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Government HP The Almighty Buck

Comptroller Accuses HP of Overcharging NYC $163m On 911 System 92

Posted by timothy
from the oh-that's-only-3-figures dept.
benfrog writes "New York City comptroller John Liu has accused HP of overcharging New York City $163 million on upgrades to its 911 system. According to a statement put out by Liu, an audit of the project revealed that HP did not perform up to spec on the contract between April 2005 and April 2008 and did not bill the city correctly for time and materials on its portion of the contract to upgrade the 911 system. According to Liu's reading, the contract was supposed to cost no more than $378 million over five years, but in January the city projected it would have already spent $307m by mid-April and had to award Northrop-Grumman an additional $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. NYC's deputy mayor for operations was quoted defending the contract."
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Comptroller Accuses HP of Overcharging NYC $163m On 911 System

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  • by Anonymous Coward
    This is a serious question to the technical community of /.; how does this happen? None of the projects I've been on have been this horrifically over budget.
    • by jdgeorge (18767) on Thursday May 31, 2012 @04:10PM (#40171865)

      According the the Deputy Mayor for Operations, nothing was overbilled.

      The reason these giant IT projects almost always cost more than the original bid is that the purchasing entity (NYC in this case) frequently either hides or isn't aware of some of the items that will affect the cost.

      In a bad economic environment, this means there's ALWAYS someone saying "that company screwed this system up, delivered late, overbudget, and violated the terms of the contract!" Sometimes it's true that the contractor screwed up, but frequently the purchaser makes it impossible to deliver according to original cost projections.

      • In other words, NYC & HP weren't using change control documents.

        • by jdgeorge (18767)

          No, in other words, the Comptroller is deliberately making it SOUND as if HP and NYC weren't using change control documents.

          I don't know what the political situation is, but I'm SURE that the comptroller's office is trying to assert that cost overruns are the fault of somebody other than the city, and trying to force the contract's cost penalty (to the contractor) provisions to kick in, thus saving the city money.

          • If that were the case, HP would easily be able to provide CCDs that show the city requested additional items that caused the cost overruns.

            Not sure that's a wise strategy.

            • by jdgeorge (18767) on Thursday May 31, 2012 @04:56PM (#40172561)

              I bet HP doesn't want to fight a PR battle with a major customer and potential customer. Anything substantive they say about this would probably be in the course of a formal investigation.

              Hmmm... Maybe I'm reading this wrong and this is really a political battle between the Comptroller and the Deputy mayor for Operations, where the Comptroller is trying to pin the blame for what he asserts is an overly expensive project on the Operations guy.

              • That sounds more realistic.

                One guy blaming another guy, without seeing all the documentation.

              • No, you are reading this wrong. NYC Comptroller is running for mayor. He is using this "scandal" in order to get his name out in front of the voters. Personally, I think this makes him look like Eliot Spitzer. If you don't know what a sleazeball Eliot Spitzer was, read his Wikipedia page and realize that it was sanitized (not particularly because of political bias, primarily because the unsanitized version would sound too tabloid).
            • by Genda (560240)

              Unfortunately a lot of government contracts have all kinds of built in ways for vendors to bid low at the front and charge high at the back (particularly if a high level government official who somehow makes out is willing to run interference.) The Deputy Mayor says this was a good contract... perhaps there's a new McMansion in the Hamptons? Country Club Membership? Pools, Tennis Courts? Yacht? Heck, that wasn't a good contract... that was a great contract!!!

            • If that were the case, HP would easily be able to provide CCDs that show the city requested additional items that caused the cost overruns.

              Not sure that's a wise strategy.

              And if it is the case, they will happily do so if and when the case goes to court. In the meantime, HP is in a no-win situation. If they keep silent, they take a significant PR hit. On the other hand, if they make defend themselves, they may piss off the next mayor of New York (Liu is running for mayor) and that will be bad for business in the long run.
              Basically what you have going on here is John Liu trying to make a big splash to improve his chances in the upcoming mayoral election.

