Gotham Gazette https://www.gothamgazette.com/component/tags/tag/1868 Fri, 24 Jan 2020 23:07:44 +0000 Joomla! - Open Source Content Management en-gb webmaster@gothamgazette.com (Webmaster) Final Signature Allows Implementation of Cuomo-DiNapoli Agreement to Restore Certain Contract Oversight Powers https://www.gothamgazette.com/state/9056-cuomo-dinapoli-state-entities-finalize-reestablished-comptroller-oversight-powers https://www.gothamgazette.com/state/9056-cuomo-dinapoli-state-entities-finalize-reestablished-comptroller-oversight-powers goccuomo con di

Cuomo & DiNapoli (photo: Governor's Office)


A resolution has finally been reached around how to deal with a thorny issue involving Governor Andrew Cuomo, contracting oversight, and the corruption that plagued some of the governor’s biggest economic development initiatives.

As of December 31, all relevant parties have agreed to comply with an August agreement between Cuomo and state Comptroller Thomas DiNapoli restoring the comptroller’s oversight of some large contracts entered into by SUNY and CUNY and their affiliates, and by the Office of General Services. The agreement is now expected to become operational in February, according to a spokesperson for the comptroller.

The memorandum of understanding was partially signed in August, but as recently as mid-December DiNapoli said SUNY Research Foundation, one of the entities coming under the comptroller’s purview, had not given the go-ahead to bring it from a “conceptual agreement,” as DiNapoli put it, to an actualized program. As of December 31, however, all parties had approved the new system, the spokesperson told Gotham Gazette.

“We have an agreement with the Executive, and we will start reviewing contracts in February 2020. All parties have acted (OGS/SUNY/CUNY/SUNY Construction/CUNY Construction/SUNY RF/SUNY Fuller Road & Fort Schuyler) and agreed to allow OSC to review their contracts,” the spokesperson wrote in a statement.

While representatives for several of the parties signed the memorandum in August, it still required approval by the boards of CUNY and SUNY affiliates, and for their policies to be updated in compliance. CUNY’s approval came on October 28, and two other SUNY-affiliated entities agreed on December 18. SUNY Research Foundation approved the agreement on December 31, just before the January deadline. No part of the deal could go into effect until all the parties had all agreed, DiNapoli said on the Capitol Pressroom in mid-December, calling the Research Foundation approval “the biggest sticking point.”

“As expected, all parties have signed the MOU and will be ready to enforce it this February,” wrote Jason Conwall, a spokesperson for the governor, in an email this week.

The agreement gives the state comptroller the authority to conduct “pre-audit” reviews of contracts procured by SUNY and CUNY and their affiliated construction funds, when they exceed $250,000. It also extends that authority over Office of General Services (OGS) centralized contracts over $85,000.

The memorandum also provides for the comptroller to send all executed contracts of $250,000 or more, with the exception of Common Retirement Fund contracts, to the state inspector general responsible for investigating fraud, corruption, and conflicts of interest in the executive branch and affiliated entities.

The new powers allow the comptroller to review contracts before they are executed to affirm that they are ethically and economically sound. During contract reviews, the comptroller’s office typically conducts due diligence to prevent fraud and waste, and promote competition. It looks at whether vendors have been found to engage in previous wrongdoing, prices for comparable goods and services elsewhere, and whether there are contract provisions that could increase an  agency’s liability.

The comptroller once had those powers for SUNY, CUNY, and OGS centralized contracts, but they were stripped with little public attention during budget negotiations in 2011, Governor Andrew Cuomo’s first year, as he sought to expand and expedite economic development.

In the mid-2010s when the Buffalo Billion scandal, in which bribes were exchanged for plum state construction contracts, implicated some of Cuomo’s closest allies and donors, good government advocates and DiNapoli himself called for the authority to be restored. Cuomo resisted. Lawmakers threatened legislative action, but nothing moved.

Then, during his 2019 State of the State speech, Cuomo surprised many by announcing that he and DiNapoli had agreed to pursue an agreement.

“Comptroller review may have prevented the $1 billion bid-rigging scandal involving upstate development projects resulting in the convictions of high-ranking state officials and major real estate and construction executives,” said John Kaehny, executive director of the good government group Reinvent Albany, in a statement commending the initial agreement in August.

The memorandum of understanding stipulates that SUNY will work with its Research Foundation to give the comptroller pre-audit review of contracts of $1 million or more. The Research Foundation includes SUNY-affiliated nonprofits Fort Schuyler and Fuller Road Management Corporation, which put out the rigged requests for proposals to build SolarCity, the $750 million solar panel plant at the center of the Buffalo Billion controversy and a key element in Cuomo’s signature upstate economic development agenda.

On the Capitol Pressroom in December, DiNapoli said, “I think the biggest piece that still has to be resolved is the SUNY Research Foundation has not taken the action to sign on...but I am very hopeful that once we get that SUNY piece closed down that we will actually be able to implement that more robust oversight that many people have called for and I think is overdue for us to have back.”

With the Research Foundation agreeing to the memorandum of understanding on December 31, it is now set to go into effect in February. While Ft. Schuyler and Fuller Road have been mired in controversy, the entity recently created to subsume and replace them, NY CREATES, is also covered under the agreement, according to DiNapoli’s office.

Unlike other powers that were restored in the deal, the state comptroller has never had pre-audit review authority over SUNY Research Foundation, the spokesperson said.

Cuomo has previously said that part of the reason for not restoring the comptroller’s power is the potential for delays in adding new bureaucratic hoops to jump through. The new agreement sets a time limit of 30 days for the comptroller’s pre-audit review, after which they become “valid and enforceable.” A report released by DiNapoli’s office last May, showed that the average contract review took between six and seven days.

In response to the Buffalo Billion scandal, state lawmakers introduced the Procurement Integrity Act to restore most of the comptroller’s pre-2011 authority, among other things. Year after year, it failed to gain enough traction to pass, but amid an ongoing drumbeat of criticism, especially after the convictions on corruption charges of two of his top former aides, Cuomo made the 2019 State the State announcement.

The agreement is voluntary and contains language stating it can be terminated within ten days by either the governor or comptroller. Good government advocates still want to see it codified into law.

“We hope momentum from completing this voluntary agreement continues and the Governor and Comptroller work together to pass a law in the 2020 session making the agreement permanent,” wrote Kaehny.

Neither codifying the agreement nor passing the Procurement Integrity Act were part of Cuomo’s very limited State of the State government ethics agenda, announced last week.

***
by Ethan Geringer-Sameth, reporter, Gotham Gazette
     

Read more by this writer.

]]>
Final Signature Allows Implementation of Cuomo-DiNapoli Agreement to Restore Certain Contract Oversight Powers Thu, 16 Jan 2020 05:00:00 +0000
Letter to the Editor: The City’s Pattern of Evasion on Tech Contract https://www.gothamgazette.com/130-opinion/9033-letter-to-the-editor-city-pattern-evasion-tech-contract https://www.gothamgazette.com/130-opinion/9033-letter-to-the-editor-city-pattern-evasion-tech-contract roundtable br cityhall

(photo: Benjamin Kanter/Mayoral Photo Office)


To the Editor:

New York City’s Chief Procurement Officer, Dan Symon, didn’t address any of the questions we’ve been raising about the $30.5 million Ivalua e-procurement contract scandal in his recent Gotham Gazette op-ed responding to my earlier piece.

As Director of the Mayor’s Office of Contract Services (MOCS), he continues to protect those responsible for this flimflam and prevent them from being held accountable. 

If the city ran an “open competitive bidding process,” as Symon states, why not release public documents that prove it? Why shield them from the public for more than a year?

Our First Amendment attorney, Dave Schulz of Ballard Spahr, has repeatedly tried to contact MOCS Assistant General Counsel and Records Officer Janet Kim, but has not even gotten the courtesy of a reply. This is after several attempts of my own, leaving us with no choice but to retain legal counsel to help Checks & Balances Project obtain records about how this lucrative contract award first came to be. 

