Rampant Lack of Oversight Led to NYCHA Contract Corruption, Comptroller Audit Finds

 

Comptroller Brad Lander’s office found dozens of cases where NYCHA could not document that work the agency had paid for was actually done.

This article originally appeared in The City.

By Greg B. Smith

NEW YORK - The New York City Housing Authority did little to follow up on apartment repairs by hired vendors and in dozens of cases could not provide evidence that the work they paid for had actually been done, the city comptroller alleged Wednesday.

The findings by Comptroller Brad Lander's audit team came in response to February's federal arrests of 70 NYCHA workers on charges of taking kickbacks in exchange for handing out hundreds of "micro-contracts" that don't require the rigorous and public competitive bidding protocols of larger contracts.

The audit alleges NYCHA's lack of oversight of these smaller contracts allowed this corruption to flourish unnoticed for years. 

Announcing the takedown in February, Manhattan U.S. Attorney Damian Williams said the scheme dated back to at least 2013, and that NYCHA workers had pocketed a total of $2 million in bribes to award $13 million in small contracts at nearly 100 developments.

Lander's auditors looked at $135 million in smaller contracts awarded by development level managers in 2022 and 2023. Their audit included examining some small contracts awarded by one of the NYCHA managers arrested by the feds.

Based on the lack of documentation to back up the work NYCHA paid for, Lander's team estimated that this included $30 million in government waste during that time.

The audit team, led by Deputy Comptroller Maura Hayes-Chaffe, sampled 120 small contracts worth $646,000 from 10 developments in all five boroughs, determining that more than $300,000 of that, or 46%,  lacked documentation to show the work had actually been performed.

That included a sampling of 19 purchase orders auditors singled out because they were bathtub replacement jobs approved by a Bronx-based NYCHA manager charged with bribery by the feds. The 19 contracts totaled $186,000; the auditors could find no documentation spelling out when or even where $176,000 in repairs were made.

So far, 58 of the 70 NYCHA workers charged have pleaded guilty, and one was found guilty at trial. Another worker is currently on trial in Manhattan Federal Court.

In 2019, THE CITY first raised questions about potential corruption in the awarding of hundreds of small contracts by lower-level NYCHA managers, documenting a pattern of the same favored vendor getting small contract after small contract, indicating a work-around to avoid competitive bidding protocols required of bigger contracts.

Speaking to the press at the Taft Houses in East Harlem Wednesday, Lander, who is running for mayor, said the findings document "rampant failures in NYCHA's oversight of its vendors." He noted that NYCHA did not track the work quality of specific vendors to see if they were doing a good or bad job, and did not have an organized way to gather tenant feedback about the quality of the repairs once they were done.

The comptroller recommended they adopt a "Yelp-like" app that would allow tenants to file comments on the quality of the repairs after they're complete. 

With such an app, Lander said, "You'd quickly see that vendors don't show up or do shoddy work." That information would also better inform NYCHA on whether a particular vendor should continue to be hired.

"How do we say anything about the work of the contractors?" asked Aixa Torres, tenant association president of Smith Houses in Lower Manhattan and a member of the comptroller's tenant audit committee. "The purpose of this isn't gotcha. The purpose of this is, this is what's being done right and this is what's being done wrong."

Housing Authority spokesperson Michael Horgan said the agency "is diligently reforming its procurement, contract administration, and vendor management processes."

Horgan noted that as of this week, the agency "has already implemented or is currently implementing many of the recommendations made in this report. While we do not agree with some of the Audit’s analysis and findings and take issue with its numerous unsubstantiated claims, we appreciate Comptroller Lander’s commitment to improving NYCHA and quality of life for public housing residents.”

When the arrests took place in February, the city Department of Investigation — which led the probe — made 14 recommendations to NYCHA to reform its practices. As of Wednesday, all of them have been accepted but five have yet to be fully implemented.

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