Contract Sports

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In December, the mayor’s office quietly approved almost $500 million worth of sensitive job training and job placement contracts, completely overhauling New York City’s welfare-to-work system. In all, for-profit companies walked away with a total of $230 million. The city doled out a whopping $105 million to one corporate giant alone, Virginia-based Maximus, in two of the biggest social services contracts the city has ever granted.

But at an obscure public hearing to approve a last-minute change to Maximus’ employment center contract–it bumped up the company’s take from $12 million to $47 million–a handful of welfare watchers raised serious objections about both the contractors and the secretive contracting process.

For one thing, City Limits has found, some of these companies have less than stellar records. As we reported in November, Maximus has had trouble fulfilling some of its other human services contracts. “If our community-based groups had as many questions raised [about their records], they’d be blown out of the water,” says Manhattan City Councilman Bill Perkins, who presented testimony against the company at the hearing. And ARBOR, Inc., which is getting $18 million in New York City for skills assessment and job placement, botched a similar job in Philadelphia last year. City officials there declined to renew ARBOR’s $21 million contract because, among other things, the company failed to keep track of clients. “They fell well below our expectations,” says Linda Blanchette, director of Greater Philadelphia Works, the city’s welfare-to-work program.

These 17 contracts, serving poor unemployed people and welfare recipients, are performance-based, meaning that companies get paid for each client they place and keep in a job. But because of the way New York City’s contracts are structured, City Project associate director Glenn Pasanen points out, it appears Maximus can collect up to 20 percent of its first-year fees right away, for an up-front take of nearly $7 million.

Pasanen and Perkins also note that the contract process wasn’t exactly public. The deals were all arranged through negotiated acquisition, a method that circumvents open bidding. And although contracts are supposed to be available for inspection before they go to a public hearing, the documents available at Human Resources Administration headquarters were little more than boilerplate, including no specifics on dollar figures or subcontracting.

“Is that good government, to be able to change policy so dramatically, and be able to distribute that amount of money without a serious process of review and negotiations to make sure that the community’s interests are being represented?” Perkins asks.