SAIC settles CityTime case for $500.4 million

McLean-based Science Applications International Corp. said Wednesday it will pay $500.4 million in restitution and penalties under a
SAIC has already recorded a charge of $232 million in anticipated losses connected with CityTime. (Jeffrey MacMillan - Capital Business) settlement on its CityTime program with New York City.

Additionally, the settlement, reached with the U.S. Attorney’s Office for the Southern District of New York, allows the attorney’s office to appoint an independent monitor for three years to review certain SAIC policies and practices, the company said in a press release.

Though the attorney’s office has charged SAIC with one criminal count — to which it has pleaded not guilty — it will defer prosecution based on SAIC’s “cooperation with the investigation, remediation efforts and acceptance of responsibility,” the company said in a statement. If SAIC complies with the deferred prosecution agreement, the charge will be dismissed in three years.

SAIC has already recorded a charge of $232 million in anticipated losses connected with CityTime, an employment timekeeping system the company managed for New York City.

Two former SAIC employees have been charged with conspiring to defraud New York, and New York Mayor Michael R. Bloomberg (I) has called on SAIC to reimburse the city for the more than $600 million it spent on the program over an 11-year period.

Last year, SAIC said it removed three top executives — Deborah Alderson, president of the company’s defense solutions group; John Lord, her deputy; and Peter Dube, general manager of the enterprise and mission solutions business — though the company said there was no evidence that any of the three were personally involved in the fraud.

In a statement issued Wednesday, John P. Jumper, the company’s new chief executive, said SAIC anticipated a high settlement cost and was ready for it.

“We in SAIC who have dedicated ourselves to higher ethical standards have felt victimized by this breach of trust as has the City of New York,” he said in the statement. “We also understand that the Company is responsible for the actions of all its employees, and we accept that responsibility, as well as the accountability that goes with it.”