Reports of “waste, fraud, and abuse” in federal contracting often prompt questions about what the government can do to hold its vendors accountable for failure to perform as required under their contracts, or for legal violations or other misconduct unrelated to contract performance. Broadly speaking, the government can be seen as having two types of legal recourse available to it in such situations. The first type involves rights provided to the government as terms of its contracts, which the government may exercise without resort to judicial proceedings. The second type involves other actions, not necessarily provided for by contract. In some cases, the government may take these actions on its own behalf, without resort to judicial proceedings. In other cases, the government must seek sanctions or damages through the courts. Not all of these mechanisms involve “penalties” as that term is generally understood. In some cases, the controlling legal authority expressly provides that the government may take certain actions only to protect the government’s interest, and “not for purposes of punishment.” However, in all cases, the government’s action represents a consequence of and response to the contractor’s delinquencies, and could be perceived as punitive by the contractor or other parties. The government generally has discretion as to whether to employ any of these mechanisms in particular circumstances, and could employ multiple mechanisms in a given case. In some cases, though, the government must choose between particular mechanisms.
First Place Scholars, the state’s first charter school, received about $200,000 more public money than it should have in the 2014-15 school year because the Seattle school reported incorrect information about its staff and enrollment, according to the Washington State Auditor’s Office.
The audit, released Monday, also found that First Place Scholars:
- Did not properly account for the use of some public funds;
- Inappropriately mixed business expenses of First Place’s private parent organization with those of the public charter school;
- Failed to follow provisions of the state’s open-meetings laws….
The Office of Superintendent of Public Instruction (OSPI) will seek repayment of at least $163,000, spokesman Nathan Olson said. #That’s how much First Place received for students who never attended First Place, Olson said. …
State’s charter-school era begins with Seattle elementary
Source: Lynn Thompson, Seattle Times, September 2, 2014
First Place Scholars, which has been serving homeless students for 25 years, will convert Wednesday from a private school to the state’s first taxpayer-funded charter school. … Washington voters turned down charter schools three times since the mid-’90s but in November 2012 narrowly approved an initiative that made Washington the 42nd state to allow charters, which receive taxpayer support but operate with more autonomy than other public schools. Their legitimacy is still under attack. The League of Women Voters, the Washington Education Association and El Centro de la Raza have challenged the initiative in court, saying charter schools should not be entitled to public funding. ”Our concern is still that we have private organizations running these schools with taxpayer dollars yet they’re not directly accountable to taxpayers,” said Rich Wood, spokesman for the Washington Education Association. The State Supreme Court has agreed to hear the case Oct. 28. In the meantime, the Washington State Charter School Commission has approved seven nonprofit organizations to open charter schools. The Spokane School District approved another. …
On the heels of new Postal Service reform legislation, a fellow at the Brookings Institution offered her own suggestions for saving the agency, including splitting it into two distinct parts. Elaine Kamarck, a senior fellow in governance studies at Brookings, released a paper Sept. 18, the same day Sen. Tom Carper (D-Del.) introduced a bill meant to bring USPS back to solvency. While Carper’s bill tries to help the agency by keeping its current organization intact, Kamarck’s solution is more dramatic. In order to save the USPS, the organization must be broken into two separate entities – one public and one private, Kamarck argues in the paper. … Kamarck says one organization should be a public sector organization with the sole mission of “delivering on the universal mandate of delivering mail service to all Americans.” While the other organization should be privatized so that “it is out from under the laws and regulations that make innovation and flexibility all but impossible,” Kamarck writes in the paper. … This new organization should be allowed to compete with similar organizations in the private sector and should be managed by people with private sector experience, she says….
Brookings Institute Report: Delaying the inevitable: Political stalemate and the U.S. Postal Service
Source: Elaine C. Kamarck, Center for Effective Public Management at Brookings, September 2015
Elaine C. Kamarck surveys the numerous and varied challenges currently facing the U.S. Postal Service (USPS), one of the nation’s oldest institutions. From a steep decline in first-class mail usage, to the rise of the Internet as the main means of modern-day communications, to immense budgetary and market strictures, and to a lack of political will to reform the agency, the USPS faces a wide assortment of problems that threaten its survival. Kamarck observes that the USPS is expected to compete with the private sector, but yet is stifled by law and saddled with a governance structure that impedes innovation. It is neither a fully public nor a fully private organization, she writes.
