News & Politics

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 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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