The city’s Department of Education is about to hand one of the biggest contracts in its history — $635 million for computer services at all public schools — to a firm that looked the other way while a corrupt school system consultant stole millions of dollars .
Schools Chancellor Carmen Fariña’s deputies refused until Tuesday evening to reveal any details of the contract they are proposing for Long Island-based Custom Computer Professionals Inc. They stalled despite requests for information by education advocates, city officials and the Daily News — and even though the contract is scheduled for a vote Wednesday by the Panel for Educational Policy.
“DOE is once again showing why it has a reputation as the least transparent city agency,” city Controller Scott Stringer said. “Skirting notification and publication requirements for a multibillion-dollar contract is an affront to taxpayers.”
It’s starting to become clear why they stalled.
DOE selected Custom, with Dell Computer’s marketing arm as its partner, for the five-year contract despite an initial bid by Custom that was hundreds of millions of dollars higher than two other vendors, ASI System Integration and ZTE, documents the DOE finally released Tuesday night show.
Officials say Custom offered better value equipment, a more comprehensive approach and a longer history of working for the DOE.
After choosing Custom, the agency then negotiated a nearly 50% reduction in its final price — from an even more astounding bid of $1.1 billion to the current but still eye-popping $635 million.
“If they were going to negotiate such a huge drop in Custom’s price, why didn’t they offer the rest of us the same chance to negotiate?” an angry executive with one of the losing bidders said.
The award is even more troubling, given Custom’s checkered past.
In 2012, Willard (Ross) Lanham, a former $200,000-a-year consultant for the DOE, was convicted in federal court of stealing more than $1.7 million from the school system and was sentenced to three years in prison.
Lanham supervised an effort between 2002 and 2008 by companies like Verizon and IBM to provide Internet cabling to more than 500 public schools. But according to a report by the Special Commissioner of Investigation, Lanham secretly funneled his brother and other friends onto the payrolls of the subcontractors he oversaw, including Custom Computer, then padded their billings and pocketed money for himself.
While Lanham was paying those workers $60 an hour, he billed the subcontractors $225 an hour for their labor. After all the markups by various layers of contractors, the DOE eventually paid $290 an hour for the same workers.
All the companies involved knew about the scheme and profited from it, but none of them blew the whistle, the report says.
At Lanham’s trial, Federal Judge George Daniels blasted the DOE for being so lax that it “was a crime waiting to happen.”
Lanham had especially close ties to Custom Computer’s chief executive Gregory Galdi. In June 2008, six months before Lanham was fired from his DOE consulting job, he and Galdi registered a new limited-liability company, G&R Scuttlehole Road LLC, with the New York secretary of state. They listed their firm’s location at the same address as Custom Computer’s headquarters in Long Island.
It’s not clear what kind of business the firm conducted, and Galdi did not return calls. State records show it was dissolved in 2011, a few months after federal agents arrested Lanham
Little wonder that some officials, like City Councilwoman Helen Rosenthal, chairwoman of the contracts committee, are urging that the vote on this huge contract be postponed.
“I’m calling for an emergency hearing of my committee and for a full public review of this contract,” Rosenthal said.
DOE says it has learned from past scandals.
“We have overhauled oversight of technology contracts and added strong safeguards to prevent waste and abuse,” spokeswoman Devora Kaye said. As for the proposed deal with Custom Computer, it “is a transparent, fiscally responsible contract,” Kaye said, “and will benefit students and taxpayers alike.”
