2023 Citywide Indicators Report

Message from the Director

The Mayor's Office of Contract Services ("MOCS") is responsible for overseeing the New York City procurement process and leading reform initiatives to make it more equitable, transparent, and efficient. Our partners who deliver the goods and services necessary to fulfill government work, particularly small nonprofits and minority and/or women-owned business enterprises ("M/WBEs"), have long expressed dissatisfaction with a process that is too burdensome, opaque, and inefficient. That's why my office has been charged with playing a leading role in key initiatives such as the Joint Task Force to Get Nonprofits Paid On Time and the NYC Capital Process Reform Task Force that focus on bringing down cycle times, untangling the regulatory web, and getting bureaucracy out of the way so contractors can do the work we hired them to do.

I'm pleased to report that we have built on the success I shared in the last year's report in delivering on the recommendations of the Joint Task Force. Several key initiatives have gone into effect, such as a multi-year contracting vehicle for City Council discretionary awards and an allowance clause in human services contracts that allows for increases in the maximum contract amount within a certain threshold. At the same time, agencies submitted 81% of their contract actions beginning July 1 to the Comptroller's office on-time, a near 25% increase from last fiscal year with a much larger contracting volume. Please see Section 5: Human Services for more details.

We have also continued our efforts to increase the utilization of M/WBEs in City procurement. MOCS played a pivotable role in advocating for and implementing an increase to the M/WBE noncompetitive small purchase threshold to $1 million in Fall 2022, and we hope to see Governor Hochul sign legislation this year that will further increase the threshold to $1.5 million. With a 60% increase in contract dollars awarded using the noncompetitive small purchase method between Fiscal Year 2022 (FY22) and Fiscal Year 2023 (FY23), it is clear that this tool is critical to achieving our collective goals to increase utilization.

The Administration has also made significant progress in implementing the recommendations from the Capital Process Reform Task Force. We requested and successfully received a fivefold increase to the Financial Control Board's threshold for reviewing Mayoral contracts, which removes weeks of administrative processing time for applicable contract actions. And we further saw several legislative priorities pass the State legislature, such as permitting electronic bidding and allowing the City to create a citywide mentorship program, which are currently awaiting the Governor's signature. Please see Section 4: Procurement Reform for more details.

As we work to further improve the rules that are the foundation of the City's procurement process, we're also working on improving our digital procurement system, PASSPort. This year, we made critical steps forward in our efforts to bring the full procurement process into one system by bringing financial functionalities, such as invoicing and budgeting, into PASSPort, after a successful pilot program this spring and summer. The year ahead will see major releases, as we look to roll out a Document Vault and take the steps necessary to fully centralize procurement in PASSPort by sunsetting HHS Accelerator.

Procurement reform rarely makes headlines, but its impact cannot be understated. Everything government does, from delivering daily services to managing citywide emergencies, is affected by procurement to a certain degree. This report provides transparency on the overall contracting portfolio needed to fulfill the government's work and gives us a guiding light on how to continue our mission.

Lisa M. Flores Director of MOCS and City Chief Procurement Officer

Executive Summary

The procurement system of the City of New York ("NYC" or "the City") affects almost every aspect of City government and public life. In Fiscal Year 2023 (FY23), the City procured over $41.1 billion dollars of goods and services from outside contractors, ranging from nonprofits providing community services, to construction firms, to goods suppliers, that ensured that City agencies run smoothly and deliver on their missions.

MOCS is the oversight and service agency dedicated to ensuring that the procurement system is equitable, transparent, and efficient for all, and that the City is following the procurement rules laid out by the New York City Charter and the City's Procurement Policy Board ("PPB") Rules. City procurement offices at each agency are responsible for protecting against waste, fraud, corruption, and abuse, as well as ensuring fair competitive access. Altogether, the procurement system promotes the delivery of direct services and goods to New Yorkers that help maintain the City's infrastructure, secure the operation of City government, and advance community programs.

As an oversight and service agency, MOCS provides strategic partnership throughout the citywide procurement process for all mayoral agencies and leads procurement reform to make it easier to do business with the City. We also provide support to agencies by overseeing the City's franchises and concessions, and administering public hearings. Additionally, we maintain and enhance the city's digital procurement system, PASSPort, which is a cloud-based software platform that provides a single, centralized environment for completing procurement activities.

Using data from PASSPort, the City's Financial Management System (FMS), and other sources, MOCS annually releases this Citywide Indicators Report to provide insight on Mayoral agencies' procurement data and performance. This reporting builds transparency into the use of taxpayer dollars for the public, helps agencies manage their performance, and provides useful data on how we can make the process more efficient.

The Citywide Indicators Report for FY23 provides information on the City's procurement spending from July 1, 2022, to June 30, 2023, and demonstrates the impact of that procurement.

Key Takeaways:

• In FY23, the City procured over $41.1 billion worth of goods and services through approximately 147,000 transactions. This represents a 9% increase in total dollar value relative to FY22 ($37.9 billion).
• The agency with the highest value procured ($8.47 billion) was the Department of Homeless Services, which was a 20% increase from the agency's FY22 contract value, related to the ongoing asylum seeker response. As with last year, the Department of Education had the largest number of transactions (over 106,000).
• The City awarded $1.42 billion in contracts to M/WBEs in FY23, achieving its highest award total to M/WBEs of all-time, and increased its Local Law 1 M/WBE utilization rate by nearly 5% to 27.9%, up from 22.9% last year.
• Of the traditional competitive procurement methods, the largest number of procurements and highest amount of dollars continues to be the Request for Proposal (RFP) and Competitive Sealed Bid (CSB) methods. In FY23, there were 625 RFPs for approximately $10 billion and 553 CSBs for approximately $4.8 billion.
• The largest industry was the Human Services Industry, totaling $18.9 billion and representing 46% of total procurement spending. This is a 7% decrease in value from FY22.
• Meanwhile, over 60% of the City's total procurement value resulted from contracts worth over $25 million, which is up from 50% in FY22.

Report Structure

Below is an outline organizing how to use this report:

How the City Spends its Money

New York City is one of the largest procuring entities in the country. In FY23, the City procured $41.1 billion of goods and services through approximately 147,000 transactions. This represents an 9% increase in total dollar value relative to FY22 ($37.9 billion). These transactions provided direct services to New Yorkers, helped maintain the City's infrastructure, and secured the operation of City government. The following procurement indicators are citywide in scope and include all Mayoral agencies.

Procurement by Industry

New York City categorizes procurements in six major industry categories: architecture/engineering, construction, goods, human services, professional services, and standardized services. See the Glossary for definitions of each industry. See Appendix B for agency-by-agency breakdowns of procurement by industry.

The FY23 value for the Human Services industry is $18.9 billion, which represents a 7% decrease from $20.3 billion in FY22, even though the Human Service industry remains the largest contracting category. Within these billions of dollars are contracts for homeless shelters, services for asylum seekers, after school programs, and much more.

The value of procurements in the Construction industry increased to $7 billion in FY23, which represents a substantial increase (50%) from $4.7 billion awarded on Construction industry procurements in FY22. This is largely because of a $3 billion construction contract for the Borough-Based Jails project in Brooklyn, which was the City's largest procurement across all industries in FY23.

• Human Services awarded 18.9 billion dollars at 46 percent of Citywide total
• Professional Services awarded 6.8 billion dollars at 16 percent of Citywide total
• Construction awarded 7.0 billion dollars at 17 percent of Citywide total
• Goods awarded 4.6 billion dollars at 11 percent of Citywide total
• Standard Services awarded 3.2 billion dollars at 8 percent of Citywide total
• Architecture and Engineeering awarded 0.7 billion dollars at 2 percent of citywide total
• Six major industry categories (architecture and engineeering, goods, construction, human services, professional services, and standardized services) combined to an award total of 41.1 billion dollars
• The Citywide total for awards was 41.1 billion dollars

Procurement by Method

The Procurement Policy Board (PPB) rules lay out the different methods for purchasing new goods and services, and the procedures that must be followed to continue or modify existing contracts. See the Glossary for definitions of each procurement method. Agency procurement professionals select the appropriate procurement method based on each Agency's business needs and the City's procurement rules. When Agency procurement professionals choose a procurement method, they must consider the industry, the scope of work falls under, the dollar amount needed for the procurement, and other factors. See Appendix A for agency-by-agency breakdowns of procurement by method.

