Black-owned businesses receive sliver of contract money eligible for M/WBE program, finds NYC Comptroller
Minority-owned businesses still own a minority of money from city contracts. City Comptroller Brad Lander’s annual report on the city’s Minority and Women-owned Business Enterprises (M/WBEs) found they received just 5% of the $40 billion in contract spending last fiscal year, which concluded this past fall.
The findings specifically examine agency compliance of Local Law 174 of 2019 (LL 174), which tasked agencies to contract a certain percentage of M/WBEs. Lander, who helped introduce the legislation while on the city council, points to favorable signs, including the Adams administration’s appointment of Michael Garner as chief business diversity officer of the Mayor’s Office of Minority and Women-Owned Business Enterprises a year ago. Generally, the report acknowledges “meaningful signs of effort, and some modest indications of progress.” But the statistics do not reflect those gains.
“If you just look at the numbers, unfortunately, they’re terrible,” said Lander. “They don’t show meaningful improvement overall from last year. And it continues to be the case that even of the portion of city procurement that is subjected to M/WBE participation goals, Black-owned, Hispanic-owned, and women of color-owned businesses only saw 1% of the value [each] of the city’s procurement last year.”
Of the $40 billion in city contract spending last fiscal year, around $9 billion falls under LL 174’s M/WBE program. A tiny sliver of that money goes to Black and brown businesses in what Lander considers a “disparity within the disparity.” Black-owned businesses receive just 1.16% of the pot for value contracts and purchase orders. Hispanic-owned businesses take home less than one percent. Women-owned businesses within minority racial groups receive a tiny fraction of the already miniscule money pool. And Native American-owned businesses are essentially absent from the conversation, despite being one of racial categories LL 174 aimed to increase economic involvement for.
For context, the average new contract value last fiscal year was $4.6 million. The average nosedives to just $511,000 for new contracts registered to a M/WBE.
And getting a foot in the door is another issue entirely. Christopher Worthy, CEO of Bounce Playground, says obtaining certification for an M/WBE for his Black-owned business took him just four to five days. But he can’t imagine applying without help.
“If I didn’t have somebody helping me and guiding me through before—I knew somebody in the Parks Department where I do most of my contracts with—that it probably wouldn’t have been as easy for someone,” said Worthy. “It’s pretty hard outside of that process to get the contracts. I’m just not sure, unless you have a contact or you’re cold calling, how do you go and get these contracts?”
Worthy’s usual contracting agency, the Department of Education (DOE), only adopted M/WBE goals stemming from LL 174 this past fiscal year.
“When we think about our contract methods and new approach on how we do solicitation, that can be complex for a small business that may not have necessarily the expertise and the experience on how to navigate the solicitation process,” said DOE Chief Diversity Officer Karine Apollon.
Lander’s report ranked the Department of Transportation (DOT) last in M/WBE participation among agencies with “large LL 174-eligible contracting portfolios.” While some of the agency’s contracts are funded outside of the City of New York sources and thus not covered by LL 174, it boasts more than $918 million in contracts subject to M/WBE participation goals.
“NYC DOT is dedicated to leveling the playing field to promote more equity and diversity in the agency’s contracts,” said a department spokesperson over email. “Under this administration, NYC DOT has achieved dramatic increases in MWBE utilization, from 11 percent in 2022 to a projected 30 percent in Fiscal Year 2024–the highest percentage ever to be hit at this agency.”
Despite the DOT’s efforts employing M/WBE businesses, most of the contract value went to vendors that weren’t certified as M/WBEs—93.15% to be exact, according to Lander’s report. Black-owned businesses received roughly 23% of the contract value for DOT goods contracts but did not receive any money from construction services, which went almost entirely to non-M/WBEs.
So the general issue of contract value persists, even with the department’s sizable increase in M/WBEs utilized since Commissioner Ydanis Rodriguez’s appointment two years ago.
The DOT’s gameplan to increase M/WBE investment moving forward includes increasing advertising with the city’s ethnic media outlets and developing outreach programs to connect certified businesses with more economic opportunities. The department also intends to follow the report’s recommendation of increasing M/WBE non-competitive small purchases, which Lander explains as a growing method to meet LL 174 goals.
“Normally, the city does a competitive bid to make sure it’s getting the best price for what it’s buying and that’s important because if you don’t, over time, you pay more than then you need to,” said Lander. “Obviously, getting the best value for taxpayer dollars is critical when the city is doing procurement. But the decision has been made and [is] supported by both the legislature and the Procurement Policy Board [that] for the smaller procurements, agencies can identify an MWBE vendor that they know can provide that good or service and contract and negotiate with [it] without competitive bidding.
“You still have to generally do competitive bidding on larger contracts over $1.5 million but something under $1.5 [million] you can directly contract with an M/WBE.”
Also advised by Lander was a more centralized “repository” for procurement opportunities and providing more accessible resources.
“There’s no one stop shop for resources,” said Worthy, “where a small business has every single thing. It’s like [when] they have [one] piece, they have to find another piece.”
The report ranked the Department of Environmental Protection the highest among agencies with “large LL 174-eligible contracting portfolios.” The Office of Technology and Innovation was the most improved.
Lander sees M/WBE contract disparities as a part of the “broader racial wealth gap.” He points to past findings of Black New Yorkers owning fewer homes and earning a significantly lower median household income than their white counterparts as an extension to the report. For Lander, using taxpayer money to pay for city contracts that go overwhelmingly to white male-owned businesses is considered a “wealth transfer.”
“Last year, the city put [in] about $40 billion worth of goods and services,” he said. “That could be a powerful vehicle for narrowing the racial wealth gap. 52% of New Yorkers are Black or Hispanic. So if 52% of the procurement went to Black and Hispanic-owned businesses, that would be a powerful driver of narrowing the racial wealth gap. But instead what we’re doing is mostly continuing to widen it.”
Tandy Lau is a Report for America corps member and writes about public safety for the Amsterdam News. Your donation to match our RFA grant helps keep him writing stories like this one; please consider making a tax-deductible gift of any amount today by visiting https://bit.ly/amnews1.
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