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The City’s Department of Homeless Services (DHS) overpaid the non-profit organization Homes for the Homeless (HFH) more than $1 million for services provided at the Saratoga Family Inn in Jamaica, Queens, according to an audit released today by Comptroller William C. Thompson, Jr.

HFH also failed to provide key social services mandated under the contract, which totaled more than $7.2 million for Fiscal Year 2004.

Under the contract, DHS was required to pay HFH for use of 222 rooms at the Saratoga Family Inn and for meals and services including health screenings, counseling, recreation, child-care services, as well as assistance in finding permanent housing and employment.

Thompson’s audit revealed that, in fact DHS paid for HFH’s expenses to run the entire 255-room complex. The audit found that through an agreement between DHS and HFH for which there was no documentation, the City had already paid HFH more than $890,000 to use the additional 33 rooms at the Inn that were not covered under the contract.

“Not only did DHS fail to monitor its payments for the use of the Saratoga Family Inn, it also failed to ensure that its clients got the important services they needed,” Thompson said. “Also, it is troubling that DHS continues to engage in unregistered, handshake agreements with vendors.”

In October 2003, DHS agreed to Thompson’s call to end the agency’s practice of engaging with vendors without going through approved procurement processes.

The audit’s main findings include:

• DHS overpaid HFH $1,055,339 in Fiscal Year 2004 for the following services unrelated to the Saratoga contract:
  • DHS paid real estate taxes of $1,605 for property adjacent to the Inn owned by HFH;
  • DHS paid $136,879 for legal services associated with HFH’s attempts to obtain a zoning variance;
  • DHS paid $916,855 for rooms not covered by the contract. (Through an arrangement which DHS was unable to document for auditors, the City had already paid HFH more than $890,000 for the use of these non-contract rooms.)
    
• HFH did not consistently provide the following social services:
• Health screening documentation
• Biweekly client assessment interviews
• Individualized living plan implementation
• Child care
• Assistance in finding permanent homes
• Assistance in obtaining employment
  
• HFH also violated contract provisions regarding conflict of interest by hiring one of its board members to obtain a zoning variance.
  
• DHS failed to provide a written agreement governing the use of the 33 non-contract rooms.

Thompson’s audit calls for DHS to recoup the $1,055,339 in overpayments. “DHS should not have been billed for real estate taxes or legal fees. By maintaining an improper agreement with HFH, the Department makes itself vulnerable to the kind of billing discrepancies we are seeing in this audit. DHS must collect these funds,” Thompson said.

Thompson called on Mayor Michael Bloomberg to put an end to the Department’s practice of engaging in offline contracts.

Thompson said: “Back in 2003, Mayor Bloomberg made the following statement when he announced contract reforms with the Department of Homeless Services: ‘Good government means transparent management and accountability, and bringing more facilities into a formal contracting process will be better from every perspective.’

Clearly, this agency has a demonstrated history of disregard for City procurement rules. I urge Mayor Bloomberg to stop DHS from flouting the very regulations he upheld three years ago.”

The audit’s recommendations include:

• DHS should ensure that it conducts preliminary health screenings for all clients arriving at Saratoga and that documentation of those screenings is maintained by HFH;
• DHS should ensure that Saratoga holds biweekly meetings with clients throughout their stay and that HFH maintains documentation of those meetings;
• DHS should ensure that HFH assigns a case manager and develops an Individualized Living Plan for each client;
• DHS should ensure that HFH case managers track client progress and revise each client’s service plan as needed;
• DHS should ensure that HFH provides child care to the children of its clients as needed;
• DHS should ensure that HFH requires and assists its clients to view apartments regularly;
• DHS should ensure that HFH provides assistance to its clients in obtaining employment services;
• HFH should ensure that its board members are free of any potential conflicts of interest; and
• DHS should reevaluate the need for the additional rooms and, if it determines that the need continues to exist, should enter into a contract with Saratoga for these rooms.

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