City Council Speaker Julie Menin has threatened to issue subpoenas for hundreds of outstanding Department of Education (DOE) contracts that have yet to be provided, four months after the initial request. Mayor Zohran Mamdani, who campaigned on reforming the DOE's extensive contracting practices, stated the contracts would be delivered in the coming weeks.
The DOE's budget is substantial, with nearly $13 billion annually allocated to contracting for services such as transportation, cleaning, food, technology, and special education. A significant portion of these contracts are renewals or extensions of existing deals, with only about 13% of new contract dollars being competitively awarded in the previous year. In about $1.06 billion of newly registered contract dollars, 57% were renewals or extensions of established terms.
These long-standing contracts are legally permissible, but they bypass competitive bidding processes that could potentially secure better value for taxpayers. Unlike most city agencies, the DOE is exempt from the citywide Procurement Policy Board rules designed to ensure competition and cost-effectiveness. While contracts exceeding $1 million require review by the Panel for Educational Policy and registration by the comptroller, these steps do not assess whether alternative vendors could offer similar or superior services at a lower cost.
Historical examples illustrate this pattern. The school bus system has largely relied on contract extensions for over four decades, with a competitive rebidding occurring only once in 2013. This instance led to a month-long drivers' strike, disrupting transportation for over 100,000 students. Subsequent administrations, including Mayor Bill de Blasio's, reverted to contract extensions, with the current administration extending bus contracts again in November.
Similar issues have affected other areas. In 2016, the de Blasio administration established NYC School Support Services, a DOE-affiliated nonprofit for custodial services, rather than competitively rebidding the contract. A 2022 audit by the state comptroller found that the DOE awarded a $6.4 billion custodial contract noncompetitively, without adhering to its own procurement rules. The audit noted a lack of detailed cost breakdowns, performance standards, and a limited window for other vendors to respond.
Universal Pre-K programs, launched in 2014, continue to operate under contracts that have not been rebid. Furthermore, a 2021 report by the city comptroller revealed that the DOE spent over half a billion dollars on "approved brand" food products over four years without competitive bidding. Federal prosecutors have since charged the DOE's former food chief and three food executives with felonies. A subsequent competitive bid for just five of those products resulted in savings of $7.8 million.
In contrast, other city agencies demonstrate a higher rate of competitive contract awards. The Department of Environmental Protection competitively awarded 72% of its contract dollars, followed by Sanitation at 68%, Parks at 61%, and Transportation at 53%. The DOE's 13% rate falls significantly short of these benchmarks.
Mamdani's proposed budget for the DOE has reached a record $38.6 billion, an increase of nearly $4 billion from the previous year. A significant portion of the projected savings within his plan hinges on improving procurement processes and ensuring vendors compete for contracts. The ability to realize these savings will depend on the administration's success in implementing competitive bidding for DOE contracts.