Questionable contract?

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Monday, May 16, 2016

Problems with DOE Contracts including lack of information on vendors or those with problematic records and unanswered questions re E-rate consent decreee and Amplify

Leonie Haimson and Patrick Sullivan of the Citizens Contracts Oversight Committee provided the following comments to the members of the Panel for Educational Policy on the proposed DOE contracts to be voted on May 18, 2016

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Comments on DOE Contracts due to be voted on May 18, 2016


Submitted by Leonie Haimson and Patrick Sullivan on behalf of the Citizens Contract Oversight Committee  


As you can see from our comments below, we continue to find problems with the many non-transparent proposed contracts, with no vendor names or amounts listed, with several preK and special education contracts to be awarded vendors with spotty backgrounds, and the proliferation of professional development contracts with unclear value. 

We also have unresolved questions about DOE’s compliance with the E-rate consent decree as well as with the proposed contract with Amplify for Core Knowledge.

Continued lack of transparency with PreK contracts

Items #2, 3, 4, 14, 19, 22 (pp.6-8, 62, 76, 83): There are serious issues with the practice of withholding full information about the preK contracts, which appears to violate the promise made by DOE to CM Rosenthal and others, after it was determined the inflated contract with Computer Consultant Specialists contract would be rejected by City Hall, after the PEP had approved it. 

At that time, the DOE promised that full information would be provided to the public about every proposed contract at least a month before the PEP vote. See the Juan Gonzalez column about the Lanham scandal, dated December 23, 2015:

“Tweed will even post information on all bids on its website 30 days before the scheduled vote by the panel, and has committed to do the same with other contracts.”

This lack of transparency could also serve to obscure that some of these vendors may have engaged in problematic activities.  In addition, no information is made available on Item #22, including its cost: “Amend contracts to provide Pre-K for All certified lead teacher incentives” and about Item #14: “Addendum to UPK Contracts (Close outs).”  For what reason are these amounts unavailable?

See also Item #4 – to provide funds for preK in charter schools. These charter schools should be identified in advance -- especially as some have been shown to engage in abusive disciplinary and push-out practices.

Problems with Special Education provider contracts

Item #5 (p. 9): These contracts are for services for students with special needs. They're retroactive but no justification is offered for why they're being approved after the services have begun. The DOE notes there is a "very competitive market" to provide these services, which make it even more confusing why they seek to contract with so many vendors who have problematic backgrounds.

This is especially true of Yeled v'Yalda Early Childhood Services for counseling, physical therapy and occupational therapy in English and Yiddish across all boroughs. This firm had serious negative audit findings in a report released by the State Comptroller just a few months ago, including submission of fraudulent expenses. See the NY Post article here and the full audit here.

Moreover the RA omits any information about the audit -- despite claiming otherwise:

"Comprehensive background checks were completed for all vendors whose contracts have estimated amounts exceeding $1 million over three years. While the background checks have not been completed for all vendors, no contract will be submitted to the Comptroller for registration until the background check is complete. Should noteworthy information become known to the DOE after the Panel meeting, it will be reported to the Panel."

But what difference does it make to let the Panel know after they have approved the contract already?  Then there is the following statement, which seems to contradict the one above, unless they  mean "more than $1 million" instead of less:

"For the background checks completed for vendors awarded contracts less than $1 million, Mayor’s Office of Contract Services’ advice of Caution database, DOE files and Vendex submissions were reviewed for the remainder. No significant adverse information has been revealed to date except as noted below."

Contracts for Professional Development services of questionable value 

Items #7, 8, 9, 10, 17 and 24: There are many Professional Development contracts aligned to the Common Core of uncertain value, especially as the state has said the standards are in the process of being revised.

# 17 describes a retroactive contract for over $1M to provide training for Renewal schools, in the form of “Math Solutions”, a program owned by Houghton Mifflin Harcourt. HMH is suspected of involvement in a kickback scheme in Detroit and  possibly Chicago; see Chicago Sun TimesNPR and Detroit Free Press. Excerpt from the link above: 

FBI agent Joseph Jensen wrote that there was "probable cause" to believe that Byrd-Bennett committed fraud, theft and conspiracy while she worked for DPS. He said emails showed Byrd-Bennett had conversations — many using her personal email account — that referenced the contract eventually awarded to Houghton Mifflin Harcourt weeks before the district even began seeking requests for proposals. Jensen also noted that the book company deposited $26,530.26 in Byrd-Bennett's money market account on July 20, 2009.
'This is an unusual financial transaction that occurred approximately three weeks before the (request for a proposal) was issued,' Jensen wrote.

Other emails showed that Byrd-Bennett had an active relationship with Houghton Mifflin Harcourt while she was employed with the district.
The documents also show authorities suspected two longtime Byrd-Bennett aides and an executive at the book publisher of helping her 'fraudulently steer' the nearly $40 million contract to Houghton Mifflin Harcourt."

Especially when so many Renewal schools feature huge class sizes, it is difficult to rationalize expensive PD contracts with companies suspected of fraud.

See also item #24: Advanced Placement training to cost more than $1M per year for two years, without specifying how many students/teachers this will reach. Much of the services provided will be online at minimal cost to the provider. Half of the cost is for a two week summer program for students -- how many will enroll? Can the DOE provide estimates?

Contracts for E-Rate Monitors and Audits 

Items #15 and 16: Contracts to pay for E-rate compliance audits and independent compliance monitors, totally nearly $1 million per year, for two years, extendable for two more years. The federal e-rate consent decree with the DOE issued Dec. 23, 2015 requires strict oversight mechanisms, as a result of the Lanham scandal, in which millions were fraudulently charged to DOE and thus to the federal government for internet wiring. 

