Montgomery County Council audit committee members pushed Montgomery County Public Schools (MCPS) administrators to incorporate more checks and contingencies into their processes after reviewing several reports from the Office of the Inspector General on Monday.
The committee reviewed three reports from the OIG on investigations into electric school bus contracts, procurement of crisis management services and alleged mismanagement of grant funds at Sargent Shriver Elementary School in Silver Spring.
The audit committee heavily questioned staff members on the steps moving forward following the OIG report that said MCPS wasted “millions” by not enforcing its electric bus contract.
The OIG report, released July 25, found that the bus contractor Highland Electric Fleets didn’t deliver buses on time, and the contract didn’t include provisions to assess fees for late delivery. It did allow MCPS to assess fees for “downtime damages” for buses being unavailable. MCPS didn’t charge these fees at the time, and didn’t terminate the agreement when the contractor failed to meet its obligations.
Dana Edwards, chief of district operations for MCPS, acknowledged faults in the district’s handling of the bus contract at the meeting. Edwards said the district saw electrifying the bus fleet as an opportunity to meet the needs of students while being environmentally friendly.
“We actually saw ourselves as trend setters at the time,” Edwards said. “Now we do have the largest EV bus fleet of all public schools, …. but we’ve also had a lot of learning since 2021. Being the first doesn’t give you an opportunity to have a peer to go to.”
Edwards said focusing on the “daily upkeep and daily work of getting children to school,” amid other challenges such as driver shortages, led to mistakes.
But County Council President and audit committee member Andrew Friedson said the fact that a lack of focus on acquiring the buses led to mistakes was concerning.
Friedson applauded the district for the intent to meet climate goals but said they received a “failing grade for implementation” and it needed to improve. “It’s not clear to me that there are systems that have been set up to prevent that from happening in the future when that inevitable dynamic occurs,” Friedson said.
Edwards said that after the OIG report, they invoiced the bus company for $1.5 million for performance and late delivery of buses in the time frame laid out in the report. This was news to the OIG, according to Inspector General Megan Davey Limarzi. According to the OIG report, MCPS should’ve assessed the contractor for $372,100 in related fees due to the delays.
“I’m only hearing today that the number that has been invoiced is $1.5 million,” Limarzi said. “Obviously an enormous concern for our office this morning is, what is the back up to that?”
The $1.5 million was based on if buses weren’t able to run, delays in buses arriving to the district and then a component around “readiness,” Edwards said.
Edwards told Friedson that MCPS didn’t consider terminating the contract in the past due to the company not fulfilling its obligations, but that it had the opportunity to do so moving forward according to the terms of the contract. MCPS is currently in contract negotiations with the company, Edwards said.
Audit Committee Chair Kate Stewart said the committee was startled by the $1.5 million number but was even more concerned the OIG wasn’t aware of the fees.
“While MCPS says that you’re going to be working with the [OIG], I want that to be meaningful,” Stewart said. “I think keeping the [OIG] apprised of what you’re doing is going to be really important to come. None of us like surprises.”
While the committee discussed the process of creating the contract, Limarzi said the OIG’s concern was about the management of the contract. Friedson said there was a “failure to deliver on the contract” and asked what MCPS was doing moving forward to ensure contracts were being enforced to ensure things such as fees are charged.
Robert Reilly, deputy chief of finance, said MCPS is evaluating the procurement payment process to “close that loop.”
“It’s just not a very good answer, respectfully,” Friedson said. “I appreciate the acknowledgement that a mistake was made, but there need to be changes based on the mistakes that were made to prevent future mistakes from happening. And that seems to be, at best, a work in progress.”
The committee also discussed procurement of crisis management services and alleged mismanagement of grant funds with the PTA at Sargent Shriver Elementary School in Silver Spring. For both, MCPS staff said it would be implementing more training, or things such as documentation to keep track of processes. Friedson said it wasn’t enough to do more training and making everyone aware of rules and policies, there needed to be checks and contingencies.
“That is clearly the thread here between all these issues,” Friedson said. “I just hope that it’s not just ‘We’re going to train better. We’re going to do better.’ It’s ‘Here is the actual process that we have improved.’”
