Public Employee Press

School Scam
Consultants mark up DOE’s costs by $1.5 million

By ALFREDO ALVARADO

Information in DC 37’s White Papers and later tips from union members helped uncover an illegal subcontracting scam at the Dept. of Education. The corrupt operation became the subject of a major probe by Richard J. Condon, special commissioner of investigation for the public schools.

Mohinder P. Lamba, a computer consultant “improperly schemed with DOE vendors to circumvent contracting rules” and stuff his own pockets, said Condon in a 15-page report.

According to the investigation, which was completed in December, Lamba and his subcontracting conspiracy cost the DOE $1.5 million. Most of the money was funneled through Reba Software & Services Inc., a company that Lamba was president and sole owner of.

Lamba’s scam began with two DOE vendors, TSR Consulting Services Inc. and Data Industries Ltd., which provide computer programmers and technicians to government and private industry. Both vendors had long-standing contracts to supply per diem consultants to the DOE. Under the contracts, subcontracting to other firms was explicitly prohibited. The consultants remained employees of the vendors, which billed DOE for their services by the hour.

TSR and Data violated their contracts with DOE by repeatedly subcontracting with Reba to place employees from Lambda’s firm in DOEassignments.

Before new administrators at DOE’s Dept. of Instructional and Information Technology put a halt to the practice, Reba billed Data and TSR nearly$9 million for consultants ­assigned to DIIT and the Office of ­Pupil Transportation from October 2000 throughJuly 2003.

Data and TSR then padded these bills by about 15 percent before passing them on to the DOE, in direct violation of the ban on subcontracting. In addition to these unnecessary added costs, each layer of subcontracting removed a level of oversight and control of the consultants from the DOE.

“Contracting out circumvents ­accountability. The public pays more and gets less,” said Gary Goff, 2nd vice president of Local 2627. “Members of our local do the job well and stay within the budget.”

The scheme did not stop with illegal subcontracting. Lamba also manipulated the process by which the school system selected its consultants. Condon reports that DOE paid Lamba and other Reba employees as consultants to participate in the interview panels that evaluate and recommend applicants for other consultant positions. Lamba used this unique position in the selection process to place Data and TSR applicants in DOE assignments. He simultaneously put them on Reba’s payroll and marked up their price in billings to Data and TSR, which used them through illegal subcontracts and again marked up their costs in billings to the DOE.

Each crooked step added to the total rip-off. In one example given by Condon, one consultant who was actually paid $25 an hour ended up costing DOE $78.75 an hour.

The report also uncovered that as many as five administrators from the DOE were involved in Lamba’s scam. DOE officials Kevin Gill, Vincent Romano and Bruce Hoffman even asked Data to increase its billing rate to DOE for Lamba’s services, so that he could get more DOE money.

This is not the first time that these DOE officials have been ­implicated in a contracting-out scandal. A previous probe of food purchasing procedures by Condon and the FBI found that their negligence cost DOE millions in unnecessary food expenditures.

Romano and Hoffman accepted laptop computers and other valuable gifts from food vendors and lied about the gifts to FBI agents. By letting Lamba influence the selection of consultants, DOE administrators—Lucille Elin-Smith and Angela Gill violated their duty to get DOE the best consultants at the lowest cost.

“Once again this shows how ­privatization winds up costing the taxpayers of New York a lot more money,” said DC 37 Executive Director Lillian Roberts. “Our members can do these jobs and have been doing them for a lot less.”

The investigation began after Roberts brought information about the subcontracting scheme to New York State Attorney General Eliot Spitzer and City Comptroller William C. Thompson Jr. They involved Condon, whose report now awaits further ­action by authorities.