Audit Report on the Department of Education’s Monitoring of Its Leadership Development Services Contract with the New York City Leadership Academy

The New York City Leadership Academy (NYCLA) is a tax-exempt nonprofit organization that prepares and supports educators to lead schools.  In collaboration with NYCLA, the New York City (the City) Department of Education (DOE or the Department) launched the Aspiring Principals Program (APP) to address an anticipated need for more principals in New York City schools.

In July 2008, DOE entered into a requirements contract with NYCLA for leadership development services[1].  The total cost of this contract was not to exceed $53,828,873.  DOE extended the contract for a year for $6.6 million and then renewed it in July 2014 for a five-year term, ending on June 30, 2019, at a cost not to exceed $40,919,927.  Pursuant to the original contract and the renewal, NYCLA agreed to provide leadership development services to “teacher leaders” (senior teachers) and aspiring principals through APP.  APP offered preparation services for assistant principals desiring to become principals, coaching for new principals (those in the position for one year or less), coaching for experienced principals, and an apprenticeship program for teachers desiring to take on school leadership roles.

On August 5, 2016, DOE exercised its right to partially terminate its contract with NYLCA in connection with the Department’s decision to provide in-house training for aspiring principals.  Pursuant to the partial termination letter, the obligations that remained under the contract would expire on June 30, 2017.  However, on September 14, 2016, DOE amended its original termination letter, and added the provision that NYCLA shall continue through the end of June 2019 to provide experienced principal coaching services to schools that request such services, depending on the availability of funding.

Audit Findings and Conclusions

The audit found that DOE did not ensure that its payments to NYCLA were adequately supported.  Specifically, we found that sampled payment requests were missing detailed records of the hours the coaches worked each day, as is required by the contract.  Although DOE has comprehensive policies and procedures to ensure that transactions are accurately recorded and supported, it did not consistently follow them and, in particular, did not require NYCLA to adhere to its requirements that the specific hours worked each day be documented in order to receive payment.  In addition, we found that DOE failed to require NYCLA to submit copies of the bills for which it requested reimbursement for expenses.  As a result, we found that out of the $559,667 sampled DOE payments made to NYCLA, $394,007 were for coaching services, including some coaching-related services, $385,612 (98 percent) of which we found to be inadequately supported.

The audit also found that DOE did not adequately monitor NYCLA’s compliance with key provisions of its contract.  Specifically, DOE did not require NYCLA to provide any of the progress reports to which DOE is entitled, to enable it to assess NYCLA’s performance.   Additionally, DOE did not provide adequate evidence that it conducted all of the monthly meetings with NYCLA as required by the contract.

Finally, the audit found that the unit price for tuition costs for 13 APP program participants was reduced without a written amendment to the contract.  We further were not provided with any documentation that explained the basis for the price reduction.  As a result, we were unable to determine whether it reflects a reduction in services to be provided by NYCLA.

Audit Recommendations

Based on our findings, we made seven recommendations to DOE:

• DOE should ensure that NYCLA maintains contemporaneous time records as required by the contract, and submit them along with all other required supporting documents to support requests for payments.
• Where reimbursement is sought for training and/or meeting expenses, DOE should ensure that adequate proof of the meeting is submitted, such as a sign-in sheet from the attendees and an agenda.
• DOE should not make payments for expenses that are not adequately supported in accordance with the terms of its contract with NYCLA.
• DOE should follow up and determine whether sufficient supporting documentation exists for the $385,612 in inadequately supported payments identified in this report. DOE should recoup any payments for which it is unable to verify that the goods were delivered or services were rendered.
• DOE should request that NYCLA provide progress reports to aid in DOE’s monitoring of its contractor’s performance, as prescribed in the contract.
• DOE should meet with contractors on a monthly basis, as called for in the contract.
• DOE should ensure that any modifications to the contract are formally documented in writing, as required by the contract.

Agency Response

DOE stated that it agreed with five of the audit’s seven recommendations, but as to three of those recommendations, it qualified its agreement stating that it agreed “inasmuch as” the recommendations reflected current practices.  In addition, DOE disagreed with the recommendations that DOE request that NYCLA provide progress reports to aid DOE’s monitoring of NCYLA’s performance, as permitted by the contract, and it disagreed with the recommendation that DOE meet with NYCLA officials on a monthly basis, as called for in the contract.

[1] DOE defines a “requirements contract” as an agreement between the Department of Education and vendors to provide materials and services to any operating unit within the New York City school system.  These contracts are established for a specified period of time, during which orders may be placed against them.  Such contracts specify unit of measure, price per unit, specifications, an estimate of quantities to be ordered, etc.