A New Charter to Confront New Challenges

Reforming the Mayor’s Management Report

One of the ways New York City government agencies disclose information about their operations, performance, and funding is through the Mayor’s Management Report (MMR) and Preliminary Mayor’s Management Report (PMMR). These reports, which are mandated by Section 12 of the City Charter, are required to be submitted by the Mayor to the Council and made publicly available by January 30^th of each year for the PMMR and September 17^th each year for the MMR. The Charter provides general guidelines as to the information that is to be included in these reports. Both reports are required to include program performance goals and metrics and an appendix detailing the relationship between program metrics and funding allocations. The full MMR includes additional details including a summary of agency rulemaking and procurement actions taken during the previous year. In addition, the City Council is required to hold a hearing on the PMMR by April 8^th.

These reports ostensibly play an important role in the operations of City government by providing multiple constituencies with valuable information. For the public, the reports should be a source of comprehensive data about agency performance. For agency heads, the metrics in the report should show where the agency has been successful or fallen short of key goals and inform future policy and funding decisions. For the Mayor, the data in the report should identify areas of management strength and weakness, and for the City Council, the information should inform budgeting and oversight.

However, despite their potential significance, the effectiveness of the MMR and PMMR are limited. This is the case because they are not sufficiently aligned with the budget structure, and the performance metrics included in the report are not always the most useful for truly understanding program effectiveness. The Department for the Aging, the City’s lead agency serving older New Yorkers, provides an instructive example of these shortfalls.

Currently, the MMR and PMMR section on the Department for the Aging includes 11 performance metrics that shed light on some of the agency’s major activities including the number of meals served to seniors, overall senior center utilization rates, and the number of clients served by caregiver, case management, and homecare programs. However, in some cases these metrics provide relatively little useful information about the effectiveness of the given programs. For instance, case management is a program that provides services for seniors to ensure they can continue to live independently. In its current version, the MMR and PMMR include only the number of case management hours provided and the number of clients receiving services, which, while interesting data points, do not explain whether the agency is providing these services effectively. The MMR and PMMR would provide more meaningful insight into the case management program if it included additional metrics like the ratio of caseworkers to clients, the amount of time clients had to wait to receive services, or the number of clients who requested but did not receive services in the fiscal year.

Similarly, the details about agency spending included in the MMR and PMMR are too vague to be meaningful. Currently, in disclosing budget information about Department for the Aging programs, the MMR and PMMR lump all of the agency’s programs together in a single broad “unit of appropriation” titled “community programs.” Units of Appropriation are the way that the City classifies programmatic spending, split between spending on the personnel required to operate the program and on non-personnel costs necessary to carry out the program. In theory, each unit of appropriation reflects a single program, but in practice this is not the case.  As a result, it is impossible to determine from the MMR or PMMR how much money the City is spending on any of these given programs or how that funding relates to agency performance. While City budget documents do include specific funding amounts for these programs, determining those amounts requires wading through a 4,000-page document that is largely inaccessible to those not already steeped in the City’s budget process.

As the example of the Department for the Aging indicates, addressing these flaws would make the City’s operations more transparent and improve the effectiveness of its key management documents. To that end, the following reforms to the City Charter would improve these reports.

Improving the Budget to Make Better Resource Decisions

The City’s budget and the accompanying financial plans are tools for maintaining sustainable spending and revenues, and ensuring accountability over the use of the public’s money. But the decisions that are made each year about the allocation of budgetary resources are also an expression of the City’s values and priorities. The process of adopting and amending the City budget should therefore be an occasion for a robust and informed debate about how resources are raised and allocated to accomplish the City’s objectives.

Unfortunately, the possibility of such a debate is hampered by an annual budget presentation that lacks critical information needed to evaluate the Mayor’s budget proposals. It limits public participation and the Council’s ability to carry out its Charter role in the budget process. The budget process can and should be improved to make budget decisions more open to informed participation by elected officials and the public. The following proposals are intended to provide more transparency in the budget process, without unduly constraining City agencies’ ability to manage the budget once adopted.

Improve the Capital Budget

New York City owns and operates a vast public infrastructure, including over 1,300 schools, nearly 800 bridges, tunnels and related structures; 6,000 miles of roadway; 19 reservoirs; 14 wastewater treatment plants and 6,500 miles of water mains; over 1,900 parks covering more than 29,000 acres; hundreds of buildings such as police precinct houses, fire stations, senior centers, branch libraries, and hospitals; and thousands of vehicles such as garbage trucks, fire trucks and ambulances. This infrastructure is critical to the future growth and dynamism of the economy and makes the City a desirable place to live, work, and do business.

