Scant and Shaky Progress for Diversity in NYC City Contracting – Next City
The Equity Factor

Scant and Shaky Progress for Diversity in NYC City Contracting

New York City Hall (Photo by Aude)

For the first time, New York City can report on how much progress it has made in increasing public procurement from minority- and women-owned businesses. The short answer is, not much: The city got a “D-plus” in 2015, compared to a “D” in 2014.

“We owe our city’s richly diverse business community more than just lip service,” said Comptroller Scott Stringer, in a statement announcing the second annual report card. “We need to deliver real spending to these very real businesses, and give them the support they need to succeed, create jobs and help our city’s economy grow.”

NYC mayoral agencies procured $13.8 billion in contracts with private firms during fiscal year 2015. Just $725 million, 5.3 percent, went to minority- and women-owned business enterprises (M/WBEs). It is a new high, counting back to 2007, and a jump up from just 3.9 percent in fiscal year 2014.

Out of 32 NYC mayoral agencies, eight improved since last year, 20 stayed the same, and four regressed when it came to M/WBE procurement. The reporting is accurate to NYC’s fiscal year, ending June 30th, which is when the compiling process begins for the M/WBE procurement report card. All of the work is done in-house, with different branches of the comptroller’s office gathering information from the other city agencies.

(Credit: NYC Office of the Comptroller)

For the first time, an agency received an “A” grade: the Department of Housing and Preservation Development (HPD). It earned the mark by surpassing M/WBE procurement goals in five categories. (Each agency sets its own goals, taking into consideration citywide goals, total agency procurement and availability of relevant M/WBE contractor firms.) Notably, HPD spent over 30 percent of eligible spending on M/WBEs, or around $15 million out of a $39 million total agency procurement pie.

On the other hand, the Department of Cultural Affairs went from a “B” to a “C.” Small Business Services went from a “D” to an “F.” Spending overall remained in the “F” range for black-owned and women-owned firms.

Transparency continues to be a major issue when it comes to reporting progress on this front, or the lack thereof.

Another $893 million in contracts from non-mayoral agencies, authorities, boards and commissions (including the NYC Housing Authority, the nation’s largest local public housing agency, which is a state-chartered entity) reportedly went to M/WBEs. But the city has not released a total procurement budget that includes non-mayoral agencies, making it impossible to really know what share of the total citywide procurement pie is going to M/WBEs.

This year’s report also expands to include transparency on subcontracting. Nineteen agencies provided no information regarding subcontractor spending. Out of the remainder, only eight reported having eligible subcontractor spending on M/WBE contracts.

City regulations require mayoral agencies to collect data about subcontracting from the firms with which they work.

“This data is critically important because subcontracting offers M/WBEs and other small firms a way into the system — and can be the best chance to compete for city contracts,” says Stringer via email.

An all-time high of 4,100 firms were M/WBE certified as of 2015, meaning they are eligible to receive a city contract or subcontract. Still, only 20 percent of them have ever received a city contract.

Preparing M/WBEs to compete for city contracts is a focus across several city programs.

There’s the M/WBE mentorship program, which matches groups of two or three M/WBEs with more experienced entrepreneurs with related backgrounds.

There’s also the Manage Forward program, a partnership of the NYC Economic Development Corporation, Brooklyn Borough President Eric Adams and Interise, a Boston-based nonprofit. Firms that have gone through Interise’s trademark StreetWise curriculum, targeted at established firms, have gone on to secure more than $3 billion in government contracts since 2008.

“In a city as diverse as New York, a 5 percent spend with MWBE businesses is unacceptable,” writes Stringer. “African-American, Latino, Asian-American and women-owned firms must be given a chance to compete for their fair share of the City’s budget.”

Stringer, leveraging his independence as an elected official not an appointed official, caused a ruckus last year with the release of the first report card. (More recently, he got headlines for rejecting city contracts with “rat-infested” homeless shelters.)

(Credit: NYC Office of the Comptroller)

In this year’s report, rather than simply not including agencies that didn’t report subcontractor data, the report card’s appendix contains a procession of “NO DATA” blocks for the 19 agencies that didn’t report as required by city regulations.

For his part, the Comptroller reported $216,819 in subcontractor spending on M/WBEs. Overall, the Office of the Comptroller got a “C” grade, including an “A” grade on procurement from Asian-American-owned firms, a “D” for women-owned firms and an “F” for black-owned firms.

The Equity Factor is made possible with the support of the Surdna Foundation.

Oscar is a Next City contributing writer, and was a Next City 2015-2016 equitable cities fellow. A New York City-based journalist with a background in global development and social enterprise, he has written about impact investing, microfinance, fair trade, entrepreneurship and more for publications such as Fast Company and NextBillion.net. He has a B.A. in Economics from Villanova University.

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