New Stringer Report: 90% of City Contracts for Human Services Submitted Late for Registration, After the Contract Start Date

Thousands of non-profits – many serving most vulnerable New Yorkers – go unpaid for months, forced to deliver services without a registered contract

HRA, DHS, DOE are worst offenders, submitting over 99% of their new contracts retroactively

Stringer calls for new, transparent tracking system for all contracts, strict agency timelines

  New York City Comptroller Scott M. Stringer released a new reportthat found pervasive delays in the City’s contracting system, particularly for human services contracts where 90.8 percent were submitted late for registration in Fiscal Year 2017 – half of them by six months or more. Moreover, all contract types had extensive delays – 81 percent of new and renewal contracts across all City agencies were submitted late in FY 2017.

The report highlighted “Type 70” contracts, which support programs for some of the City’s most vulnerable populations – including seniors, the homeless, and children – and found that some agencies, including the Human Resources Administration (HRA) and the Department of Homeless Services (DHS), submitted a shocking 100 percent of their contracts late in FY 2017, forcing cash-strapped non-profits to resort to taking loans and potentially putting themselves at financial risk.

Vendors can only be paid once a contract is registered, so “retroactive” contracts (or those registered after a contract’s start date has already passed) force vendors into a risky, catch-22 choice: wait to begin work, which can stall projects and drive up costs, or begin work without a registered contract, which can cause significant risk and financial burden to a vendor.

For human services providers, whose programs often support the City’s most vulnerable populations – such as delivering meals for seniors and providing shelter for homeless families – the stakes raised by retroactive contracts are particularly high. These services are critical and moreover, vendors are often non-profit organizations with limited budgets and cash flow. When contracts are registered retroactively, vital supports for communities are put at risk, while the non-profits themselves are often forced to take out loans to meet payroll and other expense needs.

“Behind every human services contract are people who need support from our City – food to eat, a roof to sleep under, or someone to care for them. But our slow contracting system is hurting the very organizations that the City’s most vulnerable communities depend on each day,” said Comptroller Stringer. “With non-profits already under pressure from Washington, here in New York City the bureaucratic process only makes their jobs harder. This comes down to our priorities as a city. We owe it to all our neighbors to deliver necessary services in a timely manner. And there’s a common-sense solution to this problem – hold City agencies accountable. We need to reform our contract system and make it more transparent. If a shipping company can track millions of packages as they cross the globe, we should be able to track a contract as it moves through City agencies.”

The City’s procurement process involves oversight from a number of agencies before a contract can be registered with the Comptroller’s office. While oversight is crucial to ensure that required procedures are followed and to root out corruption, waste, and fraud in City spending, the length of time it takes for a contract to work its way through all stages of review – most of which do not have deadlines – is a primary source of contract delays. Making matters worse, there is no public-facing system for tracking contracts as they make their way through the various stages of review, leaving vendors uninformed about the status of their contracts.

The Comptroller’s report includes an extensive analysis of City contracts for FY 2017, with a particular focus on human service contracts.

Vital Services Threatened by Retroactive Human Services Contracts

New York City relies on an extensive network of non-profit human service organizations to meet the needs of our diverse population. Despite their integral role in delivering City services, community-based non-profits struggle the most with delayed contract delays as their tight budgets and responsibility to deliver vital services stretches their organizations thin.

The Comptroller’s report examined Type 70 contracts – the designation for program contracts – among seven City agencies that contract for the majority of human services programs, finding for Fiscal Year 2017:

• Of the total 2,448 Type 70 contracts registered for the seven human service agencies, 2,224, or 90.8%, were retroactive by the time they reached the Comptroller’s Office.
• Moreover, the Comptroller’s analysis found that half of human service contracts were retroactive by over six months, with the average retroactive period at over 209 days.
• Retroactivity among human services contracts was higher than for other contracts. In FY17, 81% of all new and renewal contracts arrived at the Comptroller’s Office for registration after the contract start date had passed, and over one-third of all contracts were late by more than six months.
• These delays often force non-profit vendors to take loans from the City in order to make payroll and cover other expenses. In fact, in FY17, the City’s Returnable Grant Fund processed 751 loans for non-profits worth a combined total of $149.9 million – many necessitated by delayed contract awards.

Length of Retroactivity Among Registered Human Service Contracts

	Under 30 days	31 – 60 days	61 – 90 days	91 – 189 days	181 – 365 days	Over 1 year	Total
Number of contracts	428	158	155	371	709	403	2,224
% of total	19.2%	7.1%	7.0%	16.7%	31.9%	18.1%	100%
Average number of days retro	7.1	45.1	76.5	133.7	269.7	504.0	209.5

Four Agencies – HRA, DHS, DOE, DFTA – Worst Offenders

• Of the seven agencies the Comptroller’s report focused on, two agencies – the Human Resources Administration (HRA) and the Department of Homeless Services (DHS) – submitted 100% of their program contracts retroactively, meaning not one contract from these agencies arrived for registration prior to the contracted start date.
• The Department of Education (DOE) and the Department for the Aging (DFTA) did not do much better. DOE submitted all but one of its 406 program contracts retroactively (99.8%), and DFTA submitted 98.9% of its contracts retroactively, with only 3 of its 275 contracts registered before the contract start date.

Oversight Works but is Non-Existent for Most Agencies

While the Comptroller’s report found widespread problems in the agency contracting process, by comparison, the analysis found that once contracts are submitted to the Comptroller’s Office, they are processed and registered within 19 days on average. The vast majority, 96 percent, of contracts submitted to the Comptroller’s Office by the seven agencies examined were registered within an initial 30 days review window.

To help alleviate the burden placed on vendors that wait months for contracts to make it through the City’s review process, the Comptroller’s Office proposed two recommendations:

• Assign each City agency with a role in contract oversight a specific timeframe for their contract review work. By holding agencies to specific timeframes, the contracting process can be expedited and standardized.
• Create a public facing tracking system to allow vendors to monitor the progress of their contract through each stage of the contract process. Making the contract process more transparent would introduce real accountability to the City’s oversight agencies.

To read the full report, click here.