Review found NYC Parks fails to formally review contractors’ records
Questionable billing, missing timesheets, and inadequate controls to prevent fraud echo concerns previously highlighted in 2014 Grand Jury Report
Comptroller Stringer recommends Parks overhaul procedures and ensure stringent monitoring of its contractors and subcontractors to meet MWBE participation goals
(New York, NY) — Today New York City Comptroller Scott M. Stringer released an audit of the New York City Department of Parks and Recreation (NYC Parks), which found that the agency fails to ensure that its construction contractors are accurately reporting their claimed subcontracting with Minority- and Women-Owned Business Enterprise (MWBE) firms as required by law, undercutting the City’s goals for the MWBE program and potentially shutting out firms that have long been denied access to city contract spending. The audit found that NYC Parks failed to formally review its contractors’ financial records to confirm that MWBE subcontractors actually worked when the contractors claimed, calling the agency’s true level of MWBE participation into question. Comptroller Stringer’s audit notes that a 2014 New York State Supreme Court grand jury report described long-standing fraudulent practices, such as contractors’ submitting false invoices to State and City contracting agencies to exaggerate the participation of MWBE subcontractors and inflate the affected projects’ costs. NYC Parks’ failure to scrutinize its contractors’ records exposes the City’s MWBE program to the same risks of fraud that the grand jury warned about five years ago.
Based on these findings, the audit recommended a series of actions to NYC Parks to make good on its promise to MWBE firms and the City as a whole, including overhauling its policies and procedures to ensure compliance with the law regarding MWBE contractor and subcontractor hiring for agency work.
“In one of the most diverse cities in the world, we must do a better job of making fairness and equality a priority when it comes to spending city dollars to build our public facilities. If we’re going to have a true five-borough economy where everyone has a fair shot, we can’t treat contracting with MWBEs as a mere box to be checked – it must be a living, breathing commitment for this city. When the city allows vendors to report inaccurate payments to MWBEs, they cheat MWBE firms and deny opportunities. It’s wrong, and it has to change,” said New York City Comptroller Scott M. Stringer. “What we found in this audit is alarming because of what it says about the city’s priorities. We have to be more focused on doing the hard work than on getting credit for it. We can’t just talk about supporting MWBEs without following through. NYC Parks must embrace wholesale change and ensure MWBE firms are being hired – and paid – in keeping with the law. Let’s make our progressive words count, by backing them up with progressive deeds.”
Comptroller Stringer’s audit on NYC Parks’ MWBE contractor and subcontractor reporting found:
A NYC Parks contractor reportedly paid an MWBE subcontractor $249,631 for purported paving services—a trade for which the subcontractor had no record of prior experience with the agency and for which it apparently used some of the prime contractor’s workers. City guidelines warn agencies to look into precisely those kinds of circumstances to check the validity of the claimed MWBE work, but the audit found no evidence that NYC Parks had done so.
NYC Parks credited another contractor for $25,874 reportedly paid to three MWBE subcontractors although the agency had no supporting documents such as payroll records and sign-in sheets to indicate that the three MWBEs ever worked on the contract in question.
Payroll reports indicated that 10 workers associated with 1 MWBE prime contractor and 3 MWBE subcontractors were paid for services they reportedly performed on a NYC Parks contract on dates for which the relevant timesheets either did not exist or did not reflect the 10 workers’ presence at the NYC Parks job site.
The cancelled checks for $17,765 (8 percent) of the $234,307 that NYC Parks contractors reportedly paid to four MWBE subcontractors were not on file at NYC Parks, contrary to the agency’s own procedure.
NYC Parks has not developed comprehensive procedures governing its administration of the MWBE Program and does not track or maintain a central list of all contracts and subcontracts.
While NYC Parks is one of the top three City agencies with regard to both contractor and subcontractor awards to MWBEs — valued at $94 million and $31.7 million respectively in Fiscal Year 2018 (FY18) — the lack of thorough reviews of the contractors’ records to ensure the MWBE firms worked on the stated agency assignments raises concerns about the accuracy of the supporting data.
Comptroller Stringer’s audit issued a series of comprehensive recommendations to ensure NYC Parks is complying with the law and that the agency works to hold its prime contractors accountable for who they claim they’re doing business with:
NYC Parks should ensure that contractors and subcontracts submit required supporting documentation with their payment requests, such as copies of sign-in sheets and payroll reports, and ensure that those documents are maintained in the Construction Division Unit’s contract files.
NYC Parks should assign specific responsibility to designated staff members to review and compare the sign-in sheets and payroll reports that its contracts and subcontractors submit to verify that all reported payments are corroborated by the related sign-in sheets and ensure that copies of all such documents are maintained in their respective contract file.
NYC Parks should ensure that it maintains evidence in its contract file that all subcontractors were notified of their participation in an awarded contract.
NYC Parks should establish procedures to confirm that subcontractors approved on a project are the ones performing the work.
NYC Parks should ensure that it maintains an up-to-date list of all contracts procured and managed by the agency that involve MWBE contractors and subcontractors.
Comptroller Stringer has repeatedly shined a light on lagging city spending with MWBEs. In October 2018, he revealed that New York City is still lagging behind on spending with MWBEs in his fifth annual Making the Grade report, which evaluates each City agency’s spending with MWBEs. The report showed that while overall spending with diverse firms increased in FY18, 80% of certified MWBEs were still not receiving any business from the City. The City received its fourth-consecutive “D+” grade by awarding $1 billion in contracts to MWBEs out of a $19.3 billion budget in FY18 – just 5.5 percent of the total budget. Comptroller Stringer has been issuing Making the Grade since 2014 in an effort to drive the City to improve its spending with diverse firms, and hold agencies accountable when they fail to do so.
To read Comptroller Stringer’s audit of NYC Parks’ MWBE contracting and subcontracting, click here.
To read Comptroller Stringer’s latest Making the Grade report, click here.