NYC contracts with minority and women-owned businesses remain ‘woefully’ low

Mia Gindis, Opinions Editor

A report by the Office of the New York City Comptroller Brad Lander revealed that minority and women-owned business enterprises, or “M/WBEs,” hold a “woefully small” share of contracts issued by the city, despite recent efforts to expand opportunities for these contractors.

The comptroller’s office released its annual report on the city’s contracting trends on Feb. 28. It uncovered that only 5% of all new contracts registered went to certified M/WBEs. Additionally, businesses owned by Black, Latino and Asian American women and businesses owned by Native Americans each received less than 2% of the city’s contract dollars in the 2022 fiscal year.

A spokesperson from the New York City Department of Finance told City Limits that the M/WBE unit has made a concerted effort to boost marginalized business owners.

“While we are continually working to improve this process, and remain committed to implementing concrete steps under the leadership of Mayor Adams, we are encouraged by the increase we have seen in eligible contracts and P.O.s for M/WBEs with DOF as well as an increase in overall spending for DOF’s M/WBE subcontracts,” the spokesperson said.

Other key findings from the report were not as optimistic.

Although there was an increase in the number of contracts awarded to M/WBEs in the 2022 fiscal year, the average value of a new contract registered to an M/WBE was $670,000. This was nearly eight times smaller than the average $5.01 million awarded to a non-certified firm.

Fewer than 18% of city-certified M/WBEs registered for a new contract, were approved for a subcontract or a purchase order with New York City in the last fiscal year. Women-owned firms, specifically, received far less considering the number of purchase orders and registered contracts they received.

“The current M/WBE compliance mechanisms are also too reliant on self-reporting from City agencies and prime vendors as well as inputted into outdated or underutilized systems, which limits accountability as well as the City’s ability to meet the requirements of the M/WBE program,” the report said in its explanation of the discrepancy.

The findings also indicated that when M/WBEs did receive contract awards, they did not receive payment on time. Nearly 55% of M/WBE contracts registered in the previous fiscal year were retroactive compared to a citywide rate of 52%.

Long wait times for payment can be particularly detrimental to small firms, particularly those without sufficient working capital.

In the past, the comptroller’s annual report — which was previously called “Making the Grade” — assigned letter grades to each agency.

This year’s report provided a more detailed look into agency procurement, spending and contract registration in the hope of identifying specific procedural roadblocks standing in the way of the New York City Mayor Eric Adams’ administration’s plan to double the rate of M/WBE procurement.

Adams announced this goal in his State of the City address for the year.

He subsequently appointed Michael Garner — the former chief diversity officer of the Metropolitan Transportation Authority — as the City’s first chief business diversity officer of the Mayor’s Office of Minority and Women-Owned Business Enterprises to help reach this target.

“Despite promises of economic equity by past administrations, many of our city’s minority and women-owned business owners were still placed on the back burner and denied the ability to work with the city on different initiatives,” Adams said, according to a press release for the report.

The comptroller’s report also offered several recommendations to address the barriers to increasing the share of the city’s contracts with M/WBEs.

One of the recommendations included increasing access for M/WBEs to higher value contracts via competitive procurements. Other recommendations were providing more effective resources to city agencies that are responsible for making M/WBEs more accessible and maintaining a sufficient number of M/WBEs to compete for city-procured goods and services.

“It is critical for the City to address the major gaps that prevent it from contracting with diverse firms, so all of our M/WBEs have equitable business opportunities,” New York City Council Speaker Adrienne Adams said, according to the press release from the comptroller’s office.

Editor’s Note: Mia Gindis, who wrote this article, is a former investigative reporting intern for City Limits.