Thriving in the New Economy: Challenges and Changes in the NYC Contracting Process
Forum held on 9/24/2010
As part of NYTAP’s year-long exploration of the theme “Thriving in the New Economy,” we sponsored this forum to hear from Louisa Chafee, the Director of Management Innovation in the Office of the Deputy Mayor for Health & Human Services(www.nyc.gov/html/om/html/offices/om_dm_hhs.html). Joining her on a panel of other NYC government officials were Denice Williams, Assistant Commissioner for Capacity-Building in the NYC Dept. of Youth and Community Development (DYCD) (www.nyc.gov/dycd) and City Council Member Gale Brewer, (council.nyc.gov/d6/html/members/home.shtml) Chair of the Government Operations Committee. A second panel of leaders in the nonprofit community and among health and human service providers also spoke, including Don Crocker, Executive Director of the NYC Support Center for Nonprofit Management (www.supportcenteronline.org/), Valyrie Laedlein, Co-Executive Director of the Community Resource Exchange (www.crenyc.org/), and Virginia Cruikshank, Vice President of FEGS (www.fegs.org/).
Highlights of the presentations and ensuing discussions are below:
Louisa Chafee – Director of Management Innovation, Office of the Deputy Mayor for Health and Human Services The Mayor called a meeting in the wake of the Lehman Brothers failure and asked “what does this mean?,” particularly for NYC nonprofits who received large amounts of charitable contributions from LB and other large financial firms. This meeting led to a discussion of the difficulties that organizations have with the contracting processes the city uses to fund services and eventually to creation of the HHS Accelerator Project .
Currently the City provides health and human services through only a small percentage of nonprofit providers mostly large agencies, many with multiple contracts. One reason for this is that many smaller service providers can’t afford to do business with the City because of the complexity of the contracting and reimbursement processes. In addition, despite the fact that the city is using a limited number of providers, there is no coordination, no standard reimbursement rates or contracting formats and compliance requirements. One example is an agency that was subjected to 52 separate audits in one year. According to Louisa this is “extreme but by no means unusual.”
One goal is to make the process more accessible to a greater number of service providers including smaller non-profits. Simplifying and improving the contract process will hopefully increase the number of applicants.
Another goal is to increase coordination among agencies and reduce duplication of administrative and paperwork requirements, saving resources for both the City and the contracted agencies.
Some of the elements of this project will include:
- A Revised Taxonomy: Mutual descriptions of how services organizations are defined and categorized
- Promulgation of a standard contract across agencies
- Centralized Audits to reduce number of audits and standardize the process
- Use standardized accounting principles
- Shared, common Fiscal Manual (will need a small number of groups/types of contracts)
- A Data Project to assist in performance measurement, particularly for services with “soft” measures that are not easily quantified, for example domestic violence outcomes or youth programs that measure self-esteem.
The HHS Accelerator Project (www.nyc.gov/html/nonprofit/html/procurement/procurement.shtml) hopes to engage more non-profits in providing input in the process, including technical and management assistance providers, possibly through focus groups.
Denice Williams, Assistant Commissioner for Capacity Building – DYCD DYCD focuses on quality for programming and purchase quality services from community-based providers, and also seeks to invest resources in communities with highest need. The Capacity Building Unit seeks to assist DYCD contractors to provide quality services through training and individual consultations. City agencies are always looking for specific data on what their funding has accomplished. One example of a system-wide problem that DYCD has identified is a 30% annual staff turnover rate for after-school agencies.
One hope that DYCD has for the HHS Accelerator Project is that agency resources (both City and contractor) will be freed up to concentrate on delivering better services by the reduced paperwork and compliance burdens.
DYCD has also endeavored to increase efficiency and consistency of the contracting and compliance monitoring processes. For example, the Capacity Building Unit, with other units input, designed a uniform site visit tool across all the departments of DYCD. This project took over two years to put into place.
There have been cuts to the agencies and more are expected.
