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UMDNJ faulted for $16 million in no-bid pacts
But 8-month probe concludes politics did not play role in deals
Wednesday, January 11, 2006
BY KELLY HEYBOER AND JOSH MARGOLINStar-Ledger Staff
The University of Medicine and Dentistry of New Jersey improperly awarded more than $16 million in contracts last year without competitive bidding, according to a new report on the school's finances.
But the nearly eight-month independent investigation found no evidence the public healthcare university handed out contracts as political favors.
Gary Stein, a former state Supreme Court justice, was hired in May to review nearly $155 million in no-bid contracts UMDNJ awarded last year. The school's trustees asked the former justice to look into newspaper reports that some no-bid contracts were given to politically connected firms.
After reviewing thousands of pages of documents and conducting hundreds of interviews, Stein concluded the majority of contracts were awarded properly and the media has been too hard on the troubled school.
"I am persuaded that the media's sustained criticism of the university's award of bid-waived contracts, and the suggestion that those contracts were awarded primarily on the basis of political considerations, is incorrect and unsubstantiated," Stein said.
But his two-volume report is critical in numerous areas, including UMDNJ's lax purchasing policies, no-bid contracts and its hiring of numerous Trenton lobbyists.
"It's a good news, bad news, good news report," Stein said.
Last year, more than 10 percent of UMDNJ's contracts were inappropriately handed out without competitive bidding partly because the school's employees thought the public bidding process was too slow. Stein said the purchasing department was "careless and undisciplined in its approval of waivers from public bidding."
No crimes were committed, but skirting the bidding procedures for nearly 100 contracts was "inexcusable and cannot be permitted to continue," Stein said.
"We have informed university officials of the problems and have been told that action already is under way to prevent it from reoccurring," he added.
His study found numerous cases in which UMDNJ awarded contracts and made donations to groups and firms with political ties.
They included: a $75,000 consulting contract for Ronald White, a top fund-raiser for former Gov. James E. McGreevey; a $10,000 grant to an unregistered breast cancer charity run by a Newark councilwoman; and a $6,000-a-month public relations contract to Zinn Graves & Field, a firm at which Ruthi Byrne, wife of former Gov. Brendan Byrne, is a partner.
Among Stein's other findings:
UMDNJ hires numerous outside lobbyists to represent the school's interests in Trenton despite having its own in-house lobbying staff. The report recommends the school significantly reduce the number of lobbyists in favor of beefing up its own government relations department.
The university made at least three political donations last year: $500 to Newark Mayor Sharpe James' re-election fund, $250 to the state Democratic Committee, and $50 to the Hispanic American Political Action Committee at a dinner honoring Jon Corzine. Those donations violated state regulations that prohibit public universities from making political contributions.
School officials regularly approved donations to charitable organizations, including a $10,000 check to an unregistered breast cancer charity run by Newark Councilwoman Gayle Chaneyfield-Jenkins. Stein recommends UMDNJ limit its donations to $1,000 and develop new standards for choosing which organizations to support.
UMDNJ's 11-member board of trustees may be too small to oversee the university and its $1.6 billion budget. The university should consider expanding the number of trustees and setting up a separate board to oversee University Hospital in Newark.
Stein was hired by UMDNJ's trustees in May following reports that the school awarded more than $700 million in contracts over the last five years without competitive bidding, including some to politically connected firms.
After months of investigations and turmoil, a federal monitor stepped in to oversee the scandal-plagued university last month. The monitor is part of a deal with the U.S. attorney that will help UMDNJ avoid a criminal prosecution on Medicaid fraud charges.
The monitor, former federal Judge Herbert J. Stern, is looking into additional allegations of financial wrongdoing and corruption at the Newark-based school. His staff also is reviewing UMDNJ's no-bid contracts.
Stein forwarded his nearly 400-page report and appendix to the new federal monitor earlier this week.
UMDNJ has paid Stein's Hackensack-based law firm $348,044 to date, though the final bills have not arrived, university officials said. Morrison & Company, a Paramus-based forensic accounting firm, was hired to assist Stein. It has been paid $113,660 so far, though additional bills are expected.
UMDNJ President John Petillo said he was pleased with Stein's report. The university has been implementing changes to its purchasing policies based on Stein's preliminary findings.
"Most of the other stuff he talked about, we've done. Fortunately, some of this stuff we were able to fix while he worked on it," said Petillo, who was in Trenton yesterday for Gov. Richard Codey's State of the State speech.
Yesterday morning, the president appointed Christopher Kosseff, head of University Behavioral HealthCare at UMDNJ, to review the school's purchasing services office. He will report back in three weeks to begin making changes.
The university also defended some of the contracts with political ties cited in Stein's report. For example, the $6,000-a-month contract to a public relations firm at which former Gov. Byrne's wife was a partner was for community relations work.
"Mrs. Byrne has provided a number of valuable public relations services over the years, ranging from event coordination to community outreach and networking for New Jersey Medical School to production of a newsletter and brochures and media relations," said Anna Farneski, a UMDNJ spokeswoman.
Ruthi Byrne could not be reached for comment.
Some UMDNJ critics were unhappy with Stein's report.
"The justice has done a disservice to the evaluation. I don't think it's the full picture that's being painted of what's gone on for the last couple of decades there," said Assemblyman Kevin O'Toole (R-Essex).
State Sen. Loretta Weinberg (D-Bergen) said she was surprised Stein concluded political favoritism was not at the heart of many of UMDNJ's consulting contracts.
"There is no doubt that there was inappropriate behavior at UMDNJ that would result from people being hired who were not necessarily doing any work, people hired because of their political connections," said Weinberg.
Staff writer Angela Stewart contributed to this report.
