Nearly one-third of the companies and nonprofits that are members of the grassroots organization, Learn NY, have received no-bid contracts from the Department of Education since Mayor Bloomberg took control of New York City schools in 2002, according to the analysis by our investigative team.

A group with close ties to Bloomberg, Learn NY is a coalition of organizations created to advocate the renewal of mayoral control after it sunsets in June 2009.

Since it began last July, the group has raised more than three million dollars and hired a number of high-profile lobbyists - Brown, McMahon & Weinraub and the MirRam Group - in an attempt to influence the decision over mayoral control of schools in Albany.

Executive Director Peter Hatch maintains that the organization has not received any money from Bloomberg, but refused to disclose a list of donors when asked. But a New York Times article later found that Harlem Children’s Zone - whose director, Geoffrey Canada, also sits at the head of the Learn NY board - has accepted more than $500,000 directly from Bloomberg since he was elected mayor. They have also been awarded close to $388 million competitively-bid contracts from the city and education department.

Additionally, 13 of the 40 organizations supporting Learn NY have received no-bid contracts from the New York City Department of Education since Bloomberg took control of schools: Continue reading…

In January 2008, State Comptroller Thomas P. DiNapoli began an audit of the no-bid contracts awarded by the Department of Education. Time and again, Jennifer Freeman, DiNapoli’s press officer, has told us that audits usually take between six months and a year. Now, 15 months after the audit began, we are still waiting for the results.

When we last spoke to Freeman, she said, “It’s not uncommon for an in-depth audit to take six months to a year, if even a little longer.” Unfortunately, she also couldn’t give us any hints as to what we might expect to see when the audit is finally completed.

What’s the hold up? We have our various cynical ideas, but maybe this auditing business is just a complicated thing. No one we spoke with was willing to speculate about what might be holding up the comptroller’s findings. While representatives from the Public Advocate’s Office and the Department of Education said they could not comment, theorizing probably wouldn’t shed anymore light on the questions surrounding contracting at the education department.

The delay on the audit findings is not insignificant though. In June, the New York Legislature will be deciding whether to renew mayoral control over the city’s school system. If they renew it the legislature will also be deciding how and if to change any current components of the law. One bill that is currently before the Assembly’s education committee would require the department to follow the City Charter on all matters relating to procurement.

Considering how little information about contracts we, as well as other interested officials and individuals, have been able to draw out of the Department of Education, we imagine it would be difficult for legislators to understand the possible value or drawbacks to this legislation without the comptroller’s report. There is very little to go on to build an understanding of the results of the Department of Education following its own rules for, and self-monitoring, the procurement process.

Even while disputing a city audit that found its contracting process “out of control” by allowing one in five contracts to “balloon past costs,” the Department of Education still acknowledged they routinely underestimate what contracts will cost taxpayers.

Earlier this month, City Comptroller William C. Thompson, Jr. charged the Department of Education with squandering taxpayer dollars on “runaway contracts,” including one contract that ballooned from $1 million to $67 million.

According to Thompson’s audit of contracts that ended in fiscal years 2007 and 2008, the Department of Education issued 372 requirements contracts, originally estimated to cost $352,236,416. The final tab, however, exceeded $1 billion. One contract, with the Xerox Corporation for copier machines, estimated to cost $1 million, instead, ended up costing taxpayers $67 million. Another contract, with Ideal Restaurant Supply, jumped from $15,000 to $852,000.

“We are not contesting the expenditures,” Ann Forte, education department spokeswoman, commented in an e-mail message.

But that’s where any agreement apparently ended between the Department of Education and the City Comptroller’s Office.

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When the State Legislature gave Mayor Michael R. Bloomberg control of the New York City public school system in 2002, the newly created Department of Education was also granted the privilege of writing their own policy on contracts.

Other non-mayoral departments—like the MTA—adopted procedures that closely mirror the City’s official charter on contracting. The Department of Education could have easily followed suit and adopted the city charter, which allows for sole-source and no-bid contracting but also provides a system of accountability and transparency.

If Mayor Bloomberg was legitimately interested in bringing accountability and transparency to public schools, as he has publicly stated numerous times, then why didn’t he have the Department of Education adopt the city charter that governs all other city agencies?

Although the Mayor’s Office declined to comment, the Department of Education essentially said, “Because we don’t have to.”

Despite repeated attempts at clarification, the Department of Education refuses to give a straightforward answer as to why Schools Chancellor Joel I. Klein and Mayor Bloomberg decided not to adopt the city charter. Read the email thread below to see the Education Department’s response to our questions. (We’ve colored Press Officer Marge Feinberg’s email in blue for easier reading.)

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There are alarming discrepancies in two separate but supposedly identical lists of no-bid contracts awarded by the New York City Department of Education.