However, these capital assets – with a replacement cost estimated at $134 billion – are in many cases over a century old, and are in continual need of maintenance, repair, and replacement.[1] At the same time, as the city changes and grows, new infrastructure needs arise. These issues are addressed through the City’s capital budget. Each year, the City’s spends between $8 and $10 billion in its capital budget to build new housing and schools, pave streets, and buy equipment.

Yet, shockingly, there is almost no information in the existing capital budget that would inform the public whether that money is being spent responsibly, efficiently, or effectively. For instance, the capital budget does not state how much it would cost to keep our infrastructure in a state of good repair. Nor does it provide a dollar figure of how much it costs to pave a street, buy a fire truck, or build a school, let alone whether capital projects are being completed on-time and on-budget.

Take, for example, the City’s vast network of parks that together make up almost 15 percent of New York City’s land. The City’s park system is a vital resource for all New Yorkers, providing a reprieve from the concrete and steel jungles that otherwise dominate the city’s landscape. But many of our parks are old and in need of repair, averaging about 73 years old and many without a major renovation in 20 years. And yet, because of deficiencies in the capital budget, the Parks Department does not know the total amount of money needed to improve the infrastructure at each individual park or across the entire system.[2] According to a recent audit from the Comptroller’s Office that reviewed 69 Parks Department capital projects, 40 percent were not completed on-time, resulting in almost $5 million in extra cost, or 35 percent more than was originally budgeted.[3]

Ensuring that the City’s infrastructure is equipped to meet the needs of a rapidly changing city is of paramount importance. But, it is painfully clear that the current process is leaving us behind. With outstanding capital debt of $86 billion, equal to about $10,000 for every person in New York City, improving the capital budget is critical not only for strengthening the City’s built environment but also for the City’s fiscal future. The reforms discussed in more detail below will help to improve the capital budget to bring greater accountability and transparency into this critical area of City spending.

The Budget Should Allow the Public to Identify and Understand the Cost of Individual Capital Projects

Although the Charter talks about the capital budget in terms of “projects,” in practice, capital budget lines – the equivalent of expense budget units of appropriation – often encompass multiple distinct projects, identified by a “project ID.” For example, the Department of Transportation announced in 2017 a major project to rehabilitate the Brooklyn-Queens Expressway between Atlantic and Sands Avenues – including the so-called “triple cantilever” bridge – at an estimated cost of over $1.9 billion. This major project, however, was initially not its own budget line for appropriation in the capital budget, but was rather just one project ID among more than five dozen in a single DOT capital budget line, “Improvements to Highway Bridges and Structures, Citywide.”[4] Conversely, individual projects are sometimes funded from multiple budget lines, particularly when the funding includes allocations made by City Council members or Borough Presidents, or sometimes for different project phases, such as design and construction, making it difficult to account for total project spending. Major projects warrant a separate budget line both for purposes of appropriation and for tracking of schedule and cost (discussed further below).

The Capital Budget Should Include Information about the State of Capital Assets

The City’s capital budget does not include any non-financial information, meaning that important information on the condition of capital assets, such as an evaluation of their state of good repair, or the average age of assets relative to their useful lives are not reported, either in the broad capital budget categories known as Project Types, or at the budget line level. Although major capital program areas are classified in one of three “lifecycle categories” in the Ten-Year Capital Strategy – State of Good Repair, Programmatic Replacement, or Program Expansion – these categories are not carried down to the project type or budget line level where they would provide information that could help guide capital budget prioritization or measurement of the impact of capital spending.

Provide Full Reporting on Capital Project Status and Cost

Remarkably, there is currently no public reporting of the actual costs of capital projects, nor any useful information on the schedule of a project. The absence of this critical information decreases the usefulness of the capital budget.

Improve the Information Available about the City’s Capital Assets

The City’s Asset Inventory Management System (AIMS) is intended to provide annual information on the investment necessary to maintain all “major portions” of the City’s capital plant in a state of good repair, including condition assessments, maintenance schedules, recommendations, and necessary capital and expense budget funding. However, information in the system is limited. Specifically, only those capital assets having a replacement cost of at least $10 million and a useful life of at least 10 years are included in the inventory and condition assessment. In addition, some important assets that otherwise meet those criteria are not included in AIMS for a variety of historical reasons – such as the East River Bridges, and the water and sewer system – while other important assets may be excluded because they fall below the threshold, including many buildings such as branch libraries, senior centers, fire houses, and EMS stations.

