The computer system, used for purchasing and payroll by Allegheny County and the city, has been the subject of fierce disagreements for most of a decade. Thursday’s disputes were the first since the former overseer, Henry Sciortino, became the subject of multiple investigations.
Officials from the state Attorney General’s and Allegheny County District Attorney’s offices met this week to discuss the status of the investigation, which appears to focus on Mr. Sciortino’s handling of public funds and disclosures during his 12-year tenure as director of the Intergovernmental Cooperation Authority.
Mr. Sciortino lobbied hard for a merger of the city onto the county’s computer system, according to documents obtained by the Pittsburgh Post-Gazette. At times city officials accused him of harming their ability to get a good deal.
“Going back, this whole thing has been convoluted from the beginning — from the consultants that were hired to the implementation to the administration of it,” Mr. Peduto said. “So at this point, I think it’s very possible, with a federal, state and the local D.A. investigating the ICA, that damages could be sought.”
City Controller Michael Lamb countered that officials of this administration and its predecessor were unfairly tarnishing the deal.
“The former Ravenstahl and current Peduto administrations will say anything they can to bad-mouth this project,” he said.
Inflated Figures?
For a decade, Mr. Sciortino pushed the city to integrate its computing into the county’s contract for software offered by Oracle, and sold in this region by DLT Solutions, of Herndon, Va. The ICA’s leverage included the ability to withhold revenue due the city from Rivers Casino.Prices for software systems are often based on the total budgets of the organizations using the software. At the time, the combined city and county operating budgets totaled $1.2 billion.
In 2009, Oracle offered what it called a 78 percent discount on software for “the city [and the county] at a cost of $2,392,000 via … DLT at an estimated annual cost of maintenance of $526,240.” The former figure was honored two years later when the city — after much hesitation — signed on to the deal. The 2009 offer doesn’t specify whether the maintenance fee would cover both the city and the county.
In response to questions about the offer, mayoral spokesman Tim McNulty wrote that “the city would have been better served early on to engage outside experts — such as the [Government Finance Officers Association] — for help with implementing the system. That assistance would have included reviewing Oracle’s claims, which we can’t independently verify, that it offered the city a discount.”
Ultimately, the city paid support fees of $743,000 for the first year, and then $520,000 for each of the following four years. The county covers an additional $223,000 in maintenance fees to DLT, according to a report by law firm DeForest Koscelnik Yokitis & Berardinelli, commissioned by the city and released last year.
“I would argue it was a great deal for the county, and a good deal for the city,” Mr. Lamb said.
The DeForest report, though, indicated the maintenance fees are based on a total city-county budget of $1.6 billion, and were therefore inflated. Mr. Peduto’s administration continues to believe that the fees are artificially high.
“The city at the time bought more than it needed,” said Sam Ashbaugh, director of the city’s Office of Management and Budget. “There was an assumption that the city would bring the [city-related] authorities on board, and also sell it to other governments,” he said, adding that was unrealistic and never happened.
The maintenance pact with DLT is almost over. The city could re-up with the company, but Mr. Lamb and Mr. Peduto agree that the city could get maintenance for its system at a cheaper price.
“We should be looking at other options,” Mr. Peduto said. “Not only to save taxpayers money but also given the circumstances that have come to light about the ICA, we should be very transparent in any negotiation for a new contract.”
Pressure on the City
In February 2011, former Mayor Luke Ravenstahl wrote to the ICA complaining that its computing plan was “too expensive and not the best fit for the city.” Nonetheless, he signed a computing cooperation agreement with the county later that year, committing the city to pay the county, which in turn paid DLT.Although the purchasing part of the package was easy to implement, efforts to run the city’s payroll on the county’s system dragged on for years. In 2013, Mr. Sciortino wrote to his board members that the ICA might want to “capture” the city’s gambling revenue and directly “employ an agent” to install computer modules.
In May 2013, ICA chairman Dana Yealy wrote to Mr. Ravenstahl, taking pains to tell him that “the ICA has no proprietary interest in any vendor.”
City Finance Director Scott Kunka, though, wrote back that the ICA was “instructing the city to purchase products and services inconsistent with [the city’s] plan, and with a suggested vendor and price, [and that] harms the city’s operations and the ability to negotiate a favorable contract.”
Through 2015, Mr. Sciortino followed up nearly weekly with the city, demanding updates on the computer system’s implementation.
“We started getting some pressure from the ICA to move on it,” said city chief of staff Kevin Acklin, in an interview this month. “The thing just smelled.”
The city ultimately fired an installation contractor and hired another, which completed the job in time for January’s payrolls.
Only then did Mr. Sciortino release $2.9 million in gambling revenue to the city, promising an equal amount after “verification that the system is functioning properly and is acceptable to the ICA.”
Mr. Sciortino was removed from his ICA duties in April, after record-keeping questions first raised by Auditor General Eugene DePasquale. The agency paid him through May. Neither he nor his attorney responded to requests for comment Thursday.
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