              • by dgatwood (11270)

                On the other hand, if they make defend themselves, they may piss off the next mayor of New York (Liu is running for mayor) and that will be bad for business in the long run.

                Let's try a proof by contradiction. Assuming for the moment that those documents do exist, that means that Liu or his underlings botched things, and he's trying to shift the blame. If HP went on the offensive and provided documentation that the news media could use to paint Liu as a liar trying to blame others for his own incompetence,

                • by b4dc0d3r (1268512)

                  Sounds like you are trying to apply logic to a business and/or political situation. Ass-covering, instinct, and emotion are more likely to be a factor, giving us nothing to observe worth basing a conclusion on.

                • I am sorry, nothing I have seen in this story indicates that John Liu botched anything. Why would the existence of those documents indicate that the city comptroller's office botched things?
          • by DaveGod (703167)

            No... One group is saying one thing and another group is saying another. There's no reason to be "sure" which or indeed if either if them is accurate.

            The comptroller claims to have documentary evidence and makes quite specific assertions based on them. This generally is a trait of someone who firmly believes they are being truthful, partly because statements of fact are easily debunked if not. NYC responds to this with wishy-washy comments and not statements of fact. The notion that the Comptroller was "mi

      • by Hatta (162192)

        The reason these giant IT projects almost always cost more than the original bid is that the purchasing entity (NYC in this case) frequently either hides or isn't aware of some of the items that will affect the cost.

        Whose job is it to ensure that contracts are properly specced out? Who manages that person? Fire the manager.

      • big projects get loaded with contractors and subs and that can add lot's of over head and lot's people sitting on there ass waiting for paper work or other stuff to get done.

      • by Anonymous Coward

        Typical Government Competitive bidding.
        You give me a vague idea of what it is you want done.
        Me and 12 other entities produce our best guess as to what it will cost.
        We do so with foreknowledge of the fact that the choice will be made by first tossing out the highest and lowest bidders.
        Everyone underestimates because they don't want to be the highest bidder and get tossed out, no real consequences since
        it is hard to loose the contract when you are the one who knows everything about it even if there is a rebid

    • Re: (Score:3, Insightful)

      by Grygus (1143095)

      This sort of problem is going to be inherent to a system that makes decisions entirely based on the lowest bid.

      • Re: (Score:2, Interesting)

        by Anonymous Coward

        I worked in IT for a city that was bidding on a new city-wide VoIP system. The awarded the project to the lowest bidder, of course. In the end, it ballooned to more than double of what the original bid was (costing more than the most expensive bid that was originally submitted). The stuff they did implement was shoddy at best. Nothing worked as it was proposed. A total nightmare.

        The City sued and they settled out of court.

    • by alen (225700) on Thursday May 31, 2012 @04:20PM (#40172039)

      sign contract
      start changing conditions of SoW or the hardware you want
      agree to cost overruns
      complain

    • by alen (225700)

      or sign contract to upgrade software
      contractor comes in and tells you that the new software won't work on current hardware. or new current hardware won't work with some old piece of junk you are running somewhere else
      new costs for buying new hardware

    • by Anonymous Coward

      Some advice? Think long and hard about getting into any sort of contract with NYC. There are so many layers of bureaucracy, so many consultants, so many unions, so many special interests that it is virtually impossible to get anything done with less time and money than was originally budgeted. No other city in America comes close. It's a nightmare.

      No matter the terms of the contract NYC will find that you do not comply. The only alternative is going to court, which is also not cheap. We had the opport

    • by kiwimate (458274)

      You're lucky. Most projects - around 60% or 70%, according to various studies - fail in some regard.

      "Fail" can mean they went over budget, took too long, or dropped scope. Lots of projects you work on may come in under budget, but have a very reduced set of features from what was originally described.

      Projects may fail for a variety of reasons. The number one reason for failure is usually cited as being poor requirements gathering. Scope creep is also a big problem.