In addition, it is impossible to relate the recommendations in the annual AIMS report to proposed capital or expense budget expenditures. The report provides an estimate of funding required for state of good repair, as well as an “agency reconciliation” of “recently performed and planned activities.” However, there is no link back to the capital budget at the budget line level, and no way to determine from the capital budget which budget lines are for state of good repair activities.

Increase Transparency, Accountability, and Control in the Expense Budget

The appropriation unit is the level at which the City Council appropriates funds in each agency budget. Every agency must have at least two units of appropriation: one for personal services – including the salaries, wages and benefits of city employees – and another for everything else, including contractual services, supplies, equipment, and other non-labor expenses.

The Charter requires that each unit of appropriation in the budget “represent the amount requested for a particular program, purpose, activity, or institution.” Budget participants and observers have long noted that current units of appropriation are often unduly broad and effectively contain more than one program. In addition, service level and performance data are not meaningfully linked to spending, even when they are available. This limits the public’s ability to evaluate the impact of spending and the Council’s ability to allocate funds effectively within the budget.

The following revisions to the Charter would better align the expense budget units of appropriation with program objectives, and also provide meaningful non-financial data, without hampering budget administration.

Change the Definition of a Unit of Appropriation to Correspond More Closely to Programs

Defining what constitutes a “particular program, purpose, etc.” has proven elusive, suggesting that the phrase itself needs reform. The Charter should therefore define unit of appropriation differently.

The Preliminary and Executive Expense Budgets Should Present Relevant Performance Information alongside the Financial Data for each Unit of Appropriation

Although the performance measures in the Mayor’s Management Report (MMR) are nominally linked to units of appropriation, the linkage is often so broad as to be meaningless and requires a great deal of effort to research, since performance measures and budget information are presented separately. For instance, the Department of Correction reports 34 different performance measures in the MMR, in 3 different Service Areas and 8 Goals. The Department’s budget, however, is structured into 4 units of appropriation – 2 for Administration (PS and OTPS), and 2 for Operations (PS and OTPS) of which the Operations PS unit of appropriation accounts by itself for 78.5% of FY 2017 spending. However, the MMR assigns all 34 indicators as applicable to all four units of appropriation.

It is increasingly common for state and local governments to present service level and performance information alongside budgetary information when the annual budget is prepared and presented.[5] New York City’s budget process should do so as well.

Eliminate the Requirement for Separate Personal Services (PS) and Other than Personal Services (OTPS) Units of Appropriation

The current requirement that each unit of appropriation be for either PS or OTPS artificially divides programmatic spending. Costs for the same program are split between two units of appropriation, which makes evaluating the total cost – and cost-effectiveness – of a program difficult. Instead of dividing units of appropriation in this way, each unit of appropriation should include the full expenditure amount for a program, with PS and OTPS expenditures detailed separately within each unit of appropriation in the Departmental Estimates and Supporting Schedules, as is current practice.

In the First Preliminary Budget after Charter Revision, the Mayor and Council should Jointly Determine the Units of Appropriation to be Included in each Major Agency

Although the Charter gives the City Council the right to “increase, decrease, add or omit” any unit of appropriation, it is difficult to modify these units once they have been set.  To avoid a situation where the executive branch unilaterally dictates the units of appropriation, the Council and the Mayor should together determine the units of appropriation to be included, prior to the first Preliminary budget after Charter revision.

An Inclusive Budget Process throughout the Year

Responsible budgeting is a year-round exercise. After the budget for the year is adopted each June, the Mayor is obliged to update the budget estimates for the year (and the ensuing years of the financial plan) on a quarterly basis. These updates are necessary to reflect changing circumstances, more refined spending and revenue estimates based on experience during the year, new needs, and other factors. Just as with initial budget allocations, decisions on reallocations or reductions during the course of the fiscal year should reflect an open decision-making process, with opportunity for full participation by the public and the City Council.

Currently, this is often not the case. While the City Council has the power to approve or disapprove mid-year budget changes, when the Office of Management and Budget (OMB) submits a budget modification according to the process outlined in the Charter, in practice this does not always happen.[6] In years past, OMB has often waited until late in the fiscal year before submitting a modification, allowing months to pass before seeking the Council’s approval. This, in effect, deprives the Council of the opportunity to play the role in the budget process envisioned for it in the Charter, which has particularly been the case when OMB seeks mid-year spending reductions but attempts to avoid Council opposition or input. The following reform would give the Council and the public a greater say in budget decisions throughout the year.

