Purpose

To determine whether the New York State Energy Research and Development Authority (NYSERDA) awarded procurement contracts according to prescribed policies and procedures. We also determined whether NYSERDA monitored vendors’ performance to ensure compliance with contract terms. Our audit included contracts awarded or modified during the period April 1, 2011 through March 31, 2013.

Background

NYSERDA, a public benefit corporation created in 1975 by the New York State Legislature, is governed by a 13-member Board appointed by the Governor. Its earliest efforts focused on research and development with the goal of reducing the State’s petroleum consumption. NYSERDA’s mission is to “Advance innovative energy solutions in ways that improve New York’s economy and environment.” NYSERDA developed an Operations and Procedures Manual (Manual) that established procurement guidelines to follow when awarding contracts. According to the Manual, the two primary types of competitive solicitations are Program Opportunity Notice (PON) and Request for Proposals (RFP). Other examples of competitive solicitations include: Request for Quotations (RFQ); Request for Qualifications (RFQL); and administrative purchases over $50,000. Non-competitive procurements include sole source; single source; unsolicited proposals; contracts whose expected value is $50,000 or less; and Minority or Women Owned Business Enterprise (MWBE) contracts valued at $200,000 or less.

For the two fiscal years ending March 31, 2013, NYSERDA reported that it awarded or modified 5,120 contracts greater than $5,000. The total value of these contracts was approximately $1.08 billion.

Key Findings

• Although NYSERDA has policies and procedures governing the contract award process, certain policies and procedures were not always followed for 19 of the 69 contracts we reviewed. For example, five contracts (valued at $742,113) were incorrectly awarded as unsolicited proposals and, therefore, without the competition that would otherwise have been required.
• NYSERDA did not effectively monitor contract expiration dates to ensure that successor contracts were in place prior to the expiration of the previously existing contracts for similar or related work. NYSERDA paid about $9.7 million on four contracts after they had expired or after approved extensions had been exhausted.
• NYSERDA did not adequately document the justification for allocating projects (related to four contracts) to certain contractors when there were nine additional contractors pre-qualified for the same work. Two of these four contracts amounted to $15.4 million.

Key Recommendations

• Classify contracts properly and use the appropriate procurement method to award them.
• Ensure that the assignment of project task orders to contractors is properly justified and adequately documented. Also, ensure such documentation is retained in procurement files.
• Actively monitor contract expiration dates to ensure that new contracts are in place before the
  expiration of existing contracts.

Other Related Audit/Report of Interest

New York City Department of Education: Non-Competitively Awarded Contracts (2008-N-1)