Devastating audit of DOE's contracting process, which violates the City Charter and state laws

Last week I wrote about the problems with the new $670,000 DOE contract for Joel Rose's blended/computerized math instruction program, which was originally promised to be provided free to NYC schools in perpetuity since Rose developed it with about a million dollars of city funds while at DOE. The Panel for Educational Policy is due to vote on this contract on August 23.

Yet since his company New Classrooms went private, NYC has been charged many hundreds of thousands of dollars for this program with a highly questionable educational value.  Subsequently, Gary Rubinstein also wrote about the program's low quality, at different times called School of One or Teach to One.

All this cronyism is not an anomaly, sadly, but is consistent with the scandalously lax oversight of DOE contracts -- including a $1.1 billion contract proposed in 2015 for a contractor who had been involved in a kickback scheme just a few years ago --later thankfully rescinded by the Mayor's office and rebid for savings of between $163 million and $727 million.

On Friday, the NYC Comptroller Stringer released a follow-up audit showing how the DOE continues to violate  state law and its own rules when it comes to contracting.  More on this from the New York Daily News, New York Post and Chalkbeat.

From the Daily News:

In fiscal year 2016 the city school system handed out more than 500 contracts worth $2.7 billion without competitive bidding or required protections, Stringer's investigation found.
That’s 64% of the agency's total contract spending of more than $4 billion for that year....the city agency didn’t bother to evaluate vendors or keep track of their work — or to register contracts with Stringer’s office for review.

From the Comptroller's summary: 

A review of 521 limited competition contracts and contract actions revealed:

• DOE directed 442 of the vendors — approximately 85 percent — to begin work before the contract was even registered with the Comptroller’s Office, in violation of the New York State Education Law, the City Charter and DOE’s own rules;
• DOE submitted 302 new contracts and renewals to the Comptroller’s Office, on average, 258 days after their start dates, while 140 extensions of existing contracts were submitted on average 137 days after work began;
• In the most egregious case, a contract was submitted to the Comptroller’s Office 910 days — nearly two and a half years — after the vendor began work; and
• DOE submitted dozens of contracts to the Comptroller’s Office after the contract’s end date.

I myself discovered that of the 27 contracts approved at last month's Panel for Educational Policy meeting , 13 were retroactive—meaning at least some or all of the vendor's work had already started –  rendering the vote of the PEP pretty much irrelevant.  Contracts are only submitted and registered by the Comptroller after the PEP has voted. 

For the audit they specifically looked at how many contracts were registered retroactively.  Of 358 contracts and contract renewals, 84% of the vendors started work before registration,  an average of eight months prior to submission.  More than 10% of the contracts were submitted after the work had already ended.  In another data set of 163 contract extensions, 86% had started before submission,  an average of 137 days prior.


The Comptroller’s audit also found these continuing problems:

• DOE still does not provide sufficient guidance for contract assignments, and, in particular, it fails to ensure that a proposed new vendor’s capacity and history are adequately assessed. In addition, assignment files lack sufficient information justifying the assignments, detailing prior performance and documenting adequate insurance coverage, among other things.
• DOE has not developed written procedures or guidelines to help staff detect the warning signs of possible collusion when awarding contracts via actions other than fully competitive solicitations.
• While general guidance to contract managers appears to be available now in DOE’s contract management training manual, it does not offer the contract managers specific instruction about handling their responsibilities. For example, the training manual is silent on the performance evaluations that must be conducted throughout the contract period and on the frequency of such evaluations.
• Despite DOE’s representation in response to the previous audit that it would implement a standard format with standard criteria and ratings for evaluating vendor performance and a schedule for conducting such evaluations, we found that no such implementation has taken place.
• DOE still does not conduct required performance evaluations of contractors seeking renewals or extensions.
• DOE still does not adequately monitor its contract managers to ensure that contract monitoring and performance evaluations are conducted in accordance with its PPP manual.
• DOE does not ensure that limited-competition and non-competitive contracts are registered with the Comptroller prior to vendors beginning performance. As a result, vendor payments are delayed, which could potentially decrease competition and raise prices.

David Ross

The question of evaluations is key; many DOE contracts are renewed several times without any evidence that any assessments had been done of the quality of their previous work.  Even when an evaluation was done, in the case of New Classrooms for example, which showed no significant gains  through a randomized experiment, this study was unmentioned in the DOE Request for Authorization document, which asked the PEP for approval.

