Questions Remain About No-Bid Consulting Contracts
Since becoming Connecticut’s Commissioner of Education this past fall, Stefan Pryor has brought in highly paid consultants with ties to the charter school community to help craft Gov. Dannel P. Malloy’s sweeping education reform package.
Last week, allegations surfaced that these contracts were hidden from normal bidding procedures by the use of the State Education Resource Center (SERC), a quasi-public agency that is primarily funded by the Department of Education.
A whistleblower complaint filed last Friday by Tom Swan of the Connecticut Citizen Action Group alleges that the contracts were performed through SERC in order to circumvent the state’s contracting laws.
Pryor initially told the Connecticut Post that operating the contracts through SERC was legal because the state agency was a nonprofit and therefore didn’t have to follow state bidding procedures. Swan’s complaint, however, claims that SERC is not registered as a 501(c)(3), and has not filed the requisite reports with the Attorney General’s office. A search for SERC on the site nonprofit database GuideStar.org returned no results, and the center is not registered as a charity with the Department of Consumer Protection.
Jim Polites, an Education Department spokesperson, said that SERC qualifies as a nonprofit because it operates under Rensselaer Hartford Graduate Center Inc., a job-training facility in Hartford. The SERC website lists Rensselaer as its “fiscal agent.”
The complaint questions the status of SERC as a nonprofit and refers to a previous legislative attempt in 2011 to “establish” SERC as a 501(c)(3) — the provision never became law.
Swan’s complaint, which the Malloy administration has dismissed as “reckless,” calls for the contracts to be terminated and the contractors banned from working in Connecticut for five years.
“What it is starting to look like is that this administration is trying to use SERC in a similar manner to how the Rowland administration used [the Connecticut Resources Recovery Authority],” Swan said.
The Malloy administration had no comment beyond what it told the Connecticut Post last Friday, when the governor’s chief legal counsel said Swan’s allegation was “reckless” and “devoid of any evidence.”
According to emails obtained by Swan under the Freedom of Information Act, the biggest of the contracts — $195,000 — was for consultant Jonathan Gyurko, senior vice president of Leeds Equity, an investment group that specializes in the “knowledge industry,” according to its website.
Leeds Equity was paid $195,000 for just under four months of work, specifically to “assist in the development of a legislative strategy and package.” The Leeds contract also shows that the firm “will assist in the analysis of collective bargaining agreements, within and outside of Connecticut, and produce recommendations on how innovative collective bargaining arrangements” can help the commissioner turn around failing schools.
The emails show that money for the contract was initially budgeted through the Council of Chief State School Operators, which is a national association of education commissioners of which Pryor is a member. But on Jan. 19, William Cox of DSA Capital emailed representatives of Leeds Equity to tell them that the contract would instead go through SERC, though the emails didn’t explain why.
Asked about the decision to change funding sources, Polites offered the following in an email Wednesday:
“In Connecticut, to assist Commissioner Pryor’s transition following his appointment, CCSSO has provided expert assistance to the state Department of Education (SDE) on topics such as organizational design and the departmental transition. CCSSO was open to engaging others regarding additional subjects. However, SERC was specifically created by the General Assembly to assist the department in the provision of programs and activities that promote educational equity and excellence. The State Education Resource Center (SERC) is ideally situated to work with SDE on ongoing priorities.”
As of Wednesday afternoon, Cox did not respond to phone calls seeking comment, and the DSA Capital website showed a screen saying that the site is “under construction.”
Last year, Cox was paid $60,000 by the state of New Jersey to assemble a team of consultants to assist in reform efforts there. The contract with Connecticut was not part of Swan’s Freedom of Information complaint.
Peter Lyons, Leeds Equity’s Chief Financial Officer, referred press inquiries to the Department of Education.
Sharon Palmer, president of AFT Connecticut, said that she thought it was haste in education reform efforts that led to the contracts being signed.
“He wanted to get some consultants in right away,” she said, “so he rammed in some no-bid contracts to get off and running quickly.”
Pryor, one of Malloy’s last appointments, wasn’t hired until September 2011, just months before the start of the so-called Education Session.
“We certainly would not like to have that practice continue, particularly as it goes to [the education reform bill],” Palmer said.
Asked if she expects anything to come of the whistleblower complaint, she said, “I hope so,” but stopped short of agreeing with the call for the contractors to be banned from doing business in the state for five years.
A spokesperson for SERC declined to comment for this article and referred all questions to the Department of Education.