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hired programmer does lots of 'other' work instead of being focused on what he's paid to do

I wasn't quite sure I was going to enter this message on this site but figured it has something to do with IT stuff.

I am a network tech that works for a company doing IT work. I have recommended another tech that does IT work but also does programming and is good at it. The company that I work for hired him to work on a database.

The project which was supposed to be finished by now is about a year behind schedule. The company wants to fire this person and find someone else. I want to give this person one more chance but…here is where my problem is.

when he works, he gets lots done but his cell phone and his laptop email take away from his productivity greatly. Lots of answered calls during his time at the company. Because of that, we get charged a full hour of work when actually, he’s spent ‘maybe’ 20 minutes of good quality ‘focused’ work

I thought about approaching him on this issue but have held off because it wasn’t me that he’s sending the bills to (yes, he charges in 1 hour increments and there is no reduction for that ‘non-productive’ time).

So what can I do to improve the productivity without making him mad or should we just cut our losses and find another programmer? Yes, he is a friend.

Any advice would be greatly appreciated
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Wow, the responses are excellent!! Thank all of you for responding. That helps us (me) out greatly. I wasn't quite sure if I should ask this type of question on this site but obviously, I'm glad I did.