TESTIMONY
Lisa Bova Hiatt, Chief Executive Officer, New York City Housing Authority (NYCHA) on Addressing NYCHA's Bribery Charges and Transformative Efforts
1:05:18
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13 min
Lisa Bova Hiatt details NYCHA's response to bribery charges and transformative changes to improve operations and service.
- Emphasizes zero tolerance for illegal activities and outlines steps taken against implicated employees.
- Discusses the significant milestones achieved by NYCHA in the past five years, including improvements to business practices and procurement processes.
- Highlights the collaboration with law enforcement and other agencies to ensure integrity and compliance.
- Details specific actions taken to reform micro purchase processes, reduce fraud, and implement Department of Investigation's recommendations.
- Stresses the importance of transparency, accountability, and continuous improvement in serving NYCHA residents and the larger NYC community.
Lisa Bova Hiatt
1:05:18
Chairs Chris Banks, Julie Wan, Gail Brewer, members of the committee on public housing, contracts and oversight investigations, other distinguished members of the city council, Nitro residents, community advocates, public advocate and members of the public.
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Good afternoon.
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I am Lisa Bova Hayat, Maija's chief executive officer.
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I am pleased to be joined by Executive Vice President of Property Management Operations Daniel Green.
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Chief procurement officer Sergio Panicky Chief Compliance Officer Brad Greenberg and other members of NICE's leadership team.
1:06:02
Chair banks, congratulations on your appointment.
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My colleagues and I look forward to working closely with you.
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Thank you for this opportunity to discuss this very serious and very disturbing charges of bribery against 70 current and former NYCHA employees in connection with micro purchase contracts.
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We learn from issues like this as we continue the intensive efforts to transform NICA as an organization a mission that is fundamentally about better serving residents and improving their quality of life.
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First, I must emphasize that there is zero tolerance for wrongful and illegal activity at Nietzsche.
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The individuals allegedly involved in these terrible acts, put their greed first, and violated the trust of their residents, their fellow NICA colleagues, and all New Yorkers.
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All of the implicated employees have been suspended.
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These alleged actions are counter to everything we stand for as public servants and will not be tolerated in any form.
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Over the past 5 years, Nieta has achieved many significant milestones, while remaining vigilant to ensure integrity in every area of our work.
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Today, I will discuss some of the transformative changes that we have already made to our business practices and those that are underway.
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We are committed to continue making the changes necessary as part of our holistic efforts to improve NYCHA and our service to residents.
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NYCHA's success depends on partnership.
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And we will continue to work with all of our law enforcement partners to rid the authority of any and all malfeasance.
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I would like to thank Nitesh's inspector general Ralph Iannuzzi.
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New York City Department of Investigations commissioner Jocelyn Straubber US attorney for the Southern District of New York, Damian Williams, and their teams for their diligence in this investigation their collaboration with NICE leadership as well as their recommendations for improvement.
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All of us sitting here at this table as well as our broader compliance and quality assurance teams work closely with DOE and NICE's inspector general.
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And for that, we are very grateful.
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Our teams identified suspicious activity as well of as well as a lack of controls in this area and proactively sent information to DOE for review.
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We will, of course, continue collaborating with all of our partners as we put the necessary work to continue NICE's transformation.
1:09:02
I would like to take a moment to discuss some of the work we have done over the past couple of years to improve the micro purchasing process at NICA.
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Following a prior investigation, in September 2021, DOE made 5 recommendations regarding micro purchases.
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While NICE did not implement DOI's exact recommendations, DOI's findings provided the authority with the direction to undertake considerable, incremental changes, and improved internal controls to attempt to mitigate risk.
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While ensuring developments could provide efficient service to residents, especially when emergencies arise.
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To reduce reliance on micro purchases, at the developments, Knight implemented substantial reforms to our procurement processes which reduce spending on micro purchases for services by nearly half.
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Our collaboration with DOE on this effort has been a productive one.
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It involved implementing a set of procedural training and oversight changes to bring about this reduction in micro purchase spending for services at the developments.
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Some of our specific action since September 2021 include contracting with Dun And Bradstreet for integrity screening services for all vendors.
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Dun And Bradstreet has provided organizations with valuable procurement process insights for nearly a century.
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Training our property management staff on micro purchases and ethics in late 2022 early 2023.
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Rolling out a procurement ethics policy, which all staff must acknowledge.
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Increased on-site monitoring visits and reviews of micro purchases by our compliance and quality assurance teams, which resulted in referrals to DOI.
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Entering into new large contracts that encompass services previously obtained by a micro purchases to provide staff with alternatives to the micro purchase program.
