Mark Burtschi on the Battle Over Billing Fraud

Overbilling by contractors costs state and federal governments billions of dollars a year.

What is a government to do?

Mark Burtschi
Transparent Business
New York, New York

What about requiring contractors to use software that tracks keystrokes and mouse events of workers and takes screenshots of their computer screens every three minutes while working on a contract?

Legislation has been introduced into thirty-nine states that would require IT contractors to use such software.

Mark Burtschi is a vice president with Transparent Business, one of the 15 companies or so that make so-called billing verification software (BVS).

Burtschi helped draft the legislation and pushed to get it introduced in 39 state legislatures. The New Jersey general assembly passed the legislation and it is now being heard in the New Jersey Senate.

But the legislation is facing fierce opposition by a coalition of business groups, including the American Legislative Exchange Council (ALEC).

In a letter dated March 25, 2019, the business lobbies wrote that “while we are supportive of improved transparency and oversight, we are concerned that these bills would present significant privacy and data security risks for both contractors and state governments.”

“As such, we strongly urge legislators to reject these measures. The specific type of software mandated in these bills automatically collects data on all work performed by the contractor on a computer, including in many instances tracking total keystrokes and mouse event frequency and recording screenshots at least once every three minutes. The software would capture everything including sensitive data like passwords, personal health information, and other personally identifiable information with no mechanism for redaction before being recorded or stored.”

But Burtschi argues that only mouse events and keystrokes are counted.

“No data can be captured,” Burtschi told Corporate Crime Reporter in an interview last week. “All it captures is a number. And that number captures the work that a person is doing at the keyboard or with a mouse. It’s not a performance standard. It’s not going to prove whether the work is good or bad or otherwise. It will just prove whether the work is going on.”

“Another standard the industry uses is screenshots. The objections we have gotten back is that screenshots can grab private data. Screenshots certainly show that you can make progress, that progress is going on. But there are a myriad of different ways to ensure that screenshots won’t grab sensitive data. Anytime that you are working on a specific document that has sensitive data, you can code the document appropriately.”

“We have a client that is an insurance company. Anytime their employees are working on their intranet, we know they are not working on another client’s data. We know they are working on company business. It’s a simple coding application. If you are on that application, it just does not take a screenshot.”

How does a screenshot help you determine billable hours?

“It just shows that the person is working on specifically what they say they are working on. Many of these systems are user controlled for privacy purposes. You turn the system on when you want to bill hours. You turn the system off when you don’t want to bill hours. There are lots of different ways to ensure that no sensitive data is ever recovered by the program.”

“You never get any sensitive data by the mouse events and the keystrokes. That only potential is through the screenshots. There are only so many ways to protect that data from being recorded. No data will ever be recorded if you use appropriate techniques. That’s up the states. The states have control over what they need to meet the law. These programs are customizable. That customization allows for this kind of program to move forward and be safe and finally create an ability to insure that the billable hours are properly counted.”

“The opponents to this can spin this any way they want. But there is fraud happening.”

This legislation now introduced in 39 states applies only to the IT industry. Do we know how much billing fraud there is in the IT industry?

“I don’t have a number. If you look at what some of the contractors say you can get a sense. Deloitte did a study on addressing fraud, waste and abuse in billing. They look at all government spending and found an inherent 6.5 percent of waste and fraud.”

Is Deloitte opposed to the legislation?

“We are told that Deloitte is opposed. But every week, a different story comes up about waste and fraud. The Project on Government Oversight has put up a contractor misconduct database. You can type in the name of a government contractor and it will pull up detail on that company’s contractor misconduct.”

Your legislation applies only to the IT industry?

“You have to start somewhere.”

Why did you narrow it down to the IT industry?

“It was created as a management tool for an IT outsourcing company. It’s a natural fit. There were certainly a lot of objections coming out of the other industries. And because it was a natural fit, we felt it was easier to go with an IT solution rather than with a broader market solution.”

Is there similar legislation in Congress?

