NYC Comptroller: Comptroller Lander Delivers Testimony on Asylum Seeker Contracts before the City Council Committees on Oversight and Contracts

September 22, 2023

New York, NY—Today, City Comptroller Brad Lander testified before the New York City Council Committee on Oversight and Contracts regarding asylum seeker contracts. This testimony comes just days after Comptroller Lander announced a new, real-time audit of the $432 million, no-bid DocGo contract to provide shelter services to new arrivals in the city and upstate.

Read Comptroller Lander’s announcement regarding the real-time DocGo audit.

Read Comptroller Lander’s testimony on asylum seeker contracts below.

Testimony text:

Thank you, Chair Brewer and Chair Won, for calling an important hearing on the scores of contracts that City agencies have entered into to provide shelter and services for the more than 100,000 people seeking asylum who have arrived in NYC over the last fourteen months.

The Comptroller’s Office monitors emergency contracting and spending to provide budget oversight, ensure procurements follow appropriate procedures, and identify opportunities to maximize City dollars to better serve New York City residents, whether their families arrived here decades ago or just last month.

My office has sought to bring transparency to the broad scope of emergency contracting underway to provide shelter, medical care, legal assistance, and other services. We have published a directory on our website of all the contracts regarding this population that we are aware of across city agencies and the Health and Hospitals Corporation. You can peruse the most recent version of that list of contracts, award amounts, and vendors on our website.

The City Charter and NYC Procurement Policy Board (PPB) rules allow agencies to enter into contracts quickly to meet the needs of an emergency, enabling them to bypass competitive bidding or requests for proposals, as well as the full contract registration process. However, the emergency procurement process does not absolve agencies of the responsibility to select vendors carefully, attend to cost considerations, and perform vendor oversight throughout the duration of the contract.

To enter into an emergency contract, agencies must first request prior approval from the Comptroller’s Office and the Law Department. At that stage, the threshold question we review is whether the emergency situation warrants the use of emergency procurement methods. Following prior approval, agencies must submit a written determination to the Comptroller’s Office and the City Council describing the selection of the vendor, contract prices, and services to be performed, and subsequently submit the finalized contract to the Comptroller’s Office.

Emergency contracting brings greater risk of waste and fraud, as agencies scramble to procure goods and services with less time and competition. This July, after completing an audit that reviewed emergency procurement of Covid-19 testing and vaccination and found that costs were not effectively controlled during the pandemic, the Comptroller’s Office issued a best practices memo to all City agencies with guidance on increasing competition and oversight even in time-sensitive emergency contexts.

In that memo, we urged agencies to seek to maximize competition among vendors to the fullest extent practicable (noting that in both the Covid and asylum seeker situations, we have many vendors providing comparable services at widely varying prices), to ensure that selected vendors have the requisite expertise, and that sub-contractors should be pre-approved and appropriately vetted before engaged by vendors. The evidence from emergency contracting for asylum seekers thus far reveals that there is still much work to be done by agencies to comply with those recommendations.

The administration requested and received prior approval to use emergency procurement on July 29, 2022 for one or more housing facilities to provide shelter for asylum seekers, as well as to create an Asylum Seekers Service Referral Center (referred to subsequently as the “Navigation Center”). Since then, the administration has relied on that approval for the use of emergency contracting to enter into scores of contracts, for a much wider array of services:

As of July 31, 2023, the Comptroller’s office had received 71 contracts for services for asylum seekers. Drawing on information from PASSPort Public and additional information provided by City Hall, we have identified an additional 123 contracts that have not yet been submitted to our office, for a total of 194 contracts, authorizing a total of just over $5 billion in spending. The vast majority of these are from DHS (54 received, 119 total identified for a contract value of $2.2 billion) and H+H (38 identified by City Hall for $2.1 billion) for shelter and related services, including food, laundry, and security. Other agencies with asylum seeker emergency procurement include HPD, NYCEM, OTI, DSS, DCAS, and DDC.

