City Agency Audit Reports
Audit Report on the Cleaning and Maintenance of Bus Stop Shelters by Cemusa NY, LLC in Compliance with its Franchise Agreement with the Department of Transportation
Audit Number: MJ11-121A
Release Date: July 10, 2012
AUDIT REPORT IN BRIEF
This audit assessed the adequacy of Cemusa NY, LLC’s (Cemusa) efforts to ensure that its subcontractors maintain bus stop shelters in compliance with its franchise agreement with the Department of Transportation (DOT).
DOT is responsible for bridge and roadway conditions, parking and traffic operations, sidewalks, and other matters that affect the safety of drivers, cyclists, and pedestrians throughout the City. In May 2006, DOT entered into a 20-year franchise agreement with Cemusa to design, construct, install, and maintain coordinated street furniture throughout the City, including up to 3,300 bus stop shelters, 330 newsstands, automatic public toilets, trash receptacles, news-racks, and other public service structures. In consideration for being granted the exclusive right to sell advertising space on panels affixed to the street furniture, Cemusa has agreed to pay the City an estimated $1.3 billion in advertising revenue and alternative compensation over the 20-year term of the agreement.
Under the franchise agreement, Cemusa is required, at its own expense, to clean, inspect, and maintain the structures in good repair. With DOT’s approval, Cemusa has outsourced its inspection, cleaning, and maintenance responsibilities to subcontractors. DynaServ Industries, Inc. (DynaServ) is responsible for cleaning, inspecting, and posting advertisements, and Pipeline Construction, LLC (Pipeline) was responsible for repairing and replacing damaged parts and performing electrical repairs and annual electrical inspections. This audit addressed Cemusa’s upkeep of the bus stop shelters, the most common type and widely used street furniture across the City.
Audit Findings and Conclusions
The audit concluded that Cemusa needs to improve its oversight efforts to ensure that its subcontractors maintain bus stop shelters in compliance with its franchise agreement with DOT. Cemusa has certain mechanisms in place to assess its subcontractors’ performance regarding the upkeep of the bus stop shelters. However, these mechanisms do not provide sufficient assurance that the subcontractors’ performance ensures Cemusa’s compliance with the provisions of its franchise agreement regarding the upkeep of the bus stop shelters.
For the audit test period, Cemusa’s subcontractor, DynaServ, did not service (inspect and clean) the bus stop shelters at the level required. DynaServ’s productivity expectations (the number of shelters that can be cleaned by each crew in one shift) are overly optimistic and DynaServ has not allocated sufficient resources to ensure that each shelter will be cleaned twice each week on non-consecutive days as required. The audit also showed that Cemusa’s other subcontractor, Pipeline, needed to improve its performance in regard to responding promptly and repairing reported defective conditions. Further, there was insufficient evidence that all electrical inspections were carried out as reported. Based on these and additional factors discussed herein, we lack reasonable assurance that the bus stop shelters are serviced in accordance with Cemusa’s franchise agreement with DOT.
The audit made eight recommendations to address these weaknesses, including that Cemusa should:
- Work closely with its current subcontractor, DynaServ, to establish more realistic productivity assumptions and goals to ensure that all bus stop shelters are serviced two times each week on non-consecutive days as required by its franchise agreement.
- Ensure that DynaServ allocates sufficient resources to provide assurance that all required cleanings are performed. This should include sufficient staffing needed to cover holiday weeks, vacation schedules, and other scheduled days off.
- Develop a more formal and proactive strategy along with associated procedures to provide for stronger oversight and continuous monitoring of its subcontractors to ensure that they are meeting their contractual obligations to support and ensure that Cemusa is compliant with its obligations under the franchise agreement.
In their written response, Cemusa officials agreed with five of the audit’s recommendations and disagreed with three others that address the need to establish more realistic productivity goals; ensure that its subcontractor allocates sufficient resources to make certain that all bus shelters are cleaned as required; and establish benchmarks to assess its subcontractors’ performance on a monthly basis. In addition, Cemusa’s response included objections to some of our findings. After carefully reviewing the arguments in the response, however, we see no reason to alter our findings.
DOT had no comment on the audit’s findings and recommendations.