Require that any Financial Plan Changes be Accompanied by a Budget Modification Submitted to the Council within 30 days

The quarterly financial plan often contains significant changes to current year City-funds spending and revenues, sometimes including agency budget cuts or other reallocations of funds that are not simply technical in nature. The Office of Management and Budget has waited until later in the fiscal year to seek the Council’s approval for these changes, so that there is a significant period of time between submission of the financial plan and submission of a modification for Council action. This in effect limits the Council’s participation in budgetary decision making as envisioned in the City Charter.

Reforming the Procurement Process

Each year, New York City buys over $25 billion worth of goods, services, and construction, making the City one of the largest procurement jurisdictions in the world. These procurements include supplies that are necessary for public safety such as fire trucks and rescue boats, social services such as after-school programs and senior centers, and the construction and infrastructure projects that make up the City’s built environment. Despite the critical role procurement plays in keeping New York City running, our procurement process can be notoriously slow, bureaucratic, and opaque.

The pitfalls of the City’s current procurement process may not be apparent to most New Yorkers, but the effects on their everyday lives can be profound. The continuity of crucial social services such as home care for older adults and homeless shelters for families in need is threatened each time a contract is stalled. Schools rely on contracts to provide lunches and school bus services for the City’s students every day. The treatments that make tap water safe to drink, the salt that keeps roads safe during snowstorms, and the trucks that collect residential waste are all acquired via contracts. While City residents may only occasionally notice the consequences of major procurement shortcomings, City agencies and vendors constantly wrestle with a process that at best sacrifices speed for diligence and at worst fails to deliver the products and services it was established to obtain.

Outlined below are a number of proposals that would bring the City’s procurement process up to date so that it can better meet the City’s needs, demystify City contracting for residents and vendors, and maintain the requisite controls to ensure that the City is contracting with entities that possess the business integrity and capacity to justify the expenditure of taxpayer dollars. Overall, the proposals are intended to improve the current procurement system by increasing speed and efficiency, improving transparency, and ensuring accountability.

Create a Standard Procurement Timeframe

The slow pace of New York City procurement, specifically delayed contract awards, can cause construction projects to stall, leave non-profits without payment for services rendered, and ultimately drive up City costs as projects run over their contracted end dates. Yet, despite these concerns, the Comptroller’s Office is the only agency in the City’s procurement process that carries out its duties within a specified timeframe – namely, an explicit 30-day timeline for contract registration. All other oversight agencies involved in the process perform their tasks without mandated review periods.

Assigning each relevant City agency with a specific timeframe would help prevent the delay of required steps within the procurement process. The parties responsible for various stages of the oversight process include the Mayor’s Office of Contract Services, the Corporation Counsel, the Department of Investigation, the Office of Management and Budget, and the Division of Labor Services within the Department of Small Business Services. These agencies perform a range of tasks from the relatively simple, such as calendaring of public hearings, to the more complex, such as conducting research that enables procuring agencies to determine the integrity, financial strength, and capacity of vendors.

In the interest of promoting efficiency, transparency, and cost savings, explicit timeframes should be implemented for all oversight agencies. The City Charter already authorizes the Procurement Policy Board (PPB) to create “time schedules which city officials shall be required to take the actions required…” but the language should be enhanced so that each agency with an oversight role in the procurement process has an explicit timeframe in which to complete its task, similar to the explicit 30-day timeline for contract registration required for the Comptroller’s Office.

Take Concrete Steps toward Transparency

The City’s procurement process needs to be reformed with an eye toward increasing transparency. There are many meaningful steps that could be taken that would allow City vendors as well as the general public to gain easy access to contracting information. One such step would be increasing public access to contract information. While the City makes open solicitation documents readily accessible through The City Record as required by the Procurement Policy Board, it does not go as far as other cities like Chicago, where vendor proposals in response to contract solicitations are publicly posted. The City of Chicago facilitates this easily by requiring vendors to submit two versions of their responses: one original and one containing redactions of proprietary information for publication. Adopting this model in New York would allow City residents to quickly access information about how their tax dollars are being spent, and would help vendors to better understand the City’s procurement needs.

