NYC Comptroller Finds Shortfall in M/WBE Procurement

The Comptroller's report includes a number of recommendations.

Source : NYC Comptroller

April 12, 2023

Author : Patty Allen

According to New York City Comptroller Brad Lander's report, only 2% of New York City contract dollars went to Black and Latino-owned businesses in 2022.

This disturbing statistic comes  even as the city and state of New York have been national leaders in giving more contracts to minority and women-owned enterprises (M/WBE) in recent years.

Certified M/WBEs received only 5.2% of the value of all new city contracts and purchase orders registered in Fiscal Year 2022.

After years of regulations and initiatives to increase M/WBE contracting with the City, M/WBE-certified businesses accounted for only 15.9% of the smaller range of city contracts and purchase orders subject to M/WBE participation standards established under Local Law 174. (LL 174).

This law requires elected officials and mayoral agencies to create targets for the number of contracts with M/WBEs for standardized, professional, and construction services and commodities worth up to $1 million.

The departments with the biggest percentage of M/WBE contract value were Small Business Services (90.1%), Department of Cultural Affairs (85.2%), and Department of Buildings (79.6%). Meanwhile, construction and standard services procurements trailed behind those for goods and professional services in regards to fulfilling M/WBE procurement criteria.

As per the report, while businesses owned by Black, Latino, Native American, and Asian American women, only won less than 2% of contracts in 2022, 70% of M/WBE contracts went to businesses with white female or Asian American male owners. 

WBEs receive a far smaller percentage of registered contracts and purchase orders. The overall number of contracts and orders reported for male-owned businesses is more than double (11,713) those of women-owned businesses (5,338, including the white WBEs).

Even when M/WBEs were awarded contracts, the average value of the job was just $670,000, which is significantly less than the average contract for $5.01 million given to non-M/WBE. 

Often, subcontracting and M/WBE compliance procedures are paper-based, ambiguous, and ineffective. The City's capacity to comply with the M/WBE program's standards is hindered by the fact that the current M/WBE compliance methods are overly dependent on self-reporting from agencies and prime vendors of the City.

When M/WBEs are awarded contracts, they are often not paid on time. In FY22, approximately 55% of M/WBE contracts recorded were retroactive, higher than the citywide rate of roughly 52%. This is especially difficult for smaller businesses that lack the working capital to sustain prolonged payment wait times.

The Comptroller's report includes in-depth recommendations for how to overcome persistent obstacles to raising the proportion and value of City contracts with M/WBEs, including:

  1. Using "Best Value" preferences and expanding M/WBE Prequalified Lists (PQLs) to direct high dollar value contracting opportunities to eligible M/WBEs.
  2. Encourage agencies to use the current discretionary procurement techniques. This involves enhancing the usage of optional micropurchases and small purchases and lowering the threshold for the M/WBE Noncompetitive Small Purchase (NSP) approach.
  3. To achieve M/WBE goals, revamp the subcontracting procedure and include it in PASSport for increased accountability and online transparency.
  4. Give City agencies better tools that increase M/WBE data accessibility, enhance the quality of data stored in the system, and keep a sufficient pool of capable M/WBEs to compete for City-procured goods and services.
  5. Increase the speed with which City contracts are registered. The City must continue prioritizing the changes recommended by the Capital Process Task Force and Joint Task Force to Get Non-profits Paid On Time.

New York City Mayor Eric Adams explained, “Earlier this year, I established ambitious new OneNYC goals for total M/WBE spending and signed an executive order…all in an effort to truly build out support systems and create new opportunities for M/WBEs in New York City.” He continued, “ And while more than a quarter of eligible contracts were awarded to M/WBE firms in the first three-quarters of this administration, we recognize there is much more we can do to build a more equitable city.”

Category : Minority Business Enterprises Minority Women Business Enterprises Women Business Enterprises Diversity Outreach Local Government

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