Thursday, February 26, 2015

Last night's approval of the huge Computer Consultant Services contract -- what de Blasio said that day in Albany, and the failure of mayoral control

See also the video below of last night's discussion of the Panel for Educational Policy and vote on the contract.

Last night, the PEP voted 10-1 to approve a contract of up to $1 billion to a company called Computer Consultant Services that had been involved in the huge Ross Lanham kickback scheme just a few years ago- with only Robert Powell, Bronx appointee and contract committee chair voting against it.  

Panel members were apparently persuaded that it was worth the risk to rush to grant at least $650 million over five years, and renewable for up to a billion dollars, to a company that had bilked them of millions of dollars just a few years ago, in the hope of getting the Comptroller to approve it by the end of March before the federal deadline for $20 or $25 million in E-rate funds runs out.

Chancellor Farina was obdurate that the contract was fine, they had done their “due diligence”, and that no company is going to be "100% foolproof."  She said they needed the internet wiring in order to get the hardware promised by unnamed "funders" and "certain put our kids in the future, while now they're struggling in the past."  This didn't prevent several members from venting criticism.   

Powell repeatedly tried to dig out how the price for the five year contract could have dropped from $1.1 billion to $650 million apparently overnight,  which the DOE officials never managed to adequately explain, especially if the CCS  initial bid was really the “first best bid,” as David Ross  insisted.  Ross has been head of DOE contracts for more than a decade and has overseen many huge scandals, including the Lanham fiasco and this even more corrupt IT contract, of Future Technology Associates, whose report by the Special Investigator revealed "shocking incompetence, lack of oversight or outright collusion by top school officials who were supposed to protect taxpayers," according to Juan Gonzalez.  Yet Ross actually boasted that now, DOE has employees who are contract officers and managers who have taken a “full day” curriculum about their responsibilities. 

Norm Fruchter said he would have to make several different “leaps of faith” in voting for the contract, including that the “CCS that actually colluded with Lanham is not the CCS that’s not now making the bid” (though the same CEO of CCS is still in charge, Gregory Galdi,  who bilked DOE before, and who according to the Investigator's report set up a real estate company called " G and R Scuttlehole LLC with Lanham at the same address, shortly before Lanham was arrested.)   Fruchter said he was prepared to make the leap and approve the contract, but said he resented that he had been put in this position.  Ross responded this way:

 “On a very important level, I agree with you …I don’t like the way this unraveled, it’s an odd confluence of circumstances that got us here….  The Department has done a poor job leveraging E Rate dollars historically, and we engaged in a great deal of effort assisted by Ernst and Young [!] to make sure that we built new contracting procedures that would assure we could leverage E-rate dollars correctly…We were late when we started this, we could have thrown up the white flag and given up on 2015 and done a pristine procurement that would have looked great in July but I didn’t want to blow it…the ability to get federal reimbursement of $25 million for work that could be done in 2015-2016 school year..  I’m not happy doing this, at this late hour, I don’t like having you feel uncomfortable making a leap of faith… Ultimately, we will after this meeting I know have a lot of discussion and find a way to make sure as we go to the panel in the future we do it in a manner that is more transparent and makes information more available to the public.”   

I’m not holding my breath.  

Unexplained is why Ross and other DOE officials thought that making a billion dollar deal with the same company involved in an egregious scandal that caused the feds to suspend their E-rate funding in the first place would make it more likely that they would get it back again.  

Sadly, the video below missed the speech made by Mindy Rosier on behalf of Miriam Aristy-Ferrer, given before the Panel’s discussion.  The speech I gave is similar to the letter I sent them earlier in the day here.  Here are Miriam’s comments:

I could not be here so a representative is speaking on behalf of CEC 6 myself and many outraged parents in Northern Manhattan.  As our DOE struggles to regain trust, transparency and more funding from our Governor how can we approve such a proposal with Custom Computer Specialists when we know they have cheated our children before?

How can we continue to give them our business and excessive amounts of money when we know they did us wrong before?  If you truly embrace the Chancellor’s new pillar, and community engagement, you will listen to the people tonight.  The bodies in this room are not as many as those on social media outrages at this company even being considered again.  Again I urge you to vote against the proposal to give Custom Computer Specialists more of our money.

It would be the right thing to do and send a strong message about who the DOE is today, not who they were.  By approving this you will prove all the naysayers right that nothing has changed and never will. 

Not to mention you are giving fuel to the opposition to critique the DOE and rightfully so.  Again do the right thing stop corrupt past practices, VOTE no for Custom Computer Specialists, no place for that in our and Carmen’s DOE.  Thank you.  - Miriam Aristy-Farer, CEC 6 President representing 41 Washington Heights, Inwood and W. Harlem elementary and middle schools.

