New York’s $600 Million Fraud Shows Privatization Doesn’t PayMischa Gaus | July 27, 2011
How did New York City plan to prevent time theft by city workers?
By hiring contractors who would, it turns out, steal $600 million from the taxpayers. One of their crimes, prosecutors allege, was to file bogus timesheets claiming extra hours.
The payroll and timekeeping system called CityTime was originally supposed to cost $63 million but ballooned to $750 million over the last decade. It introduced biometric palm scanners to ensure city workers punched in and out appropriately.
Only rank-and-file workers were subject to the electronic surveillance, however; managers—and contractors—were exempt.The fraud came as no surprise to Jon Forster. Secretary of AFSCME Local 375...... The union uncovered documents showing that CityTime was incurring $100 million price spikes each time the no-bid contract changed vendors.
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“This is the patronage agenda of corporate America, to evade the rules and regulations of merit and fitness that civil service established to limit patronage,” said Arthur Cheliotes, president of Communications Workers Local 1180, which represents the clerical workers who used to keep the city’s timecards.
The city has requested $600 million in repayment, but probably will get only a few hundred million.
LESS WORK FOR MORE MONEY
Forster says the fraud hasn’t taught city leaders anything about contracting out. Even if there had been zero fraud, privatizing still cost the city buckets of money. CityTime consultants each made $400,000 annually, Forster said, while city employees who do the same work make $75,000.
Now the work is being handed back to those city employees (and 90 of them are doing the work of 200 consultants).
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Mayor Michael Bloomberg, a billionaire who owns the giant software and media firm that bears his name, has made shifting public services into private hands a hallmark of his three-term administration—despite mounting evidence that it costs the city much more.
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A study the union released two years ago showed that New York pays two and three times as much per hour for nurse, IT, and call-center contractors as it does for comparable city workers.
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“There’s something deeply contradictory happening when we can waste $600 million and threaten to close firehouses and fire teachers,” Forster said.
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http://labornotes.org/2011/07/new-york-600-million-fraud-shows-privatization-doesnt-pay
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