40% of human services contracts can’t get paid for over a year
The New York City Comptroller’s office published its annual report on the City’s contracting in Fiscal Year 2024, providing a detailed overview of the largest contracting jurisdiction in the country. The City procured $32.25 billion worth of goods, services, and construction. For the second year in a row, the volume and value of new procurements declined; on average, procurement contracts cost $400,000 less. However, instead of large procurements, the City has expanded its use of individual small-dollar micropurchases– which do not come to the Office of the Comptroller for review and registration.
The report includes a spotlight into the worsening payment delays to vendors by the City. The percentage of contracts registered late (i.e. after the start date on which the vendor was expected to begin providing services) stubbornly remains at 80%. 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). The percentage of late registered human services contracts rose from 88.5% in FY23 to 90.7% in FY24.
“We are failing our nonprofit partners by not paying them on time,” said Comptroller Brad Lander. “These are the organizations that provide childcare, senior meals, shelter, and vital services that allow New Yorkers to thrive. Because the City is consistently late to pay, these places cannot make payroll, are behind on their rents, and are ultimately forced to close. If we expect efficient and effective City services, the Adams Administration needs to be more efficient and effective in submitting contracts for review that provide these services.”
The City (Comptroller’s office as well as agencies) registered 12,205 new procurement and revenue contracts in FY24. 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, contact modifications, purchase orders, and more.
Over 8-in-10 contracts were registered late in FY24, and the problem is even worse for non-profits where 9-in-10 contracts are late. Agencies submitted many non-profit and human services contracts for registration extremely late. In FY24, nearly 40% (1,387 contracts) of human services contracts were registered more than a year late, due to late submissions by agencies.
While the City cannot pay vendors for services until their contracts have been registered, payment delays can also stem from processes that occur after registration. For instance, vendors must submit budgets and invoices for agency approval as a precondition for most payments and cannot begin submission until a contract is registered. This can become increasingly more complicated the longer a vendor works while their contract is pending registration.
Several Comptroller administrations have delegated registration authority to City agencies for certain procurement transactions, all within micro or small purchase dollar thresholds, to ease administrative burdens for common low-risk purchases or encourage the use of equity-based procurement methods. However, a comparative analysis of Comptroller and agency self-registered contracts reveals that such delegations have little bearing on the City’s procurement delays, even after accounting for the Comptroller’s 30-day review period. The average time for the Comptroller’s office to review and register contracts is less than 19 days.
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 to develop critical reforms to components of contracting systems. Most critically, the Task Force has yet to establish timeframes and key performance indicators for the procurement process including launching a performance management and transparent reporting system, ContractStat, by June 2023.
“Time-and-time again, nonprofit providers are asking us when they can be reimbursed, yet their contract is stuck much further down the pipeline,” said Charlette Hamamgian, Deputy Comptroller for Contracts and Procurement, who leads the work of the Comptroller’s office on contracting. “Our office is committed to not only review contracts thoroughly and efficiently, but working on these task forces with all of our partners in government to effectuate meaningful and impactful change that will unclog this bureaucratic slog.”
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. The Office published an updated primer on City contracting, which provides an overview of the process and vendor selection methods. Back in September, the Office also published Preventing Corruption in Procurement, a four-step plan to root out fraud, minimize risks, and strengthen oversight of the procurement process.
You can read the Annual Summary of Contracts Report here. Read the spotlight on contract retroactivity here.
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