NYC Health + Hospitals approved $325M in migrant security contracts. Taxpayers are footing the bill.

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By Dan Sears

New York City’s public hospital system in late October approved up to $324.7 million in contracts for private security services at the city’s “humanitarian relief centers” for migrants — and local taxpayers are on the hook for the spending.

That’s almost double the amount NYC Health + Hospitals, which is managing the intake of new arrivals, approved just months earlier for security expenses at the facilities — large-scale sites providing shelter and medical care for thousands of recently arrived migrants. There are now more than a dozen Humanitarian Emergency Response and Relief Centers, or HERRCs, across the city, a review of public records by Gothamist found.

H+H officials say the deals only authorize spending as needed and are being awarded through a competitive bidding process, but overall security expenses will likely increase due to the growing number of humanitarian centers.

The agreements come as the city struggles to manage an influx that’s brought more than 140,000 migrants since the spring of last year and as the price tag of caring for the new arrivals continues to rise into the billions of dollars, with limited federal assistance to date and severe cuts to the city budget on the horizon.

But because H+H isn’t a city agency, details on the costs and contracts are hard to come by. The hospital system, which is organized as a public benefit corporation with its own governance structure and board, isn’t subject to the same checks by the city comptroller and Council as municipal agencies. H+H is funded by a combination of patient-based revenue along with city, state and federal dollars and grants.

“The lack of transparency is a problem,” said Councilmember Gale Brewer of Manhattan, who chairs the Council’s oversight and investigations committee. Since September she’s held two hearings on the city’s migrant contracts.

“It’s very, very frustrating,” Brewer added. “It’s just wrong to have an agency that should have complete oversight, like everyone else, and they’re far from review. I think it’s sort of on purpose.”

Taxpayers are footing the bill for HERRC costs under an October 2022 agreement between the city and H+H intended to safeguard the latter’s cash flow and ability to offer health care. So far, the hospital system has received about $1 billion under the agreement, an H+H spokesperson told Gothamist on Tuesday.

At a Council hearing on Sept. 21, City Comptroller Brad Lander testified H+H had authorized more than $2.1 billion in spending across 38 migrant contracts, or 42% of all the spending authorized for migrant services up to that point in the fiscal year.

He said the hospital system wasn’t required to file contracts with his office or get prior approval for them, creating an “added barrier to transparency and oversight.”

Brewer and Councilmember Julie Won of Queens, who chairs the Council’s contracts committee, said they hadn’t received the latest security contracts.

Won said she expected some cost savings since the city went back to competitive bidding from pricier emergency procurements used previously in the crisis: “But I don’t have the contracts in front of me. I have to see it to believe it.”

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An H+H spokesperson declined to comment on the record about the transparency concerns, but said the hospital system had shared all HERRC contracts requested by the comptroller and Council once those contracts were “executed.” He added that the new security contracts were still being finalized.

Brewer noted H+H spending transactions, unlike those of city agencies, don’t show up in Checkbook NYC, the comptroller’s public database for city spending.

Data published by the Council this month shows H+H spent an estimated $592 million on migrant services from July 2023 through October 2023 — exceeding each city agency’s migrant spending and accounting for 45% of the estimated $1.3 billion total spent in that period.

Those expenditures also represented 80% of the $748 million budgeted for H+H migrant services this fiscal year, just four months in. But the Council didn’t receive cost breakdowns by service type for H+H and individual city agencies, muddying how much each has spent on specific services.

The Adams administration recently said it would cut migrant spending by 20% — along with a slew of other services, including libraries, sanitation and policing — as the city’s coffers buckle under the emergency. The move is “designed to reduce per-diem [migrant] costs and reduce the length of shelter stays,” the mayor’s budget director wrote in a letter to agency chiefs last week.

Through September the city spent an average of $396 per migrant household per day on shelter, security and food, according to the Council’s data. Since July the administration has enforced up to 60-day limits on migrants’ shelter stays — a policy local homeless advocates have condemned as cruel and contrary to the city’s right-to-shelter laws.

On Tuesday, a City Hall spokesperson told Gothamist she didn’t know whether the anticipated cuts would affect H+H.

‘It costs a fortune’

On Oct. 26, the hospital system’s board of directors unanimously voted to authorize the $324.7 million worth of security contracts with four companies, following a presentation by H+H executives.

“We’re looking to provide 24/7 security at those locations,” said Chris Keeley, chief operating officer in the ambulatory care division, during the presentation. “We want to keep our guests, our clients and our staff safe.”

Keeley said two of the companies, Arrow Security (also known as Aron Security) and Mulligan Security, had worked at the humanitarian centers since earlier in the year: Arrow since March, through a pre-existing contract, and Mulligan since June, through an emergency contract.

Board records show those contracts totaled $163 million — about half the new spending the board approved at the meeting. H+H had paid out $28 million to Long Island-based Arrow and $1.8 million to Manhattan-based Mulligan through August, Keeley said.

An affiliate of the third company, Garda World Security Services — a Canadian corporation based in Montreal — provided armored cars and other services for two city agencies and CUNY from 2010 to 2016, comptroller records show. (Neither Mulligan nor its parent company Protos Security appear in the comptroller database.)

