Comptroller Stringer “Making the Grade” MWBE Report Reveals Systemic Barriers to Competition, Exclusionary Contract Language, Unresponsive City Agencies

City Awarded $20.5 Billion in Contracts in FY 2019; Only $1.007 Billion (4.9 Percent) Awarded to M/WBEs.

After Four Consecutive “D+” Grades, City Finally Earns First “C” Grade in FY 2019 for M/WBE Spending

 New York City Comptroller Scott M. Stringer today announced the results of a first-of-its-kind survey of more than 550 Minority/Women Owned Business Enterprises (M/WBEs), which revealed systemic barriers to competition M/WBEs face when navigating City contracting – including unresponsive City agencies, opaque procurement processes and exclusionary contract language. The Comptroller also announced that the City earned its first passing ‘C” grade after four consecutive years of “D+” grades on the Comptroller’s “Making the Grade: New York City Agency Report Card on M/WBEs.”

“If we want a strong economy with real, local community wealth creation, we need an inclusive economy. That’s why my office proposes recommendations every year on how the City can level the playing field and increase access and opportunity for M/WBEs,” said New York City Comptroller Scott M. Stringer. “Accountability leads to improvement – and while today’s report indicates modest progress by the City, we cannot rest on our laurels until all City agencies make the grade. We know that there is more work to be done to dismantle the systemic barriers M/WBEs face when navigating City procurement and contracting. We must do more to ensure that the M/WBE community has the tools, resources, and capacity to compete and thrive in our economy.”

“Making The Grade” assesses 32 City agencies – and the City overall – on progress in spending with minority and women-owned businesses (M/WBEs) and is a diagnostic tool for agencies to improve performance and transparency in M/WBE spending, increase competition in City procurement and save taxpayer dollars.

Highlights in the 2019 “Making the Grade” report include:

Improvements:

• The City earned its first “C” grade in FY 2019 for M/WBE spending after four consecutive years of “D+” grades. For the first time, no agencies received an overall “F” grade.
• The City spent $911.9 million with M/WBEs in FY 2019, an additional $180.8 million from FY 2018.
• 30 out of 32 agencies improved or maintained their grades from last year.
• 92 percent of the City’s top 50 competitive contracts (about $1.7 billion) had M/WBE goals.

Problem Areas:

• There is significant room for increased spending with every minority group. The City earned a “B” grade on spending with Asian American-owned businesses and a “C” grade with Hispanic American owned businesses. It maintained its “D” grade with women and its “F” grade with African American-owned businesses from FY 2018.
• The City awarded $20.5 billion in contracts in FY 2019, of which only $1.007 billion (equal to 4.9 percent) were awarded to M/WBEs.
• 17 percent of City-certified M/WBEs received City payments in FY 2019, a decrease from 20 percent in FY 2018 due to an expansion of more than 2,000 firms in the M/WBE program.

Each year, this report also puts forth recommendations meant to reduce barriers and increase access to opportunities for M/WBEs. The Comptroller’s Office conducted a survey of over 550 M/WBEs to help inform these recommendations. Survey findings included:

• 82 percent of respondents expressed the need to improve criteria on how vendors are selected for City work.
• 69 percent of respondents found agencies unresponsive when they reached out to Agency Chief Contracting Officers, M/WBE Officers, or other related liaisons with meeting requests, phone calls. As a result, 75 percent of respondents stated that agency responsiveness needed some or major improvement.
• 38 percent of respondents who did not compete for contracts were not aware of procurement opportunities and said the process was too time consuming and hard to understand.
• More than 80 percent of respondents that served as prime vendors/subcontractors waited more than 30 days to be paid for their first invoice on average.

The Comptroller’s “Making the Grade” report made a series of recommendations, including:

• The City should require agencies to conduct market analyses and address solicitation language that creates unnecessary barriers to competition.
• The City should conduct a workforce disparity study and create a workforce diversity program.
• The City should expand the role of M/WBE Officers to serve as advocates for M/WBEs and to address agency responsiveness and contracting issues.