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DOE says city will save from contract that went to a high bidder

The company that won the contract.
The company that won the contract.

Here’s a story from yesterday’s New York Post that escaped our attention: Yoav Gonen reports that the Department of Education handed a $1.6 million contract to a vendor that wasn’t the lowest bidder — and whose services include a $315/hour consultant fee.

The contract went to the management consulting company Accenture, which you might recognize as one of several million companies whose spokesman is Tiger Woods. Accenture is promising to save the city school system $21 million in the next year by lowering the cost of books, equipment like overhead projectors, and software. The trick, according to schools spokeswoman Marge Feinberg, is bulk-purchasing of a variety the DOE previously could not accomplish. So whereas right now schools get about a 2% discount on books of the sort you’d buy at Barnes & Noble (as opposed to textbooks), when Accenture is done the discount will shoot to 35%, Feinberg said.

In the past, a contract with a different management consulting company that promised to save the school system money drew criticism for inflating its savings projections. Estimates of the cost-savings from the contract, with the firm Alvarez & Marsal, dropped over time, though the updated numbers remained far above the fee the company charged, about $16 million.

This contract is also attracting heat. The Post story quotes both a losing vendor and Public Advocate Betsy Gotbaum criticizing the department. But of course, won’t know whether these savings really materialize until next year.

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