Another super-mugging? NY State Education Department to award $27 no-bid contract to Joel Klein and Rupert Murdoch

From Rachel Monahan of the Daily News comes the startling announcement that the NY State Education Department is about to award a $27 million no-bid contract to Wireless Generation to develop a statewide student data system, and has apparently been granted a waiver by the NY state Comptroller to do so.  

Wireless, which received several no-bid contracts from DOE, is now run by ex-Chancellor Joel Klein and owned by Rupert Murdoch’s NewsCorp. 

Why did the state argue for this contract?  On the basis of Wireless’ record in developing ARIS, NYC’s much criticized $80 million data system.

Recently, Lindsey Christ of NY1 in an award-winning three-part series pointed out the glaring deficiencies of ARIS and the far superior data system developed by NYC teachers for relative pennies.  

Last  fall, Gotham Schools did a similar expose;  we featured critical observations from a teacher about the inadequacies of the system back in 2008.

The hi-tech community recognized  it a huge boondoggle and a “super mugging” when the no-bid contract was first announced in 2007.

Already, the state’s intention to grant this contract to Klein et. al. has been criticized by Susan Lerner of Common Cause: "It just smacks of an old-boys club, where large amounts of public money are spent based not on 'is this the best product?'  E.D. Kain  of Forbes writes that the decision “reeks of cronyism.”

In support of their request, SED claims that Wireless has received “national recognition from Arne Duncan.”  Of course, Duncan has also called Joel Klein, who stands to benefit financially from the deal, “a good, good friend of mine.”

The letter also reveals that the Gates Foundation, which pushed data systems and testing as part of "Race to the Top", has also selected Wireless to “build its national Shared Learning Infrastructure,”  in what is likely to prove a generous windfall for Joel Klein and Rupert Murdoch.

The SED letter requesting the waiver claims that Wireless has invested “significant time and resources in end-user research with NYC DOE educators to determine the ideal ways to display information for educators to engage in data-driven instruction…[including] focus groups of educators and administrators.” 

If so, they obviously learned nothing from any of these focus groups, as most teachers report the system is nearly worthless.  The SED letter also claims that parent find ARIS useful, while  I’ve heard mostly complaints that the system contains little more than their children’s test scores and attendance.

SED adds: “Wireless has “developed the vocabulary used throughout NY for student classification and demographic information” and, for example, “understands what ‘ELL’ (English Language Learner) means..” Wow! That should be worth a cool million there.

Finally, “New York is well aware of the risks of large-scale technology projects that to [sic] tend to run over budget, behind schedule and be under-whelming when delivered.”  Which is a perfect description of ARIS.

It is surprising that NY State Comptroller Di Napoli would provide this waiver after his 2009 audit, exposing DOE’s abuse of the no-bid contract process.  These are precious funds that should be used to benefit children, rather than line the pockets of Joel Klein and Rupert Murdoch.

Comptroller Di Napoli and Harry Wilson: where do they stand on fiscal oversight of charter schools and DOE?

New York State Comptroller Thomas Di Napoli has done several highly revealing audits of charter schools, showing their flagrant misuse of public funds. One of his audits revealed that KIPP Academy charter school in the Bronx had spent nearly $68,000 on "staff development" retreats in the Bahamas and the Dominican Republic. His office also released audits of the Western New York Maritime Charter School, showing that big-screen televisions, computer equipment and security devices purchased with public funds were delivered to the homes of school employees; and the Enterprise Charter School, which had a two-year, $60,000 consulting contract with its former CEO.

In 2007, DiNapoli released an audit showing the NYC Department of Education’s lax oversight of charter schools. According to the NY Post,

“The audit, which focused on the 2004-05 school year, found that the DOE doesn't ensure that charter schools provide it with required performance data, and that it lacks a formal process for reviewing the information. It also noted that the DOE doesn't generally require schools that aren't making adequate progress to take corrective measures, although meeting academic targets is essential to charter renewal.”

Di Napoli also did an absolutely scathing audit of the NYC DOE’s use of no-bid contracts, amounting to 291 no-bid contracts in three years. The audit revealed how “vendors often won the no-bid contracts without any proof that avoiding the regular process would save the city money. In some cases, school officials actually destroyed records about the contracting process…” (See this GothamSchools story.)

The charter lobby sued Di Napoli, to block all further audits in a lawsuit financed by the New York Charter Schools Association and the NYC Center for Charter School Excellence, on whose board Joel Klein sits. The Court of Appeals decided that he did not have the authority to audit charter schools. (The home page of DOE’s charter school office still features links to a press release by the charter school lobby, praising the court decision.)

