New York City’s Lucrative No-Bid Migrant Services Contract Is Rejected

A no-bid $432 million contract that New York City officials gave to a medical services provider to house and care for migrants has been rejected by the New York City comptroller’s office.

The comptroller, Brad Lander, cited a slew of defects with the contract awarded to the provider, DocGo, questioning why the administration of Mayor Eric Adams chose a firm to care for migrants that had no experience doing so. Mr. Lander noted that the city had failed to provide any “meaningful detail” regarding how it concluded that DocGo should be authorized to bill the city for hundreds of millions of dollars.

Mr. Lander said DocGo’s lack of expertise in providing a range of services, including social work, housing and busing migrants to motels far north and west of the city, reflected a lack of basic vetting by the agency, which hired the company under emergency procedures that waive typical competitive bidding requirements.

“It is a medical services company, not a logistics company, social services provider or legal service provider,” Mr. Lander wrote of DocGo in a denial letter that was made public on Wednesday. He also pointed to “alarming” news articles that “further detail the inflation of the company’s financial value, interference with law enforcement and workplace violations.”

The rejection will initially bar the city from paying DocGo for any work submitted as part of the contract, which is being handled by the city’s Department of Housing Preservation and Development.

Mr. Lander said the city housing agency could withdraw the DocGo contract, resubmit a less expensive version of it or fix the flaws he highlighted and seek reapproval.

“We don’t do this lightly,” Mr. Lander said in an interview. “It’s the first emergency contract we’ve declined to approve out of 300 submitted to our office.”

Mayor Eric Adams has the power to override Mr. Lander and unilaterally approve the contract over the comptroller’s objections, and at an unrelated news conference on Wednesday, he suggested he would do so.

“We are going to move forward with it. You can’t change the rules in the middle of the game,” Mr. Adams said. “I think the comptroller probably saw an opportunity to just get in the conversation.”

The mayor said the city had the authority to enter emergency contracts, and contended that his office “got the approval” from the city comptroller.

“Those who are not on the field should not be far removed and just critique everything. They’ve got to get in the game,” Mr. Adams said. “So, we’re going to continue to do emergency contracts.”

Mr. Lander, however, said that his office’s consent, which was provided in July, had applied only to the use of an emergency declaration, and that the DocGo contract still required his sign-off.

“It’s approval to use the emergency procurement method, not approval of the contract,” Mr. Lander said. “How could we approve since we didn’t have it?”

The company is already under investigation by the state attorney general, Letitia James, and the administration of Gov. Kathy Hochul launched a separate review that recently found that more than 50 security guards working for DocGo subcontractors lacked proper authorization.

In late July, The New York Times revealed the details of DocGo’s lucrative city contract, which came after the Adams administration used an emergency order to bypass a competitive bidding process. The Times reported on the company’s use of deceptive work and residency documents, threats made by security guards working under its supervision and complaints from migrants in DocGo’s care.

DocGo officials defended the company’s work and qualifications, and said in a statement on Wednesday morning that the mayor’s office had assured them that the city “intends to fully pay DocGo for the services delivered under this contract, both historically and going forward.”

“We have been providing social work services for underserved populations here in N.Y.C. for over two years, and have been working with N.Y.C. to provide services for asylees since this crisis began a year ago,” the company said.

An updated disclosure filed with the Securities and Exchange Commission on Wednesday by DocGo officials included a letter from the Housing Preservation and Development commissioner, Adolfo Carrión Jr., indicating that his agency would “inform the comptroller that he is required to take the necessary steps” to ensure payment under the contract.

“There is no risk of nonpayment as a result of the comptroller’s letter and statements regarding the contract and DocGo will be paid in accordance with the contract,” Mr. Carrión wrote. “Payment under the contract will commence promptly.”

The contract took effect on May 5, and Mr. Lander, the city’s chief financial officer, had been working to obtain the agreement, along with the agency’s rationale for hiring DocGo — required elements of his office’s contract approval process.

What Mr. Lander discovered, after he finally received the contract on Aug. 16, was that there had been flaws in the procurement process from the outset.

He noted that the housing agency had only committed $15.3 million of its budget to pay the company’s invoices, even though it already owes DocGo over $70 million so far.

The comptroller also found that the agency had given “contradictory statements” about DocGo’s ability to provide the required services to migrants. At one point, the agency asserted that the publicly traded company had the capacity to handle the migrant crisis, even though its expertise was in medical services; at another point, it claimed that DocGo could do so only if it were given $4 million in taxpayer money up front.

Mr. Lander’s office faulted Housing Preservation and Development officials for failing to disclose who referred DocGo to the agency, to provide certain creditworthiness and corporate structure disclosures from the company, and to demonstrate that the company’s subcontractors were being properly screened and selected.

Nor could the housing agency provide any evidence for its contention that the city had “exhausted efforts” to find other contractors that could do the work without needing a cash advance, Mr. Lander noted. (His office had already denied the cash advance in mid-July).

Since Mr. Lander was sworn in as comptroller at the beginning of 2022, his office has registered more than 30,000 contracts and rejected fewer than 75, or 0.22 percent. None of those were awarded using emergency procedures.

Mr. Lander also took aim at DocGo’s chief executive officer, Anthony Capone, for saying during an interview at an August investor conference — as first reported by the Albany Times Union — that the company had pursued the $432 million city contract largely to give it enough credibility to bid on a $4 billion contract with the U.S. Border Patrol.

In the same interview, Mr. Capone also predicted that ongoing gridlock in Washington would help ensure steady revenue for migrant services providers like DocGo — a posture that “suggests that the company has little incentive to assist the asylum seekers in its care to obtain legal services and work authorization that would enable them to leave shelter,” the comptroller said.

“Rather, the C.E.O. seems eager to capitalize on the fact that the longer asylum seekers remain in their care, the more the company’s revenues will grow under this contract,” Mr. Lander wrote.

Jeffery C. Mays contributed reporting.