New York City Comptroller Scott Stringer released a stinging report accusing the city’s Department of Education (DOE) of doling out billions of dollars in contracts without proper oversight. Given our knowledge of corruption in the Empire State, we suspect there are dozens of whistleblower opportunities for insiders with knowledge of education contracts fraud.
The report found many shortcomings within the Department of Education’s contracting program. Among the findings,
- DOE “does not provide sufficient guidance for contract assignments” and fails to ensure that a proposed new vendor’s capacity and history are adequately assessed. In addition, contract award records “lack sufficient information justifying the assignments, detailing prior performance and documenting adequate insurance coverage.”
- DOE has not developed procedures to help staff detect the warning signs of possible collusion when awarding contracts that are not awarded via the competitive bidding process.
- DOE’s bidding manual does not address “the performance evaluations that must be conducted throughout the contract period.”
- DOE’s failed to comply with the reforms the agency promised after the Comptroller’s prior audit. [More on that below.]
- “DOE still does not conduct required performance evaluations of contractors seeking renewals or extensions.”
- “DOE still does not adequately monitor its contract managers to ensure that contract monitoring and performance evaluations are [properly] conducted.”
- “DOE does not ensure that limited-competition and non-competitive contracts are registered with the Comptroller prior to vendors beginning performance” and as required by state law. Until a vendor contract is registered, no payments can be made. Delayed payments drive away potential competitors and therefore could mean the city pays higher prices for goods and services.
The Comptroller’s report had other findings. In particular, this audit report disclosed that:
- “DOE has inadequate controls over its procurement of contracts though the negotiated services method;
- “Procurement files of approved contracts did not consistently contain background review reports or show that issues of concern identified in the reports had been satisfactorily resolved;
- “Contract assignments in our sample were not approved by DOE’s Vendor Research & Price Analysis (Vendor Research) unit before their starting dates; and
- “Procurement files did not consistently contain the documents and approvals needed to support contract awards as specified in the PPP manual and other Division of Contracts and Purchasing (DCP) guidelines.”
New York’s schools spend billions of dollars on contracted goods and services. The Comptroller’s report found well over half the contracts issued by the department violated one or more guidelines. That makes the prospect of a fraud very high.
A lack of transparency and competitive bidding makes it easier for corrupt contractors and a few bad apples within the city conspire and cheat taxpayers. Even if no one inside the DOE is guilty of education contracts fraud, the lack of adequate controls still means higher prices for the city. When that happens, students suffer, city taxpayers suffer and so do honest vendors who don’t have the chance to participate on a level playing field.
The City’s Response to the Comptroller’s Report
On paper, the New York City Department of Education agreed with 19 of 20 recommendations. Their acquiescence sounds shallow, however. The department hedged in its statements. Given that the Comptroller found that the department failed to implement the recommendations of the last report, we worry that education contracts fraud is alive and well in Gotham City.
With respect to the prior report, Comptroller Stringer said, “This audit determined that three of the prior audit’s eight recommendations had been partially implemented and that five had not been implemented.”
Cash Awards for Education Contracts Fraud Whistleblowers
New York State has enacted a False Claims Act that allows whistleblowers with inside information about fraud involving public funds to receive cash awards for their information. The law extends to both state and local government agencies. Under the law, “local government” means “any New York county, city, town, village, school district, board of cooperative educational services, local public benefit corporation or other municipal corporation or political subdivision of the state, or of such local government.” This means if you have information about education contracts fraud involving New York City Department of Education or any New York school system or public university, you may be eligible for an award.
The first step in obtaining an award involves filing a sealed lawsuit in a state court. Calling a hotline or writing a letter doesn’t qualify you for an award.
Once the lawsuit is filed, the New York Attorney General has the right to investigate and take over the suit, send the suit to a town or city attorney or simply decline the case. If the state declines to prosecute, the whistleblower’s own legal team can prosecute the case in the name of the government.
While the case is being investigated, the case remains under seal meaning secret.
Ultimately, if the case is successful, the whistleblower can receive up to 30% of whatever is collected from the wrongdoer. If the government prosecutes the case, awards are generally 15% to 25% of the recovery. If the whistleblower’s own legal team prosecutes the case, the awards range between 25% and 30%.
The law allows the government to obtain enhanced damages meaning awards can be quite high.
New York Law Protects Whistleblowers from Retaliation
Retaliation unfortunately is a real threat to whistleblowers. The New York State Legislature anticipated that some companies would harass, fire or threaten whistleblowers.
Under New York law, those suffering from retaliation can receive back pay, double pay, interest, lost fringe benefits lost seniority rights, reinstatement and special damages.
Specifically, the law says:
“Any current or former employee, contractor, or agent of any private or public employer who is discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against in the terms and conditions of employment, or otherwise harmed or penalized by an employer, or a prospective employer, because of lawful acts done by the employee, contractor, agent, or associated others in furtherance of an action brought under this article or other efforts to stop one or more violations of this article, shall be entitled to all relief necessary to make the employee, contractor or agent whole. Such relief shall include but not be limited to:
(a) an injunction to restrain continued discrimination;
(b) hiring, contracting or reinstatement to the position such person would have had but for the discrimination or to an equivalent position;
(c) reinstatement of full fringe benefits and seniority rights;
(d) payment of two times back pay, plus interest; and
(e) compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.”
Have Information about Education Contracts Fraud?
Whistleblowers are the new American heroes. They save taxpayers money and fight fraud and greed. If you have information about fraud involving education or other government contracts , call us. Our mission is to help you collect the maximum award possible, stop the fraud and protect you should illegal retaliation occur.
In addition to the New York False Claims Act, the federal government and 29 other states have similar laws that pay awards. (Our whistleblower clients have already received over $100 million in awards!)
The whistleblower lawyers at MahanyLaw can help you determine whether you have a valid claim. If you do, we will investigate your claim, file the lawsuit on your behalf, and if necessary, prosecute the case. We can also assist if you suffer retaliation. We charge for our services on a contingent fee basis. That means there is never a charge for our services unless we recover money on your behalf.
For more information, contact attorney Tim Granitz at or by phone at (414) 258-2375. The author of this post, attorney Brian Mahany, can be reached at . You can also visit our whistleblower award page for general information on how the award process works.