Last night proved once and for all that that the contracting and accountability reforms that were supposed to improve mayoral control are NOT working.   Yet de Blasio argued in Albany yesterday that the State Legislature should make mayoral control permanent, leading Chalkbeat to say: the move towards mayoral control “illustrates a growing consensus about how the city’s schools should be governed.”  Really? 

 “Before mayoral control, the city’s school system was balkanized,” de Blasio said. “School boards exerted great authority with little accountability and we saw far too many instances of mismanagement, waste and corruption…. [Making mayoral control permanent] would build predictability into the system, which is important for bringing about the deep, long-range reforms that are needed.”


Yup. Making mayoral control permanent would guarantee that the next mayor, whoever he or she may be, could push even harder to privatize our public schools, close them by the hundreds, and push NYC kids to corporate-run charters and outsource their education to tech vendors, testing and curriculum companies – and get whatever corrupt contracts they like approved, no matter what watchdogs warn or how parents, teachers and community residents feel.  It would be playing right into the hand of the hedgefund/privatizers/ profiteers.


Funny, as opposed to this “growing consensus” for mayoral control that Chalkbeat imagines, many key Democratic Party groups in Seattle have voted against giving their Mayor two out of seven appointees on their school board.  And Chuy Garcia, who is in a run-off against Rahm Emanuel for mayor of Chicago, supports eliminating mayoral control in that town and creating an elected school board – though Chicago has had one of the longest runs of mayoral control of any school district in the country.  I don’t know of any city that has adopted mayoral control since Washington DC adopted it in 2007.


According to the WSJ, after his testimony yesterday, de Blasio had a closed door meeting with Gov. Cuomo, already in negotiations for the future of our schools.   Be afraid, be very afraid. 



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.

One Sunday afternoon, Feb. 22, 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 Feb. 18, the Public Advocate Tish James, Chair of the Education Committee Danny Dromm, and I sent a letter to the Chair of the PEP Vanessa Leung and the Bronx rep Robert Powell, drawing attention to this huge and highly questionable contract.  
 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 

Sunday, February 22, 2015

Is the company due to receive a $2 billion contract from the DOE the same as implicated in a huge 2011 scandal?

UPDATE and CORRECTION: A sharp eyed friend just noted that this contract is really for five years, with an option to renew at four more years, so it is potentially worth over $2 Billion!  I have corrected the text and the headline accordingly.  I have also gotten confirmation that this indeed the same company as involved in the Lanham kick-back scheme.

Last week Public Advocate Letitia James, City Council Education Chair Danny Dromm and Class Size Matters sent a letter to the members of the Panel for Educational Policy, with a copy to Chancellor Fariña, urging them to release the details of a contract with a company called "Custom Computer Specialist" which they are supposed to vote on at their February 25 meeting. (Click on image to enlarge.)


This company is due to receive a five year contract for "IT networking hardware and installation services" at $224.8 million per year, with two options to renew, each for another two years, potentially totaling almost more than $2 billion, as noted in the brief summary posted above and on the DOE website.

In addition, the PEP is supposed to vote on a one year contract for Verizon, costing $42.6 million for telephone services and data network connectivity. 


In response to an earlier letter from CM Helen Rosenthal, chair of the Contracts Committee, the DOE stubbornly refused  to release any details of its contracts to the public until the day before the vote, including whether they had been competitively bid or involved companies that had been investigated for improper or illegal behavior. Actually, the full documentation for the contracts approved at last month's PEP meeting was only posted several days after the vote, and only following an email to DOE from CM Rosenthal's chief of staff, Marisa Maack.

Not until today, when I had a chance to reread my 2011 testimony before the City Council Contracts Committee that I was reminded how Verizon and Custom Computer Specialists were implicated in a 2011 massive kick-back scheme to benefit then-DOE consultant Ross Lanham, who oversaw “Project Connect," a billion dollar IT contract, according to a report from the office of Special Investigator Condon.  Both vendors overcharged DOE by millions of dollars, and in turn they enriched Lanham by hiring his consulting company at hugely inflated rates.


Without more information, it is impossible to know whether Custom Computer Specialists is the same company as the "Custom Computer Specialist" due to receive a $2 billion contract on Wednesday, as listed on the DOE document above, but it seems quite possible. This lack of information only reinforces the importance of the request in our letter that the DOE or the PEP members should reveal the details of this contract immediately, and in the future, every contract at least ten days ahead of any vote.

