GA: IT Cuts Boost MARTA's Bottom Line

Feb. 20--MARTA slashed its spending on information technology by $14 million, or 25 percent, after highly critical audits concluded the transit agency was wasting money on IT services.

The spending cuts contributed the bulk of savings that enabled MARTA last year to operate in the black for the first time in seven years, according to an Atlanta Journal-Constitution review of the audit findings and MARTA management's response.

The authority has axed 115 contractors from 13 private vendors and reduced the IT department's overall budget from $56 million to $42 million, MARTA officials told the AJC.

The IT consulting budget was slashed even more dramatically, from $30 million to $9 million.

The IT department is still being reorganized for a better ratio of full-time employees with contracted staff.

The reduction in IT costs accounted for a hefty chunk of the $39 million savings in the authority's fiscal year 2013 budget that brought MARTA back into the black.

MARTA CEO Keith Parker, who took the helm in December 2013, said the IT budget had been going up every year while every other department's budget was flat or going down.

The authority hired private contractor Shyam Dunna in June to manage the department and "stop the bleeding," according to Parker, after suspending its former IT director Ben Graham for possible asset misappropriation.

Graham later resigned. He did not return calls to his home or cell phone seeking comment for this story.

During fiscal year 2013, the ratio of private contractors to full-time employees was 60 percent; now it is 17 percent.

"We had so many contractors, it was kind of like the fox watching the hen house," said Dunna.

The focus on IT spending started when whistleblowers sent an unsigned memo to Parker on Feb. 15, 2013. The letter alleged fraud, waste, abuse and lack of integrity from senior IT management.

The complaints centered on a group called General Consulting and Professional Services contractors. These workers were falsifying projects and overcharging MARTA for their time, according to the complaint obtained via an Open Records Request.

MARTA hired consulting giant KPMG to probe vendor spending, overtime costs and timekeeping records.

The audit found support for about a dozen of 18 whistle-blower allegations, but uncovered no criminal activity. Most significant among them:

-- Most bids for contract work were not advertised competitively, but simply handed out to "vendors of choice."

-- Contractors were getting unjustified rate increases. Approximately $716,000 in rate increases was approved from July 2012 to March 2013.

A subsequent top-down assessment of the IT department performed by a different consulting company also found that some projects never seem to be completed.

For example, the department had three security projects going on simultaneously for a "long time," and the cost for a project involving Voice-Over Internet Protocol had grown from $17 million to $42 million over a five-year period without any clarity as to what has been completed and what remaining scope of the program was.

It also found there was no cost transparency, so that you "can't tell what it costs to run the business."

In addition, some IT staffers were found to be well-intentioned but lacking competency.

Other key findings:

-- MARTA's IT spending as a percent of revenue was 15.6 percent -- two or three times the industry benchmark.

-- IT spending per employee was $12,695 versus the industry average of $7,595.

-- The IT department had 21 percent more back office workers than the average for peer transit agencies.

In many ways, IT serves as the backbone of the authority. The transit system uses technology to manage everything from computer networks and telephones to fare collection systems, data warehousing and tracking of train and bus arrivals.

The IT department now has about 200 full-time employees, out of about 4,500 within the authority.

Dunna, who has been paid $25,600 a month ($307,200 annually) for steering the department since June, said he doesn't know why the IT department was run so inefficiently in the past.

"Unfortunately, I could only guess why we had 147 contractors and why things weren't getting done and why things hadn't been deployed," Dunna said. "I can only guess because of the skill set, things were not properly done."

Dunna's contractor pay is more than twice the $140,000 salary of his predecessor, though it does not include benefits.

Dunna said that the authority has interviewed several candidates as a permanent replacement and is close to hiring someone.

Copyright 2014 - The Atlanta Journal-Constitution

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