New York

New York City’s Lucrative No-Bid Migrant Services Contract Is Rejected

A no-bid $432 million contract that New York City officials gave to a medical services provider to house and care for migrants has been rejected by the New York City comptroller’s office.

The comptroller, Brad Lander, cited a slew of defects with the contract awarded to the provider, DocGo, questioning why the administration of Mayor Eric Adams chose a firm to care for migrants that had no experience doing so. Mr. Lander noted that the city had failed to provide any “meaningful detail” regarding how it concluded that DocGo should be authorized to bill the city for hundreds of millions of dollars.

Mr. Lander said DocGo’s lack of expertise in providing a range of services, including social work, housing and busing migrants to motels far north and west of the city, reflected a lack of basic vetting by the agency, which hired the company under emergency procedures negating typical competitive bidding requirements.

“It is a medical services company, not a logistics company, social services provider or legal service provider,” Mr. Lander wrote of DocGo in a denial letter that will be made public on Wednesday. He also pointed to “alarming” news articles that “further detail the inflation of the company’s financial value, interference with law enforcement and workplace violations.”

The rejection will initially bar the city from paying DocGo for any work submitted as part of the contract, which is being handled by the city’s Department of Housing Preservation and Development.

Mr. Lander said the city housing agency could withdraw the DocGo contract, resubmit a less expensive version of it or fix the flaws he highlighted and seek reapproval.

“We don’t do this lightly,” Mr. Lander said in an interview. “It’s the first emergency contract we’ve declined to approve out of 300 submitted to our office.”

Mayor Eric Adams has the power to override Mr. Lander and unilaterally approve the contract over the comptroller’s objections, though such a move could raise questions about the mayor’s reasoning and motivation.

A mayoral spokesman, Charles Kretchmer Lutvak, said that “with nearly 60,000 people currently in the city’s care and thousands more coming every month, we are doing everything we can to stop families from being forced to sleep on the streets, and we are hopeful our partners in the comptroller’s office will work with us toward that goal.”

He contended that Mr. Lander’s office had approved the DocGo contract in July; Mr. Lander, however, clarified that his office’s consent only applied to the use of an emergency declaration, and that the DocGo contract still required his approval.

The company is already under investigation by the state attorney general, Letitia James, and the administration of Gov. Kathy Hochul launched a separate review that recently found that more than 50 security guards working for DocGo subcontractors lacked proper authorization.

DocGo did not immediately respond to requests for comment.

Security guards hired by DocGo’s subcontractors were accused of mistreating migrants at hotels that the firm had bused to places like Albany, N.Y.Credit…Cindy Schultz for The New York Times

In late July, The New York Times revealed the details of DocGo’s lucrative city contract, which came after the Adams administration used an emergency order to bypass a competitive bidding process. The Times reported on the company’s use of deceptive work and residency documents, threats made by security guards working under its supervision and complaints from migrants in DocGo’s care.

The contract took effect on May 5, and Mr. Lander, the city’s chief financial officer, had been working to obtain the agreement, along with the agency’s rationale for hiring DocGo — required elements of his office’s contract approval process.

What Mr. Lander discovered, after he finally received the contract on Aug. 16, was that there had been flaws in the procurement process from the outset.

He noted that the housing agency had only committed $15.3 million of its budget to pay the company’s invoices, even though it already owes DocGo over $70 million so far.

The comptroller also found that the agency had given “contradictory statements” about DocGo’s ability to provide the required services to migrants. At one point, the agency asserted that the publicly traded company had the capacity to handle the migrant crisis, even though its expertise was in medical services; at another point, it claimed that DocGo could do so only if it were given $4 million in taxpayer money up front.

Mr. Lander’s office faulted Housing Preservation and Development officials for failing to disclose who referred DocGo to the agency, to provide certain creditworthiness and corporate structure disclosures from the company, and to demonstrate that the company’s subcontractors were being properly screened and selected.

Nor could the housing agency provide any evidence for its contention that the city had “exhausted efforts” to find other contractors that could do the work without needing a cash advance, Mr. Lander noted. (His office had already denied the cash advance in mid-July).

The agency did not immediately respond to a request for comment.

Since Mr. Lander was sworn in as comptroller at the beginning of 2022, his office has registered more than 30,000 contracts and rejected fewer than 75, or 0.22 percent. None of those were awarded using emergency procedures.

Mr. Lander also took aim at DocGo’s chief executive officer, Anthony Capone, for saying during an interview at an August investor conference — as first reported by the Albany Times Union — that the company had pursued the $432 million city contract largely to give it enough credibility to bid on a $4 billion contract with the U.S. Border Patrol.

In the same interview, Mr. Capone also predicted that ongoing gridlock in Washington would help ensure steady revenue for migrant services providers like DocGo — a posture that “suggests that the company has little incentive to assist the asylum seekers in its care to obtain legal services and work authorization that would enable them to leave shelter,” the comptroller said.

“Rather, the C.E.O. seems eager to capitalize on the fact that the longer asylum seekers remain in their care, the more the company’s revenues will grow under this contract,” Mr. Lander wrote.

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