Barrett: There's No-Bidness Like Bloomberg Bidness (Updated)

There's a lot that's right about mayoral control of schools, and the pluses have been getting plenty of ink now that the law authorizing it expires in June, including our recent cover story.

But when State Comptroller Tom DiNapoli issued a 26-page audit this week slamming Mike Bloomberg's Department of Education for $342 million in no-bid contracts, the only reporters to cover it were Rachel Monahan of the Daily News and the Voice's Elizabeth Dwoskin*.

No one has a real number for no-bids before mayoral control, but the Times once put it at $12 million, and many observers believe that this explosion in end-runs around competitive procurement rules is a lesson plan in bad business.

The under-covered audit shows just how wildly unregulated DOE's no-bid contracting is -- with nearly 200 contractors beginning work before DOE's contract committee approved their deals and others advertised after they were already approved. Though DOE's contracting rules require documentation about why the deals were done without bidding, the agency's Committee on Contracts routinely fails to comply with their rules, which are substantially more lenient than the rules that apply to every other mayoral agency. The agency cites "other special circumstances," which are never explained, as the reason it dodges bids in the vast majority of cases.

DOE actually had the audacity in their formal response to the audit to claim that "this information does not need to be documented," which the comptroller replied was contrary to DOE procedures. "We disagree with DOE officials and note that public accountability and transparency are best served when the basis and need for noncompetitive contract awards are fully explained by documentation," replied DiNapoli. "In the absence of such documentation, the fairness and openness of DOE's procurement practices may be called into question."

A three-member team of Columbia Graduate School of Journalism students working under my supervision did their master's thesis on the no-bid contracts this spring and filed a freedom of information request in January, seeking the minutes of the contract meetings and other records. Since the public is barred from attending the meetings of the committee -- which claims an exemption under open meetings laws because it consists entirely of DOE staffers -- minutes were the only possible way the students could examine the agency's reasoning behind all these no-bid awards. A couple of months ago, the students narrowed their original request to just the most recent year of minutes.

Over the course of months of back and forth with the department, including DOE e-mails every couple of weeks informing the students it was working on the request, agency officials never told the students what DiNapoli's audit reveals for the first time: that the committee deliberately keeps no minutes. Finally, on the eve of the audit's release and long after the student's projects were completed, the agency wrote conceding that no minutes exist. When DiNapoli concluded that minutes "would greatly enhance the accountability over DOE's noncompetitive award of contracts," DOE agreed they'd begin to do their own special version of them, saying they would "memorialize" the "substance" of the questions and answers about individual deals.

DiNapoli ran into a stonewall similar to the students. When the audit was announced in January 2008, the Times indicated it would likely be done in six months. Instead, it took 17 months, due to DOE foot dragging. DiNapoli's office emailed the Voice that "the audit was very slow" because it took so long to obtain "the population of contracts for examination" from DOE. Dennis Tompkins, the spokesman for DiNapoli, says that the auditors requested the contract database on January 17, 2008, and got it piecemeal in March and May, but didn't get the entire database until November. When DiNapoli sent the department a final draft of the audit on March 6, 2009, seeking a response in 30 days, the department didn't comply and requested a 15-day extension. Finally, on April 27, says Tompkins, the auditors met with DOE and said DiNapoli was going to publish the audit without DOE response. The next day, DOE submitted a detailed, four-page reply that it had obviously been sitting on. DOE appeared to be trying to delay the release of the audit until legislative leaders had settled on a package of bills to renew mayoral control.

Any renewal of mayoral control might well be expected to address the anomaly that the Bloomberg administration wants to control education like it does other city services, but it has also exempted DOE from the far more stringent contracting procedures that the charter applies to every mayoral agency. The law that created mayoral control in 2002 allowed DOE to exempt itself, but DOE has also appeared to have the option of voluntarily adopting the city procedures, and has instead chosen not to do so.  Tompkins told the Voice that his auditors "believe something like that"--meaning the application of city procedures to DOE--"could be pursued" and is "likely to be possible," indicating that there is "no prohibition" in the law against it.

Comptroller Bill Thompson, the mayor's probable Democratic opponent, has also issued a report blasting the no-bids and condemning the city's decision to exploit "a gray area in the law" that allows DOE "to treat itself as a state agency whenever it's convenient," especially regarding contracting rules, and as a city agency whenever that's convenient.

DiNapoli's audit sidestepped all questions about the cost of these contracts, and the quality of services (Tompkins explained that the "volume of no-bids was a big enough target for us"). Though a breakdown in the rerouting of buses orchestrated by a no-bid consulting company was what prompted Public Advocate Betsy Gotbaum to push DiNapoli to do the audit in the first place, he decided to exclude services from the scope of the audit.

One line in the audit suggests that DOE was trying to make sure the audit never got to any quality questions, trying to focus DiNapoli's office on the contract committee. At the "opening meeting" between DOE and the comptroller's staff, "DOE officials" argued that "the work of the committee had no bearing upon the quality of the work ultimately provided by the contractor," the DiNapoli response contended. This suggests that DOE felt that if the audit's focus was limited to the DOE contract committee, quality of service would be beyond its scope. Tompkins refused "to speculate about whether DOE was trying to steer the auditors" away from quality of services issues, but was emphatic that the audit's scope was set by the auditors, not by DOE. In any event, the assertion that the committee had nothing to do with assessing the quality of services is odd since it often renews, extends or amends existing contracts.
Chancellor Joel Klein told reporters when the audit was released that it found no cases of contracts that delivered services of poor quality, after DOE and DiNapoli's office ostensibly agreed that the auditors would never even look at that. "What this shows," said spinmeister Klein, "is that the process is basically sound." Despite all the evidence to the contrary, he dismissed the no-bid controversy as "urban myth."

Research Credit: Johanna Barr, Tom Feeney and Jana Kasperkevic

*Update: Due to an editing error, this blog post implies that no other reporter besides Rachel Monahan and Elizabeth Dwoskin covered the audit. The original intent was to comment on the fact other than the Daily News, no dailies -- namely the Times and the Post -- had covered it. Elizabeth Green of gothamschools.org and Gail Robinson of Gotham Gazette both reported on the audit prior to the publication of this blog post and provided informative coverage.


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