D.C. Public Schools unlawfully awarded 36 contracts worth an estimated $270 million over the last three years, raising significant concerns around its financial management and forcing the D.C. Council to start retroactively approving the contracts to ensure that vendors for everything from school meals to special education services could be paid.

The contracting mishap has also ensnared the city’s independent chief financial officer, which had been unlawfully paying vendors for contracts that had not been legally approved, and prompted DCPS to punish an unknown number of employees. The council is also now considering a bill to repeal the school system’s independent procurement authority.

“If there is such a disregard of basic practices — having written contracts, getting the necessary approvals — then it suggests that there are material weaknesses that could lead to fraud and theft,” said Council Chairman Phil Mendelson in an interview with DCist/WAMU. “I’m not saying there has been, because I don’t know. I haven’t seen evidence of it. But with this kind of sloppy bookkeeping and basic procurement practices, there could be.”

The scandal started brewing late last year, when DCPS submitted a pair of food-service contracts worth some $40 million to the council for review and approval. By law, the council has to review and approve any city contract worth more than $1 million. But in the case of the DCPS contracts, the school system had unlawfully awarded them months prior and was seeking retroactive approval from the council.

That prompted a months-long back-and-forth between Mendelson and DCPS, a February hearing where DCPS officials conceded they were in the wrong, and a more recent accounting of the full scope of the problem: 36 contracts worth $270 million dating back as far as 2020, none of which were properly submitted to the council as the law requires. And in an additional twist, just this week the office of D.C.’s attorney general said a contract dating back to 2019 that was extended multiple times not only wasn’t submitted for a required legal review, but may not even exist.

DCPS officials say the contracting issues stemmed from staffing problems during the heart of the COVID-19 pandemic.

“Our procurement team experienced major transitions during the 20-21 and 21-22 school years, including the departure of our Chief Procurement Officer and several staff in the midst of the public health emergency,” said DCPS spokesman Enrique Gutierrez in an email. “The team continued to ensure continuity of operations and prioritize the ongoing needs of our students while managing through vacancies, facing supply chain delays, and overseeing new emergency funding streams. The context of the pandemic provides an important backdrop to our work over the past few school years, as procurement demands on the agency were heightened at the same time staffing gaps increased.”

Mendelson says he understands that staffing challenges could have complicated some of the school system’s procurement and contracting process, but also believes that senior DCPS officials failed to do their jobs. In a letter to Chancellor Lewis Ferebee in late April, Mendelson said that DCPS’s credibility had been “eviscerated” at the February hearing.

“The chancellor, when he asks for information, should be getting complete information and accurate information,” he said. “They knew of these contracts and they’re big. You would think at some point over the last three years the senior leadership of the agency would be saying, ‘How did the council approval go?’ or, ‘Is everything moving smoothly?’ It’s very concerning.”

But the problem extends beyond DCPS. The Office of the D.C. Chief Financial Officer, the independent minder of the city’s finances, made multiple payments stemming from the unapproved contracts, potentially violating a D.C. law that prohibits money from being spent without proper authorization. Those payments continued into this year, until Mendelson inquired about them and CFO Glen Lee said they were being stopped.

In a letter to Mendelson last week, Lee said he “remains committed to fully addressing control deficiencies related to payments on contracts requiring council approval. We are currently working to update our policies and procedures, provide enhanced training to staff, and utilizing technology to strengthen controls in this area.”

That may not be enough. Mendelson says a deeper dive into what happened in the CFO’s office may be necessary. “Every contract for which there is to be payments, there has to be an attestation that all appropriate approvals were received,” he said. “Somebody lied that approvals were made.”

That payments on unapproved contracts have suddenly stopped is forcing lawmakers to act quickly, largely because of concerns from some vendors that they won’t be able to make payroll. Next week the council will vote on whether to retroactively approve three DCPS contracts: one for security services in schools, one for special education services, and a third for therapeutic services. The estimated value of the three contracts is some $40 million. In a memo to his colleagues, Mendelson said he was “reluctantly” moving to approve the contracts, and only because not doing so could led to key services for DCPS being stopped.

D.C. officials say that DCPS is taking disciplinary action against a number of employees, but wouldn’t specify who they are, what positions they hold, or what consequences they might face.

“Regarding contracts being executed without the council’s approval, [DCPS] is investigating and pursuing corrective action for employees responsible. DCPS is unable to identify disciplined staff by name or position as the district has a duty to maintain the confidentiality of its personnel and refrain from providing any information that violates their privacy,” wrote Gutierrez in an email.

The council is holding a pair of hearings later this month to dig deeper into the contracting mishaps. One hearing will focus specifically on the 36 unapproved contracts, while the other will delve into a bill introduced by Mendelson and Councilmember Brianne Nadeau (D-Ward 1) to repeal DCPS’s independent procurement authority and instead require it to do what most city agencies do and work with the D.C. Office of Contracting and Procurement.

“It is critical for DCPS to retain independent procurement authority to allow [it] to continue to process a high volume of contracts across a diverse portfolio in a manner which is most responsive to our schools’ complex and changing purchasing needs in service of our students,” said Gutierrez on the potential legislation.