• There are multiple agencies utilizing staffing service contracts. Yet on several occasions, City agencies have proposed to open new contracts with existing vendors without discussing the possibility of utilizing an existing contract or comparing prices across already-existing contracts. Meanwhile, the City does not have a good tool for comparing the rates it is paying to these vendors for comparable staffing services, insisting that agencies charging higher prices for comparable services bring them down, or shifting to other vendors.
• The prices that the City is paying for hotel rooms vary widely. Based on contracts we reviewed at the end of July, DHS was contracting with 52 providers and the Hotel Association of New York City to provide shelter and services. Rates range from an average of $189 for rooms for single adults and $337 for families with children. Across all shelter types and agencies, the City is paying an average of $387 per day per household for shelter and services. This compares to the previous year’s average DHS shelter daily cost of $136 for single adult shelter and $187 for family shelter. It is, of course, reasonable that the price of hotel rooms for shelter would increase as they are under more demand. However, it is not clear what mechanisms the City has in place to control costs. This is especially important as the City looks to renew the initial one-year contracts, a process that is taking place right now.
• DHS shelter contracts include provision of food through subcontracts, which vendors are reportedly providing. Yet at the same time, DSS has established direct contracts for the provision of food to shelters. Given that there are a relatively small number of institutional food providers, it may be that the same vendors have both contracts and subcontracts to provide food at the same shelters. We have asked the Administration questions about these arrangements.
• DHS and H+H contracts include the provision of security. At the same time, the Governor has provided State troopers for this purpose as well. It is not clear whether the addition of security services provided by the State enabled the City to reduce the amount we are paying for private security.

One added barrier to transparency and oversight is the fact that the Health and Hospitals Corporation, which is not a city agency, is managing the intake center and a significant number of the Humanitarian Relief and Response Centers. H+H contracts do not need prior approval from the Comptroller’s Office and are not required to be filed with our Office. As The City reported last week: “at more than a dozen shelters, guards work for one contractor, Aron Security, under a $140 million HHC contract, while MedRite LLC, an urgent healthcare company with no prior experience staffing or running shelters, provides operations personnel at more than 20 sites as part of its $304 million arrangement with HHC.” H+H accounts for 43% percent of the spending on asylum seekers to date this fiscal year and is housing 30% of the asylum seeking population in the City’s care.

As the Council is aware, one emergency contract that has come under particularly scrutiny is the NYC Department of Housing Preservation and Development’s contract with Rapid Reliable Testing NY, LLC, commonly known as DocGo. While DocGo’s contract with HPD began in May 2023, the contract package itself did not arrive to my office until August 16, 2023. Reports from upstate elected officials and service providers, as well as recent reporting, have raised many questions about DocGo’s integrity and capability, and the Department of Housing Preservation and Development’s choice of them as a vendor for such a large contract.

My office first raised concerns in June, when the agency requested a waiver for a $4 million cash advance to pay DocGo. For better or for worse, the City’s contracting process asks most vendors, including cash-strapped nonprofits, to provide services for months ahead of payment – so a cash advance for a multi-million dollar publicly-traded company was unusual. What’s more, the agency appeared to simultaneously argue that the company was uniquely suited to provide services to asylums seekers at scale, which undermined the argument that they could only do so with advance payment. My office declined to approve the waiver.

There is little evidence to suggest that Rapid Reliable Testing NY LLC had the expertise to provide the services it has been contracted for, calling into question HPD’s vetting of the vendor’s prior experience and capacity that served as its purported basis for vendor selection. It is a medical services company, not a logistics company, social services provider, or legal service provider. Upon review of the contract and supporting documents, my Bureau of Contract Administration concluded that the agency had provided inconclusive reasoning as to the selection of the vendor, contradictory statements about their fiscal ability to provide contracted services, and inadequate oversight over the selection of subvendors. We raised these concerns in a letter sent to HPD’s Commissioner to which they responded indicating HPD’s decision is to continue to have DocGo provide services under the contract.

Given that the administration has decided to proceed with working with DocGo, my office is initiating an audit of HPD’s oversight of the contract. We will look at what systems HPD has in place to verify what services are being provided and claimed for payment, to assess whether there are effective cost controls in place and whether the vendor is meeting its obligations to provide services.

Well over a year after the first increase in asylum seekers in arriving in New York City, there remains a clear and demonstrated need for flexibility and urgency as City agencies respond to the continued arrival of thousands of people here each month. For example, I was encouraged to visit the newly established Asylum Seeker Application Center twice over the summer, in late June and then in early September, and to see significant evolution of services that will likely result in a much higher percentage of accepted applications for asylum and work authorization, which will both help these individuals get on their feet, and enable many of them to move out of shelter, saving the City significant money.

At the same time, after more than a year, and in light of some of the concerns identified in this testimony, my office is currently reviewing whether the blanket prior approval we granted on July 29, 2022 remains appropriate, or whether agencies should return to seeking prior approval for emergency procurement on an individual contract basis, a process which we utilize with frequency. We will keep the Council updated on this review.

Thank you very much for the opportunity to testify on this important topic.