Gale Brewer – Chair, Government Operations Committee, NYC Council The NYC Council, with 51 members and 40 committees and caucuses, distributes funds through various levels. These include distributions at the individual member level, committees, borough delegations, special issue caucuses, and the Speaker’s Office. These are called “member items” or “discretionary funds” and fund everything from Little Leagues to large social service programs, and often include capital funding for projects like renovation in addition to expense funding for programs.
When an organization faces delays in getting the funding, they should call the Council Member who arranged the grant, and also learn who in the Speaker’s Office is responsible for their particular issue area and be in contact with them.
These funds are distributed through contracts with various City agencies. Because the contracting process can differ so widely between agencies, some organizations actually engage in “agency-shopping” looking for the easiest processes.
There has been some improvement in the discretionary funding process over the last three years. Regarding the impact of HHS Accelerator on discretionary funding, these types of contracts will not be included in the initial “roll-out” of this program, but may be included at a later date.
In addition to the above information, there is a new resource available from the NYC Comptroller’s Office on the website called NYC Checkbook, where you can see the year-to-date expenditures of all City agencies.
Valyrie Laedlein, Co-Executive Director of Community Resource Exchange (CRE) Some service organizations provide wonderful services but are not good at administrative functions like contracting. Others have all their books in order, file reports on time, comply with all regulations, but do not provide quality services. Capacity building providers have to work with both kinds of organizations.
Regarding the HHS Accelerator Project, most service providers tend to be reactive. They respond to RFP’s and requests for documents, often re-inventing the wheel. The HHS Accelerator will make them proactive by:
- Getting documents ready for the Vault and keeping them current
- Helping them be ready to go before the RFP is issued.
These will constitute a major culture/behavior change.
Capacity builders responsibility (e.g. CRE) is to outreach and educate the service providers on what they need to do to be ready when the system is implemented.
One issue this project will hopefully address by standardizing audit process is the need for consistency in quality of agency auditors.
Don Crocker, Executive Director of the Support Center for Nonprofit Management The Support Center’s current focus is on crisis management and turnaround as a result of recession.
There has been tremendous access to the City’s process through Jenny Walty and Marla Simpson of the Mayor’s Office of Contract Services. HHS Accelerator adds tremendous access but requires behavior change which is hard; so there is a real need for dialogue between the City and the contractors who will be impacted.
Standard processes is always a good goal, but there are service providers that give good services but may not be able to use standardized processes. There will need to be a process for exceptions to the standard processes.
Most exciting is the use of technology: e.g. Vault; including access (ability for a service provider to update/change documents previously loaded.)
Outcomes: Service providers must first understand what the intended outcome for a contracted service is. It must be quality-focused, not quantity-focused. For example, with staff development training, what trainees learned is more important than how many were trained.
Virginia Cruickshank-Vice President, FEGS Many of the issues FEGS has experienced are being addressed through HHS accelerator.
One major issue is the timing of the process. For example, there is currently a “dark period” from the time of award to when the Comptroller approves the contract. This can be an extended period of time, and is especially important because there are/can be critical shifts in the environment given the length of the execution period.
Next is the “crunch time” at the end when you have two days to get all the signatures, which can also create extreme difficulty.
Cash Flow issues and timing of payments are extremely important. Time, money, cash flow issues impact all service providers, but especially the smaller ones.
Other issues that should be addressed through the HHS Accelerator Project are:
- Providing user-friendly IT interface is crucial for the success of this process.
- Simplifying the contract modification process
- Building opportunities to address staff development needs into contracts
- Clarifying what City agencies are funding what services, as the current overlap can be confusing, (e.g. some youth-focused services come from DYCD, some from Dept. of Education, others from Administration for Children’s Services)
- Providing timely feedback to agencies that submit unsuccessful proposals to see where they fell short.
Questions and Answers: During the question and answer period, several key issues were raised, including:
- How to measure “soft” outcomes like “self-esteem”
- How will funding for capacity building services be impacted by the economic recession and budget crunches
- What must management assistance providers do to make the case for further investments in the field over the coming years
Follow-up Louisa Chafee and her staff are very interested in getting input as the HHS processes are further defined. If TA Providers or their clients are interested (e.g. participating in focus groups); they are asked to contact one of the following: