Tweed's Contracts
March 4th, 2009

In this era of mayoral control of schools, the Department of Education is supposed to be like any other city agency — except when it’s not. For example, the education department’s contracts get far less scrutiny from the city comptroller’s office than the agreement signed by other city agencies.

But two recent stories have raised renewed concern about how the $18 billion a year agency awards contracts — and more revelations could be on the way.

–The department paid Champion Learning Center $79 an hour to tutor students — but of that amount. only $17 an hour went to the tutors. The rest covered for Champion’s “overhead, Juan Gonzalez reports in the Daily News. Two people hired by Champion told Gonzalez they received only $15 per hour for their work, had to pay their own transportation costs to each child’s home and also had to put up $150 fee each for fingerprinting and a security check before they could start tutoring.

–Earlier this week the Post’s Yoav Gonen reported the department awarded a $1.6 million contract to Accenture to help the department lower costs for books and equipment. Accenture got the job even though, according to Gonen, its bid was four times higher than that of the lowest bidder — and called for paying up to $315 an hour for services of an entry-level project manager. “That’s the highest rate I’ve ever heard in my life,” a losing bidder told the Post. “There appears to be no integrity there and obviously there’s no oversight.” (There is, though, apparently money paid to Tiger Woods.)

At least that contract went out for bid. Last summer, the Post found a sharp uptick in no-bid contracts for education under Mayor Michael Bloomberg and Schools Chancellor Joel Klein. Citing statistics from the city comptroller’s office, the Post said that in fiscal year 2000, when Rudolph Giuliani was mayor, the school system, signed seven no-bid contracts worth a total of $693,000. In fiscal year 2007, it signed 76 no-bid contracts totaling of $72 million. The number did, however, drop to $12 million in fiscal year 2008. Overall the department has reportedly awarded $340 million in no–bid contracts in the Bloomberg-Klein era.

“A hallmark of this administration has been its award of huge no-bid contracts on a scale never seen before in the public school system,” education historian Diane Ravitch, a frequent critic of the administration, wrote recently. “In the allegedly bad old days of the Board of Education that was disbanded in 2002, no-bid contracts had to be explained and defended by public officials in public hearings. That is no longer the case. The DOE can award such contracts to any group that catches their fancy.”

How do they get away with it. As Jarrett Murphy once explained in the Voice, “When the city’s schools came under mayoral control, they didn’t become a city agency. … the DOE ‘was created by the State Legislature and derives its power from state law.’ So the DOE says its billions of dollars of annual contracts are exempt from the city’s contracting rules.”

As a result, according to City Comptroller William Thompson — who reviews contracts of other city agencies — the department “refuses to adopt a set of formal procurement rules similar to those followed by every other City agency — a process that is open and subject to public comment and accountability.” Instead, he said in recent testimony, the department “has exploited a gray area in the law — one that allows it to treat itself as a state agency whenever it is convenient to do so and then as a city agency when it is likewise convenient. The department has even taken the position that it is not required to register its contracts with my office if it does not want to — a position I obviously disagree with.”

So what’s going on? A well-intentioned desire to cut red tape and get the job done? Klein’s commitment to making himself, and himself alone, “accountable” (to use his favorite word)? Or a license for corruption.

Whatever the answer, at least the no bid contracts seem destined for increased scrutiny. Three Columbia Journalism students have assembled a list of education department no-bid contracts registered with the comptroller. Many are with various non-profits, such as Teach for America, but it also includes an earlier contract with Accenture. One might wonder why air conditions (about $242,000 to Air Tech Kontrol) or food services or supplies ($160,000 to Ideal Restaurant Supply) cannot go out for competitive bidding. Steam traps also seem to be regularly purchased without competitive bidding, as do various consulting services and even window washing. And of course there is the granddaddy of the department’s no bid contracts: the almost $16 million paid out to Alvarez & Marsal advising the department on how to cut costs. The firm’s report, which as far as we know has never been made public, led to the school bus fiasco of 2007.

The students also compiled a list of contracts for technology, teacher training, testing and data-collection. Topping it is a contract to Supreme Evaluation Inc. of Brooklyn for something vaguely called Supplemental Educational Services. That contract, awarded in fiscal year 2003, had an original amount of $187,200 but mushroomed to a revised maximum amount of almost $4 million, according to the record. And to the surprise of few, the list confirms that, whatever the testing does or does not do for students, it does a lot for the Princeton Review.

The students have asked teachers, parents, education department officials and others to look at the list “and tell us if there are any contracts that they think ought to be further investigated. … Whos making money off of these contracts…? Are the contracts going to the right vendors?'” Those with tips can e-mail [email protected]

We’ll be curious to find out what they find out.

By on March 4, 2009, 6:07 pm
In category: Education,Gotham City,Measuring UP,Public Finance | 6 Comments »

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6 Responses to “Tweed's Contracts”

  1. Len Says:
    March 7th, 2009 at 3:50 pm

    Ms. Robinson needs to understand that there is no such thing in the law as the NYC Department of Education (DOE). It is the New York City School District and does, in fact, remain an agency of the State. Just as there is no Panel for Educational Policy (PEP) in the law; it is the New york City Board of Education. Both the DOE and the PEP are newspeak, fictional titles made up by the Mayor to confuse everyone.

    And confusion does reign!

    Notwithstanding this, the City comptroller has the authority and duty to “to audit and investigate all matters relating to or affecting the finances of the city, including
    without limitation the performance of contracts and the receipt and expenditure of city funds, and for such purpose shall have power to require the attendance and examine and take the testimony under oath of such persons as the comptroller may deem necessary.” according to City Charter Section 93.

    That he has not done so speaks only to the timidity of the present comptroller. You even quote him as saying, “The department has even taken the position that it is not required to register its contracts with my office if it does not want to a position I obviously disagree with. So where is his lawsuit?!!

    Also, as a State agency, these contracts should be audited and reviewed by the State comptroller.

    No one, apparently, is willing to stand up to Bloomnberg and Klein.

  2. Jake Says:
    April 6th, 2009 at 10:05 pm

    None of what you’ve presented as fact is true. One can only hope this is incompetence and not something worse.

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