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For Bloomberg, waste mars another digital project

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NEW YORK » Soon after taking office, Michael R. Bloomberg announced a plan to modernize the computer system that handles personnel information for New York City’s vast workforce. The $66 million project was to be one of the signature technological innovations of his tenure.

Nine years later, his administration has spent $363 million — and the work is far from done.

The administration has pressed ahead despite repeated warnings that the project is deeply troubled, according to a review of thousands of pages of city records, as well as dozens of interviews with officials and private contractors.

The administration’s own internal monitors regularly filed reports detailing chronic mismanagement, cost overruns and rampant waste.

“It was a runaway project,” said Raj Agarwal, a city official who managed the early stages of the new system before resigning in frustration over what he saw as the administration’s incompetence.

The administration has already weathered a scandal surrounding another sprawling project, CityTime, which was supposed to revamp the city’s payroll operations. The little-known tale of the personnel system offers fresh evidence that Bloomberg, who made his fortune revolutionizing information technology for Wall Street, has had difficulty carrying out a pledge to do the same with city government.

In both projects, the administration, bent on proving that outside consultants could improve the workings of government, ignored clear signs that the projects were foundering, the interviews and records show.

“No sense of economy, efficiency or value is evident in any area of the project,” the administration’s contract monitors wrote about the personnel system in March 2003, according to an internal report obtained under the Freedom of Information Law.

By this year, not much had changed. In February, the monitors said important parts of the personnel system were “not properly structured and organized,” adding that the project was “lacking executive leadership.”

This leadership vacuum contributed significantly to rising costs and delays, the interviews and records indicate. The administration delegated the project to officials who did not have the authority to make important decisions and who squandered opportunities to reduce costs. Its expensive private consultants often seemed not up to the task.

Yet throughout this time, aides to Bloomberg publicly portrayed the project as advancing smoothly. After a rudimentary version of the system went live, the administration even cited the project as one of the city’s best in 2007, giving it an “excellence in technology” prize and praising its “innovation and teamwork.”

Julie Wood, a spokeswoman for the administration, said the project had been an “enormous undertaking” and a success. She said the personnel system was already “making our human resources operation more efficient and cost effective.”

She brushed aside comparisons to CityTime. The two projects have “very little in common,” she said, “save for the fact that they are now both fully functional systems used daily by thousands of city employees.”

The city’s management of personnel information had been in the cross hairs of efficiency experts for years. No fewer than eight citywide systems, 200 agency systems and endless paperwork were required to administer employment benefits, to follow civil service rules and to move people in and out of jobs.

In June 2002, Bloomberg announced the first phase of the New York City Automated Personnel System, or NYCAPS. It was a website where people could apply to take civil service exams.

Twelve days later, a user stumbled upon a devastating security flaw that let him see other users’ personal information.

The new site — and the entire project — were quickly and quietly shut down. The city dismissed two consulting companies and the city official managing the project.

The Bloomberg administration vowed to fix NYCAPS, but officials did not seem to learn from their own mistakes, interviews show.

Rather than asserting more control over the project, the administration delegated a far bigger role to Accenture, the prominent consulting firm, which was charging the city as much as $383 an hour. Accenture had originally been hired to put the system together. Now, the administration told the company also to define what the system had to do.

When companies install such major software systems for their own use, they dislike giving both roles to the same contractor because it can lead to rising costs.

That is just what happened, according to records and interviews. After earning $8 million in 2004, Accenture was paid $26 million in 2005, $29 million in 2006 and $53 million in 2007.

The administration also brought in a new project manager, Agarwal, who had many years of experience setting up such systems in industry. But Agarwal, who worked for the Department of Citywide Administrative Services, said in an interview that he was bewildered by the administration’s oversight of the project.

Agarwal said he fought repeatedly with Accenture because the company was billing for too many workers on the project. But he said the administration seemed unconcerned.

Officials at the city’s Financial Information Services Agency, who were put in charge of the project by the administration in 2004, acknowledged problems with Accenture.

“Their profit model is to bring in as many junior-level staffers as they can,” said Rose-Ellen Myers, the agency’s deputy executive director.

The officials also acknowledged that lack of leadership resulted in costly, time-consuming “management by committee.”

“Anybody on the outside would’ve wanted that more clear: ‘I’ve got a vision, I want to do this, and everybody around me is going to go make that happen,”’ said Robert Townsend, the agency’s executive director. “That would’ve been a lot easier for us. But that’s not our reality.”

An Accenture spokesman, Jim McAvoy, blamed the Bloomberg administration for the project’s tortuous history.

The Bloomberg administration says a full-scale version of NYCAPS was put into use in March. But it is far from the project envisioned in 2002.

Hundreds of thousands of retirees do not have access to the site. Of the current workforce, tens of thousands of support-staff members and paraprofessionals in the schools are still not included.

Most glaring of all, the administration long ago abandoned its goal of modernizing the technology used to run the civil-service system, which was one of the top reasons for creating such an ambitious plan in the first place.

The Bloomberg administration has not fired or disciplined any city officials connected to NYCAPS besides the project manager dismissed over the 2002 security breach, a spokeswoman said.

Officials at the Financial Information Services Agency expressed scorn for the deal they inherited, saying it was too generous to Accenture. But the agency never renegotiated it.

Still, the agency argued that it made the best of a bad situation. By 2007, it had largely shifted to paying Accenture a fixed price for each task, rather than an hourly fee.

The financial agency says NYCAPS now gives city employees what many private-sector workers got long ago: the ability to access payroll and benefits information online. Transferring workers between agencies, administration officials said, now takes minutes instead of months.

The agency’s managers said they could imagine many new features that could be added to the system. But they acknowledged that each of those would cost more money.

And someone will have to make those decisions.

For years, the administration had ignored calls from project monitors that it appoint a senior official to formulate personnel policy. In December, Bloomberg named one — Wayne A. Rustin, a senior executive at IBM.

In April, Rustin abruptly resigned to return to industry.

The mayor has not yet named a replacement.

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