New York, NY — A recent investigation by New York City Comptroller Scott M. Stringer found that the City’s Department of Education (DOE) routinely violates its own contracting rules and internal procedures in awarding non-competitive contracts. In disregarding standard operating procedures, the DOE may have cost the city millions in wasted funding.
The Comptroller’s audit recently released, builds on a report issued in June 2015, which found serious shortcomings in the DOE’s oversight of “limited competition” contracts – those not awarded through a competitive bidding process. In Fiscal Year 2016, the Department 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 revealed that the DOE directed 442 of the vendors — approximately 85 percent — 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. The DOE submitted 302 new contracts and renewals to the Comptroller’s Office, on average, 258 days after their start dates. 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. In some cases, the DOE submitted f contracts to the Comptroller’s Office after the contract’s end date.
Because vendors cannot be paid until contracts are registered by the Comptroller’s Office, DOE’s failure to submit contracts for registration resulted in vendors providing goods and services without being paid — sometimes for years. Those delays can cause serious problems for the vendors — along with service disruptions for the City — and may discourage additional companies from bidding on DOE contracts, reducing competition for DOE’s business and increasing costs.
The present audit and the Comptroller’s 2015 review found serious shortcomings in contract monitoring and evaluation, which increases the risk that vendors who did not live up to a contract’s terms could be awarded future contracts.
“It’s unbelievable. 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,” New York City Comptroller Scott M. Stringer said. “These are issues the DOE has known about for years, and billions of dollars are on the line. 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. No one can possibly argue that these findings – and a lack of basic accountability and oversight – are acceptable.”