheets for consultants on leave, consultants who had been fired and consultants working far fewer hours than reported.

That is a concrete false-timecard allegation: the approved hours diverged from the people’s actual work. A supervisor who knew a consultant had left could recognize something the approved timesheet concealed. A staffing employee could know when someone stopped working. A project accountant could see which hours reached the bill.

The same criminal account linked these billing allegations to the people directing the work and receiving benefits. For an insider, that connection matters. The person who understands the staffing decision may be different from the person who sees the payment to the manager. We connect those accounts to understand whether the approval and the payment belong to the same transaction.

A Warning Before the Staffing Surge

SAIC received a whistleblower complaint and conducted an internal investigation concerning suspicions about Technodyne, contract mismanagement and kickbacks to the program manager, according to the Justice Department’s account of the indictment. The government placed that warning beside the later growth in consultant staffing.

The warning makes the sequence especially revealing: someone had raised the specific subcontractor and suspected payments before the later staffing expansion. We would want to understand what the internal review examined, who made the subsequent staffing decisions and how those decisions reached the bills.

The 2019 Journal of Forensic and Investigative Accounting study Unique Characteristics of Management Override Fraud Cases compared fraud cases involving management override with cases involving a lack of internal controls. It found that override cases were more likely to involve corruption or financial statement fraud. Its point about strong controls is particularly useful here:

The study helps explain why we look at who could approve a transaction, change its terms or set aside an objection. A policy and an approval signature tell only part of that story. CityTime’s alleged incentive sat inside the authority to direct the work.

The Money Trail Ran Through Other Companies

The criminal filings alleged that kickback payments to the SAIC employees passed through Technodyne affiliates in India. They also alleged that proceeds moved through shell companies controlled by relatives of the city-retained consultant and through offshore accounts in Latvia. The subcontract award and the private payment could appear under different company names in different countries.

The Justice Department’s announcement of the guilty pleas said the consultant’s cousin pleaded guilty to conspiring to make false statements to a bank and the consultant’s wife to obstruction of justice.

The criminal filings described in that announcement alleged that the cousin lied to bank employees to open accounts for a shell company. They also alleged that the consultant’s wife omitted her control of shell companies from sworn disclosures submitted to the city. Those details show why the account holder, the person controlling the company and the person benefiting from a contract decision can all matter.

SAIC Accepted Responsibility for Its Employees’ Conduct

Under its March 14, 2012 deferred prosecution agreement, SAIC accepted responsibility for illegal conduct by its employees on CityTime. The company’s New York chief systems engineer had already pleaded guilty in June 2011 to offenses including conspiracy to defraud the city and receipt of kickbacks from Technodyne and its principals.

The New York City Department of Investigation investigated the case alongside the U.S. Attorney’s Office for the Southern District of New York. The prosecution’s account connected decisions inside the prime contractor, the subcontracting chain and the city’s project management.

What Proof Do You Need as a Whistleblower?

For subcontract steering, we connect the decision that directed work, the benefit paid for it and the charges passed to the public buyer. In a CityTime-type arrangement, the billing evidence ties staffing approvals and timesheets to payments. An insider’s knowledge can explain who actually made a decision that the paperwork presents as routine.

We put those records beside the approval history to understand how a private benefit connects to the public charge.

A 2022 review, Public Procurement Fraud Detection and Artificial Intelligence Techniques: a Literature Review, published in the Knowledge Management for Law Workshop proceedings, describes research using contract and business registers to identify connections between suppliers and contracting authorities. A company name on a payment becomes more informative when connected to who controls it and who sent it work.

You may know the staffing side, the subcontractor’s accounts or the internal objection. We work with you to establish how that knowledge fits the contracting and payment decisions.

Hidden Payments Behind Technology Advice

Allegations of payments for steering technology purchases also appeared in the civil case against EMC. The Justice Department alleged that EMC paid consulting companies to recommend its products to government agencies. EMC resolved those allegations together with separate pricing allegations in a False Claims Act settlement.

The parallel is the purchased recommendation. In CityTime, the indictment described personal payments tied to subcontracted consultant hours. In EMC, the government alleged payments to consulting companies for product recommendations. Both accounts put a hidden financial incentive behind a decision the government was paying someone to help make.

How Much Money Can a Whistleblower Get From a Qui Tam Lawsuit?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. For someone seeing similar subcontract steering today, our whistleblower experts assess the public funding, the contract and the evidence with government procurement whistleblower lawyers.

You Know Who Directed the Work

If you saw a subcontract steered, staffing inflated or a private payment behind an approval, speak with our whistleblower experts about who directed the work. We build the case with you and bring in government procurement whistleblower lawyers who understand subcontract decisions and billing records. We stay beside you through the case, with your knowledge of the work at its center.