COVID Emergency Food Distributor Overbilled City by Millions, Comptroller Finds

COVID Emergency Food Distributor Overbilled City by Millions, Comptroller Finds

People dealing with food insecurity received fresh produce and bread at the Woodbine community space in Ridgewood, March 23, 2022. Credit: Ben Fractenberg/THE CITY

By Katie Honan

A food distribution company tasked with providing food to needy New Yorkers during the pandemic overbilled and overcharged the city by more than $9 million, according to an audit released Wednesday by the comptroller’s office.

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Driscoll Foods, also known as Metropolitan Foods, first contracted with the Department of Social Services in July 2020 on an emergency basis to spend around $45 million a year providing fresh produce and other food to thousands of New Yorkers who needed assistance.

The company worked to distribute food through June 2022 and was paid more than $90 million — but it ended up shortchanging the city by millions, according to Comptroller Brad Lander.

“This funding was for New Yorkers who urgently needed food to survive during the pandemic — not for Driscoll to pad their profits,” Lander said in a statement, saying Driscoll should pay back the money they owe the city to continue working with other agencies. 

“If they want to keep the City’s business, they need to pay back what they overcharged during the pandemic.”

The pandemic-era food program, funded through federal COVID relief dollars, delivered more than 2.67 million cases of food through more than 400 emergency feeding programs. 

Lander’s audit found the program was generally successful — but that DSS’s financial oversight of Driscoll, a large company, lacked proper oversight and resulted in a net $9.39 million in overbilled and overcharged payments. 

Of the millions overpaid, DSS disallowed $2.35 million but still paid out $6.44 million that exceeded the budget, the audit found. That includes $3.39 million of excess bills for staff, $1.09 million in excess bills for warehousing and storage, and $1.96 million extra just for profit.

The city made an additional $2.95 million in other overpayments, including $214,978 for food and $780,110 on delivery, as well as $811,194 in miscalculated administrative fees.

The overpayment happened as Driscoll underspent on food items by $3.9 million, the report found. 

Driscoll Foods did not respond to a phone call and email seeking comment.

A spokesperson for the Department of Social Services said the agency made sure Driscoll Foods procured, stored, and delivered millions of cases of food. 

“Unfortunately, while Driscoll successfully distributed quality food to providers – 90% of those surveyed by the Comptroller offered positive comments about Driscoll’s performance and the P-FRED program — it appears they failed to fully comply with certain contractual obligations which resulted in their overbilling of DSS,” the spokesperson said in a statement.

The comptroller’s office made multiple recommendations as a result of the audit, including suggesting DSS claw back more than $6.9 million from Driscoll, action DSS has agreed to pursue.

Lander expressed concern over Driscoll’s continued contracts with the city. In the current 2024 fiscal year, which ends June 30, and in FY 2023, five other city agencies including the Department of Education and the Administration for Children Services paid out $141 million to the company. 

He is recommending every city agency go over these contracts.

The emergency food program was launched by then-Mayor Bill de Blasio during the pandemic to distribute food to pantries and other sites, tapping into federal relief money. 

Soup kitchen and food pantry volunteers said in 2022, as the program wound down, that most of their fresh fruit and vegetables came from the emergency program. 

Alexander Rapoport, executive director of the Kosher soup kitchen Masbia, told THE CITY Tuesday that most of the people they served through the program were immigrants who couldn’t tap into enhanced food stamps supplements.

He said anyone contracting with the city should be reviewed, but that the program “was a blessing for customers.” The produce was the best he’d ever received, he said. 

“I have good memories of those trucks coming with beautiful fruits and vegetables that really helped the immigrant community during COVID,” he said. 

“For us it was definitely a program that was unprecedented with quality, the quality of the stuff that we got from there was the best and nothing replaced it since that program stopped.”

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