NYC Taxpayers Overcharged Millions In Emergency No-Bid Contracts For Illegal Immigrant Services

An audit indicates New York taxpayers are being fleeced for millions in no-bid contracts under emergency powers to deal with the illegal immigration crisis.

Hundreds of illegal immigrants sleep outside as they wait for placement at the Roosevelt Hotel intake center in New York on Aug. 1, 2023. Timothy A. Clary/AFP via Getty Images

An audit reveals that New York taxpayers are being overcharged millions of dollars for non-competitive contracts awarded by Mayor Eric Adams’s administration to for-profit companies to provide services to illegal immigrants.

The NYC Comptroller’s Office said in a Feb. 27 report that no-bid contracts inked under emergency powers led vendors to charge “exorbitant rates” to staff shelters for illegal immigrants, leaving taxpayers to foot bills that would, under a more cost-effective approach, be much lower.

New York City Comptroller Brad Lander said in a statement that city agencies probably spent “millions of dollars more than necessary” for the same services, adding that City Hall should “insist on getting the most competitive prices from its own contractors in order to keep costs down.”

The mayor’s office did not immediately respond to a request for comment.

‘Haphazard Approach’

The influx of illegal immigrants led Mr. Adams to declare a state of emergency in October 2022 and quickly scale up shelter operations to provide housing to the new arrivals under New York’s long-standing right-to-shelter laws.

Since then, the city has opened over 210 shelters and other facilities to provide temporary housing to illegal immigrants, with city authorities turning to outside vendors to provide services like meals, medical care, and site staffing.

The Comptroller’s Office audit found that roughly 340 unique contracts valued at roughly $5.7 billion were in place as of November 2023, with most of them procured on an emergency basis.

Emergency procurements, which waive competitive bidding requirements, allow the city to quickly source vendors. But they also mean less oversight and higher prices—which translate to a bigger financial burden for taxpayers.

“The City allowed for-profit companies to take advantage of an emergency in its nascency,” the audit report states, adding that companies charged “exorbitant rates” to do work that the city often procures at more reasonable rates.

The Comptroller’s audit found that supervisors and security staff at various illegal immigrant shelters were being paid “wildly” different rates, even though the services they were providing were exactly the same.

For instance, a review of the four highest-cost deals found that the city was paying private security guards between $50 and $117 per hour, which is much higher than the prevailing wage rate of $27.58 an hour.

The audit indicates that the city would have spent “far less” if it had relied on its existing organizational structure and civil service jobs rather than financially wasteful emergency procurements.

“Annualized, the savings would total approximately $50 million if certain staffing had been provided by hiring City employees rather than through the emergency contract,” the report reads.

“The City’s haphazard approach to entering these contracts—and their subsequent failure to compare or control prices across them—underscores the pitfalls of inadequate management of emergency procurement,” Mr. Lander said in his statement.

For his part, Mr. Adams said during a Feb. 26 “community conversation” event said that the city has handled 177,000 illegal immigrants and asylum-seekers and that the endeavor is “costing us a lot,” adding that “we got hit with this $12 billion migrant cost.”

New York City Mayor Eric Adams attends a news conference in New York on Oct. 11, 2022. Mary Altaffer/AP Photo

Costs In Focus

New York City spent around $1.45 billion on the illegal immigration crisis in fiscal year 2023 and is set to spend nearly $11 billion on it over the next two years, according to earlier reporting.

In November, Mr. Adams’s office released an updated financial plan for fiscal year 2024, which included a cost-cutting scheme called the “program to eliminate the gap” or PEG, which imposed a 5 percent across-the-board cut affecting every city agency, balancing the budget at the expense of services, including education and policing.

More cuts were in the pipeline in a PEG for fiscal year 2025 but Mr. Adams said on Feb. 21 that these reductions have been canceled thanks in part to higher-than-forecast tax revenue and cuts to asylum seeker spending.

Hundreds of illegal immigrants line up outside of the Jacob K. Javits Federal Building in New York City on June 6, 2023. David Dee Delgado/Getty Images

Mr. Adams said that the city would be cutting an additional 10 percent in budgeted city-funded spending on illegal immigrants in addition to a 20 percent cut in the preliminary budget that he said already saved $1.7 billion.

“The combination of our tough, but necessary financial management decisions, including cutting asylum seeker spending by billions of dollars, along with better-than-expected economic performance in 2023, is allowing us to cancel the last round of spending cuts, as well as lift the near total freezes on city hiring and other than personal spending,” Mr. Adams said in a statement.

“Make no mistake—we are not yet out of the woods, as we still need Albany and Washington, D.C. to play their roles in providing New Yorkers with additional support,” he added.

Mr. Adams has repeatedly lambasted the Biden administration for failing to provide adequate help with the illegal immigration crisis.

He said on Feb. 27 that, of the roughly 180,000 illegal immigrants that that have been provided with care, there are roughly 65,000 still being looked after by the city.