Millions In School Contracts Also With Company At Center Of CityTime Scandal

By Andrew J. Hawkins

Back in February, Comptroller John Liu rejected an $8 million contract with the consulting firm Spherion for its connection with CityTime, the payroll and timekeeping system.

Since then, the scandal has ballooned into a full-on financial black hole, with over $80 million alleged to have been embezzled by contractors over five years, and hundreds of millions more in over cost. U.S. Attorney Preet Bharara’s office is pursuing charges, with more action expected against Office of Payroll Administration executive director Joel Bondy expected this week.

CityTime was not the only Spherion contract. The company was paid almost $20 million from the Department of Education for “systems development for high school admission,” school officials said. The New York City School Construction Authority also has paid hundreds of thousands to Spherion for audio/video equipment procurement, according to city records.

Spherion was tasked with monitoring how the city spent its money on CityTime. Liu moved to freeze all contracts with Spherion after the head of the city Office of Payroll Administration was suspended without pay last week.

Michael Loughran, a Liu spokesperson, said that there were currently two active contracts with Spherion: a $2.75 million contract for consultant hiring with the Financial Information Services Agency, which oversees various streams of the city’s financial data, and a $284,000 contract with the Department of Education for system integration training. To date, the city paid Spherion $419,305 combined on just those two contracts, both of which were frozen in the wake of the CityTime revelations. The School Construction Authority’s contracts with Spherion were not, though, Loughran said, because they are not overseen by the comptroller’s office.

“The pay freeze implemented by Comptroller Liu relates to these contracts and any further request for contractual related payments of any kind,” Loughran said.

Spherion is described on its website as a “leading recruiting and staffing provider that specializes in placing administrative, clerical, customer service and light industrial candidates in temporary and full-time opportunities.”

DOE saw the firm as a “body shop,” placing administrative and support staff at hundreds of schools. The money paid to Spherion--$17.3 million over nine years—is a drop in the bucket, in relation to the agency’s yearly $20 billion budget, officials argue.

Barbara Morgan, a spokesperson for DOE, said that Spherion’s contract has been suspended in light of recent news.

“We have stopped payments to Spherion and will be conducting an expedited investigation into their contracts with the DOE to ensure that city funds were used in a lawful manner,” Morgan said.

Marli McCleary, a spokesperson for Spherion, did not return a request for comment.