UMDNJ faulted for $16 million in no-bid pacts
But 8-month probe concludes politics did not play role in deals
Wednesday, January 11, 2006
BY KELLY HEYBOER AND JOSH MARGOLINStar-Ledger Staff
The University of Medicine and Dentistry of New Jersey improperly awarded more than $16 million in contracts last year without competitive bidding, according to a new report on the school's finances.
But the nearly eight-month independent investigation found no evidence the public healthcare university handed out contracts as political favors.
Gary Stein, a former state Supreme Court justice, was hired in May to review nearly $155 million in no-bid contracts UMDNJ awarded last year. The school's trustees asked the former justice to look into newspaper reports that some no-bid contracts were given to politically connected firms.
After reviewing thousands of pages of documents and conducting hundreds of interviews, Stein concluded the majority of contracts were awarded properly and the media has been too hard on the troubled school.
"I am persuaded that the media's sustained criticism of the university's award of bid-waived contracts, and the suggestion that those contracts were awarded primarily on the basis of political considerations, is incorrect and unsubstantiated," Stein said.
But his two-volume report is critical in numerous areas, including UMDNJ's lax purchasing policies, no-bid contracts and its hiring of numerous Trenton lobbyists.
"It's a good news, bad news, good news report," Stein said.
Last year, more than 10 percent of UMDNJ's contracts were inappropriately handed out without competitive bidding partly because the school's employees thought the public bidding process was too slow. Stein said the purchasing department was "careless and undisciplined in its approval of waivers from public bidding."
No crimes were committed, but skirting the bidding procedures for nearly 100 contracts was "inexcusable and cannot be permitted to continue," Stein said.
"We have informed university officials of the problems and have been told that action already is under way to prevent it from reoccurring," he added.
His study found numerous cases in which UMDNJ awarded contracts and made donations to groups and firms with political ties.
They included: a $75,000 consulting contract for Ronald White, a top fund-raiser for former Gov. James E. McGreevey; a $10,000 grant to an unregistered breast cancer charity run by a Newark councilwoman; and a $6,000-a-month public relations contract to Zinn Graves & Field, a firm at which Ruthi Byrne, wife of former Gov. Brendan Byrne, is a partner.
Among Stein's other findings:
UMDNJ hires numerous outside lobbyists to represent the school's interests in Trenton despite having its own in-house lobbying staff. The report recommends the school significantly reduce the number of lobbyists in favor of beefing up its own government relations department.
The university made at least three political donations last year: $500 to Newark Mayor Sharpe James' re-election fund, $250 to the state Democratic Committee, and $50 to the Hispanic American Political Action Committee at a dinner honoring Jon Corzine. Those donations violated state regulations that prohibit public universities from making political contributions.
School officials regularly approved donations to charitable organizations, including a $10,000 check to an unregistered breast cancer charity run by Newark Councilwoman Gayle Chaneyfield-Jenkins. Stein recommends UMDNJ limit its donations to $1,000 and develop new standards for choosing which organizations to support.
UMDNJ's 11-member board of trustees may be too small to oversee the university and its $1.6 billion budget. The university should consider expanding the number of trustees and setting up a separate board to oversee University Hospital in Newark.
Stein was hired by UMDNJ's trustees in May following reports that the school awarded more than $700 million in contracts over the last five years without competitive bidding, including some to politically connected firms.
After months of investigations and turmoil, a federal monitor stepped in to oversee the scandal-plagued university last month. The monitor is part of a deal with the U.S. attorney that will help UMDNJ avoid a criminal prosecution on Medicaid fraud charges.
The monitor, former federal Judge Herbert J. Stern, is looking into additional allegations of financial wrongdoing and corruption at the Newark-based school. His staff also is reviewing UMDNJ's no-bid contracts.
Stein forwarded his nearly 400-page report and appendix to the new federal monitor earlier this week.
UMDNJ has paid Stein's Hackensack-based law firm $348,044 to date, though the final bills have not arrived, university officials said. Morrison & Company, a Paramus-based forensic accounting firm, was hired to assist Stein. It has been paid $113,660 so far, though additional bills are expected.
UMDNJ President John Petillo said he was pleased with Stein's report. The university has been implementing changes to its purchasing policies based on Stein's preliminary findings.
"Most of the other stuff he talked about, we've done. Fortunately, some of this stuff we were able to fix while he worked on it," said Petillo, who was in Trenton yesterday for Gov. Richard Codey's State of the State speech.
Yesterday morning, the president appointed Christopher Kosseff, head of University Behavioral HealthCare at UMDNJ, to review the school's purchasing services office. He will report back in three weeks to begin making changes.
The university also defended some of the contracts with political ties cited in Stein's report. For example, the $6,000-a-month contract to a public relations firm at which former Gov. Byrne's wife was a partner was for community relations work.
"Mrs. Byrne has provided a number of valuable public relations services over the years, ranging from event coordination to community outreach and networking for New Jersey Medical School to production of a newsletter and brochures and media relations," said Anna Farneski, a UMDNJ spokeswoman.
Ruthi Byrne could not be reached for comment.
Some UMDNJ critics were unhappy with Stein's report.
"The justice has done a disservice to the evaluation. I don't think it's the full picture that's being painted of what's gone on for the last couple of decades there," said Assemblyman Kevin O'Toole (R-Essex).
State Sen. Loretta Weinberg (D-Bergen) said she was surprised Stein concluded political favoritism was not at the heart of many of UMDNJ's consulting contracts.
"There is no doubt that there was inappropriate behavior at UMDNJ that would result from people being hired who were not necessarily doing any work, people hired because of their political connections," said Weinberg.
Staff writer Angela Stewart contributed to this report.
posted by Jones Lang LaSalle NJ News Blog at 10:53 AM
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