In FY23, we saw a 512% increase in the contract value of the innovative method, which came mainly from DDC design-build project contracts, including the nearly $3 billion Brooklyn Borough-Based Jail construction project. The innovative procurement method lets DDC use a newly approved method called "design-build," which involves a two-step qualification-based procurement process to select a single team of designers and builders to work on public works projects from start to finish. This helps provide collaboration, efficiency, and risk reduction on projects that normally would have to be processed under two separate methods – a Competitive Sealed Proposal (CSP) to award an architecture or engineering firm to draft the design, and a Competitive Sealed Bid (CSB) to award a construction vendor to build what is laid out in the design. Certain City agencies gained the ability to use the design-build method after the New York City Public Works Investment Act (PWIA) was signed into law in December 2019, and as these projects begin to get registered and more agencies start using the method, we can expect to see increased use of the innovative method.

Another key procurement tool is the M/WBE Noncompetitive Small Purchase method. While the M/WBE Noncompetitive Small Purchase method had only a small increase in the total count of contracts awarded from last year, it had a 60% increase in contract value. In FY23, MOCS worked with City and State partners to raise the threshold for this method from $500,000 to $1 million, which helps to explain this year's increase in contract value as agencies began to register larger contracts with the method.

Meanwhile, 253 Negotiated Acquisitions were processed in FY23, for a total value of $516 million. While the total number of procurements processed via the Negotiated Acquisition method increased significantly by 116% from FY22, which had 117 Negotiated Acquisitions, the total value decreased substantially, from $1.75 billion in FY22, representing a 71% reduction in dollar value. The Negotiated Acquisition method permits agencies, with prior City Chief Procurement Officer approval, to negotiate contracts directly with vendors under specific circumstances.

Procurement by Size

In FY23, 255 procurement actions valued at over $25 million were processed. This totaled to over $25 billion, which represent 61% of total procurement value in FY23. This is an increase from FY22, procurement actions valued at over $25 million accounted for 51% ($19.3 billion) of total procurement value. There was a decrease this year in the number of procurements in the $3 million to $25 million range, which may reflect the impact of inflation and other market factors that are pushing more contracts above $25 million. See Appendix C for year-to-year totals of individual agencies.

Top 10 Agencies by Procurement Values

The top ten agencies that procured the highest dollar value of contracts in FY23 represent over 85% of the total value of City procurements for FY23, processing procurement actions valued at $35.1 billion of the City's total $41.1 billion awarded in FY23.

DHS was the agency with the highest procurement value at $8.4 billion (21%), which reflects its ongoing role in response to the dual homeless and asylum seeker crises that are increasing the need for shelter services. Additionally, DHS has eight of the largest contracts this year, all related to providing shelter facilities. ACS had the biggest increase in contract value with a 404% increase from FY22, from $826 million last year to $4.1 billion this year. In FY23, ACS registered the awards for its foster care and residential care RFPs, which are a large part of the agency's contract portfolio and are usually awarded in three-year cycles.

• DHS awarded 21 percent
• DOE awarded 13 percent
• DDC awarded 12 percent
• ACS awarded 10 percent
• DCAS awarded 6 percent
• SBS awarded 6 percent
• DOHMH awarded 6 percent
• DEP awarded 5 percent
• HRA awarded 3 percent
• DOT awarded 3 percent
• All other agencies awarded 15 percent
• The Citywide total for awards in Fiscal Year 2023 was 41.1 billion dollars

Top 15 Contracts by Value

The top 15 City contracts by dollar value in FY23 were cumulatively valued at approximately $9.8 billion, which amounts to about 24% of total City contracting in FY23. This represents a decrease from FY22 ($15 billion), when the top 15 contracts accounted for roughly 40% of contract value. DHS currently holds eight of the top 15 contracts at multiple sites across NYC, providing shelter services for single adults and families with children.

Top 15 Requirements Contracts

A requirements contract is defined as an agreement entered into by a City agency and a vendor whereby the vendor generally agrees to supply the City's entire need for the contracted good(s) and/or service(s). City agencies that are permitted to utilize the requirements contract can acquire these goods or services on an "as-needed" basis quickly, efficiently, and at a lower cost through volume-based discount pricing.

The top 15 requirements contracts of FY23 were valued at approximately $1.9 billion, which is about 5% of the total dollar value of all procurements for FY23. DCAS, which is legally mandated by the NYC Charter to procure goods on behalf of City agencies, currently holds seven of the top 15 requirements contracts – including the highest value requirements contract in FY23.

P-Card Analysis Indicators

The Purchasing Card (P-Card) program is designed to assist agencies in streamlining the process for certain micropurchases, which are for goods and service contracts that are $20,000 or less, or construction contracts that are $35,000 or less. P-Cards are used by agencies to purchase goods and standard services quickly and efficiently, without the intermediate steps required by the City's Financial Management System.

In FY23, the Mayoral Agencies spent $25.7 million on 30,000 transactions using P-cards, a nearly $5 million increase from FY22 ($20.9 million). Of that total, approximately $5.5 million was spent doing business with M/WBEs in FY23, which is 22% of the total P-Card spending value. This is down from FY22, when M/WBE spending was $5.7 million or 27% of the P-Card spending value.

ACS and DOC had the highest M/WBE P-Card spending as a percentage of their total P-Card spending at 40%, while DOT had the highest M/WBE total transaction amount at over $1.75 million, which was 39% of their total P-Card spending.

As shown in the graph below, over 77% ($19 million) of all P-Card spending value went to non-M/WBEs. Within M/WBE P-Card spending, there are additional disparities that are reflected across City procurement, with businesses owned by women of color and Native American men receiving disproportionately fewer City contract dollars. Out of total P-Card spending, non-minority women owned businesses received the next largest share of purchases with $2 million (11%) in spending. After non-minority women, businesses owned by Asian, Black, and Hispanic men each represent approximately 3% of total P-Card spending, while minority women-owned business represent just over 2% combined. Native American men-owned businesses received just 0.19% of total P-Card transaction amount, which was 21 transactions. The roots of these disparities reflect patterns of injustice within our society, but as we outline in later sections, there are opportunities for the City to make its procurement more diverse through increased outreach and certification with vendors, and increased education and engagement with agency partners.

• 11% Caucasian WBE
• 3% Asian Male MBE
• 3% Black Male MBE
• 2% Hispanic Male MBE
• 1% Asian WBE
• 1% Black WBE
• 1% Hispanic WBE
• 1% Native American Male MBE
• The Citywide total was 25.7 million dollars; 77% of the total was non-M/WBE

City Council Discretionary Contracts

Each year, New York City Council (City Council) designates discretionary awards to nonprofit organizations through Schedule C of the City's expense budget and throughout the fiscal year in monthly Transparency Resolutions. Each nonprofit that applies for funding is vetted by the City Council. In addition, MOCS reviews the eligibility of organizations by checking for HHS prequalification in PASSPort and completion of the Capacity Building Training. MOCS does not review awards made by City Council directly to City agencies or governmental organizations, nor discretionary funding through capital funds.

Most agencies process the registration of discretionary awards, i.e., line-item appropriations, in PASSPort through bundled award contracts. Discretionary awards that are not registered by agencies in the current fiscal year may be registered in the next.

As of cleared award data from September 5, 2023, one half of FY23 cleared awards (52%; 4,932 awards) were designated in Schedule C, which takes place in June. The other half were in subsequent transparency resolutions, with the most sizeable (42%) in the July through October transparency resolutions. The remaining 7% of awards were designated after October.

Procurement Performance

MOCS is committed to building a procurement system that works better for New Yorkers, through increased transparency and accountability. While the previous section provided information on how City contracts are awarded, this section demonstrates the City's performance on two key procurement indicators – Retroactivity and Cycle Time.

These two metrics give valuable insight to the public and agencies on the duration of the procurement process and areas where additional process reform could bring greater efficiency. While we report on retroactivity and cycle time in other forums, including PASSPort Public, this is the first year we've reported on these metrics in the Indicators report during this Administration. We look forward to tracking the City's progress on these metrics in future reports.

