Speaker Menin on procurement protocols and Mariela Graham incident

I want to shift gears.

It was reported last week that former District 3 Deputy Superintendent Mariela Graham split contracts for the same vendor to the same vendor.

bypass the typical financial oversight of the contracts.

The contract with this vendor resulted in the placement of a former DOE employee with substantiated charges of sexual misconduct in a Manhattan school.

So this incident, of course, raises concern that there may be more widespread practice of contracts being broken up to avoid appropriate spending scrutiny.

And in fact,

SCI's report on the matter noted that schools are systemically plagued by vendor check splitting and other procurement problems.

The report concluded, quote, violations of procurement rules often resulted in financial losses to the DOE, led to state and federal prosecutions, and or prevented the DOE from working with the most qualified

vendors at fair market prices.

Can you describe DOE's typical procurement protocols and how that differs for contracts over and under $25,000?

Thank you for the question.

And before I turn it over to Alicia, I want to address the specifics of the specific question you raised.

And, you know, I have devoted my career to expanding opportunities for young people across the city.

I want to focus on building a public school system for families that does not sacrifice the education of our children for bureaucracy.

But having said that, I do regret the lapses in policy and procedures that took place.

when I was a superintendent in District 3.

The actions and questions were undertaken in pursuit of educational opportunity for children, not for personal gain, and benefited no one other than children in the district.

While our current system

in NYC public schools tries to strike a balance between system-wide purchasing and ensuring that schools and districts have a level of autonomy to

get to day-to-day transactions as well as their vision.

We have a critical need to strengthen and improve purchasing practices across our system.

And as a chancellor,

This is something I'm really going to be deeply focused on.

I'm working to make sure that it's easier to truly deliver for students with training and oversight that is enhanced but supportive, not imperative.

And so I want to really turn it over to Alicia to talk a little bit more about the procurement process on the 25,000.

Good morning, Alicia Beloui.

I forgot to state that earlier.

So as the Chancellor stated, schools have autonomy because it's seen as a way to allow schools to get the goods and services that they need as quickly as possible.

And so with that, schools have

They allotted what we would call non-contractual spend threshold of $15,000

for goods and $25,000 for services with an individual vendor, that they follow the proper standard operating procedures for purchasing.

For any spend above that $15,000 and $25,000 cap, there are specific types of procurement methods that they're supposed to initiate when they know that they have a need for a good or service.

I would say at the simplest form, the up to $100,000 schools are allowed to initiate what we call a simplified procurement process.

And it's probably the simplest and the fastest.

It doesn't require going to PEP.

It also doesn't require controller registration.

Anything above that has to go through a formal procurement process.

Primarily, the preferred process would be a competitive bid, but we also have RFPs.

We have negotiated services.

We have multiple task award contracts.

The multiple task award contracts are the contracts that are primarily used at the school level.

And what it does is it's a competitive process, but when it's initiated and a vendor is awarded a contract, it serves as kind of like a pre-qualified list of vendors who can provide a good or services.

So a lot of...

A lot of times you'll see contracts in that category that are for professional development, for assessments and things of that nature.

Schools also leverage what we call a listing application, which is essentially a sole source.

Contract and it's used for textbooks, educational software, because those items tend to be proprietary and you cannot purchase it anywhere else.

Once a procurement action is initiated by a program office, they work very closely with my team to go through all of the necessary steps and processes that are outlined in our procurement.

policy.

So that would mean, you know, releasing the bid.

That would mean receiving responses, analyzing those responses or evaluating them, and then moving toward award.

Once the contract is awarded, then we go through another due diligence process where we're doing background checks to ensure that the vendor is responsible.

All vendors are required to go through a data privacy protocol, and they have to sign data privacy agreements.

And once they're done with that, then we present those contracts to the panel for educational policy.

We meet with the panel before the actual panel vote to give them an overview of each of the contract items that they're going to vote on.

And once you're done with that, once we're done with that,

We hold the public panel meeting and they vote on it there.

Once it is approved by panel, or if it's not approved, we don't move forward with it.

But once it's approved by panel, we enter into the contracting stage.

Once we get to the contracting stage, that's kind of where additional negotiations occur.

And once we finalize that, then it gets submitted to the comptroller for registration.

That's just cliff notes.

I mean, that's a very cliff notes version of it.

Sure.

A couple questions on that.

You mentioned textbooks as an example.

Why would tech, and you mentioned that they're proprietary.

Why would.

Textbooks be a proprietary suit that seems kind of commonplace why would they be proprietary because you so oftentimes

so textbooks are proprietary to the actual publisher and oftentimes you can only purchase those items from the publisher and that's the definition of a sole source if i can't purchase it anywhere else but with that with that particular vendor

then that that that's that's a sole source it's it's it's it's not competitive so then how does do we ensure that the staff with the authority to sign contracts that are not

competitively bid are not improperly splitting payments to avoid standard procurement protocols.

Repeat the question again, I'm sorry.

So it goes into the questions that I was formerly asking the Chancellor, which is how does DOE ensure that the staff or the authority to sign the contracts that aren't competitively bid

aren't improperly splitting the payments to avoid the standard procurement process?

So I think you're referencing the non-

procurement violations.

So I think, so we provide training to staff that are, who have the authority to initiate procurement actions.

In addition to that, we also have standard operating procedures.

Now what I will say is that, you know, clearly if these things are happening, then there's always room for improvement.

And as a part of the procurement reform initiative that was recently launched at New York City Public Schools, we're looking at ways to strengthen

auditing and oversight at the practices at the school level in order to identify those inefficiencies.

And we're also seeking to strengthen our training, primarily focusing on ensuring that training is occurring on an annual basis and that it's certified, and also strengthening the training around what we deem as non-contractual purchasing.

In addition to that, we're also looking at ways to modernize our procurement infrastructure, looking at ways of centralization and also making upgrades to our existing procurement technology.

So just building on what you just said, so there are...

Is currently an effort underway to review the existing procurement protocols?

You mentioned an annual training, but is there more that is being done to reform the procurement process to prevent these things from happening in the future?

Yes, we're in the preliminary stages of developing that, yes.

But there is an actual procurement reform that is focused on these things, so increasing governance primarily at the school level.

And we also think that centralizing the procurement function itself will increase transparency and accountability and visibility.

Okay, so just in closing, I would just say you mentioned you're in the preliminary process of reviewing that.

I would like to get an update on that, so an update to my office directly and to this committee on exactly what is happening to reform the process.

I have more questions, but I want to pass it over to our chairs now.