OFAC: WNY BOE improperly awarded insurance contract, no sanctions issued

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Hudson County View has obtained a copy of the state Office of Fiscal Accountability and Compliance’s report on  the West New York Board of Education‘s practices for hiring insurance brokers, determining that the board improperly issued a contact to Alamo Insurance. However, no sanctions have been issued in the matter. 

WNY BOE

By John Heinis/Hudson County View

The seven-page report, dated January 26 of this year, begins by stating they have “identified a material issue of noncompliance with the Public School Contracts Law, N.J.S.A. 18A: 18A-1 et seq.”

Around two-and-a-half pages are dedicated to summarizing the events that transpired in the insurance firm hiring process at the WNY BOE around the middle of last year.

As Hudson County View first reported in September, the contract was originally awarded to Brown & Brown Metro Inc., of Florham Park, on June 11, 2014.

However, two weeks later, the same contract was awarded Alamo Insurance, of North Bergen, on June 25.

The summary portion of the report notes that the appointment was actually invalid since the time frame contained a typo (July 1, 2014 to June 30, 2014) and a motion to rescind the appointment of Brown & Brown at the June 25 meeting passed.

Despite that fact, a motion to issue a request for professional services (RFP) failed. For this reason, the appointment of Alamo should have never went forward, according to the report.

Additionally, a public notice incorrectly stated that the West New York school district solicited a request for qualifications (RFQ) prior to hiring Alamo Insurance.

One month after Superintendent of Schools John Fauta announced the ongoing OFAC investigation, the board terminated their contract with Alamo, leading company founder/president Louis Alamo to call the firing political.

The OFAC report further notes that allegations of outside interference by outsiders has been turned over to the School Ethic Commission (SEC), since OFAC does not have jurisdiction in possible ethics violations.

Also noted in the report is that “insurance brokerage services do not qualify as professional service,” and a board of education can award an insurance contract in excess of the bid as long as it meets the provisions of extraordinary unspecified services.

The services must be of such a qualitative nature that the performance of the services cannot be reasonably described by written specifications. However, services previously bid or generally characterized as being of a continuous ongoing nature shall be subject to the presumption that such services may not be classified as an EUS, unless the contracting unit can demonstrate in writing its inability to prepare written specifications describing the qualitative nature of the performance of the services required. If written specifications can be prepared describing the qualitative nature of the performance of the services, then they shall be so written, but notwithstanding that the other criteria of the definition have been met. Contracting unit officials might also consider the use of competitive contracting pursuant to .. N.J.S.A. 18A:18A-4.1(k).

As a result of the investigation, the board must develop and submit a corrective action plan to OFAC to ensure public service contract law will be upheld in the future, as well as public review and discuss the findings of the report within 30 days after receiving it.

Fauta told Hudson County View that the matter would be discussed at Wednesday’s regularly scheduled board of education meeting, which takes place at the West New York Middle School (201 57th Street) at 5:30 p.m.

He declined to comment on the OFAC report further, since he hasn’t had a chance to talk about it with the board yet.

A full copy of the report can be read here.

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