Audit Report On The Department Of Parks And Recreation’s Monitoring Of Subcontracts Covered By Local Law 129
AUDIT REPORT IN BRIEF
This audit determined whether the Department of Parks and Recreation (Parks) complied with Local Law 129 with regard to monitoring the use of Minority- and Women-owned Business Enterprises (M/WBEs) by vendors that were awarded contracts in which M/WBE subcontractor participation goals had been established. The scope period covered by this audit was Fiscal Years 2007 through 2010.
Local Law 129 established the City’s M/WBE Program. This law, enacted in 2005, responded to a study commissioned by the City Council that found that there was a significant disparity in contracting opportunities afforded to certain M/WBE groups in City procurement. Local Law 129 was intended to address the disparities revealed by the study. It details certification, contract-participation goals, technical assistance, and administrative procedures to promote the utilization of M/WBE firms for contract and subcontract opportunities valued at less than $1 million. The agencies overseeing City prime contracts that have M/WBE subcontracting goals (set by the agency) are required to monitor the compliance of the prime contractors with their plans to use subcontractors and M/WBEs (i.e., their utilization plans).
Parks’s principal mission is to assure that the parks, beaches, playgrounds, stadia, marinas, recreational facilities, gardens, malls, squares, and public spaces of the City are clean, safe, and attractive for the health and enjoyment of the people. According to the City’s Agency Procurement Indicators report, from Fiscal Year 2007 through Fiscal Year 2010 Parks awarded a total of 304 contracts (valued at $673,400,236) with M/WBE subcontractor participation goals.
Audit Findings and Conclusions
Parks is in partial compliance with the provisions of Local Law 129 relating to its monitoring of the use of M/WBEs by vendors that were awarded contracts with M/WBE subcontractor participation goals. While there is evidence of some monitoring by Parks, the agency needs to enhance this monitoring to be better able to determine whether the established M/WBE subcontracting goals have actually been met by the prime contractors.
Parks does require vendors awarded contracts with M/WBE participation goals to submit a Subcontractor Approval Form to report the subcontractors they anticipate using and a Subcontractor Compliance Form to report the payments they make to each subcontractor. Parks resident engineers observe subcontractor activity at the construction sites and note this activity on daily and weekly reports. When reviewing contractors’ payment requests, Parks resident engineers complete a checklist to record the extent to which the contractor has achieved its M/WBE goal based on the information presented by the contractor. Parks, however, does not review the prime contractors’ records to verify payments to M/WBE subcontractors and is therefore unable to determine whether the M/WBEs are receiving the appropriate levels of payment. In addition, there is little evidence that Parks contacts the M/WBE subcontractors to verify the extent of their use by the prime contractors. By not performing these steps, Parks cannot fully assess whether the prime contractors are achieving the M/WBE participation goals specified in the contracts nor can Parks accurately ascertain whether it is effectively contributing to the City’s use of certified M/WBEs, as was intended by Local Law 129.
Audit Recommendations
To address these issues, the audit recommends, among other things, that Parks:
- More effectively monitor the use of M/WBEs by prime contractors by contacting M/WBEs identified in utilization plans to confirm their level of participation, by more closely reviewing subcontracting plans and actual payments to subcontractors, and by auditing the contractors’ books and records.
- Initiate enforcement actions against those prime contractors that do not comply with the M/WBE provision of their contracts.
- Ensure that prime contractors only indicate on the Subcontractor Compliance Form their actual payments to subcontractors.
Agency Response
In its response, Parks disputed some of the audit’s findings but generally agreed to implement or continue to implement the audit’s recommendations.