March 8, 2021

State Education Contract Canceled With News Corp. Subsidiary Wireless Generation

The New York State comptroller’s office has rejected a $27 million contract with a News Corporation subsidiary to build a data system for tracking student performance, as fallout widens against the international media conglomerate due to a phone hacking scandal in Britain.

Thomas P. DiNapoli, the state comptroller, had given the green light to state education officials in May to pursue a no-bid contract with Wireless Generation, an education technology company based in Brooklyn in which News Corporation had acquired a 90 percent stake last November for more than $360 million.

Last week, however, Mr. DiNapoli decided that the revelations surrounding News Corporation had made final approval of the contract untenable. In a rejection letter, first reported on Saturday by The Daily News, he told state education officials that they should instead put the project out to bid to a variety of companies.

“We believe the record remains incomplete with respect to the vendor responsibility issues involving the parent company of Wireless Generation,” the letter said.

The comptroller’s office also said it now believed other companies could do the work, making a competitive bid necessary.

The concerns that killed the state contract follow other questions raised about Wireless Generation’s work in New York City.

The company was acquired by News Corporation just weeks after Joel I. Klein, a former New York schools chancellor, left city employment to work for News Corporation as vice president of educational technology. Wireless Generation helped to develop and run the city’s $80 million student data system, known as ARIS, as well as the technology behind one of Mr. Klein’s favorite projects, a computer-based learning model known as School of One.

Strict city ethics rules prevent former officials from working on matters they had substantial involvement in as city employees; News Corporation said Mr. Klein had no involvement with the purchase of Wireless Generation, which had been in the works for several months before he joined the company.

New York will still work with Wireless Generation indirectly, as part of a consortium of states building a shared data framework known as the Shared Learning Collaborative. Financed by the Bill and Melinda Gates Foundation, the $44 million project, awarded to Wireless Generation in June, is being directed by Stacey Childress, a former board member at Wireless Generation. She stepped down and sold her stock in the firm before taking the position at the Gates Foundation, a Wireless Generation spokeswoman said.

In the wake of the most recent revelations of phone hacking by The News of the World, the British tabloid that News Corporation closed in July, the state and city teachers’ unions and other critics wrote to the comptroller to ask him to deny the data system contract on ethical grounds.

“It is especially troubling that Wireless Generation will be tasked with creating a centralized database for personal student information,” the New York State United Teachers wrote in a letter, “even as its parent company, News Corporation, stands accused of engaging in illegal news gathering tactics, including the hacking of private voice mail accounts.”

Wireless Generation said it was disappointed with the comptroller’s decision and was weighing whether to submit another bid.

The State Education Department — which had been trying to move quickly with the project because it is part of a series of efforts being financed by a Race to the Top federal grant with a four-year timetable — accused the comptroller’s office of playing politics.

“The comptroller has allowed political pressure to get in the way of vital technology that would help our students,” said Jonathan Burman, a spokesman for the department. “Our office will review all options to implement the kind of system our schools need to move forward.”

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