We’ve requested records from only two former MOCS employees but have repeatedly received automated emails that put off providing us with records due to the “complexity” of our request. Again, we’re asking for emails from only two accounts. 

Last year, we waited nine months to be told MOCS had no records. So, we simplified our request. Yet MOCS is referred to in the Ivalua contract 75 times and described as “the City’s central compliance and oversight agency for procurement.” 

There are serious questions that Symon doesn’t want to answer that we are determined to pursue on behalf of New York City taxpayers: 

Why was a French technology company that had never worked with any government in the U.S. given a $30.5 million contract by the largest municipality in the nation?

Was it because they partnered with powerful KPMG lobbyists who have deep ties to the Mayor and other city officials? 

Symon claims the original 2016 contract was expanded “based on the success of early system releases and the demand from our stakeholders.” In fact, when the contract was expanded by $15 million in 2018, the design wasn’t done and “executive sponsor” KPMG had been fired, according to the limited public records produced by DoITT. Isn’t it more likely that the $15 million was given to Accenture, who replaced KPMG?

Symon tries to discredit Dallas, Texas’ $49,900 e-procurement system, built by Bonfire Interactive of Canada. But consider that if one day Ivalua, Accenture, and MOCS do finally finish an end-to-end e-procurement system for the 40 agencies as originally promised, New York City taxpayers will pay more than $1 million per agency. That’s compared to about $3,300 per agency in Dallas. Both systems can handle $15 billion-plus in annual spending by city agencies, yet why does New York City’s system cost nearly 340 times more? 

We’re not arguing that an e-procurement system for New York City is a bad thing. But it is a bad thing if city taxpayers were ripped off by some kind of insiders’ deal. Public records should tell us if that’s true. Why won’t the city give them up?

Sincerely,
Scott Peterson, executive director of Checks and Balances Project, an investigative watchdog that seeks to hold government officials, lobbyists, and corporate management accountable to the public. On Twitter @CandBP.

***
Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

]]>
Letter to the Editor: The City’s Pattern of Evasion on Tech Contract Tue, 07 Jan 2020 05:00:00 +0000
Taxpayers and Vendors Realizing Great Value from City’s Procurement Overhaul https://www.gothamgazette.com/130-opinion/9000-taxpayers-and-vendors-realizing-great-value-from-city-procurement-overhaul https://www.gothamgazette.com/130-opinion/9000-taxpayers-and-vendors-realizing-great-value-from-city-procurement-overhaul ethnic media roundtable

(photo: Rob Bennett/Mayoral Photography Office)


The City of New York has embarked on a mission to transform a procurement system that is outmoded, inefficient, and wasteful, and we are proud to have already made monumental progress. This paper-heavy process has been built up over generations, it is overly burdensome, particularly to small vendors, nonprofits and minority- and women-owned businesses, and, for many years, has plagued vendors with delayed approvals, slow payments, and a lack of transparency.

This reform effort has been underway for a number of years. A system that has been built up over decades cannot be overhauled by a few techies pulling all-nighters.

Procurement transformation is crucially important partly because of its scale. The City of New York enters into contracts every year for over $20 billion in goods and services; nearly $7 billion of that is with nonprofit organizations that deliver health and human services to our most vulnerable neighbors. This purchasing is made by 40 city agencies, with a combined staff of more than 6,000 procurement professionals from a network of more than 14,000 vendors. Last year alone, we managed more than 43,000 procurement actions. 

But it is also important because of the lives it touches. A nonprofit organization that provides housing for the homeless or assistance to children in foster care or meals to the elderly likely delivers its critical services through contracts with the city. They need those contracts to be developed and executed expeditiously and to be paid on a timely basis to ensure uninterrupted services – lives are literally counting on it.

Clearly, this is too important an initiative for the city, our vendors, and our communities to allow the project to be denigrated or mischaracterized — as it was in a recent op-ed column, “Taxpayers Fleeced for Nearly $47 Million in Tech Boondoggle...” (Dec. 13).

The company we chose to help us build our new platform, Ivalua, was selected through an open competitive bidding process. Its proposal was evaluated and selected by an evaluation committee, pursuant to the city’s procurement rules. Its original contract was for $30 million and increased not because of any cost overruns, but because we decided to expand the scope of the work, based on the success of early system releases and the demand from our stakeholders. Moreover, the strength of Ivalua’s product is validated by other jurisdictions across the country that have effectively implemented its e-procurement technology. 

Trying to compare what New York City is doing here with a smaller municipality purchasing 15 software licenses for a light procurement tool is like comparing a canoe to an aircraft carrier.  It is in no way comparable to the design of an end-to-end procurement system that involves 40 city agencies, 6,000 staff, thousands of vendors, and more than 43,000 procurement actions annually.

Like many other large citywide transformation projects, this one – called the Procurement and Sourcing Solutions Portal (PASSPort) – is being developed and launched in stages. It has been live since August 2017, phase two was launched in April 2019, we are on track to release phase three, our largest release, in Spring 2020, and another component, which will digitize citywide budgeting and invoicing, will be released by early 2021. Our expansion of PASSPort has been fueled by the quantifiable efficiencies we have seen already and the demand by vendors and city agencies to go completely digital. 

No reform of this magnitude is going to take place without some mistakes along the way. When those happen, we will be transparent about them, take responsibility, and work hard to fix them. But we all need to be clear about the facts – which show that the City of New York’s procurement transformation is happening as planned and on a reasonable timeframe, that it has already produced enormous benefits, and that it will prove to be of great value to city agencies and vendors, as well as to city taxpayers.

***
Dan Symon is the City of New York’s Chief Procurement Officer and Director of the Mayor’s Office of Contract Services.

***
Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

]]>
Taxpayers and Vendors Realizing Great Value from City’s Procurement Overhaul Tue, 17 Dec 2019 05:00:00 +0000
Taxpayers Fleeced for Nearly $47 Million in Tech Boondoggle But Few City Leaders Notice https://www.gothamgazette.com/130-opinion/8983-taxpayers-fleeced-nearly-47-million-in-tech-boondoggle-but-few-city-leaders-notice https://www.gothamgazette.com/130-opinion/8983-taxpayers-fleeced-nearly-47-million-in-tech-boondoggle-but-few-city-leaders-notice budget hearing joint

(photo: Michael Appleton/Mayoral Photography Office)


What if I told you that in an effort to enable 40 New York City government agencies to buy goods and services more cost-effectively, some city officials have put on a tutorial on how not to buy goods and services – and stuck taxpayers with a bill heading toward $47 million? 

As a New Yorker, you’d probably tell me to “Get the hell outta here!” -- then I’d have to give you details.

So here’s how the flimflam went down. Three years ago, city government hired an inexperienced French technology company, Ivalua, to custom-build procurement software for tens of millions of dollars ($30.5 million, to be more precise) to help the city agencies buy goods and services less expensively.

The company’s partner in landing the contract was KPMG, a global professional services firm with deep ties to the mayor’s office and city agencies through well-connected lobbyists.

Two years after the contract was signed, the design hadn’t been completed. Fast forward to today, and few if any of the 40 agencies benefit from the promised customizable, end-to-end e-procurement system. And while officials had the legal ability to cancel the contract and claw back $25 million of the $30 million they’d spent, they chose instead to give the vendor another $15 million to get the software working.

Another increase will bring the expected cost to almost $47 million.

There is procurement software from Bonfire Interactive, Ltd., a Canadian e-procurement firm, that’s readily available for $50,000 and used by Dallas, Texas. But New York City officials dismissively declare the Big Apple is vastly different from other major cities, but don’t address why proven, far-cheaper options were ruled out.

Forty city agencies continue to rely on old-fashioned methods for finding and paying vendors. Yet officials at two agencies, the Department of Information Technology and Telecommunications (DoITT) and the Mayor’s Office of Contract Services, that were directly involved in the contract decision-making process, duck basic, reasonable questions about who enabled this boondoggle in the first place.

