UPDATED: NM PED spends millions on sole source contracts to out of state companies

PART ONE.

The New Mexico Public Education Department (PED) is spending millions of dollars on no bid contracts with out of state entities.

This practice has been going on since at least 2013, and generally out of sight of the public and legislators who have approved PED’s annual budgets.

The Candle is in the process of reviewing what are called “inter-governmental agreements” (IGA’s) between PED and the Region IX Education Cooperative (REC IX), and has an open Inspection of Public Records Act request with REC IX for review of scores of sub-contracts that are derivatives of the many IGA’s between these two government agencies.

REC IX is located in Ruidoso, and is one of several education cooperatives located across New Mexico (click here to see map) and established years ago by the legislature to:

“…provide fiscal administration, technical assistance, and direct services to participating member school districts and state-operated schools.  These services may include personnel development, diagnostic evaluation, child find (sic), related services, technical assistance, and policy and procedure development.  Headstart, Eisenhower Math and Science Training Act, Drug Free Schools and Communities Act, and other programs are also administered by RECs.  RECs are state agencies administratively attached to the Public Education Department.”

By pushing this spending of millions of dollars through REC IX, the Secretary of PED, Hanna Skandera, has been able to avoid these sub-contracts from showing up on the New Mexico Sunshine Portal.

The New Mexico Public Education Department acts as the steward for the spending of hundreds of millions of dollars from state and federal sources.

For the past several years Ms. Skandera has implemented several controversial and divisive initiatives, which she has imported from other states. Millions of the dollars hidden through the arrangement between PED and REC IX have been spent on these initiatives – NM TEACH and all incarnations of the teacher evaluation system.

The efforts to conceal (or at the minimum make it more difficult for the public to find out about) these no-bid contracts directed to specific out of state entities is disturbing coming from an administration which claims to be the most transparent in New Mexico’s history – especially when Governor Martinez boasted within months of her taking office about singing House Bill 252, a bill which requires PED to establish guidelines governing procurement and administrative expenses.

In a statement issued by her press office on March 30, 2011, regarding legislative measures she was signing into law about transparency in education spending, Governor Susana Martinez is quoted stating:

“Every parent deserves to know exactly how we are spending tax dollars to boost student achievement and progress in classrooms across the state,” said Governor Martinez. “Unfortunately, we have seen far too much money being spent to fund a bloated bureaucracy and administrative waste. During these challenging economic times, we must ensure these important financial decisions are driven solely by what is in the best interests of our students. Putting school budgets on New Mexico’s Sunshine Portal and taking additional steps to make education spending more transparent will allow parents and taxpayers to hold state and local leaders accountable for results.”

The efforts by PED to spend state and federal dollars in the manner it has on these programs flies in the face of the Governor’s claims to “make education spending more transparent.”


PART TWO.

Here is what The Candle has unearthed so far.

[NOTE: From the limited description on the New Mexico Sunshine Portal of over 90 contracts and/or sub-type contracts (and amendments to same) since FY 2013, it seems PED has penned more than $31 million worth of IGA’s to REC IX, with instructions in key instances as to which entities will get millions in sole source sub-contracts.]

Secretary Skandera has a history of engaging out state companies and advisors who have a predilection for more privatization of educational programs.

In the first weeks of taking control of PED back in 2011, Skandera contracted at least five individuals from out of state to advise her on what many critics described as a deconstruction of the department.

Within six months they developed a plan which eliminated more than thirty key positions at PED. As recently as a few weeks ago, in a presentation before the Legislative Finance Committee (LFC), the Secretary spoke about reducing the number of full time employees (FTE’s) at PED and claiming educational spending would be more accountable.

It appears that number is now hovering around sixty positions no longer filled by state employees at PED.

When questioned by a Senator about an increase in contracts for work previously performed by PED employees, Skandera insisted the reduction in employees and the increase in contracts were inconsequential.

When pushed further by other legislators at both the LFC hearing and at a subsequent Legislative Education Study Committee (LESC) meeting about the contracts, specifically about out of state contracts awarded by regional education cooperatives like REC IX, both Skandera and her deputy secretary Paul Aguilar responded they were not aware specifically of out of state contracts.

