Dive Brief:
- New York City is increasingly late in paying its suppliers and vendors, according to the latest report on city contracting from the New York City Comptroller.
- The share of contracts registered late by the city rose to 77% in the first half of fiscal 2024, which began July 1. That’s after 66% were registered late in fiscal 2023 and 52% in each of the two years before that.
- “These delays cause vendors to wait longer for payment and particularly hurt nonprofits, human service providers, and Minority and Women-owned Business Enterprises,” the comptroller’s office said in a press release.
Dive Insight:
For a city, New York’s procurement needs are massive. In FY23, it logged 12,820 new procurement and revenue contracts, totaling $38.2 billion in all. That’s a level of spending larger than 30 U.S. states, the comptroller’s office noted.
What the office refers to as retroactivity rates — i.e., that percentage of contracts registered by the city after their start date — are getting worse.
And it’s especially bad for providers of human services, the comptroller said in the report. In the first half of FY24, 95% of total contract value for human service and nonprofit vendors — many of whom provide help and shelter for the homeless — were registered late. The retroactive rate for the city’s procurement contracts for goods was about 66%.
The comptroller’s office blamed the city’s “onerous and slow procurement process” for the delays, which can put off payments to vendors for six months to a year.
“This causes a tremendous strain on many of these organizations, as they are forced to borrow to cover cash flow or triage their own expenses, and makes it extremely difficult to pay, sustain, and grown their businesses,” the report noted.
The city is well aware of the issue and has launched initiatives and committees to address it, including one called the “Joint Task Force to Get Non-Profits Paid.”
“Unfortunately, some of these reforms have stalled while the impact of others has not yet been felt,” the comptroller’s office said in the report. “Most critically, time frames and key performance indicators for the procurement and contract process have not been established as promised.”
Even steps taken to help women and minority-owned enterprises get paid faster have backfired. Specifically, a program to allow smaller purchases from M/WBE-certified vendors without a competitive process was meant to speed up payments. But instead, the large majority of those contracts were registered as late, the comptroller said.
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