Vendor bribed CPS employee with vacation home stay during bid for $30M contract, inspector general says

Although CPS ended up not awarding the contract to the vendor, she eventually was given a different, much smaller contract for nursing services just a few years later — and still has that work with the school district.

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Chicago Public Schools headquarters.

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A vendor looking to win a $30 million nursing services contract with the Chicago Public Schools tried to sway the bidding by letting a district employee stay at her vacation home.

And although CPS ended up not awarding the contract to the vendor, she eventually was given a different, much smaller contract for the nursing services just a few years later — and still has that work with the school district.

Those were the key findings of an investigation by CPS Inspector General Nicholas Schuler’s office, which released its 2019 year-end report Monday detailing the office’s most significant cases of the past year.

Though the inspector general’s office didn’t identify the vendor, previous reports show ATC Healthcare Services Inc., through a franchisee, is the company that lost the 2015 bid for the earlier nursing work.

During that request-for-proposal process, the franchise president “improperly used her vacation home to influence a member of the committee deciding whether she would be awarded a multi-million dollar contract,” the IG’s office found.

She also lied to investigators by saying she was unaware the CPS employee was involved in the proposal process, that the employee never stayed in her vacation home and that she never gave the employee the keys to her home, Schuler’s office said.

The employee admitted to investigators that she stayed in the home with the franchisee’s permission, the report said. Emails also showed the franchise president knew the employee was part of the decision-making committee.

Schuler told the Sun-Times the effort was an attempt at “subverting the process” and said that the “behavior is simply intolerable.”

“It goes to the heart of anybody’s concerns about public contracting, that somebody’s got a thumb on the scale,” he said.

The IG’s office recommended breaking ties with the franchise and its president, and it said CPS should encourage better ethics training at the parent company while also hiring an independent monitor, paid for by the company, to assess and report on the company’s corporate ethics.

CPS spokeswoman Emily Bolton said the district has enlisted an independent monitor and is working to find a new local franchisee.

The CPS employee who accepted the benefit, meanwhile, worked in the Office of Diverse Learner Support and Services but has since resigned from the district for other reasons. The CPS board placed the employee on a do-not-hire list, barring her from employment with the district.

Bolton said in an emailed statement that “the actions by a former employee and local franchisee president were completely unacceptable and accepting gifts from prospective vendors are strictly prohibited in board policy.”

ATC, the parent company, has plenty of history with the school district, having been paid more than $11 million by CPS from 2006 to 2015 for nursing work.

But the New York company was dropped after another vendor was hired in June 2015 to take over some school nursing services and then all nurse scheduling. That new vendor’s four-year, $30 million contract ended in June.

Soon after ATC lost its bid, it sued, saying CPS had helped the other vendor hire away ATC nurses. A federal judge dismissed part of that case, records show.

Plagued by problems finding enough nurses to staff its buildings, CPS last year expanded its stable of outside nursing firms to eight — including giving some of the work to ATC and the same franchise president who had offered use of the summer home to the CPS employee.

Schuler said his office looked into the franchise’s new contract but found no connection to the previous misconduct. The franchise has received around $100,000 in payments from CPS since last year, he said. Bolton said ATC provides about five nurses.

ATC representatives could not be reached for comment.

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