Common-Core Testing Contracts Favor Big Vendors
Most of the biggest contracts being awarded by the two main consortia creating online common-core assessments—perhaps the most ambitious and complex testing projects in U.S. history—are flowing to some of the education industry's most familiar and entrenched players.
Testing companies and organizations such as Pearson, McGraw-Hill Education CTB, and the Educational Testing Service are among the top winners of prime assessment contracts awarded through those state consortia with federal money—awards worth more than $300 million combined so far.
Some assessment experts say that even large companies could be stretched by heaping the demands of the common-core tests on top of other contracts, and fear that chances for new ideas and innovation in testing will be lost.
But the success of the big players in securing the lucrative new work is not surprising, given the sheer scale of the effort, industry observers point out.
"The scope of this endeavor is so much bigger than the kind of state bids that were available during the pre-common-core days," said Gregory J. Cizek, a professor of educational measurement and evaluation at the University of North Carolina at Chapel Hill. Mr. Cizek, who is on the technical-advisory committee for one of the consortia, the Smarter Balanced Assessment Consortium, likened the work of designing assessments for states and districts to that of building a house with a team of carpenters.
"Now, you need someone who can build a skyscraper," he said. "You need a construction firm."
Relatively few companies and organizations have the staff and expertise to carry out the broad work demanded by either of the main consortia overseeing the creation of assessments aligned with the Common Core State Standards, according to many who know the industry argue. Those tests of English/language arts and math will be in place in participating states this school year.
The contractors are handling tasks such as developing test questions; designing technology platforms, and providing support for either Smarter Balanced, which is creating tests being given in 17 states, and the Partnership for Assessment of Readiness for College and Careers, or PARCC, which is giving exams in nine states plus the District of Columbia.
Even if companies across the industry don't land prime contracts directly through the two consortia, other financial opportunities in testing abound.
The prime contracts awarded through Smarter Balanced and PARCC with federal money do not include the potentially huge flow of money from 24 other states that are either not giving tests through the two consortia or are undecided about what tests to give. In addition, the two consortia's federal grant awards do not include a separate wave of contracts being issued by Smarter Balanced states to administer their tests—work that the consortium chose to leave to those states.
While no firm estimate exists of the total value of those nonconsortia, or test-administration contracts, states responding to an Education Week inquiry reported having made awards worth anywhere between a few million to tens of millions of dollars. Some states are planning to spend much more than that—Florida, for instance, recently agreed to hire the American Institutes for Research, a Washington-based nonprofit, for an estimated $220 million over six years for an array of state testing work.
The contracts awarded through Smarter Balanced and PARCC derive from a pool of $360 million in federal Race to the Top funding, and the two consortia to date have awarded roughly $305 million. The remainder has covered a variety of expenses, including administrative costs and salaries, additional test-development work, and consulting for Smarter Balanced; and support for staff in the states, meetings and travel, and the costs for states acting as fiscal agents for PARCC.
The federally funded contracts went through competitive procurement processes overseen by the consortia's different state fiscal agents, and additionally, in PARCC's case, by PARCC Inc., a nonprofit. Both Smarter Balanced and PARCC provided Education Week with lists of prime contractors hired with federal money, and with broad descriptions of the work that contractors were asked to do.
Much of the work for the two consortia is already complete, though some is ongoing, the consortia's records show. The list does not include subcontractors, which in some cases are being heavily relied on to carry out the work.
One of the biggest winners has been McGraw-Hill Education CTB, a Monterey, Calif.-based testing company, which has collected $72 million as a prime contractor for Smarter Balanced to carry out a long list of tasks, including test-item development and review, test scoring, and project management.
Some test-makers secured prime contracting work with both consortia. The ETS, a Lawrenceville, N.J.-based nonprofit, has won a combined $43 million, with $32 million coming from PARCC for test-item development, and $10.6 million from Smarter Balanced for three separate prime contracts associated with testing services and development.
Another familiar player in the industry, Pearson, has won awards worth about $63 million, almost entirely through PARCC.
But the giant New York- and London-based education services provider, which has 40,000 employees worldwide, also could reap a much greater windfall through a separate PARCC contract for a range of testing services—a deal that a rival vendor has argued is potentially worth more than 1 billion. The contract to Pearson would not come from federal money; it was issued though New Mexico, and it would leave it up to individual states to decide whether to hire the company through a price agreement.
The rival, the American Institutes for Research, is fighting the award in court.
The size of the work required by the two consortia—which, for many awards, involves much more work than a typical state-assessment contract—gives the major players an even greater advantage, according to those familiar with the testing industry. Larger companies, they say, have the resources to craft better proposals and carry out the work.
David Connerty-Marin, a spokesman for PARCC, argued that while big players like Pearson and ETS had secured the biggest contracts from the consortium, the awards list in fact reveals a diversity of winners, with smaller players getting hired for more modestly sized jobs, and subcontractors getting work, too.
Having a group of states working together in crafting tests has also given those states more leverage to set high demands on contractors than any individual state would be able to do on its own, he added.
"The power of working with multiple states [means] we're pushing the industry in new directions," Mr. Connerty-Marin said.
Jon Cohen, the president of the assessment division for the AIR, said the testing industry is being altered by forces that go beyond the common core—most notably, the overall transition from paper-and-pencil-based to online exams. That shift has opened up competition by reducing the need for organizations, including the AIR, to devote major resources to paper-processing costs, and the transition will ultimately benefit schools and students, he said.
"It's one of the few places where you can get faster, cheaper, and better [tests] all rolled up," Mr. Cohen said.
