After no-bid deal falls apart, Texas Education Agency review calls for clearer contracting procedures

An internal review of the Texas Education Agency's contracting regulations found this week that the agency needs a more concrete process for determining whether to bypass competitive bidding when it enters into a new contract. 

Texas Education Commissioner Mike Morath ordered the review after a controversial no-bid contract to overhaul special education fell apart last month. More than $2 million had already been spent on services rendered through the deal before it was axed.

TEA's internal audit division found Thursday that the agency's contracting manual "basically follows" state regulations but needs more clarification and development to "reinforce best practices."

“Following a comprehensive review of our contracting policies and procedures, a number of areas have been identified where the agency can strengthen its practices. Our auditors have made useful recommendations that will lead to greater transparency and effectiveness for the agency," Morath in a statement Friday. "I agree with the findings in this report and the agency is moving forward to implement all of these recommendations."

In the spring of 2016, TEA pursued a deal with Georgia-based company SPEDx to both analyze how Texas schools serve students with disabilities and help create a long-term special education plan for the state. But critics questioned why such a significant deal was awarded to a relatively unknown company without allowing other firms to bid for the job. TEA officials first argued it had done nothing wrong — confirmed by the internal audit division — but subsequently terminated the contract to review its contracting processes.

The review recommended TEA better lay out its internal steps for when to offer no-bid contracts to companies or organizations.

"Outline steps necessary to be performed in concluding that no other vendor could perform similar services and the approval level of the justification," Bill Wilson, director of the internal audit division, wrote in the review. "This would preclude any criticism that the Agency did not make a due diligence effort to determine if other vendors could provide similar services."

TEA amended and significantly expanded its contract with SPEDx last September to help develop a "strategic plan for advancing the Agency's vision, mission, and priorities related to special education in Texas through" the 2020-2021 school year — a move that drew public attention and ire.

Wilson said in the contracting review that TEA should develop procedures for how to address substantial changes to a contract's scope of services, including requirements for referring major amendments to the legal department.