EXECUTIVE SUMMARY

 

In this review, the Of?ce of Public Integrity (OPI) examined compliance with the City of Rochester?s and the
State of New York?s Minority and Women-Owned Business Enterprise program requirements as
well as the City?s oversight of the program. We noted the following observations that require management
attention to improve administrative and internal controls, to ensure the program is run effectively and
ef?ciency and that participants are receiving all the bene?ts that the program is intended to.

A City contractor evaded the participation requirements by using an sub-contractor as a
?pass-throug Payments were routed through the sub-contractor to achieve the appearance of
participation.

The Bureau of Purchasing inadvertently approved the initial plan to authorize $6,500 in materials alone to
count toward the utilization goals. This is in violation of the requirements. Furthermore, the
Bureau of Purchasing erroneously included additional unallowable expenses, totaling $1,146, to count toward
the utilization goals as well.

An sub-contractor contracted 100% of their work out to a ?rm resulting in a utilization
shortfall of 100% of the sub-contract value. The Bureau of Purchasing imposed a reduced penalty on the prime
contractor for 70% of the sub-contract value and factored in unallowable expenses of $1,146 (noted above) to
offset and further reduce the penalty imposed.

OPI noted three contracts in which the sub-contractor performed a small amount of labor on the
contract but purchased large amounts of materials/supplies from a sub?contractor, thus giving the
appearance the prime contractor used the as a pass-through.

Of the eight public works contracts examined, none met all three of the utilization sub-group goals
unless the City?s Of?cer granted a waiver or a reduction in the utilization goals. Even though the
Of?cer granted waivers or reduction of utilization goals for seven of the eight contracts examined,
four of these contracts still did not meet the City?s utilization goals for one or more of the 
sub-groups. As a result, ?ve of the eight contracts reviewed did notmeet the City?s utilization goals
in at least one of the sub-groups based upon the ?nal contract amount.

The City?s utilization requirements give the City the right to retain an amount up to the amount cited
in the approved utilization plan which has not been paid to any firms. However, OPI noted
that City personnel did not enforce unmet commitments for two contracts. Consequently, there were
no repercussions for these contractors that failed to meet their commitments. Even though the City imposed a
reduced penalty for one other contract that failed to meet the African~American participation
commitment, they did not impose a penalty for the utilization shortfall for the Hispanic sub?group for
that contract.

All eight of the contracts examined increased in value due to change orders. Of the eight, seven did not
proportionately increase their utilization, as required, nor receive a waiver exempting them from such
an increase.

One of the three contracts that incurred a change of 5% or more of the initial contract award value did not have
a revised ?Schedule of Participation? form, as required by the City. The other two contracts
had revised forms, however, the forms decreased the utilization instead of increasing them in
proportion to the increase in the contract value.

The City is unable to verify whether participation expenses are valid because the City relies upon the
prime contractor?s word for the amount expended by sub-contractors without obtaining supporting
documentation to substantiate the participation expense amounts reported.

OPI noted six instances where OPI obtained supporting documentation from the prime contractors and/or the
sub-centractors differed from the amount reported on the ?nal progress reports. While the total

amount reported on the ?nal progress reports for these instances, totaled $80,612, only $75,228 of supporting

documentation was provided for our review. In four instances, the supporting documentation was less than the
amount reported to the City on the ?nal progress reports and in two instances the amount reported was 
over?stated.

OPI noted ?ve of the eight contracts examined were missing one or more of the four participation
progress reporting forms required throughout the phases of the contracts.

OPI noted three instances where required preconstruction forms (Forms A, B, and C) were missing ?'om City
records.

The utilization plans are too vague and do not provide a detailed description of services that the
will perform. The vague description of the work makes it dif?cult for the Of?cer to
determine whether are capable of providing the services outlined in the initial plan and to properly
assess the validity of their participation as projects progress.

OPI noted that the City does not have an adequate reconciliation process to verify whether goals have
been achieved for Neither the City?s Of?cer nor DES (for architectural/engineering
professional services) review or analyze actual utilization expenditures for to ensure
compliance with the City?s requirements.

We noted architectural/engineering services utilization report only captures proposed
goals and does not include actual expenditures paid to vendors/consultants. Additionally, it
does it include change orders to an agreement that would impact the goals. 

OPI noted that both NYS certi?ed vendors/consultants located outside the Rochester Metropolitan Statistical
area and non-certi?ed vendors/consultants were included in utilization reports for the
PSA categories. However, per City policy, only NYS certi?ed vendors/consultants located within the
Rochester Metropolitan Statistical area count towards meeting the City?s utilization goals.

The Bureau of Purchasing combines both certi?ed and non?certi?ed vendors/consultants expenditures
in calculating their annual utilization for personnel training/testing and advertising/media professional services.
As a result, this calculation cannot be utilized as a basis to determine whether utilization goals for
personnel training/testing and advertising/media are actually being achieved.

The City lacks a standardized process for vendors/consultants to request and obtain a City waiver for
architectural/engineering professional service agreements.

City administration does not receive a status report on the program for indicating whether
utilization goals were actually achieved for each PSA category. 

For and FY-2015, OPI noted that the City fell short in meeting the City?s annual utilization
goals set forth in Ordinance No. 94-213 for all but one PSA category.

