In 1989, the U.S. Supreme Court ruled that Richmond, Virginia’s minority business enterprise program was unconstitutional because the city set a goal of 30 percent of construction contracts to minority-owned companies, based on the fact that the population of Richmond was approximately 50 percent black. This case, City of Richmond v. J.A. Croson Co., and others that followed it, set legal boundaries for city’s intending to create similar programs.
The Color of Contracts: New York’s MWBE Program
Read the entire series here.
A government must provide evidence that a significant disparity exists between the utilization of minority- or women-owned companies and the number of such companies capable and willing to do the work. The disparity cannot be based solely on population statistics.
Also, the programs need to have specific goals.
“To be effective, enforceable, and legally defensible, a race- and gender-based program must meet the judicial test of constitutional ‘strict scrutiny.’ Strict scrutiny requires current ‘strong evidence’ of the persistence of discrimination, and any remedies adopted must be ‘narrowly tailored’ to that discrimination,” reads a disparity report by the New York State’s Department Of Economic Development from 2010.
This means goals need to be tailored to specific industry and minority groups, which the city has done. The state, on the other hand, has not done this.
The legally accepted threshold to determine whether companies owned by women or minorities are being discriminated against is .8. This means that if less than 80 percent of companies capable and willing to do work for a government are actually getting those jobs, there is a significant enough of a disparity to warrant a goals program.
Gov. Andrew Cuomo set a blanket 20 percent goal for all minority- and women-owned businesses in 2011. In fiscal year 2010-2011, M/WBE participation was at 10.3 percent, according to the state’s annual report on its program. The following year, it rose to 16.7 percent. The most recent data, from fiscal year 2012-2013, shows the governor hit his goal, at 21 percent. While impressive, it’d be unfair to say it’s more successful than the city’s program because the data is incomplete.
Unlike the city’s program, the state’s program is not tailored to specific minority groups or different industries, as court cases including Croson have shown governments need to do.
In the most recent fiscal year, $1.4 billion of the state’s $7 billion in procurement went to M/WBEs, but there is no breakdown for industries or minority groups. In the city’s program, disparity studies have shown that there exists no disparity in contracts for Asian-owned companies in professional services, standard services or construction. Any contracts to those companies do not count for the city’s percentages.
The state does not release detailed statistics on what types of companies received the $1.4 billion in M/WBE contracting. The only breakdown is that 53.7 percent of it went to women-owned companies while 46.3 percent went to minority-owned companies.
City Limits asked the governor’s office for more specific information on the M/WBEs that received the money, but that information was not provided. Critics of this blanket goal have argued the state could very well be hitting its goal with a large percentage of contracts going to companies where no disparity even exists.
This series was made possible by Long Island University’s George Polk Investigative Reporting Grant. Click here to return to part 1.