Retroactivity

A contract is considered late or "retroactive" when its start date occurs before the contract is registered by the City Comptroller. Retroactivity can cause cash flow and service continuity issues because the City cannot pay vendors prior to registration, and late registration can drive up the City's costs, as vendors increase their bid prices to account for anticipated delays.

As shown in the graph below, across all Mayoral Agencies, contracts were registered on time – before the contract start date – 29% of the time in FY23. Slightly over half (52%) of all contracts were registered within 30 days of the contract start date, and 68% of contracts were registered within 60 days. However, that also means that nearly one third of contracts were registered over two months late. There were 196 contracts that were retroactive by over a year in FY23.

We can see that retroactivity also varies across industry for new contract actions. The Construction Industry has the lowest rate of retroactivity, with 54% of contracts registered on time and over two thirds registered within 30 days of the contract start date. The Human Services industry, which we discuss in greater detail later in this report, has the second highest percentage of on-time contracts at 38%, although the industry also has one of the highest rates of contracts that are over 91 days retroactive at 30%. Professional Services has the highest retroactivity, with just 15% of contracts registered on time, followed by Goods at 25%. The Architecture/Engineering Industry has the highest percentage of contracts that are 91 days retroactive at 33%.

• 15% of Professional Services contracts were registered on time

Competitive Sealed Bid and Competitive Sealed Proposal Cycle Time

As the City continues to explore innovative ways to maximize efficiency in City procurement and reduce redundancies, a challenge that the City still faces is the length of time needed to get City contracts registered. In this report, cycle time is defined by the length of the time between the date an agency draft solicitation is created in PASSPort and the date of contract registration in the Financial Management System (FMS).

City procurement is governed by multiple rules and laws to ensure that the procurement process is transparent and fair, and to prevent corrupt and waste. Lengthy cycle times for procurements do not necessarily mean that there were delays in the contract administration process but rather reflect the time it takes to process competitive procurement methods. While we will always aim to process contracts more quickly and reduce cycle time, what matters most is that contracts are registered on time.

This section of the report provides the end-to-end cycle time for two competitive procurement methods: the Competitive Sealed Bid (CSB) and the Competitive Sealed Proposal (CSP), also known as a Request for Proposal (RFP). These competitive methods may require multiple oversight approvals, feedback sessions from stakeholders, a required public solicitation period, and the evaluation process, which are all reflected in the end-to-end cycle time measurements.

The end-to-end cycle time will vary amongst different City agencies depending on several factors. Some of these factors are the agency portfolio, volume of active solicitations, the details of the scope of work in a solicitation, the procurement method utilized, the rules and regulations associated with the selected procurement method, and the potential requirement of oversight approval(s), among other things.

Competitive Sealed Bid Cycle Time

The Competitive Sealed Bid is the procurement method frequently used for purchasing goods, construction, and standardized services. In this procurement method, the bid from the responsive and responsible vendor with the lowest price is awarded the contract.

For FY23, the median cycle time for CSBs was 352 days – almost a full year. DCAS (Municipal Supply Services) and DDC ranked first and second with the shortest cycle times at 163 and 278 days, respectively. DCAS also processed the highest number of CSBs. DPR and DSNY had the two longest cycles times at over 600 days, or almost two years. DPR processed the second highest number of CSBs in FY23, which may contribute to the long cycle times; however, DSNY had a similar cycle time while processing 12 CSB contracts.

Cycle times also vary by industry, as shown in the charts below. Given the complexity of the projects involved, it is unsurprising that CSBs in the Construction industries have the longest cycle times, while more straightforward goods contracts have a median cycle time of less than 200 days.

• Construction cycle time was 462 days
• Goods cycle time was 163 days
• Professional services cycle time was 328 days
• Standard services cycle time was 422 days
• Average cycle time for CSB was 352 days

Note: Excludes DOE Contracts; PASSPort sourced contracts only.

Competitive Sealed Proposals/Request for Proposal Cycle Time

Competitive Sealed Proposals are used when an agency is seeking to award a contract to the responsive and responsible bidder whose proposal is determined to be the most advantageous to the City, while considering factors or criteria set forth in the RFP in addition to price. They are most frequently used when procuring human/client services, professional services, and architecture/engineering services. The median cycle time for this method was 593 days – over a year and a half. This cycle time is over 200 days longer than the CSBs but reflects the additional time that it takes to complete the evaluation process and solicit public input.

For FY23, DFTA and DOP have the fastest cycle times at 168 days and 225 days, respectively. DYCD and NYPD have the two longest cycles times at over 700 days. DYCD's longer cycle time aligns with their volume, which constituted the highest number of CSPs in FY23.

For CSPs, the Human/Client Service industry has the highest median cycle time of 624 days and 210 of the 278 CSPs were in this industry.

Standard Services had the fastest median cycle time at 427 days, followed by the Architecture/Engineering industry that had a median cycle time of 541 days. Across industries, CSP cycle times do not vary as much as CSBs, reflecting the inherent time that it takes agencies to draft the solicitation document, source and evaluate proposals for criteria beyond lowest prices, and the need for further reforms to streamline this process.

• Architecture/Engineering cycle time was 541 days
• Human services cycle time was 624 days
• Professional services cycle time was 588 days
• Standard services cycle time was 1012 days
• Average CSP cycle time was 595 days

Note: Excludes DOE Contracts; PASSPort sourced contracts only.

In addition to overall end-to-end cycle time, a review and analysis was completed for the cycle time of phases within the procurement process in PASSPort, including the Pre-Solicitation Review, Evaluation, Awarding, and Registration phases. Please see table below for details on how these phases were defined.

The largest difference in cycle times for Competitive Sealed Bids and Competitive Sealed Proposals occurs during the evaluation and contract award phases of the procurement process. Evaluating proposals and awarding a contract take 62 and 39 days, respectively, for CSBs and 139 and 130 days, respectively, for CSPs.

The difference in cycle times for CSBs and CSPs is by design. Contracts resulting from Competitive Sealed Bids must be awarded to lowest responsive and responsible bidder. After bids are opened, once the lowest bidder is deemed responsive and responsible, the agency can move to the contract award phase. Competitive Sealed Proposals, on the other hand, does not have to be awarded to the lowest bidder, but to the offeror whose proposal is determined to be most advantageous to the City. To select a winning offeror, the agency must undergo a more detailed evaluation period, taking into account both price and other factors set forth in the RFP and proposals might undergo multiple rounds of evaluation.

CSBs that are being awarded to the lowest bidder are also exempt from the requirement to hold a public hearing prior to contract award, while CSPs are not. The public hearing process adds time to the contract award phase, resulting in the longer cycle time for CSPs.

As shown above, even the agencies and industries with low cycle times need time to progress through the feedback cycles and approval processes that are inherent to competitive procurement methods. However, MOCS is aware that there are still opportunities to reduce cycle times by investigating bottlenecks. MOCS is working on strategies to reduce cycle time through critical procurement reform projects to streamline an efficient procurement process and by strengthening transparency tools, such as PASSPort Public, that allow more visibility into the steps for contract processing and registration.

The procurement phases are defined by the tasks in PASSPort that correspond to the beginning and end of each phase, which are outlined in the table below.

Procurement Reform

MOCS is committed to transforming policies and practices to bring procurement into the modern digital era, and to make the process more efficient and cost-effective. In FY23, MOCS advanced several procurement reform initiatives, including advocating for updates to the Procurement Policy Board rules, implementing reforms from the Joint Nonprofit Taskforce and Capital Process Reform Taskforce, and advocating for legislative updates. The section below outlines these reform efforts and how they have helped improve the City's procurement process.

PPB Rule Updates

In FY23, the Procurement Policy Board (PPB) voted to adopt changes to the PPB Rules, which govern procurement actions for City agencies. Since the appointment of new PPB members in October 2022, the PPB has actively held meetings and hearings on a regular basis to discuss rule updates and upcoming changes. The following rule changes were adopted by the Board this fiscal year:

M/WBE Noncompetitive Small Purchase Mechanism

The amended PPB Rule 3-08 increased the dollar threshold for the M/WBE Noncompetitive Small Purchase method by replacing the $500,000 threshold with a cross reference to New York City Charter § 311(i)(1), which currently sets the threshold at $1 million. This rule change will allow any subsequent threshold increases from the state to go into effect immediately, without requiring a PPB rule change as in the past. This will allow agencies to utilize newer, higher thresholds more quickly and efficiently. The amended rule also establishes a more robust notice requirement for procurements made using the M/WBE Noncompetitive Small Purchase method to promote oversight and transparency in the City's procurement process.