The City?s requirements established three speci?c annual goals that must be met for
architectural/engineering services. However, DES has indicated in Request for Proposal letters to
vendors/consultants that the awarded vendor/consultant is not required to strictly meet each of the goals, but
rather participation in one or more of the goals would be acceptable.

Of the four DES architectural/engineering tested, DES did not meet any of the City?s sub-
group utilization goals for two of the and only met one of the
sub?group goals in the other two 

The goals for Public Works contracts and have not been modi?ed since 1994. The 
goals for competitive bid requirements has not been modi?ed since its establishment in 1993.

The Bureau of Purchasing?s summary reports do not accurately capture whether utilization
goals have been achieved. The current report submitted to City administration only includes proposed public
works contract amounts prior to the work being performed. This proposed amount is compared to the 
goals as a composite instead of capturing actual expenditures paid for g? City department contracts to
determine whether goals were actually achieved.

The City?s Of?cer primarily oversees the Department of Environmental Services (DES) public works
contracts for compliance with participation goals and acts as a consultant for other City departments
that administers contracts and 

The City did not achieve any of the annual dollar goals established for competitive bid contracts during our scope
period.

The Bureau of Purchasing does not provide City administration with any reports re?ecting the annual status of
the program for of?ce supplies and offset printing competitive bid contracts.

The City does not have an adequate reconciliation process to verify whether goals have been achieved
for competitive bid contracts for of?ce supplies and offset printing services.

Of the seven NYS contracts examined, two received a waiver of the utilization goals or an exemption
and four did not meet their respective NYS goals in their entirety. Supporting documentation for one of the
contacts was not available for OPI to review and therefore we could not verify whether goals for this
contract were met. 

OPI noted a lack of communication and standardized process between departments administering contracts and
the Bureau of Purchasing. During the course of interviews with various City department personnel responsible
for administering NYS grants with components, OPI noted some departments had not communicated
with the City?s Of?cer throughout administering their grants/contracts.

The Rochester Police Department (RPD) did not complete and submit required NYS forms to report actual
participation for the non-exempt contract OPI examined. Additionally, there was no 
company utilized on this contract and as a result NYS goals were not achieved.

Even though NYS granted a waiver to the City for the FY2014-15 SOOP grant administered by DRYS, the
City applied and received this waiver a year after program expenditures were incurred.

For two of the four NBD contracts examined, OPI noted that non?certi?ed companies were included
in the utilization plan and/or on an A?irmation of Income Payment to form. Inclusion of
these non-certi?ed companies gave the appearance of over-stated participation.

OPI noted that required documentation for a Neighborhood and Business Development (NBD) contract with
Of?ce of Temporary and Disability Assistance (OTDA) funds was not on ?le with the City. OTDA requires
the prime contractor to submit Contractor Quarterly Compliance Reports. NBD indicated that they were not
aware of this requirement for this project and did not verify if the prime contractor completed these forms.

OPI noted one contract administered by NBD lacked suf?cient supporting documentation. This
contract was listed on a departmental summary report indicating a 5% participation, however, there
was no documentation to support any utilization amounts expended for this project. At the time of
our review, NYS required 20% participation.

OPI noted numerous clerical errors in the MUNIS information programs for reporting. Either the
MUNIS ?elds are inaccurate or not consistently utilized. As a result, obtaining data from the system
is unreliable and cannot be utilized to assist in tracking, reporting, or monitoring of participation or
compliance with the program objectives.

Of the 246 DES contracts examined for utilization of the checkbox ?eld in MUNIS, we
noted 83 instances where the ?eld was improperly marked and 49 instances where the ?eld was not
used at all. This is an error rate of 54%.

During the course of our sampling selection process, the checkbox ?eld was improperly
used on seven DRYS contracts and one IT contract selected for testing.

While reviewing a MUNIS generated report of coded vendors, OPI noted three instances in
which a vendor with the exact same business name, had more than one vendor number.

In addition, we noted several vendors listed more than once on MUNIS with their vendor names
varying in spelling or title of company. This duplication of vendor records further
diminishes the accuracy of the data available and may cause records to be unintentionally divided.

The ?elds available on the MUNIS system to identify a vendor as an ?rm are not being
utilized consistently and accurately making it impossible to determine the number of 
vendors on MUNIS. In addition, some cf the data is outdated and does not re?ect current certi?ed
vendors.

City department?s administering contracts/grants are not utilizing the sub-contractor ?eld within
MUNIS. This ?eld also has the capabilities of containing sub?contractor information relating to the
project to aide in tracking participation. In addition, within the contract entry program on
MUNIS, the ?eld to attach sub-contractor information such as invoices, Form F, payroll
records, canceled checks, are not being utilized.

The City?s vendor input forms, to add/modify vendor records on MUNIS, do not distinguish between certi?ed
and non-certi?ed vendors. As a result, both certi?ed and non?certi?ed vendors are inputted
into MUN IS in accordance to the input form and captured together under the same ?eld.

The progress form (Form F) completed by the prime contractor throughout the phases of each public
works contract and submitted to the City are retained in the Bureau of Purchasing?s Wage and Compliance
area. These forms are not attached to the individual contract on MUNIS nor are they used to reconcile or to
verify goals achieved or actual payments made to sub-contractors.

data that is collected for a given contract is not centralized in a single, easily accessible location, such
as MUNIS. Rather, the data is fragmented amongst various departments/bureaus.