The New York Daily News did a series of articles about a dubious outsourcing contract that the New York school system is involved with. To put it mildly, the NY Department of Education (DOE) is getting taken to the cleaners!
The story begins when the Chancellor of the New York City DOE, which is the largest public school system in the United States, recently cut the school budget by $400 million and ordered a hiring freeze. Nothing unusual about that as states wrestle with budget problems, but the story doesn't end there.
Chancellor Joel Klein decided to outsource a $95 million contract to work on the DOE computer system to a Florida based contractor. The company that won the contract is called "Future Technology Associates" (FTA).[NY Contract Info on Future Technology Associates] If you haven't heard of this company don't be surprised because they don't even have a company website (at least one I could find using Google). The NY Daily News didn't have much luck finding the company either:
As the Daily News reported last week, the company's only official addresses, on Schermerhorn St. and its "headquarters" in Jacksonville, Fla., are mail drops.[Joel Klein is ready to give firm without offices new $95 million DOE contract, July 22nd 2009]
I got sort of lucky on one of my Google searches and found out a little more about who this company is. There is a complaint filed by the SEC that accuses its parent company of securities fraud.
... with its principal place of business in Sarasota, Florida. Aerokinetic purports to be in the business of researching, developing, and marketing alternative power technologies and other innovative products, through its two wholly-owned subsidiaries, Future Technology Associates, Inc. ("FTA) and Scientific Technology Associates, Inc. ("STA"). Both subsidiaries are incorporated in Delaware and Bridwell is their sole shareholder.[SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v AERKINETIC ENERGY CORPORATION, Defendants. [PDF]
Good luck to any of you that can find a website for Aerokinetic Energy or STA. The more you try to find out about these companies the more they will seem to evaporate!
The shadow company called Future Technology Associates has been winning the NY DOE contracts since 2005. The contracts are very lucrative because they are non-competitive "no bid".
Last year FTA billed NY taxpayers an average of $250,000 for 63 full-time consultants that were supposedly needed to do the job. Those would be some highly paid consultants — but the kicker is that none of them got paid that much — and even more of a kicker is the worker demographics. A former programmer at the company blew the lid on the whole thing when he said, "most of the 60 people I worked with at FTA were from India."
The newspaper found out what the consultants are paid by looking at the company's Labor Condition Applications for their H-1Bs.
Since it began its work for DOE, Future Technology Associates has filed 19 applications with the U.S. Department of Labor for permission to hire foreign workers under temporary H-1B visas.
On those applications, it claimed to be paying those employees from $45,000 to $80,000, with the average at $65,000.[Computer firm bills Ed Dept. average of 250K per consultant]
If you want to see a few of the LCAs, follow these instructions:
This is a good illustration of just one of the reasons it's next to impossible to figure out how many H-1Bs work in a given city or state. These H-1Bs are listed in Florida but there is no telling how many of them work for New York, or how many actually work in New York.
The first thing that caught my eye is the vague job title of "consultant" instead of something more specific like "computer programmer". Deceptive data should have immediately tipped off the DOL that something fishy was going on, but of course it didn't. One of the things that needs to be changed about H-1B besides abolishing the entire program is that employers should be required to give specific job titles.
The second thing to notice is that none of the salaries were in the quarter million dollar range that they duped the NY DOE into paying. Instead the salaries ranged from $60-$80K.
So, what we have is a company that employs lots of H-1Bs and Indian nationals (perhaps on other visas like L-1) and yet they can't even put up a company website. My first thought was that Chancellor Joel Klein must be a complete idiot for allowing this to happen, but one look at his biography proves that theory wrong. His resume is very impressive. He has been involved with the law and education for a very long time so mere stupidity doesn't seem plausible.
The quality of work at the FTA doesn't seem that good, especially considering how expensive it is. To be blunt, the system crashes, there are schedule delays, and the software doesn't manage databases well. Here is a comment made by City Councilman Robert Jackson who is head of the Education Committee:
"I've been complaining for years in Council budget hearings about the delays in the DOE's meshing its accounting systems with that of the Office of Management and Budget," Jackson said.[Computer geeks at Future Technology Associates earn more than Joel Klein does]
It would seem that New York schools could hire some very good Americans to do this kind of work, especially if they were offered a quarter million dollars a year. Not so says officials at the DOE who claim that the rates that FTA charges are, "better than competitive" when compared with the rest of corporate America. Wow! I had no idea that hiring American programmers was so expensive nowadays!
Be sure to read the articles because the quality of the investigative journalism is something that is rare nowadays. The last article was published January 2008 and yet nobody seemed to pay attention.