Why was a French company that had never worked with any government in the U.S. given a $30.5 million contract by the largest municipality in the nation?

Why are the agencies involved hiding emails and other lawful public records that could shed light on the origins of this scandal? 

This is happening now. And few who can do something about it -- like City Council Speaker Corey Johnson -- have taken any action to address it.

Then-DoITT Commissioner Anne Roest, who signed the contract; Chief Procurement Officer Michael Owh, who ran point; and KPMG official Samir Khushalani, who was the “executive sponsor,” have all left town.

Other officials at DoITT and the mayor’s office who were involved have avoided owning the problem. Instead, they have delayed and denied reasonable Freedom of Information Law (FOIL) requests for documents and emails regarding this troublesome contract.

Based on limited records we at Checks and Balances Project uncovered, we discovered that Ivalua’s design had not been completed and requirements were not validated two years after the contract was signed. These public records show that nearly every milestone had been missed.

DoITT, in charge of the project until the mayor’s office took over in January, replaced KPMG with Accenture. And in June 2018, former Commissioner Samir Saini signed paperwork giving Ivalua another $15 million. Since then, according to Checkbook NYC, the city comptroller’s digital database, an additional increase brings the expected price for the software system to $46.89 million.

In a city with an annual budget of more than $92 billion, nearly $47 million might not seem like that much. But it’s real money, the equivalent of: 

-188,000 new textbooks for public school students
-1,106 police officers, starting annual salary
-1,040 firefighters, starting annual salary
-23,992 Section 8 two-bedroom housing monthly rental vouchers
-740,157 discounted monthly MetroCards to low-income New Yorkers.

Considering Mayor de Blasio’s oft-stated focus on creating more middle class jobs, throwing more wasted money at an expensive, custom e-procurement system that doesn’t work as promised is especially disappointing.

There are several officials and institutions that have the ability to do something about this growing contract scandal: Comptroller Stringer; Public Advocate Jumaane Williams; Speaker Johnson; the City Department of Investigation; City Council Member Ben Kallos, who chairs the Contracts Committee and sits on the Oversight and Investigations Committee, and other Council members; and city media. Only Stringer and Kallos have taken any interest in the wake of a Daily News story on the boondoggle. 

Playing fast and loose with public funds isn’t a new thing in New York City. But that doesn’t mean it’s OK. The question is, who will do something about it? 

***
Scott Peterson is executive director of Checks and Balances Project, an investigative watchdog that seeks to hold government officials, lobbyists, and corporate management accountable to the public. On Twitter @CandBP.

***
Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

]]>
Taxpayers Fleeced for Nearly $47 Million in Tech Boondoggle But Few City Leaders Notice Thu, 12 Dec 2019 05:00:00 +0000
Fixing the City’s Broken System that Puts the Social Safety Net at Risk https://www.gothamgazette.com/130-opinion/8682-fixing-the-city-s-broken-system-that-puts-the-social-safety-net-at-risk https://www.gothamgazette.com/130-opinion/8682-fixing-the-city-s-broken-system-that-puts-the-social-safety-net-at-risk speaker m mv cm helen westside

(photo: William Alatriste/City Council)


The recently-passed New York City budget greenlights billions of dollars to some of the most vital programs across the five boroughs. These dollars will help to fund homeless shelters, emergency food pantries, senior services, mental health services, and early childcare for the most vulnerable New Yorkers.

The City of New York contracts with over 1,000 community-based organizations (CBOs) to provide these essential human services at a cost of $6 billion annually. But thanks to the City’s broken procurement system, CBOs are forced to wait a very, very long time to see their money. In fact, according to a recent Comptroller’s report, human service providers wait an average of 221 days before being reimbursed for services and labor they have already provided.

Under the current system, CBOs are forced to essentially cover the City’s costs and then wait over seven months on average for payment, which, when it arrives, doesn’t cover their actual costs. What private business would accept -- or be able to operate under -- these terms?

This awful status quo persists because there are virtually no timelines attached to the City’s procurement process, which allows bureaucrats to sit on contracts and deprive local nonprofits of desperately needed funds. After a contract is awarded, it goes through the supervising agency’s review process, then to the mayor’s office, and, if all goes well, on to the comptroller for registration. Only the comptroller is subject to a time limit, however, which is 30 days.

As a result, 80 percent of all contracts issued by the City are currently delivered late, with a whopping 89 percent of human services contracts arriving tardy. For nonprofits and charities that provide crucial citywide services, these delays can be catastrophic. Since these organizations cannot close their doors to those in need, many opt to take on loans. The problem is, these loans often come with interest. 

One study estimated that late contracts cost New York City nonprofits a staggering $774 million in 2018 ($756 million in negative cash flow and another $18 million in associated financing costs). This is up from $675 million in 2017.

Think of the critical services -- for the elderly, young children, and disabled people -- that could have been provided by the $18 million lost to interest payments.

This burdensome debt not only drags down the vital services that CBOs can provide, but also threatens the livelihood of their employees. As Human Services Council Executive Director Allison Sesso writes, human service workers “increasingly find themselves in the very same position as their clients -- in need of social service assistance to provide for their families.” The financial strain also disproportionately affects already marginalized populations, as women and people of color represent 85% and 75% of human service workers, respectively. In an industry with already high employee turnover, the City should be doing everything in its power to bolster, not undermine, these organizations’ finances.

This is why we are introducing legislation that will help end the long delays within the City’s contracting process and bring relief to CBOs. Our legislation, Intro. 1627, would require the City’s Procurement Policy Board to establish time limits on each bureaucratic phase of the procurement process for any contract exceeding $100,000. The limits would be developed in consultation with each contracting agency and the Mayor’s Office of Contract Services (MOCS).

Not only will this legislation help CBOs and other human services providers be paid in a timely manner, it will also require MOCS to report publicly on each agency’s adherence to the time limits, providing the public with a necessary source of accountability.

New Yorkers deserve the best services, and the CBOs providing those services deserve to be paid fairly and on time by a city government they can hold accountable. Overhauling the procurement system may be bureaucratic and slow in nature, but it is necessary if we are to properly serve the New Yorkers who are most in need.

***
City Council Members Helen Rosenthal and Ben Kallos represent Manhattan districts. On Twitter @HelenRosenthal and @BenKallos.

***
Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

]]>
Fixing the City’s Broken System that Puts the Social Safety Net at Risk Thu, 18 Jul 2019 04:00:00 +0000
Does New York City Need a Chief Diversity Officer? https://www.gothamgazette.com/city/8447-does-new-york-city-need-a-chief-diversity-officer https://www.gothamgazette.com/city/8447-does-new-york-city-need-a-chief-diversity-officer mayor office city hall riders

(photo: Michael Appleton/Mayoral Photography Office)


Many days throughout the year there are people gathered on the steps of City Hall calling on city government to make policy. On March 14, a rally of women and people of color who own businesses, organized by city Comptroller Scott Stringer, focused on a change that could significantly alter the direction of city government and opportunities for those business owners and others in similar positions.

Those in attendance were backing Stringer’s push to have the 2019 New York City Charter Revision Commission put a proposal on the November ballot to require a Chief Diversity Officer in the mayor’s cabinet and one at each city agency.

Fittingly, Mayor Bill de Blasio, AirPods in his ears, walked into City Hall at the time of the rally, seemingly paying it little mind. Over the last several years, Stringer has assailed the de Blasio administration’s approach to contracting with MWBEs -- minority- and women-owned business enterprises -- and called on the mayor to add a chief diversity officer (CDO) to his administration. De Blasio has adjusted the city’s MWBE contracting goals multiple times and created an MWBE office in 2016, but he has not created the CDO position. He has also repeatedly dismissed Stringer’s criticisms.

