A company hired to provide food to underserved New Yorkers overbilled the city by $9 million, a new report from city Comptroller Brad Lander shows.
The city Department of Social Services contracted with Driscoll Foods from 2020 to 2022 to run the Pandemic Food Reserve Emergency Distribution Program that provided families facing food insecurity with fresh produce and shelf-stable items. The $90 million contract included $65 million dedicated to sourcing food. According to the audit, released Wednesday, the initiative delivered nearly three million cases of food to 400 emergency providers, food pantries and community kitchens around the city, accomplishing its goals.
Lander’s office found that lack of oversight from the department led to overspending by $9 million. The city did not ensure that money budgeted in the contract for food was actually spent on food or that expenses that were claimed and paid for were “reasonable and necessary.” The agency also did not make sure Driscoll properly maintained its inventory records or approved subcontractors prior to issuing payments for related services.
About $3 million in overpayments went toward staffing, $214,000 went toward food costs and $780,000 went toward delivery and transportation expenses, the comptroller’s office found.
“Neither DSS, Driscoll, nor the auditors can be assured that all costs paid for by the Program were reasonable and necessary, or that food acquired through the program was delivered in its entirety to participating [emergency food programs],” the report reads.
The department has already recouped nearly $2.5 million from Driscoll, but another $7 million remains unaccounted for. Lander’s office recommends the agency recoup that money from the company, work to ensure future vendors comply with contract terms and require Driscoll to disclose all rebates it received for food supplied to the program. The report also recommends the department establish written cost allocation guidance for vendors and ensure staff who are responsible for fiscal oversight are aware of city policies.
According to the audit, the agency has agreed to take corrective action including providing staff with reinforcement training and standardizing its cost allocation language. Nicholas Jacobelli, a spokesman for the agency, said DSS will conduct an in-depth post-audit review of Driscoll’s invoices and potentially recoup overpayments. He added that the pandemic created staffing challenges that impeded the agency’s ability to monitor invoices.
Representatives for Driscoll, which is based in Wayne, New Jersey, did not respond to a request for comment. The department has no active contracts with Driscoll, Jacobelli said.
Jacqueline Neber , 2024-05-16 11:33:03
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