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Schools under fire for use of contracts

The Baltimore Sun

The Baltimore school board is regularly resorting to the use of emergency contracts to conduct routine business, potentially costing taxpayers hundreds of thousands of dollars and raising new concerns about financial controls 2 1/2 years after a budget crisis, a Sun review has found.

Over the past six months, the board has bypassed competitive bidding to approve at least 21 contracts worth more than $19 million - a process rarely used by surrounding school systems. What's more, even with regular, non-emergency contracts, work is often under way before the board has signed off on it.

"Somebody has got to be accountable as to why and how this kind of thing happens," said Skip Strovel, a vice president of a Beltsville company that submitted the low bid for a technology contract this spring, only for the contract to be thrown out and awarded as an emergency to another company - for nearly three times the price.

Members of the school board, who are jointly appointed by Gov. Robert L. Ehrlich Jr. and Mayor Martin O'Malley, have sometimes questioned the purchases in public meetings, only for a majority to approve them a few minutes later, according to meeting transcripts reviewed by The Sun.

School boards in Maryland are only supposed to use emergency contracts when students' safety is at stake or their education would otherwise be disrupted - when a storm destroys a school roof, for example.

City school system officials say they are trying to reduce their reliance on emergency contracts, but they are sometimes forced to use them to comply with state and federal mandates that other systems in Maryland don't face.

They say that many of the recent emergency contracts were necessary to complete summer renovations to accommodate 4,300 students displaced when their schools closed. The state required the school closures.

A Sun review found that the summer building renovations accounted for 11 of 21 emergency contracts that the school board approved between March and September, but only $6.6 million of the $19 million spent.

Another 10 contracts, worth $12.5 million, covered a variety of purposes, often for predictable expenses. The largest one, worth $7.8 million, was for cafeteria food - a decision challenged in court by a lower bidder but upheld last week by the state school board.

Interim Chief Executive Officer Charlene Cooper Boston said she has been looking at the system's use of emergency contracts.

"I don't know if there's a concern," she said. "I know there are reasons you have them."

Just three months ago, there was much fanfare as school and city officials pronounced the system fiscally healthy and deficit-free for the first time in seven years. In early 2004, the system had to accept a city bailout after the discovery that it had a $58 million deficit.

The deficit was caused primarily by problems in payroll: The system had far more people on staff than it could afford to pay. But according to a 2003 report by the Greater Baltimore Committee, another major trouble spot was that budgeting processes were not being followed or enforced.

"We don't want to go back down a road we've been down in the past," school board member Diane Bell McKoy said at a July meeting when four emergency contracts were approved.

Her sentiment was echoed by board chairman Brian D. Morris, who said the system has worked hard in the past few years to rebuild its financial stability and credibility in the community. "Any slippage of that," he said, "is an unacceptable outcome."

In an interview last week, Morris said the system is trying to minimize its emergency contracting, but state and local regulations do allow for it and "when appropriate, we use it."

Maryland school systems are required to conduct a bidding process for contracts worth more than $25,000, except in the case of emergencies.

When using emergency contracts, systems can shorten the length of time before work on a project begins from several months to a few days. Usually, that means they pay more for the services.

Other systems in the region report using emergency contracts sparingly. After Baltimore, Anne Arundel County used the most: four in the past year.

In Baltimore County - a system with 20,000 more students than the city - the last emergency contract was in 2004, when a well at an elementary school had to be replaced.

Howard County school officials said they haven't had an emergency contract in at least five years. And the Carroll County school board has approved just two emergency contracts in that time, one when a portable classroom was infested with mold and another when a high school had an air quality problem.

"We really only use it for health and safety," said Stephen Guthrie, Carroll's assistant superintendent of administration.

Jeffrey Parker, Baltimore's director of procurement, said for the most part, the city does, too.

"We look at emergencies in terms of whether or not it would affect public health, safety and welfare of the school system," Parker said, adding that the system had just as many emergency contracts last year as this year. "Those emergencies can relate to the delivery of special education services, the delivery of meals, but in most cases, they have to deal with ... acts of nature or acts of God."

But none of the 21 emergency contracts since March fits into that category.

On July 25, the board approved a $1.2 million emergency contract for IBM to install an e-mail archiving program. Without the program, the system risked losing all its e-mail because its computers were overloaded.

It also would have been unable to set up e-mail accounts for 800 new teachers, all of whom were scheduled to receive laptop computers.

"Didn't you know all this months ago?" board member Kalman "Buzzy" Hettleman asked Howard Steptoe, the system's information technology officer.

"Basically, yes," Steptoe replied. He said the system had sought bids for the project months earlier, but none of the four received were acceptable.

The highest of those four was from IBM, which later got the contract as an emergency.

Strovel, the vice president of sales at Beltsville-based DataBank IMX, said his company proposed a viable solution that would have cost the system $433,283. "We put in a lot of time and effort," he said. "They just let the thing go without any explanation."

Parker said DataBank's proposed solution was inadequate.

Before the board voted on the IBM contract, Hettleman also voiced concern that it was unclear where the money for it would come from. And Bell McKoy questioned Boston, the interim CEO, for not informing the board of the plan to give laptops to new teachers.