Subscriptions

Amended PPB Rule 1-02(f)(5) provides clarity on the definition of subscriptions, accounting for modern technologies to include research databases and training materials while removing outdated references.

Looking Ahead

In addition to the rule amendments adopted in FY23, MOCS prepared to introduce rule changes that would streamline the procurement process, including, but not limited to, a set of proposed rule changes to reduce the frequency of certain notices published in the City Record. Removing the consecutive postings requirement can reduce the administrative burdens and delay connected to the five-day notice periods. This proposed rule is expected to advance through the rulemaking process in FY24.

Joint Nonprofit Taskforce Reform Updates

Nonprofit organizations deliver critical services to the City but have long identified issues with the City's procurement process that lead to delayed contract registrations and late payments. In order to address these persistent challenges, Mayor Eric Adams and Comptroller Brad Lander co-convened, "A Better Contract for New York: A Joint Task Force to Get Nonprofits Paid on Time," which issued concrete recommendations for improving the procurement process.

MOCS is at the forefront of implementing these recommendations and other initiatives to help streamline the procurement process and get nonprofits paid on time. In the past year, we've advanced the following initiatives:

City Council Discretionary

As announced in this Mayoral press release, the administration and Council have agreed to implement multi-year base contracts that can be used to pay for discretionary awards, in order to reduce processing time for the many recurring discretionary award recipients. We estimate a nine-month savings in time to payment in the outyears after each contract is registered.

Allowance Clause

The standard human services contract has been amended to include language that would provide an allowance for increased funds beyond the contract maximum to a certain threshold. This new contract language has alleviated the number of amendments that agencies and providers are required to process for predictable service needs and has accelerated cashflow. It was also successfully utilized to implement the $68 million workforce investment from last year.

Vendor Integrity Unit

The Vendor Integrity Unit was launched to proactively evaluate vendor risk and support agencies in managing contract performance. The Vendor Integrity Unit will drive policy standardization across agencies for complex integrity and compliance issues, and it will use advanced data analytics to target vendor reviews.

Vendor Compliance Cabinet

MOCS, Mayor's Office for Nonprofit Services (MONS), and the Mayor's Office of Risk Management and Compliance (MORMC) announced the Vendor Compliance Cabinet earlier this summer, which is a body responsible for identifying gaps in policies and procedures that make it difficult for agencies to enforce compliance. Ultimately, through monthly meetings, it aims to increase the transparency and standardization of vendor compliance and accountability, reduce risks and costs by closing policy gaps, strengthen contract oversight and management practices, and gain contracting efficiencies through strategic risk management.

Citywide Audit Reform

In response to provider feedback, MOCS, MONS, and MORMC are also working through a policy proposal which will let agencies rely on the independent audits providers already do, and limit contract audit to risk-based only. The goal of this proposal is to streamline the auditing process and reduce the number of audits to provide better value to City agencies. The proposed audit policy for human service programs and vendors was presented to the Vendor Compliance Cabinet and MOCS will continue to engage providers to support successful implementation.

Capital Process Reform Taskforce Updates

To improve capital project delivery, the Capital Process Reform Task Force, which was convened by Mayor Adams and comprised of leaders from the construction industry, labor, and M/WBEs, is performing a comprehensive review of the City's capital project process. Capital projects involve physical infrastructure used in support of government operations or general public use and are expected to be used for at least five years.

As a part of the Task Force's recommendations, the City proposed multiple bills to the New York State legislature that would cut capital project delivery time and increase opportunities for small business and M/WBEs. As of the end of FY23, the State legislature has passed the following bills that are awaiting Governor signature:

M/WBE Noncompetitive Small Purchase Threshold Increase

On October 6, 2022, New York State enacted Senate Bill 9351 (2022-S9351) amending New York City Charter § 311 to increase the dollar threshold from $500,000 to $1 million for direct purchases from City-certified M/WBEs. This NYC Charter update is also reflected in PPB Rule 3-08, as described above. Pursuant to this new law, agencies may make procurements of goods, services and construction for amounts not exceeding $1,000,000 from businesses certified as M/WBEs without a formal competitive process.

In June 2023, a new Senate Bill S7563 (2023-S7563) was introduced to further increase the dollar threshold for direct purchases from City-certified M/WBEs from $1 million to $1.5 million. If enacted, this would further expand opportunities for M/WBEs in City contracts. As of the end of FY23, this bill is currently awaiting Governor signature.

Electronic Bidding

Senate Bill S7362 (2023-S7362) amends New York State General Municipal Law § 103 to permit New York City to authorize or require bids and offers for any contract to be submitted electronically, regardless of the type of contract being procured, including bids and offers for contracts for public works. It would also authorize the City to conduct bid openings and readings by public livestream rather than through an in-person procedure. This will significantly increase efficiency in the capital projects workstreams and reduce administrative burdens. As of the end of FY23, this bill is currently awaiting the Governor's signature.

Wrap-Up Insurance Programs

Senate Bill S7385 (2023-S7385) amends the existing New York State insurance law § 2504 to exempt certain public construction projects from specific restrictions. It will exempt the City, DOE, New York City Industrial Development Agency (NYCIDA), NYC Health + Hospitals (H+H) and NYC Housing Authority (NYCHA) from the prohibition of using owner-controlled insurance policies in connection with any construction contract and will exempt these entities from using contractor-controlled insurance policies that have an estimated cost of more than $5 million. This will expand the City's ability to use owner-controlled and contractor-controlled insurance, also known as "wrap-up" insurance. This will benefit small contractors, including small businesses and M/WBEs who often struggle to find affordable, competitive insurance options that meet the standards required for public construction projects. A single policy is much more efficient and consumes considerably less time and resources and will remove administrative burden from smaller contractors seeking to do business with the City. As of the end of FY23, this bill is currently awaiting the Governor's signature.

Construction Mentorship

Senate Bill S7526 (2023-S7526) will amend the New York City Charter to add a section permitting city agencies to create two-tiered small business construction mentoring programs. City agencies would be able to designate certain construction contracts for mentee businesses and restrict bidding for these contracts to qualified mentee businesses. This bill will also permit the agency to competitively select and contract with experienced construction management firms to provide mentee small businesses with services and assistance to perform under City contracts. This legislation will increase opportunities for small businesses in capital projects. As of the end of FY23, this bill is currently awaiting the Governor's signature.

M/WBE Certification Reciprocity

Senate Bill S7371 (2023-S7371) will amend the executive law section 314 to authorize the New York State Department of Economic Development Division of Minority and Women's Business Development and the City to enter into a memorandum of understanding providing reciprocal acceptance of M/WBE certification between a program operated by the City and the State. Currently, the process to establish and maintain certification at both levels of government can be administratively burdensome for M/WBEs. Removing the separate and duplicative processes can lead to reduced costs and increase opportunities for M/WBEs and increase coordination and partnership between the City and the State. As of the end of FY23, this bill is currently awaiting the Governor's signature.

Revising the City's Approach to Public Hearings

Public hearings are required on procurements above $100,000 and add about weeks to the procurement process for each contract. The State Senate passed legislation (S7383) which would give the City's Procurement Policy Board the ability to change the public hearing threshold and allow for public notice, rather than public hearings, for contracts above the threshold. However, this legislation did not make it through the State Assembly during the previous session. MOCS will continue to advocate for this legislation to bring a modernized approach to transparency into public contracting.

Additional Capital Process Procurement Reform

Financial Control Board

Mayor Adams requested and successfully received a fivefold increase to the Financial Control Board's (FCB) threshold for reviewing Mayoral Agency contracts, including the Department of Education. Until now, all new Mayoral contracts valued above $10 Million had to go through an additional level of review by the Financial Control Board. The previous thresholds had not been increased in over 35 years, even though the City's budget and spending had quadrupled during that period. The threshold for FCB review on new contracts was increased to $50 million or more. This reform will remove weeks of administrative processing time for applicable contract actions.