Among other things, it says that the feds will require "Certification by NYC DOE that no person or entity with any affiliation with Lanham is currently serving, or will serve, as E-rate Program Personnel and by NYC DOE’s vendors, consultants, contractors and service providers that no employee or contractor has any affiliation with Lanham."

And: "For purposes of Subparagraph 3(c) an “affiliation” means a situation in which a person, organization, or other entity is associated with Lanham or Lanham Enterprises as an employee, employer, subordinate, subsidiary, consultant, contractor, subcontractor, member, agent, supplier, or partner, or in any comparable capacity, or has been so associated at any time since five years prior to the Effective Date, except that no E-rate Program Personnel has an affiliation with Lanham or Lanham Enterprises merely as a result of Lanham’s prior status as a consultant to NYC DOE."

It was recently revealed that the DOE still has several ongoing contracts with CCS- Custom Computer Specialists, many of them awarded after the Special Investigator's report was released in 2011, linking that company with Lanham in defrauding the city.

As the Special Investigator's report also disclosed, Lanham was involved in a real-estate company with the CEO of CCS – Gregory Galdi, who is still CEO of the company: " Lanham and the Owner of CCS engaged in a real estate venture together called “G & R Scuttlehole,” located in Bridgehampton, New York.  As Juan Gonzalez later reported:

Lanham had especially close ties to Custom Computer’s chief executive Gregory Galdi. In June 2008, six months before Lanham was fired from his DOE consulting job, he and Galdi registered a new limited-liability company, G&R Scuttlehole Road LLC, with the New York secretary of state. They listed their firm’s location at the same address as Custom Computer’s headquarters in Long Island.  It’s not clear what kind of business the firm conducted, and Galdi did not return calls. State records show it was dissolved in 2011, a few months after federal agents arrested Lanham.

Unanswered questions re Amplify contract

#24: DOE proposes a contract for $650K per year for seven years with Amplify to provide the Core Knowledge curriculum. The RA states the following: “Amplify has previously provided these materials to multiple DOE sites without a contract.  The estimated contract amount is based on previous non-contracted expenditures and FY 2016 estimates…”

How were these curricular materials supplied without a contract previously, and what cost? What are the “previous non-contracted expenditures and FY 2016 estimates?  According to the NY Times, $2.4 million was spent by the Fund for Public Schools starting in 2008-9 to provide the Core Knowledge materials in ten public schools. 

Yet a blog post from 2013 quotes E.D. Hirsch, the author of the Core Knowledge, who insists that all the curricular materials for grades K-3 are now available for free on the CK website for grades K-3. He added that “The only way Amplify can make money from CK Pre-K-through 3 is if a school or district doesn’t want to bother with printing, and therefore orders from them. But this also means that Amplify would need to offer the materials at an attractive price."

In fact, the NY State Education Department paid Core Knowledge to make the program available throughout the state for preK- 2nd grades for free, as part of their $36.6 million Race to the Top grant. The Core Knowledge website now provides comprehensive materials on its website for grades preK-5 for free. As the website explains:

The comprehensive CKLA program for P–3 is now available for free download. Two units for grades 4–5 are now available and additional units will be added during the 2014–15 school year.
Currently, the complete program is available for P–3. Although grades 4 and 5 are still in development, two units in each grade are currently available. Four to six additional grades 4–5 units will be added to the Download Manager by the summer of 2015.
Although materials are downloadable for free, there are costs associated with printing the materials. The volume of program materials may exceed the capability of home or school printers. It is recommended that a school or district work with a professional print shop for printing. Printers may discount pricing based on volume, so schools and districts should thoughtfully consider how they might consolidate their needs to leverage the best pricing available. 
For schools that prefer to purchase printed, packaged materials, CKLA Preschool kits (including trade books) and student activity books are available from the Foundation. Visit our bookstore for details. Printed, packaged kits for K–5 are being produced by Amplify Education, Inc. through a licensing agreement with the Core Knowledge Foundation. For more information about pricing and availability, visit Amplify’s website.

How many NYC schools will be supplied with this curriculum now, at what cost per student, compared to downloading these materials for free?  

Answers to these questions are especially important as Joel Klein was previously the NYC Chancellor before becoming the CEO of Amplify. Though the DOE states that Amplify has now informed them that Joel Klein is no longer an employee, an investor or a Board member, “he may serve as an advisor” and thus may still reap financial benefits from this contract.

Contract with the UFT to provide Common Core training

#26: A separate PD contract with the UFT Foundation for $1.55 million per year to provide training on the Common Core learning standards through the UFT Teacher Centers, apparently funded by the state, is also retroactive from July 2015, for reasons hard to understand: 

“This contract is retroactive because the UFT received an additional grant (SIG6) which was allocated December 2015 to fund three staff members who had to remain under the Teacher Center grant funding until the SIG 6 funds were received.  Consequently the UFT could not finalize the FY16 scope of work until the final available amount that could be used toward the contract for FY 16 was determined.”

This explanation is confusing; why couldn’t the scope of work under the original grant be determined before the additional federal SIG funds were received?

Also confusing is that nearly $975K of the grant is going to OTPS, including furniture, computers, rental, travel, expenses, printing, advertising, consultants, and other general office expenses – compared to $575K for compensation and salaries for Teacher Center personnel, who would be expected to be doing much of the training. It would be helpful to see a more detailed breakdown of expenses. Why would the purchase of furniture be needed to train teachers in the Common Core?

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