Possible Superstorm Sandy Price Gouging Prompts Review

hurricane120State Comptroller Thomas P. DiNapoli will examine payments made by the state in response to Superstorm Sandy to make sure state agencies received goods and services at the appropriate price.

DiNapoli’s review was sparked by possible price gouging discovered on six purchase orders submitted by the Department of Homeland Security (DHSES) last month. That review prompted one vendor to cut its price by more than $63,000. The Comptroller returned the purchase orders to DHSES for adjustment or renegotiation.

“The devastation resulting from Superstorm Sandy was extraordinary,” DiNapoli said.  “To assist storm response, state procurement laws were temporarily suspended.  State agencies entered into emergency contracts, many of which did not require my office’s approval.  We will check vendor pricing, make sure contracts were awarded fairly and ensure that the goods and services were delivered to protect the public from unscrupulous behavior.”

Contracts executed under stressful conditions may be at increased risk for bid rigging, price gouging, favoritism and other issues. Since the storm struck, the Comptroller’s office has processed more than $400 million in contracts and spending and posted the details online with daily updates to enhance transparency and public accountability.

Like Open Book New York – the Comptroller’s public database of state spending and contracts –the Superstorm Sandy online page lists spending by date, amount, agency and vendor.

The page contains a range of state outlays from $98 million in expedited income tax refunds for flood zone residents to $5 million for the restoration of Fire Island. The bulk of contracts processed are from the state Office of General Services and Department of Transportation.  Overall storm spending is expected to be in the billions of dollars.

In addition to expediting the contract and payment process since the storm, DiNapoli has introduced a package of relief measures to assist homeowners and local governments.  This includes allowing the adjustment of property assessments on damaged properties, authorizing the issuance of storm bonds for short-term financing to pay for storm costs and easing restrictions on the use of reserve funds by local governments and school districts to pay for Sandy-related expenses.


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