A list of no-bid contracts that we obtained from the Pubic Advocate’s Office, which was created from the education department’s very own records, includes hundreds of no-bid contracts that do not appear in the City Comptroller’s records for the same years. Likewise, some no-bid contracts on file with the Comptroller’s office are missing from the Public Advocate’s records.

For example, the list provided by the Public Advocate’s Office shows that the education department between 2003 and 2008 awarded over $485 million in no-bid contracts. But the comptroller’s list shows only half that amount: $262 million in no-bid contracts.

The biggest disparities are in the 2006 no-bid contracts. The Comptroller’s list shows $31 million in no-bid contracts awarded by the Department of Education that year. The Public Advocate’s records have over $184 million worth of no-bids being awarded, six times the amount than on the Comptroller’s list.
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As we’ve conducted this investigation, getting any response from the Department of Education has been difficult – until now.  On Wednesday morning, we were granted a 45-minute interview with Executive Director of Contracts and Purchasing David N. Ross.

Ross also sits as the head of the Committee on Contracts, which recommends which no-bid contracts should be approved by Schools Chancellor Joel I. Klein.

In his testimony before the City Council last November, City Comptroller William C. Thompson told council members that the awarding of no-bid contracts by the education department lacks oversight and has ballooned from a reported $700,000 per year to more than $47 million annually.

But even while faced with this stark difference in numbers, Ross denied that no-bid contracting has appreciably increased since mayoral control of schools.

“The idea that we’re out here doing tremendous numbers of exceptions without review is a completely bogus argument,” he said. “In proportion to our budget, it’s not a lot.”
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Several companies with Department of Education no-bid contracts have spent hundreds of thousands of dollars lobbying the DOE. We searched for the no-bid vendors on our lists in a database of intended lobbying activities maintained by the New York City Clerk’s Office and came up with a few interesting results

After receiving a no-bid contract worth nearly $4 million in 2002, Supreme Evaluation, Inc. spent more than $150,000 between 2006 and 2008 lobbying the Department of Education. According to the department’s record of recent contracts, they were awarded multiple contracts worth about $13 million in 2007. According to David N. Ross, executive director of the department’s Division of Contracts and Purchasing, their contracts are for services related to No Child Left Behind, the vendors for which are certified and chosen by the state.

SourceCorp, Inc., a company that specializes in helping companies and government agencies make their offices more efficient, spent $90,000 lobbying the Department of Education about procurement in 2007, after being awarded a $2.2 million no-bid contract in 2005 and being the winning bidder on a contract worth nearly $1 million in 2006. In 2008–one year after they lobbied the department–SourceCorp was again the winning bidder on a multi-year contract worth almost $1 million.

Lobbying a city agency and receiving contracts from that agency is perfectly legal. And lobbying an agency does not always yield tangible results like a contract. We found many companies and organizations that lobbied the DOE about procurement decisions did so even after they had already received a no-bid contract.
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Last month, during his weekly radio address, Mayor Michael R. Bloomberg emphasized the importance of “transparency and accountability.”

“The past seven years we’ve swung open the doors of city government,” he said.  “Giving the public the essential information it needs to make sure that we are living up to our obligations and responsibilities to New Yorkers.”

We could not agree more.

But unfortunately, this has not been our experience with the Department of Education.  There, transparency has been – at best – elusive.  Some of the major brick walls we’ve hit include:

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For the investigative journalist, the city’s VENDEX system is a good place to see who’s doing business with New York City.

VENDEX is a database that contains information for every city contract and information regarding ownership, financial capacity, business structure, affiliations and involvement in government investigations on the vendors that do business with the city. Last week, we combed through hundreds of Department of Education VENDEX files at the Mayor’s Office on Contracts.

The filings were wildly incomplete, missing hundreds of vendors and contracts. Never mind that the VENDEX database for the Department of Education only went back to 2006. But we managed to walk away with one lead.

Supreme Evaluation, Inc., a company that conducts assessments and evaluations for the New York City public school system, had a “caution” assigned to it. According to this document, in 2006, the Office of Special Investigation looked into allegations of “improper recruitment and enrollment of students in supplemental educational services.”

We requested the investigation report from the Special Commissioner of Investigation for the New York City School District, but have yet to receive it.

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In February, we focused in on about 35 contracts to drill down on. We have submitted a FOIL request to the City Comptroller’s office for these contracts and are hoping to have them later this month. You can take a look at the list here, which shows the names of the vendors and the goods or services each was to provide–though, in some cases the contract descriptions are vague, or simply repeat the name of the vendor.

We whittled these contracts out of a longer list, which we received from the City Comptroller’s office in December. You can take a look at the longer list here. We were surprised to find that, according to this list, some of the contracts listed on the Department of Education’s own website as having been exceptions to competitive bidding were not among the no-bid contracts on file with the City Comptroller.

We’re hoping you’ll take a look at both of these spreadsheets and let us know if anything jumps out at you or reminds you of something that you might have heard or read about suspicious contracting or spending. We look forward to your input. Happy hunting!