Lax NYC oversight led to PPE price gouging during early days of pandemic: Comptroller

NYC failed to conduct enough oversight on the emergency procurement of personal protective equipment at the start of the COVID-19 pandemic, putting taxpayers dollars at risk of price-gouging and leaving the city vulnerable to opportunistic vendors, a new audit conducted by the city’s Comptroller’s Office found.

According to the report, shared exclusively with the Daily News, the city’s Department of Citywide Administrative Services, didn’t consistently conduct vendor background checks in the rush to supply the city with PPE. In some cases, the city purchased from known unreliable vendors.

“Emergency procurement is a necessary tool for responding to crises — the City cannot slog through a RFP process while people are getting sick and dying. But the City must protect itself from crisis profiteers,” Comptroller Brad Lander said in a release.

During the emergency, much of the red tape on procurement, including the typical request for proposals, or RFP, was lifted.

The Trump administration was widely criticized for a lack of a coordinated response to PPE shortages, forcing cities and states to compete against each other for resources and scramble for solutions.

The Comptroller’s audit examined 59 procurements between March 1, 2020, and June 30, 2020, valued at more than $1 billion. For 11 of them, valued at more than $200 million, the Department of Citywide Administrative Services didn’t show they conducted background checks on the vendors, the report said.

In four of those cases, the vendors either didn’t provide products or gave faulty products.

Although the administrative services department found warning signs for six of the procurements, in total valued at $173 million, it didn’t report them to other city agencies, the audit found.

While the Department of Citywide Administrative Services claimed that it continued to conduct price analysis, and that prices fluctuated over time, the audit found that the agency didn’t document price comparisons, and as a result, may have overpaid.

In one case, the agency paid one vendor $7.50 per cloth mask for one order — and $4.80 per mask for a second, duplicate order — both well above the average price of a cloth mask.

In many cases, the city skipped the approval line to go ahead and make prepaid PPE orders without the proper authorization. In five of those cases, the PPE either never got delivered, or the vendors delivered defective equipment.

The city prepaid a vendor $9.1 million for an order of ventilators that never came — instead eventually receiving a batch of shoddy N95 masks. On the third try, the city finally received the correct masks.

In a letter to the Comptroller’s Office, the Department of Citywide Administrative Services pushed back against the findings of the audit.

“[T]he report does not place in proper context the transactions it recounts, and in some cases, omits or erroneously states important facts related to the catastrophic emergency the City and DCAS faced in the early months of the pandemic,” Dawn M. Pinnock, the commissioner wrote.

The city continues to use emergency procurement at Rikers Island and with the migrant crisis.

“Though my office found significant shortcomings, this report does not minimize DCAS’ accomplishments; rather, it is intended to serve as a guidepost to help DCAS and other agencies learn from past emergencies and apply lessons from the pandemic to future crises,” Lander wrote in the report.