Boston Public Schools improperly handled a plumbing vendor’s invoices and wasted nearly $25,000 that could have been spent on students, an investigation released Sunday by a city watchdog agency found.
BPS failed to pay a plumbing vendor $164,000 for work performed since 2018, according to a May 11 report by the Boston Finance Commission. Rather than pay the vendor directly, the district funneled the money owed through a separate heating, ventilation, and air conditioning contractor that “falsely” charged the district for that payment at the district’s request, the report said.
The move led the HVAC contractor, Canton’s ENE Systems Inc., to charge BPS an additional 15 percent fee and created potential mechanisms for corruption, the report said.
The missteps by BPS amounted to a “breach of policy, procedures, and public trust,” the report said, noting that because the district did not pay the vendor directly, its system could still show the district owes the vendor $164,488.
“This transaction,” the report said, “unnecessarily cost the taxpayers money that could have gone towards services for Boston Public School students, undermines the faith citizens have in their public officials, and will potentially cause vendors to question whether they should enter a business relationship with the City of Boston.”
BPS billing employees should have contacted the auditing department, which could have walked them through completing the payment to the vendor, the report said.
The district “should know that approaching a contractor to hide a payment problem puts pressure on vendors to ‘do BPS a favor’ or potentially suffer some consequence,” the report said. While there is no evidence any corruption occurred, according to the report, such practices “create avenues to receive unwarranted financial gain” for city employees. Investigators learned the district had used the unusual billing practice in past instances, but with smaller amounts of money, the report said.
In response to the findings, Superintendent Mary Skipper called for an outside auditor to investigate all payment processes with vendors and identify needed changes to prevent such errors from recurring, said Max Baker, a BPS spokesman. He said BPS is already reviewing its processes to ensure vendors receive timely payments that meet contractual and legal requirements.
“BPS values the relationships with our many vendors and is committed to providing them with the payments they are due for services rendered in a timely manner and consistent with Massachusetts procurement laws,” Baker said. “This matter will be thoroughly investigated, as we understand holding BPS employees to the highest standards is critical to ensuring public trust in the stewardship of public funds.”
The incident is the latest in a string of blunders by the district, which last month admitted miscalculating dozens of students’s grade-point averages, sending them inaccurate information on their eligibility for exam schools. A recent report by Ernst & Young also found the district’s data is unreliable in many areas, including graduation rates and on-time bus performance. To avert a state takeover of the city’s schools, BPS is under a state-mandated improvement plan aimed at its internal controls and data systems, as well as its services related to transportation, English language learners, special education, and safety.
According to the May 11 report, the finance commission received a request for assistance in October 2021 from the unnamed BPS plumbing vendor who had been awarded a multiyear contract but had not been fully paid for services he had performed since 2018.
BPS said the district would review the vendor’s invoices and pay him, the report said. But over the following year, the vendor e-mailed BPS and the finance commission several times voicing concerns that BPS was not paying for all his work. BPS told the commission the district was working with the vendor to review the total BPS owed him.
In February, the vendor reported being paid in full for his work, the report said, but the finance commission learned BPS did not pay him directly, but rather paid him through ENE.
A BPS employee working to get the plumbing vendor paid told the finance commission he came up with the idea to have ENE file an invoice for the plumbing vendor’s work and say the vendor was ENE’s subcontractor even though that was not true, the report said. The employee said a supervisor approved his idea and told him to move forward with the plan, the report said. The report did not name the employee or the supervisor, and BPS did not answer questions Monday about whether the two are still employed in the district.
ENE is a national company with multiple city contracts totaling $20 million, the report said. ENE paid the plumbing vendor the amount BPS owed the vendor, $164,448, after ENE contacted the vendor and asked him to complete paperwork stating he was ENE’s subcontractor, even though he has never worked as a subcontractor for ENE, the report said.
A Feb. 8 invoice shows ENE added a 15 percent surcharge, or $24,673, for work completed at the Campbell Resource Center in Dorchester, a family school registration site, the report said. A partial invoice included in the report shows the cost of labor to be around $4,400, outside purchased materials around $14,200, and a category for “subcontractors” to cost around $189,200.
The report said it was “unethical” for ENE to charge for work that was not within the scope of its contract, “falsely” invoice that work as subcontractor work at the Campbell Resource Center, and charge a surcharge for that cost. However the report notes that it is a common industry practice for contractors to charge a fee for subcontractor costs.
Representatives for ENE Systems Inc. did not respond to a request for comment Monday.
Naomi Martin can be reached at firstname.lastname@example.org.