Repealing Executive Order 102

On September 21, 2023, Mayor Adams issued Executive Order 35 of 2023 ("EO35"), which repealed Executive Order 102 of 2007 ("EO102"). While maintaining important wage protections for workers, the new EO35 removes the redundant and inefficient EO102 review, which required that lowest bidders whose bids are within a certain percentage or dollar amount under the next lowest bidder submit prevailing wage documents in the pre-award phase for additional review by agencies. Since EO102's implementation in 2007, the City has put in place a number of stronger and faster checks for prevailing wage. Repealing EO102 fulfills another recommendation from the NYC Capital Process Reform Task Force and will streamline the process for delivering capital projects in the City.

Revising the Executive Order 50 Review

Executive Order 50 of 1980 requires contractors to demonstrate that they are equal employment employers, and New York City is committed to ensuring this goal. However, the current implementation of Executive Order 50 addressing this includes redundant steps. Executive Order 50 and the SBS Division of Labor Services review require a check each time a contractor is awarded a City contract, even if that contractor has recently gone through the process for another contract. The City is planning a rulemaking process to change the SBS Division of Labor Services implementation of Executive Order 50 to by-vendor rather than by-contract and create a certification that lasts for three years. By doing this, the City will still conduct important checks to ensure that City contractors do not have discriminatory hiring processes but will not unnecessarily burden contractors and City employees.

Human Services

In FY23, the City of New York procured nearly $19 billion in health and human services (HHS) contracts, representing 46% of total City procurement value. Through these contracts, human services providers, particularly nonprofit organizations, provided essential services to millions of New Yorkers, including operating homeless shelters, supporting asylum seekers, running childcare centers and afterschool programs, and more.

The following sections give an overview of the City's relationship with human service providers this fiscal year, including City agencies' on-time registration performance for FY23 HHS contracts, this year's successful "FY24 HHS Timely Registration Initiative," and the Returnable Grant Fund.

HHS Timeliness Prompt Payment Report

The City seeks to achieve 100% timeliness in contract registration, especially for HHS contracts. When a contract is registered late, it can cause cash flow and service continuity problems because the City cannot issue reimbursements or advances to providers prior to contract registration, even if the services have already begun. To address this cash flow issue, the City has the Returnable Grant Fund (RGF), which provides interest-free loans that help human services providers bridge the gap in funding while awaiting contract processing and registration.

However, the City recognizes that on-time registration is a preferred solution to the RGF. The City has measures in place to make sure providers are paid in a timely fashion, including through Section 4-12 of the Procurement Policy Board (PPB). Section 4-12 authorizes the City Chief Procurement Officer to authorize interest payments to providers for late registration of HHS contracts, if it has been determined that the agency is generally submitting contracts in an untimely manner.

HHS timeliness is measured differently than retroactivity, which was covered earlier in this report. Retroactivity is based on when the contract is registered, while HHS Timeliness is based on when an agency submits a contract to the Comptroller.

For HHS Timeliness, a contract action is considered on-time if it is submitted to the Comptroller before the contract start date; the action is considered late if it is submitted to the Comptroller after the contract start date. However, we consider contracts that are submitted to the Comptroller within 30 days of the start date to be substantially in compliance. The Section 4-12 rule applies to all human service contracts, including new awards and extensions, but excludes City Council discretionary contracts, which, by definition, are untimely.

Please see below for the analysis of this year's HHS contracts by agency.

• ACS is 93% on time
• DFTA is 90% on time
• DHS is 41% on time
• DOHMH is 83% on time
• DOP is 59% on time
• DSS/HRA is 42% on time
• DYCD is 17% on time
• HPD is 50% 31-60 days late
• MOCJ is 1% 61-90% days late
• SBS is 100% 181-365 days late
• Citywide total is 55% on time

As the table above shows, over half (55%) of the 854 HHS contracts from human service agencies were submitted to the Comptroller on time, and two-thirds (66%) were submitted within 30 days of the start date in FY23. While the majority of contracts were submitted in a timely manner, there were still nearly 300 contracts that were submitted a month or more late, demonstrating that the City still has work ahead to improve the process.

ACS and DFTA had the highest percentage of on-time submissions to the Comptroller in FY23, submitting 93% and 90% of contracts on time, respectively. Other agencies, such as HPD, MOCJ, and SBS, struggled to submit their contracts on time. As shown in the graph below, high contract volume is not necessarily correlated with untimely submissions. Despite having the highest contract volume, ACS had the highest rate of on time submissions. The next set of agencies with the highest contract volume – DYCD, DSS/HRA, and DHS – all submitted the majority of their contracts after the contract start date.

Although the Citywide Chief Procurement Officer has not deemed any agencies to be substantially late, MOCS recognizes that there is still progress to be made. We are working on multiple reforms and initiatives to ensure more timely registration for HHS contracts, which are outlined below.

FY24 HHS Timely Registration Initiative

MOCS manages a yearly cross-collaborative effort across the human services agencies to ensure the timely registration of their HHS contracts, including both new solicitations and continuation actions, for the coming fiscal year and we have already made substantial strides in our efforts for FY24, which began on July 1, 2023. The "FY24 HHS Timely Registration Initiative" set milestones, timelines, and a regular reporting structure to hold agencies accountable for the on-time registration of nearly 1,300 FY24 July 1 contract actions valued at over $10 billion.

Although this initiative tracks HHS timeliness based on when a contract is submitted to the Comptroller, the universe of contracts differs from the FY23 HHS Timeliness Prompt Payment report. Most importantly, the previous report tracks the on-time submission of human service contracts registered in FY23, which ended in June 2023, while this initiative tracks the on-time submissions of contracts for the current fiscal year (FY24). Additionally, while the FY23 HHS Timeliness Prompt Payment report encompasses all FY23-registered HHS contracts from human service agencies, the FY24 HHS Timely Registration Initiative tracked exclusively HHS contracts included in the Human Service Procurement Plans that agencies must publish each year. The differences in timeframes and the universe of contracts mean that the timeliness percentages will be different; however, we can expect to see the FY24 initiative's performance reflected in next year's HHS Timeliness Prompt Payment report.

For the FY24 Timeliness Initiative, overall contract volume was 60% higher than in the previous fiscal year, and agencies faced competing priorities, such as the asylum emergency response, while remaining committed to getting our HHS contracts submitted to the Comptroller on time. This initiative required a diligent, coordinated push to support agencies, trouble-shoot issues, report out on progress, and maintain accountability.

This year, our efforts yielded excellent results. By June 30, 2023, we collectively reached 81% on-time submissions to the Comptroller and significantly surpassed last year's performance of 58% on-time submissions, supporting our goal of getting nonprofits paid on time.

Returnable Grant Fund

The RGF provides interest-free loans to help human services providers bridge the gap in funding while awaiting contract processing and registration. Created in 1992, the Fund is run in partnership with MOCS and the Fund for the City of New York (FCNY).

As detailed in Table 1: RGF Activity, in FY23 the RGF made 194 loans to 119 vendors totaling $100,729,928, a 13% increase in the total value of all loans issued in FY22. The size of individual loans ranged from $2,845 to $7,039,235, showing diversity in the program size and provider need. The upward trend in loan value was, in part, due to emergency contracts for sanctuary facilities, which required startup costs to support asylum seekers (26% of total value), and targeted support of justice-involved program contracts (48% of total value).

Overall, the need for loans tends to have an inverse correlation with the City's "Timely Registration rate" – the percentage of 7/1 HHS contracts submitted for registration by their start date – as indicated in Table 2: Yearly Comparison – RGF v. Timely Registration. It is evident that RGF loan applications generally increase in the years when fewer contracts are registered on-time.

MOCS continues to focus on reform efforts to improve the procurement process so that contracts are registered on-time and our provider partners can focus on providing critical human services to New Yorkers. Additionally, MOCS is updating the loan application process to make the Fund more accessible and readily available to providers.

M/WBE Partners

Economic Opportunities for M/WBEs under Local Law 1 of 2013

New York is committed to encouraging a competitive and diverse business environment—one that truly reflects the makeup of this City. The Minority and Women-owned Business Enterprises (M/WBE) Program was created to address the documented disparity between City contract awards to specific ethnic and gender groups and the representation of those groups within the New York City regional market. Overall, the M/WBE Program, led by the citywide M/WBE Director, seeks to increase the contracting opportunities and participation among City-certified M/WBE firms.

