Two weeks ago incoming New York City Mayor-elect Eric Adams and Comptroller-elect Brad Lander acknowledged in an opinion piece what many in the nonprofit sector already know: late registration and payment have been endemic under the de Blasio administration, which imposes significant hardship on these organizations. Both announced the creation of a joint task force named, “A Better Contract for New York,” which aims to “get nonprofits paid on time,” as well as “to identify the root causes of the dysfunction, establish a clear agenda to fix it and implement the changes.” Adams and Landers also vowed to, “hit reset on the city’s relationship with the nonprofits that are central to serving our communities.”
For nonprofits, it is hard not to be excited that the new mayor and comptroller have embraced this important but unglamorous topic so early and so publicly. At the same time, the problems have been well known for a long-time including in reports and recommendations from Comptroller Scott Stringer and the Department of Investigation. And despite some progress - for example, the 25% advance on many registered contracts – very little has changed. What makes things different this time?
To find out NYN Media spoke with Deputy Comptroller Lisa Flores whose procurement experience can provide context on the issues.
You've spent almost 20 years in New York City government including the last 8 as the Deputy Comptroller for Contacts and Procurement. What does that role entail?
My bureau is responsible for registering all agreements that are funded with City dollars which represents approximately 20,000 contract actions in an average year. I also spend time on procurement-related policies to advance transparency and efficiency. Much of what I do is problem solving. For example, at the beginning of the pandemic when everything was bleak and unknown, I moved most of my staff onto human services contracts; we registered 198 in one day, clearing our queue so that payments could flow. More recently, we took steps to collaborate with the DOE to prepare for their massive birth to five program. Working closely with DOE, we standardized our review process specifically for this program and have registered over 900 of the contracts without any major issues.
The city struggles to do what seem like easy and obvious things: follow the (PPB) rules, register contracts before the associated work begins, pays bills on a timely basis, etc. What makes it so hard here?
NYC’s procurement portfolio is large, complex and based on many rules that haven’t kept pace with technological advances, or the changing realities of business practices. A lot of the steps in the procurement process are technical or administrative and require sufficient resources to complete and a laser focus throughout the process to identify roadblocks, solve problems and meet the desired outcomes. A related issue is accountability and transparency when it comes to contract delays and late payments. That’s why I sent a letter to the administration urging them to amend the PPB rules with a focus on the nonprofit sector. For example, the Comptroller’s office has 30 days to register or return a contract. So if a contract is pending with my office, you can find it on Checkbook NYC and know exactly when that clock started. The procurement timeframe recommendation is simple: set a 60-day timeframe for all agencies to complete their approvals from the point a contract is awarded to the point it is submitted to my office for registration;
I also recommend that the City finally take steps to fully fund the nonprofit sector’s cost of doing business with the City upfront. We already use this model in some of the City’s contracts for construction and professional services which include a built-in annual increase for certain items that are tied to a published index for escalation.
Finally, I recommend that we explore automatic interest payments for late payments on contract invoices.
The good news is that the City is better positioned now than ever thanks to the roll-out of a new online procurement system. The next steps are to bring transparency to the process by posting contract milestones in that system and eliminate the delays and pressure points in the payment process.
You've got long-standing groups with no history of problems getting taken to task for trivial amounts of money in detailed project budgets while other organizations - CCS, CORE - get hundreds of millions of dollars. Isn’t this an example of one-size fits none rules? Is that too harsh?
The rules are aimed at setting standards for deeming if a vendor is responsible and has the capacity and the integrity to perform its contracted requirements. But you are right, sometimes it may seem that there is a one size fits all approach especially when in cases like CORE
We need to give agencies the tools to apply the appropriate level of action when there are questions, concerns and red flags. It is time to revise the Vendex/PASSPort section of the administrative code to add common sense disclosures such as related HDFCs, LLCs and other information that is included on the 990s and in other public databases. Leverage the PASSPort system with enhanced data collection and give agencies the tools to review and evaluate the information in it. Now is the perfect time for the City’s procurement system to evolve into one that uses data not only for strategic sourcing but for risk assessment as well. Of course everything would require consultation from the sector and from the appropriate oversights such as DOI but it would revolutionize the way the City contracts with nonprofits.
