New York Mayor Eric Adams has long warned of a $12 billion fiscal apocalypse as the city bears the cost of caring for thousands of asylum seekers.
Where that money is going is coming under scrutiny.
New York City has signed more than $4 billion of contracts related to the migrant crisis under emergency rules adopted last year allowing them to bypass a competitive bidding process, according to documents seen by Bloomberg. Elected officials want to know whether taxpayers are getting the best deal.
A City Council oversight committee plans to hold a hearing on Thursday to question some 196 deals made by the city. Less than 2% of them used a bidding process, according to a draft report obtained by Bloomberg. Its concerns include private security companies, as well as sizable contracts granted to companies in Texas and Florida.
The scrutiny comes as the Adams administration plans for budget cuts to offset the cost of caring for the migrants, which has an estimated daily price of $383 per family. More than 113,300 people have arrived in the past year-and-a-half, with 59,900 in the city’s care as of Sept. 10.
Contracts seen by Bloomberg News show the city is paying nonprofit providers and hotels a wide variety of rates for hotels, ranging from $120 a night to nearly $400 in some cases.
The panel found the disparities could only partly be explained by the difference in services given at various locations, according to its draft report. The vast differential “suggests that the City is not effectively exerting its bargaining power” in pricing contracts with hotels, the committee said.
City Council Member Gale Brewer, who chairs the committee, said she has specific questions about the city’s $140 million contract with Arrow Security, which is providing private security services at several of the hotels being used to house migrants.
A copy of the contracts shows the company’s least experienced guards are paid a minimum rate of $33.81 an hour – significantly higher than the average for a private security guard, and in some cases more than a police officer makes, Brewer said in an interview. A representative for Arrow Security didn’t respond to a request for comment.
“Thanks to our emergency contracting authority, not a single family with children has been forced to sleep on the streets,” said City Hall spokeswoman Kayla Mamelak. “We always welcome a partnership with the Council to identify efficiencies that could help us more cost-effective ways to care for this population and move them into permanent housing.”
At the hearing, five Adams administration officials answered questions, but representatives of seven companies the city has hired to manage the crisis declined to appear, said Council Member Julie Won, who chairs the contracts committee. Won told the audience that the mayor’s office asked the companies’ representatives not to attend. The mayor’s office later disputed that claim.
The crisis has strained the city’s finances and its relationship with the federal government. The mayor, who has lambasted President Joe Biden for not helping enough, recently announced a plan to cut 15% of the budget so the city can afford migrant-related costs.
When city officials declared a state of emergency in August 2022, it allowed the Adams administration to bypass normal procurement rules to quickly provide services to the migrants. A year in, the city has started amending the contracts to extend multiple years into the future, with no clear end in sight to the influx of migrants to the city.
Almost all of the 196 migrant-related contracts are presumed to have been signed under the emergency procurement processes, the committee found. That process forgoes the typical oversight making sure the city is getting competitive pricing. Just three of the deals were made through a competitive sealed bid or proposal, the committee found.
Council investigators also discovered that a majority of the spending on migrants – some $2.2 billion of contracts – is being funneled through the New York City Health and Hospitals Corp., a city-managed nonprofit that operates with greater financial independence and more opacity than a city agency.
“Nearly 40% of vendors providing asylum-seeker services had also provided services during the Covid emergency,” raising the question of whether the city simply “awarded many emergency contracts to preexisting vendors from a prior emergency, instead of potentially seeking new companies better suited to address the distinct needs of this very different crisis,” the draft report said.
The city’s $432 million contract with medical staffing company DocGo has come under particular scrutiny following a New York Times report that questioned how effectively the company was providing services to migrants.
“Maybe they were qualified to do health care,” Brewer said of DocGo. “But are they qualified to do case management? They’re doing busing, they’re doing case management, they’re doing everything,” Brewer said.
The company’s chief executive officer, Anthony Capone, resigned last week after the Albany Times-Union reported he had embellished his résumé. City Comptroller Brad Lander, who has repeatedly raised questions about the mayor’s cost estimates for migrant care, recently announced his refusal to formally register DocGo’s contract with the city, citing “serious concerns about the selection of this vendor and its performance of contract duties.”
DocGo said it has been operating large-scale health programs since its launch in 2016.
“We’ve provided medical transportation and logistics, medical services and social work services over 7.5 million times, to millions of patients including asylum seekers,” said Michael Padovano, a company spokesperson.
Both Lander and City Council members have asked whether the city should stop treating the migrant crisis as an emergency and return to normal contracting processes.
“After 18 months, this is no longer an unexpected situation that merits the broad suspension of due diligence processes to ensure that city funds are being spent wisely and with integrity,” Lander said.
(c) 2023, Bloomberg · Laura Nahmias