      There are ways to disguise this. One easy w

      • For software projects, I've heard 90% are failures! About 30% are total failures, and 30% are partial failures. The arguable ones are the 30% that meet specs, but are late and/or over budget. Are those failures? How late and how much over do they have to be to rate as a failure? If they aren't considered failures, then 60% may be about right. The 90% figure counted all those as failures.

        It's an appalling rate of fail. And it seems a big reason for it is not incompetence nor that planning is that ha

    • by D'Sphitz (699604)

      A better question is, how do so many of these projects have budgets in the several hundred million dollar range? And we're not even talking about the feds, this is at the city level, ONE CITY! And it seems this article is giving them more credit than they deserve, other articles claim [govtech.com] they are $1 billion over budget, not the total cost mind you but that is the overrun, and another 7 to 10 years to go on top of that.

      About 2 years ago I read NYC was something like $600m over budget on some timekeeping soft

      • Colour me a non-American, but how is New York City's budget paid for by your federal taxes? In Australia, income taxes are collected at the federal level, and don't get apportioned to city councils - they have to levy their own taxes/rates etc.
        • by sjames (1099)

          The federal government grants large cities and states big chunks of tax money with strings attached in order to effectively extend it's power while sidestepping the Constitution.

      • by gorzek (647352)

        CityTime is a totally separate initiative, and in fact it was found that the contractor involved with it bilked the city out of tons of money. It cost about $700M, and in the end the city got a settlement for $466M. The original estimate for the project was about $68M, so the city will still have wound up paying about 3.5x that for it.

  • When is the last government contract that DIDN'T go more than 50% over budget?
  • by serviscope_minor (664417) on Thursday May 31, 2012 @04:04PM (#40171767) Journal

    How do I get in on the action? I do quite a bit of contract work these days, and it's almost impossible to pursuade any clients to accept any risk (i.e. by billing time, rather than a fixed cost) on R&D projects, even with a heavy element of R. How these large companies manage to pursuade others to write them a blank cheque is beyond me.

    And before anyone mentions the government, Oracle seems to be very good at doing that with companies and other non-governmental organisations. I don't think I've heard of anyone who has done business with Oracle and not been fucked over by them.

    I think it's just a reality distortion field which large companies have. Perhaps that's why they are large companies.

  • by fuzzyfuzzyfungus (1223518) on Thursday May 31, 2012 @04:11PM (#40171873) Journal
    You almost have to admire HP for fucking it up so badly that somebody voluntarily hired a defense contractor in the hope that they would be more competent and efficient...
  • Just opened my bill and saw a $1 surcharge added for enhanced911. My state's trying to make-up losses. Now I know why.

  • Do it in-house (Score:5, Insightful)

    by JDG1980 (2438906) on Thursday May 31, 2012 @04:36PM (#40172283)

    This is the second contract software project over $100 million that NYC has screwed up in just the past couple of years. (CityTime [slashdot.org] was the other.)

    NYC is a big city which no doubt has lots of custom software projects it needs to do. Wouldn't it make more sense to hire employees to do this? It couldn't possibly cost more than the $600 million (!) of overbilling on CityTime plus the $160 million overbilling on this new white elephant. And they'd have actual control over the people they hire, and be able to hold them fully accountable if/when something went wrong.

    • Re: (Score:2, Informative)

      by Anonymous Coward

      Wouldn't it make more sense to hire employees to do this?

      Not if they're eligible for pensions, can roll over their unused sick days and vacation time and cash them out on retirement, moonlight during working hours, and are protected from dismissal by a bevy of union-negotiated rules.

    • In a purely practical and objective standpoint, you are correct. It would make more sense to have employees of the city to do it.

      But this is not a practical or objective world. There are politics to be played; Backs to be scratched and palms to be greased. For those in that sort of position of authority, there is a game to be played. Who can they trade this favor of a contract (with the possibility of over-payment) for some future consideration or contribution?

      This is not the world of high-school civics tha

    • This assumes competent management hiring competent employees through a fair skills based hiring process and wisely managing the project over multiple administrations and the long term to achieve success.

      If you've worked in government or big business that one sentence should be enough to make your risk management tendrils wrap around your neck and attempt to strangle you.

