Council passes bill to control contract spending

On the same day that the parties involved in the CityTime scandal were ordered in Manhattan Federal District Court to pay more than $500 million to New York City, the Council passed a bill to require notification of cost increases for large contracts connected to capital projects.
Under the bill, the Council will be notified whenever a capital project contract worth at least $10 million is extended or modified in a way that increases its cost by 20 percent or more.
The bill would also require the city to notify the Council on any extensions or modifications that resulted in a 10 percent cost increase above the revised contract value, after the project is completed.
“It’s no secret, clearly, that the city has gone over-budget on many of its large projects,” Speaker Christine Quinn said before a stated meeting at City Hall on Wednesday, March 14. “These overruns have cost taxpayers millions of dollars.”
She said expensive contracts take money away from the city’s other important capital projects – such as schools, libraries, parks and infrastructure.
“The best way to limit cost overruns is to tightly manage contracts so that projects stay on budget,” Quinn said. “With timely notice to the Council when project costs start to climb, we can better monitor projects and contracts, we can determine whether it makes sense to continue to fund a project, or whether the city needs to make contract changes to check wasteful spending, or whether the city needs to walk away altogether.”
Brooklyn Councilwoman Letitia James, who sponsors the bill, said she brought CityTime to the attention of the Contracts Committee in 2008, while she was a member.
The CityTime contract was meant to monitor city employee timekeeping and to keep public workers from reporting false overtime hours. But lengthy delays and cost overruns led to a federal investigation into the contract.
Now, Mayor Michael Bloomberg, who received much of the blame for the CityTime scandal, must sign off on the contracts bill before it can take effect.
Also currently under investigation, which James said she helped bring to light, is a $380 million emergency communications transformation program, a contract which later ballooned to $666 million.
James said that contract costs increased more than twice the rate of overall budget spending in the last five years, equating to more than $10 billion in spent public funds. The majority of such expenditures pay for personnel and professional service contracts.
“There has been considerable evidence,” James said, “that some of these contracts are poorly managed and lack needed oversight.”