Sunday, July 18, 2010


*** News Release ***


NEW YORK, NY - New York City Comptroller John C. Liu urged the Panel for
Education Policy (PEP) to reject the Department of Education (DOE)
resolution for a "Blanket Approval of Purchases through Contracts", which
would allow the DOE to make contract purchases without PEP approval. The DOE
resolution, on the meeting agenda posted for the upcoming July 19 PEP
meeting, comes less than a year after PEP approval of contracts became
required in the school governance reform (widely known as the extension and
modification of mayoral control of New York City schools) passed by the
state legislature last August.

During the heightened public debate leading up to the legislative passage,
New York State Comptroller Thomas DiNapoli had issued an audit report which
found significantly diminished assurance that the DOE's non-competitive
contracts were justified.

Comptroller Liu stated: "It's rather amazing that the DOE is already
plotting an end-run around the stronger DOE accountability required by
school governance reform passed less than a year ago. The State legislation
answered public demands for greater scrutiny and oversight of the DOE, yet
the DOE just doesn't relent in its pursuit of less public scrutiny and less
oversight. This little-known resolution, if passed, will not only circumvent
State law, but will encourage more expensive and unnecessary contracts, many
of which will undoubtedly be no-bid contracts that the public clearly
disapproves of."

New York City Councilmember and Education Committee Chairperson ROBERT
JACKSON stated: "Comptroller Liu's letter should be required reading in
Albany. Each and every one of our State legislators needs to understand how
their intent is being averted by DOE's attempt to bypass the explicit
protocol they established to foster accountability and public scrutiny.
This violates State law by removing PEP oversight, but the stealth bomber
under the radar approach of presenting this speaks volumes about DOE lack of
respect for public discourse and disclosure."

Assemblymember MICAH KELLNER stated: "This resolution is a clear attempt to
circumvent the contracting oversight provisions included in the school
governance reforms that were passed by the legislature last summer. By
putting forward this resolution the Department of Education is showing that
they want to pick and choose which parts of the law they want to comply
with. That is not how the law works."

In his July 16 letter to the PEP urging rejection of the resolution,
Comptroller Liu also noted that the resolution was not properly disseminated
for review prior to the vote and is inconsistent with existing procurement
policies and procedures. Although the vote on the resolution is listed on
the PEP's meeting agenda for tomorrow, July 19
721/PEP_RevisedAgenda_Jul192010.pdf), the resolution itself is still nowhere
to be found nor provided. The full text of Comptroller Liu's letter is

July 16, 2010

Mr. David C. Chang
Chairperson, Panel for Educational Policy

Mr. Tino Hernandez
Chairperson, Contracts Committee
Panel for Educational Policy
Department of Education
City of New York
52 Chambers Street
New York, NY 10007

RE: Agenda Item C, Panel for Educational Policy Meeting, July 19, 2010

Dear Mr. Chang and Mr. Hernandez:

On Monday, July 19, 2009, the Panel for Educational Policy ("PEP") will be
asked to approve a resolution entitled "Blanket Approval of Purchases
through Contracts of the City of New York and its Agencies" amending Section
2-08(d)(2) of the Department of Education's ("DOE") Procurement Policy and
Procedures to permit DOE to make purchases through contracts of the City of
New York and its agencies without PEP approval. Presently, contracts with
the City of New York and its agencies require approval by the PEP in
conformance with New York State Education Law Section 2590-g(5)(c). I write
to inform you of the need for your continued oversight and to urge you to
reject the resolution as it is imprudent, inconsistent with existing state
law and would perpetuate DOE's history of poor transparency and

My office has repeatedly asked for copies of the resolution, and to date, a
copy of the resolution has not been provided. But it is our understanding
that the resolution seeks to amend Section 2-08(d)(2) of the DOE's
Procurement Policy and Procedures as approved by PEP on January 27, 2010 to
exempt any contracts from PEP approval by the City of New York and its
agencies as undertaken by the DOE. Section 2-08(d)(2) currently exempts
only contracts with the U.S. General Services Administration and other
federal agencies or those with the NYS Office of General Services and other
State agencies from PEP approval. However, DOE has no authority to amend
its Procurement Policy and Procedures when such amendment would be
inconsistent with the provisions of New York State Education Law as amended
on August 11, 2009.

It has been less than a year since the New York State Legislature
strengthened the PEP's authority over DOE's contracting process because it,
in its wisdom, believed that it was prudent to require greater oversight and
public transparency over what amounts to billions of dollars in taxpayer
expenditures each year. My office takes the same position. Public
transparency is our duty. Blanket approval of contracts with City agencies
effectively removes these contracts from the PEP and public scrutiny. Had
the State Legislature intended to exempt these contracts from the PEP
approval, as it elected to do with New York State and federal contracts, it
would have done so.

Presently, the City of New York conducts procurements, known as
"requirements contracts," that are structured to serve multiple agencies.
Such contracts are generally let for goods and/or services concerning
information technology and commodities purchases through contracts held by
the Department of Information Technology & Telecommunications (DOITT) and
the Department of Citywide Administrative Services (DCAS). Requirements
contracts were established to achieve economies of scale and are limited to
the above two agencies. Although my office has been informed that DOE
intends to purchase from only DOITT and DCAS requirements contracts, it is
my understanding that the proposed resolution provides for no limitations on
the exemption.

Additionally, I must point out that it is unclear whether DOE has complied
with applicable PEP by-laws concerning public review. Section 2.5.1(g) of
the PEP by-laws states that the PEP shall undertake a public review process
"prior to approving a procurement policy for the City District and any
amendments made thereto;..The public review process shall include notice of
the proposed item under PEP consideration at least 45 days in advance of the
Panel vote on such item. Such public notice shall include a description of
the subject and the purpose and substance of the proposed item under
consideration, and shall otherwise conform to the requirements of Education
Law 2590-g(8) (a)." Based upon a review by my office, such required public
notice does not appear to have been properly posted on the PEP website, as
required, nor has such notice been properly provided in conformance with the
Education Law. My office discovered this item on July 2, 2010 under the
"Public Meetings" and "Agenda" section of the website rather than under the
"Public Notice" section. Additionally, the date of the Agenda page changes
automatically, thus there is no way of knowing when, in fact, the item was
posted and whether the 45 day requirement was met. Moreover, the website
contains no information under the "Meeting Materials" section nor the does
the Agenda item itself describe with any detail what could remotely be
interpreted as the "purpose and substance" of the proposed item.

In light of the fact that 30 percent of the City's budget is spent on
education, our City's taxpayers need more accountability on school spending
and the PEP should not allow DOE to maneuver an end run around governance
reform that was passed less than a year ago and to do so in a manner that
appears calculated to deceive the public.

I strongly urge you to reject the resolution.


John C. Liu

JCM: dm
cc: Philip A. Berry, Vice Chairman
Linda Lausell Bryant
Joe Chan
Joan Correale
Dmytro Fedkowskyj
Tomas Morales
Gbubemi Okotieuro
Gitte Peng
Anna Santos
Patrick Sullivan
James Whelan
Geneith Turnbull, Deputy Comptroller, Office of Contract Administration
David N. Ross, Executive Director, DOE Division of Contracts and Purchasing

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