A second-term Democrat who created a CDO at the comptroller’s office upon taking the citywide position in 2014, Stringer has now pushed the issue to the fore as the 2019 charter commission considers what changes to the city’s central governing document and structure it will propose to voters this fall -- it is listed first among Stringer’s 65 charter revision proposals.

The City Hall rally, which included Stringer, MWBE owners, faith leaders, Manhattan City Council Member Ben Kallos, and Brooklyn Assembly Member Rodneyse Bichotte, came just hours before Stringer and others testified before the commission on the subject of adding the CDO positions to the charter.

Among other responsibilities, the CDO position would oversee city procurement and contracting with MWBEs, as well as strategies to improve those efforts. The city spends billions of procurement dollars each year to buy things such as office supplies or hire contractors on city construction projects. The CDO would also focus on issues of equity and diversity in city government, with each CDO at individual city agencies handling these tasks with a narrower scope.

“I’ve said to the mayor every year that we would really benefit from a chief diversity officer in City Hall,” Stringer told Gotham Gazette just after the rally. “For me, talk is cheap. We’re either going to be in the business of equality and economic justice or we’re not.”

The CDO in Stringer’s office, currently Wendy Garcia, is tasked with overseeing all of its procurement dollars, about $14 million spent annually.

“Every time I see a law or a regulation or some rule that inhibits minorities or women to have access, my job is to fix it and change it,” Garcia told Gotham Gazette in an interview. According to Stringer’s charter revision proposals, Garcia has helped the Office of the Comptroller almost double its spending with MWBEs to over 24% of its procurement spending in fiscal year 2017.

“I think people do not fully appreciate the role of the chief diversity officer,” Stringer said. “Imagine a chief diversity officer in City Hall in this building right now working every day across all agencies to look at ways to up-spend to bring more people into the procurement process. This is a necessary part of government. It’s the future of the city. There’s nothing more important than creating wealth with opportunity.”

Each year, Stringer puts out an MWBE report card for city agencies and the mayor’s office, and he includes his office as well. Six of the 32 agencies graded by the Comptroller’s Office already have CDOs: Department of Design and Construction, Department of Finance, Department of Information Technology and Telecommunications, Department of Sanitation, Department of Transportation, Fire Department, and Law Department. (None of the agencies with chief diversity officers increased their share of procurement going to MWBEs by over 2.5% from 2017 to 2018 except the Department of Finance which spent only $25 million on procurement in total, about 21% of its procurement dollars.)

The Department of Design and Construction (DDC) has one of the biggest procurement budgets in city government, totaling nearly $1.7 billion, about as large as the other agencies with CDOs combined. DDC hired Chief Diversity and Industry Relations Officer Magalie D. Austin in 2014. According to budget testimony delivered last month by DDC Commissioner Lorraine Grillo, "Mayor de Blasio singled out DDC as the top performing agency in the City’s M/WBE program. We’ve awarded more than $1 billion to M/WBE firms since 2015. Between FY15 to FY18, our overall M/WBE utilization rate has increased from just under ten percent to 23 percent."

Furthermore, the Metropolitan Transportation Authority (MTA) and New York State also have chief diversity officers. Governor Andrew Cuomo, who took office in 2011, responded to a 2010 disparity study by focusing on the state’s procurement dollars going to MWBEs. In 2014, he upgraded his goal for MWBE utilization from 20% to 30% of the value of state contracts. In fiscal year 2017, the percentage of MWBE utilization in New York State was 28.6%, according to Empire State Development’s Division of Minority and Women's Business Development Annual Report 2018.

The state chief diversity officer originally solely oversaw the MWBE procurement process but has recently added workforce diversity and inclusion duties as well. Currently, the role of chief diversity officer is filled by Lourdes Zapata.

Other Major Cities Have CDOs
Outside of New York City, the position of chief diversity officer can be found in other major city governments around the country, almost all only created in the past five years.

There are currently chief diversity officers in Chicago, Boston, Philadelphia, Columbus, San Antonio, Austin, Nashville, and Buffalo. The duties (and titles) of these CDOs vary – most of the positions are human resources in nature, such as researching workplace diversity, recruiting diverse applicants for city jobs, and raising awareness for diverse hiring practices.

If the proposal passed, New York would be the first major city with a chief diversity officer whose main job duty would be to oversee procurement for MWBEs.

In Philadelphia, the role of Chief Diversity and Inclusion Officer is filled by Nolan Atkinson Jr. When offered the job, “I had one qualification. I wanted the title to be the Chief Diversity and Inclusion Officer,” he told Gotham Gazette in a phone interview. “I believe inclusion is vital in having a successful tenure in this position.”

Atkinson’s office provides diversity training to city employees, publishes quarterly reports, and oversees the Office of Economic Opportunity, which manages procurement to WMBEs.

Philadelphia city government awarded over $440 million out of an estimated $1.4 billion contracting budget (30.5%) to M/W/DSBE’s (Philadelphia includes business owners with a disability) in fiscal year 2018, a $128 million increase over fiscal year 2017, according to the City of Philadelphia’s Department of Commerce’s Office of Economic Opportunity Fiscal Year 2018 Annual Report. Philadelphia has set an “aspirational” goal of 35% of contracting dollars to go to diverse businesses. In terms of city employee diversity, the Philadelphia city workforce skews heavily male, at 65% of the workforce, and 58% of “new hires.”

Boston’s CDO Danielson Tavares has had more success reflecting the city’s population in the city’s workforce but does not oversee procurement.

Danielson Tavares, Chief Diversity Officer of the City of Boston, told Gotham Gazette, “my initial mandate was as to try to diversify the [city government] workforce to be as reflective of the city population as possible with special attention to underrepresented populations.”

According to the first ever workforce report looking at diversity in Boston in 2015, just 42% of city workers were non-white while 54% of the city was non-white. The December 2018 report showed that out of the nearly 1,500 new city hires in the year before the report, 55% were non-white.

Something both Atkinson and Tavares emphasized: for a CDO position to work, they need the support of the mayor of the city.

It doesn’t seem like the proposal has it in New York.

The New York City Push, MWBE Spending, & the Charter Revision Commission
In a statement to Gotham Gazette, de Blasio spokesperson Raul Contreras highlighted the work of the Mayor’s Office of Minority and Women-owned Business Enterprises but was noncommittal regarding the CDO proposal that’s in front of the charter revision commission.

A chief diversity officer in New York would undoubtedly cause changes in the procurement spending infrastructure with the Mayor’s Office of M/WBE’s currently overseeing procurement to M/WBE’s. When asked at a March 21 press conference -- one week after the Stringer-led rally and testimony at the charter revision commission -- about the possibility of a CDO in New York City, de Blasio said, “I think the current approach is a very aggressive, effective way. We’ll always look at ways we can improve it, but I think this model is the way to get it done.”

“If you’re chief diversity officer and you don’t report to the head, you’re set up to fail,” said Wendy Garcia. “If you’re reporting directly to the head, you’re part of the system.”

“As long as it doesn’t get overly politicized, we see the power and leverage of a position like this necessarily maintained,” said Julie Nelson, Co-Director of the Government Alliance on Race and Equality (GARE).

An issue the 2019 Charter Revision Commission brought up in its hearing was the already existing framework in the city overseeing M/WBE investment. Commissioner James Caras asked the panelist of experts who testified on the issue if a CDO was really necessary as the duties of the position, diversity hiring and overseeing the M/WBE program, are already handled by the Department of Citywide Administrative Services (DCAS) and the Mayor's Office of M/WBEs, respectively.

Commissioner Stephen Fiala argued that the specifics of how a CDO would integrate with the current MWBE officers in city agencies are unknown and would only add to a complicated charter and city bureaucratic structure.

“We’re always too quick to come up with a catchy title and then try to ram it into the charter and then we’re left very disappointed when nothing happens.”

A possible downside to the idea of chief diversity officers, said Nelson, is “when individual positions are allocated with the responsibility, that can take the pressure or the weight off other people” when promoting diversity.

