|
SUBJECT TO INFLUENCE:
New York State Agency Contracting
Billions of taxpayer dollars are spent on state services provided by outside contractors each year. New York State agencies and authorities award contracts to businesses and not-for-profits that successfully propose to furnish goods and deliver services. Yet, there have been a growing number of controversies and scandals resulting from the awarding of these contracts. Indeed, two sitting members of the state legislature and a top-ranking Administration official have been sent to jail for their roles in illegally influencing state contracting decisions. The goal of this report is shed light on state procurement practices, stimulate researchers to examine these practices more deeply and offer recommendations to policymakers.
FINDINGS
Finding – Over $42 billion in New York State agency contracts were approved between 2001 through 2003; $26 billion was awarded in an “Influence-able” process. According to information obtained from the Comptroller’s office, during the years 2001 through 2003, state agencies were approved to spend over $42 billion on contracts. Obviously, lobbyists could influence all of those contracts. However, using a conservative assumption of “influence-able,” this report estimates that $26 billion of agency contracts were awarded using criteria that were not based solely or primarily on the lowest price. In those circumstances, the contracts were awarded in a way that allowed vendors the opportunity to influence the contract.
Finding – Successful vendors donated nearly $2.2 million to State Lawmakers; Governor Pataki and the State Republican Committee were the biggest beneficiaries, garnering over 29% of donations. After removing campaign contributions from PACs and lobbying firms – which may have made such donations for a wide range of reasons – nearly $2.2 million was donated to elected officials from successful vendors. The campaign contributions from these sources showed an interesting split – roughly a third of the donations went to the Governor or the State Republican Committee, roughly a third went to Senate Republicans and roughly one fifth of the donations went to Assembly Democrats.
Finding – Health, construction and financial service interests top the list of campaign donors receiving agency contracts. Not surprisingly, the health, construction and financial services industries – those most susceptible to government regulation and most likely to provide services – topped the list of campaign donors.
Finding – State agencies’ contract dollars were not awarded in a manner that evenly distributed them throughout the state. Twenty-five percent of contract dollars were awarded to companies based in New York City; 22% to New York City suburbs; 10% to the Capital District; and 14% to the remainder of Upstate. The awarding of state contracts was not spread evenly throughout New York. Not surprisingly, entities whose headquarters appeared to be based in New York City received nearly half of all contracts dollars awarded. What was surprising was the small percentage of contracts that went to companies that appeared to be based in the non-Capital District areas of upstate New York. Thirty percent of contracts went to either out-of-state entities or researchers could not identify the geographic location of the entities.
Finding – Fifteen vendors appear to have violated New York State campaign finance law. New York State law limits the maximum amount corporations can contribute to elected officials. No corporation can contribute over $5,000 in the aggregate to all races in New York State. There were 15 instances in which vendors appeared to have violated the law.
Finding – Where identified, corporate officers donated substantial amounts of campaign dollars. We identified the corporate officers for 75 of the largest vendors. In aggregate, the contributions from these officers accounted for almost 27% of all of the contributions from these 16 vendors. Since New York State campaign finance law does not require individual contributors to disclose the name of their employer, it is very likely that other employees or officers from these or other vendors have given additional donations not identified in this report.
RECOMMENDATIONS
With so many billions of taxpayer dollars at stake, it’s important that New Yorkers have confidence that contracting decisions are based on the public’s best interest.
Recommendation – Expand oversight of lobbying to include efforts to influence government contracts. New York’s lobbying law narrowly defines reportable activities. Unlike many other states, New York does not require lobbyists or their clients to report efforts to influence agency purchasing decisions. Thus, efforts to influence agency decisions on billions of dollars in purchases fall under the public’s “radar screen.” This “stealth lobbying” is extremely lucrative and has led to some questionable and sometimes illegal purchasing decisions by New York State agencies. The State Lobbying Commission has recommended that the lobbying law be amended to redefine “lobbying” to, among other provisions, cover lobbying that seeks to influence government procurement decisions.
Recommendation – The State Comptroller should more closely examine campaign contributions by agency contractors and propose – if appropriate – measures to ensure that such donations play no role in procurement decisions. The Comptroller should initiate an investigation into the findings of this report to help the public better understand to what extent, if any, contributors are donating to political committees as part of an effort to influence the state procurement decisions.
Recommendation – The State Comptroller should make its contracting database available on the Internet. A publicly accessible database of state contracts and contractors would help add much needed transparency to the state contract awards process and perhaps encourage additional bidders to vie for contracts. The Comptroller’s database, however, was designed for internal tracking of contracts that the Comptroller’s office audits. More thorough record keeping on the number of bidders per contract and making the database available via the web would add to the scrutiny and oversight of the bidding process in New York.
Recommendation – Expand the State Comptroller’s oversight of state contracts to public authorities. Legislation should be enacted that allows the Comptroller the same oversight of authorities’ contracting actions as it now has for state agencies.
Recommendation – Strengthen the State Board of Elections campaign contribution database. The State Board of Elections should perform more comprehensive and thorough checks on the data supplied by campaign committee treasurers. Simple checks include using software to verify that addresses and zip codes match up and are entered without obvious typos. Additionally, periodic filings should have their transaction dates verified as to ensure that the date field has been entered properly and that the date falls within the time frame of the reporting period. Software to provide these checks is readily available and commonly found in a wide variety of commercial applications. In addition, we recommend that legislation be enacted that tracks the federal law’s requirement that employer and occupational information be disclosed by campaign contributors.
Recommendation – Expand the electronic filing requirement by campaign donors to local government candidates and political committees. A major informational gap is created by the failure of local campaign contributions to be easily accessible in the same manner as state campaign data. The single clearest reason why this is necessary is that New York State law is currently unenforceable. New York State election law limits annual corporate contributions to $5,000 for all races. The State Board of Elections is charged with enforcing that limit. However, political filings are kept at county boards of elections and the State Board simply cannot regularly review these “hard copy” filings to adequately monitor corporate donations.
Read the full report in .pdf format by clicking here. | 
