Contract Participation of Minority- and Women-Owned Business Enterprises

Issued Date
November 04, 2016
Agency/Authority
Westchester County Health Care Corporation

Purpose

To determine whether Westchester County Health Care Corporation (WCHCC) established annual minority- and women-owned business enterprise goals, is making an effort to reach these goals, and is accurately reporting these results to the Department of Economic Development. The audit covers the period April 1, 2013 through September 30, 2015.

Background

WCHCC is a State Public Authority created under Sections 3300-3321 of the Public Authorities Law, with eight of its 15 directors appointed by the Governor. The primary mission of Westchester Medical Center is to serve as the regional health care referral center providing high-quality advanced health services to the residents of the Hudson Valley and the surrounding area.

Article 15-A of the New York State Executive Law requires State agencies and public authorities to promote the participation of minority-owned business enterprises and women-owned business enterprises in State contracts. Specifically, State agencies and public authorities are to establish annual goals for such participation (expressed as a percentage of its total contract spending for the year, net of exemptions and exclusions), make a "good faith" effort to achieve their goals, and report quarterly on its level of participation to the Department of Economic Development (DED). WCHCC reported to DED total contract expenditures of $18.7 million for fiscal year 2013-14, $13.9 million for fiscal year 2014-15, and $8.3 million for the first two quarters of 2015-16. WCHCC reported MWBE utilization of $3.8 million (20.29 percent), $3.4 million (24.46 percent), and $2.3 million (28.04 percent) for the same periods, respectively.

Key Findings

  • For the 2014-15 and 2015-16 fiscal years, the goals were 21.71 percent and 30.23 percent, respectively. WCHCC officials told us that they determined the percentage in the goal plan using the anticipated MWBE expenditures compared to the total available budget. However, that was not the case: The anticipated MWBE expenditures were estimated by multiplying the available budget by a certain percentage, but the limited documentation provided did not support the specific steps taken to develop its MWBE participation goals. Without a clear process to develop the annual goal, WCHCC’s ability to ensure it develops achievable and appropriate strategies to meet the objective of the program is limited.
  • WCHCC’s Procurement policy states that it encourages the participation of MWBEs in its procurements. We found that while WCHCC officials described the efforts they have made to attract certified vendors to achieve MWBE participation goals, they have not documented these efforts during the period covered by this audit.
  • WCHCC officials initially stated that they reported MWBE utilization to DED based on payments, as required by DED. However, this was not the case, and as a result, WCHCC did not submit accurate quarterly reports to DED for fiscal years 2013-14 and 2014-15 and April-September 2015. Of the 120 invoices, 91 (76 percent) totaling $4 million were reported in a different quarter and 39 payments (33 percent) totaling $1.06 million were reported in fiscal years other than when they were actually paid. WCHCC officials acknowledged that the MWBE utilization information reported to DED was incorrect but that they took corrective action, and going forward, MWBE participation will be based on actual payments to MWBEs; however, they will not correct the amounts previously submitted to DED. WCHCC also incorrectly reported payments to a non-MWBE vendor as MWBE utilization. Payments totaling $475,598 were made to this vendor between April 2013 and September 2015. However, this vendor was not a certified MWBE.

Key Recommendations

  • Document the processes used to establish WCHCC’s annual MWBE goal plan, including the development of the rates for the individual program components of the overall MWBE initiative.
  • Document the results of WCHCC’s MWBE outreach plan and use the results to assess effectiveness and revise outreach efforts, as appropriate.
  • Develop and implement formal procedures to identify and summarize MWBE payments and ensure that MWBE participation data is reported accurately to DED.

Other Related Audits/Reports of Interest

Metropolitan Transportation Authority: Contract Participation of Minority- and Women-Owned Business Enterprises (2014-S-6)
Dormitory Authority of the State of New York: Contract Participation of Minority- and Women-Owned Business Enterprises (2014-S-7)
New York Thruway Authority: Contract Participation of Disadvantaged Business Enterprises and Minority- and Women-Owned Business Enterprises (2014-S-76)

Carmen Maldonado

State Government Accountability Contact Information:
Audit Director: Carmen Maldonado
Phone: (212) 417-5200; Email: [email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236