In FY23, the City awarded approximately $1.42 billion–the highest ever–in combined prime and subcontract awards to City-certified M/WBE vendors out of $5.11 billion LL1 eligible contracts, an increase relative to FY22 ($1.38 billion). This represents a combined M/WBE utilization rate of 27.9% among contracts subject to the City's M/WBE Program . This drastically improves on the City's 22.9% combined utilization achieved in FY22, and marks one of the highest utilization rates the City has achieved since the program started in 2015. The City continues to diligently work and partner with our City-certified M/WBE firms to help alleviate market disparities and provide necessary goods and services across the City.

Graph

• 465 million dollars FY 2015
• 696 million dollars FY 2016
• 1.04 billion dollars FY 2017
• 1.07 billion dollars FY 2018
• 1.01 billion dollars FY 2019
• 1.10 billion dollars FY 2020
• 1.17 billion dollars FY 2021
• 1.38 billion dollars FY 2022
• 1.42 billion dollars FY 2023

Economic Opportunities for M/WBEs - Reference Notes

1. Section 6-129 of the New York City Administrative Code establishes Citywide participation goals for M/WBEs for standardized, professional, and construction services contracts, regardless of value, and for goods contracts valued under $1 million. These may include subcontract awards made on prime contracts awarded prior to July 1, 2013 that are not subject to the law. ⤣
2. Under Section 6-129(q) of the New York City Administrative Code (NYC Admin. Code), agencies are not required to set participation goals on the following types of contracts: (1) those subject to federal or state funding requirements which preclude the City from imposing goals; (2) those subject to federal or state law participation requirements for M/WBEs, disadvantaged business enterprises, and/or emerging business enterprises; (3) contracts between agencies; (4) procurements made through the United States General Services Administration or another federal agency, or through the New York State Office of General Services or another state agency, or any other governmental agency; (5) emergency procurements; (6) sole source procurements; (7) contracts for human services; and (8) contracts awarded to nonprofit organizations. ⤣

Prime Contract M/WBE Utilization

In FY23, M/WBE prime contract awards subject to the Program represented 22% of the applicable prime contract universe, compared to 16% in FY22. As the tables below demonstrate, M/WBEs were awarded approximately $1.05 billion in prime contracts in FY23. For additional details on the information presented in this table, please refer to Appendix G.

Agency Prime Contracting Highlights

The City continues to make every effort to increase contracting opportunities for the M/WBE community. Certain agencies have distinguished themselves in this regard during FY23. In particular, the Office of Technology and Innovation (OTI) awarded nearly $245 million to M/WBE prime contractors this past fiscal year, representing 52% of its prime contractor awards. The Department of Parks & Recreation (DPR) and the Department of Design and Construction (DDC) awarded nearly $178 million and $170 million, respectively, during FY23, also contributing to the City's overall efforts and utilization of M/WBEs.

• OTI awarded 24 percent
• DPR awarded 17 percent
• DDC awarded 16 percent
• All other agencies awarded 43 percent
• Top 3 agencies (OTI, DPR, and DDC) combined to award 57 percent, a total of 593 million dollars
• Citywide total for awards was 1.05 billion dollars

Subcontract M/WBE Utilization

Many M/WBEs use subcontracting opportunities as a point of entry into City contracting. Thus M/WBE subcontracting participation goals are set as material terms on applicable prime contracts to ensure access to City work. The participation goals are set in relation to the scope of work required by the contract and the availability of M/WBEs that can perform the work.

As the table below shows, during FY23 approximately $406 million was awarded to M/WBEs in subcontracts for standardized, professional, and construction services, which is down from last year ($466 million). These subcontracts were all awarded in FY23, regardless of when the prime contract was registered. The subcontracts, distributed among different M/WBE groups, represent 69% of all such qualifying subcontracts awarded. This is an increase in M/WBE subcontract utilization from FY22, which was 51%. For additional details regarding information presented in the table below, please refer to Appendix I.

Agency Subcontracting Highlights

As was the case in FY22, DDC accounted for a significant portion of subcontracts awarded to M/WBEs during the reporting period, awarding $203 million in M/WBE subcontract awards, which was a small increase from last year. DOT and DPR rounded out the top three agencies with approximately $80 million and $48 million in subcontract awards, respectively.

• DDC awarded 50 percent
• DOT awarded 19 percent
• DPR awarded 12 percent
• All other agencies awarded 19 percent
• Top 3 agencies (DDC, DOT, and DPR) combined to award 81 percent, a total of 331 million dollars
• Citywide total for awards was 406.9 million dollars

Large-Scale Contract Approvals

Pursuant to LL1, City agencies are required to obtain approval by the City Chief Procurement Officer (CCPO) before soliciting procurements anticipated to be valued at more than $10 million. The CCPO is required to review the procurements in order to evaluate whether it is practicable to divide the proposed contracts into smaller contracts, and whether doing so will enhance competition among M/WBEs. A full list of these determinations is included in Appendix J.

In FY23, the number of large-scale contract approvals decreased 30% from last year (40), although the contract value is down only 3% from $888 million in FY22.

Large-scale contracts concentrate the City's business in the hands of a few large vendors and create fewer opportunities for smaller, less established businesses (like M/WBEs) to compete for contracts, although four large-scale contracts worth $165 million still went to M/WBEs. The 30% reduction in large-scale contracts reflects the work of agencies to identify opportunities to break up large procurements and pursue other contracting arrangements to meet their needs. This is a component of the City's work to expand opportunities for M/WBEs and is reflected in the increased M/WBE utilization rate highlighted above.

Large Scale Contract Approvals - Reference Notes

1. Under Section §6-129(h)(2)(e) of the NYC Admin. Code, agencies are not required to obtain CCPO approval for capital projects valued over $25 million and contracts excluded under Section 6-129(q) of the NYC Admin. Code. ⤣
2. Approvals that occurred in FY23 but have not yet resulted in the release of any solicitation are reported only after the contract is awarded in order to protect the integrity of the bidding/proposal process. ⤣

Waivers, Modifications, and Noncompliance

A vendor that plans to submit a bid or proposal in response to a solicitation for a contract that is subject to M/WBE participation goals may seek to request a reduction in the goals by filing a waiver request with the contracting agency during the solicitation stage. The agency and MOCS then evaluate the extent to which the vendor's business model and subcontracting history is consistent with this request. The Agency and MOCS also consider the availability of M/WBE vendors when determining whether to grant a waiver request. In order to qualify for a waiver, a vendor must show both the capacity to execute the contract with less subcontracting than projected and legitimate business reasons to do so.

During FY23, vendors sought a total of 118 requests for waivers of the M/WBE participation requirements at the solicitation stage. Of those requests, 41 were denied (35%), while 9 were approved as full waivers (8%) and 68 were approved as partial waivers (58%), see Appendices – Table G. In FY22, there were fewer waiver requests (91), but they were denied, fully approved, and partially approved at similar rates as this year.

Waivers may be granted only to vendors that demonstrate both the capacity to perform the prime contract without subcontracting and a prior contracting history of doing similar work without subcontracting, taking into consideration the total number of M/WBE vendors which are able to perform work on the specific contract. Some of the waivers that were granted involved repeated requests from the same firms, as they sought multiple bidding opportunities.

As waivers must be applied for in the solicitation phase, vendors who bid or propose with a waiver request might not end up winning the contract award. During FY23, 13 contracts were registered where a winning vendor obtained either a full or partial waiver of the total participation goal and one contract was registered that had their waiver denied. For more details, see Appendices – Table K.

Pursuant to Admin. Code 6-129, contractors may request modifications of their M/WBE utilization plan after the award of the contract if the contractor made reasonable, good faith efforts to meet the goals set by the agency. In FY23, MOCS approved six (6) such modification requests. Agencies are also required to report any contractors who do not comply with the set M/WBE goals on a contract, and violations may result in the agency taking specific actions against the contractor that may impact future contracts. In FY23 there were no findings of noncompliance regarding M/WBE goals.

