(The Center Square) — New York City’s top bean counter is moving to block the city’s Education Department from unilaterally signing off on contracts with minority and women-owned businesses amid a federal probe and concerns about misuse of the privileges.
The move by New York City Comptroller Brad Lander effectively strips DOE of its ability to bypass his office’s review of contracts valued at less than $1.5 million for minority and female business owners when that allowance expires at the end of the year. Landers’s office will now vet those contracts.
“In delegating its registration authority, our office must feel confident that an agency has the capacity to comply with all procurement rules, laws and procedures to avoid the risks of corruption, fraud, waste, and abuse,” Lander wrote in a letter to the state agency. “As a result of the federal investigation and subpoena regarding DOE contracts, an ineffective use of the self-registration delegation, and reporting deficiencies we cannot renew the delegation at this time.”
Lander pointed to a recent report in Politico that the agency has been hit with a subpoena by federal authorities as part of broader corruption investigations related to contracting in public schools.
He also cited a separate probe by the Southern District of New York, investigating allegations of nepotism in the DOE’s contract system and whether the agency bypassed conflict of interest rules.
“Investigators have also flagged noncompetitive purchases with a firm managed by individuals who had previously been banned from working in city schools due to financial misconduct,” he wrote. “Though the specific contracts alleged to be under investigation were not procured via the M/WBE Small Purchase method, they call into question the DOE’s capacity to adhere to procurement rules, laws and procedures that safeguard against fraud, corruption and waste.”
A New York City program gives a preference to minority and women-owned businesses in contracts for city goods and services. DOE received a two-year waiver from submitting contracts valued at less than $1.5 million to the comptroller’s office for pre-clearance.
However, Lander said that beginning Jan. 1, 2025, DOE contracts under the program must be submitted to his office for review before they can be awarded to the businesses.
“Our authority to review and register contracts prior to the agency having the functionality to expend public dollars is necessary to safeguard public spending, ensure accountability, and offer transparent oversight into city contracting,” he wrote.
Lander’s move comes just days after New York City Mayor Adams announced that the city is awarding $1.59 billion in contracts to minority- and women-owned businesses, an increase from $1.4 billion last year.
In the previous fiscal year, which ended in July, the city spent more than $6 billion on “historically marginalized” businesses, according to the mayor’s office.
