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Reports that a Department of Education technology contractor improperly stole millions of dollars from the city are returning attention to the way the school system reviews contracts.

Building more oversight over contracts was one of the goals of the reauthorized mayoral control law passed by state lawmakers in 2009. The law handed review power of contracts to the Panel for Educational Policy, the citywide school board controlled by the mayor. But since 2009, several panel members have complained that they lack the information necessary to review contracts before approving them, making their oversight authority meaningless.

In the case of the contract with Future Technology Associates, the firm accused of fraud yesterday by the city schools investigator, panel members had less than a day to review detailed information about the contract before voting on it in September 2009, according to email messages obtained by GothamSchools. Officials shared the information in response to a request by the Manhattan representative on the panel, Patrick Sullivan.

The contract came up for a renewal vote at the first meeting of the PEP after the mayoral control reauthorization. In an email to Sullivan the day of the meeting, department General Counsel Michael Best cited reauthorization as motivating school officials to prepare more thorough background materials.

Sullivan, an opponent of the Bloomberg administration’s education policies, responded that those materials — which included a draft agreement between the city and Future Technology Associates — were not sufficient. He said that a day to review them was not enough time. (more…)

Changes in the way public schools are run that were ordered by a law this summer could take until the end of the school year to implement, school officials said today.

At a meeting of the City Council Education Committee this afternoon, council members, along with teachers union president Michael Mulgrew, accused the Department of Education of dragging its heels in putting key provisions of the new school governance law into place.

At issue is how soon the DOE will make three key changes: returning superintendents to work exclusively in their districts, including parents of special education and English-language learner students on Community Education Councils and beginning work to open a new parent training center.

Testifying before the Council, Micah Lasher, the education department’s executive director of public affairs, said that he expected all of the new changes to be implemented fully by the end of this school year.

But Council Education Committee Chair Robert Jackson complained that time frame is too long. “The law doesn’t give you a year,” he said. “We need this implemented now.” (more…)

The speedy pace and the unnervingly scripted feeling of today’s Board of Education meeting is captured in this video I took, which at four minutes documents almost half of the meeting.

The video starts just as board members are voting for Deputy Mayor Dennis Walcott as president. Walcott leads the rest of the meeting. After he takes over, you’ll see the group vote to elect the Department of Education’s chief lawyer, Michael Best, as its secretary and hear the resolution proposed that would make Joel Klein chancellor. We all know how that vote turned out: 7-0 in support of extending to Klein “all powers under law … that may lawfully be delegated to the chancellor.”

The board members, from left to right: Jimmy Yan, Patricia Harris, Carlo Scissura, Walcott, Edward Burke, Edward Skyler, and Fernandez. Sitting just behind the board on their left (our right) was Klein, who looked on but never said a word during the proceedings or the press conference that followed.

The full text of the resolution to rehire Klein is below: (more…)

City Council Member Melinda Katz introduced a resolution asking the state to change the law so that the Department of Education is required to follow city contracting rules. (Via Azi's Flickr)

Comptroller Bill Thompson attracted lots of press Wednesday by accusing the Department of Education of “runaway spending” on contracts. But another, less sexy development could have a much greater impact.

That’s the fact that momentum is growing to force the department to follow the same contracting rules as other city agencies, in the form of endorsements from a list of advocates, including one office that rarely butts into policy debates, and a new City Council resolution calling on a change in the state law that allows the DOE to duck the usual regulations.

Agencies from the NYPD to the parks department cannot hand taxpayer dollars over to an outside contractor without first following the rules of a citywide office called the Procurement Policy Board. The DOE is the only city agency that does not have to follow the board’s rules, which do everything from forcing public hearings on contracts above a certain price to imposing strict guidelines on what contracts have to be bid competitively.

The DOE’s exception was born well before the 2002 mayoral control law gave the mayor authority over the schools, but it has gotten more attention under the new structure, which makes school contracts harder to track. While the old Board of Education reviewed all contracts above a certain size before they were signed and held public hearings where citizens could respond to the contracts, the Department of Education has presented only a small number of contracts before the new version of the board, the Panel for Educational Policy.

The result is that hundreds of contracts have been offered without competitive bidding — and without a public hearing to discuss what the contracts include.