    • Part of the problem with government contracts is that the project isn't just a business process with a uniform management struture. There's an operational hierachy that is trying to manage the actual project completion AND a political process capable, willing and actively engaged in influencing key elements of the project which effect it's effective completetion.

      In some ways an in-house staff is worse than contrators. Contractors aren't really captured by the political process and once they are awarded

  • by Loopy (41728) on Thursday May 31, 2012 @04:40PM (#40172337) Journal

    The old jokes about $500 hammers notwithstanding, it's amusing to me how corporations are almost universally blamed when government contracts overrun. Nobody seems to notice that it's only government contracts that do this regularly -- normal companies that do this go out of business or into bankruptcy.

    Back here in the real world, we call this piss-poor planning, usually traced back to marketing/sales causing constant feature creep or declaring ex post facto that a certain spec (that THEY WROTE!) doesn't meet customer/program demands.

    I wonder, has anyone ever seen a post-mortem review of a government contract? Does government ever even attempt to figure out where the inefficiencies lie and correct them or at least plan for them next round?

    Also, in before the NASA boogeyman shows up.

    • by JDG1980 (2438906)
      If you think private companies don't get gouged by badly-thought-out IT contracts, you haven't been looking hard enough.
    • Nonsense. The difference is gov't is usually has to say out loud how badly things went because they are accountable to the voters at large.

      Corporations do not brag about $100 million thrown down the toilet from a failed 5 years effort. It happens all the time. How often? Hard to say, because this is not something that anyone wants to be easy to track.

      For really complex projects, the failure rate could easily be 50%. But it is not reported as a failure. A new contractor comes in to finish the work and

    • I have yet to see an 'enterprise' project that does not have significant cost overruns. At any larger company I have worked at.

      Heck, my buddies company is in the 3rd iteration of trying to 'modernize' their core software. last time, some salesman convinced them to buy big sparc servers (as in many of them), and convert to java.. lots of $200/hour contractors..

      Didn't work like they wanted. director got 'moved' and new one brought in. Was going to move everything to .NET since it would apparently save a f

    • by geekoid (135745)

      "...only government contracts that do this regularly"
      this is completely false.

      "I wonder, has anyone ever seen a post-mortem review of a government contract?"
      I have, many times.

      " Does government ever even attempt to figure out where the inefficiencies lie and correct them or at least plan for them next round?"
      'the government" well, we don't have a single governments, so that's not a useful term.
      The agencies who I have audited and reviewed certainly did that.

      Now some facts:
      The vast majority(90%+) of governme

    • by Tablizer (95088)

      Part of the problem is that a government agency is encouraged to "reign in costs" by having fixed-price contracts. However, for a large systems it's very difficult to define a sufficient system up front because of the complexity involved.

      The Extreme Programming movement is partly a result of a backlash against "big design up-front", by the way.

      So when it's ordered as a fixed-price contract, unforeseen needs are inevitably going to pop up. Well, these result in cost overruns.

      I don't know of any easy fix for

  • by countach (534280) on Thursday May 31, 2012 @04:43PM (#40172367)

    More than half a billion dollars for a project to take 911 calls? WTF? I mean even in my wildest dreams, with mapping and links to other systems and who knows what, how in the heck does it cost that much?

    • Re:Amazing (Score:5, Insightful)

      by Anonymous Coward on Thursday May 31, 2012 @04:54PM (#40172535)

      I worked on the project for 6 months. I'm not surprised that HP over billed...but rather they got paid so much to do so little. Between Verizon, HP, Gartner, and a multitude of other contractors/sub-contractors, the program bled $$$! To top it off NYC employees on the program came in two varieties: 1. Lazy and waiting to retire with their pensions, or 2. Incredibly incompetent. In some cases a few "gifted" employees managed to be in both of those categories. The very few people who actually cared and wanted to do anything were shutdown, left out of meetings, asked to leave, or just berated for trying to do the right thing and move the program forward.