It’s just wrong to have an agency that should have complete oversight, like everyone else, and they’re far from review.

Councilmember Gale Brewer

The three companies were selected from a dozen vendors who’d applied to an open request for proposals issued by H+H in July, according to hospital system officials. Keeley said bid evaluators prioritized vendors’ experience with multi-hospital systems, homeless shelters and immigrant populations.

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A fourth company, SLSCO, was originally greenlit by the board but is no longer in the running for a contract, according to the H+H spokesperson. The Texas-based firm has garnered criticism for constructing border walls between the U.S. and Mexico since the Trump administration, and over its owners’ hefty donations to the political campaigns of Texas Gov. Greg Abbott and Florida Gov. Ron DeSantis — both of whom have leveraged state resources to transport thousands of migrants to New York City and other major cities.

“All of the work performed under these contracts, all of the expenses, would be reimbursed to Health + Hospitals under the MOU [memorandum of understanding] that we have with the mayor’s office for all of this work related to the asylum-seeker effort,” Keeley said at the board meeting.

He noted the contracts didn’t “guarantee” work, so H+H would have discretion to dole out assignments based on the companies’ capabilities, facilities’ needs, and pricing considerations. He said procurement staff were still “negotiat[ing] down” the companies’ proposed rates and would soon finalize the agreements.

“We’re happy with the progress that we’ve been making so far,” Keeley told the board, adding that the contracts were expected to start Nov. 1, with one-year terms and two six-month renewal options.

As of Oct. 29, 17 humanitarian centers were open and housing roughly 22,000 migrants, more than 16,000 of whom were traveling as families, the City Council’s data shows. That accounted for a third of the more than 65,000 total migrants in the city’s care.

The sites began rolling out last fall and currently include tent facilities on Randall’s Island, at the Creedmoor Psychiatric Center in Queens, and at Floyd Bennett Field in Brooklyn, as well as converted office space and hotels. They’re among more than 210 facilities the city is using to accommodate migrants.

Brewer said there were so many private guards at HERRCs she’d visited that they almost seemed to be “tripping over each other.”

“I don’t know if they’re all needed,” she told Gothamist. “I would rather use some of that money for ESL, OSHA classes, legal aid, anything to get people working. It costs a fortune.”

Companies scrutinized by press

The companies have drawn various levels of scrutiny over their practices in recent years, but the H+H board discussed little of that at the Oct. 26 meeting. The board has more than a dozen members, most of whom are mayoral appointees, and typically meets monthly.

Arrow CEO A.J. Caro was invited to speak at the City Council’s Sept. 21 hearing on migrant contracts, according to Brewer, but didn’t show up. He didn’t respond to an emailed question about why, but said Arrow had sought work at the humanitarian centers because the company specializes in security and was “able to assist NYC as the needs arose.”

A fire guard for Mulligan allegedly waved a handgun at residents of a migrant “respite center” in Brooklyn on Labor Day, following a fight among some residents, news organization The City reported, identifying the guard as a retired NYPD detective. Mulligan spokesperson Michael Balboni on Tuesday told Gothamist the guard had been “retrained, reassigned and no longer has direct contact” with migrants at city-run facilities.

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During his presentation, H+H’s Keeley said hospital system staff had deemed both companies’ work at HERRCs “satisfactory across the board.” He said Arrow had improved its performance after it was discovered some of its guards had left their posts before their shifts were over, creating “a gap in coverage” — an issue he said had been resolved.

Caro said he was unfamiliar with the incidents described, noting Arrow communicates daily with H+H staff and strives to immediately address any service issues “as a company practice.” He didn’t answer a question about Arrow’s proposed rates for the new HERRC contract.

Balboni declined to share Mulligan’s proposed rates, saying they weren’t “public information.” He added that the company’s work at the humanitarian centers aligns with Mulligan’s long-standing mission to provide security in the city.

All the expenses would be reimbursed to Health + Hospitals under the MOU we have with the mayor’s office.

Chris Keeley, chief operating officer in H+H’s ambulatory care division

GardaWorld has attracted controversy over conditions at an emergency intake center for unaccompanied migrant children in Fort Bliss, Texas, that was staffed by one of its U.S.-based subsidiaries, Block Club Chicago reported.

The company, which Chicago recently awarded a $29 million contract to build migrant tent facilities, referred to the hospital system for comment on the new HERRC contract, but said its subsidiary GardaWorld Federal Services “was not responsible for case management, security, or any services at the Fort Bliss facility that were referenced” in a critical report last year by the U.S. Department of Health and Human Services’ inspector general.

H+H told Gothamist it was confident in the companies’ ability to provide security services without incident, despite the issues reported. The hospital system also said it’d recently hired a “HERRC security lead” to supervise and provide additional training to contracted guards.

The board met on Thursday afternoon to consider a packed agenda.

Members unanimously voted to approve up to $128.5 million in contracts with four companies for project management services at the humanitarian centers, and H+H executive Ted Long said staff would present further proposals for HERRC services at the board’s next meeting, in December.

“We’ll see you in a few weeks,” Long said, to laughs, after the vote was taken.

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