All these problems are not new, but occurred during the previous administration as well, under the aegis of David Ross.  Ross spent 12 years at the DOE as chief procurement officer,  and is now going to oversee contracts at the MTA – another troubled government agency that cannot afford to waste a single penny of public funds. Will the new contract head at DOE clean up this horrible mess?  We will have to see, but from the weak responses to the audit from DOE, I would not bet on it.

The person ultimately in charge however is Chancellor Fariña.  We've had four Chancellors in a row who were lax in terms of allowing the waste of  millions of dollars in taxpayer money, while more than 300,000 NYC children continue to languish in classes of 30 or more.  Will Fariña stick around after the election?  And if not, who will replace her?

The city's use of a non-profit to pay irresponsible preK vendors and get around the procurement rules

Sue Edelman of the NY Post reports on how the Mayor’s office asked a city-related nonprofit called the Fund for the City of NY to cover the costs of preK providers who had evaded taxes, engaged in fraud, failed to hire sufficient qualified staff and/or exhibited other unspecified problems.

Now the DoE is asking the NYC Comptroller to retroactively approve these contracts so the city can reimburse the Fund  to the tune of $1.36 million, in an apparent end run around the  procurement rules.

What the story doesn't mention is that the DoE continues to ask the Panel for Educational Policy to approve payments to preK and/or Special Education providers before background checks are complete- and to approve contracts with vendors where investigations have already revealed serious issues in the past.

This behavior is of questionable legality and risks taxpayer funds and kids' lives.

More details about the problems with these preK vendors  is revealed in the Addendum of this month’s RA's.  Patrick Sullivan and I, on behalf of our Citizens Contract Oversight Committee, highlighted these in our comments sent to the PEP before the vote, as well as other unresolved questions, pertaining to the Amazon contract and special education vendors who were found to have spotty records.

In terms of the Amazon contract, we had pointed out that there was no cost-benefit analysis of how much it will cost to provide e-readers to hundreds of thousands students if they are to receive 30-40% of assigned readings digitally, as the DOE plans; no analysis of the risk to student privacy if teachers will now be able to track student behavior online; and no analysis of how Amazon may access to their digital profiles to engage in targeting advertising to students and enlarge the corporation's massive market share, which further enables their monopolistic and abusive practices, protested by publishers and authors.  Finally, there was no mention of the fact that numerous studies have shown that students who access their reading assignments through digital devices comprehend and retain significantly less.

In terms of the special education and preK contracts, there continues to be a troubling lack of care in the DOE’s practice of rushing these contracts through without sufficient information in advance, or even after background checks have shown them to have engaged in activities that would bar them from other city contracts.

Yet not one PEP member brought up any of these issues during this month’s Contract Committee meeting or during the PEP meeting itself.

I have been told that there are backroom discussions where PEP members privately air their concerns to DOE officials, but the public doesn't have the chance to hear the questions asked or the responses.  The private nature of these discussions sidesteps the open transparent process that is supposed to prevail for a governmental board, and deprives the public of their right to know.

Sue Edelman asked me if the contracting process was better or worse under Bloomberg.  I said that I thought it was about the same because a lot of rotten contracts were also approved during those years. 

Yet at least from 2007 onwards, when Patrick Sullivan served on the PEP as the representative of the Manhattan Borough President Scott Stringer, he consistently challenged the DOE’s decisions and forced officials to respond to questions in a public forum.

In 2009, as part of the effort made by the Legislature to improve accountability when Mayoral control was renewed, the PEP was given the authority to approve DOE contracts, because of all the abuses that had occurred as a result of corrupt and wasteful spending.  Patrick was frequently supported in his challenges by the Queens rep Dmytro Fedkowskyj, the Brooklyn rep Kelvin Diamond and the Bronx rep Monica Major.

Yet never did the PEP actually vote down a contract during the Bloomberg years, as it was controlled by the Mayoral supermajority and the Staten Island rep which together served as a reliable rubber stamp.  The Panel did retroactively rescind a contract awarded to the tutoring company Champion Learning Center, after the NYC comptroller's office had rejected it due to an ongoing federal investigation.

