HP 'overcharged New York City by $163m' on 911 system
IT titan fires back: 'Read the contract'
New York City comptroller John Liu has accused Hewlett-Packard of overbilling the Big Apple to the tune of $163m on a long-delayed upgrade to the 911 emergency call system. HP says Liu is misinterpreting the contract and it is delivering its part of the 911 call center upgrade under budget.
According to a statement put out by Liu, the comptroller's office did an extensive audit of the Emergency Communications Transformation Program (ECTP) project – which is managed by the city's Department of Information Technology and Telecommunications (DoITT) – back in March. At the time, it reckoned that the project, which was awarded to HP in 2004 and was supposed to be done in 2008, was going to take until 2015 to complete.
Having gone through that ECTP audit report (PDF) with a fine-toothed comb, Liu is accusing HP of not performing up to spec on the contract between April 2005 and April 2008 and for incorrect billing for time and materials on its portion of the contract to upgrade the 911 system used by NYPD and the Fire Department City of New York (FDNY). DoITT has been chastised, as it was back in March, and told it needed to put in place better vendor selection and payment control processes.
By Liu's reading of the original ECTP contract, the system was supposed to cost no more than $380m over a five-year term with two options to extend until June 2012. In January of this year, the city projected it would have spent $307m by mid-April. In January last year, Northrup Grumman was awarded $286m to do a second part of the original contract, ballooning the cost to $632m, and Liu's office is now estimating that cost overruns beyond this could be as high as an additional $362m.
The equipment and systems integration portion of the original HP contract was supposed to cost $270m, with $156m coming from hardware and software and $114m for integration services.
The comptroller is suggesting that HP has overbilled the city by $113m during the 2005 through 2008 time period despite "unsatisfactory performance" that meant the HP was not entitled to the funds, as far as Liu's office is concerned. Liu is also estimated that based on a sampling of timesheets filled out by HP and subcontractors on the project that found $2.5m in time and material charges that as much as $50m in similarly unjustified costs might have been added to the ECTP contract by HP. Add it up, and the city could recoup as much as $163m from the HP portion of the contract by the comptroller's math.
"With one month to go before the City's budget is ratified, and with devastating cuts on the table, taxpayers should be outraged at the fleecing that transpired under City Hall's watch," Liu said in his statement.
Liu, who is no stranger to controversy himself and who is in the midst of a fundraising scandal of his own, has handed off the report to the Manhattan District Attorney's office for a review to see if fraud charges should be brought against HP.
Cas Holloway, Deputy Mayor for Operations for the City of New York, was quoted by the Associated Press defending the HP contract, saying that Liu "is not going to allow the facts to get in the way of the story he wants to tell" and adding that Liu was misreading portions of the HP contract and that there was "rigorous oversight" of the billing.
HP seems to agree with the Deputy Mayor in its assessment of what HP was originally contracted to do, and that was only to deliver the Public Safety Answering Center (PSAC1) system, not a unified computer-aided dispatch system or the PSAC2 system that was awarded to Northrup Grumman.
"HP is undergoing a process to review and analyze the audit, checking its findings against our records," an HP spokesperson tells El Reg.
"HP is committed to helping the city of New York build an effective and innovative 911 call center for the city’s greatest public servants – those at the front lines of emergency response every day. To date, HP's work on the ECTP project has been delivered under the originally estimated budget of $380m, and HP anticipates that when its scope of work is 100 per cent complete at the completion of Phase 1 on June 30, it will remain under the original budget." ®