Official Site of The State of New Jersey

TRENTON — The Office of the State Comptroller (OSC) today directed the Educational Services Commission of New Jersey (ESCNJ) not to proceed with proposed public contracts or extend current contracts. The decision follows ESCNJ's repeated failure to comply with New Jersey's procurement laws despite more than a year of OSC guidance. The proposed contracts, submitted on behalf of ESCNJ’s cooperative pricing system, involve custodial supplies and the purchase, repair, removal, rental, and installation of modular buildings.

OSC issued an audit report in 2024 that found ESCNJ repeatedly failed to notify the office of contracts exceeding the $2.5 million and $12.5 million thresholds as required by law. The audit concluded that ESCNJ had never submitted a contract to OSC since OSC’s creation in 2008, despite prior written reminders in 2017 and 2021, and direct notice of potential violations in August 2022.  During the audit period (FY 2021–FY 2023), ESCNJ failed to report any qualifying contracts, including an estimated  43 contracts exceeding $2.5 million. The audit also found that ESCNJ did not properly estimate the value of cooperative purchasing contracts as required by regulation, and that ESCNJ failed to determine the quantities and total value of goods and services needed for its procurements, including cooperative purchasing contracts. Only after receiving the draft audit report in 2024  did ESCNJ begin submitting contracts to OSC for review.

Since that audit was released, and after ESCNJ provided OSC with notice of proposed contracts, OSC has attempted to work with ESCNJ for more than a year to assist it in complying with state law. Despite repeated requests for ESCNJ to submit a plan demonstrating how it will comply with applicable law, ESCNJ has been unable or unwilling to do so. The agency continues to enter into contracts without indicating its needs for the goods or service it is contracting for; fails to include the estimated needs of its registered members; fails to describe how it will determine the lowest responsible bidder for contracts being solicited as low bid procurements; impermissibly sought to award multiple contracts to multiple vendors; and violated the Public School Contract Law in extending current contracts.

OSC in its decision finds that “ESCNJ has repeatedly disregarded applicable law while increasing its purchasing power and generating income from the commissions and fees it obtains through its [cooperative pricing system]” and that ESCNJ’s “ongoing violations, despite repeated communications from OSC regarding how to comply with the law . . . as early as 2017, demonstrate a clear intent to avoid OSC’s procurement review authority to avoid scrutiny.”

New Jersey’s public contracting laws exist to guard against favoritism and corruption, and to promote unfettered competition. OSC’s role is to ensure that local and state government entities comply with these laws. When they fail to do so, OSC is authorized to direct them not to proceed, which it has done in the decision issued today.

OSC's decision also prohibits ESCNJ from renewing or extending its current contracts upon their expiration on March 31, 2026, without first addressing all outstanding findings and submitting proper notice to OSC, as required by law.

Read the letter.

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To report government fraud, waste, mismanagement, or corruption, file a complaint with OSC or call 1-855-OSC-TIPS.