New York City’s Department of Education routinely ignores its own rules and procedures when it comes to awarding over 500 non-competitive contracts worth more than $2.7 billion, according to an audit released Friday by city comptroller Scott Stringer.

“It’s unbelievable," Stringer said. "This investigation shows that DOE acts as though the rules don’t matter. We’re talking about billions of dollars spent without real oversight, without competitive bids, and without accountability.But this is about more than just contracts. It’s about right and wrong, because every time we don’t get the most competitive price, it means a dollar is taken away from our kids. When it comes to our schools, every penny counts.”

In Fiscal Year 2016, DOE awarded $2.7 billion in contracts without full competition, representing 64% of the agency’s total contract spending. A review of 521 limited competition contracts and contract actions showed:

  • DOE directed 442 of the vendors -- about 85% -- to begin work before the contract was even registered with the Comptroller’s Office, in violation of the New York State Education Law, the City Charter, and DOE’s own rules;
  • DOE submitted 302 new contracts and renewals to the comptroller’s office an average of 258 days after their start dates, while 140 extensions of existing contracts were submitted on average 137 days after work began;
  • In the most egregious case, a contract was submitted to the comptroller’s office 910 days -- nearly two and a half years -- after the vendor began work; and
  • DOE submitted dozens of contracts to the comptroller’s office after the contract's end date.

Among other findings: the DOE failed to review vendors’ performance as required; the DOE failed to consistently conduct background checks on vendors and address red flags; the DOE paid more than $2 million for 55 improper purchases; and final contract files often lacked approvals and required documents.
“We have a rigorous procurement process with strong oversight mechanisms, and many of this audit’s conclusions are incorrect,” said Will Mantell, First Deputy Press Secretary for the DOE. “We perform background checks on all vendors and post them online, maintain the appropriate documentation on procurements, and recently implemented an electronic performance evaluation system. We’ll continue to work to strengthen our procurement process and ensure students and schools get the services they need.”

The report released Friday is Stringer’s 17th on the DOE since taking office.

“These are issues the DOE has known about for years, and billions of dollars are on the line,” Stringer said. “When it comes to contracting, this is an opaque agency that refuses to accept responsibility, that often uses inaccurate arguments to defend backwards organizational practices.”

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Chip Barnett

Chip Barnett

Chip Barnett is a journalist with more than 40 years of experience. Barnett is currently Senior Market Reporter for The Bond Buyer.