Newark’s $4.5 Million No-Bid Contract

When the Newark school board voted to settle litigation it had started, it did more than stop senseless litigation. It broke the law. 

In the state of New Jersey, any public agency that wants to enter into a contract for a service over the cost of $44,000 MUST put out a request for proposal in order to obtain the best deal for the government agency. 

This keeps government officials from steering deals to friends or others who might take advantage of the agency–which would result in higher costs for taxpayers. 

But Newark Public Schools failed to do that, and instead entered into a $4.5 million contract with a real estate developer without going out to bid. 

Why is that bad? Because we don’t know if $4.5 million is a fair price for the services the Newark district is obtaining. Here’s why I don’t think it’s a fair price at all. 

The deal is with the Hanini Group. Newark Public Schools sued the Hanini Group and made them spend hundreds of thousands of dollars on litigation for multiple years. Don’t you think the Hanini Group will want to recoup those dollars in this deal? I do. They are not dummies. If I were them and I wanted to settle the litigation, you can bet I would incorporate all of my spending on lawyers into the price I charge to refurbish the building. It’s only logical. 

Are we supposed to believe that Hanini gave the NBOE a great deal out of the goodness of their for-profit heart? 

And what is another red flag that this wasn’t the best deal? Because the school district hid the contract. TapInto Newark had to sue the district in court in order to get this public contract to be shared with the public. Newark Board of Education paid lawyers for 106 hours to try to prevent this contract from becoming public. Obviously, they lost in court. 

This was a flagrant violation of procurement law and I have reached out to the NJ Department of Education’s Office of Fiscal Accountability and Compliance Investigations Unit, as well as the NJ Office of the State Comptroller to see what they think. 

I will update you on what they say.