Robert A. Schaeffer, the public education director for FairTest, the National Center for Fair & Open Testing, described the awarding of contracts to major vendors as inevitable, especially given recent test-industry consolidation. Yet he also said it was part of a "same-old, same-old" cycle that will put the common-core states at risk.
Mr. Schaeffer, whose Boston-based group opposes what it sees as an overemphasis on standardized testing, said online-test disruptions on state assessments overseen by major vendors were a natural consequence of those companies' scramble to land big contracts and their lack of necessary personnel or other resources to keep up.
With entire groups of states attempting to launch common-core tests this academic year, the prospects for disruptions soar, Mr. Schaeffer said, especially given districts' well-documented technological shortcomings.
"The industry is somewhere between not-ready-for-prime-time and still-gearing-up," Mr. Schaeffer said. "It takes time to test new technologies. And the pedal-to-the-metal approach doesn't work."
Independent of the contracts awarded through the consortia using federal funds, individual states that adopted the common core have made large and small awards to vendors for a variety of services, including test design and adminstration.
DELAWARE → AIR $4.3M
One of many Smarter Balanced states to hire an administrator to help with its tests. Has awarded AIR, its existing vendor, a one-year contract for common-core test administration and other work, including exams in other, non-common-core subjects.
FLORIDA → AIR $220M
Adopted common-core standards but dropped out of PARCC; hired AIR to design and manage overall state testing for $220 million.
MAINE → AIR $2.4M
Has hired AIR for Smarter Balanced test administration through the end of 2015 for a contract with option to renew.
KANSAS → Center for Educational Testing and Evaluation $6M
Adopted common core but dropped out of Smarter Balanced. Has a contract with the Center for Educational Testing and Evaluation, affiliated with University of Kansas, to develop tests.
WYOMING → ETS $18.6M
Smarter Balanced state, but not giving consortium test this academic year. Has hired ETS for test administration, with much smaller contracts to AIR and ACT.
NEW YORK → Pearson $32M
PARCC state, still determining whether to use consortia's test. Pearson has a contract over five years to develop grade 3-8 common-core tests; high school exams developed in-house.
Pearson won a potentially enormous PARCC contract, awarded through the state of New Mexico for a wide range of work in test development and administration. The contract award is being challenged in court by AIR.
Others agree that the tide of consortia and state testing work can put pressure on companies trying to juggle various jobs, and creates potential anxiety among states.
For a state relying on a major company for its testing, "if they send out their A team, you're going to be fine. The B and C team will be quite good," said Scott Marion, the associate director of the National Center for the Improvement of Educational Assessment, a Dover, N.H.-based organization that advises states and districts on testing. "When you get down to the D team, then that becomes a problem. The state doesn't care if you [also] have a consortia contract. You have to be able to deliver."
Another risk in having a market dominated by major players is that companies devote so much time to pursuing and executing contracts that new ideas and innovative approaches get pushed aside, said Marianne Perie, the director of the Center for Educational Testing and Evaluation at the University of Kansas, in Lawrence. Her center has state testing contracts with Kansas and Alaska.
When requests for proposals are put forward, testing organizations "have to go as fast as they can to meet the deadline—and that's not conducive to innovation," Ms. Perie said.
Ms. Perie noted that with the pairing of prime contractors with subcontractors, it would be wrong to assume that too many companies are being shut out.
"If you're a vendor and you're doing good work, you will find business," Ms. Perie said.
McGraw-Hill Education CTB, for instance, told Education Week it is relying on seven subcontractors to help with a $53.7 million Smarter Balanced contract that includes test-item development, review of items, scoring, checking alignment with standards, and project management. The subcontractors include not only individuals providing consulting, but companies and organizations such as the AIR; the Data Recognition Corp., of Maple Grove, Minn.; and Measurement Incorporated, of Durham, N.C.
New Competitive Landscape
Other contracts connected to the two consortia's work are flowing through the testing market in indirect ways.
Unlike PARCC, which is overseeing both the delivery and management of its tests, Smarter Balanced is leaving the administration of its exams to individual states, and many of those states have awarded contracts to companies or are reviewing multimillion-dollar bids for that work.
It made sense to "centralize the things that are essential" for the exams, while giving states flexibility to hire test administrators who could manage services, said Tony Alpert, Smarter Balanced's chief operating officer.
By creating opportunities for states and vendors to administer Smarter Balanced tests as they see fit, the consortium is "opening up a marketplace and trying to reduce the potential for a monopoly," Mr. Alpert said.
Those contracts, and other awards from states not tied to either consortium, represent a huge financial opportunity for testing companies for years to come, observers predict.
"That is the next battleground where competition will occur," said Barry Topol, the managing partner of the Assessment Solutions Group, a Danville, Calif.-based company that consults with states. The flow of money will feed a "vibrant market," he said.
Mr. Alpert, of Smarter Balanced, said he's optimistic that the process his consortium used in hiring contractors to get its test off the ground will pay off for states and schools.
He pointed to Smarter Balanced's administration of a field test to 4 million students earlier this year. That trial run, in the view of Mr. Alpert and by the measure of some observers, was not marred by major problems.
Smarter Balanced was keen on incorporating new testing concepts, Mr. Alpert said, but it also needed help from contractors in designing a reliable test. In coming up with a plan for the test, Smarter Balanced officials decided against incorporating some potentially impressive features—such as the use of high-resolution video—and focused on features they were confident they could execute.
"Innovation can be a double-edged sword," Mr. Alpert said.
There were additional ways "we could have been innovative," he said, "but at the expense of success."
Vol. 34, Issue 06, Pages 1, 13-14Published in Print: October 1, 2014, as Common-Core Testing Awards Suit Big Vendors