Firm that hired ex-Cuomo aide received no-bid state contract
Former Gov. Andrew M. Cuomo at a press conference at the Lenox Road Baptist Church in Brooklyn on July 10. Credit: Kendall Rodriguez
ALBANY — The company hired to administer the state’s program to provide federal aid to renters landed the $115 million, no-bid contract the same month that a former top Cuomo administration aide joined the firm, records obtained by Newsday show.
Joseph Spinelli resigned in May as senior adviser and deputy secretary to then-Gov. Andrew M. Cuomo after 15 months on the job, according to Spinelli’s LinkedIn page.
That month, Spinelli joined Guidehouse, an international consulting company based in New York City as director of state & local government practice. On May 3, Guidehouse received the $115 million contract for one year’s work to administer the state’s Emergency Rental Assistance Program, according to a copy of the contract.
The contract with Guidehouse was exempted from a standard pre-audit by state Comptroller Thomas DiNapoli under a measure adopted by Cuomo early in his tenure to speed contract approvals.
In addition, the contract was exempt from competitive bidding under Cuomo’s Executive Order 202, which he signed March 7, 2020. That order provided "procurement flexibility" that was part of his effort to speed services and aid to New Yorkers during the pandemic, according to Anthony Farmer, director of public information for the state Office of Temporary and Disability Assistance, which handled the contract.
The contract says Guidehouse is "charged with administering" the New York State Emergency Rental Assistance Program, or ERAP. The program is designed to help low- and moderate-income New Yorkers pay rent and utility bills to avoid homelessness forced by the loss of income during the pandemic. It is the largest of 22 state contracts the company has received since 2010, according to state records.
"Guidehouse and its subcontractors are responsible for developing the ERAP application portal and managing staff who are processing applications and determining program eligibility," Farmer said.
Some government watchdogs expressed concern that the contract was issued without competitive bidding in May — after the crush of the pandemic eased.
"In March of 2020 New York — and the world — were in the fog of dealing with the pandemic," said Blair Horner of the New York Public Interest Research Group. "However, the contract was awarded a year later and COVID was not as big an unknown. Generally, no-bid contracts should be used in only the narrowest of circumstances. And no state contract of any significance should be awarded without the comptroller's review … awards made this past May should have had strict scrutiny."
"Governor Hochul should review this contract — and any others of significance — that were awarded during the later months of the pandemic," Horner said.
The way the contract was handled raises questions, said John Kaehny of the Reinvent Albany good-government group.
"This OTDA contract with Guidehouse could be completely innocent, but the timing of the award clearly raises questions of conflict of interest and potential influence by the governor's office," Kaehny said. "The state comptroller should use their constitutional power and fully audit how the contract was awarded."
The state comptroller's office said in a statement to Newsday: "Issuance of executive orders which suspend the comptroller’s independent oversight limits transparency and increases the potential for waste, fraud and abuse … When this oversight is removed, even for emergency situations, the process may not work as well as it should."
The rental aid program had a rocky start. Thousands of checks were delayed to renters and landlords. Gov. Kathy Hochul made getting the checks out one of her first priorities after she succeeded Andrew M. Cuomo in August following his resignation amid sexual harassment allegations. The state program has gotten back on track and has distributed most of the funds.
Even though the contract was exempted from competitive bidding, Farmer noted that "multiple competitors were interviewed" before the award was made. Even so, the interview process doesn't require companies to provide the same amount of information that is required under competitive bidding to assure fairness.
The companies Farmer cited as being interviewed either didn’t respond to requests for comment from Newsday or declined comment.
As for Spinelli, Farmer told Newsday in a written statement that the state staff that selected Guidehouse for the contract "had no knowledge that this individual was being considered for employment or was employed by Guidehouse. Moreover, this individual was not identified at any point by Guidehouse as having any role in ERAP for either Guidehouse or any of its subcontractors."
Guidehouse said Spinelli’s hiring played no role in the state contract. "At no time did Joseph Spinelli have any involvement in the NYS Emergency Rental Assistance Program (ERAP) for either Guidehouse or any of our subcontractors, nor was the state aware of his application for employment with Guidehouse or subsequent offer," the company said. "He has had no role in the ERAP engagement prior to or since joining the firm, and no involvement in the procurement of this contract."
"I never ever had anything to do with the ERAP contract," Spinelli told Newsday.
In February, three months before the no-bid contract was issued, the state had put it out for competitive bidding, two state officials confirmed, inviting companies to submit bids through the state Homes and Community Renewal agency.
But that request for proposals was canceled because it "did not meet the program’s needs," said Farmer, declining to be more specific. Charni Sochet, spokeswoman for Homes and Community Renewal, confirmed that the contract was transferred to the Office of Temporary and Disability Assistance.
The ERAP program has been criticized as being slower than those in other states to get the federal aid to renters who lost income during the pandemic and now face eviction.
DiNapoli in an Aug. 16 report on the program said, "New York was the only state that did not distribute any Emergency Rental Assistance Program through June 2021." The report stated low-income, "rent-burdened" households statewide that needed the aid included 42,490 households in Suffolk County and 35,122 in Nassau County.
Renters and landlords have faulted the Cuomo administration for delaying the program by weeks to tailor it to serve more low-income renters, for creating a complex application form for tenants and landlords, and for not providing adequate public education on how to apply. The comptroller's report found the system was overly complex, failed to fully address language barriers and required computer skills often lacking in the neighborhoods most in need.
Spinelli’s state service dates to former Gov. Mario Cuomo, who appointed him to be the state’s first inspector general. Spinelli also was chairman of the Finance and Audit Committee of the New York Racing Association and chairman of the state Commission on Public Integrity, which has since been replaced by the Joint Commission on Public Ethics. A former FBI agent, he was involved in the famed ABSCAM investigation of the late 1970s and early 1980s that resulted in the prosecution of several members of Congress.
Since 2019 Guidehouse has lobbied in New York, spending about $50,000 a year. The company used Albany-based lobbyists to mostly lobby the Cuomo administration on health and technology issues, according to state lobbying records. Neither the company nor its top officers are listed as contributors to Cuomo’s campaign account, according to Board of Elections records.
Records show the state has paid $14.5 million of the ERAP contract to Guidehouse so far. The contract is scheduled to end May 2, 2022.
Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He has covered Albany since 2001.
