Collusion eyed in NYC school milk contracts

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Dairy companies serving New York City's public schools appear to have colluded for years to win milk contracts, according to an audit from the comptroller's office released Wednesday.

City Comptroller Scott M. Stringer also found that the city's Department of Education lacked adequate controls, such as determining a bidder's financial stability, to detect and prevent such wrongdoing.

"We should not have to worry how our milk is being distributed, who's colluding, who's looking to do things backdoor," Stringer said at a news conference at his lower Manhattan office.

He said the results of the audit have been referred to the U.S. Justice Department's antitrust division for further investigation.

The comptroller's auditors believe that the alleged collusion -- by Beyer Farms, Elmhurst Dairy and Bartlett Dairy, all from Jamaica, Queens -- may have driven up the cost of school meals. But Stringer's office conceded it doesn't know for sure.

Joseph N. Paykin, a lawyer for Bartlett, called the allegations "false and defamatory" and said, "Every contract it has been awarded has been the result of competitive bidding and bids are made for competitive reasons."

A statement from Elmhurst said it "followed all proper protocols in bidding and fulfilling" its 2008 contract.

Beyer is out of business.

The audit predates Stringer's tenure and covers 2008 through 2013. The contracts in question totaled $134.1 million.

In a statement, Department of Education spokeswoman Devora Kaye said many of the audit's recommendations have been implemented, though the department said in its official response in the audit that it disputed many of the findings about how it assessed bidders.

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Gina Talamona, a Washington, D.C.-based spokeswoman for the Justice Department, confirmed that the federal government received the audit, but declined to comment further.

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