SAIC settles CityTime case for $500.4 million

March 14, 2012

Science Applications International Corp. said Wednesday that it will pay $500.4 million in restitution and penalties under a settlement over 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, will allow the U.S. attorney to appoint an independent monitor for three years to review SAIC policies and practices, the McLean-based company said in a news release.

The U.S. attorney’s office has charged SAIC with one criminal count, to which the company has pleaded not guilty. The company’s statement said the U.S. attorney will defer prosecution based on SAIC’s “cooperation with the investigation, remediation efforts and acceptance of responsibility.” 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 that 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 the company 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 — although the company said there was no evidence that any of the three were involved in the fraud.

In a statement issued Wednesday, John P. Jumper, the company’s new chief executive, said SAIC had 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. “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.”

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