Purpose

To determine whether the Administration for Children's Services (ACS) properly awarded, extended, and renewed non-competitive and limited-competition contracts with vendors. We also assessed the adequacy of ACS's monitoring of contractor services. The audit covered the three fiscal years ended June 30, 2013.

Background

The mission of ACS is to protect and promote the safety and well-being of New York City’s (City) children, young people, families, and communities. It does so by providing them with child welfare, juvenile justice, early childhood care, and education services. As part of this effort, ACS contracts with various community-based organizations to operate many of its programs. ACS is required to comply with the provisions of the City’s Rules of the Procurement Policy Board (Procurement Rules). During our audit period, ACS had 1,884 active contracts with a value of approximately $6.5 billion. To perform our audit, we tested a judgmental sample of 40 of ACS’s larger noncompetitive or limited competition contracts.

Key Findings

• ACS officials did not always comply with the Procurement Rules and document their justification for awarding certain non-competitive and limited-competition contracts. For 13 contracts (totaling about $20 million), there was inadequate documentation to justify the non-competitive methods used to award the contracts.
• ACS officials did not provide sufficient oversight of contractor performance. Officials renewed or extended contracts with some vendors that had poor performance. In fact, 12 sampled contract vendors received less-than-satisfactory performance ratings. The vendors’ contracts totaled $114.1 million. For 9 of the 12 vendors, children in their care were abused by employees or foster parents. Consequently, in some cases, the health and safety of children were placed at risk.
• ACS officials did not always register contracts in a timely manner. Since the City is not permitted to pay unregistered contractors, a vendor’s cash flow and ability to provide needed services may be adversely affected.

Key Recommendations

• Optimize opportunities to solicit competitive bids in awarding ACS contracts to vendors. In particular, ensure that sufficient lead time is made available to obtain services through contracts by the time such services are needed.
• Adequately document the justification for not employing competitive procurement processes to obtain services.
• Monitor all contractors in a timely manner and document the justification for extending or renewing contracts with vendors with a history of poor performance.
• Do not extend or renew existing contracts with vendors until the performance of such contractors has been adequately evaluated.

Other Related Audits/Reports of Interest

New York City Human Resources Administration: Personal and Miscellaneous Service Contracts (2010-N-3)
New York City Administration for Children’s Services: Accounting for and Contracting Children In Foster Care (2004-N-5)