NYC taxpayers fleeced for millions on rushed, overpriced no-bid contracts for migrant services, audit finds

New York City Comptroller Brad Lander said Mayor Eric Adams' current no-bid contract practice for migrant services is 'a recipe for fiscal waste'

By Chris Pandolfo FOXBusiness

New York City taxpayers have been fleeced for millions of dollars with emergency no-bid contracts awarded by Mayor Eric Adams' administration to buy services for illegal immigrants, an audit finds.

A report released Tuesday by NYC Comptroller Brad Lander analyzed four emergency asylum-seeker-related contracts held by different city agencies and found that prices paid "varied wildly" for similar services across the four contracts. The Adams administration also paid "significantly higher" rates to outside contractors than what the city would usually pay to existing shelter vendors and public sector employees, according to the audit.

"The City agencies charged with serving asylum seekers entered into these costly, no-bid, contracts at the same time that they are facing budget cuts and hiring freezes," Lander said. "The analysis of just one site found that hiring new City employees instead of staffers supplied by the vendor would deliver as much as $50 million in savings in a single year, even when factoring in the costs of fringe benefits for City employees."

"The current practice is a recipe for fiscal waste," he added.

New York City Mayor Eric Adams speaks during a press conference at the Office of the District Attorneys on Feb. 8, 2024 in New York City. Adams has wasted millions of taxpayer dollars on pricey no-bid contracts for migrant services, an audit has foun (Michael M. Santiago/Getty Images / Getty Images)

The audit was first reported by the New York Post.

According to the comptroller, as of November 2023, the city has awarded 340 unique asylum-seeker contracts held across 14 different city agencies, representing an estimated contract value of $5.7 billion. Most of these contracts were awarded on an emergency basis, with little or no oversight.

The audit examined four emergency contracts, each held by a different city agency, to supply staffing at commercial hotels, welcome centers and Humanitarian Emergency Response and Relief Centers. Three of the contracts were "selected without any competitive bidding," the report said.

More than 150,000 migrants have arrived in New York City since 2022, overwhelming city resources as officials have struggled to find housing, food and clothing for them. Texas Republican Gov. Greg Abbott has bused asylum-seekers to New York and other cities in an effort to assist them in traveling to sanctuary jurisdictions and also highlight the crisis that border communities face on a daily basis.

Adams, a Democrat, declared a state of emergency in October 2022 to ramp up shelter operations and house migrants under the city's Right-to-Shelter laws. That process involved awarding emergency contracts to different vendors for meals, medical care and site staffing to meet migrants' needs.

Elected leaders and immigrant advocates of New York City gather in Foley Square to call on New York City Mayor Eric Adams to stop the 60-day shelter limit for asylum-seeking families who face eviction from shelters beginning Tuesday morning, Jan. 9, (Selcuk Acar/Anadolu via Getty Images / Getty Images)

The mayor has decried the arrivals as a humanitarian crisis and said that services provided for the migrants will cost the city about $12 billion over three years. However, the comptroller's audit states those costs have been inflated by for-profit vendors charging "exorbitant rates" for services frequently procured by the city for much cheaper.

In one "egregious" example, a Texas-based disaster firm called SLSCO LP charged hourly rates that were 237% higher than a similar contract awarded to the Essey Group, LLC by a different department, while DocGo, a migrant shelter firm, charged another department 146% more than Essey for the same positions, the audit found.

In another case, SLSCO is billing the city $201.06 per hour for off-site managers ó nearly double what Garner Environmental Services Inc. has billed and four times more than DocGo has charged for their off-site management positions.

Job descriptions examined in the report showed that NYC is billed $90 per hour for security guards at migrant sites provided by SLSCO, $78.99 per hour by Garner and $50 per hour for DocGo security officers.

Migrants line up outside a migrant re-ticketing center at St. Brigid School on E. 7th St. on Friday, Jan. 5, 2024 in Manhattan. (Barry Williams for NY Daily News via Getty Images / Getty Images)

At the same time, an existing contract with FJC Security Services to provide unarmed security guards only bills the city $24.09 per hour.

The no-bid emergency contracts approved by the Adams administration were "radically more expensive" than hiring new city employees to staff migrant shelters would have been, according to the report. A peace officer employed by the Department of Homeless Services only costs the city $29.80 per hour, a rate 40% more affordable than the least expensive asylum-seeker security contract, the report said.

Full-time supervisors at migrant sites made out like bandits. The audit found that SLSCO was initially paid nearly $1,500 for each shelter supervisor who worked an eight-hour shift, or $185.63 per hour. DocGo supervisors are contracted at $2,000 per day, billed on a 24-hour basis, while the supervisors are only on site 12 hours per day.

In contrast, the only firm that competed for its contract, Essey, paid supervisors a little less than $550 per day.

"The Comptrollerís Office estimates that certain staffing costs to provide services to asylum seekers at the Row Hotel were approximately 2.5 times higher under an emergency contract with SLSCO than if the city had delivered those same services with city employees," the report states.

The audit found that city departments failed to communicate with each other to keep tabs on prices and mitigate costs.

"There was little, if any, evidence of coordination or planning between City agencies to evaluate and monitor prices of services or to ensure commensurate pricing across City agencies," Lander said, describing how agencies charged with oversight of these contracts could not provide requested documents for the audit.

The report comes as Adams faces criticism over a $53 million pilot program to hand out prepaid credit cards to migrant families. New Jersey company Mobility Capital Finance received a no-bid contract with the city to run the program, the New York Post first reported.

"The asylum-seeker contracts show the dangers of this process run amok ó wildly high staffing prices with little consistency across agencies, costing much more than traditional procurements or hiring City employees, procured from largely non-M/WBE subcontractors with varying levels of approval or oversight," the comptroller's report states.

"The City allowed for-profit companies to take advantage of an emergency in its nascency," said Lander. "These companies charged exorbitant rates for roles that are frequently procured by the City at more reasonable rates."

The comptroller slammed the city for having "no significant plans in place to reduce asylum-seeker costs by contracting in sensible and sustainable ways."

"The City should responsibly martial its resources by using a competitive procurement process, managed by a single agency with experience in providing shelter, and transition to a sustainable contracting model for a new budgetary reality," Lander recommends. "This would strengthen accountability and find budgetary savings to respond in ways that are both fiscally responsible and compassionate to New Yorkers in need."