Another more sweeping step would be for the City to create a transparent contract tracking system, allowing vendors to view the status of their contracts as they move through the various stages of review. Currently, with the exception of the Comptroller’s transparency website, Checkbook NYC, that only makes data available when the agency submits contracts for registration, there is no consistent way for vendors to know what stage of review their contracts are in and how long that review might take. Vendors often complain of a “black hole” that occurs after signing a contract with an agency, when many months may go by without clear information about what is happening with their contract. It would be enormously helpful to vendors if they could go online and find out if their contract is under review at the Mayor’s Office of Contract Services, the Law Department, or the Office of Management and Budget. If timeframes were implemented in conjunction with a tracking system – allowing vendors to learn which agency was reviewing their contract and how long the review would take – vendors would be better able to plan for future projects, manage their cash flow, and would likely achieve greater organizational stability.

Ensure Meaningful Oversight

Before any City agency can enter into a contract, the City’s existing procurement process requires that procurement decisions be reviewed by a number of parties outside the agency. However, only one of those layers of oversight, the Comptroller’s registration process, takes place outside of the Mayor’s purview. In registering a contract, the Comptroller’s Office reviews the contract documents to make sure there are sufficient funds available to fulfill the contract, that the appropriate procedures were followed, that the contractor is in good standing, and that there was no corruption in the letting of the contract or with the contractor itself. This review, while vital to protect taxpayers, takes place only after a City agency has executed a contract with a vendor, but before payments are made.

The Comptroller’s review is constrained by a number of factors. Addressing these weakness in the procurement process through the reforms discussed below will better protect City residents, guard against corruption or abuse, and result in improved outcomes for all New Yorkers. These reforms not only ensure meaningful oversight, but also outline a process protected through a true system of checks and balances.

Identify Potential Problems Earlier in the Process

While the City Comptroller’s contract registration function may have been designed to ensure that independent oversight takes place before a contract is legally implemented, in actuality, the Comptroller’s review process occurs only after an agency has made a procurement decision. A more efficient and effective system would encourage City agencies to engage the Comptroller’s Office earlier in the process to identify potential weaknesses and address any problems more proactively.

Importantly, this type of process has worked effectively at the State level. Specifically, New York State’s contract registration process provides the State Comptroller with what is known at the State level as “pre-audit” authority to review a contract before it has been “approved.” In contrast to the current process used by the City Comptroller, this “pre-audit” authority refers to the review of a contract package for registration purposes prior to execution by the applicable agency and vendor. This review focuses on the process used to enter into the agreement as well as the terms and conditions of the contract to ensure they are in the City’s best interest. However, this review is not intended to slow the process down nor is it intended to usurp the business making decisions of the contracting agency. According to a 2014 report issued by the State Comptroller, this pre-audit authority is important because “uncovering problems after the fact is simply too late to have the most meaningful impact; at that point, taxpayer money has been spent, projects may have advanced and recovery is made difficult, and important programs and services could be negatively impacted.”[7] The State Comptroller reports that based on this authority it was able to save State taxpayers over $30 million in Fiscal Year 2017. What’s more, this happened without slowing down the procurement process, with over 96 percent of contracts approved within 30 days during the fiscal year.[8]

The experience of the State Comptroller suggests that reforming the City’s procurement process by empowering the Comptroller’s Office to review contracts prior to their execution will improve outcomes for taxpayers, contracting agencies, and vendors alike. Doing so would give the Comptroller the opportunity to identify potential errors or concerns in the contract selection and award process as well as in the contract itself upfront, rather than through an audit after the agreement is registered and funds have been expended.

Mirroring the procurement process used at the State level would require the City to make more comprehensive reforms to its own procurement system. However, while more comprehensive reforms are considered, the Charter should be amended to make clear that the Comptroller’s authority includes the ability to work with City agencies prior to that agency’s execution of the contract and/or the performance of any work under that agreement.

Right to Object to Contracts That Appear to Materially Violate Federal, State, and City Law, Codes or Regulations

The Comptroller’s obligation to register contracts is designed to ensure independent review of the mayoral administration’s procurement decisions. Specifically, the Charter provides the Comptroller with the ability to object to the registration of a contract if the Comptroller’s Office finds that the City does not have the funds to pay for the services it is buying, or certain necessary legal certifications have not been obtained from its Corporation Counsel.

In addition, the Charter authorizes the Comptroller’s Office to object in writing to the registration of a contract if the office believes there was possible corruption in the letting of the contract or that the proposed vendor is engaged in corrupt activities. However, the Mayor may nevertheless require the Comptroller to register the contract even if the Comptroller has objected on those grounds.