The IT "Project Connect" scandal became big news, and Lanham was sentenced to 37 months in prison, as well as pay $1.7 million in restitution to DOE, according to the prosecutor on the case, Preet Bahara. Judge George Daniels criticized the DOE for allowing so much money to be stolen from both the city and the feds, since the internet wiring was partially paid for by the federal E-Rate program: "There was absolutely no checks and balances, no procedure to identify and prevent the overbilling that went undetected at DOE,” Daniels said. “It was a crime waiting to happen." 


I am unaware as to  whether either company, Verizon or Custom Computer Specialists, have repaid DOE for these overcharges, which amounted to millions of dollars.  Yet in November 2014,  according to the NY Times, Comptroller Stringer wrote a letter to the Chancellor, revealing how the city was still being investigated by the feds and had been suspended from the E-Rate program because of the Lanham scandal, losing as much as $120 million in the process.   

Perhaps the DOE has now been reinstated since the brief description of this new contract says it will be paid with "Tax levy, Capital and E-Rate funds."

Below are relevant excerpts from Condon's 2011 report:
An investigation conducted by this office has substantiated that Ross Lanham (“Lanham”), while employed as a consultant for the Department of Education (“DOE”) to oversee “Project Connect,” billed millions of dollars to the DOE for five consultants whom he employed through his company, Lanham Enterprises, Inc., without the knowledge and/or agreement of the DOE….. All of the vendors profited, to some extent, from Lanham’s scheme.   The investigation also established that Verizon, in order to be awarded a multi-million dollar contract, agreed to Lanham’s demand that Verizon use subcontractor Custom Computer Specialists (“CCS”) at a higher cost to the DOE than Verizon would have charged for the same services. …

Custom Computer Specialists

In an interview with SCI investigators, a Senior Manager at CCS, which was a subcontractor to IBM on Project Connect, stated that Lanham approached him in April 2002, and asked him to hire two consultants, Michael Ginzburg at $70 per hour and Jennifer Thornton at $30 per hour, and to pay them directly. The Senior Manager stated that CCS would then bill Lanham Enterprises, a consulting company owned by Lanham and his wife, Laura, at $75 and $35 per hour respectively for their services. The Senior Manager stated that in April 2002, service agreements were executed between CCS and Lanham Enterprises and CCS and each of the consultants. The CCS Senior Manager told investigators that, at some point, Consultant Tamika Stevenson “came on board.”

When investigators asked the Senior Manager whether he contacted anyone at the DOE regarding CCS hiring the consultants, the Senior Manager indicated that he did not and added that he also did not know whether anyone else from CCS ever contacted the DOE about this matter. …Iacoviello [DOE Director of Deployment and Implementation] recalled that Lanham had in formed him that the DOE did a lot of business through IBM and CCS, and had said that CCS will “become your best friends, because without them nothing gets done around here.”…. Iacoviello stated that he then began to question Lanham about the price that CCS was charging for construction and integration costs which averaged approximately $75,000 per school, and sometimes higher.  Iacoviello recalled that when he asked the Business Account Manager why the DOE was paying so much money, he replied that Lanham told Verizon that Verizon had to use CCS if they wanted to get the work.  Iacoviello told investigators that when Lanham directed Verizon to use CCS, he acted on his own and bypassed both the Verizon and City bidding processes. ….

Lanham subsequently added three more consultants, Lanham’s brother, Robert Lanham, Tamika Stevenson, and Karen Tempio, using a similar pass-through arrangement, but using Verizon instead of IBM. Although these consultants were being paid $60 to $70 an hour, Lanham billed CDC $225 per hour for each of these consultants.  CDC then either billed Verizon $247.50 an hour for the consultants, or submitted their invoices to CCS, who in turn billed Verizon $247.50 an hour. The DOE was subsequently billed at least $290 an hour by Verizon….

CCS facilitated Lanham’s concealment of the employment of the consultants.   CCS also benefited by Lanham’s threat to Verizon that they would lose millions of dollars in business if they did not hire CCS. SCI was not able to determine the extent of the relationship between Lanham and CCS....

Verizon concealed from the DOE and law enforcement that they got millions of dollars in contracts through Lanham only after agreeing to hire CCS as a subcontractor. All of the subcontractors named in this report, except Bayview, facilitated the concealment of the fact that Lanham was profiting from the DOE while he was being paid to represent the DOE….[emphasis added.]

It is the recommendation of this office that the DOE recover all the money paid to IBM and Verizon for the Lanham consultants. It is further recommended that the DOE bring in outside auditors to determine any additional cost to the DOE and the Federal government engendered by Verizon’s use of CCS as a subcontractor on work that Verizon could have done at a lower cost.