The city’s fiscal watchdog on Wednesday rejected Mayor Eric Adams’ proposed new contract with Exodus Transitional Community to administer a program placing inmates released from Rikers Island in hotels — action rooted in THE CITY’s finding that the nonprofit relied on an unlicensed security company. 

Earlier this month, THE CITY revealed that, under a previous pandemic-emergency contract, Exodus had relied on the unlicensed firm, Global Operations Security, to provide security at the hotels, including one where a female inmate reported an alleged sexual assault by an Exodus employee in 2020.

On Wednesday, Comptroller Brad Lander sent the newest contract between the Mayor’s Office of Criminal Justice (MOCJ) and Exodus back to City Hall, stating, “While we acknowledge the critical operational challenge of maintaining housing stability for people living in shelter, we must make diligent use of the resources we have to house people safely.”

Comptroller registration of city contracts is usually pro forma, unless  the office’s review detects indications of potential corruption.

This is MOCJ’s second hotel contract with Exodus, which would have paid the organization an additional $40 million through June. After THE CITY reported on the first contract — which rose from $856,000 to $55 million in just 16 months — the city Department of Investigation, the Queens district attorney and the state attorney general all launched investigations into the use of unlicensed security. 

Last week, following THE CITY’s reporting, the Adams administration admitted that City Hall had been deceived by Global, which they said had falsely claimed to Exodus and MOCJ to be licensed. At one point, MOCJ was given the license number of another firm that had nothing to do with the hotel program.

Comptroller Brad Lander, pictured attending a 2020 rally while serving on the City Council. Credit: Ben Fractenberg/THE CITY

But behind the scenes, the security problem continued to go unresolved.

Before THE CITY exposed the lack of a license, the Mayor’s Office had already submitted the second contract with Exodus to Lander for his review — and named Global as the subcontractor that would be handling security at the Exodus hotels going forward.

At the time, a City Hall spokesperson says, they didn’t know Global was unlicensed.

A day after THE CITY’s initial March 13 report, the Adams administration said Global had been fired. Last week, they said a new security firm had been brought in.

But on Wednesday, Lander revealed that in the process of asking his office to register the new contract, MOCJ was unable to confirm that the new security firm Exodus had hired as a subcontractor had a valid watch guard license, as required by the state.

“A number of questions remain regarding this contract, including payments to Global and Exodus’ subcontracting procedures,” Lander stated. “In addition, the Mayor’s Office of Criminal Justice was unable to confirm that they independently verified the authenticity of the new subcontractor’s license prior to our deadline. We have therefore returned the contract to MOCJ at this time.” 

“Providing stable and secure housing to formerly incarcerated New Yorkers is essential both to help them rebuild their lives and to our city’s effort to address public safety,” he added.


No-Bid Deal

On Wednesday, the Mayor’s Office declined to reveal the name of the new proposed security firm or the watch guard license that firm claimed to have obtained. 

It’s still not known how many people released from jails have been placed in hotels since the program launched at the start of the pandemic. In response to THE CITY’s findings, Adams this week ordered a review of all pandemic-related emergency contracts, all of which were awarded on a no-bid basis with no oversight by the comptroller.

Exodus was first awarded the contract to place Rikers and state prisoners from prison in hotels to help curb the spread of the virus in April 2020. That first contract, dubbed a COVID-related emergency, expired in January, but City Hall wanted to continue the program. 

Emergency COVID contract procurement rules were by then no longer in effect, meaning the comptroller had regained the power to review contracts going forward. Nevertheless, MOCJ labeled the new no-bid, six-month contract with Exodus — worth $40 million — as an “emergency” agreement, thus awarded without competitive bidding.

Adams’ team has so far declined to describe what kind of “emergency” exists to justify continuing to place released inmates in hotels.

Now that Lander has refused to register that contract, it’s also not clear how the inmate hotel program will continue to be handled. Late Wednesday the Mayor’s Office did not respond to THE CITY’s questions.