Asked about this reservation, Garcia told Gotham Gazette it is the reason the CDO must be in every agency and there must be one CDO who reports directly to the mayor.

If skipped over by the charter revision commission, the creation of a citywide chief diversity officer could be legislated by the New York City Council, however the expert panelists at the revision commission’s hearing were dubious of this path as the charter is less malleable to political changes and pressures.

It’s notable that of the ways the push for a CDO could succeed, like through legislative action or executive order, changing the city’s Charter is the only way that does not directly include the mayor, though he does have four appointees to the 15-member commission. (The City Council could pass a bill then override a mayoral veto. There is no current bill in the Council to create a CDO.)

When the 2019 Charter Revision Commission heard testimony on the proposal of creating a CDO at the March 14 hearing, commissioners appeared interested in the topic. After including the CDO concept in its list of issues to explore further, the commission heard from Stringer and others, among a series of expert hearings it held on a variety of topics, and will now put forward its narrowed focus areas on April 22. That list will determine which issues the commission plans to craft actual ballot proposals around for suggested changes to city government for voters to approve or disapprove in November.

The MWBE program, created by city law in 2005, attempts to increase the amount of city procurement dollars that go to minority- and women-owned businesses. In fiscal year 2018, the city awarded $19.3 billion in contracts, of which $1 billion, or about 5.5%, went to MWBEs, according to Comptroller Stringer’s Making the Grade 2018 report. In 2007, it was just 1.6%.

In the same 2018 report, Stringer gave the city as a whole a D+. Of the 32 mayoral agencies graded, only nine received a B or higher, including the Office of the Comptroller. On spending specifically with African-American-owned businesses, five mayoral agencies received a B or higher.  

To improve, Mayor de Blasio set the goal of awarding $16 billion to MWBEs by 2025 in his OneNYC plan, a goal which has since been increased to $20 billion by 2025.

Amid earlier criticism from Stringer, de Blasio created the Office of MWBEs in September of 2016, which is currently responsible for overseeing the MWBE program. The office, currently led by Jonnel Doris, is part of the mayor’s office and is overseen by the Deputy Mayor for Strategic Policy Initiatives, currently Phil Thompson. The office was created and enhanced under Thompson’s predecessor, Richard Buery.

Talk of a chief diversity officer actually came up in the 2013 New York City mayoral race. At a very early forum in the race -- held in June 2012 when Stringer was exploring a mayoral bid before he shifted to the comptroller’s race -- participating candidates including de Blasio criticized the Bloomberg administration approach to diverse hiring and MWBE contracting. According to news reports the candidates all supported the idea of a CDO at City Hall. “De Blasio also endorsed the idea, but said he would go further, making the person who holds that post a deputy mayor,” according to a Reuters article from the time. That’s what de Blasio has done, in a way.

But the city has failed to hit MWBE procurement benchmarks that were codified by Local Law 1 in 2013. For example, 18% of the value of city construction contracts awarded are supposed to go to women-owned businesses. In 2018, the city awarded just 4.1%, according to the comptroller’s Making the Grade 2018 report.

On the matter of diversity in the mayor's office and city government more broadly, little has changed since de Blasio took office, according to the most recent statistics available from the city. While de Blasio has elevated more women and people of color to top city leadership positions, the larger workforce is about what it was in Mayor Michael Bloomberg's final year of 2013.

According to the U.S. Census Bureau, as of July 2017, New York City as a whole was 52.3% female and 46.7% male, and 32% white, 29% Hispanic, 24% black, 14% Asian, and 1% other races.

According to the city's Department of Citywide Administration Services: in 2013 the mayor's office was: 60% female and 40% male, and 54% white, 17% black, 15% Hispanic, and 14% Asian; in 2017 the mayor's office was: 58% female and 42% male, and 46% white, 20% black, 15% Hispanic, 16% Asian, and 3% some other race.

In 2013 the city government workforce was 58% female and 42% male, and 40% white, 31% black, 19% Hispanic, 8% Asian, and 2% some other race. In 2017 the city government workforce was 59% female and 41% male, and 38% white, 30% black, 20% Hispanic, 9% Asian, and 3% some other race.

Nelson, of the Government Alliance on Race and Equality, told Gotham Gazette the vast resources and dollars of New York City could have a real benefit on policies that would help people of color, if implemented well.

“What we don’t want to have happen is for these positions just to be spokespeople for the status quo,” she said.

***
by Truman Stephens, Gotham Gazette

Read more by this writer.

Ben Max contributed to this article.

Note: this article has been corrected to reflect accurate procurement spending with MWBEs by DDC. The original published version of the article inaccruately described DDC as making minimal progress in MWBE contracting in recent years whereas it has increased such spending significantly.

]]>
Does New York City Need a Chief Diversity Officer? Sun, 14 Apr 2019 04:00:00 +0000
Charter Revision Commission Hears Expert Testimony on City Budgeting and Contracting https://www.gothamgazette.com/city/8352-charter-revision-commission-hears-expert-testimony-on-city-budgeting-and-contracting https://www.gothamgazette.com/city/8352-charter-revision-commission-hears-expert-testimony-on-city-budgeting-and-contracting mbdb execb

 (photo: Edwin J. Torres/ Mayoral Photo Office)


The 2019 Charter Revision Commission, which is looking at ways to improve the city’s central governing document, heard suggestions on Monday from community-based organizations, fiscal watchdogs, and former and current city officials about potential changes to the city’s byzantine budgeting process.

Over the course of more than three hours, experts weighed in on the city’s flawed contract procurement system, the severe lack of transparency in spending on capital projects, the possibility of creating a rainy day fund for the city, and measures to generally improve accountability in city spending. There was general agreement that city procurement needs to be overhauled to make it more efficient and transparent, but broader opposition to changes in the budgeting process and the administration’s ability to set revenues and expenditures.

The city’s budget and budgeting processes are one of four areas of focus for the commission, which will sift through the hours of testimony it has heard, and has yet to hear, before releasing a draft of ballot proposals sometime next month. The proposals will go through another round of public input before the final questions are approved in June. The proposals will then be presented to voters on the November election ballot. The commission has already held hearings on elections reform, exploring issues such as ranked-choice voting, redistricting and campaign finance improvements, and another on police accountability measures. The next hearing is scheduled on Thursday, where the commission will look at issues involving finance and governance including the city’s pension system, a Chief Diversity Officer proposal, and issues around corruption and conflicts of interest.

City Contracting
At Monday’s hearing, there was broad consensus from those within and outside government about how the city’s contracting process works, or rather, doesn’t. Advocates representing human-service nonprofits, which receive most of their funding from the city, bemoaned the now well-known sorry state of the system, with contracts delayed for months, threatening their financial security and their ability to provide uninterrupted services. Unlike private contractors, they cannot cancel the services they provide, advocates said, since they fill the gaps where the city is not meeting the needs of vulnerable New Yorkers. “We’ve entered an era for nonprofits that’s very dangerous,” said Janelle Faris, executive director of Brooklyn Community Services.

Michelle Jackson, deputy executive director of the Human Services Council, which represents more than 100 nonprofits, noted that the city spends $6.5 billion on human services each year, which also allows nonprofits to leverage state and federal funding and philanthropic dollars. “We’re an economic engine,” she said. “The sector nationally is larger than the airline industry yet we do not treat nonprofits the same way we treat airline executives.”

Jackson recommended several measures to improve procurement including established contracting timeframes, interest or other penalties on late payments by the city, and more detailed annual reporting in the Mayor’s Management Report, which tracks performance indicators for city services. Marla Simpson, a former director of the Mayor’s Office of Contract Services (MOCS), however, said financial penalties may not be effective and the best solution may be to name-and-shame agencies for their failures. “Transparency and sunlight is a much more important cure,” she said.

Officials from the comptroller’s office and the Mayor’s Office of Contract Services concurred that city contracting is inefficient though they outlined steps they have already taken to improve it and promised that improvements are slowly coming to fruition. “I agree that New York City’s procurement must be overhauled,” said Daniel Symon, acting director of MOCS, in his opening statement. “Reliance on paper, a patchwork of siloed agency systems and a sometimes necessarily risk-averse culture combine to limit achievable results.”

