No Bids, No Signed Contracts, Scarce Selection Docs: Audit report reveals unsound digital curricula payouts at BCPS

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UPDATED: Not solid, nor sound. A long-awaited external audit of Baltimore County Public Schools has noted limited findings on the timing of employee financial disclosure filings, with procurement practices touted by the school administration as “fiscally solid.” Yet the 200-plus page auditors’ report clearly does not support district claims of “sound procurement” overall.

The report lists a mess of criticisms over wanton employee travel spending far above school policy; a lack of district oversight of procurement card transactions; unsubstantiated piggyback contracts; and a litany of multimillion dollar curricula spending with no signed contracts and very little documentation on why the vendors were selected — curricula increasingly supplied by edtech companies that sponsor conferences and serve on panels widely attended by BCPS administrators. A clean bill of health this is not. Are we being “Barred?” 

UPDATE: For a stellar deep analysis of the audit, including rampant travel-related and BCPS document purge issues, see this new Baltimore Post article by investigative reporter Ann Costantino.

In terms of problematic high-dollar spending, a primary concern flagged by auditors in “observations” include: Curriculum & Instruction, the department that Verletta White oversaw as Chief Academic Officer during the scope of the audit. White now has oversight as interim superintendent. Among other concerns in the audit, on p. 26-27:Written contracts, including acceptance of standard terms and conditions, are a critical component of risk management. There is no written contract for curriculum purchases” for several curricula contracts reviewed, including “Mathematics Supplemental Resources,” known as DreamBox.

BCPS payouts to DreamBox, a much-criticized math platform, mushroomed from $635,000 in 2014, soon after former Superintendent Dallas Dance launched the laptop program, to double that by 2016, and hitting $3.2 million barely a year later in 2017. (See audit appendix here). This is the company that Dance, later convicted of perjury, met with as part of his paid affiliation with the controversial Education Research & Development Institute (ERDI), according to The New York Times. And White — whose consulting with ERDI led to an ethics violation —  pressed hard for the nearly $2 million increase in Summer 2017, when she took the helm, asking the Board of Education to approve the expanded contract spending authority. Expenditures on DreamBox are among ongoing tens of millions in no-bid curricula contract spending authorities with ERDI clients.

Again, with “no written contract for curriculum purchases?”

Also noted for the awarding of multimillion dollar curricula deals: “Very little pre-procurement activity documentation is maintained for curriculum purchases.” These procedures do not follow BCPS’ established business practices, the audit noted, and are not aligned with “traditional procurement best practices.” This criticism applied specifically to six curricula deals — a third of the 18 various contract spending authorities reviewed by auditors. Related documents can be found at BCPS here.

A note to county and state officials and school board members — while a limited finding related to any violations of state laws so far is welcome — please do not allow the spinning of the post-audit message to foster continued multi-million dollar no-bid curricula contracts, with little to no track record on how selected or tracking of products or services, and few if any contracts actually signed. (!) A focused Phase 2 audit, as recommended previously and set to go before the board for approval, is clearly needed.

Some fixes are being pursued by the district, including more oversight of unauthorized spending with procurement “credit cards,” or P-Cards, p. 30-33 (why that issue wasn’t found in the 33 routine audits White cites is clearly a concern. With those 33 audits, seems much of this would have been corrected previously). Overnight travel will now be pre-approved, White said in a video. Good thing: The audit found that nearly all employees were spending up to three times the federal General Services Administration rate, which BCPS policy follows. On p. 34 of the audit:

Does the hotel rate exceed the GSA rate in effect for the geographic location in which the hotel stays occurred? Yes, 91.9 percent. No, 8.1 percent.” That included a $559 night stay just down the road in Washington, DCtriple the rate at that time. Fiscal responsibility, anyone?

The issue of piggybacked “cooperative contracts” also reveal questionable selection processes, including a lack of documented rationale for avoiding bids or linking the two contracts. The audit (p. 28) notes that BCPS has “not established a procedure to document the consideration of pre-procurement and contractual details of the underlying piggybacked contract. BCPS may not be able to demonstrate its compliance with Annotated Code of Maryland Section 5.112.” BCPS says it will maintain better documentation. (Again, if this brushes up against state law, what were all those national “procurement awards” for, anyway?)

BCPS’ “management” response to the curricula spending issue in the BCPS-hired audit is particularly vague and insufficient: “Management agrees that the maintenance of documentation will assist in demonstrating compliance with Policy and Rule 6002,” the rule BCPS cites when allowing numerous no bid-contracts for curricula.

