Comptroller Stringer: City Continues to Short Change Minority and Women-Owned Businesses

Fifth annual report reveals City received fourth consecutive “D+” grade overall,”F” grade among African American owned businesses

City contracted just five percent of $19.3 billion budget with M/WBEs in Fiscal Year 2018

Lack of progress highlights need for City Charter mandated Chief Diversity Officer in City Hall and at each City agency

   New York City Comptroller Scott M. Stringer revealed that New York City is still lagging behind on spending with minority and women-owned business enterprises (M/WBEs) and renewed his call for a Chief Diversity Officer in each City agency and in City Hall.  The fifth annual “Making the Grade” report, which evaluates each City agency’s spending with M/WBEs, showed that while overall spending with diverse firms increased in Fiscal Year 2018, 80% of certified M/WBEs are still not receiving any business from the City.  The City received its fourth-consecutive “D+” grade by awarding $1 billion in contracts to M/WBEs out of a $19.3 billion budget in FY18 – just 5.5 percent of the total budget.

Comptroller Stringer has been issuing Making the Grade since 2014 in an effort to drive the City to improve its spending with diverse firms, and hold agencies accountable when they fail to do so. This year’s report highlights the City’s failure to meet spending goals with firms owned by women, Hispanic-Americans and Asian-Americans, but sounds the loudest alarm on the City’s spending with Black-owned firms. Despite an overall “D+” grade, the City earned an “F” for spending with Black-owned firms.  Meanwhile, spending with Asian-American firms earned the City a “C”, with Hispanic-Americans a “D”, and with Women-owned firms a “D.”

“New York City is one of the most diverse cities in the world, and yet our own government fails to make fairness and equality a priority when it comes to spending city dollars.  There needs to be someone in every city agency making sure minority and women-owned businesses are being given a fair shot to get a piece of a $19 billion budget – that’s why the City Charter has to be changed to include a Chief Diversity Officer,” said Comptroller Stringer. “If we are going to build a five borough economy, we cannot perpetuate a system that fails to build wealth in communities that have historically been left behind. While progress is happening, this report shows just how far we have to go.”

Despite the City’s overall “D+” grade, several agencies made progress over the last fiscal year.

• Grades increased at 9 agencies, decreased at 5 agencies, and stayed the same at 17 agencies – meaning almost 30 percent of agencies increased their grade.
• Three agencies received an “A” grade – Department for the Aging, Commission on Human Rights, and Department of Health and mental Hygiene.
• However, ten agencies that received either a “D” or “F” grade account for 50 percent of the City’s total M/WBE spending, depressing the citywide grade despite areas of improvement.

Stringer’s report advances four proposals to level the playing field for M/WBEs and ensure the City’s multi-billion dollar procurement budget is lifting up all New Yorkers.

A charter mandated Chief Diversity Officer. Accountability begins at the top – and that’s why Comptroller Stringer is calling for a City Charter change to mandate the hiring of a Chief Diversity Officer (CDO) in the Mayor’s cabinet and in every city agency.  According to public data, out of 32 mayoral agencies, only seven currently have a CDO, with only four reporting to the Commissioner. But every agency needs a dedicated, executive-level leader to focus on diversity and drive results. The current City Charter Revision Commission provides a unique opportunity to enshrine a CDO in the City’s governing document.

Create competitive opportunities for M/WBEs on citywide requirements contracts. A major obstacle to increasing M/WBE spending is the Citywide requirements contracts that represent approximately 10 percent of the City’s total budget. These contracts are agreements that agencies enter with a limited number of vendors to meet the City’s demand for particular goods or services on an “as-needed” basis, often over multiple years.  Examples of items and services purchased through requirement contracts are automobiles, fuel, equipment maintenance, cleaning services, large scale printing of election documents, and more.  The City spent more than $1.5 billion through requirement contracts in FY18, but M/WBEs received only $102.5 million – less than seven percent – of this spending.  The City should increase opportunities for M/WBEs by awarding requirements contracts to a pool of vendors, rather than one vendor alone, and by striving to include M/WBE subcontracting goals in all requirements contracts.

The City should require prime vendors to disclose details about their commitment to diversity, including their own supplier diversity plans. In FY18, the City’s top 25 vendors received $2.7 billion from the City, but only 3.8% of those dollars made it to M/WBEs. To encourage more M/WBE opportunities among top vendors, the City should require vendors to share details of their own supplier diversity programs when they bid on City contracts. Agencies should be allowed to award points to prospective vendors with robust M/WBE programs and Chief Diversity Officers.

The City Charter should be amended to alleviate the financial burden of contract delays for M/WBE vendors by assigning deadlines to every agency in the contract review process. In FY18, one in four M/WBEs had to work for at least three months without a contract in place or wait just as long after their contract start date to begin work.  Meanwhile, over 69 percent of contracts awarded to certified M/WBE vendors were submitted to the Comptroller’s Office for registration after the contract date.  Without a registered contract, a vendor cannot get paid – that’s interrupted cashflow.  In order to make the process more efficient, transparent, and sustainable for all firms, the Charter Revision Commission should include specific timeframes for each oversight agency in the procurement process.

“In a City that prides itself on opportunity, women and people of color in business continue to be sidelined and neglected, ” said Public Advocate Letitia James. “In a City that thrives on diversity and inclusion, it’s our duty to ensure that M/WBEs are given the opportunities they need to survive. I commend Comptroller Scott Stringer for his continued efforts to highlight and correct this important issue.”

To read the full report, click here.