City will now begin to track subcontractors


Mayor Michael Bloomberg and Comptroller John Liu put out a rare joint press release on March 19 to announce landmark reforms for how the city tracks its subcontractors.

The new program will not only increase transparency for how billions in public money is spent, it will for the first time create a uniform system for the city to monitor payments to companies doing work for the city.

“This is a really big deal in a very boring wrapper,” said John Kaehny, co-chair of the New York City Transparency Working Group.

The story has flown nearly as far under the radar as the subcontractors who have managed to avoid public scrutiny until now. 

The city has not had a uniform way of tracking how much prime vendors pay subcontractors and how that money is used. 

In fact, according to the city comptroller’s office, there has been very little oversight of subcontractors because every city agency has its own method for keeping tabs.

Many of the records of payments — sometimes in the millions of dollars — are handwritten and sent through the mail. 

The wonkiness of reforms to the city’s subcontracting requirements may explain the lack of traction in the news media, but why wasn’t the program — which makes New York City the first city in the nation to make subcontracting data available to the public — even announced at a press conference?

Perhaps it was because the new initiative was born out of the CityTime scandal, one of the biggest frauds in the city’s history and a major blemish on Mr. Bloomberg’s tenure as mayor.

 Because of fraud, the project to modernize city’s payroll system ballooned from $73 million to $700 million. Science Applications International Corporation, the main contractor on the job, ended up having to pay back $500 million. 

While SAIC was the prime vendor for the job, about two-thirds of the total work was conducted — and some of the fraud allegedly perpetrated — by subcontractor TechnoDyne. 

A year ago, the Mayor’s Office of Contract Services and the Comptroller’s Office started working on the project to track such transactions. Computer company CGI created the tracking system for $1.6 million.

Beginning this month, vendors with new contracts valued at $1 million or more will have to digitally disclose the names of subcontractors hired and every payment to them. In June, the ceiling will be lowered to $250,000, which means it will affect 96 percent of all city contracts. The information will be integrated with Checkbook 2.0 — a transparency site launched by the comptroller in January  — so the public has access to the information.

“These new reporting requirements will help us to continue to lead the way in making government more accessible and accountable to the public,” Mr. Bloomberg said in the press release no one read.

“Giving all New Yorkers the ability to keep an eye on this information will give contractors 8.3 million more reasons to spend tax dollars as prudently as possible,” Mr. Liu said in the same press release.

Good government groups, including Citizens Union, Citizens Budget Commission, New York Public Interest Research Group, Reinvent Albany and NYC Transparency Working Group have all heralded the new system. Mr. Kaehny of Reinvent Albany and the NYC Transparency Working Group said the next step will be to push the state toward enacting the same reforms. 

This will be the first time the public can view this information, but amazingly, it will also be the first time the city can view this information in one place. Until now, a single company could be doing hundreds of millions of dollars in business for multiple vendors and multiple city agencies and the company’s name could remain anonymous and all its spending could go unchecked.

“The fact that this thing wasn’t being reported before is astonishing,” Mr. Kaehny said.

This will undoubtedly crack down on future waste and fraud like CityTime, but also projects like the Croton Water Filtration Plant, which has more than tripled in cost. It will also allow the public to access company names and payments on projects that have been delayed because of improper construction — like the reconstruction of Memorial Grove and the Parade Ground in Van Cortlandt Park. 

At Croton, a prime contractor was fined for abusing the city’s minority and women-owned business program. The new system will make such violations more difficult by naming subcontractors and allowing those monitoring the system to cross check with lists of minority and women owned contractors. 

Many companies have gotten very good at answering the city’s requests for proposals, but they are not necessarily the best companies to perform the jobs, according to the comptroller’s office. Companies can win bids and then turn around and pay other companies to do the bulk of the work. 

It’s impossible to know how much of the $5.6 billion in services and construction the city spent in fiscal year 2012 went from prime vendors to subcontractors because the lack of oversight.

“It makes it hard to know who’s doing business with the city and how much business,” Mr. Kaehny said. “There’s a very, very good chance there are big subcontractors out there that were doing way more business than the bigger vendors.”