This is not about who becomes the next permanent superintendent. Yet there is an ongoing problem at BCPS: Vague and sometimes unfulfilled district leadership promises or even pushback following Maryland Office of Legislative Audits reports, which cited the continuing BCPS practice of allowing no-bid or single-source contracts, despite concerns about a need for “fairness and integrity.”

Maryland legislative auditors in 2015 (and previously) recommended that BCPS seek bids for any contracts higher than $25,000, as aligning to BCPS policy overall. 

In that 2015 report, conducted prior to the laptop program, BCPS officials defended various procedures to not seek bids for numerous services and contracts, saying their procedures were compliant with the law. The State OLA found a need to respond with a strong follow-up “Auditors comment” — see full citation and link below.

“A comprehensive procurement policy requiring competitive procurements for all types of purchases is a recognized best practice and it helps ensure fairness and integrity in the expenditure of public funds,” the report stated.

“Other Maryland school systems have established comprehensive policies, including competitive procurement requirements for service contracts. BCPS’ apparent reluctance to establish a policy requiring competitive procurement for all service contracts is perplexing given that its procurement manual already requires it to obtain price quotes for lower cost services (that is, services valued at less than $25,000).

OLA Audit: https://www.ola.state.md.us/Reports/Schools/BCPS15.pdf

Thomas J. Barnickel III, CPA, Legislative Auditor: p. 33-35

**Procurement Reform letter and report.

http://procurement-reform.org/wp-content/uploads/2015/11/MD-BCPS-Audit-July-2015-excerpt.pdf

See addendum, p. 33-35:

“Analysis

“BCPS had not established a comprehensive procurement policy that requires competitive procurement of certain services or documentation of justifications for not using competitive procurements.”

Recommendation 3
We recommend that BCPS amend its existing policies to require competitive procurement methods to be used for all contracts for services. 

(Side note: this response, in which BCPS refuses to follow the OLA’s recommendations). 

  1. Response 3
    BCPS complies with all applicable state, federal, and local statutes. State law is silent as to the purchase of services valued at $25,000 or more and BCPS’ Policy 3210, Purchasing Guidelines, Section VI., provides that BCPS shall have the option to issue bids, requests for proposals, or solicit price quotations for any requirements that do not require formal bids. BCPS’ Rule 3210, Purchasing Guidelines, Section V., provides for the establishment of procedures for informal bids, RFPs, and price quotations and these are incorporated in Purchasing Procedure 3210.006.

Auditor’s Comment:
Our report finding did not indicate non-compliance with State statutes by BCPS, but questioned the lack of a policy requiring the use of a competitive procurement process for all service contracts. A comprehensive procurement policy requiring competitive procurements for all types of purchases is a recognized best practice and it helps ensure fairness and integrity in the expenditure of public funds. Other Maryland school systems have established comprehensive policies, including competitive procurement requirements for service contracts. BCPS’ apparent reluctance to establish a policy requiring competitive procurement for all service contracts is perplexing given that its procurement manual already requires it to obtain price quotes for lower cost services (that is, services valued at less than $25,000).”

____________________

Howard County and other Maryland entities have been criticized for no-bid or piggyback contracts as well. 

Howard County, for example, was cited for no-bid contracts. Also note this related state audit on spending on unused/misused tech by a government agency. “Legislative auditors say Maryland’s Department of Human Services mishandled state contracts and unnecessarily spent nearly $5 million — sometimes without getting anything in return,” the Sun noted. The 2017 audit “found the agency’s handling of a huge IT project “resulted in DHS paying approximately $4 million more than necessary for one project that was ultimately cancelled.”

Sounds familiar for ScholarChip ID, the failed lanyard ID program, where about $4 million in public tax dollars has been spent, though the unwieldy student IDs were dropped, attendance kiosks sent back, and software glitchy. The services overall,  “ultimately cancelled?” For more on overall STAT spending and ScholarChip woes, see this summary.

_____________________

And lastly, in an especially odd twist, some of the school board members were cited for filing financial disclosure forms “late,” several months prior to actually assuming office. BCPS reported only an April 30 deadline date. Board Vice Chair Julie Henn noted in a post on her public Facebook page: “Before I even applied for appointment to the Board, my 2015 financial disclosure (which was not required prior to appointment) was five months late and was flagged as such.”

— JCS

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