A Lesson in School Contracts
May 19th, 2009

Ever since a management-consulting firm got a no-bid contract from the Department of Education and recommended changes in bus routes that resulted in children being stranded on the side of the road, critics have assailed the department’s procurement policies. Now, as the state legislature examines whether the current system of mayoral control of schools needs more checks and balances, critics of the department have some additional ammunition.

An audit by State Comptroller Thomas DiNapoli released today found that the department “needs to improve its procurement requirements … to ensure no-bid contracts are appropriately awarded.”

The audit, requested by Public Advocate Betsy Gotbaum, found that, between July 2005 and June 2008, the department gave out 291 no-bid contracts for amounts of $100,000 or more, totaling $342.5 million — a small fraction of the department’s annual $17 billion plus budget. In making these awards, the department did not always document why the contract did not go out for competitive bidding, according to the state comptroller. Further the department violated procedures, for example, having a contract start before it was fully approved.

“One non-competitive contract in the amount of $16.5 million for strategic, advisory and financial management services was approved on June 1, 2006 but was not advertised in the City Record until 25 days later, undermining the openness of the procurement process,” a statement by DiNapoli’s office said. This was the aforementioned management-consulting contract, with Alvarez & Marsal, an arrangement the department has staunchly defended.

At a forum last week, schools Chancellor Joel Klein called the issue of no-bid contracts “an urban myth.” (For excerpts from that discussion and other viewpoints on school governance, see The Great School Debate.)

Earlier this year, City Comptroller and mayoral candidate William Thompson Jr. took on another aspect of the department’s contracting procedures charging that about 20 percent of contracts it let over the last two years ended up costing at least 25 percent over the amount bid. One, to Xerox for copying machines, slated to for $1 million ended up at a whopping $67 million, Thompson said.

School officials have sharply disputed Thompson’s allegations, saying that in some instances his numbers were just plain wrong.

But the charges about contracting focus attention on a key point made by some critics of mayoral control: Even though the mayor says the education department should be treated as any other city agency — at the forum Klein compared it to the police department say, or the health department — because schools are a function of the state, Klein’s department has managed to avoid the oversight accorded other city agencies.

Thompson, for example, has said that 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. ” As a result, he charged, it 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.

Many of the proposals for altering mayoral control call for increased scrutiny of contracts and other department operations. Thompson and the City Council Working Group on School Governance on would simply treat the education department as another city agency. The Parents Commission on School Governance would create an independent Office of Inspector General for education, while the Council of School Supervisors and Administrators, which represents school principals, would give the city comptroller more power. Other proposals call for providing the Independent Budget Office with increased oversight authority.

For more on issues involved the debate over mayoral control of city schools, see The Mayor’s High Stakes Test.

By on May 19, 2009, 12:02 pm
In category: Albany,Education,Gotham City,Measuring UP,Public Finance | 3 Comments »

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3 Responses to “A Lesson in School Contracts”

  1. Larry Littlefield Says:
    May 20th, 2009 at 12:31 pm

    Is anybody going to ask why funding for schools is being cut (again) while total spending for education is expected to rise, in part through state and local tax increases and in part through federal debt?

    The 25/55 pension plan was pushed by Weingarten, agreed by Bloomberg, passed by the Assembly with almost no votes against, passed by the Republican State Senate without any no votes in exchange for UFT support in a special election upstate, and signed by Spitzer just before Client 9. No press releases were issued on the subject, and no one talks about it. So neither does the press, including this organization.

    Ask the question!

    Fair school funding is being abandoned. The assertion that teachers who no one wants to be responsible for will not be placed in the classroom is being abandoned. The after school and summer programs to give disadvantaged kids are chance are being abandonded.

    And spending is going up — until federal money runs out. Where is it going, and why is that fair? Why is the outcome of all this attention to the schools over a decade going to be earlier retirement for NYC teachers, and higher spending in the rest of the state where it was off the charts to begin with?

    It’s over. And no one will say who the winners are.

  2. Dee Alpert Says:
    May 21st, 2009 at 10:23 am

    I wonder why nobody has published information regarding the political contributions, if any, of the firms which received the largest contracts awarded without competitive bidding or documentation of necessity of non-competitive bidding procedures.

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