M/WBE Noncompetitive Small Purchase Method (NCSP)

Pursuant to the PPB Rules, agencies may use the M/WBE Noncompetitive Small Purchase method to make purchases for goods, services, or construction from any City-certified M/WBE up to and including the maximum amount authorized by the City Charter without a formal competitive process where there are available City-certified M/WBEs to provide such goods, services or construction that meet the need of the agency. Purchases made under this method are not subject to the formal competitive bid or proposal requirements set forth elsewhere within the PPB Rules.

To increase M/WBE utilization and to support the City's goal of increasing awards to M/WBE vendors, agencies, wherever practicable, use the M/WBE NCSP method to award contracts to M/WBE vendors.

As noted in previous sections, the threshold for this method increased during FY23 from $500,000 to $1 million, providing increased opportunities to M/WBEs and helping to increase the contract value that is procured using this method. The NCSP had only a small increase in the total number of contracts from last year, but it had a 60% increase in contract value, reflecting the impact of this threshold increase.

In FY23, Mayoral agencies, excluding the Department of Education, awarded a total of 887 contracts to M/WBEs valued at approximately $176 million using the NCSP Method. Two agencies that have distinguished themselves in utilizing this method are the Office of Technology and Innovation (OTI) and the Department of Transportation (DOT). OTI awarded over 19% of all Mayoral NCSP awards in FY23 with 141 contract awards totaling over $32.6 million. DOT awarded nearly 14% of all Mayoral NCSP awards in FY23 with 103 contract awards totaling over $23.5 million.

Agencies not subject to the PPB Rules have also benefited from using the City's NCSP Method when procuring goods and services to increase their M/WBE utilization. When including both DOE and Non-Mayoral agency data, the total number of contract awards to MWBEs increases to 1063 with a total dollar value of almost $196 million.

M/WBE Noncompetitive Small Purchase Method (NCSP) - Reference Notes

1. PPB Rule § 3-08(c)(1)(iv) ⤣
2. City Charter Section 311 (i)(1) ⤣

M/WBE Disparity Within Disparity

During FY23, M/WBEs were awarded 27.9% of the total contract dollars across mayoral agencies. The table below details the differences in the number of contracts awarded and the value of awarded prime contracts to both M/WBEs and Non-M/WBE firms for four contract industries (goods, construction, standard, and professional services). M/WBEs were most successful in Goods contracts $1 million or below, winning 68% of the total value of contracts awarded within this industry.

Even though M/WBEs won 80% of all Construction Services contracts awarded, the value of those contracts accounted for only 17% of the total contract value awarded during the reporting period. Similarly, Non-M/WBEs were very successful in competing and winning larger in Professional and Standard Services contracts solicited throughout the fiscal year.

The City has made significant strides in awarding contracts to M/WBEs through initiatives and policies designed to prioritize M/WBE utilization. However, contract award data shows that certain categories of M/WBEs continue to be underutilized and may not have the same access to opportunities as some of their counterparts. This occurrence is often referred to as the "disparity within the disparity."

The table below details the differences in contract awards to M/WBEs of varying ethnicity and gender for FY23. Asian male owned firms and Non-minority Women owned firms received almost 70% of the total contract dollars awarded to M/WBEs in comparison to their counterparts. Asian male MBEs were awarded over $397 million in contracts and non-minority WBEs were awarded contracts valued at over $324 million of the $1.05 billion that went to M/WBE prime contracts. The remaining M/WBE ethnic or gender categories made up the remaining 31% of contract value ($323 million), with each category receiving 12% or less in contract award dollars for the same reporting period.

City M/WBE Certification data from SBS shows how variations in the certified pool can influence the disparity within the disparity. For example, non-minority women owned firms were awarded over $140 million in Construction Services contracts while all other ethnic minority women owned firms (Black, Hispanic, and Asian WBE) were awarded a total of $12.8 million, less than 10% of the construction awards going to women. However, there are 492 non-minority women certified within Construction Services versus a total of 320 certified ethnic minority WBEs (89 Black, 120 Hispanic, 111 Asian, and 0 Native American WBEs). Because the total number of certified non-minority women owned firms in Construction Services surpasses the total number of certified ethnic minority women owned firms within each category by over 75%, greater availability gives non-Minority women opportunity to respond to solicitations and compete for contracts at significantly higher rates than any other certified ethnic minority women owned firms.

• M/WBE Disparity

In the City's effort to address these disparities, multiple tools exist to help agencies solicit and award more contracts to M/WBES. These include the creation of M/WBE prequalified lists (PQLs), use of Best Value CSBs and Best Value RFPs/CSPs, the M/WBE Noncompetitive Small Purchase Method (NCSP) and increasing the discretionary threshold limits through legislative actions. Such policies are intended to make our program more effective for those M/WBE groups that have not benefitted as much as others to date.

Another example of the City's use of procurement tools to target disparity-within-disparity firms is Executive Order 26 of 2023, which sets the requirement for all initial NCSP awards valued up to $500,000 that agencies exclusively solicit to underutilized M/WBE ethnic or gender categories. Implementation of this initiative, coupled with increasing the discretionary threshold, has increased the number of contracts awarded to underutilized MWBEs.

M/WBE Disparity within Disparity - Reference Notes

1. All certification numbers were pulled from the most recent MWBE Chief Business Office's Meeting held on June 22, 2023.⤣

M/WBE Competitiveness

In FY23, 1,024 prime contracts from PASSPort were registered that used the competitive sealed bid (CSB) or competitive sealed proposal (CSP) methods, which came from 547 solicitations in PASSPort. Through direct outreach, 1,739 unique vendors responded to those solicitations on the contracts that were registered during FY23.

Just 23% of the vendors who responded to the 547 solicitations were M/WBEs, meaning that over three fourths of all vendor responses came from non-M/WBEs. The breakdown of response by M/WBE category align closely with the disparities noted above, with male-owned Asian businesses and non-minority women making up the next largest groups of responses to solicitations.

• M/WBE Competitiveness

When human service contracts, which are excluded from LL1, are removed, the percentage of responses coming from M/WBE vendors increases to 34%, however, the disparities between different M/WBE categories remain the same.

For the M/WBE program to succeed, City procurement rules must be equitable, accessible, and simple to use, but increased certification and outreach to M/WBEs will also diversify the competition pool. Of the solicitations that resulted in contracts registered in FY23, 43% (228) did not receive a response from any M/WBE vendors, which means that it was not possible for the agency to select an M/WBE for that contract.

The City also wants to bring in new vendors who have never done business with the City before. However, only 18% of responses to the solicitations for contracts registered in FY23 came from vendors who were new to doing business with the City. Out of the different M/WBE categories, black women-owned businesses had the highest percentage of new vendors responding to the solicitations at 22%, and for the rest of the categories, new vendors made up less than 20% of the solicitations in each category. If we want to increase these numbers, the City will have to keep simplifying and expanding access to procurements of all kinds.

Construction Indicators

The chart below details the construction industry contracts registered in FY23 and highlights the top five City construction agencies by dollar value of construction contracts, which were DDC, DEP, DOT, DPR and DSNY. This section will also provide details about Construction-specific topics, including Project Labor Agreements, the Apprenticeship Program Directive, and Construction and Design Change Orders.

In FY23, the construction industry was the second largest industry, with nearly $7 billion in procurement, up 50% of the construction contract value of $4.3 billion from FY22. Most of this increase comes from the nearly $3 billion Brooklyn Borough-Based Jail construction project, which was the City's largest contract in FY23. Additionally, we are seeing more agencies restart projects that were put on hold during the pandemic, leading to increases in change orders and other construction-related procurement actions.

Graph

• DDC Apprenticeship Program Directive: 817 million dollars
• DDC Project labor agreement (PLA): 3.5 billion dollars
• Apprenticeship Program Directive: 1.9 billion dollars total
• Project labor agreement (PLA): 4.1 billion dollars total
• Not subject to project labor agreement or the apprenticeship directive: 595 million dollars
• Citywide Total: 2.4 billion dollars FY 2021

Project Labor Agreements and Apprenticeship Program Directive

A Project Labor Agreement ("PLA") is a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for applicable construction projects. Since 2009, the City and the Building and Construction Trades Council of Greater New York and Vicinity (BCTC) have entered into PLAs for certain renovation and rehabilitation of City-owned buildings and structures, as well as certain specified new construction projects and design build projects. The PLAs create direct labor cost savings, ensure a reliable source of skilled and experienced labor, permit flexibility in work schedules, and avoid many potential causes of project delays, such as labor strikes, which are prohibited by PLAs. The PLAs also contain unique provisions to help small, M/WBE construction firms. All prime contractors and subcontractors on projects subject to a PLA must agree to the terms of the PLA by signing a Letter of Assent prior to award of the project.

