Investigative Report Finds SAIC Not Delivering on Mega Contracts

By Amita Sharma / Investigative Reporter, KPBS Public Broadcasting

Published February 9, 2007 at 3:30 PM PST

This story was published more than 17 years ago.

People usually associate names like Boeing and Lockheed Martin with big defense contract work. But for years, a San Diego company has been striking gold with the U.S. Government. It earned $8 billion

People usually associate names like Boeing and Lockheed Martin with big defense contract work. But for years, a San Diego company has been striking gold with the U.S. Government. It earned $8 billion in federal government contracts alone last year. But an investigative piece in next month's Vanity Fair finds that despite the company's success on Wall Street, it hasn't delivered on some of its biggest projects costing taxpayers hundreds of millions of dollars. Full Focus Reporter Amita Sharma looked into the story.

Vanity Fair Reporters Don Barlett and Jim Steele write that the FBI paid SAIC $124 million to create a new computer system for the bureau. One of the reasons the agency gave in 2001 for not knowing that two of the September 11th hijackers were living in San Diego was that its antiquated computer system wasn't set up to share information. But three years later, SAIC's project to develop a new system for the bureau failed.

A report partially blamed the failure on the FBIs changing directions. But a government audit found that the system SAIC delivered to the bureau was so incomplete and useless that the FBI had no choice but to scuttle the project.

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I spoke with SAIC executive vice president Arnold Punaro today. Here's what he had to say about that project when I asked him if the company had made any mistakes.

Punaro: We felt on that project that we, SAIC, should have done a better job of communicating at the highest levels of the FBI. That the way the FBI was running the program, the way they were changing the requirements, the way they were managing the program was putting a successful completion at risk.

There was another high-profile, big-budget project, according to Vanity Fair, that SAIC didn't complete. After the 9-11 terrorist attacks in 2001, SAIC won a $280 million contract from the National Security Agency to create a new computer system that would organize the agency's worldwide surveillance of telephone and e-mail communications. But after working on the contract for four years and receiving a billion dollars for the work, the project was left unfinished. Punaro says he's can't talk about it for security reasons. But overall, he says the company has had over $100,000 successful government contracts.

Punaro: Yes we’ve had a few troubled contracts. The government actually, on some contracts, you know, you basically have performance parameters and that determines what your fees are. We win over 75 percent of our work competitively, and yes, we feel we have been very good stewards of the government, of the taxpayers money. It’s actually the taxpayers money –- and have delivered solutions on time and on budget. But we have had our share – as every contractors have had -- of troubled programs.

Pinaro calls the Vanity Fair piece a work of fiction, a fairytale.