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:

Harlem Children’s Zone, received a $2,222,700 no-bid contract in 2008.

Ridgewood Bushwick Youth Center, received a $425,000 no-bid contract. Bushwick is an organization run and controlled by Assemblyman and Brooklyn Democrat leader Vito Lopez, who is close to Bloomberg.

Good Shepard Services, a nonprofit providing tutoring and literacy programs for children received eight no-bid contracts in the past five years worth a total of $3,761,748.

Fordham University, which helps schools establish “Inquiry Teams” and helps establish accountability tools—ARIS, ACUITY and Scantron—received $546,000 in 2009.

City Year, an organization that provides one-on-one tutoring services and literacy training programs, is the largest recipient of AmeriCorps funds in New York State. It also received the largest no-bid contract of the bunch – a $11,097,217 contract in 2006, though these could be federal or state funds funneled through the city’s education department.

Other members of Learn NY receiving no-bid contracts include Ghetto Film School, Young Women’s Empowerment Network, Outward Bound of NY, Publicolor, MOUSE and Learning Leaders. Beginning with Children Foundation and Explore Charter School also received no-bid funding.

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.

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.

The Department of Education otherwise lashed back at Thompson, arguing that Thompson’s office “failed to conduct a careful reading of the contracts and to verify basic contract information.”

“Unfortunately, your office’s analysis is marred by distortions and misrepresentations,” Schools Chancellor Joel I. Klein wrote in a harshly worded letter to Thompson, regarding the audit.

Thompson’s office denied these allegations, saying the numbers speak for themselves. In his audit, Thompson found that one in five of the agency’s requirements contracts, in which the Department of Education and the vendor agree on a price per unit instead of the total final cost, went over budget by more than 25 percent.

“It’s simply a case of runaway contracts,” Thompson said of his findings. “It’s reprehensible that the Department of Education plays by it’s own rules and goes on some insane spending spree. And who pays? Taxpayers, parents, children, all of us”

The Department of Education, however, said the $1 million contract was actually one of three contracts that together were estimated to cost $31 million. So instead of the contract costing 67 times its original price, it was only a little more than double. Forte also said that requirements contracts are difficult to estimate because “vendors provided us with estimates based on our inventory.”

Thompson stands by his audit.

“The Department of Education’s failure to accurately determine costs prevents it from negotiating the best prices, and is contrary to sound business practices,” said Kristen D. McMahon, spokeswoman for the Comptroller’s Office. “Even if they have it right regarding Xerox, which they do not, they’re still admitting that they posses the inability to properly estimate costs.”

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.)

From: Andrew Schmid Sent: Sunday, March 29, 2009 6:19 PM
To: Feinberg Marge
Subject: Questions about procurement policies

Hi Ms. Feinberg,

I hope you had an enjoyable weekend.

I was wondering if you would be so kind as to ask Mr. Ross the following for the record:

Although I understand that state law allows the DOE to create it’s own procurement policies, I’m curious as to why DOE, especially as proponents of mayoral control, doesn’t elect to abide by the procurement policies of every other city agency?

In other words, if the city’s procurement policies are good enough for every other agency, why does DOE chose to exempt themselves from these policies?

As always, thank you for your time!

Sincerely,

Andrew

On Mon, Mar 30, 2009 at 1:14 PM, Feinberg Marge <MFeinbe@schools.nyc.gov> wrote:

Attached you will find the list you requested.


Response to your question below:

“By law, the DOE is not subject to the City’s procurement process. The DOE follows Education Law 2590-H, subdivision 36 which directs the Chancellor to create a procurement policy, and GML 103 and 104, which refer to the bidding process.”

From: Andrew Schmid

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.

Yet officials from the Department of Education’s Committee on Contracts have said, on the record, that although the department follows its own purchasing guidelines instead of those that all other city agencies follow, they still register “every no-bid contract over $25,000 with the Comptroller’s office.”

When asked how such huge disparities between agency records—which should be nearly identical if each contract is, indeed, registered with the comptroller—can therefore exist, Committee on Contracts Chairman David N. Ross said that some contracts don’t make it through the bureaucracy or simply get lost along the way.

The Comptroller’s office had a different answer, saying the Department of Education only occasionally registers its no-bid contracts with his office—essentially picking and choosing which contracts to send over for registration.

As each points the finger at the other for the reasons behind the huge discrepancies between lists, we can say based upon our investigation that neither the Comptroller’s list, nor the Department of Education’s—nor the Public Advocate’s, for that matter—accurately depicts how many no-bid contracts have been awarded and how much in taxpayer money has been spent on them over these past six years, leaving one to ask: why does the mayoral controlled Department of Education have different purchasing guidelines than every other city agency?

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.”

To emphasize his point, Ross used a colored pie chart that showed less than 1 percent of the “Goods and Services” budget was allocated for exceptions to competitive bidding for fiscal year 2009.

Later in the interview, when asked about the discrepancy between the education department’s list of no-bid contracts and the comptroller’s list, Ross responded that his office sends all contracts that are over $25,000 to the comptroller for registration.

This may be true. But when we compared the comptroller’s list to the Department of Education’s list for 2006, for example, we found that only 17 of the 42 no-bid contracts for that year had actually been registered by the Comptroller’s office.

