Informal bidding process: cause for concern?

by Tina Collins

The School Reform Commission (SRC) has awarded hundreds of millions of dollars worth of contracts for educational services in the Philadelphia School District in the past five years that did not go through formal competitive bidding processes.

This practice is allowed by state law, and District officials say that it is often the best way of obtaining effective educational programs.

However, the District's reasons for choosing contractors and its evaluations of contractors' performance are not easily accessible to the public, prompting calls for “better oversight” and questions about whether the District is really getting its money's worth when it contracts out.

According to a recent study by Research for Action, the number of contractors providing educational services such as afterschool tutoring and professional development to the District has more than doubled in the past four years. The total dollar amount the District spends annually on outsourced educational services is in the hundreds of millions.

Because of an exemption for purchasing certain types of services in Pennsylvania's state Education Code, the District is not required to seek competitive bids on the vast majority of these contracts.

State law requires school districts to use a competitive bidding process only when awarding contracts for over $10,000 worth of construction, repair, or maintenance of buildings, or for the same amount of “furniture, equipment, textbooks, school supplies and other appliances” for schools.

Because of this lack of legal requirements for awarding contracts for educational services, the School District's policies on how to choose providers for these services are mostly informal. Those that exist are rarely put into writing.

From outside the District, concerns about a lack of a clear and public process for awarding and monitoring contracts have been raised recently by City Controller Alan Butkovitz, who is investigating no-bid contracting in the School District. He plans to release a report on his findings on this issue by the end of this year.

“One of the reasons we were interested in that,” he explained, “is because of the city's trend away from no-bid contracting, in particular the elimination of political connections in no-bid contracting,” he said.

“So on one side of the equation, there's been a judgment in Philadelphia that all that stuff is a prescription for trouble,” Butkovitz observed. He said the School District, which represents “almost 46 percent of the spending of the government in Philadelphia,” remains “a gigantic loophole.”

Similar concerns have been aired since the earliest days of the state takeover in 2001. Mayoral candidate Michael Nutter was vocal during that period in asking who would have oversight over District contracts after the reforms, and he has retained his skepticism - especially in regard to no-bid contracts.

“We should not wait until there is a scandal, but instead should work to prevent a future one from occurring,” he recently told the Notebook. “We need better oversight and systems to protect against abuse now.”