Lisa Flores, deputy comptroller for contracts, said the procurement system is “notoriously slow, bureaucratic and opaque,” and leads to delays that increase project costs for city vendors, which end up being passed on to taxpayers. She noted, for instance, that in fiscal year 2018, 80 percent of all new and renewal contracts submitted to the comptroller’s office for registration came in after the start date (40 percent of those contracts were late by six months or more) and for human services contracts, the number increased to 89 percent. She called for more transparency and accountability, particularly by setting specific timelines for agencies to submit contracts. Currently, the city charter only requires the comptroller’s office to register contracts within a timeframe.

The commissioners recognized that procurement reform is an age-old issue. “I was on the City Council 20 years ago and we were having the same discussions,” said Commissioner Stephen Fiala, though he expressed doubts about imposing penalties on agencies for late submission of contracts. Other commissioners pressed the expert panel on oversight at agencies and the institutional issues with procurement.

Flores suggested more outward transparency for the process and establishing metrics to track whether agencies are working in a timely manner. Symon, though, was wary of creating timelines for agencies that could potentially allow them to delay their work or lead to clashes with vendors. “What I don’t want to do is start with an arbitrary time-frame when we don’t know how fast it can be,” he said. Both agreed that the contracting process needs to be more structured and predictable, with vendors being able to track the progress of their contracts in real time. A time-frame, Flores said, would be an important first step. Advocates agreed.

City Budgeting
There was similarly consensus on the subsequent panels where experts testified on the city’s expense, revenue, and capital budget procedures. But rather than agreeing on ways to improve the budget, they mostly were on the same page in warning the commissioners to be careful about interfering in what is already a strong fiscal management system.

“Changing our fiscal discipline practices will cause unintended and perhaps adverse consequences,” said Chuck Brisky, deputy director for expense and capital coordination for the Mayor’s Office of Management and Budget. He opposed any shift in responsibility for the city’s revenue forecast, which is set by the mayor. Brisky said the mayor is accountable to New Yorkers for providing services and so must be responsible for setting the revenue projections that funds those services.

“If the budget isn’t balanced by even one-tenth of one percent at our current revenue and spending level, the city could lose control of its finances to the Financial Control Board under the Emergency Financial Act,” he said. The state, he noted, doesn’t have the same stringent budget and accounting standards as the city. Brisky also opposed any changes to the mayor’s power to impound revenues, which allows for short-term fixes during times of crisis such as natural disasters, financial recessions or terror attacks.

Preston Niblack, deputy comptroller for budget, echoed that sentiment, as did Mark Page, a former director of OMB, and Anthony Shorris, previously the first deputy mayor under Mayor Bill de Blasio. Both Page and Shorris repeatedly cautioned the commission to tread lightly around imposing new mandates on the administration’s budgeting powers.

Niblack did raise several measures that could make the budget more transparent. It’s “very hard to understand exactly what you’re getting for your money,” he said, noting that the budget process is not linked to the delivery of services. The MMR, he said, is ineffective and does not report measures attached to spending.

When Commissioner James Caras posed a question about the mayor’s ability to impound revenue, Niblack did agree that there could be limits on it to prevent misuse for political reasons. “Right now it’s open ended and should probably be restricted,” he said.

The city’s capital spending process has been particularly fraught, leading to hundreds of millions in cost overruns and delayed projects. At the hearing, Jon Kaufman, chief operating officer at the Department of City Planning, outlined several reforms DCP has implemented and said that his department works with agencies to appropriately plan their future capital needs. But, he said, “I don’t think additional charter mandates are going to lead to materially increased collaboration.”

Independent fiscal watchdogs also bolstered the administration’s argument. Carol Kellermann, former president of the Citizens Budget Commission (CBC), gave the commission two pieces of advice: “First, do no harm...Second, don’t use the charter to do things that can be done by local law.”

This question, what can and should be done by local law as opposed to amending the city charter, has been a theme raised throughout charter revision processes, including the one formed last year by Mayor Bill de Blasio, which saw three charter amendments passed by voters, all of which, some argued, could have simply been passed as local law.

Kellermann and her successor at CBC, Andrew Rein, did recommend that the charter consider a proposal to create a rainy day fund for the city. Though Kellerman noted that it would require authorization from the state as well, she said the charter commission could create the criteria for it and present it to voters for their approval, strengthening the city’s case in front of the state. She also pushed for greater transparency in the capital budget, including by expanding the annual statement of needs that agencies provide to all city-controlled public authority assets.

On a proposal to create independent budgeting for certain offices -- such as the public advocate, comptroller, and the Civilian Complaint Review Board -- Kellerman warned that it would be “dangerous” and could disrupt the city’s budget process by giving other elected officials besides the mayor creeping authority over the budget.

“The City Charter calls for a lot more clarity on programmatic spending and performance in the city’s operating budget than we actually see in practice,” said George Sweeting, deputy director of the Independent Budget Office, a nonpartisan city agency. He noted that the budget includes units of appropriation that are overly broad and that obscure spending, and that the charter should be strengthened to require units to be linked to individual programs. Kellermann also said as much, though she laid some blame at the City Council’s feet. “The Council really needs to insist more on doing this...but the definition in the charter is already clear that they need to be more specific than they are,” she said.

Sweeting recommended that the charter commission start looking at ways to improve the Retiree Health Benefits Trust, which the city uses as a form of reserves, as a means of testing the appropriate way to create a dedicated rainy day fund. That could include specific “rules for when deposits have to be made and when withdrawals could be made.”

***
by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

]]>
Charter Revision Commission Hears Expert Testimony on City Budgeting and Contracting Tue, 12 Mar 2019 04:00:00 +0000
Time for the City to Pay Up https://www.gothamgazette.com/130-opinion/8299-time-for-the-city-to-pay-up https://www.gothamgazette.com/130-opinion/8299-time-for-the-city-to-pay-up Justin Brannan

Justin Brannan, the author (photo: @JustinBrannan)


Talk is cheap. The city needs to pay up.

We have all been impacted by the important work of hundreds of human services providers across the city, many of which are deeply rooted in our communities. These vital non-profit organizations deliver services to New York City’s most vulnerable – the poor, the hungry, the homeless, our children, our grandparents. The clear and powerful impact of this sector makes it easy for politicians to praise the services these non-profits provide — but such talk is cheap if you don’t back it up with action.

The uncomfortable truth is that these crucial organizations are very much at risk and in direct harm at the hands of the same government agencies and elected officials who praise them. How so?

Human services contracts are registered late by city agencies 94% of the time, forcing organizations to make impossible decisions to bridge massive gaps in their funding. Ninety-four percent!

In fact, most city contracts with non-profit human services providers are registered months or even years after these non-profits begin providing the services they cover. While this money is being held up by a broken and opaque contracting system, critical support for children, the elderly, those experiencing homelessness, people with disabilities, those living with HIV and AIDS, immigrants, and individuals coping with substance abuse and mental health challenges are put in direct risk.

This is shocking and unacceptable.

A domestic violence shelter cannot close for months while the city gets its act together. Senior centers can’t stop serving daily meals because of a funding gap due to a late payment from the city. Instead, non-profits are forced to front money, taking on costly loans and lines of credit with high rates of interest that are never reimbursed by the city agencies that held up their money up in the first place.

I cannot believe this has somehow become the status quo. It must change.

There are real human and financial consequences if a non-profit doesn’t start its services on time. Not to mention the corresponding challenges for those who work providing these crucial services.

It is time for those responsible for this crisis to step up. Non-profits have borne the brunt of the city’s delays, putting the financial health of their organizations in jeopardy to ensure communities receive critical services. While no contract should ever force a provider to start delivering services before being paid, at the very least non-profits should not bear the cost! Those interest payments must be the responsibility of those at fault and should be paid, in full, by the city, a requirement that would provide a direct incentive to process contracts on time.