If these sub-contracts prepared and awarded by REC IX, had been awarded directly by PED, the identities of the contractors would have been available on the Sunshine Portal, easily accessed by the public.

When asked if her agency had copies of sub-contracts REC IX awarded on behalf of PED, Skandera responded she was not certain. Aguilar offered that PED would have to get them from REC IX.

While The Candle is awaiting access to the sub-contracts issued by REC IX to sub-contractors, we have found some information which calls into question the feigned lack of knowledge of specifics expressed by Skandera and Aguilar earlier this month when responding to legislators’ inquiries.

The Candle has been able to review some of the IGA’s between PED and REC IX.

We have also reviewed audits conducted of REC IX for the fiscal years 2015 and 2016.

By entering the many intergovernmental agreements with REC IX, Ms. Skandera and her team were able avoid significant, if any, public scrutiny of the derivative contracts – more than 88% of those awarded in one year alone were given to out of state entities, and millions provided as sole source contracts.

The IGA’s between PED and REC IX provide the cooperative with specific instructions from PED as to how spend the millions of dollars, and in some cases PED further instructs REC IX as to which entities millions of the dollars will be paid.

These IGA’s are signed and reviewed by the Secretary, and as Paul Aguilar is the Deputy Secretary of Finance and Operations, it is safe to assume he knows about the contents of them.

Each IGA has an Article which is entitled “Statement of Work” which contains instructions such as the following:

Purpose: Provide professional development and technical assistance for schools participating in the teacher evaluation protocols and processes.

Scope of Work: The Contractor shall manage and coordinate, at the direction of the PED Educator Quality Division and with PED approval, professional service contracts and payments for professional services, in accordance with provision XVII of this agreement and as specified:

Develop and execute contractual agreement with Southern Regional Education Board (SREB) to provide, at the direction of PED, regional training support for school administrators and leaders on the teacher evaluation tools, domains and implementation;

… and …

sub-contract with additional consultants, at the direction of PED, to support any facet of the effective teacher/school leader system from July, 2015 to June 2016

In most cases the IGA’s contain an Exhibit which enumerates the amount of money for each budget category (including in some instances the amount to a company/entity specifically identified by PED – such as SREB (located in Atlanta, Georgia) and referred to above, which according to the FY 2016 Audit of REC IX, was awarded at least one sole source contract in the amount of $1,585,367.96).

The Candle even found a hand-written post-it amongst the PED documents for one of the IGA’s amended agreements, signed by Skandera in September of 2016, where a PED employee suggests that maybe they can’t directly name a sub-contractor the state agency wants hired through the sub-contract. This was noted after PED had done so in previous contracts.

A close look at the State Auditor’s report on Region IX for FY 2015, reveals that of about $3.4 million awarded in contracts for PED by Region IX that year alone, about 89% of that amount went to out-of-state companies or individuals … that is approximately $329,000 was awarded to New Mexico entities and more than $3,000,000 went to out-of-state entities.

And upon reviewing the State Auditor’s report on Region IX for FY 2016, it appears that about 74% of the $3.14 million went to out-of-state companies … that is approximately $815,000 was awarded to New Mexico entities and more than $2.3 million went to out of state entities. (And of $815,000 spent on New Mexico companies, more than $560,000 was spent on HOTELS and CONFERENCE ROOMS – essentially it had to be spent locally because of the nature of where the conferences had to be held.)

In the current fiscal year (2017), it appears that REC IX has IGA’s with PED in excess of $10 million – that is not including any amendments not currently listed on the Sunshine Portal.)

While PED has for many years entered IGA’s (and continues to do so) for traditional, regional types of services which the cooperative would provide schools in its region, the significant up-tick (to the tune of tens of millions of dollars) in IGA’s from PED are for many of the controversial Skandera-led initiatives.

As PED can contract directly with these sub-contractors, it raises several questions.

Why would PED use REC IX as an intermediary?

What is the inherent value, or reason, to sub-contract through another government agency (especially when that agency is going to add on administrative costs)?

