As New York City aims to award more MWBE contracts, challenges remain
Recently marking its first anniversary, the New York City Mayor’s Office of Minority- and Women-Owned Business Enterprises is making a number of efforts to reach its ambitious goal of awarding at least 30 percent of city contracts, in terms of dollars, to MWBEs by 2021. In fiscal year 2017, the city awarded more than $1 billion in contracts to these enterprises and brought the total number of certified MWBEs to more than 5,000.
However, challenges remain in meeting the 30 percent target.
“There has been significant progress made by MWBEs over the last several decades, but there is still a lot to be done,” said Thomas Boston, the founder and CEO of EuQuant, a Georgia-based economic research company. “The capacity of these firms is lagging behind and their No. 1 challenge nationally is growing their capacity.”
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Boston outlined the ways in which New York City was falling short in a May report, which was published by the Building Trades Employers’ Association. He spoke at a recent City & State event sponsored by BTEA.
The EuQuant report concluded that MWBE construction capacity in New York City was surprisingly low and required greater funding of capacity-building programs. He also found that an overwhelming majority of city and state certified MWBEs did not have the licenses or registrations required by the New York City Building Code in order to be awarded certain contracts.
The statistics cited in the report painted a troubling picture of the current status of MWBEs. According to the report, only six of the 249 MWBEs certified to do heavy construction on streets, bridges and sewers had the capacity to perform contracts larger than $27 million. Meanwhile, 17 of 519 MWBEs certified in commercial and institutional building construction had the capacity to perform contracts larger than $30 million.
Jonnel Doris, the director of the Mayor’s Office of MWBEs, told City & State in a follow-up interview that his office recognized the need to build capacity and is working to address the problem.
“Over the last year, we released two funds that address the capacity of these businesses, one is the (Contract Financing Loan Fund),” Doris said. “Many businesses, particularly MWBEs, pay a premium to get loans to do business in the city and we felt the need to address that. We have a fund through which you can get half a million dollars at 3 percent interest if you’re an MWBE and you have a contract with us. That’s a capacity changer for an MWBE that won’t have the capital to perform the work.”
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Noting that the construction industry was currently experiencing a boom, Doris added that these businesses also paid unnecessary premiums on bonding. “We addressed that, and now MWBEs can get up to a half a million dollars also for their bonding assistance. And, of course, Small Business Services has several capacity-building programs to help these businesses develop.”
Gregg Bishop, the commissioner of the city Department of Small Business Services, shared some of the challenges in achieving the 30 percent MWBE goal during a panel discussion at the event organized by City & State and sponsored by BTEA.
“There are firms that are operating in New York City that may not look at government as an opportunity for diversifying their revenue source,” Bishop said. “We have a challenge at Small Business Services in finding and uncovering every single firm that could be certified. The firms that are certified actually seek government work as an opportunity to increase their revenues, but we know for sure that there are firms in the New York City area that have not looked at the New York City market. We have also heard from MWBEs that our certification process is cumbersome, and we have actually streamlined it.”
Both Doris and Bishop expressed eagerness to continue expanding opportunities for MWBEs to reach the city’s 30 percent MWBE goal.