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Editorial: State taking overdue steps to tighten policies on development contracts

It would be nearly criminal if workers doing an honest job were left unpaid for their efforts on state contracts, but the fact is that New York has to be rigorous in its expectation of contractors who bill the state for millions of dollars. Especially in light of federal indictments involving state development efforts, including Buffalo’s RiverBend project, New York needs to adopt oversight policies that ensure taxpayers are being protected.

Fortunately, that may be happening based on a review commissioned by Gov. Andrew M. Cuomo, who proposed and pushed through RiverBend, which will soon become the largest solar panel manufacturing plant in the Western Hemisphere. If questions about the construction project there are a blemish on his record, it is to his credit that he sought out a professional and intensive review of state contracting policies.

The review, conducted last year by Manhattan attorney Bart M. Schwartz, chairman of Guidepost Solutions LLC, found “systemic problems” and “sloppy processing” in the state’s handling of $49 million in bills. He also recommended that payment on those bills – a portion of the $417 million analyzed – be withheld from vendors because of “issues of insufficient documentation, appropriate authorization, or other issues.”

That’s troubling, if employees of those vendors are also left in the lurch. They have mortgages to pay and mouths to feed and are presumably not responsible for troubles between their employers and the state that is funding their incomes. Nevertheless, that may be what happens and may, unfortunately, be unavoidable.

The fact is that New York has a reputation for political corruption, and one that has been well earned. This state is frequently careless and sometimes felonious in its financial habits. It needs clear processes and expectations, understandable by both state officials and vendors, to ensure compliance and, where that is lacking, to make that failure plain.

There is good news here. Only days after the report was given to Cuomo in April, Howard Zemsky, the Buffalo developer who serves as the head of Empire State Development, assured Schwartz that a number of steps had already been taken to address the issues.

According to Zemsky, that includes revising bylaws, implementing stronger policies and procedures, increasing transparency and accountability over expenditures, and bringing on new senior leadership.

In a letter to Cuomo, Schwartz expressed satisfaction that the governor’s office “has been engaged with attempting to rectify the issues we have raised.”
That’s good news, but problems with making ontime payments is a continuing issue for the Cuomo administration. A story published in The News last week reported that a subcontractor on the University at Buffalo’s new Jacobs School of Medicine & Biomedical Sciences is owed nearly $1.1 million for work he completed more than a year ago.

“They owe me a lot of money, and it’s hurting me terribly,” said Charlie Sorce, owner of Insulation Coatings & Consultants. With 40 unionized employees working for his company, he said, “I’m robbing Peter to pay Paul constantly. It’s out of my pocket. My line of credit is gone. This has ruined me.”

Thank you, New York.

It’s not the first time the state has been harmfully late with payments for high-profile projects in Western New York. Delays have previously caused problems at the RiverBend and Athenex projects.

If the repairs Zemsky has already cited will also help fix destructive problems such as these, that would be good. If not, the state has more work to do.

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