Audit Finds Mismanagement in State’s Emergency Family Refuge System

A latest audit statement from the state critiqued the Healey administration’s management of the emergency family refuge system. The auditor’s report accuses the state of being inadequately prepared for the surge in migrant arrivals, ultimately resulting in ‘inappropriate and illegal’ direct contracts without soliciting bids. The audit refers to a lack of due oversight that led to escalating costs, running into thousands of dollars in some instances. The auditor also commented on the lack of robust documentation validating decisions made by the administration.

The audit, made public on Tuesday, focused on the financial records from July 2021 till June 2024. During this timeline, the state housed over 7,700 families in different accommodations like shelters, motels, and hotels, while over 10,000 families were denied help. Notably, several direct, no-bid contracts were identified that pertained to services like food and transportation, consequently resulting in ‘excessively high overheads and inefficiencies’.

While the state can legally resort to no-bid contracts during emergencies, like the sudden influx of migrants in Massachusetts, the audit found the length of these no-bid contracts to be ‘unreasonable.’ It was further emphasized that emergency contracts ‘should ideally last for a few weeks, not months’, implicating the excessive duration of the no-bid contracts.

In his written retort to the audit, Ed Augustus, the Housing Secretary, argued that the report overlooked ‘the pressing need for a rehaul of the defective system we were handed over, the enormity of the crisis imposed on Massachusetts and the tremendous progress made since our tenure began.’

The audit report scrutinized one contract in particular with an East Boston-based company. This company received approximately $9.4 million for the preparation and delivery of meals to families temporarily living in 30 hotels and motels. The audit report criticized the state housing office for not evaluating a standard delivery fee rate and neglecting adequate supervision of the contract, leading to overpayments on nearly 10% of deliveries.

The housing officials challenged this portrayal, claiming that the investigators seemed to have ‘misconstrued’ the concept of a standard-rate delivery proposal. They contend that it’s ‘presumptuous’ to suggest that a single-rate delivery fee might have resulted in cost reduction.

The audit also called out a no-bid contract with a provider ‘at the edge of Cape Cod.’ In one instance, it was highlighted that the state had been charged $140 for a taxi ride that merely covered 223 feet, within a parking lot owned by the cab provider. The corresponding $2.8 million no-bid contract with the transportation firm was initially supposed to end in April of 2024 but was extended twice, with an additional budget of $4 million.

According to the audit, such amendments deviated from the norms, regulations, and globally endorsed best practices for emergency procurements. In response, the housing office underlined that they attempted getting competitive bids for transportation services after signing the initial emergency contract. However, they did not receive any ‘adequate bids.’ Also, it was highlighted that the flagged rides made up just 0.01% of all the trips undertaken.

The housing office further emphasized that Massachusetts faced a significant crisis during the audited duration. They shared that the administration has since then established a ‘resilient, sustainable shelter program and enhanced staffing to ensure the system operates effectively and meets our goal of providing brief, rare, and non-recurring shelter.’

Certain providers also defended the use of emergency procurements. A negative review was received from an operator of a Norfolk emergency overflow shelter, who disagreed with the audit. The operator expressed, ‘It is not feasible to have an emergency procurement for shelter and then have standard procurement for food and transportation, as it would lead to inadequate provisions.’

The state has decided to shut down its remaining hotel and motel shelter facilities by this summer. This decision aligns with the state’s tightened control over the program and the significant reduction in families needing emergency shelters. The audit identified that the state did not ensure that payments to shelter providers met the terms and conditions laid out in their contracts.

The audit reviewed payments to shelter providers that totalled just over $700 million; further, the state expended an additional $283 million post-audit. The report pointed out ‘several instances of agreement non-compliance’ with regards to contract terms. The auditor suggested several remedial measures such as assembling standing crisis management teams and shifting from no-bid contracts to ‘properly procured contracts’ as rapidly as possible.

The auditor’s office is set to reassess the proposed changes with state housing officials after six months as a part of their post-audit review process.