The Canadian Union of Public Employees released a scathing report on Friday listing problems that have come up in facilities where three leading food and cleaning companies have operated. The so-called “Big Three” companies are Sodex of France, Aramark of the United States and Compass Group of the United Kingdom. Norma Robinson, the president of CUPE Local 1252, predicts poorer quality food and “deaths from hospital-based infections” if any of the companies is chosen. … The department hopes to wrap up negotiations with the company that would providing the privatized services in the fall, he said. … Health Minister Victor Boudreau said in April the province had already picked a company and was negotiating a contract. He didn’t identify the company. Boudreau said at the time it would lead to “significant savings” in the health budget and that there would be “an impact” on the number of food and cleaning service jobs. It’s part of the Gallant Liberals’ overall push to reduce spending to grapple with a projected $470.6-million deficit, a figure that includes a $150-million contingency cushion.
Privatization in Health Care: Pay More, Get Less
Source: Canadian Union of Public Employees, Local 1252, September 18, 2015
The New Brunswick Council of Hospital Unions – CUPE Local 1252 which represents hospital workers, released a report today that portrays a poor picture of the situation that prevailed in hospitals and other institutions where food and cleaning services have been privatized. … “Our research into the three companies being considered to take over those services, Sodexo, Aramark and Compass, shows a very troubling picture of the quality of the services provided. All over the world, all three competitors have shown very poor track records when it comes to cleaning and food preparation. The latest being in Ontario’s Niagara Health Region where the Hospital Board ended that relationship with Aramark after a major outbreak of C. difficile that caused the death of 37 patients.”
For more than a decade, the Michigan Secretary of State’s office tried and failed at upgrading its driver’s license, vehicle and voter registration computer system. According to a 3-year-old audit report done by the Auditor General’s office, the project started in September 2003 at an estimated cost of $50 million. The audit found that nine years after the Business Application Modernization (BAM) Project started it still needed improved oversight. … The contract was improperly bid. The report says the original contractor, EDS, which was eventually bought out by Hewlett-Packard, assisted in designing the bid process which it eventually won. Then, to top it all off, workers delivered misleading and inaccurate reports about BAM problems to the legislature. … The audit found a former Department of State senior executive overrode internal controls by approving eight payments totaling $4.5 million, that the BAM project manager disapproved. Later, the audit found four more similar payments totaling nearly $2 million.
D.C. Public Schools is not equipped to improve its lowest-performing schools and should have the ability to convert them to charter schools, according to a report being released this week by the Progressive Policy Institute. What the traditional school system is missing is greater autonomy to create specialty programs, extend school days, shut down failing schools or replicate high-performing ones, the report said. … The report, “A Tale of Two Systems: Education Reform in Washington D.C.,” was funded by the Walton Family Foundation and the Eli and Edythe Broad Foundation. The Washington-based Progressive Policy Institute promotes market-based solutions to public policy issues.
Progressive Policy Institute Report:
A Tale of Two Systems: Education Reform in Washington D.C.
Source: David Osborne, Progressive Policy Institute, September 15, 2015
The older of the two, the District of Columbia Public Schools (DCPS), uses a “unified governance model” that emerged more than a century ago, in which the district operates all but one of its 113 schools and employs all their staff, with central control and most policies applied equally to most schools. Since 2007, when Michelle Rhee became chancellor, DCPS leaders have pursued the most aggressive reform effort of any unified urban district in America. Racing against them—and carrying 44 percent of D.C. public school students—is a very different vehicle, designed and built largely in this century. This model does not own or operate any schools. Instead, it contracts with 62 independent organizations—all of them nonprofits—to operate 115 schools. It negotiates contracts with operators, lets parents choose their schools, shuts down those that repeatedly fail to achieve their performance goals, and replicates those that are most effective. … Most experts agree that DCPS has more students “in crisis”—homeless, coming out of jail, former dropouts, and so on—because families in crisis don’t usually make the effort to apply for charters. And many charters don’t accept students midway through the school year or “backfill” seats after students leave, while most DCPS schools do. Far more students leave charters for DCPS during the school year than the reverse, and sometimes the new entrants set back schools’ test scores, graduation rates, and attendance rates.