It is also important that there is clear public access to data about which city agencies have the longest delays and why contracts are being held up. This information is vital not only to promote accountability but also to seek the needed remedies to this failure.

Contracts and the procurement process may not be the sexiest topic in this city of headlines, but it has an exponentially reverberating effect on the city and how it functions. If we allow this to continue, these compounding late payments to the human services sector will only get worse and soon every neighborhood will suffer the consequences.

As chair of the City Council’s Committee on Contracts, I have heard dozens upon dozens of devastating stories about how organizations are impacted by these unnecessary barriers built around them by the city. Talk is cheap. Action is long overdue – we must act now to address this crisis.

***
City Council Member Justin Brannan represents parts of southern Brooklyn. On Twitter @JustinBrannan.

***
Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

]]>
Time for the City to Pay Up Thu, 21 Feb 2019 05:00:00 +0000
Fixing the City's Broken Approach to Nonprofit Contracting https://www.gothamgazette.com/130-opinion/7801-fixing-the-city-rsquo-s-broken-approach-to-nonprofit-contracting https://www.gothamgazette.com/130-opinion/7801-fixing-the-city-rsquo-s-broken-approach-to-nonprofit-contracting scott stringer

Comptroller Scott Stringer, a co-author (photo: @NYCComptroller)


From housing for homeless families to meals for our seniors, non-profit organizations are on the front lines of our city, supporting our most vulnerable neighbors. Yet these groups are surviving hand-to-mouth when it comes to funding and often it’s our own city government that’s stalling the contracting process and delaying payments that thousands of nonprofits rely on.

In a new report, New York City Comptroller Scott Stringer’s office looked at thousands of human service contracts, and found an astounding 90 percent were submitted to the Comptroller’s Office for registration by a City agency after the contract start date had already passed, with half of them arriving six or more months late. Some agencies, including the Department of Homeless Services and the Department of Education, submitted over 99% of their contracts late.

The consequences of the City’s chronic lateness are huge. Because vendors don’t get paid until their contracts are registered, widespread delays in the contracting process force cash-strapped nonprofits to take out loans, miss payroll, or potentially cut services, just to deal with the shortfall in cash. In the last fiscal year alone, nonprofits took 751 City-issued bridge loans worth $149.9 million in total to keep the wheels turning as the City slowly processed their contracts.

It’s unacceptable. The burden of the City’s sluggish procurement process shouldn’t fall on our non-profit partners. That’s why we’re calling for common-sense reforms to break through the bureaucracy.

The City should build a public tracking system for contracts. If you can track a package as it moves across continents, you should be able to track contracts as they move through City agencies. Moreover, the City must develop clear metrics and strict timeframes throughout the procurement process, which will bring a basic level of transparency and accountability into this system.

Consider this: a non-profit is awarded a City contract to provide job training, with a specific start date for summer programming. That contract then goes through multiple layers of bureaucracy at the contracting agency before going over to some, if not all, of the following oversight agencies for review: the Mayor’s Office of Contract Services, the Law Department, the Office of Management and Budget, the Department of Investigation, and the Division of Labor Services at the Department of Small Business Services.

These levels of review are crucial and help to safeguard the integrity of the City’s public procurement process, rooting out waste and fraud. But as these agencies are not held accountable to deadlines, the full process can take months or even years to complete before the contract arrives at the Comptroller’s Office for registration.

In the end, the non-profit is left waiting for its contract and subsequent payment, without information on the process. This forces hundreds of non-profits into an impossible catch-22: wait to begin work, which can stall vital services and drive up costs – and in reality is rarely possible – or begin work without a registered contract, which can jeopardize the organization’s finances.

But with strict time-frames and a tracking system, non-profits might be spared this turmoil and gain some control in a process that currently treats their ability to function and help thousands of New Yorkers as an afterthought.

What we’re putting forward is a blueprint for the City to do better. Making these fixes will bring the contracting process in line with the City’s priorities, because behind these contracts are people who need food to eat, a roof to sleep under, or someone to care for them. These people are our neighbors, our relatives, and our friends. And right now, the snail’s pace of City agencies is putting their care at risk.

***
Scott Stringer is New York City Comptroller and Jose (Joey) Ortiz, Jr., is the Executive Director of the NYC Employment and Training Coalition. On Twitter @NYCComptroller and & @JoeyOrtizJr of @NYCETC_org

***
Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

]]>
Fixing the City's Broken Approach to Nonprofit Contracting Thu, 12 Jul 2018 04:00:00 +0000
Added Scrutiny of City’s Delinquent Contracting Practices https://www.gothamgazette.com/city/7748-added-scrutiny-of-city-s-delinquent-contracting-practices https://www.gothamgazette.com/city/7748-added-scrutiny-of-city-s-delinquent-contracting-practices cm stephlevin ant reynoso

Council Member Levin (photo: John McCarten/City Council)


The new city budget does not do enough to address the tremendous backlog of city contracts with nonprofit groups that have been left languishing by city agencies, the groups say. This comes after a recent report from the city comptroller that shows 81 percent of new and renewed contracts were registered retroactively, meaning after their start date, last fiscal year. Human services were the most affected, with more than 90 percent of contracts in this category submitted retroactively to the comptroller’s office by city agencies, half of them late by six months or more.

Mayor Bill de Blasio and the City Council recently agreed to a $89.2 billion operating budget for the fiscal year beginning July 1. Though it continues to increase spending at various city agencies that rely on human services nonprofits, there is no accompanying deal to address the rampant contracting delays across city agencies.

The problem of contract delays affects cash flow and services to the public, and also compounds other issues, such as contracts not accounting enough for overhead expenses, that together contribute to a financial crisis for many organizations that the city contracts with to provide vital services from homeless shelters to after school programs.

“It needs to be a priority of this administration to fix the backlog in contract registration and also the significant amount of contract amendments that are pending from investments the city made last year: money that was announced on July 1 of 2017 that providers still have not gotten in June of 2018,” said Michelle Jackson, spokesperson for the Human Services Advancement Strategy Group (HSASG), in an interview last week. The group, which consists of nine associations and represents some 2,000 human services provider organizations in New York City, will be testifying at a City Council oversight hearing on the issue at City Hall this Thursday, June 21. “There really needs to be a focus on getting all of those amendments and registrations up to date,” Jackson added.

The delay in the city’s procurement process means vendors -- predominately nonprofits in the human services sector -- are forced to either fund their own work while they wait for the city to register and approve their contracts, or delay starting operations entirely. For providers waiting to have their contracts renewed, Jackson said, “they have to just keep operating the service because you don’t just send all the kids home, you don’t kick everyone out of the shelter. It’s not like a construction project where you can just wait to get all your documents signed…Nonprofits are taking a real fiscal and legal liability by waiting for these contracts.”

It’s a system in “dire need of reform,” according to Comptroller Scott Stringer’s report. In a statement to Gotham Gazette last week, Stringer’s spokesperson added: “One of city government’s most important jobs is delivering services to New Yorkers in need – that’s why fixing the city procurement process is urgent and essential. Providing services to our most vulnerable residents depends on our ability to execute social service contracts expediently.”

The next step in addressing the issue is this week’s hearing of the City Council Committees on Contracts and General Welfare at City Hall, which will be co-chaired by Brooklyn Council Members Justin Brannan and Stephen Levin, the respective chairs of those committees. The “process has to be sped up,” Levin said.

“These providers are operating at significant deficit and often we engage with providers that are doing a lot of the work that we would like to see providers do, and they are doing it on their own fundraising,” Levin told Gotham Gazette.

The backlog is also putting pressure on the city’s Returnable Grant Fund, a revolving fund providing interest-free loans to nonprofits. February testimony from Acting Chair of the Mayor’s Office of Contract Services, Dan Symon, to the City Council was referenced in the comptroller’s report, claiming the Fund processed 751 loans for nonprofits in fiscal year 2017 as a “direct result of delayed contract awards.” The combined total of these loans was $149.9 million.

