Issue of the Week

Contracting Advice For The New Administration

by Kathryn Freed

During the six years that I was chair of the City Council committee on contracting, I saw organized crime connections, unnecessary bureaucracy, and political games involved in the city's contracting processes.

At one hearing, a woman who worked at day care center in the Bronx testified that she pawned her jewelry to pay her rent because the city was six months late in paying a contract that paid her salary. Part of the reason that the renovation of City Hall park took slow long to complete was that the city kept issuing contracts and then finding out that the contractors were corrupt. We were constantly looking into where the cement was coming from. And despite warnings last November that the city may lose up to $135 million in federal funding because our contracts with welfare-to-work companies violate the required standards and do not meet the needs of the city. The city has not taken action to correct it.

When I was head of the committee, I sometimes felt like I was the lone voice in the wilderness complaining about what was going on. If you look at some of the most important services that people really depend on a day-to-day basis, it all goes back to contracting.

When I was chair of the committee, I was often frustrated by the process of trying to get the mayor's person from each agency to come to the council hearings. Often the commissioners would simply not show up or they would send someone who only answered that they did not have the information we were seeking. The city charter gives the City Council committees the authority to issue subpoenas, but it is rarely used. In the past, everything in the City Council went through the Speaker. Several times when I approached the Speaker's office about issuing subpoenas, the request would be turned down.

One example of an area that needs to be closely investigated and cleaned up is the New York City Housing Authority, You name it, and the New York City Housing Authority screws it up. There is evidence of corruption in their contracts, including kickbacks and failure to comply with federal rules about paying prevailing wages. They do not hire residents for their job projects (or at least very few) as they are supposed to. There is also supposed to be apprentice job training programs for residents, that are supposed to be approved by the state labor department. But I'll pay anyone $100 who can find one.

When my predecessor on the committee, Carolyn Maloney, was chair, the contracts committee reviewed the entire city budget. Now each individual committee reviews their particular issue like housing, welfare, aging, etc. The problem with this way of doing it is that no one has an idea what the overall contracting picture looks like and where to make changes.

While large nonprofits with big budgets have the staff and resources to navigate the contracting system, small nonprofits, most of which operate on shoestring budgets, can not keep up with all of the paperwork and delays in payments. There are simple policy changes that can be made, such as creating a reasonable schedule of when reports are due, when contract renewal decisions will be made, and when payments will be sent out. There has to be requirements for the city to meet their deadlines in a timely manner.

The last administration changed the way human services are provided in the city. Many of the small, community-based service p roviders were phased out as contracting requirements were changed so that smaller groups could not longer meet them. Large and for-profit service providers came in. The number of outside contractors increased at the same time that the number of city workers increased. The new administration needs to look at those changes. Any time the city wants to make a change to the city's procurement policy board rules, the rules for doing business with city agencies, those must be reviewed.

When most people hear the word "contracting" their eyes glaze over. But things like housing, day care, welfare, job programs, and right now the clean up and rebuilding of the World Trade Center site, all depend on an efficient and effective system of contracting. I hope that the next administration will give it priority and realize that it is incredibly important for the city. And that they keep public oversight that is fair and open to everyone. An open process increases competition, increases public scrutiny, keeps the costs down, and decreases the chances of corruption.

Kathryn Freed is a former City Council member for lower Manhattan. She served as chair of the contracts committee for six years.

Read "City Contracts" by Seth Forman

Read "Breaking The Contract With Nonprofits" by Susan Buttenwieser


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