City doled out $1.7B in emergency contracts to respond to rapid increase in asylum seekers, extreme weather & communicable diseases from January 2022 to September 2023
Comptroller’s review comes as $432M emergency contract with DocGo uncovered concerning information & lack of experience in providing shelter & support services
New York City Comptroller Brad Lander released a deep dive into the City’s use of emergency procurement in light of various recent events that have necessitated it, including the rapid increase in asylum seekers’ arrival, extreme flooding, and the COVID-19 pandemic. Under the City Charter, the Comptroller’s office (along with the Law Department) is charged with assessing whether to grant prior approval for agencies’ use of the emergency procurement method, while also working to ensure transparency and compliance with procurement rules and regulations.
This review examined 292 new emergency contracts from January 1, 2022 to September 30, 2023, totaling $1.73 billion. Seventy-four of those 292 contracts are for asylum seeker services, totaling $1.38 billion (80% of new emergency procurement dollars).
The review found significant delays in agencies submitting required outlines and contracts. In FY23, agencies filed emergency contracts on average 144 days (nearly five months) after the start of the contract term even though the City’s procurement rules require that agencies submit contracts to the Comptroller’s within thirty days. The Comptroller’s review also found that agencies likely failed to report the vast majority of subcontractors on these contracts, as required by procurement rules.
“When New York City faces an emergency, agencies must manage unexpected circumstances as nimbly and efficiently as they can. However, agencies navigating emergency procurements should not defer reporting deadlines and must adhere to guidance around transparency, accountability, and greater cost efficiency when stewarding city dollars. Otherwise, unscrupulous vendors could take advantage of the situation, supplies could go to waste, and the public could lose its trust in government to act responsively and responsibly in times of crisis,” said Comptroller Brad Lander.
“Transparency, oversight, and accountability are critical when the City is spending billions of public dollars through emergency contracting,” said Speaker Adrienne Adams. “Comptroller Lander’s report revealing deficiencies in the Administration’s emergency contracting only underscores the need for the City to move away from an overreliance on this type of procurement and turn towards more sustainable solutions to meet the holistic needs of our communities and those seeking asylum. The city must move away from emergency contracts, especially with for-profit companies that are inherently expensive, and instead shift to non-profit organizations with a greater expertise and commitment to providing services in the long-term public interest of our city. The Administration should begin taking steps to ensure better transparency and to protect the fiscal health of our city.”
“In just about a year, the City spent $1.73 billion on 300 emergency contracts. These emergency contracts allowed vendors to be hired without standard competitive bidding that allowed taxpayers to be overcharged. The City must eliminate the use of no-bid emergency procurement practices because this migrant crisis is no longer ‘unforeseeable,’” said Council Member Julie Won. “As we continue to undergo painful budget cuts, the City’s procurement process must include the necessary guardrails to limit overspending, hold vendors accountable, and ensure our neighbors are receiving adequate services.”
The Procurement Police Board (PPB) rules and City Charter enable agencies to accelerate the procurement of goods and services through the emergency procurement method when circumstances arise that threaten life, safety, property, or necessary services that standard procurement methods cannot meet. Agencies must identify the emergency, then receive ‘prior approval’ from both the Comptroller’s office and the Law Department. Next, agencies must identify vendors capable of addressing the emergency, solicit cost quotes, and ensure that the vendor has the requisite integrity before awarding a contract. Vendor can start work immediately once agency awards contract.
After these steps, agencies submit a written determination, a formal outline for the basis of the emergency and vendor selection, to the Comptroller and Law Department at the earliest practicable time. Typically, agencies should submit a written determination, a critical record relied upon by oversight agencies, within 15 days of the contract’s start.
The report revealed that:
- In the 21 months analyzed, agencies submitted 73% of all written determinations late, more than 15 days after the contract start date.
- Of the agencies overseeing at least 40 emergency contracts, the Department of Housing Preservation and Development (HPD) successfully submitted 36% of their written determinations at the earliest practicable moment, whereas the Department of Health and Mental Hygiene (DOHMH) submitted the fewest on time written determinations at 6.8%.
- Agencies submitted only 27% of asylum seeker-related written determinations within 15 days.
Next, agencies must file a contract package with the Comptroller within 30 days of awarding the vendor for payment to vendor and review by oversight entities. The PPB rules requires agencies to submit their emergency contract packages 30 days after awarding the vendor the contract, but City agencies often submit emergency contracts late. The report further revealed that:
- Agencies submitted 84% of emergency contract packages to the Comptroller’s office after 30 days.
- For the asylum seeker emergency, agencies submitted 73% of contract packages to the Comptroller office 30 or more days after the contract start date.
The City expects vendors pursuing emergency contracting opportunities to provide goods, services, or construction without guarantee of timely pay, which can discourage M/WBEs, nonprofits, and small vendors without sufficient working capital and who face barriers from traditional lending institutions, from pursuing these contracts. Submitting a contract allows the agency and the Comptroller’s office to review the contract terms, conditions, and scope in order to hold vendors accountable. For instance, on September 5, 2023, the Comptroller’s office returned a $432 million HPD emergency contract with Rapid Reliable Testing NY, LLC (DocGo, Inc.) over concerns inclusive of the vendor’s lack of experience in providing temporary housing and support services and the agency’s process for selecting this vendor for the award. The Comptroller uncovered much of the information that caused concern during our review of the contract package upon eventual submission, more than three months after the contract start date.
Although contracts commonly utilize one or more subcontractors, most agencies do not report subcontractor information in the Payee Information Portal (PIP), the system of record for related approvals and payments. For example:
- Among the 17 agencies with emergency procurement contracts, only eight agencies recorded subcontractors in PIP.
- Of the 292 reviewed contracts, only 73 contracts had at least one approved subcontractor in PIP. City agencies recorded subcontractor approvals for just 16 of out of 74 asylum related emergency contracts (21%) in PIP, even though it is likely that the vast majority included subcontractors.
- As part of the Comptroller’s office post-submission review of asylum seeker contracts, while the Department of Homeless Services (DHS) referenced subcontractors in 51 of its contract filings, only 12 of these contracts had at least one subcontract record in PIP.
The Comptroller recommends:
- Integrating risk assessments and data driven forecasting tools into procurement planning
- Canvassing agencies for relevant citywide contracts
- Building new pre-qualified vendor lists
- Providing guidance to agencies on additional alternative sourcing methods
- Transitioning goods, services, or construction provided under emergency contracts to a competitively sourced contract whenever possible
- 137 out of the 292 emergency contracts file for an extension. 82 of those contracts filed for an extension that lasts more than six months.
- Strengthen accountability for vendor integrity and performance evaluation reviews.
- As of September 2023, only 58 of the contracts (19.9%) had performance evaluations recorded in PASSPort. Of the contracts with start dates before September 30, 2022, 116 of those contracts still have missing performance evaluations. No agency has conducted a performance review of any asylum seeker contracts.
- Reform emergency procurement rules and procedures to achieve greater accountability.
View the entire report here.
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