City Agency Audit Reports
Audit Report on the Department of Parks and Recreation’s Controls over the Awarding of Concessions
Audit Number: FK10-129A
Release Date: December 05, 2011
AUDIT REPORT IN BRIEF
The Department of Parks and Recreation (Parks) is responsible for managing over 29,000 acres of City parkland. As the custodian of this land, Parks is also responsible for soliciting and awarding concessions to operate various recreational, dining, parking lot, and retail facilities. These include golf courses, tennis courts, restaurants, and food carts. The concession solicitation and award process is overseen by the Mayor’s Office of Contract Services (MOCS) and governed by the Franchise and Concession Review Committee (FCRC) rules, which are codified in Title 12 of the Rules of the City of New York. These rules allow concessions to be granted using competitive, semi-competitive, and non-competitive methods. Concessions solicited through competitive methods must be awarded to the highest rated, responsive, and responsible bidders and proposers.
Parks oversees approximately 500 concessions throughout the five boroughs. These concessions generate approximately 91 percent of the City’s total concession revenue. Typically, concessionaires pay Parks minimum stated fees or percentages of gross receipts. Concession revenues account for more than half of Parks’ revenues which are used to support Parks’ programs and services. In Fiscal Years 2008, 2009, and 2010 Parks reported concession revenues of $52,585,844, $46,079, 926, and $39,830,380, respectively.
Audit Findings and Conclusions
Parks needs to improve management of its concession solicitation and award process to ensure that: contracts are executed in a timely manner, enabling concessions to continuously operate; viable bids and proposals are accepted; and solicitations are competitive. With improved planning and management of the solicitation and award process, Parks could have collected up to $8.8 million in additional concession revenue ($6.9 million for continuous operations and $1.9 million for rejected bids), as detailed in Appendices I and II.
Furthermore, our review found that Parks failed to maintain critical documents or to document key decisions that ensure the integrity of concession awards for the competitive sealed bid and proposal processes. Specifically, Parks did not maintain documentation to support that it awarded concessions to the highest rated, responsive bidders and proposers; did not maintain documentation to support that officials responsible for recommending concession awards were free from bias and potential or actual conflicts of interest; and lacked adequate key controls that would allow Parks and other City agencies to make proper responsibility determinations. As a result, we are not able to ascertain whether Parks properly awarded concessions.
Additionally, Parks improperly granted numerous sole source concessions to not-for-profits. Our review noted that Parks entered concession contracts with various not-for-profit organizations without FCRC review and approval. Consequently, these sole source awards, contracts, and associated revenues lack oversight, transparency, and accountability. Parks also lacked written policies and procedures and adequate controls over concession files. As a result, Parks’ employees may not have performed their jobs properly or consistently, and proprietary and other sensitive information may have been compromised.
To address these issues, we make 22 recommendations, including that Parks should:
- Track the solicitation and award process to ensure that it progresses in a timely manner.
- Make and retain approved written determinations to reject all bids or proposals that detail why an award is not in the City’s best interest.
- Examine why it receives a small number of responses to solicitations and initiate appropriate corrective action to increase competition for future solicitations.
- Maintain and retain in concession files all documentation supporting and evidencing bid and proposal ratings.
- Maintain and retain in concession files all documentation evidencing that bids and proposals were received within submission deadlines.
- Ensure that Committee members sign Evaluator Affidavits when completing proposal rating sheets.
- Complete Vendor Information Exchange System (VENDEX) or other comprehensive performance evaluations.
- Comply with FCRC rules when granting sole source concessions to not-for-profits.
- Institute written policies and procedures that adequately and specifically address the duties and procedures to be followed by key employees responsible for the solicitation, receipt, safeguarding, opening, and evaluation of bids and proposals, and the award and registration of contracts.
- Appropriately restrict access to and establish accountability for custody of concession files.
Parks submitted a two-part response: a three-page cover letter and a 10-page Summary of Objections to the Report’s Findings and Recommendations (Summary of Objections). A reading of the cover letter could easily lead a reader to conclude that Parks disagreed with the entire report. However, somewhat hidden within the Summary of Objections were some acknowledgements by Parks, which we appreciate, that the report was correct on some very important points including that a significant portion of its concession portfolio “should have been awarded in a more time effective manner.” In addition, Parks agreed to implement a number of our recommendations, including those relating to the advertisement of solicitations, corrective actions to be taken to increase competition for concession contracts, and efforts to ensure that selection committee members assigned to evaluate vendors’ concession proposals are free from any potential conflicts of interest. Concerning the remaining areas of the report, Parks often presents arguments that do not really address the report’s findings but, rather, serve to obscure the issues.