Bureau of Audit
Audit Report On Other Than Personal Service Expenditures Of The New York City Council July 1, 2004–June 30, 2005
September 21, 2007
AUDIT REPORT IN BRIEF
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We performed this audit to determine whether the New York City Council (Council) complied with certain purchasing procedures for Other Than Personnel Services (OTPS) expenditures set forth in the New York City Comptroller’s Internal Control and Accountability Directives (Comptroller’s Directives) #3, #6, and #24 1 ; Procurement Policy Board (PPB) rules; and the Procurement Rules of the Council (Council Rules).
The Council is the law-making body of the City of New York. It comprises 51 members who are the elected representatives of the 51 Council Districts throughout the City’s five boroughs. The Council also monitors the operation and performance of City agencies, makes land-use decisions, and has sole responsibility for approving the City’s budget. As the legislative branch of municipal government, the Council is an equal partner with the Mayor in the governing of New York City. For Fiscal Year 2005, the Council spent more than $14.3 million in Other Than Personal Service expenditures.
Audit Findings and Conclusions
The Council did not comply with the City Charter, PPB rules, Comptroller’s Directives #3, #6 and #24 and its own purchasing procedures when making OTPS purchases. For example, the Council violated City Charter requirements, PPB rules, and Council Rules when purchasing printing services. The Council paid approximately $1.67 million for printing without entering into formal contracts—$1.46 million, of which, was paid to five vendors.
In general, the City Charter and the PPB rules require that contracts be awarded through competition. Instead—with the exception of three purchases totaling $35,470—the Council split printing orders or made several small purchases by individual Council members to prevent the total from reaching the $5,000 threshold for small purchases above which would have required the solicitation of bids from five vendors or a full public procurement. In addition, the Council: permitted affiliated companies to submit competing bids against each other for the same proposal; violated Comptroller’s Directive #24 by using miscellaneous vouchers for all Member purchases and “shared” expenditures, totaling $3.49 million; violated Council and PPB rules when making OTPS expenditures from its Central Office by not obtaining bids on purchases that exceeded $500 (Council rules) and $5,000 (PPB rules); did not use requirement contracts in 22 instances when procuring various items totaling $14,232; made improper and questionable payments, totaling $54,939; and, made improper and questionable imprest fund payments, totaling $2,837.
The Council should:
- Immediately discontinue its practice of splitting purchases to circumvent the PPB rules, Council Rules and the competitive bidding process.
- Procure services, especially printing services, in accordance with the provisions of the City Charter, PPB rules, and Council Rules by using the competitive bidding process, by entering into formal contracts with the vendors and by registering the contracts with the Comptroller’s Office.
- Determine whether all bidders are independent from each other to ensure that all purchases are made through open competition. In that regard, the Council could review the backgrounds of vendors who routinely do business with the City by reviewing VENDEX and the New York State Department of State Business Entity Database.
- Discontinue its use of miscellaneous vouchers to pay vendors for Member services.
- Enforce its own procurement rules by soliciting bids for purchases exceeding $500, or review its policies and procedures to determine whether they meet the current needs of the Council.
- Ensure that it complies with PPB rules by soliciting bids for purchases exceeding $5,000.
- Consider requiring that all purchases of goods and services be purchased from requirements contracts, if available.
- Ensure that all OTPS purchases are made in accordance with Comptroller’s Directives and Council Rules, and that they have adequate supporting documentation.
- Ensure that all imprest fund purchases are made in accordance with Comptroller’s Directive #3 and have adequate supporting documentation.
1 Comptroller’s Directive #3, “Procedures for the Administration of Imprest Funds”; Comptroller’s Directive #6, “Travel, Meals, Lodging and Miscellaneous Agency Expenses”; and Comptroller’s Directive #24, “Agency Purchasing Procedures and Controls.”