$5.2 million contract costs $7.4 million

City school officials OK overruns on pact for computer services

Work continues to expand

March 29, 2000|By Liz Bowie and JoAnna Daemmrich | Liz Bowie and JoAnna Daemmrich,SUN STAFF

Six weeks before Baltimore's school board signed off on a $5.2 million technology contract, a local computer company warned that it would need at least $1 million more to modernize the district's antiquated computer systems.

Information Control Systems wrote the schools' chief financial officer, Roger Reese, that it was amending its bid to $6.5 million to cover the cost of adding four subcontractors, according to a March 5, 1999, memorandum obtained by The Sun.

Reese said yesterday that he could not recall the memo. "That doesn't ring a bell," he said.

Robert Booker, chief executive officer of the city school system, said that Reese initiated a "hard-line negotiation" with ICS officials in early spring 1999 and scaled back the scope of work to $5.2 million over 18 months.

But eight months into the contract, the ICS memo proved prophetic. The company's workload had expanded -- and the bill was back up to $6.5 million.

Now, the school district has spent $7.4 million -- and is buying additional computer services from the company at $744,000 a month.

Booker, while praising ICS' work, has said he plans to present a contract revision to the board, possibly as early as tonight.

"The problem was that this was such a complicated system," ICS President Garland O. Williamson said yesterday. "It is like peeling back the layers of an onion."

Under the contract, the district isn't buying computers. It is paying a consultant, ICS, to make sure it has working systems to keep track of students, issue paychecks and make purchases without elaborate paperwork, none of which was possible in the past.

School officials defend the contract, saying it has finally given them accurate student data to present to the state.

They have quietly approved the escalating costs -- without public discussion or revising the contract -- to cover subcontractors and computer technicians on temporary visas whose work is billed at rates from $65 to $148 an hour.

The contract initially called for ICS to manage the installation of student tracking and financial systems, ready school computers for 2000 and train the district's staff on the latest technology.

Costs have risen because ICS determined that more Y2K work was needed and took on new jobs, such as designing a school Web site and building a data warehouse. But the financial system remains only 30 percent complete.

Last year, when ICS was one of four bidders, it offered to handle everything for $4.9 million, Booker said. The district's review panel chose IBM, but the low ICS bid persuaded the school board to ignore that recommendation.

ICS revised its initial estimate, according to the March 5 memo, because Williamson brought in several subcontractors to "increase ICS' personnel resources."

ICS had few employees of its own, so it turned to other contractors and companies set up to bring in foreign workers under a temporary visa program, H-1B, that has been criticized for abuses.

One subcontractor was NuSource, directed by Lalit H. Gadhia, a once-prominent Maryland Democratic fund-raiser who went to prison in 1996 for laundering campaign contributions.

Within months, NuSource warned that 10 times more Y2K work was required than budgeted. School officials quickly assented to avoid a Jan. 1 computer crash.

Another subcontractor was Carnegie Morgan, a financial advisory business owned by Larry E. Jennings Jr. Jennings served on the city housing board in the early 1990s, when his relatives won more than $1.18 million in a no-bid housing repair scandal.

Less than four weeks after getting the memo and bringing down the price, Reese asked the school board's permission to open negotiations with ICS, according to minutes of the March 30, 1999, board meeting.

By then, ICS' project manager, Donald G. Hall Sr., his brother and his son were working out of the schools' administration building.

The next month, the board approved the $5.2 million contract.

Board members said yesterday that they did not recall any discussion of higher costs.

"You are asking me to think back a year. We get the distilled essence of the conversations with staff. I don't have the recollection," said school board President J. Tyson Tildon.

"I have trouble remembering this morning. How can I remember a year ago?" said board member Edward J. Brody.

Mayor Martin O'Malley said yesterday that he has "concerns" about the contract. Booker has promised to provide him a written report "that would better explain what they are doing for those dollars," O'Malley said.

Booker, he said, "believes he got some value for the dollar paid."

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