Light bulbs at $708 apiece: how the New York City Hall is renovating subsidized housing at exorbitant prices

The New York City Housing Authority (NYCHA) is at the center of a scandal. Bribery, inflated and inconsistent expenses are among the many violations identified. According to The City, in some places replacing a light bulb cost $708.

How much does it cost to replace a light bulb at NYCHA? The housing authority paid a vendor $4 to replace six LED lights and hoods at the Throggs Neck Houses in the Bronx. Another vendor billed NYCHA $250 to replace one door in the compactor room. To install anti-slip rubber pads on a staircase with 4 steps, they demanded $985 - $15 each.

When law enforcement arrested 70 NYCHA workers earlier this month bribery charges, they identified the source of corruption as microcontracts for the renovation of apartments without bidding, which were concluded with selected suppliers in exchange for cash to the manager.

Many of the sellers' invoices raise serious questions about whether NYCHA has paid hundreds of thousands (or even millions) of taxpayer dollars in inflated costs over many years. All of these accounts had one thing in common: the suppliers sought compensation as close as possible to what was then permissible under each contract, regardless of the work performed.

Inconsistencies

These microcontracts have an incentive for suppliers to invoice just below the maximum allowable - $5 before the end of 000, $2019 after (regardless of the volume and cost of the work performed). Often, invoices contradicted themselves, with contractors demanding the same amount for different amounts of similar work.

One supplier billed $4 to replace 950 LED lamps and shades at the Robinson Houses in East Harlem. He then charged almost the same amount ($48) to replace just 4 LED lamps and shades in Throggs Neck homes in the Bronx. A week earlier, the same supplier charged slightly less ($980) to replace just six LED lights and covers at Throggs Neck. NYCHA approved all of these payments - apparently not noticing the difference in the amount of work.

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NYCHA warned

Several years ago, investigators from the independent organization that oversees NYCHA began identifying these suspicious expenses and notifying the housing authority, and in some cases, reporting certain vendors to law enforcement. Corruption related to these contracts was first reported in 2019.

The extent of this potential deception of taxpayers is unknown and has not yet been addressed in the bribery cases brought by Manhattan U.S. Attorney Damian Williams and the city's Department of Investigation.

On February 6, 70 NYCHA employees were charged with corruption. They awarded hundreds of contracts to contractors without going out to bid, totaling $13 million. NYCHA justifies using these contracts to expedite a huge backlog of renovation requests. The department motivates this by the fact that participation in competitive bidding slows down the completion of work.

The Housing Authority has been repeatedly warned that it does not scrutinize these contracts and the performance of the selected suppliers closely enough. The Office of Special Investigations (DOI) said this lack of control allows suppliers to demand payments significantly higher than the cost of their work.

NYCHA has faced criticism over the poor condition of the 175 subsidized apartments it manages. Contracts with unreasonably high prices for services add fuel to the fire.

In the fall of 2021, when nine NYCHA contractors were arrested as a result of an undercover DOI investigation, Commissioner Margaret Garnett pointed out that the use of these no-bid contracts created a built-in incentive for overbilling. At that time, NYCHA's micro-contract cap increased from $5 to $000, and the bribes paid by contractors were always a percentage of the contract amount—usually 10%.

Corruption in plain sight

At times, the far-fetched nature of these bills was obvious. In one eight-month period in 2019, TEENUSA Construction, a Richmond Hill, Queens-based contractor, won 29 microcontracts for the same amount ($4) even though the work was on different complexes and involved a variety of tasks.

• Removal and replacement of three damaged stairwell doors at Throggs Neck Houses in the Bronx: $4;
• Replacement of 20 LED lamps and hoods at Whitman Houses in Brooklyn: $4;
• Install 101 square feet of new vinyl commercial tile at Williamsburg Houses in Brooklyn: $4.

Many of these questionable bills were presented in plain sight, but NYCHA approved them all, raising questions about the lack of oversight that has raised concerns about possible corruption over the past five years.

Lack of licenses

In one case, NYCHA paid a sewer cleaning company that was not licensed to perform such repair work. It was necessary to cut and reinstall pipes, and this requires a license. According to the whistleblower, the New York City Housing Authority sidestepped the problem. It ordered the supplier to bill for “catchment cleaning,” which is precisely the type of work that does not require a license.