Audit Report on the Department for the Aging’s Awarding of Non-competitive and Limited-competition Contracts

This audit determined whether the Department for the Aging (DFTA) had adequate controls relating to the awarding of contracts on a non-competitive or limited-competition basis and whether DFTA evaluated contractor performance before awarding such contracts. The primary scope of the audit was non-competitive or limited-competition contracts awarded by DFTA during Fiscal Year 2011.

DFTA promotes the independence, health, and well-being of older New Yorkers through a broad range of services, both directly and through over 700 contracts. Contracts with vendors are procured based on the award method used, which is an indicator of whether the contract was awarded on a competitive, non-competitive, or limited-competition basis. Requests for proposals (RFPs) are one of the methods used to award contracts on a competitive basis. According to the New York City Procurement Policy Board (PPB) Rules, “procurement by competitive sealed proposals is the preferred method for awarding contracts for … client … services.” A significant portion of DFTA contracts is for the provision of client services.

Renewals and negotiated acquisition extensions are methods used to continue existing contracts for limited periods of time. Renewals and extensions are considered to be awarded on a non-competitive basis. Negotiated acquisitions are used in time-sensitive situations in which vendors must be retained quickly or when there are only a few vendors available to provide the goods and services needed. Since the agency need not negotiate with each qualified vendor, negotiated acquisition contracts are considered to be awarded on a limited-competition basis.

According to the New York City Financial Management System (FMS), 710 DFTA-related contracts valued at approximately $237 million were awarded in Fiscal Year 2011.

Audit Findings and Conclusion

DFTA generally has adequate controls relating to the awarding of contracts on a non-competitive or limited-competition basis and evaluates contractor performance before awarding such contracts. However, DFTA did not adequately plan its contract process to ensure that procurements were done in a timely manner and the use of contract extensions was minimized. DFTA may have been able to achieve cost savings through the use of more competitive procurements.

For our 10 sampled contracts, DFTA obtained the necessary approvals to award the contracts on a non-competitive or limited-competition basis. DFTA had the required written justifications, Agency Chief Contracting Officer (ACCO) approvals, and City Chief Procurement Officer (CCPO) authorizations for these contracts. In addition, contractor performance evaluations were conducted in the periods prior to the contract renewals or extensions in our sample. The contractors had a satisfactory or better record of performance.

However, DFTA had some internal control weaknesses relating to the awarding of its contracts that should be addressed. Specifically, DFTA: did not issue new RFPs in a timely manner in order to limit the use of contract extensions; did not consistently submit contracts for registration in a timely manner; and lacked written procedures concerning the procurement process.

Audit Recommendations

To address these issues, the audit recommends that DFTA:

• Begin its contract procurements earlier to account for complexities involved with revising client service programs.
• Ensure that it submits contracts to the City Comptroller for registration in a timely manner.
• Develop and distribute to appropriate staff a set of written procedures detailing the contract procurement process.

Agency Response

In their response, DFTA officials agreed to implement the audit’s recommendations. They stated that they were “pleased with the positive findings of the audit and appreciate[d] the constructive recommendations for improving the Agency’s internal controls.”