Wednesday, February 25, 2015

News update on immense DOE contract, worth up to $1 billion, for IT company implicated in scandal to be voted on tonight by PEP

See also articles on this highly questionable contract yesterday and today from the NY Post, Daily News and Chalkbeat NY.

Every so often I find out something in the area of education policy-making that causes the top of my head to blow off.  Three years ago it was inBloom, and though the plan to provide a tremendous amount of children's personal information to this corporation who would store it, package it, and make it available to vendors without parental consent caused great concern and controversy, it took years of protest by parents throughout the country before we managed to shut inBloom down.

On Sunday afternoon, my head exploded again when I realized that Custom Computer Specialists, supposed to receive an immense contract potentially worth more than $2 billion over nine years was the same firm involved in a scandalous kickback scheme just a few years ago, in which millions of dollars of public funds were stolen, and which led to the conviction and imprisonment of DOE consultant Ross Lanham.

I immediately blogged and tweeted about my discovery (made after re-reading my own 2011 testimony before the City Council .)  On Sunday night and Monday morning, reporters started calling DOE about the contract, to inquire what was going on but got few answers.

On Monday at 5:30 PM, members of the Panel for Education Policy Contract committee gathered at Tweed for their regularly scheduled meeting with  David Ross, Director of Contracts and Purchasing for DOE since 2004, and Courtenaye Jackson-Chase, general counsel to DOE,  who has worked in the legal department since 2006.  Both were thus clearly aware of the Ross Lanham scandal when it erupted in the news in 2011, in which CCS was found not only to have provided kickbacks to Lanham, but to have profited from the scheme itself. See the Special Investigator's report here.

Along with Ross and Jackson-Chase, gathered around a table in a meeting room at Tweed were Chair of the Contract committee, Robert Powell, the Bronx Borough President's appointee, committee members Isaac Carmignani, a mayoral appointee and Deb Dillingham, Queens appointee.    Missing were Contract committee members Elzora Cleveland and Roberto Soto-Carrion (son of Gladys Carrion, NYC Commissioner of Children's Services ), both Mayoral appointees, and Manhattan appointee Laura Szingmond. Mayoral appointees Lori Podvesker and chair of the PEP  Vanessa Leung also attended. (Here is a full list of PEP members.)

Right before the meeting began, reporters in the audience started getting emails from DOE flacks announcing that the price of the contract had just been reduced by almost 50%, from $225 million per year, for five years, with an option to renew for another four years -potentially worth more than $2 billion, down to $127.5 million per year,  worth as much as $1.15 billion.  The fact that they had managed to cut the contract by almost 50% in the last 24 hours - as we know since PEP members were not told this previously -- was clearly meant to dismiss the controversy; to me it also provided strong evidence that this contract was hugely inflated in the first place.

During the ensuing discussion, Robert Powell asked why the DOE was spending so much for internet wiring without a plan to provide the electricity in many schools to make online access possible.  Without answering this question, Ross said that the "process and the contracts were structured around being able to leverage E-rate reimbursement" of about $120 million over five years, without mentioning that the DOE had been cut off from federal E-rate funds since 2011 as a result of the Lanham scandal, according to information months ago provided the NY Times by Comptroller Stringer.

Even though billions have already been spent on wiring classrooms for the internet,  Ross and Hal Friedlander, chief information officer of DOE said these funds had to be "refreshed" every three to five years, in order to upgrade the connectivity of schools, especially now that cell phones will be allowed in the classroom and to enable online testing.

Ross said that the Lanham scandal was a "horror story" that had led to "soul-searching" and "significant changes," including the fact that DOE now has staff members to oversee contracts, who have each taken a "full day" of training on how to manage contracts. (!)  Ross also assured panel members that CCS had provided a "corrective plan" that features a promise that they "will contact SCI [the Special Commissioner of Investigation] or the appropriate agency if there is any suspicion of wrongdoing," though apparently not paying back any of the money they overcharged NYC.

Ross added that many DOE officials, including himself, had been forced by the feds to undergo "E-rate training" and they are now in "discussions" with the feds to try to persuade them to resume providing these funds. In the meanwhile, he insisted, the PEP must approve this contract right away, so that it could be registered with the Comptroller by late March, in hope of getting federal reimbursement this fiscal year.

Thus the argument seems to be that DOE must spend billions  every few years to upgrade connectivity whether or not schools have the electrical capacity for computers, CCS should get this contract as they promised to be improve their behavior in the future, and PEP members must approve this contract without delay, in order to persuade the feds to cover part of the huge cost of contract to a company that had been involved in the scandal that caused the feds to suspend E-rate funds in the first place.

Additional concerns revealed in Juan Gonzalez' column today include that CCS bid millions more than competing vendors, and that the CEO of the company had earlier set up a real estate LLC with Lanham, at an address identical to CCS.   According to DOE documentation provided by a reporter, DOE awarded the contract anyway to CCS because  among other things,  "Unlike the other bidders, CCS has at least 15 years of experience in supporting the DOE (!) and other school districts with their E-rate programs and other technology needs."

Bravo, to Public Advocate Tish James, who according to Yoav Gonen in the NY Post is calling for DOE to withdraw the contract.  Geoff Decker in Chalkbeat NY writes that the lack of information provided the public and even PEP members  calls into question the 2010 revisions to mayoral control, which were supposed to provide more transparency and accountability around the awarding of contracts.

In this vein, the full documentation of this contract as of 11 AM today is still not posted on the DOE website, nor for ANY of the other contracts to be voted on tonight by the PEP, despite promises by the DOE that they would do so each month at least  24 hours before the panel meeting.

Below is an email I plan to send today to  Chancellor Farina and the PEP members; feel free to copy or send your own message.  Their emails are all here.




Dear Chancellor Fariña and the members of the Panel for Educational Policy:

I urge you to withdraw the five year contract to Custom Computer Specialists (CCS) due to be voted on tonight.  There is no possible justification for awarding such a huge contract to a company that was already implicated in a corrupt kickback scheme in 2011.  If it is true that the in just the past few days,  the Department of Education has renegotiated the price of the contract from $225 million per year to $127 million per year, that is only further evidence that the price was significantly inflated in the first place. 

In the meantime, please release all the documentation concerning the bidding of this contract, what DOE’s current status is regarding the E-rate program and whether the city’s federal funding from the program has now been reinstated, whether CCS ever repaid the funds they overcharged DOE, and why so many millions of dollars must still be  spent on internet connectivity, given that nearly two years ago, in the November 2013 capital plan, the DOE claimed that “all of DOE’s school buildings and their classrooms have broadband connectivity and wireless access.”

FYI, for $125 million per year of city spending -- less than the amount proposed to be given this vendor -- the DOE could double the number of seats in the capital plan, according to the NYC Independent Budget Office, and significantly alleviate school overcrowding.

This highly questionable contract should NOT go forward until parents, elected officials and parents can be reassured in a fully transparent manner that it is absolutely necessary and has been awarded properly  to the right vendor.

Yours sincerely, Leonie Haimson 

1 comment:

Anna Dell'Olio said...

Thank you for alerting all of us that there still much work to be done to make the Department of Education transparent and accountable. We must not let our guard down.