Late Payment of Contracts by City Agencies Remains a Large and Growing Problem, Comptroller’s Annual Contracts Summary Report Finds

 

New FY 2023 report on procurement: two-thirds of all contracts were submitted late for registration

The New York City Comptroller’s office published its annual report on the City’s contracting in fiscal year 2023, providing a detailed overview by procurement type, method and agency. The report also reviews trends in procurement, including the longstanding and growing problem of City agencies submitting contracts late for registration.

According to the Annual Contracts Summary Report, the City entered into 12,820 new procurement and revenue contracts in FY 2023, valued at $38.22 billion – more than budgets of 30 states. The report provides a transparent and detailed snapshot of that contracting activity, including information on what agencies have been purchasing, what procurement methods they are utilizing, the 10 largest contracts, real property transactions, contact modifications, purchase orders, and more.

The percentage of contracts registered late (i.e. after the start date on which the vendor was expected to begin providing services) grew from 52% in FY21 and FY22 to 66% in FY23, and to 77% for the first half of FY24. These delays cause vendors to wait longer for payment and particularly hurt nonprofits, human service providers, and Minority and Women-owned Business Enterprises (M/WBEs).

“We expect our vendors to provide services on time, so we should pay them on time,” said Comptroller Brad Lander. “It’s especially egregious that our non-profit human service providers – who provide meals to home-bound seniors, shelter for homeless New Yorkers, child care for our kids, and so much more – and our minority and women-owned businesses (M/WBEs) wait so many months, many of them even more than a year, just to get paid for services they provided long ago. Speeding up the contracting process is necessary to help New Yorkers benefit from efficient and effective City services.”

For the first half of FY24, human services agencies delayed the registration of contracts containing over 95% of the total contract value for nonprofit organization and human service providers, a significant increase from prior years. Agencies submitted many of these contracts for registration extremely late. In FY23, more than 27% (1,218) of the City’s contracts with non-profit vendors were registered six months to one year late and 31% (1,388 contracts) more than a year late, due to late submissions by agencies.

Late registration is a problem for M/WBEs as well. The largest share of M/WBE procurement contracts used the M/WBE Noncompetitive Small Purchase (NCSP) method, which the City designed to reduce delays in the contracting process by allowing agencies to contract with City-certified M/WBE vendors for up to $1.5 million without competition. However, the large majority of contracts registered via the M/WBE NCSP method were still late.

For years, the City’s onerous procurement process caused considerable registration delays that hinder the ability of many of its vendors to get paid on time. The current Mayoral and Comptroller administrations created the Joint Task Force to Get Non-Profits Paid on Time and the Capital Reform Task Force in 2022 to develop critical reforms to components of contracting systems. Both task forces made meaningful progress over the past two years, including the “Clear the Backlog” initiative in the summer of 2022, an Expanded Work Allowance to allow modifications to be made to existing contracts without requiring lengthy contract amendments, and an initiative with the City Council to make discretionary award contracts multi-year.

Unfortunately, some of the Joint Task Force’s proposed reforms stalled. Most critically, the Task Force has yet to establish timeframes and key performance indicators for the procurement process as promised. City Hall originally committed to launch ContractStat, a performance management and transparent reporting system by June 2023, but has yet to launch it. Without this key accountability tool, the City cannot collectively measure ongoing improvement of the contracting process.

“This year’s report is a window into where the major gaps in the procurement process are,” said Charlette Hamamgian, Deputy Comptroller for Contracts and Procurement, who leads the work of the Comptroller’s office on contracting. “When approving contracts, our team prioritizes transparency and equity, seeking reliability and accountability for the delivery of quality goods and services that directly benefit New York City’s local businesses and residents.”

Under the New York City Charter, the Comptroller’s office is responsible for reviewing and approving most City contracts and agreements entered into by City agencies before they are legally effective and payments can be made. Once a contract arrives at the Comptroller’s office for registration, the office has up to 30 days to ensure that appropriate funds exist for the City to pay the vendors, confirm that the City agency followed the procurement rules, and to verify that there was no corruption in the decision-making process. The Comptroller’s office is currently the only City entity with a time limit proscribed by law in the City’s procurement process.

In addition to the Annual Contracts Summary Report, which is required by law, the Comptroller’s office has provided an array of information about City contracts:

• In response to the growing use of emergency procurement in recent years, in response to the Covid-19 emergency and the growing need for shelter and services for people seeking asylum, the office recently published “Rethinking Emergency Procurements; A Roadmap to Efficiency and Accountability.” 
• On a regular basis, the office is updating a publicly available database of contracts for asylum-seeker services. 
• The Comptroller’s award-winning Checkbook NYC offers a searchable database of information on City contracts. 
• Last fall, the office released a Contract Primer on NYC Contracting. The Primer contains useful descriptions of many of the contract categories, solicitation methods, and contracting processes that are discussed in this Report.  
• In February, the office releases its annual report on M/WBE procurement, highlighting trends in the City’s efforts to make sure agencies are contracting fairly and inclusively. Read last year’s report here.

You can read the Annual Summary of Contracts Report here.