In general, the school system is not supposed to let contractors begin any work until the board has approved it. In the case of emergencies, work can begin before approval.

On May 23, the board approved an emergency contract for $321,545 for a reading test that had already been administered to students. (Officials said the state hadn't mandated that they give the test until March - though the board met four times after that directive before the May 23 approval.)

On June 27, the board approved a $60,508 emergency contract for staff workshops at a charter school that had begun June 19. (Officials said the money came from a federal grant that had to be used before the fiscal year ended June 30.)

Board member George M. VanHook Sr. expressed frustration that night over repeatedly being asked to vote on contracts that were already a done deal.

"A prudent manager or a planner with some sense of vision would have presented it much sooner," he said. "I'm ... sitting here now almost with a loaded gun to my head."

Even on regular contracts, deals often appear to be complete before the board weighs in. Just last week, the board approved a contract for software that went into effect nearly three months ago.

Another contract was for a school sports program that began at the start of the school year. The board initially voted it down, but after an impromptu presentation by administrators about its benefits, reconsidered and approved it.

On Sept. 12, the board approved an emergency contract to install a new teleconferencing system at the Upton Home and Hospital Services School. Administrators explained that the previous teleconferencing system, used to hold classes for students who are hospitalized or unable to leave their homes, was too old to move when the school changed locations this summer. The problem was, board members weren't aware the school was moving.

The school closures and relocations have been the result of a state demand that the system, with room for tens of thousands more students than it has enrolled, make more efficient use of space.

By the time the school board decided in the spring which schools to close, officials said, there was not enough time to go through the regular bidding process for the renovations needed this summer.

David Lever, executive director of the state's public school construction program, said the system faced a daunting task to get its buildings ready in time for the opening of school. Of the emergency contracts, he said, "It's perfectly understandable that some pieces fall to the side when you're doing so much." He added, though, that emergency contracts should not be necessary as the system continues closing schools over the next few years.

Parker, the system's procurement director, said emergency contracts could also be needed when a bidder protests a contract award, since protests can take months to adjudicate.

This summer, a company that was not awarded a food-services contract filed a protest. In the meantime, the system needed someone to provide food by the time school started in August. So in July, it awarded the contract on an emergency basis.

The company that lost the bid, Eastern Food Services, sued in Baltimore Circuit Court, which sent the case to the state board of education. The state board last week upheld the city's authority to issue the emergency contract, even if it was "poorly planned."

To reduce its reliance on emergency contracts, Parker said, the system is working to hire - through a bidding process - contractors to be on call when unexpected situations arise. Officials in Baltimore County say that's how they're able to avoid emergency contracts.

"We're well on our way," Parker said, "to being at the same level as other school systems."

Emergency contracts

The Baltimore school system has bypassed the bidding process to award the following emergency contracts - worth more than $19 million - in the past six months:

March 14

Vendor: Verizon Service: computer network upgrades Cost:$1.7 million

April 11

Vendor: MDK-12 Digital Library Project Service: memorandum of understanding allowing the Montgomery County school system to negotiate a contract with online service providers for all public school systems in Maryland Cost: none

May 23

Vendor: Riverside Publishing Service: Gates-MacGinitie reading tests Cost: $321,545

Vendor: Magothy Technology Service: uninterrupted power supply unit Cost: $46,743

June 27

Vendor: Goucher College Service: graduate-level course and workshops for staff at Empowerment Academy, a charter school Cost: $60,508

Vendor: Progressus Therapy Service: clinicians to provide makeup services owed to special education students

Vendor: Mid-Atlantic Furniture Service: science labs at four schools Cost: $51,800

July 11

Vendor: JAK Construction Service: renovation of Highlandtown Elementary School No. 215 Cost: $384,000

Vendor: Tito Contractors Service: renovation of Booker T. Washington Middle School Cost: $1.3 million

Vendor: Arbutus Refrigeration Service: kitchen equipment at six schools Cost: $20,790

Vendor: Theatre Service & Supply Service: stage curtains at three schools Cost: $27,000

Vendor: Struever Bros., Eccles & Rouse Service: renovation of Robert Poole Middle School Cost: $1.5 million

July 25

Vendor: IBM Service: e-mail archiving system Cost: $1.2 million

Vendor: Lenovo Service: 220 tablet computers for clinicians to track the special education services they provide Cost: $380,380

Vendor: Educational Tracking and Consulting Service: software for computers tracking special education services Cost: $550,000

Vendor: Clovervale Farms Service: cafeteria food and paper supplies Cost: $7.8 million

Aug. 22

Vendor: Modular Genius Service: portable classrooms at three schools Cost: $443,700

Vendor: Tito Contractors Service: renovation of Francis M. Wood Alternative High School (converting into Vivien T. Thomas Medical Arts Academy) Cost: $2.5 million

Vendor: JAK Construction Service: renovation of Harbor City School No. 413 Cost: $92,000

Vendor: Chasney & Co. and R.F. Warder Service: air conditioning units for two schools Cost: $73,525

Sept. 12

Vendor: Cross Telecom Corp. Service: teleconferencing system for Upton Home and Hospital Services School Cost: $93,246 [Source: Baltimore City Public School System ]

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