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The Department of Education has failed to regulate and keep an eye on its job order contracts program, leaving it susceptible to fraud and abuse, according to an audit released last week by City Comptroller William Thompson.

Many unfinished and poor repairs performed by contractors were found during the audit. The DOE’s use of the Gordian Group, an independent consultant, to undertake both inspection of the contractor program and to offer consulting services was also a clear conflict of interest, the report read.

“The Department of Education has allowed its job order contracting program to fall into disrepair,” Thompson said. “DOE needs to implement internal controls to correct the issues revealed in today’s audit. New York City’s schoolchildren need and deserve well-maintained facilities, and their parents need to know that their hard-earned tax dollars are not being misused.”

In 1994, the DOE’s Division of School Facilities, which is responsible for overseeing school building maintenance by using its own work force and administering job order contracting, employed Gordian to develop and implement the contractor program and to provide construction management services, said Thompson.

This practice continued for more than a decade, with small jobs being added to contractors’ plans, work being overlooked, shoddy work being done and no oversight on behalf of the DOE – except by a company that both served as the overseer of projects and the consultant to ensure that the projects were being performed properly.

In 2005, approximately $18.7 million of the Division’s budget was allocated to the contractor program, which was recorded by Gordian in a “Construction Task Catalog” of unit prices for specific work items, upon which the value of contracts are based.

While reviewing 32 files of projects that were in effect in 2004 and 2005, the audit found that the DOE’s lack of any written policies or an adequate system of internal controls to ensure that invoices submitted by Gordian are properly reviewed and approved resulted in the DOE overpaying $63,482 in management fees.

Incomplete and poor-quality work was found in the deteriorated and defective doors at PS 70 in Long Island City, unpainted ceiling piping at PS 162 in Bayside, frayed and missing carpet at IS 228 in Brooklyn and missing adhesive strips on entrance steps at PS 262 in Brooklyn, according to the audit.

The DOE disagreed with many of the audits findings, explaining that the contract program was used appropriately.

“[The program] is not a substitute for competitive bidding but an alternative to job-specific bidding, which saves time, expense and uncertainty by shifting the competitive bidding process to the front end of its management of maintenance and repair work,” the DOE wrote in response to the audit.

They DOE “took umbrage” with the Comptroller calling the work “incomplete and inferior,” noting that the inspectors were not qualified to evaluate the program and had a “fundamental lack of understanding” of how the contracting process works.

“Clearly, the Department has failed to understand the salient conclusion of this audit,” Thompson said. “The Department’s response attempted to obfuscate the serious issues raised in the report by speculating that the auditors do not understand the job order contracting program; by contending that the opinions expressed in the audit were predicated on the auditors’ “philosophy;” by submitting information that contradicts documentation in its files; and by providing irrelevant information.”