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SAIC Scandals

by WS Editors

Thomas Drake’s revelations about National Security Agency’s contracts with SAIC — the (mostly) defense contractor Science Applications International Corporation — read like a how-to on purging the public purse. But there is more in SAIC’s four-decade history.

This past March, New York City fined SAIC half a billion dollars for what a prosecutor described as “the single biggest fraud” against the city. SAIC had repeatedly delayed work on a project to produce a computerized payroll system. So the original $70 million contract swelled to $700 million. Shell companies, money laundering, and overseas accounts kept the project alive until the city investigated. SAIC paid the $500 million to avoid criminal charges and keep the door open for more defense work.

In 1995, SAIC settled out of court with the Air Force, paying a $2.4 million fine, for falsifying test results and producing non-functioning navigation devices. (It still earned $22 million from the contract.)

In 2004, Defense Department auditors challenged SAIC’s padding an extra $10 million onto a contract to develop media in Iraq — finding “widespread, unsubstantiated equipment purchases.”

In 2005, the FBI wrote off more than $100 million and walked away from a flawed IT system the agency claimed was outdated before SAIC completed it.

Such numbers aren’t even a blip compared to SAIC’s $11 billion yearly earnings from the defense establishment.

Given the blur between SAIC and defense agencies — former defense secretary Robert Gates has served on its board — who’s surprised?

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