“We need to make sure we are providing services equitably across the board,” Levin said. “That when you go to shelter you’re not just lucking out in getting into a good provider or a provider that’s has the ability to raise significant money versus a provider that can’t. That’s not an equitable system.”

Mayor de Blasio and his administration were widely criticized following the release of Stringer’s report, with questions raised about the progressive mayor’s commitment to human services organizations and their clients. The issues raised by the comptroller’s report are longstanding and nonprofits groups and their supporters have been lobbying city government to improve the process for sometime.

In a statement to Gotham Gazette last week, a City Hall spokesperson said the mayor’s office has been working to reduce contracting backlogs and that model budgets -- a system introduced this year designed to increase rates for providers funded below what is considered the ‘model’ to deliver appropriate service -- will help these departments fulfil their administrative duties to outside contractors.  

“We’ve invested more than a quarter-billion new dollars annually in our shelter provider partners to address decades of disinvestment and reform outdated rates they were paid for many years,” the spokesperson said. “We have also been working closely with these vital partners to resolve inherited contracting backlogs, implement model budgets for the first time ever, and address any outstanding challenges they may have to ensure they can deliver the services our neighbors in need deserve as they get back on their feet.”

 

Due to this work in resolving contracting issues, the City Hall spokesperson said this year is the first time in recent memory that providers will be operating with registered current contracts. As of May 2018, 97 percent of fiscal year 2018 contracts are registered and active, with only one contract still at the comptroller’s office and another contract pending provider budget submission.

According to the comptroller’s report, the seven city agencies that contract for the majority of human service programs are: the Administration for Children’s Services (ACS), Department of Education (DOE), Department of Youth & Community Development (DYCD), Department for the Aging (DFTA), Department of Homeless Services (DHS), Human Resources Administration (HRA), and Department of Health and Mental Hygiene (DOHMH).

All of these departments submitted more than half of their registration and renewal contracts retroactively to the comptroller’s office last year. DHS and HRA submitted 100 percent of these contracts retroactively, and the DOE was at 99.8 percent of registration and renewal contracts submitted after their start date. In HRA’s case, more than 60 percent of retroactive contracts were submitted to the comptroller’s office more than six months after the contract was due to start.

Despite the backlog, some departments are set to receive less funding in fiscal year 2019 than in the current, soon-to-end fiscal year, according to the city budget that was released on Monday June 12.

DYCD, for example, is receiving about $121 million less in funding via the city budget this financial year, yet of 859 registered or renewed contracts it received last year, 795 (92.5 percent) were submitted retroactively, according to the comptroller’s report. Similarly, DOHMH is allocated $112 million less in fiscal 2019 than it was in 2018, and of 314 new and renewed contracts it handled last fiscal year, 265 (or 84.4 percent) were submitted after their start date.

When asked if the budget has allocated enough resources to these city agencies that are struggling with contracting, Council Member Brannan said: “This is something we intend to discuss at the hearing on the 21st, both from the administration side as well as what the providers think. I am committed to working with the Speaker, Administration, as well as the Comptroller, to ensure we are processing contracts in as swift a manner as possible so that vital services are not being jeopardized due to procedural snafus that can be remedied.”

“I hope that through our hearing we can shed light on the administration’s progress implementing model budgeting across different agencies as well as seeing how the providers are faring with model budgeting,” Brannan added.  

DHS and the DOE, which respectively submitted 100 percent and 99.8 percent of contracts retroactively to the comptroller’s office last year, are both receiving an increase in funding for the upcoming fiscal year. According to the city’s preliminary budget, DHS is receiving more than $183 million in additional funding compared to the current fiscal year and DOE is budgeted an additional $1.2 billion.

Speaking to Gotham Gazette, Council Member Levin said the Council’s preliminary budget hearing with DHS dealt largely with where the increased funding is going and he is confident the additional funding will help the agency in improving contract delays.

“In our preliminary budget hearing with DHS, we did talk a lot about where a lot of the increased funding is going and they spoke a lot about the model budget contract,” Levin said. “So we’re expecting that it should be able to be covered in the significant increases in budget year-over-year in DHS. I have every expectation that they’ll be able to be covered it for sure. And if they’re not, there’s opportunities to do budget modifications.”

“We need a system that’s set up that can afford the services that we need to provide for over 60,000 people in shelter ...” Levin continued. “We need to make sure that the providers are funded enough so that they can provide adequate services.”

Comptroller Stringer's report makes two recommendations for improving the processing of contracts within city agencies: to stipulate deadlines for every agency that handles contract applications and to implement a transparent tracking system for vendors to follow their applications through the process. But the report also describes an extremely cumbersome system, weighed down in bureaucracy, in which up to five departments sometimes will handle a contract before it reaches the comptroller’s office -- the only agency with a deadline, which is 30 days -- where it is ultimately approved or kicked back to city agencies for more processing.

“What we’re looking at now is 100 percent late registration [from some departments] and what’s going to happen today and tomorrow to get that fixed?” Jackson, of the Human Services Advancement Strategy Group, said, adding that while she “absolutely agrees” with the comptroller’s recommendations, “a tracking system and a timeline are not going to fix the backlog” already in existence.

The HSASG is calling for a “SWAT Team” to immediately help clear the backlog, as well as allocation and recognition of this in the budget. Jackson said the group is asking for an additional $200 million to human services, not only to fix the contracting delays, but to also go to areas such as benefits, insurance, and occupancy costs.

“A lot of these contracts don’t have cost escalators, and obviously in New York City rent goes up every year (a lot of expenses go up), and there’s not a way to capture that,” Jackson said. “Of course we were disappointed to not see further investment in the sector but we appreciate it’s a long-term investment that needs to be made.”

Brannan said he “supports the recommendations” laid out in the comptroller’s report and that he is “working with the Comptroller’s office to come up with potential legislative fixes that would provide for agencies to process city contracts within a much more reasonable period of time.” He said he’s spoken to the Mayor's Office of Contract Services about next phases in rolling out the city’s Procurement and Sourcing Solutions Portal (PASSPort), saying it “in theory should significantly reduce procurement delays.”

The spokesperson from City Hall also said the planned updates to PASSport will “make it easier for agencies to order and pay for goods off centralized contracts.” The system, which was initially launched in August 2017, will be updated with “phase two” in 2019 and “phase three” will launch approximately one year later to “enable online bidding and invoice management for all agencies,” the spokesperson said.  

New York City isn’t the first city to require urgent and comprehensive procurement reform. A 2005 report by the San Francisco Bay Area Planning and Urban Research Association (SPUR) on fixing that city’s similarly “slow and burdensome” contracting system provided the administration with a range of recommendations that might be applicable in New York City today. These included, not only fixed deadlines for every department and a transparent tracking system, but also recommendations to increase public information and awareness of the city’s contracting system; allow simultaneous review by agencies; develop clear and explicit procedures for fast-tracking contracts; and use a post-audit approach to test compliance by departments, instead of every single contract moving through the comptroller’s office.

There is no indication of any other measures being taken to address the contracting backlog in New York City, though the City Hall spokesperson said: “We are continuously looking to improve our practices to also realize timely procurement.”

More ideas will likely be raised at Thursday’s Council hearing, but for those in the nonprofit sector, the fiscal year 2019 budget was the perfect place for the city to demonstrate its understanding of, and commitment to solving, the problem. “We would have liked to see it in the budget, even if it was just a statement about how to get all this money out the door,” Jackson said. “I think there needs to be a real recognition that this is a priority to fix the registration process and it needs to happen right away.”

***
by Caitlin Bishop, Gotham Gazette
@caitybishop  @GothamGazette

Read more by this writer.

]]>
Added Scrutiny of City’s Delinquent Contracting Practices Tue, 19 Jun 2018 04:00:00 +0000