      I got stick and tired of the waste and being a part of a system which did very little work and enabled people from the top down to just simply show up and collect their paychecks. Employees are not rewarded for hard work but rather for how many people they know...they work very hard to protect their respective piece of the cake and do everything possible from allowing anyone to succeed in their jobs. It's a disgusting shame and now I really have seen - up close and personal - where my tax dollars were going.

      • I don't suppose you could blow a whistle or something, could you? Do you have enough to show actual malfeasance?
      • It seems like for this much money NYC could have built a whole new 911 system from scratch alongside the old one.

        Then flipped a switch to turn on the new system and turn off the old one when it was all finished.

        Of course, I know nothing about how this system was designed or built, but having dealt with a few projects, sometimes there is a great deal of expense trying to "save money" by upgrading the old system.

        I would be interested hearing more from your inside look at how they were trying to do this projec

        • by geekoid (135745)

          It only seems that way because you are pretty clueless about the scope of the project.

          How do you run two emergency systems side by side? 911 systems include call center, lines, vehicular communication, radio frequency, every emergence personnel, training, data housing, real time access backing up.
          And only about 4500 other things.

          911 systems are highly entrenched, custom systems.

      • You just described the hell that is being a competent sysadmin currently working for a branch of the DoD. I've only been here a few months, and I'm desperate for a fast exit to anything else.

  • A government IT and infrastructure project went over budget? What a shock. This article would be post-worthy if it was a government contract coming in UNDER budget, this is the norm not the exception. The people in charge of arranging these projects: A) Do not understand the actual requirements. B) Often do not know what they already have. C) Drastically underestimate or do not factor in at all the maintenance costs. D) Don't know what they actually want or how to articulate what it is they think th
    • by geekoid (135745)

      wrong. Most government projects are on or below budget. Most are highly detailed in the specs.

      It's nice you can spout off about something you know nothing about and continue to keep those old myths moving along.

      jerk.

  • by Anonymous Coward

    It was called ECTP, or the Emergency Communications Transformation Program. I worked in the PMO as one of many subs to HP. The fault for this, if indeed there was "overcharging", is with the City of New York. ECTP was run by the Mayor's Department of Information Technology and Telecommunications, or "DOITT", in conjunction with the NYPD and the FDNY. This project was plagued from the beginning with problems of the government's making.On a daily basis, the cops fought the firefighters , the firefighters foug

  • More governments need to nail those bastard that over charge and don't meet spec. Too many people are afraid they will look bad, so the force a bad system out and don't take recourse.

    Portlands former Mayor Katz come screaming to mind.

  • There is no God given right for America to have a job done without us fucking America up the ass so far that whoever pulls it out will be crowned the fucking King of England. .

    Carly Fiorina HP CEO, June 14, 2010

    There is no job we gave to Americans after we talked Congress into letting us re-patriate the taxes we dodged by relocating our jobs overseas, and with which we promptly paid ourselves huge bonuses and made a huge stock buy-back.

    Carly Fiorina HP CEO, June 14, 2010

    There is no job that is America's God-given right anymore, except mine.

    Carly Fiorina HP CEO, June 14, 2010

    There is no job for the 20,000 Americans we laid off so we could pay ourselves tens of millions in bonuses for that quarter...

    Carly Fiorina HP CEO, June 14, 2010

    There is no job for Americans at HP anymore because HP is going down like a crack whore in a housing project

    Carly Fiorina HP CEO, June 14, 2010

    There is no job that is America's God given right anymore.

    Carly Fiorina HP CEO, June 14, 2010

    http://videocafe.crooksandliars.com/heather/carly-fiorina-election-about-economy-and-d [crooksandliars.com]

  • ... what software they're running for the 911 center.

    Let me say that someone I know very well worked for the vendor who supplied the hardware and software for the City of Chicago 911 system in the late nineties. They heard that the vendor, PRC, which was first part of Litton, but sold around 2000 to Northrop-Grumman, had sold the system, Altaris, based on a prototype, *then* they had to make it actually work. By '97, they had, mostly, and it was to upgrades and enhancements. All of this ran on DEC Alpha fai

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