A group of Columbia Journalism students has reported that the DOE also makes it difficult to find contracts once they’ve been signed. The department does not maintain reading rooms for the public to review contract documents, against the requirements of the Freedom of Information Law, and many contracts simply aren’t available for review, they reported. Asked about the concerns at a City Council hearing Wednesday, school officials said they would look into them.

A Public Airing

The lack of PEP hearings is despite language in the state law that gives the panel the power to “approve contracts that would significantly impact the provision of educational services or programming within the district.” (Read a PDF of the law here.)

Patrick Sullivan, a PEP representative from Manhattan who is a critic of the Bloomberg administration, told me that he has seen only labor contracts come before the PEP, never a goods-and-services contract. Sullivan said that he recently asked the department to submit a new $79 million contract with a firm called MAXIMUS to manage special education data for a PEP vote.

The department’s general counsel, Michael Best, denied Sullivan’s request in an e-mail message that I obtained, though he did offer to share some information about the contract — after the meeting had happened. Best wrote:

If you really want to see the contract, we do not have an electronic version to send around, but if you were willing to come down to tweed we can arrange to let you take a look at it.

Sullivan, who was appointed by the Manhattan borough president, Scott Stringer, said he was not satisfied. “If the PEP had to vote on the contracts, then there would be some accountability there. Then we would be holding Klein accountable for the spending,” he said. “Because they refuse to allow any of those, and they just spend whatever they want and whenever they want, they’re refusing to comply with the accountability requirements of the law.”

A spokeswoman for the department, Ann Forte, said of the contract, “We do not believe Panel approval was required.”

City Council members would urge state lawmakers to make that change under a resolution introduced this week by Council member (and comptroller candidate) Melinda Katz. “It is amazing to me that there would be allowed any exception to what any city agency must do,” Katz said at a hearing Wednesday, announcing the resolution.

School officials yesterday declined to follow an invitation from Katz to self-impose the restrictions other agencies follow. They said the department’s exception is important because it allows the system’s 1,400-odd schools to buy things like copy machines and textbooks on their own, without having to navigate a maze of regulations. “They need the flexibility, within accountability guidelines, to actually make the purchases necessary for their students,” the department’s chief operating officer, Photo Anagnostopoulos, said.

Best, the department’s general counsel, said other mayoral agencies must get every contract they write reviewed by a chief contracting officer. That would be very difficult in a system of 1,500 schools, he said.

Katz and other advocates said Wednesday that the exception means the department’s contracts fly under the radar of proper oversight.

George Sweeting, the deputy director of the city’s Independent Budget Office, added his endorsement to the resolution, in a move he said was unusual for the IBO, which usually stays out of policy debates.

“The PPB rules are intended to improve transparency, avoid excessive costs, and reduce the potential for favoritism that can result in the absence of competitive bidding,” Sweeting said in prepared testimony. “It is difficult to understand how those rules are considered useful when other city agencies procure goods and services, but unnecessary or too cumbersome for the DOE.”

The Speed Imperative

City Council members also pointed to the department’s $16 million contract with Alvarez & Marsal, the consulting firm that re-arranged the school system’s bureaucracy. The contract attracted attention because it was awarded without any bidding and because it led to the 2007 scandal where a midyear rerouting of school bus lines left many children stranded in the cold. The department has said the bus routing was a mistake but defends the rest of Alvarez & Marsal’s work, which it says saved the city $170 million.

David Ross, the department’s head of contracting, told City Council members Wednesday that Schools Chancellor Joel Klein awarded Alvarez & Marsal the contract without any competitive bidding because he felt a time crunch. “The chancellor had an interest in completely making extensive changes to the school system and operations,” Ross said. “It was felt that it was just not practical or possible to do an RFP or competitive process and make the reforms and changes that were needed in the schools.”

He said that Alvarez & Marsal “had the advantage” because they had already begun working with the school system under a contract with the Fund for Public Schools, which used private philanthropic donations to start off work with the firm. “They were already there. They had done a lot of the work,” Ross said. “So the inertia behind them was already very significant.”

School officials repeatedly called the Alvarez & Marsal contract unique. In an interview yesterday, Ross told me that the department handed out $28 million in no-bid contracts in 2008, a number he said is low compared to years past. In testimony to the City Council, Anagnostopoulos said the so-called “exceptions” contracts were all less than $5 million in value, and 85 percent of them were with community-based organizations that run pre-kindergarten classes.