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AGENCY TESTIMONY
Procurement choices and fiscal risks in NYC
4:35:27
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113 sec
The IBO highlights significant issues with New York City's procurement practices, particularly concerning late payments to nonprofit providers. These practices pose fiscal risks and create instability for service providers.
- New York City often fails to pay its bills on time, especially to nonprofit providers
- Late registration of contracts, particularly for RFP awards, causes significant delays in payments
- Analysis of human service contracts ending June 30, 2024, shows that vendors have been paid less than 70% of the contract value as of two weeks ago
- These payment delays can cause significant financial strain on nonprofit providers
Louisa Chafee
4:35:27
Recently, I've had the pleasure of testifying to two charter revision commissions, and I look forward to testifying to this council's charter revision commission.
4:35:35
In each of these testimonies, I'm addressing sound fiscal management, and that really means paying one's bills on time.
4:35:43
New York City does not.
4:35:45
This is an issue that I know is particularly important to the council and has been discussed extensively this morning.
4:35:51
The council can continue to use the budget process and your oversight rule to push city agencies to operate more responsibly towards nonprofit providers whose stability depends on timely payment for their services to the city.
4:36:05
IBO is currently looking into issues of late registration and late payment and expects to report more of our findings this spring.
4:36:13
But to illustrate the scale of the problems, let's consider two data points.
4:36:18
IBO reviewed registration for human service contracts with the Department of Youth and Community Development with start dates in fiscal year twenty twenty five and found that while both RFP award and contract extensions tend to be registered late, the late registration gap for RFP awards is about fifty days longer than extensions.
4:36:39
For a struggling vendor, that gap is the equivalent of three or four payrolls.
4:36:44
IBO also examined spending data for human service contracts that ended on 06/30/2024.
4:36:50
As of two weeks ago, vendors have been paid less than 70% of the contract value.
4:36:56
That gap most likely indicates agencies practice of holding up payments while arguing about relatively minor items on each invoice.
4:37:06
So, as we look towards potential budget belt tightening or cliffs as the director called them, it's critical for this council and New Yorkers to be able to track the budgets for the programs that serve New Yorkers.