Question Firm's Record
UFT, Gotbaum Blast No-Bid DOE Pact

By HOWARD MEGDAL

Numerous union and government critics took aim last week at the Bloomberg administration's decision to award a $17 million no-bid contract to the firm Alvarez and Marsal for seven consultants to scrutinize the city school budget for wasteful spending.

BETSY GOTBAUM: 'Deal sets off alarms.'

Public Advocate Betsy Gotbaum called for the deal to be suspended pending an investigation, while United Federation of Teachers President Randi Weingarten called into question the wisdom of mayoral control over city schools, saying the contract permitted DOE to duck accountability.

'DOE Didn't Do Homework'

"It is clear that the DOE didn't do its homework before going ahead with this $17- million, no-bid give-away," Ms. Gotbaum said in an Aug. 29 statement. "Even a cursory check of Alvarez and Marsal's track record would be enough to set off alarm bells."

Ms. Weingarten said that "some of these contracts may be terrific, but the no-bid process raises issues of secrecy, transparency and accountability. The bidding process must be open and completely above reproach. An open process is a necessary check and balance against patronage, cronyism and self-dealing."

Mayor Bloomberg defended the deal at an Aug. 29 press conference, noting that even no-bid contracts are posted online and reviewed by the City Comptroller before being awarded.

"It's a $17-million contract over a period of time which is trying to save us $200 million a year," Mayor Bloomberg said. "Think about where you work if they put up a competitive bid for every job. Just getting the lowest person who's willing to work at the lowest price doesn't get you what you want."

Council to Weigh In

But City Council Education Committee Chairman Robert Jackson took issue with the pay scale for the consultants, who are earning between $275 and $450 an hour.

"If they'll save us $300 million, okay, it may be worth it," Mr. Jackson, who has pledged to hold a hearing on the matter, told the Daily News. "But to pay $17 million on a contract that was not competitively bid and knowing the contract is paying employees over 18 months $1.6 or whatever millions, I think anyone has to question that. Quite frankly, those individuals are making more money than any city employee in New York."

Ms. Gotbaum also raised the issue of other budget restructurings taken on by the firm, which did not return a call from this newspaper seeking comment.

"Under Alvarez and Marsal's management in St. Louis, 16 schools were closed and class sizes grew. Now the firm is overseeing the 'recovery school district' in New Orleans, appointing a former Defense Department contractor and oil executive with no education experience to be the district's chief financial officer."

Ms. Weingarten, meanwhile saw the choice as symptomatic of an abuse of power by the Mayor's DOE team.

"The people who run the school system see it as a private corporation and they can pay anyone anything and not be held accountable. It's the perfect example of something that has to be looked at when the State Legislature revisits mayoral control before it sunsets in June 2009."