Philly School District probe sees no "evidence of wrongdoing" by Ackerman

A Philadelphia School District investigation has found "no evidence of wrong-doing" by School Superintendent Arlene C. Ackerman or her deputy in awarding an emergency, no-bid contract for $7.5 million to install surveillance cameras.

Michael A. Davis, the district's general counsel, late Friday afternoon released a statement he said summarized the findings of a report prepared for the district by lawyers at Pepper Hamilton L.L.P.

Earlier in the day, the district told The Inquirer that a request for a copy of the full report, made under the state's right-to-know law, was denied.

The district, however, did give The Inquirer documents showing that the investigation has cost nearly $173,000. The attorneys' fees, costs of copying computer hard drives, and other expenses were detailed.

The district said Pepper Hamilton had interviewed 32 district employees, but did not identify them.

In his statement, Davis said that "for months," Ackerman and Deputy Superintendent Leroy Nunery "have been scrutinized for the installation of emergency cameras in 19 'persistently dangerous' schools."

He said that the district hired Pepper Hamilton in December to conduct an investigation to determine whether any employees had violated the law or district policies and procedures, and to look at the effectiveness of the district's procurement and contracting policies and procedures.

The investigation began after The Inquirer reported on Nov. 28 that Ackerman had intervened on behalf of IBS Communications Inc., a small minority-owned firm in Mount Airy, to install the security cameras.

Ackerman pushed aside a Newtown company - Security Data Technologies Inc. - that had begun preliminary work on the project, sources told The Inquirer.

The report summary did not address that action, but said investigators found no evidence of "improper or unlawful motives" behind the selection of IBS for the 19 schools or "the selection of the contractors used" in an earlier project at South Philadelphia High School.

In the South Philadelphia job, IBS was added as a contractor after the bulk of the work was completed. All that was left was the drawing of "as-builts," schematic drawings of the equipment that was installed. Another firm had been willing to prepare the drawings for one-twelfth the cost.

Ackerman has denied ordering staffers to award the larger, $7.5 million emergency no-bid project to IBS specifically. But she has acknowledged that her aides learned about the company after she produced the firm's business card and told them to give IBS a portion of South Philadelphia work.

IBS is not on a state list of vendors that have been approved to handle emergency, no-bid work; the Newtown firm is on that list.

The district has said that it was permitted to select IBS because it was on a city list and because the state takeover law that established the School Reform Commission in 2001 gives the district contracting flexibility.

Davis' summary of the report does not address the issue of emergency lists, nor does it assess why IBS was given until June 30 to complete an emergency contract. The Newtown company's plan called for security work at the 19 schools to be completed by Nov. 30, 2010, according to documents obtained by The Inquirer.

Pepper Hamilton, Davis said, found that Ackerman and Nunery had expressed concern that minority contractors were not being considered to act as prime contractors on district projects "and asked whether IBS had the ability to act as the prime contractor" on the persistently-dangerous-schools project. "They were told that IBS had the ability to do so."

Davis' summary does not indicate who told them that IBS could handle the work. However, he said the attorneys concluded that the district's procurement office decided to use the firm.

In an interview with The Inquirer in December, Nunery said he - not the procurement staff - made the decision. Earlier, district spokeswoman Shana Kemp had said in statement that John J. Byars, the district's chief procurement officer, was responsible.

The report summary said the procurement office "failed to have IBS prepare a cost estimate for the project and instead used SDT's original $7.5 million proposal."

Investigators also determined that district employees who initially recommended using Security Data for the $7.5 million contract had done nothing wrong.

Because of the "apparent need" to expedite the security upgrades, "the process was not as transparent and inclusive as it could have been," Davis said.

Specifically, he said Pepper Hamilton found that senior staff did not provide Ackerman or Nunery a proposed walk-on resolution to award the contract "with sufficient time to review and ask questions" before the SRC's Sept. 22 meeting.

A School District e-mail reviewed by The Inquirer, however, showed that a request to approve the SDT proposal was sent to Nunery on Sept. 17. The e-mail - provided by sources outside the district - outlined the rationale for the walk-on resolution in a five-page attachment.

The SDT plan also called for using 33 percent minority-owned firms and 34 percent women-owned firms, but the subcontractors were not identified, Pepper Hamilton said.

Although the district initially indicated that investigators also would try to determine who had disclosed information to The Inquirer, the summary does not address the issue of leaks.

Six top administrators were placed on paid administrative leave during the inquiry. Four have returned to work. Byars is one who has not, according to sources.

Pepper Hamilton, Davis said, has recommended that the district should plan for capital projects "to avoid the use of emergency contracting" and "create more transparent and inclusive procedures . . . when exceptional situations arise."

Although Davis has signaled that the district has concluded its internal examination of the IBS contract, other inquiries are continuing.

Pennsylvania Auditor General Jack Wagner said last week that he had decided not to pursue an in-depth audit of the IBS contract amid strong signs that the FBI had a preliminary inquiry under way into the district's procurement practices.

Federal agents have visited school administrators' offices in recent weeks, according to district sources, and another source reported being present at briefings where Davis mentioned federal interest.

State Rep. Michael McGeehan (D., Phila.) has said that one district official who had been interviewed in December by FBI agents about the IBS contract has had "additional conversations" with federal law enforcement officials. He declined to name the person interviewed.