Currently, the City continues its efforts in negotiating and entering into new PLAs with the BCTC for upcoming City construction projects, including design-build infrastructure projects. In FY23, approximately 63% of all construction contracts (by dollar value) were subject to a PLA, up 27% from FY22 (36%). This increase potentially reflects that the construction volume has been increasing following the COVID-19 pandemic, which expands the universe of contracts that require PLAs. Additionally, certain authorized city agencies have been using the design-build method more frequently, which requires a PLA.

Apprenticeship is the process of learning a skilled trade through on-the-job training plus related classroom education. Apprentices are able to earn full journeyworker wages as training is completed. The Apprenticeship Program Directive requires that certain construction and construction-related maintenance contractors have apprenticeship agreements appropriate for the type and scope of work to be performed that have been registered with, and approved by, the New York State Department of Labor. This requirement expands the pool of work available to graduates of state approved apprenticeship programs, provides ready sources of trained workers to City construction contracts, reduces turnover, and provides clear pathways to stable careers in the construction industry, all while apprentices earn wages and benefits. The Apprenticeship Program Directive applies to individual construction contracts and construction-related maintenance prime contracts valued above $3 million (and subcontracts on such projects valued at or above $2 million) that use apprenticeable construction-related trade classifications.

In FY23, approximately 28% of all construction contracts (by dollar value) were subject to the Apprenticeship Program Directive, down 23% from FY22 (51%). However, the Apprenticeship Program Directive obligations are automatically met by contractors who work on PLA contracts. This means that as a greater number of contracts fall under PLAs, we can expect the percentage of contracts that are subject to the Apprenticeship Program Directive alone to naturally decrease, even though the use apprenticeships is actually increasing due to the PLA requirement.

Change Orders: Cycle Time and Volume

Change orders are agency-authorized, written documents that allow for modifications of a contract while the contract is being performed. Change orders are used to adjust the value of the contract or the time for performance, and are classified as either Construction Change Orders (CCO) or Design Change Orders (DCO), depending on the scope of work. Change orders allow the vendor to complete work included in the scope of the contract. They also allow the agency to make non-material changes to the scope, such as accounting for site conditions that were unknown at the time of contracting.

In FY23, there were over 1,000 CCOs, valued at over $500 million, which is a 142% increase in volume from last year. This most likely reflects renewed movement on the backlog of construction projects that were put on hold during the pandemic. Despite the higher volume of change orders, the cycle time for processing the change orders decreased slightly from 57 days in FY22 to 50 days in FY23.

In FY23, there were 163 DCOs, valued at over $157 million, which is a 61% increase in volume from FY22 and once again, likely a reflection of agencies working through backlogged construction projects from the pandemic. The cycle time for DCOs this year increased to 42 days, which is up from last year's DCO cycle time of 17 days. During FY21 and FY22, agencies were submitting change orders to de-encumber unused funds because of pandemic related budget pressures, which is a faster process and therefore artificially lowered the DCO cycle times. This year's increase in DCO cycle time is a return to "normal" pre-pandemic cycle times, and reflects that construction agencies are once again working on design projects.

The values reported in both tables do not include no-cost change orders.

Procurement Impact

In addition to City agencies using the procurement process to fulfill their respective missions and to maintain their operations, City procurement impacts New York City residents in other ways.

Below are examples of how FY23 procurements affected environmental, community, and economic developments in New York City.

Reducing The Environmental Footprint of New York City

Environmentally Preferable Purchasing

The City's Environmentally Preferable Purchasing (EPP) laws were designed to minimize the environmental harm caused by the City in its role as a consumer of goods. This multi-faceted procurement program established environmentally preferable standards to address a host of environmental concerns including energy and water use, air quality, greenhouse gas emissions, hazardous substances, recycled and reused materials, and waste reduction. Pursuant to Local Laws 118, 119, 120, 121, and 123 of 2005, and Local Law 111 of 2021, City agencies are required to meet environmentally preferable purchasing standards, such as minimum recycled content, when purchasing particular categories of goods and services and through certain construction contracts. Local Law 112 of 2021 further amended the EPP laws by requiring a one-time report on agency textile purchases, which was published separate from this report.

This year over $480 million was spent on environmentally preferable purchasing, down over a hundred million from last year ($603 million).

All EPP reports required by law can be found in Appendix E.

Preferred Source

While satisfying the procurement needs of City agencies, the Preferred Source program creates job opportunities for disabled and incarcerated New Yorkers who otherwise might not be able to find work, empowering them with dignity and a sense of purpose. To advance special social and economic goals, all state agencies, political subdivisions, and public benefit corporations are required to purchase approved products and services from preferred sources if their offering meets the agency's needs. New York State's Preferred Source requirements were established by Section 162 of the New York State Finance Law. Purchases from preferred sources take precedence over all other sources of supply and do not require competitive procurement methods. The list of preferred sources is maintained by New York State's Office of General Services.

In FY23, the City purchased over $135 million of goods and services from New York State preferred source vendors. This is down from FY22, when the City purchased over $259 million from these preferred vendors. City law requires a report detailing the City's procurement of products and services offered by preferred sources.

The full report on Preferred Sources is available in Appendix F.

Franchises and Concessions

The Franchise and Concession Review Committee (FCRC) is responsible for approving certain franchise and concession transactions as provided in the City Charter and the Concession Rules of the City of New York. A franchise allows a private entity to occupy or use City property to provide a public service, such as telecommunications or transportation. A concession allows a private entity to use City-owned property for a private use that serves a public purpose, such as restaurants in a City park, sports and recreational facilities, or pedestrian plazas. Franchises and concessions typically generate revenue for the City.

In Fiscal Year 2023, City agencies awarded 54 concessions with a projected revenue of $33 million. The 493 operating franchises and concessions, many registered in previous fiscal years, generated approximately $195 million and $53 million in revenue, respectively.

Revocable Consent

A revocable consent is the City's grant of a right to a private entity to construct and maintain certain structures on, over, or under City property for private improvements. In exchange for fees paid to the City, revocable consents are generally for the sole use and benefit of the recipient. The City grants revocable consents for a variety of private improvements, such as sidewalk cafés, stoops, and underground conduits. All sidewalk café agreements and revocable consent agreements require public hearings, pursuant to Section 371 of the New York City Charter, including posting of notices in the city record.

For Fiscal Year 2023, the Department of Transportation (DOT) submitted 84 revocable consent agreements and the total amount of all registered revocable consent agreements was $10,519,044.

Appendices

Agency Indicators Report

Visit Agency Indicators Report to see a breakdown of each agency's Fiscal Year 2023 procurement by method, industry, and size.

Glossary

The Glossary defines relevant key City procurement and contract registration terminology. Visit Agency Acronyms for a list of City agencies and websites.

Executive Summaries Archive

Fiscal Year 2022 Executive Summary

Fiscal Year 2021 Executive Summary

Fiscal Year 2020 Executive Summary

Fiscal Year 2019 Executive Summary

Fiscal Year 2018 Executive Summary

Fiscal Year 2014 Executive Summary

Fiscal Year 2013 Executive Summary

Fiscal Year 2012 Executive Summary

Fiscal Year 2011 Executive Summary

Fiscal Year 2010 Executive Summary

Fiscal Year 2009 Executive Summary

Indicators Appendices

Fiscal 2023 Agency Procurement Indicators Report Appendices

Indicators Report Appendices from Previous Fiscal Years

FY22 Appendices Download

FY21 Appendices Download

FY20 Appendices Download

FY19 Appendices Download

FY18 Appendices Download

FY17 Appendices Download

FY16 Appendices Download

FY15 Appendices Download

FY14 Appendices Download

FY13 Appendices Download

FY12 Appendices Download

FY11 Appendices Download