nas P. DINAPOLL Siare Corre N10 Save Sree ‘Auman, New York 12236 STATE OF NEW YORE ‘OFFICE OF THE STATE COMPTROLLER December 21, 2010 ‘Samuel Schaffner Assistant Chief Procurement Officer New York City Transit Authority - Materiel Division Two Broadway New York, NY 10004 ‘Dear Mr. SchalTner: Re: Contract DW32686 Science Applications International Corporation (SAIC) Contract for the VHF Radio System Upgrade, Phase 1, in the Boroughs of Brooklyn, Manhattan, Queens, and the Bronx (Solicitation Number W-32686) After a preliminary review of the documents provided with the submission of contract 1DW32686 to Science Applications Intemational Corporation (SAIC) for the VHF Radio System Upgrade, Phase I, in the Boroughs of Brooklyn, Manhattan, Queens and the Bronx (Solicitation Number W-32686), this Office is returning the contract disapproved. The reason for this Office’s disapproval is a recent and potentially significant vendor responsibility issue, namely whether there is any SAIC involvement in the CityTime consultant scandal where consultant fraud and money laundering charges were recently announced by the United States Attorney’s Office and, which on December 14, 2070, resulted in a federal criminal complaint against individuals (not employed by SAIC) who allegedly arranged for fraudulent payments from New York City. While SAIC and its employees are not at this time accused of criminal wrongdoing, the exact nature of SAIC’s involvement in this matter remains unresolved and requires additional review and assessment by your office. This responsibility issue is especially significant given the size of the current proposed contract ($118 million), and is heightened by the other allegations, among other things, of mismanagement and cost overruns by SAIC on the CityTime contract. OSC officially received this contract for review from the New York City Transit Authority (“the Authority” or “MTA”) on December 17, 2010. In advance of this contractSamuel Schatfiner “ December 21, 2010 submission, the Authority provided OSC a file containing various Vendor Responsibility documents on December 9, 2010. Included was an email from the Authority's Vendor Relations Unit briefly relaying SAIC’s history with the CityTime project. According to the file, it appears that much of this information was provided by the Executive Director of the Oflice of Payroll Administration (OPA), Joel Bondy, whose office was the lead in the CityTime Project. Mr. Bondy is alleged to be a long-time associate of one of the consultants who is named in the criminal complaint. According to press reports, Mr. Bondy bas since been suspended without pay by New York City, In light of the circumstances, you will need to find an independent source to verify SAIC’s performance on the CityTime project. Also included in these documents were SAIC’s Vendor Responsibility Questionnaire, dated February 23, 2010, and a memo to the president of the New York City Transit Authority identifying Significant Adverse Information (SAI) dated October 14, 2010. Neither the Vendor Responsibility Questionnaire nor the SAI included information on the CityTime project. Based on the above, the Office of the State Comptroller (OSC) cannot approve the contract at this time. If, after further review, the Authority can adequately support and document that SAIC is a responsible vendor, the Authority may resubmit the contract for our review. We may also require mote detailed information on other SAIC vendor responsibility issues, Any contract resubmission would require, at a minimum, a written assessment of the following items: 1. The relations complaint; ip between SAIC and the six individuals named in the criminal 2. SAIC’s role, if any, in the submission of allegedly fraudulent invoices to New York cit 3. SAIC’s culpability, if any, with respect to payments to its subcontractor based upon allegedly fraudulent invoices (which ultimately flowed to the individuals named in the criminal complaint); 4. The relationship between SAIC and Office of Payroll Administration Executive Director Joel Bondy; 5. An MTA Inspector General opinion on SAIC vendor responsibility; 6. An independent assessment of SAIC’s role in the cost overruns associated with the CityTime project; 7. The controls the Authority has in place to prevent similar overruns and fraud from ‘occurring on this contract; 8. Whether SAIC will employ consulting firms, subcontractors and sub-subcontractors ‘on this MTA project and, if so, the identities of each; andSamuel Schaffner December 21, 2010 9. Roles any of the key individuals associated with the proposed contract may have had in the CityTime project; In addition, upon resubmission of this contract, OSC requires that the Authority provide us with an updated Vendor Responsibility Questionnaire for SAIC and a new responsibility determination, OSC also requires that the Authority provide OSC with documentation of the process it uses to vet subcontractors identified for this project. Such documentation should include a summary of resources used to assess responsibility, any vendor questionnaires submitted by these entities, and the final vendor responsibility determination for each subcontractor. Finally, any contract resubmission must be accompanied by evidence of MTA Board approval of such resubmission. OSC expects MTA to do the necessary due diligence before committing taxpayer dollars on this $118 million project. Your attention to this matter is greatly appreciated. Sincerely, Cheulstl € Bra Charlotte E. Breeyear Director Bureau of Contracts flr vk