While the Comptroller’s role in the procurement process is to provide an independent check on the Mayoral agencies, the narrow circumstances under which the Comptroller can object to registering a contract limit that independent oversight. One way to enhance that oversight is to add additional authority in the Charter that would provide the Comptroller with the ability to object to contracts that appear to materially violate Federal, State, and City laws, codes, or regulations. For example, in 2012, the Comptroller objected to registering a contract for new taxi vehicles on the basis that the new vehicles were not wheelchair accessible and in violation of the American with Disabilities Act. In response, rather than amending the contract, the City argued that the Comptroller had no basis in the Charter to make this objection.

Providing the Comptroller with greater authority to protect the City from entering into contracts that appear to materially violate Federal, State and City laws, codes or regulations could help ensure that adequate checks and balances are in place to safeguard the operation of City government.

Ensure Consistency across Comptroller Functions

Weaknesses in the City Charter can result in one part of the Comptroller’s Office being required to take action that is inconsistent with City policies and directives that are set by another part of the Comptroller’s Office in the exercise of its duties. For instance, the Comptroller both registers City contracts and also issues directives to City agencies on financial operations, such as controls that must be in place with respect to City funds and other accounting principles.

To remedy this situation, the City Charter should specify that the Comptroller’s Office has the authority to require agencies to comply with other standards or policies set by the Comptroller relating to a particular procurement or contract action as a condition to registration. Doing so would ensure that City agencies adhere to a consistent set of policies and prevent the Comptroller’s Office from acting in ways that do not adhere to the agency’s own policies.

Clarify How to Determine Possible Corruption

The City Charter specifies that the Comptroller may object to the registration of a contract if there is sufficient reason to believe there is possible corruption in the letting of the contract or that the proposed contractor is involved in corrupt activity. However, the Charter does not provide a definition of corruption or corrupt activity. As a result, this standard has been subject to different interpretations among previous Comptrollers.

Nevertheless, there are some general universally agreed upon factors that lead to a determination that there is a possibility of corruption that could be enumerated in the Charter. For instance, there could be a possibility of corruption if there is sufficient information to determine that a potential vendor may be providing favors or gifts to influence those responsible for overseeing the procurement award. Another example could be the intentional submission of false information on official City forms relating to a vendor’s integrity or capacity. In one case, a New York Court reviewed and found proper the Comptroller’s refusal to register a busing contract with a vendor based upon the submission of an apparently false sworn statement by the vendor’s president regarding the entity’s association with an individual who had been convicted of giving an unlawful gratuity to a school bus inspector.

Unfortunately, combatting corruption remains an issue for those responsible for overseeing the New York City procurement and contracts. To better guide that work, the Charter should be enhanced by providing additional clarity on the types of information and analyses that could be used to determine whether to object to a registration on grounds of corruption. Such guidance would provide a more solid foundation for the Comptroller’s oversight work.

Improve Efficiency to Save Taxpayer Money

An effective and efficient procurement process ensures that the City is able to get the best quality goods and services on-time and on-budget. When that process breaks down, however, it can add costs and result in poor service for the City and its residents. A number of reforms to the procurement process can be made that will ensure that taxpayer dollars are spent most efficiently.

Reform the Construction Contract Change Order Process

In Fiscal Year 2017 alone, the City spent $3.6 billion on construction. However, the construction contractors who perform this work widely believe that slow processing of change orders, coupled with slow payment for extra and changed work, are major threats to project success and contractor viability.  For example, a 2017 report from the Center for an Urban Future found that on average, City-managed construction projects for nonprofits experienced almost a year of delays as a result of the change order approval process, slowing down projects and increasing costs.[9] The construction companies most impacted by these problems tend to be smaller firms that need uninterrupted cash flows to meet payrolls and sustain their businesses. The city could address this challenge were it to periodically undertake a comprehensive review of the change order process with a focus on making the process more efficient and effective for contractors and the City alike.

Ensure Emergency Preparedness

The procurement process plays a critical role in the City’s response to natural disasters and other emergencies. In non-emergency situations, the City’s procurement process appropriately involves a number of different reviews to make sure that taxpayer dollars are being spent wisely. When faced with emergencies like Superstorm Sandy, however, the City may not have the ability follow the standard procurement process and instead may need to purchase goods and services much more rapidly. These “Emergency Purchases” operate under a unique set of procurement rules that provide agencies with greater flexibility to obtain needed supplies and services, but because they may sacrifice the safeguards in place for standard procurements in order to expedite critical purchases, the City may be more vulnerable to higher costs, waste, or abuse.

