By Rich Bockmann
Dairies in Queens could have possibly milked the Big Apple for millions of dollars because the city Department of Education lacked proper oversight of its school lunch contracts, the city comptroller said.
An audit released by Comptroller Scott Stringer last week found that the DOE lacked adequate controls to make sure there was no collusion between three dairy vendors in Jamaica that were awarded milk-distribution contracts.
“DOE ignored red flags that its milk contracts may have been tainted,” Stringer said. “We see possible collusion when rival bidders become business partners within two months of being awarded contracts. Instead of doing its due diligence, DOE needlessly put taxpayers at risk.”
Just two months after the Elmhurst Dairy, Beyer Farms and Bartlett Dairy competed with each other for $134 million worth of contracts in the summer of 2008, Elmhurst and Beyer subcontracted the majority of the work to Bartlett, their former competitor, Stringer said.
The result was a jump for Bartlett from handling 6 percent of the city’s milk delivery to nearly 70 percent before the contract even went into effect. Furthermore, Elmhurst and Beyer did not tell the DOE they planned to use subcontractors, which they were required to do when bidding, the comptroller said.
“All of these warning signs should have raised concerns at DOE,” Stringer said, “and we have referred the matter to the United States Department of Justice for further investigation.”
All three distributors are next to one another in Jamaica just south of Liberty Avenue.
Stringer said that while his audit found no evidence of collusion among the companies, the possibility exists and he called on the DOE to keep a more watchful eye over its contracts.
Beyer Farms went bankrupt in 2012, and the DOE should have seen the warning signs that the company was distressed when analyzing its bid, Stringer said.
The comptroller recommended that the department develop procedures to root out signs of possible collusion and troubled bidders.
“Moving forward, DOE must put tighter controls in place to ensure that bids are made independently and that bidders have the financial ability to deliver the services they promise,” he said.
Reach reporter Rich Bockmann by e-mail at rbockmann@cnglocal.com or by phone at 718-260-4574.
