Press Release

Contact: Anna Farneski
(973) 972-4501
farnesam@umdnj.edu

Stein Report Finds No Unlawful Contracts
Diligence Demonstrated by UMDNJ Personnel

NEWARK, NJ (1/10/06)—Retired NJ Supreme Court Justice Gary Stein issued a 400-page review today of procurement, purchasing and bid waiver processes at the University of Medicine and Dentistry of New Jersey. 

The 8 month-long study conducted by Justice Stein and a team of forensic accountants focused on purchases for goods and services obtained by the university covering parts of 2004 and 2005 and also reviewed a number of other management decisions raised in media reports in recent months. 

“On behalf of the thousands of dedicated UMDNJ employees who work hard every day, I want to thank Justice Stein for his diligence and honesty, ” said UMDNJ President John J. Petillo. “This report is a critical tool that will help us effectively address legitimate concerns and dispel unfair characterizations of the past year. We have made many changes and we will make many more, and we will let no one sway us from our mission of education, research, healthcare and community service.” 

Justice Stein recommended a series of measures to improve the approval of waivers from public bidding. Many of these reforms have already been implemented since he issued an interim report in September, 2005. 

“Our detailed review of university purchasing for fiscal year 2005 demonstrates that the overwhelming majority of expenditures for goods and services pursuant to $154,836,684 of bid-waived contracts during fiscal year 2005 was made in conformity with the public bidding law and that there was no evidence of improperly motivated bid waivers or the awarding of bid-waived contracts for purposes of favoritism or for political considerations,” Justice Stein said. “Accordingly, 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.” 

Among the report findings: 

• UMDNJ  must address laxity in the approval of waivers from public bidding by making technological and staffing improvements in the Purchasing Services Department.  The report notes that staff “has acted with a high degree of responsibility,” but some in some cases staff misapplied public billing requirements. The dollar value of those equated to less than 5% of the total purchases made by the university in 2005. 
  
  
• The University should expand the benefits of group purchasing achieved through existing contracts.  More than $60 million of the $154 million of bid-waived contracts (nearly 40 percent) during fiscal year 2005 was directly attributed to a group purchasing contract with Novation, a national buying consortium.
  
  
• Justice Stein recommended a reduction in the use of state lobbyists, although he found a need for them in advocating for funding in Trenton, a function previously carried out by the Commission on Higher Education. The number of lobbyists has been reduced and those who currently have contracts have been notified that their contracts will not be renewed upon expiration.

Many of the Justice’s recommendations have been implemented already. UMDNJ has stopped all blanket waivers, except for select categories. Final interviews are underway for the newly created position of Waiver Coordinator.  Bids are being solicited for new software to help audit the procurement process and maximize efficiencies within the Purchasing Department. Additional staff could be added once technological improvements are completed and reviewed. A training program for purchasing staff began in December, and an online version will be available by Spring.

President Petillo has assigned Mr. Christopher Kosseff, President of University Behavioral HealthCare at UMDNJ, to oversee the implementation of Justice Stein’s reforms with the Purchasing Department. Mr. Kosseff brings an extensive knowledge of the university to this review, along with expertise in process improvement. 

“We will tolerate nothing less than strict adherence to all rules and regulations regarding procurement,” Petillo said. 

The report also examined, at the University’s request a series of contracts given by a previous University administration to lobbyists, including Ronald White and Patrick McCarthy. In August, this administration filed a lawsuit against the estate of Ronald White and his company, International Brokerage Concepts, for breach of contract. The University has no proof of any work Mr. White allegedly performed. 

A similar lawsuit was filed this year against Washington attorney Patrick McCarthy, who was hired by previous administrators and paid $168,000, for fraud and breach of contract.

UMDNJ contracted with Justice Stein and his law firm of Pashman Stein in Hackensack. He was assisted by a team of forensic accountants from the firm of Morrison & Company of Paramus.

Justice Stein's statement and full report are available for download in PDF format.