Citing a “severe crisis,” Bronx Borough President Ruben Diaz, Jr. has asked the New York City Housing Authority to declare an emergency so it can get boilers fixed without following the usual rules for handing out contracts.
Failures of boilers at several NYCHA developments have made headlines in the new year, although the authority maintains that the vast majority of its 178,000 apartments have working heat. According to Diaz, however, “nearly half of all NYCHA boilers citywide need to be replaced,” including many “insufficient temporary boilers.” Comptroller Scott Stringer has faulted NYCHA for mismanaging its boiler supply.
“NYCHA has told me that their hands are tied by the procurement process,” Diaz wrote on Monday in a letter to NYCHA chairwoman Shola Olatoye that his office released to the media on Tuesday. “That is no comfort to a family forced to live in a frigid apartment on the coldest days of the year. We must act to cut red tape during this time of severe crisis. An emergency declaration must be made.”
NYCHA, in a statement to City Limits, dismissed the idea: “NYCHA’s underlying issue is its $17 billion in capital need. While we have staff working 24/7 to provide repairs as quickly as possible, federal disinvestment has resulted in aged and unreliable infrastructure and this cannot be remedied overnight.”
Because it receives capital funding from federal, state and city governments, NYCHA operates under overlapping sets of procurement rules. Their aims are the same: to prevent fraud and maximize value for the taxpayer’s dime, at the expense of flexibility and speed. Under the city’s rules, for instance, agencies have to publish a solicitation, hold a competition, select a vendor, determine that the winner is a responsible company, negotiate a contract, get it signed and register it with the city comptroller. Then work can begin.
While agencies don’t have to follow those steps for every single purchase, the rules apply even for deals of modest value. Olatoye testified before the City Council in 2015 that state rules require it to accept sealed bids for all construction contracts over $50,000 and contracts for materials and supplies over $25,000, and award the deal to the lowest “responsive and responsible bidder.”
The contracting rules and guidelines for all three levels of government do, however, each create a way to bypass many of the procurement regulations in the event of an emergency.
“An emergency condition is an unforeseen danger to life, safety, property, or a necessary service. The existence of such a condition creates an immediate and serious need for goods, services, or construction that cannot be met through normal procurement methods,” the city’s procurement rules say. “An emergency procurement shall be limited to the procurement of those items necessary to avoid or mitigate serious danger to life, safety, property, or a necessary service,” and requires “the prior approval of the Comptroller and the Corporation Counsel.” An emergency contract can begin without a “pre-solicitation” review of the marketplace, without a public hearing and without waiting for the deal to be registered by the comptroller.
“The procedure used shall assure that the required items are procured in time to meet the emergency,” the rules say. “Given this constraint, such competition as is possible and practicable shall be obtained.”
State procurement guidelines echo the city’s, though they add, “an agency should make a reasonable attempt to obtain at least three oral quotes,” and note: “An agency’s failure to properly plan in advance – which then results in a situation where normal practices cannot be followed – does not constitute an emergency.” The feds let an agency bypass the regular process only when “the public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation.”
In the city at least, emergency contracts are a very small part of the total amount of spending the city does through procurement.
In fiscal 2017, only 88 of the roughly 39,500 contracts awarded or extended by the city were done on an emergency basis, according to an annual report by the Mayor’s Office of Contract Services. These deals were worth about $77 million—out of some $21 billion in total city contracting done that year. The Department of Housing Preservation and Development had the most of any agency—39—followed by the Department of Sanitation with 22.