After Boston Public Schools was found to be stiffing a plumbing contractor on a $164,000 bill, racked up since 2018, district employees sought to resolve the issue by directing another vendor to pick up the tab, according to a city watchdog report.
Not only was this a breach of policy, the Boston Finance Commission contends, it left the school district with a substantially larger bill, as the second vendor tacked on a 15% fee, totaling $24,673, in the invoice it sent to BPS — which “falsely” labeled the charges as subcontractor work performed at Campbell Resource Center.
What should have been a $164,448 payment to the initial vendor swelled to $189,162.
The difference in cost benefited the contractor that BPS roped in for the favor, ENE Systems, Inc., a national HVAC company that has roughly $20 million worth of contracts with the Boston Public Schools, the report said.
“This breach of policy, procedures and public trust by City of Boston employees unnecessarily wasted $24,673.33 of the taxpayers’ money,” the commission’s report states. “BPS would have found a solution to this problem had they simply contacted Auditing, which would have walked them through the necessary steps to complete the payment.”
Superintendent of Schools Mary Skipper responded to the incident by calling for an external auditor “to investigate all of our payment processes with vendors and identify needed changes to our payment processes to prevent these errors from happening in the future,” a BPS spokesperson said on Sunday.
“BPS is reviewing its internal payment processes to ensure our vendors receive timely payments in accordance with their contract terms and procurement laws, said Max Baker, a spokesman for BPS. “This matter will be thoroughly investigated, as we understand holding BPS employees to the highest standards is critical to ensuring public trust in the stewardship of public funds.”
The Finance Commission was told during its investigation of the matter that “this has occurred previously but the amounts were smaller.” It directed the school district to take immediate corrective actions to prevent this from occurring again.
“As the awarding contract authority, Boston Public Schools should know that approaching a contractor to hide a payment problem puts pressure on vendors to ‘do BPS a favor’ or potentially suffer some consequence,” the report states.
According to the report, the Finance Commission was first contacted by the impacted BPS vendor in late October 2021. The vendor, whose name was not disclosed, was awarded a multi-year contract through a bidding process, but had not been fully paid since 2018.
The Commission proceeded to contact the chief operating officer and assistant director of finance for the Boston Public Schools, which led to a group call a year later, in November 2022. The call concluded with BPS officials stating that they would review the vendor’s invoices and pay him, the report stated.
In February of 2023, the vendor told the Commission he was fully paid for his services. It was later found that BPS had not made the payment, but rather that it “had arranged for another of their contracted vendors” to pay the bill.
ENE Systems submitted a February 2023 invoice for subcontractor work completed at Campbell Resource Center. It also tacked on a 15% fee, as a surcharge for subcontractor services.
A BPS employee, whose job involves approving vendor invoices, told the Commission that this particular bill, despite its stated purpose, was actually seeking reimbursement for what ENE had paid the other vendor on the district’s behalf.
This BPS employee also stated that the idea to delegate BPS payment to a separate vendor “was his own” and was told by a supervisor to go forward with the plan, the report stated.
The Commission noted that BPS did not secure the services of ENE to solve its billing issues. For that particular vendor to “invoice for work that was not within the scope of their contract that was falsely invoiced as subcontractor work,” and to “charge a surcharge for that cost is unethical.”
Further, since BPS did not make the payment, the past due amounts remain unreconciled in its system, which makes it appear as if the district still owes the vendor $164,488, the report states.
“This transaction unnecessarily cost the taxpayers money that could have gone toward services for Boston Public School students, undermines the faith citizens have in their public officials, and will potentially cause vendors to question whether they should enter a working relationship with the City of Boston,” the report states.
ENE Systems did not immediately respond to a request for comment.
