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Over the years, SeaChange Capital Partners has been approached by numerous nonprofits

pushed to the brink of financial calamity while waiting to get paid by New York City. Last year
we analyzed the financial burden from contracts registered in Fiscal 2017. Thanks to new data
provided by the Office of New York City Comptroller Scott M. Stringer, we’ve now updated that
analysis for Fiscal 2018 in New York City Contract Delays: Vol 2.
The short story is that things remain bleak:

 The 2,543 social service contracts registered in 2018 were an average of 221 days late (11
days longer than in 2017); the odds that a contract was registered on time was 11 percent
(2% better than in 2017); and 20% remained unregistered after a year (unchanged since
2017).
 Organizations could only be “pretty sure” (i.e. 80%) that a contract would be registered after
369 days and could only be “really sure” (i.e. 95%) after 623 days.
 The 1,000+ discretionary awards – which represented 40%of all contracts but only 3% of the
value – were by far the latest: The median delay was 304 days and nonprofits could only be
“really sure” that a discretionary award would be registered after almost two years of
waiting.
 Renewals were the fastest: a full 36% of renewals were actually registered before the start
date and the median delay was only 25 days though organizations still needed to wait nine
months to be “really sure” that a renewal would be registered.
 The total cash flow burden imposed on all nonprofits due to registration delays in 2018 was
$744 million (up from $675 million in 2017)

Our report also highlights the critical importance of the relatively small number organizations
that the City does large volumes of business with year-in and year-out. Based on contracts
registered in Fiscal 2018, more than 85% of the City’s total social service spending was
concentrated in these 100 “battleship” nonprofits.
Fortunately, there are encouraging policy discussions are underway to address endemic
contract delays. The City Council has made recommendations to the Charter Revisions
Commission to: (i) increase transparency and accountability in the pre-registration process; (ii)
reduce contract delays by setting time limits for agency procurement processes, and (iii)
identify problems earlier in the procurement process. The City Council’s Committee on
Contracts has proposed bills to expedite the inter-agency oversight review process of large
unregistered contracts and to require that the City pay interest on late payments. The New York
City Comptroller, Scott M. Stringer, has proposed that each agency have a timeframe to
complete its tasks and that the status of contracts should be tracked through a publicly
available system.
Our report suggests three other things that the City should consider at a moment when
procurement reform appears to be of serious interest to policy makers: create a separate unit
to handle discretionary awards and require that these awards follow a small number of pre-
defined model templates; make advances against renewing contracts if the nonprofit is willing
to provide service on the starting date under an registered contract; and utilize master-
contracts for those battleship nonprofits deemed to be of high organizational quality.
New York City needs healthy nonprofit partners more than ever; but these partners cannot be
healthy without timely and predictable payments. While how much to pay nonprofits is a
thorny political issue – there is only so much money to go around – paying promptly and
predictably would seem much more straightforward. We are optimistic that the current
discussions around procurement reform can finally lead to real change.