Neither has the PEP voted down a contract since de Blasio took office, to my knowledge. Even the outrageously inflated $635 million contract for Custom Computer Specialists was approved 10-1, though the company had previously engaged in a corrupt kickback scheme.  Only Robert Powell, the Bronx rep, voted against it. Luckily, this contract was so outrageous and the media attention so intense that City Hall rejected it after the PEP vote.

Patrick resigned from the PEP in 2013, as neither the new Manhattan BP nor the Mayor would re-appoint him, and Robert Powell recently left the PEP as well.

Even so, we remain intent on publicizing the flaws in these contracts and in the DOE’s procurement process because not a dollar should be wasted when hundreds of thousands of NYC children are still crammed into overcrowded schools with classes of 30 or more, with the city claiming they can’t afford to do anything to address these issues.

If you want to volunteer for our Citizens Contract Oversight Committee, or have a tip to share, please email us at NYCschoolcontractwatch@gmail.com  Thanks!

Vote on eliminating reporting on class size and TCUs postponed

The mayor has established a Report & Advisory Board Review Commission through a charter amendment, which is supposed to decide which legally-mandated reporting requirements should be eliminated.  The Commission has a majority of mayoral appointees and has the authority to override city law.

DOE proposed the elimination of the  November class size report and the annual report on TCUs or school trailers, making claims about how the later class size report in February was more “accurate” (which registers lower class sizes esp. in HS, after thousands of students have dropped out or been discharged from school) and  how the TCU data is  replicated in the Blue Book, or that somehow this data was not “useful”.  I refuted these bogus claims in my comments to the Commission here and here.

Elizabeth Weinstein, the Mayor’s head of the Office of Operations and the Chair of the Commission, was supposed to announce today by 5 PM which reports and commissions she supports eliminating; with the vote of the entire Commission supposed to occur on Oct. 30.
Yet today, the Commission sent out an email, saying the vote would be postponed until November 19, and the chair will now announce her position no later than November 12 at 5 PM, to be posted on the Commission website at www.nyc.gov/ReportsandBoards


The latest public comments are posted here: If you’d like to send in your comments on whether the DOE should be allowed to eliminate these reporting requirements, you can email <ReportsAndBoards@cityhall.nyc.gov>.

Below is a letter sent yesterday to the Commission from the NYC Comptroller’s office. 

Letter Re Class Size and TCU Reporting

Fewer crimes at Impact schools? The real reason they don't want you to know....

See this NY Times piece, on the Mayor’s press conference where Bloomberg reported a sharp drop in crime in schools citywide and especially at the “Impact schools.” These are schools that have been flooded with police and scanners. Excerpt:

Last fall, City Comptroller William C. Thompson, a likely mayoral candidate, issued an audit showing that in a sampling of schools, several crimes that were recorded in school records were never reported to the state or the police.

Several crimes?

Actually, the audit from the Comptroller's office found that out of the ten sampled schools, 414 – or 21 percent– of 1,996 incidents went unreported – including a rape.

The Mayor’s press conference was held at the HS of Graphic Communication Arts, where the sharpest drop in reported crime this year occurred.

The Daily News had a far more skeptical account:

Last year, Controller William Thompson released an audit of 10 schools that found 21% of serious incidents weren't reported to the Education Department. The school where Tuesday's press conference was held - High School of Graphic Communication Arts - failed to report 13 out of 171 incidents in the 2004 to 2005 school year.

Several teachers Tuesday said administrators discouraged reporting incidents that might cause penalties for their school. "Everyone figured out that they only want good news," said a teacher at one impact school. "The principals are afraid for their heads."

This is Campbell’s law at work. No principal or teacher will report a crime knowing that this may land the school on the list, because most Impact schools start to lose students fast. And once a school loses students, it tends to be phased out or phased down, and people lose their jobs.

Once on the list, studies show, student attendance falls and most likely, achievement and grad rates as well.

Accordingly, of the 19 high schools on the Impact list in 2005, 15 of them have now been closed or are being phased out or "phased down" -- that is, with vastly smaller enrollments. This is as good way as any to guarantee that these schools will have fewer reported crimes -- especially if they no longer exist.

For more on the chronic underreporting of school crime, see this report from the Public Advocate’s office. And here is a story from NY1, detailing last fall’s audit and the fact that the HS of Graphic Communication Arts was cited as a chronic offender.