Updated with response from Elmhurst Dairy.
In his first audit of the city’s Department of Education, Comptroller Scott Stringer said Wednesday that the city hasn’t done enough to prevent wrongdoing among companies it pays to provide milk.
“DOE ignored red flags that its milk contracts may have been tainted,” Stringer said in a statement.
The audit’s criticism focused on three big contracts, totaling more than $134 million, awarded between 2008 and 2013 to Beyer Farms, Elmhurst Dairy, and Bartlett Dairy. After bidding against one other, the three companies subcontracted with each other—which Stringer said could be a sign of colluding to waste taxpayer money.
One of those three companies, Beyer Farms, also went out of business in the middle of its contract. Stringer also charged that the DOE should have done a more thorough analysis of that company’s financial health when its contract was awarded in 2008. Now, Stringer has turned the information over to the Department of Justice to investigate.
In response, the Department of Education agreed to refine certain oversight practices, but pushed back against Stringer’s characterization of their current vetting as inadequate.
“The DOE believes it sufficiently performed its due diligence” in assessing the financial capacity of vendors, the city’s response notes. The DOE did agree to more comprehensive record-keeping and new procedures to examine potential collusion among its vendors.
The two remaining companies involved, Elmhurst Dairy and Bartlett Dairy, won new, smaller contracts last December to provide milk from March to September 2014. Elmhurst’s netted the company $6.1 million, while Bartlett’s contract was for just over $7 million.
Bartlett did not immediately respond to requests for comment. In a statement, Elmhurst Dairy said it “followed all proper protocols” for its 2008 contract and had not been contacted by Stringer’s office.
You can see the comptroller’s presentation, and read the full audit report, here: