Objective

To determine whether the selected New York City Department of Education contracting practice was effective in procuring the custodial service contracts it has in effect for the 2017–2020 and 2021–2028 fiscal years at the lowest available price, while maintaining the quality of service. The audit covered DOE’s procurement of the contracts as well as its efforts to assess the quality of those services for the periods both prior to and after contract renewal (fiscal years 2018–2021).

About the Program

The New York City Department of Education (DOE), the nation’s largest school system, serves approximately 1 million students at its more than 1,800 elementary, middle, and high schools located in over 1,300 buildings (some buildings house multiple schools). DOE’s Division of School Facilities (DSF) is responsible for the maintenance, repair, and safe operation of these buildings and employs more than 900 custodian engineers to oversee these functions.

Up to and including fiscal year 2016, DOE custodian engineers were assigned their own budget allocation from which they hired and supervised their custodial staff, handled their payroll, and purchased their supplies. In April 2016, citing a disjointed custodial system with little oversight or transparency, the Mayor announced reforms to the DOE system to address mismanagement and long-standing maintenance disparities across schools and ensure all schools are clean and well-maintained.

Under this new system, a not-for-profit corporation affiliated with DOE – New York City School Support Services (NYCSSS) – was created solely to provide custodial services at DOE schools. NYCSSS would handle staffing, including hiring and payroll, and DSF would be responsible for purchasing supplies. DOE custodian engineers would remain janitorial supervisors and oversee the work of NYCSSS’ approximately 7,500 custodial staff (e.g., cleaning, garbage disposal, heating, air conditioning, plumbing, painting, minor repairs).

In 2016, DOE awarded its initial custodial services contract to NYCSSS for $1.81 billion (revised to $1.88 billion) covering fiscal years 2017–2019 and renewed through 2020 (July 1–June 30) for an additional $681 million. Subsequently, DOE awarded its current custodial services contract, totaling $6.36 billion, for fiscal years 2021–2028 to NYCSSS. New York City’s administration estimated that, despite initial cost increases, spending would “break even” by 2019 due to savings in procurement. Additionally, the contract stated that this new system would result in cost savings for DOE and/or the City.

Goods and services, such as the NYCSSS custodial services, are procured through DOE’s Division of Contracts and Purchasing (DCP) and must comply with its Procurement Policy and Procedures (PPP Guidelines). DOE used a non-competitive procurement method, known as negotiated services, in awarding its contracts to NYCSSS. PPP Guidelines require that, for this type of contract, DOE provide four elements of support, including a detailed cost breakdown of services to be provided and documentation showing that potential vendors were contacted.

Oversight of custodial services, including performance standards, is essential to ensure all schools are clean and well maintained and to assess and measure whether NYCSSS is delivering the quality of services for which it was contracted. DOE currently has tools that capture cleaning and maintenance information, including an application that collects data on the conditions at DOE buildings, a system that tracks the status of work orders, and twice-yearly custodian engineer ratings.

Key Findings

• DOE did not fulfill all the elements required to make the determination that negotiated services – the non-competitive procurement method used to award the custodial services contracts – was in its best interest. DOE did not follow PPP Guidelines and submit a detailed cost breakdown of services to be provided. Additionally, while DOE published a notice of its pending 2021–2028 contract with NYCSSS to satisfy the obligation to contact potential vendors ahead of awarding a contract, it allowed only 5 business days for any interested parties to respond.
• DOE’s contracts with NYCSSS do not include any performance standards related to the quality of work performed by custodial staff, and DOE has no system in place to record and measure the quality of how well its buildings are being cleaned and maintained.

Key Recommendations

• Ensure all applicable PPP Guidelines are followed (i.e., inclusion of detailed cost breakdown of the services provided and documentation showing vendors were contacted) when procuring services using the negotiated services procurement method and before awarding the contract.
• Develop a system for consistently recording and measuring how well DOE buildings are being cleaned and maintained. In the meantime, take steps to maximize the usefulness of the tools that are available, such as ensuring all twice-yearly custodian engineer ratings are performed and including comments where deficiencies are noted.