Given the controversy surrounding the PED initiatives, was this detour created to obscure the costs of contracting?

Was it done in this manner to conceal or camouflage sole source contracting to a PED-preferred vendor?

On another note related to the research undertaken so far: when REC IX personnel were contacted by The Candle and asked why would a state agency like PED enter into IGA’s with REC IX for educational services traditionally provided by PED employees, they answered that apparently PED did not have enough employees – that was the same day the Secretary had stated to LFC the elimination of about 60 employee positions since her taking charge of the agency.

(Edited and updated Tuesday, December 27, 2016.)

Look here in early January for more details from our IPRA requests. And hopefully we will have some comments from legislators and from PED to some probing questions next week. 


(SOURCED DOCUMENTS: Scroll over and click on the items below for access to related document.)

Region IX Education Cooperative – Audit FY 2015   (See pages 60 – 63 of Audit.)

Region IX Education Cooperative – Audit FY 2016   (See pages 51 – 54 of Audit.)

Just one of the IGA’s (with amendments) between NM PED and Region IX for FY 2016:

Intergovernmental Agreement, #16-924-00142, (Between NM PED and REC IX) Page One (Recital of Basics.) 

Intergovernmental Agreement, #16-924-00142, (Between NM PED and REC IX) Page Five (Signature Page.)

Intergovernmental Agreement, #16-924-00142, (Between NM PED and REC IX) Page Six (Exhibit A – Statement of Work.)

Intergovernmental Agreement, #16-924-00142, (Between NM PED and REC IX) Page Seven (Exhibit B – Financial Information Sheet.)

Intergovernmental Agreement, #16-924-00142, (Between NM PED and REC IX) AMENDMENT No. 1 – Page One (Recital of Basics.)

Intergovernmental Agreement, #16-924-00142, (Between NM PED and REC IX) AMENDMENT No. 1 – Page Two (Signature Page.)

Intergovernmental Agreement, #16-924-00142, (Between NM PED and REC IX) AMENDMENT No. 1 – Page Three (Exhibit B-1 – Financial Information Sheet.)

Intergovernmental Agreement, #16-924-00142, (Between NM PED and REC IX) AMENDMENT No. 2 – Page One (Recital of Basics.)

Intergovernmental Agreement, #16-924-00142, (Between NM PED and REC IX) AMENDMENT No. 2 – Page Two (Signature Page.)

Intergovernmental Agreement, #16-924-00142, (Between NM PED and REC IX) AMENDMENT No. 2 – Page Three (Exhibit B-1 – Financial Information Sheet.)

Just one of the IGA’s (with amendments) between NM PED and Region IX for FY 2017:

Intergovernmental Agreement, #17-924-00025, (Between NM PED and REC IX) – Page One (Recital of Basics.)

Intergovernmental Agreement, #17-924-00025, (Between NM PED and REC IX) – Page Five (Signature Page.)

Intergovernmental Agreement, #17-924-00025, (Between NM PED and REC IX) – Page Six (Exhibit A – Statement of Work.)

Intergovernmental Agreement, #17-924-00025, (Between NM PED and REC IX) – Page Seven (Exhibit B – Financial Information Sheet.)

Intergovernmental Agreement, #17-924-00025, (Between NM PED and REC IX) AMENDMENT No. 1 – Page One (Recital of Basics – With Statement of Work.)

Intergovernmental Agreement, #17-924-00025, (Between NM PED and REC IX) AMENDMENT No. 1 – Page Two (Recital of Basics, Continued.)

Intergovernmental Agreement, #17-924-00025, (Between NM PED and REC IX) AMENDMENT No. 1 – Page Three (Signature Page.)

Intergovernmental Agreement, #17-924-00025, (Between NM PED and REC IX) AMENDMENT No. 1 – Page Four (Exhibit B-1 – Financial Information Sheet.)

Intergovernmental Agreement, #17-924-00025, (Between NM PED and REC IX) AMENDMENT No. 1 – Page entitled: PED Internal Routing Sheet, containing post-it notes including one raising concern about specifically naming a subcontractor in IGA.

 

 

 

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