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Issuance of prequalified vendor lists that could be used to select vendors in place of development staff selecting micro purchase vendors.
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Updating the micro purchase process with enhanced forms that require vendors to itemize costs and enhancing the micro purchase reporting requirement to increase transparency and accountability.
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Fundamentally, we believe that in order to best serve our residents, developments need an appropriate level of flexibility to be able to secure the fastest possible service for residents particularly during emergencies and government entities, including public housing authorities across the nation, as well as other city agencies commonly use micro purchases to obtain critical services quickly.
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In addition to enabling developments to get smaller and lower cost repairs done expeditiously, Without undergoing a lengthy and complex procurement process, micro purchases support our MWE and local hiring goals.
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DOI also recognize that we must focus on reform of the micro purchase process to protect it from abuse while maintaining efficient service for Nitro Residence.
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However, after this clear violation of trust and misuse of authority and as part of NICE's ongoing and collaborative efforts alongside DOE, to reduce fraud and abuse of micro purchases.
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We are in the process of implementing DOI's full suite of 14 recommendations.
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All of DOE's recommendations have either been implemented or are underway.
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We expect to fully implement all 14 recommendations within a year.
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For instance, We are currently analyzing how our systems can be adapted to allow staff to upload additional documentation regarding micro purchases before payment is issued.
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We are creating additional prequalified lists of good goods and service providers for use in lieu of micro purchase vendors.
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These prequalified vendors are required to undergo a vendor integrity review developed by NICE and DOE.
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We are augmenting training for staff and for MicroPurchase vendors.
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Micro purchases will continue to be reviewed by property management leadership and the compliance and quality assurance departments.
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And any irregularities will continue to be reported to DOE.
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The compliance and quality assurance departments will conduct semiannual audits of micro purchase data and record keeping, and will provide greater transparency and accountability into the authorities use of micro purchasing by posting the results of these audits on our website.
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We are also displaying signs and prominent locations at developments and property management offices.
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Highlighting the prohibition of bribes and other criminal offenses, and are requiring staff and vendors to acknowledge the same in both paper and digital forms.
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And most critically, we are planning to implement an alternative staffing model for the micro purchase program.
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It will essentially separate the micro purchase request and approval process from developments instead placing the review and approval responsibility with specialized staff with the necessary expertise.
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At the same time, we are examining ways we can ensure the prompt selection of vendors to do essential work quickly.
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With less potential for abuse.
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While we work to enact these important structural changes, As part of our larger organizational transformation efforts, there will be increased oversight of the micro purchase program.
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We believe that with the additional oversight and the implementation of DOE's latest recommendations, We can continue to tackle this issue and make progress all in service to residents.
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Transformation at NICE is a sweeping endeavor that impacts every area of our organization, including operations, and the management of our property portfolios and is guided by our transformation plan.
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1 of the key advancements of the past few years was the creation of NICE's 1st ever compliance environmental health and safety and quality assurance departments.
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As you have heard, the compliance and quality assurance teams are an essential part of our efforts to ensure that residents are benefiting from quality work performed in an ethical manner.
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These teams not only work closely with DOI, but they also include former DOE employees among their ranks.
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A compliance department unit that is dedicated to reviewing micro purchases, employs a former DOE fraud investigator.
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And the vice president of the quality assurance department is a former associate commissioner at DOE.
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His staff includes 2 former DOE employees who help conduct investigations.
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Additionally, In 2022, Nita's procurement department hired a former DOE senior inspector general who is also previously an assistant district attorney.
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To oversee the procurement ethics and vendor responsibility department, and strengthen the authorities' vendor responsibility and integrity review process.
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The procurement department has also restructured the purchasing process to bring procurement closer to night shift neighborhoods.
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And is strengthening its analytical capabilities to improve transparency into the micro purchase process.
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Better serving residents and improving their quality of life is at the heart of our endeavors.
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While we are dismayed by and will not tolerate the actions of any bad actors.
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We know that the vast majority of NICE employees show up every day to work hard and do right for our residents and for our city.
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It must also be stated that the issues we are discussing today reiterate the need for large scale improvements driven by crucial housing preservation programs like the trust impact.
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So we can reduce the need for constant band aid fixes across our portfolio.
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These vital programs generate 1,000,000,000 of dollars of funding to comprehensively renovate residence homes while preserving their rights and protections, including permanently affordable rent.
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Change is also at the heart of our mission.
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Especially given the decades of federal disinvestment besetting the authority.
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This change takes time, but it's happening.
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Thanks in part to the support of partners like the council and DOE.
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Thank you.
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We're happy to answer any questions you may have.