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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

Department of Corrections and Community Supervision
Selected M/WBE Purchases by Various Facilities


Issued: March 07, 2014
Link to full audit report 2013-S-30
Link to 90-day response

Purpose
To determine whether Department purchases from one vendor, American Indian Women Incorporated (AIW) complied with minority- or women-owned business enterprise (M/WBE) procurement rules and other State purchasing requirements.

Background
An M/WBE is defined as an entity that is at least 51 percent owned and controlled by the minority members and/or women whose ownership interest is real, substantial and continuing, and who control the day-to-day business decisions. These enterprises must also be authorized to do business in New York State and registered under the State's M/WBE program, which is administered by Empire State Development (ESD). For 2013, the Department's M/WBE program goal was to direct a minimum of 10 percent of its discretionary purchase amounts to minority-owned businesses and another 10 percent to women-owned businesses, for a combined annual total of 20 percent.

Between February and September 2013, five Department facilities directed about $21,000 of purchases of maintenance supplies (such as paint, padlocks, plumbing supplies, and safety equipment) through AIW, a registered M/WBE vendor. These purchases were for relatively low dollar amounts; typically under $2,500.

Key Finding

  • We found the Department's purchases through AIW complied with all existing M/WBE rules and requirements, and that AIW is a legitimate, qualified M/WBE vendor certified by New York State. AIW served as an intermediary or "broker" for the facility; a role that is not prohibited by any rule or regulation.
  • However, the extent of any "value-added" by AIW's role in these transactions is not readily apparent; especially in cases where facility staff still did the work of obtaining prices, selecting vendors and picking up the purchased products. These purchases raise certain issues that we believe warrant further consideration by management and ESDC officials.

Key Recommendations

  • How does the use of M/WBE firms as brokers for transactions advance the overall program goals of promoting access and opportunities for minority- and women-owned businesses and eradicating the barriers that have unreasonably impaired their access to traditional contracting opportunities?
  • To what extent should brokers be required to add value to a transaction and how could that value be quantified or measured?

Other Related Audits/Reports of Interest

Taking Affirmative Action to Improve New York State’s MWBE Program


State Government Accountability Contact Information:
Audit Director: John Buyce
Phone: (518) 474-3271; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236