AUDIT: Shortchanged by $9.39 million

How a pandemic food supplier overcharged the City. Dear New Yorkers, Looking back, New York City’s resilience in the face of the COVID-19 pandemic stands as a testament to our unparalleled spirit and determination. Through innovation, mutual support, and an unwavering belief in our collective future, we navigated dark days. It wasn’t easy, though. One of the biggest problems we faced throughout the pandemic was increased food insecurity. An estimated [1.4 million]( New Yorkers were experiencing food insecurity by 2021. This was a substantial increase from pre-pandemic levels, as many faced job losses and economic hardships. In response, the City created the Pandemic Food Reserve Emergency Distribution Program (P-FRED), under the purview of the NYC Department of Social Services (DSS). DSS administers the Supplemental Nutrition Assistance Program (SNAP) and other essential services to support New Yorkers with low incomes. P-FRED was designed to provide food to emergency food providers, food pantries, and community kitchens across the five boroughs – and this goal was broadly met. The City entered into an emergency contract with food supply company Driscoll Foods, and approximately 2.67 million cases of shelf-stable food and fresh produce were delivered to approximately 400 emergency food providers. But as my office’s [latest audit]( found, Driscoll Foods shortchanged the City by $9.39 million for food distribution services. The City’s [$90 million contract]( with Driscoll Foods was intended to support New Yorkers who urgently needed food during the pandemic—NOT for Driscoll to pad its profits. A volunteer packs bags for emergency food distribution during the COVID-19 pandemic. Photo credit: Robin Hood. Here’s how it happened: Driscoll spent approximately $3.9 million less on food items than the contracted amount. Then, rather than spending the surplus to assist more food insecure New Yorkers, Driscoll billed the City $2 million more for its own profit, spent $3.4 million on additional staffing costs, and over-billed $1.5 million on food warehousing and storage—totaling $9.39 million. DSS failed to properly administer P-FRED and monitor the $90 million contract. What needs to happen next is clear: While DSS already recovered $2.35 million from Driscoll, the remaining $7 million must be recouped immediately. Thankfully, DSS has agreed to follow this recommendation – along with most of the [other suggestions]( in our [new audit](. Finally, this isn’t the only time we’ve dealt with Driscoll. The company still holds millions of dollars in contracts for school lunches and to feed children in foster care. If Driscoll wants to keep the City’s business, it needs to pay back what it overcharged during the pandemic. And going forward, the City must better monitor its contracts with Driscoll and other food vendors. With stronger, more capable management, we can more effectively serve food to insecure New Yorkers – throughout global pandemics and everyday life. Thanks, Brad [Facebook]( [Twitter]( [Link]( [New York City Comptroller's Office]( Copyright © 2024 New York City Comptroller's Office, All rights reserved. Our mailing address is: 1 Centre Street, New York, NY 10007 Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](.