C&BP Seeks Letter NYC Agency Doesn’t Want to Reveal
Since last summer, after receiving a tip, Checks and Balances Project has been looking into questions about NYC’s lucrative contract with software company Ivalua to custom-build an eProcurement platform for some 40 city government agencies.
Ivalua was a little-known French technology company, with offices in Silicon Valley, when on May 11, 2016, its fortunes changed. That’s when Anne Roest, then-Commissioner of NYC’s Department of Information, Technology and Telecommunications (DoITT), signed a $30.5 million contract with the company.
Ivalua had no experience building eProcurement systems for governments in the United States. But according to the contract, taxpayers could rest assured that if something went wrong with the $30.5 million contract, Ivalua would have to give up a $25 million bond for non-performance:
Unfortunately, things did go wrong. A detailed timeline in DoITT’s Statement of Work was not met. In fact, two years later, internal documents show (see: 2. Scope & Solutions Overview) that Ivalua’s design wasn’t completed and requirements for building the platform had not been validated.
Nevertheless, a lot of taxpayer money was spent on a company that seems to have been learning on the job. According to the official Checkbook NYC, the City paid Ivalua $16.14 million in the first two years of the contract. By January 1, 2019, when the contract was “assigned” to the Mayor’s Office of Contract Services, the spend had risen to $27.55 million.
The expensive project to custom-build an online eProcurement platform for government agencies didn’t work as promised. But instead of cancelling the $30.5 million contract, NYC DoITT increased it by $15 million to a new “contract maximum” of $45.5 million.
Did the City enforce the provisions of the $25 million bond and collect the funds due to Ivalua’s failure to achieve “timely performance of its obligations?” It doesn’t seem so.
Performance Bond Letter
Section 5.3.4 of the contract, which was notarized on June 16, 2016, includes this curious provision:
“Notwithstanding any of the foregoing, in the event that the terms and conditions of this section conflict with the terms and conditions of the Performance Bond Letter then the terms of the Performance Bond Letter shall control.”
Our initial Freedom of Information Law (FOIL) request filed on August 2, 2018, asked for “any amendments filed under the eProcurement solution contract (No. CT185820161425412)” and “Any additional documents or agreements executed with Ivalua,” among other items. DoITT did provide us a few documents.
But DoITT never sent us the Performance Bond Letter.
An “Undue Burden”
On June 10, 2019, DoITT General Counsel Michael Pastor sent C&BP a letter that said turning over 4,294 emails his agency had located in response to our August 2nd request would “create an undue burden on DoITT staff” because they would need to be read and redacted. Pastor declared our request for documents closed.
We thought about the financial stakes involved for City taxpayers and decided to try again. On August 23, 2019 — a year and two weeks after our initial FOIL request — we filed a new records request with DoITT. You can read it HERE. This time, among other terms, we’re asking DoITT to search for emails that contain the term “performance bond.”
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Scott Peterson is executive director of Checks and Balances Project, an investigative watchdog that seeks to hold government officials, lobbyists and corporate management accountable to the public. Funding for C&BP is provided by Renew American Prosperity and individual donors.
You May Also Want to Read:
C&BP Analysis: NYC Pays 340x More Per Agency for an e-Procurement System than Dallas, Texas
Questions Focus on How New York City’s de Blasio Administration Buys Procurement Software
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