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Consultants Paid $50M Yearly, Says New DoITT Chief

May 30, 2012
By Marc Bussanich, LaborPress City Reporter
The Department of Information Technology and Telecommunications’ new Chief Information and Innovation Officer, Rahul Merchant, has only been on the job for about four weeks. But that didn’t stop City Council members at a hearing on Tuesday, May 29 from asking him how many private contractors the City relies upon to modernize and implement its IT infrastructure and what are they paid to do the work.  

DoITT offers a wide range of technology solutions to different City agencies and businesses, including IT Services, Project Management Services, IT Security, Wireless Technologies and Enterprise Application Services, among others.

According to the agency at Tuesday’s hearing, its Fiscal 2013 Executive Budget is approximately $442 million, which “is an increase of $24 million from the Fiscal 2013 January Budget and a net decrease of $27 million from the Fiscal 2012 current modified budget.”

Council Member and Technology Chair Fernando Cabrera greeted Merchant and then asked him if he had the chance to read the recent report by a Virginia-based consultant on the City’s $2 billion 911 emergency response system, a review ordered after the City’s poor response to the winter snowstorm in December 2010, which contains up to 80 recommendations for improvements to the system to stave off a repeat of 2010.

Merchant replied that he read only one report, which was an edited report.

Apparently, the unedited report contains about 200 plus pages.

“I’m not aware of any different copy that’s been made public,” insisted Merchant.

So Cabrera asked Merchant if he could comment on what recommendations his agency could implement based on Merchant’s reading of the copy he possessed.

But Merchant replied, “Council Member Cabrera, it will take me longer than four weeks to tell you which recommendations should be implemented.”

Cabrera went on to tell Merchant about a story in the New York Daily News that stated that Hewlett-Packard was overcharging the City to install just a few electrical cables at the 911 communications center in Brooklyn.

Merchant’s general counsel, Charles Frazier, refuted the news report, claiming that the reporter, veteran Juan Gonzalez, misinterpreted a memo.

“The opinion written by the reporter was based on a legal memorandum that a member of my staff wrote four years ago. Unfortunately, the reporter made three factual errors,” said Frazier.

Frazier explained that the actual cost to install the cables was not $355,000, as reported by the News. Rather, “the final contract was $260,000” and the scope of the work included “connecting 488 workstations and running 1,500 cables with 3,000 connections,” Frazier said.

Cabrera also noted that the News story revealed that the company was charging $374 per hour for union electricians, rather than the prevailing wage of $100 per hour.”

Frazier couldn’t answer Cabrera’s question about what was the hourly rate.

“I don’t have the hourly rate figure, but the electricians were paid at prevailing wages. If you calculate that the work was for 880 hours, plus time for waste disposal, the electricians’ wage and benefit rate was $100 per hour.

Finance Chair Domenic Recchia appeared late, as he was finishing a prior meeting. But he quickly asked Merchant, “The unedited report—you’re unaware of it?

“I haven’t seen it and am not aware of it,” replied Merchant.

“Did you ask anyone at City Hall for the unedited report,” inquired Recchia.

“I asked my deputies and they told me there wasn’t an unedited report,” said Merchant.

Recchia at one point said that maybe the meeting should be adjourned until Merchant and his staff could be prepared to testify. It didn’t come to that as Recchia informed Merchant that the Committee would be forwarding questions to his office and would look forward to the agency’s answers by week’s end.

Recchia then told Merchant, “A big issue with the 911 system, which you need to look into, is the number of consultants being paid millions of dollars, who in turn hire subcontractors that we don’t know who they are. There are many qualified people in-house that can do the work.”

When Recchia asked how many consultants are working agency-wide, Merchant said approximately 603 being paid $50 million annually.

Recchia also requested that the list of contractors be submitted to the Committee by week’s end.

When asked in an interview if he would bring more work in-house rather than rely too heavily on outside consultants, Merchant said, “We have to combine the expertise we have in house with the expertise from the outside.”

He added, “The goal is to try to do as much work as we can from our current in-house workforce, but when there is a need for a specialized skill set, there’s a fine balance. We’re working on it, but I can’t say for sure that this is going to go up by X, and the other will go down by Y.”

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