Lack of Coordination Across Multiple Emergency Contracts Led City Agencies to Overpay Millions of Dollars to Staff Asylum Seeker Services, New Comptroller’s Report Reveals

 

In a report released analyzing the City’s major emergency staffing contracts for asylum seeker services, New York City Comptroller Brad Lander revealed that lack of coordination by City Hall likely led the City to pay for-profit companies millions of dollars more than necessary.  

The Comptroller’s Office analyzed the top four emergency staffing contracts entered into by City agencies to staff facilities for asylum seekers. The report found drastic discrepancies in the pricing of equivalent services. In one comparison, the compensation for a comparable position ranged from $58 to $201 per hour across the four contracts.  

“The City’s haphazard approach to entering these contracts – and their subsequent failure to compare or control prices across them – underscores the pitfalls of inadequate management of emergency procurement,” said New York City Comptroller Brad Lander. “The result is that City agencies likely spent millions of dollars more than necessary for the same services. Rather than evicting people from shelter in the middle of winter, the City should insist on getting the most competitive prices from its own contractors in order to keep costs down.”  

The Comptroller’s analysis compared the four highest-cost emergency contracts procured by mayoral agencies for asylum seeker staffing services at hotels, welcome centers, and Humanitarian Emergency Response and Relief Centers (HERRCs):  

• The Essey Group (Essey), LLC procured by the Department of Homeless Services (DHS);  
• SLSCO LP (SLSCO) procured by New York City Emergency Management (NYCEM);  
• Rapid Reliable Testing NY, LLC (otherwise known as DocGo) procured by the Department of Housing Preservation and Development (HPD); and  
• Garner Environmental Services (Garner) and Department of Citywide Administrative Services (DCAS) — a master agreement involving NYCEM and Health and Hospitals (H+H). 

The latter three contracts were selected without competitive bidding. In addition, the report found no evidence that City Hall coordinated to insist on receiving the most competitive pricing or to evaluate and monitor service across the contracts.  

The report analyzed the prices paid for comparable staffing positions across the four contracts (on-site leadership, case management, general support, security, and off-site management), finding wide variability of staffing rates: 

• SLSCO’s hourly rates for case managers were 237% higher than Essey’s. DocGo’s rates were 146% higher. 
• SLSCO billed the City $201.06 per hour for off-site managers – double the rate charged by Garner and four times higher than DocGo.  
• The hourly rate the City is paying private contractors for security guards is more than double the prevailing wage. 

The report found that, in many cases, the City paid far more to the private contractors than it would have paid to City employees:  

• Staffing costs for some positions under SLSCO’s contract at the Row Hotel were approximately 2.5 times higher than if the City used its own employees. 
• On just one site analyzed by the auditors, City employee staffing would deliver as much as $50 million in savings in a single year, even when factoring for the costs of fringe benefits. 

In emergencies, in order to prioritize speed of procurement, City agencies have the authority to bypass the usual contract requirements of competitive bidding. In this situation, however, City agencies wound up soliciting multiple contracts without achieving the benefits of competitive pricing. 

As of November 2023, the Comptroller’s Office has identified 340 unique asylum-seeker contracts held across 14 different City agencies, representing an estimated contract value of $5.7 billion. In early December, the Comptroller revoked the Mayor’s blanket authority (granted in July 2022) to issue emergency contracts for asylum seeker services, requiring agencies to obtain prior approval from the Comptroller’s office on a contract-by-contract basis. 

More than 20 months after significant numbers of asylum seekers began to arrive in New York City, the Comptroller’s office calls on City Hall to transition to a more cost-effective approach, using a competitive procurement process, managed by a single agency to ensure competitive prices, contractor oversight, and better coordination. 

Read the report here.