Bureau of Audit

FK10-147A
January 24, 2012

AUDIT REPORT IN BRIEF

Download the Complete Report (pdf 4.65 MB)

The Department of Education (DOE) serves approximately one million students in more than 1,600 schools as well as non-public (i.e., charter, parochial, private, and out-of-City) school students.  To serve students, DOE employs pedagogic staff and procures consultant services from companies and individuals.  During Fiscal Year 2010, DOE expended $836.2 million¹ on Professional Services for Direct Educational Services to Students (Direct Student Services).
When procuring Direct Student Services, DOE must comply with New York State Education Law Article 52-A, § 2590 (h), DOE’s Procurement Policy and Procedures (PPPs), Other Than Administrative Individual Consultants Standard Operating Procedures (SOPs), and other relevant laws and rulings. DOE’s PPPs and SOPs set forth policies and procedures for procuring goods and services and assign individuals and units with specific responsibilities in the procurement process. These rules and regulations are intended in part to: ensure the wise, prudent, and economical use of public money; make as consistent as possible the uniform application of these policies; foster broad-based competition; and meet the needs of DOE students, staff, and offices.
A large part of the Direct Student Services DOE provides are made up of Related Services. Related Services are defined as “developmental, corrective and other support services required to assist a student with a disability to benefit from instruction” and include: counseling, occupational therapy, physical therapy, speech therapy, health education services, vision services, and hearing education services. Under federal and State laws, DOE is mandated to provide students Related Services of the type, frequency, duration, and manner specified in their Individualized Educational Programs (IEPs) and within prescribed timeframes.

Audit Findings and Conclusions

It is not clear whether DOE made maximum reasonable efforts to contract with Related Service providers because it: did not utilize open-ended solicitations or re-solicit for Related Service providers more frequently to directly engage needed providers; imposed overly restrictive staffing requirements on prospective contractors; discouraged prospective contractors because it allowed contracted consultant companies to also act as independent consultants; and did not assign and award contracts based on a systematic needs analysis. Consequently, DOE does not have a sufficient pool of contracted resources to provide mandated Related Services.  As a result, DOE is authorizing the use of independent consultants through Related Service Authorization (RSA) Forms to provide these services, which may result in higher rates paid under lesser performance standards, monitoring constraints, and insurance requirements. More important, according to DOE’s Division of Instructional and Information Technology (DIIT) Related Service Status Reports for June 2010, DOE failed to provide Related Services to 72,302 of 285,736² students referred for such services—more than 25 percent (see Appendix I).

Additionally, DOE did not ensure that available DOE internal or contracted resources were utilized prior to authorizing the use of independent consultants; review consultants’ past performance prior to retaining services; or maintain and register independent consultant agreements.   Consequently, DOE may have unnecessarily engaged independent consultants; may have employed consultants incapable of satisfactorily providing services to students; and cannot effectively monitor independent consultants and hold them sufficiently accountable for their performance.

Audit Recommendations

To address these issues, we recommend that DOE should:

• Utilize open-ended solicitations or solicit more frequently for Related Service providers in order to retain sufficient contracted consultants to provide Related Services which cannot be fulfilled through DOE staff.

• Ensure that minimum staffing capacity requirements for future solicitations are not overly restrictive.

• Reconsider its practice of allowing contractors to also act as independent consultants while paying them at their highest contract rate for the service provided and not holding them to the associated contract terms.

• Assign and award future contracts based on a systematic needs analysis that considers all factors affecting the need for services including, but not limited to, the length, frequency, and duration of services.

• Ensure that it provides all students Related Services of the type, frequency, duration, and manner specified by their IEPs and within prescribed timeframes.

• Institute controls to ensure that available DOE personnel and contracted consultant companies are utilized prior to authorizing the use of independent consultants. These controls should include but not be limited to making written determinations that DOE personnel and contracted consultant companies are not available to perform services and employing computer system edits to ensure that DOE personnel and contracted consultant companies are successively exhausted prior to engaging independent consultants.

• Complete Performance Evaluations and enter cautionary information in VENDEX.
• Review consultants’ past performance prior to retaining services.
• Maintain RSA Forms used to engage independent consultants.

• Register all contracts and agreements as required by New York State Education Law Article 52-A, § 2590 (h) and DOE procurement rules.

Agency Response

In its response, DOE primarily objected to the report’s “shameful commentary…that the Department failed to provide related services to more than 25 percent of the students recommended for the services in School Year 2010” on the basis that reported DIIT Related Service Status Report data was “untested” and that service provision was not within our scope. However, DOE’s objections are unfounded because DOE itself compiled, reported, and used DIIT Related Service Status Report data to make procurement decisions as well as to track, monitor, and report on service provision. Further, since DOE used this data as the sole basis for determining the level of Related Services that must be provided through contracted companies, it is well within the scope of our audit.

DOE also stated it was concerned and took issue with the report’s “unsupported findings, leaps of logic and largely stale and unviable recommendations.” Nevertheless, DOE acknowledged the report’s findings by agreeing to implement or partially implement many of our recommendations. In particular, DOE indicated that its new Request for Proposals (RFP) would address the report’s recommendations and improve its contracting efforts.  However, during the course of the audit, DOE did not inform the audit team that the RFP was completed or share this critical document with them. As a result, we cannot determine whether the new RFP will, in fact, address the recommendations and improve DOE’s contracting process.