In response, the recent state legislation that lifted the charter cap last spring specifically gave the State Comptroller authority to audit the use of public funds by charter schools – though the charter school lobby has said that will continue to try to block any more audits in court, despite the new law.

Yet this may not be necessary if the GOP candidate for Comptroller wins. His name is Harry Wilson, and he is a former hedge fund operator, who has accused di Napoli of launching “politically motivated” charter audits, and has pledged not to “harass” charter schools by auditing their use of public funds, no matter what the new law says.

Not surprisingly, Harry Wilson is the favored candidate of Mayor Bloomberg, as well as Bryan Lawrence, co-founder of Girls Prep charter, and Whitney Tilson of DFER fame, all of whom have contributed to his campaign. Here is Tilson’s endorsement of Wilson:

Harry is personally close to many in the charter school movement and was considering starting a charter school when he decided to serve in the Obama Administration instead….. DiNapoli engaged in a number of nuisance audits designed to harass charter schools in his early tenure as Comptroller. His attacks were so over the top, that the NY Charter Schools Assoc. sued him and the court agreed, finding that DiNapoli overstepped the bounds of his audit power …However, with the recent passage of legislation to race the charter school cap in the state, one of the provisions that was snuck in grants the Comptroller this same audit power over charter schools.

Want more? Harry Wilson is a close colleague of Steve Rattner, the Mayor’s personal financial adviser. Wilson served with Rattner on Obama’s auto task force, and is portrayed as the “hero” in Rattner’s new book about saving GM. In turn, Steve Rattner is the best friend of NY Times’ publisher, Arthur Sulzberger; and was one of the power brokers who convinced Bloomberg to run for a third term.

A couple of weeks ago, Bloomberg and Sulzberger were the two co-hosts of Rattner’s book party, which was attended by the financial and power elite of NYC, including the head of Goldman Sachs, JP Morgan, Joel Klein etc. This very public celebration of Rattner and his accomplishments occurred just as Rattner was pleading guilty to a “pay to play” kick-back scheme of bribing the former State Comptroller to grant Quadrangle, Rattner’s investment company, millions in state pension funds to invest in 2004 when Hevesi was Comptroller.

Rattner paid $1.1 million in finder fees to Henry “Hank” Morris, Hevesi’s former chief political consultant, and he also agreed that Quadrangle would help finance a B-movie made by the brother of the pension fund manager. Rattner first claimed he had nothing to do with this B-movie deal, but emails apparently reveal that he helped put it together. As a result, he has agreed to pay a fine of $5 million and accept a ban from the securities industry for at least five years. He could also face perjury charges for lying about his involvement in the bribery scheme.

Yet despite this, the mayor not only hosted his book party, but has pledged to keep Rattner on as his top financial adviser, helping to run Willett Advisors, the group set up to invest the mayor’s personal fortune. (The company is named after Thomas Willett, NYC’s first mayor.) As Bloomberg told reporters, “Steve Rattner's my friend, of course I'd keep him on. Why would you not? If he can do anything to help, I value his advice and he's a close friend of mine and you stick by your friends.” (More on the Bloomberg/Rattner connection at Gotham Gazette.)

Here is an excerpt of the NY Times’ endorsement of Wilson for Comptroller:

“It is rare for someone of Mr. Wilson’s talents and expertise to compete for one of the most important and least glamorous jobs in state politics. Mr. Wilson went to Harvard Business School and worked for Goldman Sachs, the Blackstone Group and Silver Point Capital. Mr. DiNapoli tries to make that résumé sound tainted, but the investment and management skills exhibited with General Motors are just what are needed for New York’s financial and ethical blight.”

Unmentioned in Times’ endorsement, of course, is the fact that Wilson’s friend and former colleague, Steve Rattner, had bribed the previous holder of the office that Wilson is now campaigning to fill, and who surely participated in that “financial and ethical blight” which the editorial claimed to decry.

Meanwhile, Di Napoli has banned all “pay to play schemes” by prohibiting the pension fund from doing business with any investment adviser who has made a political contribution to the State Comptroller, and has appointed an independent Inspector General to safeguard all the comptroller’s investment decisions. And he has never been accused of financial corruption, even by the same three editorial boards that endorsed his opponent.

Not coincidentally, all three papers are owned by men personally close to Bloomberg, and all three papers also supported the elimination of term limits as well as the renewal of mayoral control.