Mismanagement of DocGo Contract by Adams Admin Wasted Millions of Dollars on Unused Hotels, Unauthorized Subcontractors, & Moldy...

Mismanagement of DocGo Contract by Adams Admin Wasted Millions of Dollars on Unused Hotels, Unauthorized Subcontractors, & Moldy Rooms for Asylum Seekers, New Audit from Comptroller Lander Finds

New York, NY - In a new audit released today of the Adams' Administration's $432 million contract with Rapid Reliable Testing NY LLC (commonly known as DocGo), the Office of the New York City Comptroller revealed that the Department of Housing Preservation & Development (HPD) failed to conduct sufficient oversight of the contract, costing taxpayers millions of dollars. The audit-commenced when the Adams Administration insisted on moving forward with the contract despite the Comptroller's Office's objections-found that HPD did not hold DocGo to contract terms and did not require DocGo to provide appropriate documentation demonstrating that claimed costs were actually incurred and reasonable. A detailed review of invoices presented for the first two months of the contract found that nearly 80% of payments-$11 million of $13.8 million paid-were unsupported and should be recouped.

"My office repeatedly sounded the alarm on the Adams Administration's rush to contract with DocGo, and our audit confirmed that the City's haphazard management ended up wasting millions of taxpayer dollars on DocGo," said New York City Comptroller Brad Lander. "Our detailed investigation into DocGo invoices and properties found a wide range of fiscal mismanagement and shoddy oversight-from DocGo overpaying security subcontractors by $2 million, skimming off over $400,000 in overhead for almost 10,000 unused hotels rooms, and failing to ensure promised social and casework services. Each misstep reveals that the Administration failed to adequately vet the company or oversee their work."

In May 2023, HPD entered into a one-year, no-bid emergency contract with DocGo to provide temporary housing and support services for asylum seekers, both inside and outside of New York City, under blanket authority granted by the Comptroller's office in July 2022 to address the rapidly rising numbers of new arrivals. The City contracted with a significant number of other providers to provide similar services within New York City, but DocGo was the only one contracted to provide these services outside of the five boroughs, which is unusual because the city does not have clear jurisdiction outside of the city. DocGo is a medical services company that provided COVID-19 medical testing and vaccination services, but lacked experience in providing any type of emergency housing (contrary to the "Written Determination" HPD provided to the Comptroller's Office at the time).

In September 2023, when the $432 million emergency contract was ultimately submitted to Comptroller's Office, the Comptroller denied it, citing numerous concerns associated with vendor selection, vendor responsibility, fiscal capacity and subcontractor selection. DocGo lacked experience in providing emergency housing, and the company failed to offer clear insight into its nearly half-billion dollar budget. City Hall chose to move forward with the contract despite the Comptroller's objections.

The Comptroller immediately commenced an audit of the contract and requested the initial invoices. Documentation for services provided for May and June 2023, the first two months of the contract, became available to the auditors in October and November of 2023. Auditors completed their detailed review of invoices and supporting documentation in April 2024. Auditors first shared their concerns about the poor quality of invoice reviews with HPD at a meeting on April 15, 2024. The Comptroller's Office shared the draft audit with HPD in early July 2024 and received a response July 19, 2024.

The Comptroller's detailed review of these invoices found:

• Nearly 80% of the $13.8 million paid to DocGo for expenses incurred in May and June 2023 (the first two months of the contract) were inadequately supported or not allowed.
  • Auditors identified 40,219 hours, charged at an hourly rate of $50, for security above the generally allowable limit provided in the contract. This equates to over $2 million in overpayments to DocGo, including $583,274 in profit, for security guards that were not authorized when the costs were incurred.
  • Under the contract, DocGo could secure hotel rooms at a flat rate of $170 per room per night, regardless of the amount charged by the hotels for the room, and reimbursed at a flat rate regardless of whether the rooms were occupied. DocGo was paid almost $1.7 million for vacant rooms in hotels with no occupancy during this two-month period. Of this amount, DocGo collected $408,680 in commissions. Cumulatively, the City paid for 9,874 unused hotel room nights in the two-month period under review.
• DocGo used nearly 67% of the amount claimed for this period to pay unauthorized subcontractors. DocGo only submitted 29% of its vendors for review as required, and HPD did not review and approve a single one.
  • DocGo submitted Subcontractor Approval Forms for only 12 of the 41 subcontractors that provided services during May and June 2023 and HPD could not provide the agreements with DocGo for 33 of the subcontractors.
  • The subcontractor with the highest-value contract-Platinum Community Care-was among those DocGo did not submit a Subcontractor Approval Form for, and HPD had no copy of the subcontract on file. The subcontract with DocGo is listed in Payment Information Portal (PIP) as having a maximum value of $42 million.
  • Information for only 9 of the 41 subcontractors was entered in the PIP as required.
  • HPD did not approve any of these subcontractors in PIP-all nine that were submitted were listed as "pending review" as of April 11, 2024.
  • Among the subcontractors not entered in PIP were the 20 hotels utilized under the contract in May and June, which received $4,962,425 (54%) of the $9,227,666 in payments reportedly paid to subcontractors during May and June 2023.
• HPD failed to ensure DocGo staffed hotels with the number of caseworkers and social workers specified in the contract. This failure may have denied asylum seekers the services necessary to move toward self-sufficiency and stable housing, and therefore leave the City's care.
  • During the day, the ratio of caseworkers to rooms was supposed to be 1:30; during night shifts, each hotel could reduce the caseworker staff by half, to a minimum of one overnight caseworker per site. DocGo understaffed caseworkers by 1,670 hours for 82 days at 15 hotels and understaffed supervisors (social workers) by 4,693 hours for 317 days at 18 hotels. There were 101 instances totaling 2,424 hours during which there was no supervisor present on site.
• 80% of the 189 hotel rooms auditors visited in New York City and upstate had at least one deficiency, and a small number posed serious health and safety hazards. Auditors also administered over a thousand questionnaires and received over 200 responses.
  • 122 (65%) did not have a microwave and 67 (35%) did not have a refrigerator.
  • 103 (41%) respondents were unhappy with the meals provided.
  • Auditors documented instances of mold, water damage, and paint peeling, which could lead to significant health risks.
  • 74 survey respondents also noted roaches, bed bugs, rats, and other pests in their living conditions.
  • 25% of asylum seeker respondents were not aware that they could enroll their children in school, and no signs were posted at the hotels informing them of this.