“But different things happen along the way,” Ross said, referring to the discrepancy.  “There are some contracts that the comptroller hasn’t registered, there are some contracts that don’t get through the bureaucracy quickly enough. It can be difficult to reconcile that number.”

However, sources in the Comptroller’s office have said in separate interviews that the Department of Education does not register all contracts with the City Comptroller.

According to the Comptroller’s office, the Department of Education registers contracts with the comptroller on a voluntary basis, in effect picking and choosing which contracts to send for registration. The Comptroller’s office disagrees with this position and believes that the education department should register all contracts, like all other city agencies.

Former communications director for Public Advocate Betsy Gotbaum, Jim Vlasto, who spent the last several years investigating the increased awarding of no-bid contracts by the education department, said what makes it even harder to keep track of no-bid contracts is the fact that Committee on Contracts meetings are closed to the public.

Ross acknowledged that meetings are closed to the public but also pointed out that the agenda for the committee is published well ahead of time, both on the department’s Web site and in The City Record.

“So the fact that we don’t have a public meeting is not, in my view, to suggest that we don’t have a public process,” he said.

Because the Committee on Contracts is technically an advisory board and only makes recommendations on contracts and not final decisions, they are not required by the Open Meetings Law to conduct their meetings in a public forum.

Ross said his favorite reason for having a closed meeting was that it allowed the committee to “have a very lively and robust debate around the actions that are brought before the committee.” In this way, Ross said, the committee can provide the chancellor with a thorough review and honest recommendation.

We are still awaiting our Freedom of Information Law request for the Committee on Contracts minutes to be filled.

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.

Several entities, however, lobbied the department in the same year of or year prior to being awarded a no-bid contract include: Beginning with Children Foundation, a charter school operator; The College Board, which administers the SAT’s and AP tests as well as operates charter schools in the city; Sports and Arts in Schools, which now operates many of the after-school programs operated in city public schools; and New Visions for Public Schools, a small schools operator that has also provided consulting services to the department.

Aside from no-bid vendors, one of the things that we found most interesting was lobbying activities by operators of schools. Considering all of the controversy surrounding charter schools in New York City right now, it would be interesting for someone to search the lobbying database for other charter school operators and see how many of them have lobbied the City Council or the Department of Education in recent years.

“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:

Little access to vital public records, including contracts.  According to New York’s  Freedom of Information law , records should be made readily available to the public to review and at minimal cost.   Our requests for electronic copies of contracts have continuously been denied–and even if DOE decided to permit us access to paper copies, we would be charged $0.25 per copy.

Our investigation requires we review dozens – if not hundreds – of contracts. That’s easily thousands of pages.  At $0.25 per page to copy, this quickly becomes economically infeasible, essentially denying the meaning of the Freedom of Information Law.

Lack of reading rooms. We would not have needed the paper copies if there were  reading rooms where we can peruse contracts. The Freedom of Information Law says that government agencies should provide reading rooms where records are on hand and accessible to the public.

Unduly long processing time. There is tremendous lag time between when we file a FOIL, and when we receive a response.  By law, the DOE should take five days to respond to a FOIL request, and under 20 days to produce the document – or give a detailed response for the delay.  While we’ve been notified that our request will take longer to grant, we have not been told why, or how much longer it will take.

Problematic VENDEX filing system. By law, vendors vying for city contracts must have completed VENDEX Questionnaires. Once completed by the vendor, the forms are then supposed to be filed with the Mayor’s Office of Contracts. These filings, which include information on the vendor and its principals, are openly available to the public.  However, when we went to review these files, we discovered that only a fraction of the Department of Education’s VENDEX forms had been filed with the Mayor’s Office of Contracts.  When we called the DOE to ask where we could go to review the remaining VENDEX, we were told that the DOE does not maintain their own VENDEX system, so most of the documents are simply unavailable for review.

These public access issues aren’t unique to our team.  ParentAdvocates.org blogger and Rubber Room reporter Betsy Combier reported having to wait as long as two years for a return on her FOIL requests.  And even then, she only finally received a reply after she filed a complaint.

Even Public Advocate Betsy Gotbaum has had problems with Department of Education FOIL requests.  A source in the Public Advocate’s office told us just yesterday that the members of Public Advocate’s staff have also had to wait for nearly two years for a reply to some of their FOIL requests.

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.

We did, however, obtain the VENDEX questionnaire, along with a letter written by the chief administrator for the Department of Education’s Division of Contracts and Purchasing, Jay Miller, to the president of Supreme, Neil Maron.

In his letter, Miller wrote, “the DOE believes you now understand the importance of training your employees on policies and procedures as well as the need for strict observance of the DOE’s code of ethics.”

Yet, even while apparently contesting the findings of the investigation for ethics violations, Supreme lobbied the DOE and the Mayor’s office, and was subsequently awarded a contract worth over $11.7 million, as well as two contracts worth a little under $1 million each.

And that’s not all.

According to our database—compiled through records we obtained from the Comptroller’s office and from the Department of Education Web site—since 2002, the Department of Education has awarded Supreme over $17 million in contracts. Additionally, in 2002, Supreme was awarded a no-bid contract for $187,200 for “supplemental educational services.” By the end of the three-year contract, though, the Department of Education paid Supreme nearly $4 million.

We’ve called Supreme several times, but no one was either available to comment or willing to comment.

We’ll keep you updated with what we learn when we receive the investigation report and any other information.

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!