HR Administration

Clocking CityTime, the Craziest Contract Ever

By Jeremy Smerd

Jul. 1, 2010

In March 2003, executives at software company Science Applications International Corp. were scrambling for a way out of a deal with New York City to build a timekeeping system for its 167,000 municipal employees.

The contract was worth $114 million. But SAIC executives realized soon after taking over the work from a previous contractor that there was no way they could build a system for that amount. The city’s workforce was too large, its union rules too complex.

“We should have killed the deal right there,” says Gerard Denault, vice president and operations manager of SAIC.

The company fired the employee who signed the contract, but the city didn’t let SAIC off the hook. Instead, lawyers at the Office of Payroll Administration, the agency overseeing the project, insisted that SAIC fulfill its end of the deal. With the remaining city funds plus $30 million of its own money, SAIC developed the framework for the software that would eventually be called CityTime.

But what started in 1998 as a $63 million project has ballooned today to more than $700 million and counting. Less than half the municipal workforce—about 77,000 employees—are expected to be on CityTime when SAIC’s contract with the city expires in September.

Delayed and over budget, CityTime has become an easy political target for unions expressing privacy concerns and politicians staring down budget cuts. Many of the delays and wasted dollars can be traced back to foot-dragging and internal politics within city agencies, as well as a failure by city administrators to grasp, at least initially, the technical complexity and political perils of the enormous project.

As the project nears its final phases, the completion of CityTime is in no way assured.

SAIC needs the board of the Office of Payroll Administration to approve a three-year contract extension worth $108 million to transfer all remaining workers to the system, and then transition the maintenance of the system over to city workers.

The two-person board that approves CityTime contracts is split, however. While the member representing the Bloomberg administration stands behind CityTime, recently elected City Comptroller John Liu and his board member do not. Liu says he will not approve any new contracts until the completion of an audit of the project by his office this fall.

The Office of Payroll Administration and its executive director, Joel Bondy, who has already come under attack for lax management of $200-an-hour CityTime engineers, have kept a low public profile. SAIC, angered over the way it has been portrayed in the media, broke its silence by speaking with Crain’s New York Business, a sister publication of Workforce Management.

 The private contractor
“I don’t think people understand the complexity of this system,” Denault says.

He then lists a number of reasons why CityTime took so much money to build and why it is an important step in modernizing the city’s operations. New York City employs 6,000 people solely to track the time of workers, and there are 4,000 different ways to classify “time” in the city workforce. Every month, the Police Department generates 1.5 million time sheets, and each one must be stored for 55 years by law. Timekeepers at the department have a 30 percent error rate, costing the city hundreds of millions of dollars annually in overpayments and miscalculated pensions. And underpaying workers leads to costly labor grievances.

An assistant to Denault opens a 2-foot-wide green metal binder. Inside are timekeeping sheets that look like box scores for a very long, very high-scoring Yankees game. This is how the Department of Sanitation used to keep time, Denault says. The time sheet’s bewildering system of marks and scratches reflects the complexity of union contracts, each one representing a different pay rate: regular shifts, Saturday shifts, plowing snow on Saturdays, plowing on a Tuesday, driving a garbage truck, driving a pickup truck.

CityTime has changed all that.

Now timekeepers use drop-down menus to take roll call. Employees report in when they arrive and leave work using electronic hand readers or a Web-based time-tracking system. CityTime translates the hours a person works into how much a person gets paid.

“Now, what took an hour takes 15 minutes,” Denault says of how CityTime has simplified the work of the city’s timekeepers.

 Bureaucratic roadblocks
Building the system was a technical challenge; implementing it has been a political one. The mayor’s OPA board member, Mark Page, urged SAIC to roll out the system at a pace each agency felt comfortable with, according to the company. “You can’t push this system onto agencies before they’re ready,” he told SAIC executives through an interlocutor, OPA executive director Bondy.

The Office of Payroll Administration says most requests to delay the implementation of CityTime “are usually granted, despite the fact that the agencies and their staff are already fully prepared.” Ensuring acceptance of the system by city employees was “deemed to be more important than simply implementing CityTime as quickly as possible.”

