As the immigrant situation worsens in New York City, Mayor Eric Adams is in danger of losing his ability to quickly spend hundreds of millions of dollars on the crisis using his emergency powers.
City Comptroller Brad Lander warned the city that it could restrict the city’s power to enter emergency contracts – a power granted by his position – to deal with the influx.
He said that now that the crisis has been going on for 18 months, “it is no longer an unexpected situation that warrants the broad suspension of due diligence processes to ensure that city funds are spent wisely and with integrity.”
Lander also informed the city, in a letter sent Friday, that he was beginning an audit to determine how the city came to award a $432 million no-bid contract for migrant services to DocGo.
The company describes itself as a medical services company. But multiple investigations and various journalistic reports, even in The New York Times, revealed worrying information about his performance and lack of experience in handling asylum seekers. Mr. Lander subsequently approval denied of the DocGo deal – the first time it has rejected an emergency contract from the city.
The contract went into effect on May 5, but the comptroller’s office did not see it until August 16. The office then discovered several flaws in the procurement process, as well as inadequate evidence that the company’s subcontractors had been properly vetted.
The contract, which was reviewed by The Times, also included provisions that appeared structured to benefit DocGo. In one example, the company was allowed to bill taxpayers $170 per hotel room per night to house immigrants (many of them in upstate motels that typically cost much less) and then profit from the difference.
“There are too many outstanding questions and concerns about this contract and this contractor,” Lander said in an interview. “The goal here is real-time oversight and accountability, not a post-mortem audit that identifies problems later.”
The heightened scrutiny comes as DocGo CEO Anthony Capone resigned on Friday, a day later. admitting in the Albany Times Union that their resumes and biographies falsely claimed a graduate degree in artificial intelligence, causing another drop in the company’s already lagging stock price.
A spokesman for Mayor Charles Kretchmer Lutvak warned of devastating consequences for asylum-seeking families if Lander were to revoke fast-track approval for emergency migrant services contracts.
“If the comptroller decides to put politics before the well-being of people seeking asylum and declares that this crisis is no longer an emergency, asylum seekers will have to sleep on the streets while they wait for the comptroller to approve city contracts,” Lutvak said. .
Despite the questions surrounding DocGo, Mayor Adams had expressed his intention to move forward with the contract, insisting that Lander had already given it the green light. The mayor has the power to unilaterally approve the contract over the comptroller’s objections.
Lander, who made his plans public on Monday, said he would not block payments to DocGo but would instead begin a “real-time audit” (another tool he has never used before) to ensure that DocGo meets its contractual obligations and the city does not pay false invoices.
“We wouldn’t have to wait to see what they present” to the housing agency, Lander said, citing a particular contractual provision that allows him to immediately inspect the company’s financial records.
DocGo officials said Monday that the company would “respond accordingly” if notified of an audit, and maintained that the firm “continues to provide high-quality services” as its partnership with New York City strengthens.
There is still an urgent need to give city agencies spending flexibility to serve the migrants who arrive in New York City by the thousands each month. But Lander said the crisis was no longer an unforeseen emergency or a clear reason to suspend procurement rules designed to reduce the cost of caring for immigrants.
“The DocGo contract in particular raises serious concerns for us about whether that blanket preapproval is being treated as a blank check,” Lander said in the interview.
If he revokes the broad prior approval, Lander said his office would have to examine agencies’ proposed use of emergency procurement powers on a case-by-case basis. A contract the size and scope of DocGo’s, for example, would have to be opened to competitive bidding, he added.
Such a move would not affect the city’s hospital system, a public benefit corporation that has numerous emergency contracts to handle the influx of immigrants. But Lander said a repeal would affect all agencies directly reporting to the mayor and the pursuit of contracts for services to asylum seekers; some small contracts, such as those under $1.5 million, would continue to be exempt from competitive bidding rules.
“If we repeal blanket preapproval, yes, then each of those agencies would simply have to come to us to approve any individual contracts,” he said.
The company’s contract with the city’s Department of Housing Preservation and Development, which has not been made public, requires DocGo to provide some of its outsourced services at no markup. For example, laundry and food service are “billed at actual cost,” capped at $270,000 per month and three meals costing no more than $33 per person each day, the contract says.
But DocGo is allowed to make considerable profits on its biggest monthly expense: the hotel rooms that house migrants. Under the contract, the city must pay the company a fixed sum of $170 per room per night, so the contractor can keep the difference between what it pays for the hotel and the amount it receives from the city; The city has to pay for microwaves and refrigerators if they are not included in the rooms, the contract says.
In Albany, DocGo is paying about $100 a night for rooms at the Holiday Inn and about $80 a night for rooms at the Ramada Plaza, the hotel where a Times reporter witnessed migrants being threatened by DocGo’s security team, say sources familiar with the rates.
DocGo said the rates it pays to hotels housing migrants were the product of “confidential business negotiations” and refused to release them.
“Our prices have been accepted by the City of New York based on our history of providing high-quality services,” the company said through an outside spokesperson for 5WPR, a public relations firm with experience in crisis management.
The housing agency said it should not be assumed that DocGo is benefiting from the $170 fee because just over half of the immigrants in its care stay in hotels in New York City, where rates tend to be higher. high, and establish a fixed rate. allows the city to avoid unpredictable spikes.
Allowing DocGo to make money from the hotel rooms it offers to immigrants may help explain why the company told investors last month that it has about $300 million in net proceeds from its no-bid city contract and projects a gross profit margin. exceeding 35 percent until the end of this year.
The city says there are about 4,200 immigrants in DocGo’s care in New York City and upstate. With a estimated $70 million What DocGo is owed so far, that equates to about $16,700 per migrant who has gone to DocGo so far under the contract, which went into effect on May 5.
DocGo called the figure “misleading” because the number of migrants varies over time, and a city housing spokesman said the $16,700 did not include migrants who have already vacated the hotels. The spokesman also noted that the cost was much less than the $383 per night that the mayor cited in early August as an expense to care for immigrants in the city.
Still, the contract does not meet all of the immigrants’ needs. In interviews and accounts in newsImmigrants and their advocates have complained that they are not receiving the health care they need, even though the company and the City Council have repeatedly said that health care is included in the contract.
However, the fine print shows that DocGo is only required to provide remote telehealth appointments, and they are limited to 600 visits, with a total cost of no more than $39,000 per month.
Any on-site medical care must first be requested by the city and, one month in advance, provided or coordinated by DocGo only after mutual agreement with the company, and assuming it has the “capacity to provide it,” the contract says. . DocGo and the housing agency said DocGo has been providing medical care in upstate sites where there are immigrant families with children.