“There isn’t yet. The company is looking at the possibility of doing that. It could happen this year. It could happen later.”

What are the considerations on introducing legislation in Congress.

“You need to find someone in Congress to introduce it. In 39 different states, we have found one or two legislators who have taken this up.”

What are the politics of it? Is it a Democratic or Republican thing?

“No. We have Republican and Democratic sponsors across the board. My sense is that in Democratic states there are Democratic sponsors in Republican states there are Republican sponsors because they are the most likely to move legislation.”

Is the American Legislative Exchange Council (ALEC) opposed?

“They signed onto the recent letter in opposition. But ALEC didn’t go through its normal process in signing that letter. It kind of surprised me. We have Republican sponsors all over the country.”

What about the Chamber of Commerce, Business Roundtable, National Association of Manufacturers?

“They should be in support of the legislation. This is a great way for contractors to prove that the hours they are billing to the government are legitimate. It’s just like police body cameras. There was such a furor over police body cams when they were introduced. Yet today, the police use it to prove their case. And it helps both sides. Both sides get a better view of what is going on when these confrontations happen.”

Right now, they are dragging their feet. Interestingly, not a single one of the companies opposed has come up and asked me for a demonstration. I offer demonstrations to the architects and to the engineers to their lobbyists. No one has ever taken me up on it. They are making objections without ever having seen what they are objecting to. That is what mystifies me a bit. If they saw it, they might see some advantages in using a system like this and their clients might really enjoy it.”

“We know that when it comes to billable hours, the number one objection that companies have is that you receive a bill at the end of the month and they have no idea where the hours came from. This is a way to get around that.”

“One of the fastest growing lawsuits out there in the employment law area is for non exempt employees who are bringing lawsuits with attorneys against companies for millions of dollars for overtime pay. There is little ability to track those hours.”

How would this software play into False Claims Act lawsuits?

“If a company was using our software, it is very unlikely that someone could bring a False Claims Act case against them for billable hours on a computer. The verification is just that solid.”

Big law firms have a big problem with billing and overbilling. Is this software applicable to law firms and their billing?

“Absolutely. It can integrate into the systems they have. One objection raised by the other side is how expensive the software is. And this is a great question to lead into this. You work 2,000 hours in a year — 50 weeks, 40 hours a week. And you bill half of that — 1,000 hours a year. Let’s say you are billing at $100 an hour. The program might cost you $1 a day. That’s not a lot.”

“At 1,000 a year in billable hours, and it costs you $360 a year – that’s 36 cents an hour. That’s not a lot. That includes the storage of the data. You are not going to knock out small business owners at 36 cents an hour.”

“Storing this information isn’t costly.”

Every employee is checking the weather, their airline schedules, ESPN, sports scores. And that’s the mild stuff. It looks as if you are snooping on your employees.

“Shouldn’t the government get an hour work for an hour paid? The statistics show that anywhere from ten percent to as high as 50 to 60 percent, depending on the employee – about a third of the average employee’s day is wasted on checking on sports scores, maybe doing some gaming, maybe doing some online shopping. One of the reports I read — number 9 was listed as doing your resume.”

“With this system, you are being watched during the time you are working. You turn the system on when you want to bill hours. And you turn it off when you want to stop doing hours. That gives you great control of your time. That gives you the ability to do what you want to do when you want to do it. I like fantasy football and fantasy baseball. But that shouldn’t be billed to clients. That is personal time. Our clients tell us that they see anywhere from a ten to a forty percent improvement in the productivity of their employees during their billable hours.”

Because they are being watched?

“Because the system is in place. And they are getting better at it. Some people say — employees will hate this. But that’s not our experience. Our experience is that some employees hate it. But they are the ones who end up showing forty percent productivity improvements when they sit down and do the work instead of the time wasters. The ones who have been doing the work all along are only seeing improvements of ten percent or so.”

[For the complete q/a format Interview with Mark Burtschi, see 33 Corporate Crime Reporter 14(13), Monday April 8, 2019, print edition only.]

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