Consider these three ideas to reduce the pain inflicted on nonprofits by late registration and payment. Please describe what you think about them:
The first is to treat discretionary items - at least the small ones - as grants rather than continuing to pretend that they are actually contracts for services. DCLA does this and it would greatly reduce the procurement headache. The notion of $5,000 or $10,000 having a separately negotiated scope of work seems absurd.
The NYS constitution prohibits municipalities from providing gifts through the use of public funds. According to a Law Department opinion from 1993, DCLA grants are considered a budget allocation in support of cultural institutions for a public purpose without the City receiving anything in return. While the current discretionary process is certainly a budget allocation process, the City does receive services as a result of those contracts, even the tiny $5,000 ones. Having said that, it is definitely an idea I would support exploring with the Council and the City. If it does not end up being a viable option, the new City leadership has a great opportunity to create an improved process that builds on the lessons learned since the current PQL process was put into place. With the performance metrics available through PASSPort, it should be possible to identify the real hold ups. What is the average length of time to get pre-qualified? What is the average length of time to negotiate a scope of services with an agency once the Council has allocated funds? How long does it take to complete each milestone? That data should inform a new solution to discretionary contracting.
The second is to facilitate lending by third-parties (banks, CDFIs, foundations) against contracts - perhaps even unregistered contacts - by making it easier for nonprofits to assign payments to them from the City.Better yet, why not create a public-private fund - like the New York City Acquisition Fund - to do this lending.
As you know, the City has a loan program that is administered through the Fund for the City of New York for certain registered contracts. But the creation of additional third party lenders and/or public/private funds to provide additional sources of support is definitely worth exploring particularly if some lenders would be willing to lend against unregistered contracts. The City’s financial management system can assign payments to third-party lenders, though agencies have been reluctant to do it other than with the Fund. But first and foremost, the goal should always be to get contracts registered on time.
The final idea is to establish a help-desk for nonprofits to call when they are confused, bewildered or just plain being lied to about where a given contact stands. Nonprofits with connections often find ways to do this but many others do not have these connections. As a matter of equity the role should be formalized and philanthropy might even pay for it.
Absolutely. I would love the City to create a help-desk that is staffed with folks who know how to help with the technical issues and are well versed in the suite of services that are available to nonprofits. Ideally the nonprofit would be assigned a “case manager” so they don’t get bounced from one person to another. The City Council recently introduced a bill to create the Mayor’s Office of Nonprofit Services so perhaps that office will serve that function. The help-desk function needs to be within an agency that has the power to push for resolution once an issue has been identified. The bedrock of public procurement is fairness and accessibility, both of which would be aided by an office that is available to all.
What advice would you give nonprofits leaders hoping to do business with the new administration?
I have been so impressed by the nonprofit sector’s ability to organize and advocate for their policy priorities. With so many levels of government changing in 2022, it is going to be important that the sector continues this. For individual nonprofits, it really is important to be part of an umbrella group or other advocacy group. There are new local laws and undoubtedly lots of changes to come that will impact nonprofit contracting. It is important to have a reliable source of information and access to training. Stay engaged, let your councilmember and other elected officials know what is needed, and continue to build mutual trust.
What's next for you on the professional side?
I enthusiastically joined City government almost two decades ago because I believe in public service. My mother worked for the City for over 30 years and I saw it as an opportunity to use my strategic and analytical skills to have a direct impact on making the best City in the world more efficient, more accountable and, more equitable. So, if I can be helpful and have a positive impact, I’d love to continue my City service for another two decades, but I am exploring all options.
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