SAIC expected some pushback from agencies—and got it. One delay SAIC says has become emblematic of the pointless waste that has endangered the project came from the Human Resources Administration. SAIC says it was ready to bring the agency’s 15,000 employees onto the system three years ago, but Jane Roeder, a deputy commissioner who oversees AutoTime, its current time-management system, refused to cooperate.

It was only when Roeder announced her June 18 retirement that SAIC was able to schedule the transition. SAIC says it plans to bring 5,000 employees onto CityTime the weekend of July 18 and the rest of the department by the fall.

“This should have been done three years ago, and it cost the city millions of dollars,” Denault says.

Roeder declined to comment. A spokeswoman for HRA would not address whether Roeder’s departure cleared the way for bringing the agency onto CityTime, except to say that Roeder is one of several officials in charge of the agency’s time management system.

The Office of Payroll Administration said HRA was not brought over to CityTime sooner because it had a timekeeping system and “was already realizing some benefit.”

But SAIC rejects this logic. The AutoTime system was costing the city $3 million a year simply to license the software. Ending it would have been easy and would have brought immediate savings, in part because the maintenance of the entire CityTime system is more cost-effective. When fully rolled out to 167,000 employees, the system—including software, hardware and personnel—will cost the city $29 million a year to maintain. It would be even more cost-effective if the city eventually rolls out the system to the Department of Education’s 136,000 employees as well.

By next year, CityTime should start paying for itself in cost savings, SAIC says.

 Union opposition
One of the most vocal opponents of CityTime has been Local 375 of DC 37, the Civil Service Technical Guild, whose 6,800 members have a presence in 30 city agencies. Jon Forster, a union representative, says his members objected to having to place their hand on palm readers that he says are unsanitary. Having to “punch in” makes the employees, who are primarily engineers and architects, feel like “we’re on the factory floor,” all of which he calls bad for morale.

The union mounted a campaign to derail CityTime, outmaneuvering both the city and SAIC. Its protests outside the Parks Department and the Department of Design and Construction forced SAIC to develop a Web-based alternative to the palm scanners, at a cost of “several million dollars extra,” Denault says. In the end, many of the union members for whom the system was designed were not permitted by their managers to use it. Those managers, instead, preferred the original palm scanners.

One of the biggest grievances among union members is that CityTime may hit workers’ paychecks. “Now you’re going to turn around and nickel-and-dime us with these time clocks,” Forster says.

What unions call nickel-and-diming, city officials call accurately tracking labor costs. CityTime will ultimately help managers identify workers with high overtime costs or excessive sick-day absences. It can also be used during labor negotiations to gauge the cost of small changes in labor contracts.

 Comptroller’s control
Regardless, both SAIC and the city—which answered questions by e-mail and turned down requests for an interview with Bondy—say the delays should not come as a surprise to John Liu’s office. “The offices of both [OPA] directors reviewed and approved all contract amendments and encumbrances in their administrative roles,” OPA’s response reads. “The Comptroller’s Office registered all contract actions.”

Although Liu took over from his predecessor in January, he retains the same chief information officer, Michael Bott, who attended quarterly meetings that monitored CityTime’s progress and discussed its delays.

Liu is following up on concerns raised during his tenure on the City Council contracts committee that SAIC and its contractors were paid rates labeled exorbitant by at least one council member. SAIC billed the city $400,000 for about 2,000 hours of work by one of its contractors—a rate of around $200 an hour that covers salary, administrative and other SAIC expenses.

SAIC is desperate to complete the project, in part to sell the system to other municipalities under a proposed revenue-sharing deal with the city. CityTime, it says, is the only software of its kind that can manage the complexities of tracking a big, unionized government workforce.

If SAIC’s contract is not extended by the end of September, however, the system will be not only incomplete, but also worthless.

“If we walk out on September 30, the system shuts down,” Denault says. “The city cannot maintain the system without us. They have no staff to support it. The option is: Give us an extension, or carry the system out [yourself].”

Workforce Management Online, July 2010Register Now!

Jeremy Smerd writes for Crain’s New York Business, a sister publication of Workforce Management.

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