Contracts Committee Agenda:
Getting Non-Profits Paid
INTRODUCTION
The City of New York procures $15.6 billion in goods and services from the human services sector every year. These contracts are essential to city operations - from operating homeless shelters, to providing legal counsel to tenants facing eviction, and serving meals to homebound seniors. Yet the City has failed to pay these providers on-time for decades. Non-profits are forced to take out loans and wait an average of 388 days after a contract start date before receiving reimbursement. Action is needed to clear existing invoicing backlogs, proactively address recurring payment issues, and create better systems to get non-profits paid on time.
The Contracts Committee in partnership with City Hall, the Mayor’s Office of Contract Services, and the nonprofit sector will pass legislation, collaborate on policy changes, and carefully monitor progress to achieve real and sustainable improvements and cut red-tape and bureaucratic hurdles.
Reliable Access to Funding: Advances
(1) Citywide Implementation of Quarterly Advance Payments: The City Council strongly supports the 50% advance payment law, but if large advances on July 1st pose significant cash flow challenges to the City of New York, alternative approaches must be considered that guarantee nonprofits are paid promptly. As an alternative to 50% up front payments, MOCS and MONS should monitor the quarterly advance payment pilot to DHS and MOCJ and swiftly expand it citywide to all human services agencies following evaluation of the first year pilot results. The quarterly advance model should alleviate cash flow challenges and provide a better year round model for nonprofit partners.
(2) Returnable Grant Fund: Too many nonprofits need bridge loans because of the City’s failure to pay them for their work, but the Returnable Grant Fund is failing to meet demand. The City should shift the review of returnable grant fund applications to a single designated point person at each agency who reviews and recommends applications to the Returnable Grant Fund in collaboration with MOCS and MONS. Nonprofits that are struggling to receive attention to register contracts from city agency personnel should not be required to wait on those very same staff members to process bridge funding grant applications. Additionally, the City should expand the model to include additional lenders that can offer the same rates and larger grant sizes than the Fund for the City of New York, providing optionality to nonprofits. The City should ensure that funding is available for every non-profit seeking a loan and that loan applications are processed in 14 days. The administration and returnable grant fund operators should provide regular updates on grant applications and utilization by nonprofits.
Speed Up Payments
(3) Launch Clear the Backlog Initiative: City Hall should launch a 10-week clear the back-log initiative focused on approving budgets and invoice payments. The initiative should set a goal of all agencies approving 90% of outstanding budgets and invoice payments and setting that as an ongoing benchmark. Agencies should report weekly to City Hall on the number and value of outstanding invoices and length of time under review. Staff from agencies with high-capacity should be lent to agencies in need, and MONS should assist nonprofits to properly submit documents for approval.
(4) Impose Timelines on Budget Readiness and Invoice Approvals: In parallel with the Clear the Backlog Initiative, MOCS should issue guidance directing agencies to approve budgets within 30 days of contract approval (before contract registration). MOCS should also direct agencies on proper invoicing practices, including review of entire invoices and partial-payments. Following issuance of the guidance, MOCS should host a mandatory training for all relevant agency staff on best invoicing practices. MOCS should review each agency's guidance to nonprofits on invoicing and work with MONS to train nonprofits and ensure invoices are submitted in a timely fashion. Through monthly Contract Stat reports, MOCS should disclose the number, value amount, and length of delay of unapproved budgets, invoice payments, and pending invoices on contracts with approved budgets.
(5) Reissue Local Law 169 of 2023 Report: In collaboration with the Council, MOCS should reissue the Local Law 169 report with ambitious timelines for each discrete stage of the contract process - from RFPs to budget approval to invoices. Suggested timelines should breakdown every required stakeholder review, including OMB, Law, and City Hall, and provide a suggested timeline for each stage. In developing timelines, MOCS should analyze agencies with the best and most efficient processes, such as ACS. These recommendations should ultimately be adopted by the Procurement Policy Board. If necessary, the City Council should pass a new version of this law with clear directives.
Enhance Agency Capacity
(6) Agency staffing: MOCS should create a model plan for agency contracting staffing levels at all stages of the process, including procurement, legal, and fiscal staffing (Intro 1053). The model plan should be designed for human services agencies to meet ambitious timelines set out in the new LL 169 report. Agencies should report to MOCS biannually on their budgeted and actual staffing levels. Additionally, MOCS should work with DCAS on a targeted recruitment effort for procurement staff, and implement robust career pathways and professional development to facilitate career growth.
(7) Council Discretionary Grants: The Council Discretionary pilot should be expanded to include any organization receiving up to $50,000 in City funding from a City agency. This intervention would take ~2500 allocations out of the City agency procurement process and transform these onerous City contracts into grants. This will save significant time for City agency staff and enhance capacity to more efficiently process larger agency contracts. MOCS, MONS, and the City Council should launch a campaign to educate organizations on the new process and ensure that they understand their obligations and can complete required paperwork.
(8) PASSPort Improvements: MOCS should conduct a survey of City agencies and nonprofit partners to evaluate suggestions for improvements to PASSPort functionality. Potential changes such as allowing simultaneous Law and OMB review, upgrading bulk uploads, improving teams assignment processes, and moving Comptroller PIP review to PASSPort should be prioritized. MOCS should also recommend rule or legislative changes that would improve Passport functionality.
Ensure Ongoing Accountability
(9) Nonprofit Resiliency Committee: City Hall should recreate the non-profit resiliency committee with leadership from City Hall, OMB, MOCS, MONS, health and human service agencies, City Council, and non-profit leaders. The Committee should convene monthly for at least one year to create an accountability mechanism and consistent thought partnership to address issues from invoicing best practices to returnable grant fund reforms.
(10) ContractStat: ContractStat should be public, and monthly data should be reported on contract registration status, budget readiness, invoice approvals and delays, and outstanding budget modifications, disaggregated by agency and vendor. Non-profits and agencies should be able to easily pinpoint the source of delays and hold ups. MOCS and MONS should analyze data monthly to make recommendations to agencies and City Hall on the sources of delays.
(11) DOE Accountability: The Department of Education currently operates outside of MOCS oversight and Procurement Policy Board procedures per NYS Law. DOE should voluntarily align with all MOCS and PPB transparency measures - including utilizing PASSPort and data tracking in ContractStat - to ensure effective oversight over critical education contracts, especially as the City expands 2K and 3K.