Audit Report on the Human Resources Administration’s Awarding of Non competitive and Limited-competition Contracts

This audit determined whether the Human Resources Administration (HRA) had adequate controls relating to the awarding of contracts on a non-competitive or limited-competition basis and whether HRA evaluated contractor performance before awarding such contracts. The primary scope of the audit was non-competitive or limited-competition contracts awarded by HRA during Fiscal Year 2010.

HRA assists individuals and families in achieving and sustaining their maximum degree of self-sufficiency. HRA provides cash assistance, public health insurance, employment services, and other support services. HRA uses many vendors to provide these services. Contracts with vendors are awarded based on the procurement 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 HRA 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), 302 HRA-related contracts valued at approximately $618 million were awarded in Fiscal Year 2010.

Audit Findings and Conclusions

HRA has insufficient controls relating to the awarding of contracts on a non-competitive or limited-competition basis and did not always evaluate contractor performance before awarding such contracts.

For our sampled contracts, HRA obtained the necessary approvals to award the contracts on a non-competitive or limited-competition basis. HRA had the required written justifications, Agency Chief Contracting Officer (ACCO) approvals, and City Chief Procurement Officer (CCPO) authorizations for these contracts. However, HRA had several internal control weaknesses relating to the awarding of these contracts that should be addressed. Specifically, HRA:

• did not have an effective central tracking system for monitoring contract expirations to ensure that new RFPs were issued in a timely manner and that the use of contract extensions was limited;
• did not always conduct performance evaluations of vendors prior to contract renewals or extensions;
• did not publish notices to renew contracts in accordance with PPB Rules; and
• lacked its own written procurement policies and procedures.

Audit Recommendations

To address these issues, the audit recommends, among other things, that HRA:

• Develop an effective central tracking system to monitor the expiration of contracts.
• Ensure that the process of completing pre-solicitation reviews (PSRs), issuing RFPs, and awarding contracts is completed in a timely manner.
• Ensure that vendor evaluations are conducted prior to contract renewals or extensions.
• Ensure that its notices of intent to renew contracts are published in a timely manner.
• Finalize and distribute to appropriate staff a comprehensive set of written policies and procedures detailing the contract procurement process.

Agency Response

In its response, HRA generally agreed to implement or continue to implement the audit’s recommendations, but disputed most of the audit’s findings. After carefully reviewing HRA’s arguments, we found them to be without merit.