Just 5.3% of overall City contract value went to M/WBEs in FY 2023; even out of the smaller share of contracts covered by M/WBE participation goals, only 9.8% went to M/WBEs — and only 1% went to Black, Hispanic, or women-of-color owned businesses
The Adams Administration has made progress on some of last year’s recommendations, but the data largely tells a story of how far there is to go
NYC Comptroller Brad Lander released the office’s Annual Report on M/WBE Procurement, exposing critical shortcomings in the City’s efforts to ensure equitable distribution of contracts among Minority- and Women-owned Business Enterprises (M/WBEs). Within the city’s program to encourage higher M/WBE utilization, agencies registered only 9.8% of eligible contracts to M/WBE prime vendors in FY23. Black, Hispanic, and women-of-color owned business each hover at just 1% of contract value.
“M/WBEs deserve their fair share of City contracts, yet this year’s disappointing numbers fall woefully short of where we need to be,” said Comptroller Brad Lander. “The Adams Administration has taken steps to improve equity in City contracting – but the data tells a story of how far there is to go. We offer detailed recommendations for streamlining connections between the City and businesses seeking contracts, being more diligent about setting and monitoring goals, and transforming the way contractors – especially in human services – utilize M/WBE subcontractors. With stronger management and coordination, we can reverse these unacceptable trends and move toward fairness in City contracting.”
The Comptroller’s Annual Report on M/WBE Procurement provides a comprehensive review of contract registration data to analyze City agencies’ performance in awarding M/WBE prime contracts based on procurement method, dollar value, and industry. Key findings include:
- M/WBEs secured only 5.3% of the roughly $40 billion of new City contracts and Purchase Orders (POs) registered in FY 2023, compared to 5.2% in FY 2022.
- In the narrower universe of City contracts and POs subject to M/WBE participation goals under Local Law 174 (about one quarter of the City’s total procurement), M/WBEs represented just 9.8% in FY23, down from 16% in FY22.
- Black M/WBEs represented only 1.16% of registered value contracts and POs subject to LL 174 goals, Hispanic M/WBEs only 0.96%, and women-of-color combined only 1.03%
- M/WBEs are winning more contracts, but those contracts are for a fraction of the value of firms owned by white men. M/WBEs accounted for 60.3% of the total number of new contract registrations subject to LL 174 goals (up from 58.5% in FY 22). But the average value of a new contract registered in FY23 to M/WBE was just $511,000, less than one-ninth the $4.6 million average of contracts with non-certified firms.
- Only about 20% of all City-certified M/WBEs secured a contract, PO, or approved subcontract registered by the City in FY 2023.
- More than half of contracts awarded to M/WBEs are registered late, posing a significant challenge for smaller firms without sufficient working capital. This was even the case even for M/WBE Noncompetitive Small Purchase contracts, which were late nearly 70% of the time despite that agencies have the authority to self-register these actions.
The report utilizes a new weighted performance metric to evaluate the relative performance of agencies compared to their peers with similarly sized procurement portfolios subject to LL 174.
- Top performers in their categories: DEP, DHS, Law Department
- Lowest performers: DOT, DCAS, DOF
- Most improved from FY22: OTI, DHS, Law Department
The report examines agencies’ use of the M/WBE Noncompetitive Small Purchase (NCSP) method, one of the City’s most effective tools at directing discretionary contract opportunities to M/WBEs. New legislation allowed agencies to use this method for procurements up to $1 million (and now to $1.5m), but agencies are not taking advantage of this newly increased threshold. Similarly, master agreements awarded to M/WBEs are less likely to be used than those registered to non-certified firms. Insufficient oversight for goal-setting in contracts also underscores the need for a more rigorous and extended examination and utilization process beyond the initial contract award. The system for tracking subcontractors remains badly incomplete, making it difficult to meaningful utilize or measure subcontracting to M/WBEs.
The Report also evaluates the Adams Administration’s efforts to move the needle. It finds meaningful effort, some progress on the FY22 recommendations, and substantial areas for continued improvement. The City successfully lobbied in Albany and implemented the change to raise the M/WBE NCSP method threshold to $1.5 million. Some progress has been made since last year in establishing more pre-qualified lists, utilizing “best value” procurement, achieving higher dollar use of M/WBE NCSP, directing micro-purchases to M/WBEs, updating training and guidance to agencies, and making relevant date more easily accessible. No progress was made reforming the subcontracting process, validating commodity codes to agencies can find the right M/WBEs, or improving the timeliness of contract registration. The FY24 report also offers new recommendations to the Administration:
- Streamline connections between M/WBEs and agencies. Strengthen the tools to connect M/WBEs to appropriate contracting opportunities, by standardizing commodity code selection and searches across agencies procuring similar goods & services.
- Survey underutilized firms. Understanding the reasons most certified M/WBEs do not engage in business with the City is essential for implementing targeted improvements and enhancing the effectiveness of M/WBE participation programs.
- Strengthen goal-setting procedures, support, and oversight. The City must establish and enforce standardized expectations for setting goals and monitoring compliance for all eligible contracts, including for contract changes and modifications.
- Increase utilization of M/WBE subcontractors in human services contracting. The City should increase M/WBEs participation in the human services sector, through prime contracting and especially through more effective subcontracting processes.
In preparing this report, the Comptroller’s Office held a series of M/WBE roundtables in each borough to gather on-the-ground feedback from small and large M/WBEs across industries. The experiences of these M/WBEs informed the findings and recommendations in the report. Direct testimonies from the participants of these sessions can be viewed in this video.
“Expanding equitable opportunities for our city’s Minority and Women-Owned Business Enterprises (M/WBEs) is critical to the success of our communities,” said Council Speaker Adrienne Adams. “While the City has made progress to increase contracting with M/WBE firms, it is clear that more work is needed to reach targeted participation goals. It will be important for all partners in government to continue working together to confront the challenges facing M/WBEs and ensure they have the necessary resources and support to thrive.”
“As an advocate for equitable opportunities in procurement, I am deeply concerned by the findings outlined in the upcoming report. The persistently low percentage of contracts awarded to M/WBEs underscores the pressing need for comprehensive reform. Urgent action is required to rectify this imbalance and ensure fair access to contracting opportunities for all. The NAMC New York Tri-State Chapter and I stand ready to support efforts to implement meaningful change, including debundling jobs and creating smaller-sized design-build projects that can be set aside for the M/WBE community. In addition, capacity-building endeavors with real results are needed to support these businesses, empowering them to thrive in a competitive market,” said Nayan Parikh, President of Ashnu International and President of the National Association of Minority Contractors New York Tri-State Chapter.
Watch M/WBE Firsthand Stories.
Read the Annual Report on M/WBE Procurement.
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