The de Blasio administration is hoping the third time is the charm when it comes to getting Albany to ease contracting rules so more minority- and women-owned firms can get city work.
City Hall is pressing state legislators to allow the city to award contracts valued at under $200,000 to Minority- and Women Business Enterprises (MWBE) without a formal competitive process, as state agencies are permitted to do. Right now, the city can only use that streamlined approach for contracts valued up to $20,000 when purchasing goods and up to $35,000 when hiring services. The city asked for but failed to get the change in 2015 and again last year.
“I really believe this is something of a win-win for everybody,” said Deputy Mayor for Strategic Policy Initiatives Richard Buery in an exclusive interview with City Limits. “This is about something bigger: our agenda around creating a city that works for all New Yorkers, creating a city that creates opportunity for all New Yorkers. On the merits, that’s something that makes sense to more people. That’s what we’re appealing to.”
In a second and new request, the city is seeking state authority to create MWBE mentorship programs in law, accounting and other sectors that have traditionally not been the focus of diversity initiatives.
The push for legislative action comes as the city chases the ambitious goal set by the mayor last fall of letting 30 percent of contracts to MWBE firms. Prior to that, the mayor had been criticized for failing to prioritize MWBE participation. In fiscal 2015, the first full budget year under Mayor de Blasio, MWBEs won 8 percent of contracts. In fiscal 2016, that share leapt to 14 percent.
De Blasio also set a dollar-figure goal for MWBE contracting–$16 billion by 2025—and a target of 9,000 MWBE firms certified or recertified by 2019 so they are eligible for those minority- and women-target contracts. In addition, the mayor created a new office to handle MWBE efforts with senior adviser Jonnel Doris as its head, and gave Buery overall control of the MWBE initiative.
“The city has under Mayor de Blasio’s leadership made a huge commitment to this area,” Buery told City Limits. “By setting out all these goals, I think we’ve started to create momentum.”
According to City Hall, there has been progress toward the mayor’s targets since he set his goals last fall. There are now 5,000 certified MWBE firms. The share of city contracts so far in fiscal 2017 is 18 percent. “No one should be complacent with that,” the deputy mayor warned. “It’s very easy for that number to go up and down in a particular quart or particular year, depending on what’s happening, so we’re always focused on overall dollar spending.” And on that score, according to Buery, the city is “well above pace” toward the $16 billion goal.
In order to continue toward that goal, “we’re going to need the ability to do ‘best value’ contracting,” Buery said, referring to the approach the city would take to awarding MWBE contracts outside of competitive bidding. “Of course the lowest price matters. In no case do you do business with somebody who isn’t qualified to do that work. That’s not what this is about,” Buery continued. “This is about understanding that the city’s long-term interest involves lots of things.”
The change in procurement rules would give the city more flexibility but is chiefly aimed at reducing the burden on small businesses. The paperwork requirements of a formal competitive process are much heavier than under a discretionary approach. “Contractors have to pay someone to analyze [a request for proposals], design a bid, submit the bid and wait for the agency or contractor to actually choose a winning bid for projects that are small in size relative to other contracting opportunities,” says one city spokesman. “Point is, often times it’s not worth it for MWBEs … to go through this whole process for small projects.”
“I would expect that to have a huge impact,” says Tiffany Joy Murchison, vice chair of the New York City MWBE Alliance and founder and executive officer of TJM & Co., a public-relations firm. “The process can sometimes be discouraging, especially when it’s for a small amount of money. So when you look at it from the perspective of a small business owner, any time away from running it is money we are losing. Allowing someone to participate at a higher spending level allows them to gain the capital to then start to put things in place: hire more employees, outsource procurement if I need to. ”
According to City Hall, the change in procurement rules would increase the scope of discretionary contracting from 25,500 contracts valued at $109 million in a recent year to 28,000 contracts worth $294 million.
Buery says the streamlined process will not force the city to relinquish or weaken any of the safeguards in place to prevent contracting fraud. According to City Hall, last fiscal year the city did 227 site visits to firms whose applications for MWBE status “raised questions about the business eligibility.” Nine businesses were denied MWBE status after that visit. In the first half of the current fiscal year, 123 visits were performed and two firms were denied the MWBE designation.
The mentorship proposal also makes sense, according to Murchison of the MWBE Alliance. “Our board members and our membership are diverse,” she says. “We’re not all contractors. We definitely need mentorship programs outside the construction industry.”
The city’s existing construction-industry mentorship program offers firms “a business needs assessment to identify areas to be addressed in your business,” “one-on-one mentoring from an experienced M/WBE construction management firm,” and “bidding assistance on city contract opportunities,” among other help, according to Department of Small Business Services literature.
Key to getting the Senate and Assembly to back the changes before the session ends on June 20, the deputy mayor said, is getting MWBE firms to speak up. “It’s important that they hear from their local businesses: ‘I am a business in your community. I do work in this area. I am minority-owned. I am woman-owned.”
State Sen. James Sanders, who authored the city’s current MWBE when he was a member of the City Council, says there has been resistance in Albany to the administration’s requests in previous years. “They might think it’s an unfair advantage when in fact what we’re describing is an even playing field,” he says of opponents. But with the balance of power seemingly shifting in the Senate, he sees reasons for optimism.
Same goes for his view of the mayor. “After a slow start I believe that the mayor is starting to see that he cannot transform the structural [inequality] of New York City without transforming and creating an even playing field for businesses of color,” Sanders says. “It would have been fantastic if those things were done in the first days of the de Blasio administration but we have waited 400 years. We can wait a little longer to get it right.”
Streamlining the procurement process is only one area where the city has to reduce barriers to MWBE involvement, the senator adds: Nudging banks to lend to those firms is also critical. But Sanders gives the mayor credit for inviting critics of his MWBE policies to be part of city government’s policy development. “Now he needs to take these policies he’s been developing and he needs to implement them; otherwise it will end up a dress rehearsal that goes nowhere.”
The de Blasio administration has introduced MWBE targets into areas of city policy where it has other ambitious goals—like the affordable housing program, which earlier this year awarded a batch of MWBE contracts, even as it resist calls to set aside work for community-based not-for-profit developers. The question, of course, is whether in the short term the city will be able to meet its MWBE goals and its other key policy targets, like producing as much housing as it can with the resources it has.
“Ultimately, it’s really a false choice,” Buery argued. “Over the long term, the way we are going to achieve these ambitious goals, whether it’s on housing or anything else, is by truly mobilizing all the talent in the city. If we do that, that’s how we achieve these long-term ambitious goals.”