AUDIT REVEALS HPD FAILED TO TRACK AND VERIFY MINORITY AND WOMEN-OWNED BUSINESSES PARTICIPATION ON CONTRACTS

Agency did not hold prime contractors accountable for subcontractor spending and did not upload all contract information to City financial system

New York, NY – (RealEstateRama) — The Department of Housing Preservation and Development (HPD) failed to keep track of all of its contracts and subcontracts awarded to Minority and Women-Owned Business Enterprises (M/WBEs), undermining citywide efforts to ensure that its spending is done transparently and with accountability, according to a new audit released by New York City Comptroller Scott M. Stringer.

“When City agencies don’t track whether the money they spend on M/WBEs actually goes to those vendors, it opens the door to potentially fraudulent activity,” Comptroller Stringer said. “The M/WBE program is essential to ensuring that all businesses have an equal chance to compete for City contracts, but HPD’s failure to adequately track and report contracts puts that opportunity at risk.”

The audit sought to determine whether HPD complied with key provisions of Local Law 1—the City law that modified the City’s M/WBE program in 2013. Auditors examined HPD contracts for Fiscal Years 2014 and 2015 and found that:

• HPD does not track or maintain a centralized list of all contracts and subcontracts subject to Local Law 1 that were awarded to M/WBEs;
• HPD did not record all required contract information in the City’s Financial Management System (FMS) for contracts subject to Local Law 1;
• HPD potentially overstated the amount of reported M/WBE utilization for four sample contracts by $13,900;
• HPD did not present evidence that it effectively monitored prime contractors’ use of M/WBEs for contracts with participation goals, including no documented evidence that prime contractors actually made promised payments to subcontractors and no evidence of job-site inspections to verify M/WBE use; and
• HPD had inadequate evidence that it considered relevant and required information under Local Law 1 in setting its annual M/WBE goals and did not provide evidence that it adequately monitored progress toward those goals.

The audit follows a 2010 audit of HPD that found similar deficiencies in the agency’s monitoring under Local Law 129—the precursor to Local Law 1.

While HPD received an “A” in the Comptroller’s 2015 Making the Grade report, that grade was based exclusively on self-reported agency spending with M/WBEs, and unlike this audit, did not examine HPD’s compliance with reporting and monitoring requirements outlined in Local Law 1. The Comptroller’s Making the Grade report also noted that HPD failed to ensure that prime contractors uploaded

To see the full audit click here

Contact : Eric Sumberg, esumberg (at) comptroller.nyc (dot) gov, 212-669-3535 – See more at: http://comptroller.nyc.gov/newsroom/stringer-audit-reveals-hpd-failed-to-track-and-verify-minority-and-women-owned-businesses-participation-on-contracts/#sthash.p70zGAU3.dpuf