| Releases & Statements
For Immediate Release:
Tuesday, August 29, 2006
Public
Advocate Calls on DOE to Suspend No-Bid Contract
With Alvarez and Marsal, Pending Investigation
Today, on behalf of the 1.1 million
children in New York City public schools, I’m calling on
the Department of Education to suspend its no-bid contract with
the corporate “turnaround” firm Alvarez and Marsal,
pending a thorough investigation of the firm’s work in other
school systems around the country.
It is clear that the DOE didn’t
do its homework before going ahead with this $17 million, no-bid
give-away. Even a cursory check of Alvarez and Marsal’s
track record would be enough to set off alarm bells.
Here’s how it ended in St. Louis,
the firm’s first public-sector assignment, according to
the St. Louis Post-Dispatch: “The turnaround firm was going
to put the district on a solid financial and organizational footing…Instead,
there is vague talk of a plan…The financial mess the turnaround
firm was going to fix? It’s still with us.”
Under Alvarez and Marsal’s management
in St. Louis, 16 schools were closed and class sizes grew. Now
the firm is overseeing the “recovery school district”
in New Orleans, appointing a former Defense Department contractor
and oil executive with no education experience to be the district’s
chief financial officer. The New York Times reports that the New
Orleans public school system has been “replaced by a small
but labyrinthine system of state, city, and charter-operated schools,
each with its own rules, applications, and starting dates.”
In some cases, students are being turned away because of low grades
or special needs.
And this is the firm the DOE is handing
$17 million in taxpayer money with no competitive bidding process?
These are the consultants who will each make $1 million at the
unheard-of rate of $450 an hour, while our teachers and administrators
are still paid less than their counterparts in the suburbs and
across the country? Do we really want a company with this track
record telling us how to reorganize our school system?
In the conclusion of its editorial,
the St. Post-Dispatch noted that “several other school systems
have expressed interest in the turnaround firm,” then added,
“For [the firm’s] sake, let’s hope they don’t
ask for references.” Unfortunately, that appears to be exactly
what’s happened.
The DOE must put on the brakes before
it makes a costly no-bid blunder. We’ve seen what Alvarez
and Marsal did in St. Louis and New Orleans. New York City public
schools cannot afford that kind of help
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