Faced with a massive budget shortfall, the Philadelphia School District has scrapped plans for a $1.1 million system to track job applicants that would have cost more than twice as much as two other options and taken three times longer to deploy.

Superintendent Arlene C. Ackerman scuttled the contract with Kenexa Corp. of Wayne one month after The Inquirer reported that the district overrode staff recommendations to select cheaper alternatives, according to documents The Inquirer obtained from the district in response to a right-to-know request.

"It would not be fiscally responsible to move forward with the contract with Kenexa," district spokeswoman Shana Kemp said Wednesday.

The School District is facing a budget gap of $40 million in its $3.2 billion budget through June and a potential shortfall of $400 million to $500 million in the next fiscal year.

The Kenexa deal is one of several district contracts to come under scrutiny in recent months, including a $7.5 million emergency no-bid contract for surveillance cameras that is the subject of a preliminary FBI inquiry. Another multimillion-dollar contract to manage the district's headquarters building is being rebid after allegations of tampering and bid-rigging.

Kenexa was selected over two less-expensive competitors by Estelle G. Matthews, the head of the district's human-resources department. She said she preferred the Kenexa system because "it was like a Volkswagen vs. a Cadillac."

The district made no public announcement that the contract had been shelved, and Kemp commented after The Inquirer obtained documents confirming the action. A spokeswoman for Kenexa could not be reached for comment Wednesday.

Because Kenexa had begun preliminary planning work on the tracking system, the company was entitled to be paid up to $75,000 under the terms of a letter of authorization the district provided to the company.

The district also dropped plans to award a separate, $100,000 contract to another firm to serve as project manager to oversee the implementation of the Kenexa system, according to another set of documents provided by sources.

The six-month contract with Convectus Solutions Inc., of Dallas, was listed on a draft of the Philadelphia School Reform Commission's Dec. 8 agenda but was removed from the final agenda.

As The Inquirer reported in early November, the SRC voted Aug. 25 to award the contract to Kenexa at a cost of $1.14 million over five years.

The other two finalists said they would do the work for much less - $385,561 and $436,000, both also over five years. Eleven companies had responded to the district's request for proposals.

A committee of district staffers evaluated the proposals and initially excluded Kenexa from further consideration because it was one of three with total costs exceeding $1 million, according to sources familiar with the review.

Staffers were dismayed, sources said, when the evaluation criteria were altered and Kenexa was brought back into consideration by Matthews.

She was not a member of the evaluation committee. But district officials said it was not unusual for her to play a key role in selecting a vendor because her department would use the online system. It was intended to automate and streamline the district's cumbersome hiring process.

A month later - amid increased scrutiny after an Inquirer report about the $7.5 million surveillance contract - and growing financial concerns, the Kenexa project was ended.

Kimberly Williams, one of Matthews' deputies, announced that the Kenexa contract was being canceled at a budget meeting in early December in Ackerman's large conference room at district headquarters, a source said.

Williams, according to the source, said Ackerman had made the decision to ease the budget crunch and because the tracking system was not essential.

Ackerman and Matthews were at that budget meeting, as was Deputy Superintendent Leroy Nunery, sources said.

Although the SRC had approved the Kenexa contract in August, no final agreement was signed. The district and Kenexa had been negotiating the language and terms under the "letter of authorization" signed Oct. 29. That letter was extended to Dec. 7 but was not renewed, according to district documents.

Jessica A. Diaz, the district's open-records officer, said the district had not paid Kenexa as of last week. She said the district was expecting to receive an invoice from Kenexa for payment.