Several for-profit companies, including a medical firm facing scrutiny from authorities, are on track to get new city contracts worth more than $560 million to provide various services for migrants — a move that comes as Mayor Adams faces calls to shift away from a for-profit procurement model amid the asylum seeker crisis.
The debate over the municipal contracts also comes as Adams is pushing to impose steep budget cuts, including a 20% trim in city spending on the crisis.
The new contracts deal with services being provided at the city’s 16 Humanitarian Emergency Relief and Response Centers, commonly known as HERRCs. The city’s public hospital system, known as H + H, oversees the HERRC shelters, which are operating out of hotels and sprawling tent-style facilities that have housed tens of thousands of migrants since the crisis started last year.
In a live-streamed meeting Monday, H + H’s finance committee voted unanimously to award new contracts related to catering, laundry and case management services at the HERRCs to 13 companies, most of them for-profit operations.
The contracts, which are expected to receive final approval from H + H’s full board later this month, would give those companies as much as $565.6 million to provide the services at the HERRCs for 12 months, starting Jan. 1, paperwork reviewed by the Daily News shows. A whopping $355 million of that price tag is for “catering services” at the shelters, the paperwork shows.
Manhattan Councilwoman Gale Brewer, a Democrat who chairs the Council’s Oversight and Investigations Committee, was perplexed when asked about H + H’s decision to continue contracting with for-profit firms.
“Why the hell are they doing for profit?” she said. “It sounds to me like it’s more of the same.
“The reason I’m particularly upset is that we have budget cuts that are supposedly the migrants’ fault, and then we have these contracts with for-profit providers,” Brewer added, referring to budget cuts at city agencies, including the NYPD, announced by the mayor last month on the auspice that they are needed to offset migrant costs.
One of the companies greenlit to continue performing “case management” at the HERRCs is DocGo, a medical provider firm that has been contracted by the city since earlier this year to carry out those services.
The Adams administration’s decision to rely on DocGo stoked controversy this past August, when State Attorney General Letitia James’ office launched an investigation into the firm over allegations that it mistreated and misled migrants as part of its city-subsidized program to relocate them to other parts of New York and the country.
Under the new contracts authorized by H + H’s finance committee, DocGo will be among five companies to receive $176.8 million to do case management at the HERRCs, a category of work that includes continuing to manage the migrant relocation efforts. The documents reviewed by The News do not make clear how much each company will be paid as part of that lump sum.
The other four companies in line for case management contracts are Cherokee Nation Management and Consulting, an Oklahoma-based consulting and professional services firm, Medrite, a medical services firm, Horne LLP, a professional services firm, and International Rescue Committee. All those companies are for-profit operations, except for the International Rescue Committee, a Manhattan-based nonprofit that works with humanitarian aid efforts.
Before voting through the contracts at Monday’s hearing, Freda Wang, chair of H + H’s finance committee, noted that the spending levels included in the new contracts appear consistent with what the city’s currently shelling out on the same services on a per-day basis.
“That’s right,” replied Chris Keeley, a chief operating officer at H + H. “It’s very comparable to where we are at now,” Keeley also said.
The similar spending levels come after Adams, citing the fiscal strain of the migrant crisis, ordered his administration last month to figure out a way to slash city spending on services for migrants by 20% this fiscal year, which runs through June 30. That would translate to roughly a $940 million cut.
In order to achieve such major savings, City Council Democrats have said Adams’ administration must stop hiring for-profit companies to carry out migrant services, arguing that such a model results in higher costs for the city.
A spokeswoman for Adams’ office did not return a request for comment.
Adams has for months argued his administration must receive more financial help from federal and state governments as the city continues to house and provide services for more than 65,000 mostly Latin American migrants.
Beyond the case management spending, the $355 million “catering services” contracts for the HERRCs were approved by the H + H finance committee to be carried out by Rethink Food, Kommissary, Bridging Cultures Group and Riviera Caterers. Most of those entities are for-profit, too.
Keeley and Ted Long, a top H + H official, said at the finance committee meeting that the $355 million price-tag is calculated based on the HERRCs being at full capacity, with all residents eating three meals per day. They said they’re working to bring that dollar figure down.
The last portion of the spending authorized by the H + H finance committee is laundry services, to the tune of $33.8 million for the full contract term. That award is split between four contractors, one of which is Blu Laundry Services, a commercial laundromat in Brooklyn.
Like Blu Laundry, the other three contractors, HappyNest, Sodexo and Sun International Trading, are for-profit entities.
Specifics on how Adams will trim migrant crisis spending by 20% this fiscal year remain unclear. To date, the city has spent more than $2 billion on housing and providing services for migrants.
Speaking at City Hall last month, Jacques Jiha, Adams’ budget director, said one way to drive down migrant costs is focusing on getting new arrivals to leave the shelter system quicker. To that end, the administration has enacted policies limiting consecutive shelter stays for single adult migrants to 30 days and migrant families with kids to 60 days.
“That’s one aspect of the solution,” Jiha said.