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State to Audit No-Bid Award of City’s School Contracts
Ohanian Comment: About time. The Alvarez & Marsal firm generates 16 hits on this site. They have a long track record of spending lots of money.
By Jennifer Medina
The state comptroller, Thomas P. DiNapoli, is opening an audit of the City Education Department’s increasing practice of awarding contracts without competitive bidding. In the past five years such contracts have totaled $315 million.
To keep down costs, competitive bidding is normally required of city agencies. But although the Education Department is controlled by Mayor Michael R. Bloomberg, it is by law a state-authorized entity free from some of the more stringent city financial regulations.
School officials have said that awarding contracts without bidding gives them more flexibility and allows them to get better and faster results, but the city has been fiercely criticized for a rapid rise in no-bid contracts since Schools Chancellor Joel I. Klein came into office.
In 2002, when the school system was still controlled by the Board of Education, 32 contracts totaling $11.9 million were awarded without bidding. In 2003, after Mr. Klein took over, the number nearly doubled and totaled more than $56 million. They reached a high of $121 million in 2006, then dropped again last year to $62 million, according to the city’s public advocate, Betsy Gotbaum, who has been a critic of the practice. She pressed the state for the audit last fall.
“This is about transparency and accountability,” Ms. Gotbaum said. “Why are they awarding so many contracts without any other consideration? It may all be perfectly legitimate and fine, but we don’t know why.”
In a letter sent to Mr. Klein on Tuesday, the comptroller’s office said it would begin the audit on Jan. 21. Audits typically take between six months and a year. The audit was reported in The Daily News on Friday.
Most city education contracts are still competitively bid, but some of those that were not have been particularly well publicized.
The city came under tough criticism in 2006 over a $15.8 million deal with Alvarez & Marsal, a consulting firm that was hired to restructure the schools’ financial operations and cut as much as $200 million from the city’s more than $15 billion budget. The consulting firm also restructured several school bus routes to save money, but the plan infuriated parents when it took effect last January.
Some of the consultants charged as much as $450 an hour for their work, and were able to bill as much as $500 a day for such expenses as transportation and housing.
— Jennifer Medina
New York Times
2008-01-12
INDEX OF OUTRAGES
Pages: 380
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