These risk are not merely hypothetical. For instance, in the aftermath of Sandy, the City entered into an emergency procurement for portable toilets that resulted in the City paying nearly double for a standard toilet and 120 percent more for an accessible toilet than it would have under the terms of a standard contract. Similarly, during the harsh 2013-2014 winter, the City used an emergency procurement to purchase additional road salt that cost about 285 percent more compared to a standard procurement contract.[10] These examples, discussed in more detail in a separate report from the Comptroller’s Office, indicate that reforms to the City’s emergency procurement system are warranted.

Under the City Charter, emergency preparedness programs are overseen by the City’s Office of Emergency Management (OEM). Among other duties, OEM is responsible for developing emergency preparedness plans and coordinating with other City agencies. However, nothing in the Charter explicitly speaks to OEM’s responsibilities in the context of developing plans for emergency procurement.

To this end, Section 497 of the Charter should make clear that part of OEM’s responsibility is to lead the City in putting together a publicly available, comprehensive, and coordinated emergency procurement plan that takes into account the expertise of agency procurement officials, the Mayor’s Office of Contract Services, the Department of Citywide Administrative Services, and the Office of the Comptroller. The emergency procurement plan should consider topics such as better cataloguing of “on-call” contracts— agreements with vendors that can be arranged ahead of an emergency event— and the adoption of emergency riders in standard City contracts. In addition, any procurement plan should include provision for rapid response measures to respond to housing needs after an emergency.

In addition, the Charter should be amended to require that that the details of every emergency procurement be posted and made available to the general public. Currently, the City Council receives notice of emergency procurement approvals, but releasing them more broadly would provide the public with important information relating to the emergency procurement practices of agencies and further accountability and transparency. Doing so would also help ensure that emergency procurements are only utilized to address an immediate need, rather than being abused to circumvent standard procurement procedures. Finally, the agency responsible for making the emergency procurement should be required to re-certify the ongoing need for an extended emergency procurement on a periodic basis to the Corporation Counsel and the Comptroller’s Office.

Publishing City Council-Obtained Data and Reports

The City Council collects significant information about the operations of City government that is not consistently released to the public. Ensuring that more of this information becomes available will increase transparency, promote accountability, and lead to a better-informed public.

For example, in recent years, the City Council has been considering legislation to reform the regulation of mobile food vendors like food trucks and food carts.[11] However, although data that could better inform the public and other local policymakers about this issue is collected and reported to the Council by the Department of Health and Mental Hygiene, it is not widely released. Specifically, Section 17-325.2 of the City’s Administration Code requires the Department of Health and Mental Hygiene to report data to the Council every year on the number of permits that have been suspended or revoked during the year. While this information could assist the public in understanding whether the law is being appropriately enforced, the data is not released by the Council or the agency to the public.

Similarly, during questioning at Council hearings, City agency leaders and other members of the public testifying at a hearing frequently tell members of the Council that they do not have a particular piece of information but will provide it subsequently. However, because that information is not discussed during the hearing or included in the formal testimony, it is not included in the hearing transcript that is eventually made publicly available on the Council’s website. As a result, when the information is eventually shared with the Council it is generally not easily available to the public. These practices deny the public and other parts of government access to information that reveals important details about government policies and programs.

Strengthening the Campaign Finance System

New York City’s campaign finance program is a national model for effective public financing of elections. But it can be improved to ensure that candidates act ethically and appropriately in raising funds.

Prohibit Certain Political Appointees from Donating to the Campaign of their Employer

Section 2604 of the Charter and Conflict of Interest Board rules prohibit an elected official from soliciting their employees for donations to their political campaign or conditioning employment on donations. However, consistent with their first amendment rights, all public employees are allowed to donate should they choose to, and to have those donations matched under the City’s campaign finance system.

Recognizing that employees’ contributions to an employer’s campaign creates the potential for conflicts of interest, other public entities have imposed limits on the ability of public servants to donate to such campaigns. At the state level, for example, members of public authority boards and State agency officers and officials who serve at the pleasure of the Governor are prohibited from making monetary contributions to the Governor or Lieutenant Governor’s political campaigns.[12] Similarly, at the federal level, U.S. Senate ethics rules prohibit the staff of a Senator from donating to their employing member’s political campaign.[13]

Similar reforms should be applied to high-level staff of elected officials in New York City. The City Charter’s conflicts of interest provisions already impose heightened restrictions on Deputy Mayors, agency heads, and employees with “substantial policy discretion.” They prohibit these individuals from soliciting political donations or serving as officials of political parties. The names of those employees are made public each year by the Conflicts of Interest Board.[14] To enhance public confidence, the Charter should further restrict these employees from donating to the political campaigns of elected officials who employ them.

