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Audit: DOE awarded 291 no-bid contracts in three years

The city Department of Education awarded outside vendors $342 million in contracts in the last three years without following competitive bidding procedures that are standard across other city agencies, an audit released today by the state comptroller, Thomas DiNapoli, has found. School officials are allowed to offer no-bid contracts, but only if they follow certain guidelines, and the audit declares that Bloomberg administration officials often did not follow its own regulations.

For instance, vendors often won the no-bid contracts without any proof that avoiding the regular process would save the city money. In some cases, school officials actually destroyed records about the contracting process, the audit found.

School officials told auditors that the records were destroyed “mistakenly” and that the employee who destroyed them has been given training “to prevent future problems.” Speaking to reporters today, Schools Chancellor Joel Klein said the school system would compile better documentation in the future, but he pointed out that the audit found no cases of contracts that cost the city money or were of poor quality. He also said that a majority of the 291 no-bid contracts are with vendors that operate prekindergarten classes.

The audit addresses this point, saying that the purpose of the investigation was never to look into the quality and costs of the contracts, but rather the procedures the department followed in awarding them.

The audit also found that nearly 200 contracts began before a committee charged with vetting the contracts ever reviewed them, and others were not publicly advertised until after they were approved. The contract with the Alvarez & Marsal consulting firm that attracted attention because some of A&M’s work led to a bus rerouting that left children stranded in the middle of winter was not listed publicly in the City Record until 25 days after it was approved, the audit found.

DiNapoli conducted the audit at the request of the city’s public advocate, Betsy Gotbaum, who has criticized the Bloomberg administration for years for handing out too many no-bid contracts. In an interview today, Gotbaum said that the results of the audit were upsetting. “Where’s the transparency? Where’s the accountability?” she asked.

In a formal response to the audit, Deputy Chancellor Kathleen Grimm defended the department’s contracting process, saying that officials did examine cost-effectiveness and that flexibility is sometimes required or an obvious choice in contracting, such as when an initiative is already underway and changing vendors would unsettle a project.

Gotbaum said the audit underscores a recommendation by a commission she created on school governance, that the Department of Education should be subject to the same contracting rules as other city agencies.

Klein said that the reverse is true; the audit shows extra oversight is not needed. “You just had the oversight!” he said. “What this shows is that the process is basically sound,” Klein said earlier. “I’ve seen lots of audits. I’ve never seen one that didn’t say you couldn’t follow procurement rules a little closer.”

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