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Politico: Education behemoth Pearson reaps millions from no-bid public education contracts (including NC) (UPDATED)

*Scroll to the end of this story for a response from the NC Department of Public Instruction

Politico’s Stephanie Simon published an investigative report today looking into the business dealings of British education giant Pearson, finding that the company’s success is due in part to negotiating lucrative no-bid contracts with public education agencies around the country — including one with North Carolina.

The investigation found that public officials often commit to buying from Pearson because it’s familiar, even when there’s little proof its products and services are effective.

The North Carolina Department of Public Instruction, for instance, declined to seek competitive bids for a new student data system on the grounds that it would be “in the best interest of the public” to simply hire Pearson, which had done similar work for the state in the past. The data system was such a disaster, the department had to pay Pearson millions extra to fix it.

The data system Simon refers to is PowerSchool, which the News and Observer reported last year “has so many problems that the accuracy of transcripts, athletic eligibility and the number of students enrolled in schools is uncertain.”

Many of those problems were fixed, and the state sought a discount from Pearson to reduce the $7.1 million price tag for the PowerSchool. It’s not clear if any money was refunded, however, nor is it clear whether the state or local districts will be responsible for the $6 million owed to Pearson next year for PowerSchool.

Simon’s investigation also found that in many cases, Pearson was never held to performance targets outlined in the contracts—if they didn’t meet the standards, they weren’t penalized.

In addition to PowerSchool, Pearson also backs one of North Carolina’s new online virtual charter schools, N.C. Connections Academy. The State Board of Education approved N.C. Connections academy just last week for a four year pilot program, alongside K12, Inc.’s N.C. Virtual Academy.

The state legislature required the State Board of Education to approve two virtual charter schools for the pilot program, and only two non-profit organizations applied — one backed by Pearson, the other by K12, Inc.

The approval came in spite of serious reservations on the part of some board members as well as education advocates who feared that North Carolina’s students could experience the same negative academic outcomes that have been experienced by virtual charter school students in other states, or that poor students would have a hard time accessing the technology and infrastructure necessary for online learning.

Read Stephanie Simon’s full investigation of Pearson here.

***
2/18/2015 UPDATE: NC Department of Public Instruction’s CFO, Philip Price, reached out to N.C. Policy Watch to respond to the Politico investigation of North Carolina’s contractual relationship with Pearson for its new student data system, PowerSchool.

Price said DPI took 16 months to work with the NC Attorney General’s office and other key state-level education stakeholders to gain a waiver for bidding out the adoption and implementation of a new student data system. The impetus for continuing to contract with Pearson, said Price, was that the education behemoth also owned the state’s old data system, NC WISE. A significant costs savings would occur if Pearson also undertook the construction and implementation of PowerSchool.

“NC WISE cost $168 million to implement. Pearson charged us just $3.7 million to convert to PowerSchool,” said Price.

That figure doesn’t include additional monies ($1.25 million) that the state had to pony up for more training and help with migrating data from NC WISE to Power School. Even so, Price says, the state saved a lot of money going with Pearson.

Politico’s story also makes the allegation that Pearson is typically not penalized when it fails to live up to contractual obligations. But Price says at least in North Carolina, that’s not the case.

“We’ve gotten credits back since we established a service learning agreement,” explained Price, who says that if Pearson doesn’t meet certain agreed upon elements of the contract, they refund the state money. “$437,000 in September 2014, and we’re still receiving credits.”

Pearson also gave North Carolina a year of free content, worth $6 million, for its SchoolNet application, which allows teachers to build lesson plans and formative assessments.

One Comment


  1. Downeaster

    February 10, 2015 at 8:12 pm

    To be completely fair, part of DPI’s decision to go with Pearson for the data system is that Pearson acquired the vendor of the state’s existing data system and Pearson stated they would no longer support that data application, forcing the state’s hand. With that said, the implementation of PowerSchool in NC has been a disaster.

    Also in following the money it is worth noting that one of the virtual charter school operators approved by the state last week is operated by Pearson, which means even more of NC’s education dollars are headed to Pearson’s pockets.

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