(Bloomberg) -- New York City Mayor Eric Adams plans to direct a cumulative $60 billion of contractual work to minority- and women-owned businesses, known as MWBEs, by 2030; an ambitious goal requiring the city to more than double its annual rate of contracts to these underrepresented communities.
Michael Garner, the city’s first chief business diversity officer, is tasked with seeing the initiative through, meeting with small business owners throughout the city’s five boroughs. First up, he plans to create a mentorship program to get more MWBEs bidding for and winning contracts, replicating a similar initiative he designed at the Metropolitan Transportation Authority.
Once a business becomes a certified MWBE, it can better compete for government work. Obtaining New York City contracts and purchase orders can help a small enterprise expand, raise capital and plan ahead as many municipal agreements extend beyond just one year. But certification doesn’t guarantee work. Of the 10,768 city-certified MWBEs, as of June 30, 2022, only 17.7% obtained a new contract in fiscal 2022, according to a February report from New York City Comptroller Brad Lander.
“Access to government contracts is the lifeblood to the growth and development for certified MWBE firms,” Garner said. “It is incumbent upon us to not only award taxpayer-driven contracts in a cost effective manner, but in an inclusive manner.”
With a $100 billion operating budget and a $165 billion 10-year capital plan, New York City has plenty of work to dole out. It awarded $44.6 billion of contracts and purchase orders in fiscal 2022, yet only $2.3 billion, or 5% of the combined contract value, was directed to certified MWBEs, according to Lander’s report.
Breaking Down Barriers
Mayor Adam’s vision for MWBE participation is “very aggressive,” Garner said. The administration aims to award $25 billion to certified companies between fiscal 2023 and 2026 and reach a cumulative $60 billion by fiscal year 2030; a big change in a short period of time.
“We need to come up with solutions and programming that will eradicate those barriers to entry, which, in construction, will always reside around access to capital, access to the right size contracts, access to cost-effective insurance,” Garner said.
The more MWBEs participate in government agreements, the better chance municipalities have in helping smaller businesses thrive and increase employment in lower-income neighborhoods, said Jenn Steinfeld, director of entrepreneurship and economic development at the National League of Cities.
Guiding MWBEs through mentorship programs can help them develop bidding submissions and better compete for contracting business as many smaller establishments are reluctant or unable to pay for outside professionals for assistance, said Quenia Abreu, president of New York Women’s Chamber of Commerce.
“Contracting and procurement is where cities move their real money,” Steinfeld said. “If they are wanting to address racial equity in their economies, then certainly moving their money and prioritizing investment in those MWBEs is a really important way of doing that.”
Many US cities and towns are working to increase MWBE participation. For instance, Chicago wants minority-owned firms to receive at least 25% of the annual dollar value of all non-construction contracts for goods and services. Additionally, the city wants women-owned businesses to win at least 5% of the annual dollar value of such contracts.
Lobbying State Legislators
For New York City to hit its participation targets for certified MWBEs, it needs help from state lawmakers, Garner said.
Since stepping into his new role in February, Garner has lobbied state legislators to pass laws that will help the city incorporate more MWBEs into city work. Garner and Mayor Adams are pushing for Albany to allow New York City to increase the size of contracts that it’s allowed to assign without soliciting bids. Raising the limit to $1.5 million from $1 million could help the city reach its $60 billion goal, they say.
Lawmakers are also mulling a bill that would allow the city to use wrap-up insurance — where an owner buys insurance on behalf of a contractor — removing yet another barrier to entry.
Women of color, in particular, have struggled to gain entry into New York City contracting work. The average value of contracts won by Latina-owned business in fiscal 2022 was $137,433 and $373,126 for companies owned by Asian American women, far below the average $5 million for non-certified firms, according to the city comptroller’s report. Those averages don’t include contracts for human services, emergency procurements and intra-governmental contracts.
“Nothing is going to change if we don’t make changes in the process, if we don’t make the changes that allow for more women, especially for more women of color, to come into the contracting space,” said Abreu of New York Women’s Chamber of Commerce.
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