Only Provide Matching Funds in Competitive Elections

The City’s matching fund program is a good and important use of public dollars. But because public funds are limited, and a dollar spent in matching funds is a dollar that cannot be spent on some other public purpose, it is important that they be used wisely. Currently, Campaign Finance Board rules prohibit a candidate for office from receiving matching funds if that candidate (1) endorses their opponent or (2) loses the primary election but is on the ballot for the general election, unless the candidate certifies that they are campaigning for office.

In addition, the City’s Administrative Code includes additional provisions designed to ensure that public funds are only used in competitive elections. To do so, candidates for office participating in the matching fund program are prohibited from receiving more than 25 percent of the maximum amount of public funds they are eligible to receive, unless their opponent meets certain criteria for competitiveness.[15] However, these rules are relatively easy to meet, and they do not ensure that public funds are being provided in legitimately competitive elections. For example, if an opponent has received endorsements from other elected officials or organizations with more than 250 members, or has appeared on television, radio, or in print media at least a dozen times in the prior year, then the election would be considered competitive, meaning that the candidate could receive additional public funds. Strengthening these provisions would ensure that public dollars are only being provided to candidates in truly competitive elections.

[1]     Comptroller’s Directive #10 sets out the criteria for when a physical asset is “capital-eligible” – that is, may be paid for by issuing bonds to borrow funds, rather than through regular annual expense appropriations. Broadly, if an asset costs at least $35,000 and has a useful life of at least 5 years, it is deemed capitally-eligible.

[2] “A New Leaf: Revitalizing New York City’s Aging Parks Infrastructure,” Center for an Urban Future, June 2018: https://nycfuture.org/research/a-new-leaf.

[3] New York City Comptroller, “Audit Report on the Department of Parks and Recreation’s Oversight of Construction Management Consultants,” June 15, 2018: https://comptroller.nyc.gov/reports/audit-report-on-the-department-of-parks-and-recreations-oversight-of-construction-management-consultants/.

[4] The construction phase of the BQE project was subsequently moved to its own budget line, but the design portion was still funded through a different budget line.

[5] See for example the Washington, D.C. budget (https://cfo.dc.gov/budget), which incorporates key performance indicators and workload measures into the budget presentation and narrative.

[6] Under §107.b of the City Charter, when there are no new City-funds revenues to be appropriated, the Council may approve or disapprove the modification submitted by OMB, with failure to act within 30 days deemed as approval. Section 107.e applies when there are new City-funds revenues to be appropriated, in which case the Council has essentially the same powers with respect to allocating funds that it does when the budget is adopted.

[7]    New York State Comptroller, “State Contracts by the Numbers: Longstanding Contract Oversight Authority Serves Taxpayers,” January 2014: https://www.osc.state.ny.us/reports/procurement/state_contracts_by_numbers_jan2014.pdf.

[8]    New York State Comptroller, “State Contracts by the Numbers 2017 Calendar Year: OSC Contract Review Protects Taxpayer Dollars,” March 2018: https://www.osc.state.ny.us/reports/procurement/state-contracts-by-numbers-2017.pdf.

[9]    Center for an Urban Future, “Slow Build: Creating a More Cost-Efficient Capital Construction Process for Cultural Organizations and Libraries in New York City,” April 2017: https://nycfuture.org/pdf/CUFSlowBuild.pdf.

[10] New York City Comptroller, “Fiscal Resiliency: Reforming New York City’s Emergency Procurement System before the Next Storm,” October 2017: https://comptroller.nyc.gov/wp-content/uploads/documents/Fiscal_Resiliency.pdf.

[11] New York City Council, “New York City Council to Introduce ‘Street Vending Modernization Act,’” October 11, 2016: https://council.nyc.gov/press/2016/10/11/124/.

[12] 9 CRR-NY 6.2, “Executive Order No. 2: Eliminating Politics from Government Decisionmaking.” https://govt.westlaw.com/nycrr/Document/I4f085175cd1711dda432a117e6e0f345?viewType=FullText&originationContext=documenttoc&transitionType=CategoryPageItem&contextData=(sc.Default).

[13] U.S. Senate Select Committee on Ethics: https://www.ethics.senate.gov/public/index.cfm?p=campaign-activity.

[14] New York City Conflicts of Interest Board, “Policymaker Lists,” https://www1.nyc.gov/site/coib/public-documents/policymaker-lists.page.

[15] New York City Administrative Code 3-705(7).