A new report from the Brookings Institution shows that for-profit colleges aren’t just part of the student-loan crisis—they’re a disproportionately large segment, and one that has swelled in recent years. Between 2000 and 2014, the number of students holding education debt doubled to 42 million, their total debt outstanding quadrupling to over $1 trillion. In 2000, there was only one for-profit institution among the 25 colleges and universities where students held the most student-loan debt. In 2014, there were 13, and University of Phoenix topped the list. The amount of debt owed by those attending for-profit colleges has grown from $39 billion in 2000 to $229 billion in 2014—which is more attributable to increases in the rate of borrowing at those schools than to increases in enrollment. … During the recession, when jobs were particularly hard to come by these promises carried extraordinary appeal, especially for those with only a high-school education. Between 2000 and 2011, enrollment at for-profit colleges grew from 3 percent of total fall enrollment to 9 percent of total fall enrollment. …
A crisis in student loans? How changes in the characteristics of borrowers and in the institutions they attended contributed to rising loan defaults
Source: Adam Looney and Constantine Yannelis, Brookings Institute, September 11, 2015
Abstract: This paper examines the rise in student loan delinquency and default drawing on a unique set of administrative data on federal student borrowing, matched to earnings records from de- identified tax records. Most of the increase in default is associated with the rise in the number of borrowers at for-profit schools and, to a lesser extent, 2-year institutions and certain other non-selective institutions, whose students historically composed only a small share of borrowers. These non-traditional borrowers were drawn from lower income families, attended institutions with relatively weak educational outcomes, and experienced poor labor market outcomes after leaving school. In contrast, default rates among borrowers attending most 4-year public and non-profit private institutions and graduate borrowers—borrowers who represent the vast majority of the federal loan portfolio—have remained low, despite the severe recession and their relatively high loan balances. Their higher earnings, low rates of unemployment, and greater family resources appear to have enabled them to avoid adverse loan outcomes even during times of hardship. Decomposition analysis indicates that changes in characteristics of borrowers and in the institutions they attended are associated with much of the doubling in default rates between 2000 and 2011. Changes in the type of schools attended, debt burdens, and labor market outcomes of non-traditional borrowers at for-profit and 2-year colleges explain the largest share.
International bodies have advanced the case for social impact bonds projects – the G8 group of countries established a Social Impact Investment Taskforce, the Organisation for Economic Development and Cooperation (OECD) and World Economic Forum (2013) extolling their virtues. Global banks such as Bank of America Merrill Lynch, Goldman Sachs, JP Morgan Chase and Co. and Morgan Stanley, have played a key role in promoting and funding social impact bond projects in anticipation of attracting wider private investor interest and a new ‘asset class’. There are currently 54 operational social impact bond projects in 13 countries with at least a further 23 at the planning or procurement stage. The UK is the global leader with 32 operational projects with outcome payments valued at £91m, followed by the US with 9 projects. … A four-part strategy is required: 1) An alternative vision of public services that provide early intervention and prevention, good quality integrated core services and multi purpose use of public buildings; 2) Public Service Innovation and Improvement Plans at departmental or service level; 3) An agreement not to propose or approve social and development impact bond/pay-for-success projects; 4) Action strategies to build alliances of staff/trade unions, service users/community organisations and other campaigns to organise support for strategies and scope for transnational action.
MDHHS enters into contract and grant agreements for various community health-related goods and services. These include laboratory testing supplies and vaccines, diabetes prevention services and substance abuse services. The Grants and Purchasing Division is responsible for ensuring that contract and grant agreements are developed, approved, and processed according to applicable laws, rules, regulations, policies, and procedures. During the 20 month of our audit period, MDHHS recorded $369 million in contract and grant agreement expenditures.
Program variation has long been touted as a charter school advantage, so a recent AEI report rates the diversity of charter school programs in 17 major cities. Examining charter school websites, the report finds the schools evenly split between “Specialized” schools (e.g., no excuses, STEM, or Arts) and “General” schools. It finds small to moderate correlations between city demographics and certain types of charter schools but also finds that specialized schools tend to morph into homogenized general schools. The report has several weaknesses. It claims superior diversity for charter schools but doesn’t empirically compare charter offerings with those of traditional public schools, which typically include many diverse options. Similarly, the introduction claims charter schools are hamstrung by red tape, but this is not addressed in the report. Also, as acknowledged in the report, coding schools based on website descriptions is an error-prone enterprise, yet no check of the accuracy of the data is provided. As the correlations between charter schools and city demographics are based on only 17 cases (cities are the unit of analysis), this is too weak a base to support the report’s conclusions. Fundamentally, the report does not make the case for its major claims, and thus has only minimal utility.
Measuring Diversity in Charter School Offerings
Source: Michael Q. Shane and Jenn Hatfield, American Enterprise Institute, July 21, 2015
There are two main reasons given to support charter schooling: (1) that charter schools will improve academic achievement by taking advantage of flexibility not afforded to traditional public schools; and (2) that deregulation will allow for more diverse schools than would otherwise be created. The academic achievement argument tends to get the most attention, but research strongly suggests that parents want more from schools than just high test scores. So what do we know about the diversity of charter school options across the country? In this paper, we offer the beginnings of an answer to that understudied question by coding 1,151 charter schools educating more than 471,000 students in 17 different cities. We searched the website of every charter school for descriptive words about their mission, vision, educational philosophy, academic model, or curriculum. We used these words to code the school as “general” or “specialized.” Specialized schools were further broken down into 13 possible types, including no-excuses; science, technology, engineering, and mathematics (STEM); arts; singlesex; and military schools