Two of the biggest names in testing are locked in a dispute over one of the most coveted jewels in the K-12 market: the right to oversee a suite of assessments in California, a state with about one-eighth of the country’s students.
The state’s recent decision to award a tentative three-year, $240 million contract to the Educational Testing Service drew an angry response from a rival vendor, Pearson, which has accused reviewers of missteps that include sloppy scoring and improperly discarding records of their deliberations.
The California dispute is just the latest example of the legal and procedural scrapes playing out as state testing goes through a period of enormous change, shaped by such factors as the shift from print-based to online testing and the adoption of new assessments aligned with the Common Core State Standards.
As numerous contracts to design and administer state tests have been snapped up, companies are fighting with increasing tenacity to lock in remaining deals and protect what they have, said Doug McRae, a retired testing executive who has worked for numerous assessment businesses, including what is now McGraw-Hill Education CTB, one of the unsuccessful bidders in California.
California officials received bids from three of the nation’s largest testing companies for a lucrative three-year statewide testing contract. Here’s how the companies were rated by reviewers in a few key categories—and the pricetags they put on their work.
Source: California Department of Education
Mr. McRae, who did not work for any of the companies on their California bids, was critical of the process the state followed in awarding the contract to the ETS.
“There’s more contention and competition right now,” Mr. McRae said. “It’s a change point in the K-12 market,” and what happens over the next few years “is going to set the stage” for the future of the industry.
Pearson, a worldwide education company with 40,000 employees, has emerged as a favorite target of critics who view it as a symbol of corporations reaping big profits from public education.
But in the California dispute, the London- and New York City-based company describes itself as the aggrieved party, saying the process was slanted to favor the Lawrenceville, N.J.-based ETS, which is the incumbent test administrator in the state.
Pearson officials, whose bid for the work was $34 million cheaper than that of the ETS, declined to say whether they will sue to stop the award, but they have asked California officials to reconsider the ETS agreement, which is still under negotiation and is scheduled to go before the state board of education for final approval next month.
“In a climate where there are doubts about the fairness and openness of a procurement process, contractors who are not incumbents may not be willing to invest to compete and win contracts,” Douglas Kubach, the president of Pearson’s school division, argued in a March 30 letter to state officials. "[T]axpayers will suffer as a result, losing the benefits of innovation and the best value that comes from competition.”
$1.2 Billion Market
California is one of 18 states giving tests created by the Smarter Balanced Assessment Consortium, a group of states that has designed exams aligned with the common-core standards.
Smarter Balanced is leaving the administration of those tests to individual states. California asked vendors to bid to administer its common-core exams in English/language arts and math, and for testing work in science and other subjects over the next three academic years, starting in 2015-16.
The overall market for summative assessment—typically defined as tests designed to measure student academic progress at the end of a school year or a course—stands at about $1.2 billion a year, said Barry Topol, the managing partner for the Assessment Solutions Group, a Danville, Calif.-based company that consults with states on testing. So a California contract potentially worth up to $80 million a year represents a big piece of that pie.
Pearson is the “800-pound gorilla” in state testing, Mr. Topol said, meaning that securing the California deal is probably less critical to the company than it would be to some of its rivals. (Pearson reported it has contracts to provide at least one statewide test in 20 states; the nonprofit ETS said it has six statewide testing contracts, including its current work in California.)
“It’s a big deal for Pearson,” Mr. Topol said of the pending California deal, “but it’s a huge deal for ETS.”
John Oswald, an ETS vice president and its chief operating officer, said in a statement that the ETS is “highly diversified,” working not only in testing, but also teacher licensure, English-language proficiency, college admissions, and other areas. The organization’s main reason for working in K-12 assessment “is to further our nonprofit mission,” he said.
“It would be very disappointing to lose the California contract because it would make it harder for us to help the state improve teaching and learning for more than six million students,” he added. “We don’t have shareholders to please, so increasing earnings is not a priority.”
California officials received bids to take on the work from three companies: CTB, the ETS, and Pearson. State reviewers judging the companies’ in areas such as test scoring, assessment security, test administration, and reporting gave the ETS the top score, a 932, with CTB next at 794, and Pearson coming in third with 769.
But Pearson claims the process was skewed in favor of the ETS in a number of ways.
In a letter to California state schools Superintendent Tom Torlakson and state school board President Michael W. Kirst, the company alleges that state reviewers improperly allowed the ETS to take one of Pearson’s proposed testing strategies—having teachers score assessment results—then let the rival vendor incorporate that plan into its final proposal. The state’s scorers failed to reward Pearson for its vision, the company claims.
‘Especially Troubling’
The company also contends that California officials improperly destroyed public records—notes taken by individual reviewers. Doing so was “illegal” and “renders the procurement invalid,” Mr. Kubach asserted in the letter.
Pearson officials also said it was “especially troubling” that their company submitted the lowest-cost proposal of the three bidders—$206 million over three years—but received a lower score from reviewers for price than CTB, which turned in a bid for $224 million. The state has not adequately explained its rationale for judging cost proposals, Mr. Kubach argued.
California officials declined an interview request from Education Week, noting that contract negotiations with the ETS are ongoing. But in a statement, the state education department said Pearson’s claims are badly off target.
The state has not told the ETS to adopt the Pearson plan for training teachers to score tests, said Keric Ashley, the education department’s interim deputy superintendent. Instead, the state merely wants the “ETS or any other vendor to use California teachers to the greatest extent possible.”
Key Factors
Mr. Ashley said in the statement that it is “standard operating practice” for individual state reviewers to toss out their notes when the scoring of bids is made by group consensus. And he said Pearson’s submission of the lowest-price bid, on its own, guaranteed nothing.
While cost is important, “the most important consideration is the technical ability of a company to test 3.2 million students each year,” Mr. Ashley said, “including providing reliable scores and reporting those scores in a timely fashion.”
A spokesman for the ETS, Tom Ewing, said in a statement that the company would not comment on the bidding process, or Pearson’s complaints, given the “ongoing nature of the contractual process.”
But the ETS is “proud of having submitted a proposal rated the highest by a careful and independent process,” Mr. Ewing said.
Pearson’s role in disputing the California deal sharply contrasts with the position the company occupies in another contract battle.
The American Institutes for Research, a Washington-based research and testing organization, is suing in New Mexico to halt a contract award to Pearson for work associated with the Partnership for Assessment of Readiness for College and Careers, or PARCC, the other main state testing consortium developing common-core tests.
The AIR argues that the proposal for the work unfairly favored Pearson because it was bundled with work the company had already done for PARCC. The value of that multiyear, multistate testing deal is potentially enormous, the AIR says— worth an estimated $1 billion.
