NYC wastes millions of dollars on no-bid migrant contracts, comptroller audit says

New York City is wasting millions of dollars on no-bid emergency contracts for migrant services, including overpaying by $50 million for personnel at a single shelter in Midtown, according to a new audit from city Comptroller Brad Lander.

The audit found that four major contractors for migrant services charge "exorbitant rates" that "varied wildly" from company to company, with little oversight. For example, the companies' hourly tab for off-site managers ranges from $57.79 to $201.06. Hiring city employees instead of for-profit contractors would result in annual savings of $50 million at the Row Hotel in Midtown alone, according to the report.

"The city allowed for-profit companies to take advantage of an emergency in its nascency,” the report said.

“New York City has led the nation in managing this national humanitarian crisis,” said City Hall spokesperson Kayla Mamelak in a statement, adding that over 60% of the migrants who have stayed in shelters have since left the shelter system. “Our success stems in large part from our ability to adapt and respond to the evolving needs of this crisis.”

Mamelak said that at the start of the crisis, the city “bundled” various services into contracts to “rapidly meet the emergency needs.” And as the contracts have ended, she said the city has shifted its focus to “long-term planning for future needs” and remains “committed to maintaining these cost-saving measures.” She added that City Hall will review the comptroller’s report and fix any issues that needed to be addressed.

The city allowed for-profit companies to take advantage of an emergency in its nascency.

the city Comptroller's report on migrant contracts

The report is the comptroller's latest broadside against the Adams administration on migrant spending. Since the start of the city's migrant influx in spring 2022, Lander has long complained the city's use of emergency contracts for migrant spending was rarely justified. He revoked Adams' emergency powers to hire migrant contractors without prior approval in December.

The city had 340 migrant-related contracts totaling $5.7 billion across 14 different agencies as of November, according to the comptroller's office. Most were procured through the less-rigorous no-bid emergency procurement process. All told, city spending on migrant services is estimated at $6 billion to $7.8 billion through June 2025, according to the Independent Budget Office’s analysis from December.

The comptroller's audit on published Tuesday focuses on four emergency contracts totaling $706 million, for the firms SLSCO, the Essey Group, DocGo, and Garner Environmental Services, all hired by different city agencies.

The report found there was little, if any, coordination between agencies to monitor prices or ensure equal pricing across contracts, and that the companies were paid "wildly different rates" for staff they hired.

In one "particularly egregious" case, hourly rates for SLSCO , which was hired by NYC Emergency Management, were 237% higher than for the Essey Group, which was hired by the Department of Homeless Services. And rates for similar positions at DocGo, secured by the Department of Housing Preservation, were 146% higher than for the Essey Group.

The report found that the Essey Group, which was hired through a competitive bidding process, consistently had the best rates.

Hiring new city employees for the work would be cheaper than paying some of the companies for their contracted staff, according to the analysis. For example, on-site leaders at traditional DHS shelters are paid $50.99 an hour. Meanwhile, SLSCO charged the city $139.22 — over 150% more — for the same role. The city would have saved $50 million annually at the Row Hotel by hiring city employees instead of SLSCO contractors, according to the report.

The report said the city has had "ample time to navigate this new status quo," but says the Adams administration still doesn't have meaningful plans to cut costs on asylum-seekers.

Lander recommended the city use a competitive bidding process for migrant-related contracts, managed by a single agency with experience providing shelter. He also criticized the city’s policy of limiting shelter stays for migrants to 30 and 60 days.

“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,” Lander said in a statement. “The result is that city agencies likely spent millions of dollars more than necessary for the same services. Rather than evicting people from shelter in the middle of winter, the city should insist on getting the most competitive prices from its own contractors in order to keep costs down.”