The City of Chicago has given over $7 million to Spherion, a company whose employees were targeted by federal prosecutors last week for its role in a money laundering scheme.
Citipayments.org's Dan O'Neil was the first to notice Chicago's connection to Spherion. We dug a little deeper into some Chicago records and found that the company was originally awarded a $6 million contract, but has already received $7 million for "application development, support and ongoing maintenance" and "consulting."
We were curious what that really meant.
More at chicagoreporter.com
In the most recent scandal out of New York, Spherion was hired for
"quality assurance" as the city switched to an electronic payroll
system. Its original contract was for $3.5 million, but in the end, the city ended up paying Spherion $49 million.
It seems Spherion was paying subcontractors,
many of whom were friends and business associates of executives. In turn, those subcontractors were giving kickbacks to their sugar daddies
Back in 2005, the same company was in the news because employees stole donations meant for Hurricane Katrina victims and funneled them to their friends and family.
So, just what business does the City of Chicago have with a company that has such an ugly reputation? We're not entirely clear.
The City of Chicago's website says the contract is a "management consulting agreement" for business and information technology. Outside of that, the description isn't very specific. I called the city's procurement department and asked to speak to the media relations person, I was sent to voicemail. I left a message and looked into the subcontractors that the city lists under Spherion's contract. There are three: the Simmons Group, Palladium Technology, and Sofbang LLC.
I gave each one a call this morning. At Palladium, the number had been changed, and the new number had an indecipherable voice mail greeting. I left a message. At Sofbang, I was greeted by the receptionist and then told to call another employee - Danny Asani - who did not answer his cell phone. I left a message. And Ann Simmons at the Simmons group also didn't pick up her cell phone. I left a message.
The websites for all three businesses say that the firms deal with technology. The Palladium
site says the business provides "end-to-end e-Business solutions to government
and Fortune 500 companies." Sofbang builds "business technology
solutions designed to change." And the Simmons Group has over 25 years
of experience in "information technology and project management consulting services for public and
private sector business."
Just what does all that mean? Well, frankly, I have no idea. Then again, I'm a reporter, not a business woman. But when I asked Dan O'Neil about it, he said that something like "quality assurance" or "ongoing support" is an easy place to hide corruption in contracting. Software, in particular, he said, was notorious for over-billing.
A company spokesperson from Spherion was the only person to return my call so far today.
"SFN Group has been cooperating with the U.S. Attorney's investigation regarding the alleged fraud within New York City's Office of Payroll Administration's CityTime program, and intends to continue doing so," said Cheryl Hilpert, in an email.
"To date, we have no reason to believe that SFN Group is itself a target of the investigation, and will make any additional comments as appropriate
So what are Chicago taxpayers getting for what we pay Spherion? That part remains somewhat of a mystery.
Jeff Kelly Lowenstein contributed to this blog.
Photo credit: Andrew Magill