Lessons from NYC: Procurement during the pandemic

By Jennifer Geiling, Deputy Director, Procurement Operations & Erin Villari, Deputy Director, Procurement Operations, New York City’s Mayor’s Office of Contract Services (MOCS)

Global pandemics, devastating wildfires in the west, hurricanes in the south – we are now in an era where catastrophes like these are disrupting government services and the lives of our communities like never before. For cities like New York and many others that outsource a large portion of their human services to non-profit organisations, planning for crises has become an essential function.

Services to our most vulnerable populations – people and families that are homeless and hungry, sick and elderly and children in high need – cannot stop during a pandemic or natural disaster. In fact, in times like these, they are more important than ever.

The steps we took in New York City – one of the hardest hit locations in the world by COVID-19 – enabled vital human services to continue uninterrupted and quickly evolve to meet the changing and unprecedented needs of our communities. The process we followed may provide a roadmap for other municipalities to follow as they develop contingency planning of their own for whatever the next crisis may be.

Like many municipalities, New York City’s social services are delivered primarily through contracting with human services organisations.  In times of emergency, municipalities need a mechanism to flexibly and quickly modify these contracts to allow on-the-ground service delivery that reflects the shifting environment and corresponding changing needs.

For example, to deliver services during COVID-19 pursuant to Department of Health requirements, many non-profits had to close facilities and shift service delivery to a remote or off-site model. Some providers needed to acquire technology to enable staff to deliver contracted services remotely and manage business operations from home. With staff falling ill and others needing to take care of family members, some organisations had to recruit temporary workers. Cleaning supplies and masks became an expense that all non-profit organisations incurred in higher volumes and inflated costs.

Dealing with these and the many other unexpected needs during a sudden crisis may not be contemplated in existing contracts. In New York City, the Law Department anticipated these scenarios and established contractual flexibility when the Mayor declares a state of emergency. During COVID-19, city agencies could quickly approve necessary service modifications and allow providers continuous cash flow during the acute period of transition and emergency. Ultimately, communities most at risk benefit from this flexibility, as services remain uninterrupted while also reflective of new needs.

Cashflow and communications

In emergency situations like these, many unplanned expenses need to be paid up front, which can cause a paralysing or even existential cash flow crisis to non-profit organisations. To ensure necessary liquidity and support financial stability, New York City took the unprecedented step of advancing contract funds in the final quarter of the fiscal year. At the peak of the COVID-19 crisis, from March to end of May, we issued 1,350 budget advances totalling US$755 million to ensure providers had sufficient cash on hand. And we paid 9,100 invoices with a cycle time of three days, from approval to payment. A digital financial management platform enabled this swift response and proved crucial to maintaining business operations when agencies and providers were working remotely.

A centralised leadership structure is also crucial from management and communications perspectives. Many providers hold contracts across city agencies and a uniform approach is necessary to limit confusion, expedite services and support clarity in a very uncertain environment. In our case, leaders from City Hall, the Office of Management and Budget and the Mayor’s Office of Contract Services convened programme, fiscal and executive leadership from more than a dozen city agencies in daily tactical conversations to rapidly address new issues that were surfacing regularly, develop uniform policies, create consistent messaging and oversee the prompt financial response. To ensure providers received information in real-time to make effective on-the-ground decisions, this centralised leadership team coordinated communication efforts across agencies, non-profit coalitions, city websites and digital conferences.

While we were responding to service delivery and financial concerns, along with the need for immediate modifications of existing contracts, we were also bumping up against the end of our fiscal year, when we needed to look ahead at the numerous renewals, extensions and new contracts that would need to be processed – despite our being in the midst of a pandemic. That is an eventuality that anyone dealing with a crisis must consider: moving forward in a new normal.

New York City was fortunate that we already had in place a digital platform for human services contract budgeting and invoicing and were in the midst of streamlining our procurement process – moving away from slow, paper-based systems and into digital contracting. That enabled us to move quickly to adopt practices that were in the works , but became essential during the pandemic – such as electronic signatures and the elimination of notary public requirements. By leveraging digital tools and modern practices, the City of New York realised the same level of contract timeliness as the prior fiscal year – more than 80 percent of our July 1, 2020 human services contracts were ready for registration on time. This allowed providers to receive cash advances and begin invoicing immediately.

Between COVID-19 and what now feels like a steady onslaught of catastrophic disasters, it has been a challenging time for many state and local governments and the future holds much uncertainty. However, these crises have driven home how critical it is to move from the type of outmoded, time-consuming, paper-heavy systems we have used in the past – and toward systems that allow for greater speed and adaptability.

Modernisation of the procurement process, along with centralised management and flexible contracting policies are procurement lessons learned in New York City that we hope can serve as guideposts to others across the country as they consider their contingency plans to address future emergencies.