A significant portion of respondents raised issues with the general lack of communication with DocGo staff caseworkers (80%) regarding next steps, such as work authorization, jobs, housing, school enrollment and medical appointments. Coupled with the fact that DocGo understaffed caseworkers and social workers on sites and that HPD did not enforce the number of caseworkers and social workers specified in the contract, these issues raise the concern that asylum seekers may not have received the services they needed to move towards self-sufficiency and out of the City's care.

Comptroller Lander continued, "The fiscal mismanagement coupled with the hazardous conditions and lack of case management is nothing short of cruelty. Thousands of asylum seekers travelled thousands of miles to seek safety and support as they start their new lives and instead were met with infestation, inedible food, and inadequate services. Our audit unearthed what we already suspected-that DocGo never should have gotten into the business of housing asylum seekers."

As of June 12, 2024, HPD paid DocGo $181.9 million for services provided under their contract. The City did not renew the contract with DocGo, but did grant a zero-dollar contract extension with DocGo to transition asylum seekers in upstate facilities out of their care through December 2024.

To address the review's findings and move to a more accountable asylum system, the auditors recommend that HPD should:

1. Recoup the $4.7 million in unallowable expenses from DocGo.

1. Obtain appropriate documentation to substantiate the over $6.3 million in inadequately claimed costs. Where not provided, recoup all unsupported payments to DocGo.

1. Undertake second level reviews of all invoices paid to date (totaling $168.1 million as of June 12, 2024) and hold DocGo to contract terms and conditions, agency, and City fiscal policy. HPD should recoup all unallowable and/or inadequately supported payments identified during this review. Alternatively, if HPD will agree to seek recoupment based on our review, the Office of the Comptroller will conduct sample-based reviews of additional invoices.

• HPD responded, "While HPD already conducts multiple levels of invoice and payment review and has procedures to ensure that payments are made only for substantiated costs, the Agency will conduct another round of review of invoices paid as of June 12, 2024… Based on the additional round of review, HPD will recoup if necessary."

1. Hold back a minimum of 15% of the total contract value from DocGo until HPD completes all second-level invoice reviews and identifies the extent of total overpayments, to ensure the City's capacity to recoup.

1. Hold DocGo to the terms of the contract, enforce agency standards, and comply with fiscal policy to all remaining invoices are authorized, reasonable, and fully supported by appropriate documentation, before HPD approves payments.

1. Retroactively review all of DocGo's subcontractors and conduct required vetting and approval, including that all subcontractor agreements are documented in writing and all payment to these subcontractors are entered in the PIP.

1. Ensure that vendors provide all activity and performance reports required under the contract and utilize them when reviewing invoices submitted by the contractor to ensure that the goods and services for which the contractor is seeking payment are commensurate with the information being reported.

1. Conduct unannounced inspection of accommodations (both within and outside of the City) used in connection with the contracts of this nature to ascertain whether the accommodations are in acceptable working condition and have the required amenities.

"Thank you Comptroller Lander for bringing to light this alarming situation," said Council Member Alexa Avilés. "This report is damning. While this city continues to nickel and dime tried and true nonprofit partners, the administration has squandered millions in a handout to a negligent corporation. Unfortunately, the Mayor's utter mismanagement both betrays the public trust and harms vulnerable newcomers."

"It is both disturbing and unsurprising to learn the extent to which DocGo grossly mishandled over $400 million in taxpayer dollars," said Council Member Shahana Hanif. "This avoidable error was enabled by the Adams Administration's reckless contracting procedures and continued dismissal of valid concerns raised by Comptroller Lander and many Council Members. I appreciate the Comptroller's thorough audit and urge the Administration to pivot to more effective uses of funds related to supporting new arrivals including expanding legal services and ending the inhumane and financially counterproductive shelter evictions."

"Comptroller Lander's audit paints a clearer picture of over-inflated and misused city spending including $2 million in overpayments to DocGo for security guards and $1.7 million for hotel rooms left unoccupied for months," said Council Member Julie Won. "As chair of contracts, I will continue to provide oversight on DocGo's existing $41 million contract with a migrant shelter in my district and push for human service providers to be awarded the city contracts to do this work."

Read the full audit here.

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