Comptroller Stringer Report: Share of City Procurement with Minority and Women-Owned Businesses Drops for First Time in Years, Citywide Grade Remains “D+”

(New York, NY) – The total share of City procurement with minority and women-owned business enterprises (M/WBEs) declined in Fiscal Year 2016, according to a report released today by New York City Comptroller Scott M. Stringer. In the first drop in three years, only 4.8 percent of the City’s $15.3 billion annual procurement budget went to M/WBEs in FY16. The numbers were unveiled in the Comptroller’s third-annual “Making the Grade” report, which evaluates Mayoral agencies – as well as the Comptroller’s Office itself – on their spending with M/WBEs.  Due to continued low spending with these firms, the City earned an overall grade of “D+” for the second year in a row.

This year’s M/WBE procurement rate of 4.8% is a substantial decrease from last year’s rate of 5.3%. While overall City M/WBE procurement has gone up, the share with M/WBEs has gone down. The Comptroller’s report is intended to highlight these issues, provoke constructive conversation, and recommend changes to the M/WBE program to yield better outcomes.

“As much as we talk about moving forward, this report demonstrates that at least for the last fiscal year, we moved backwards and have a long way to go. Government needs to lead by example, but it’s clear that when it comes to securing City contracts, our minority and women-owned businesses still aren’t getting a fair shot. By shining a spotlight on this issue, today’s report gives us another chance to focus on getting this right. This isn’t about blame, but instead about inducing change,” Comptroller Stringer said. “Right now, game-changing shifts just aren’t happening. Ensuring minority and women-owned businesses have a fighting chance will increase competition in City procurement and boost local economies all across New York. Today, we’re outlining a roadmap so agencies can do a better job delivering results.”

Although there are roughly 540,000 minority-owned and 414,000 women-owned firms in New York City, only 4,527 – less than 1 percent – are certified with the City. Further, the Comptroller’s analysis found just 994 of these certified firms received City spending in FY16.

This year, the Comptroller’s Office is also releasing a first-of-its-kind series of interactive online maps, to help the public understand breakdowns in City M/WBE spending. To see the maps – which show which certified M/WBEs received City spending by race, ethnicity, and gender – click here.

For the third year in a row, “Making the Grade” uses data from CheckbookNYC, the Comptroller’s transparency website, to analyze how much 31 Mayoral Agencies and the Comptroller’s Office spent with M/WBEs during the last fiscal year. Each agency is graded on the amount they spend on construction, professional services, standard services, and goods, based on the guidelines set forth in Local Law 1 of 2013.

More on City Agency Grades:

• While the City was graded “D+” on its M/WBE spending, the grades vary drastically by race, ethnicity, and gender. The City earned an “F” with African American-owned firms, a “D” with Hispanic American and Women-owned firms, and a “C” with Asian American-owned firms.
• Fifteen agencies – nearly half of those that were analyzed – earned grades of “D” or “F,” including eleven that have consistently earned one of these grades since the report was first issued in 2014.
• Three agencies – the Departments of Buildings and Sanitation and the Business Integrity Commission – were graded “F” this year. The Department of Sanitation also earned an “F” the past two years.
• Eleven agencies earned a higher grade this year than last, including the Comptroller’s Office, which improved from a “C” to a “B.”

The Comptroller’s Office made three recommendations for how the City can improve its M/WBE program and drive better results:

1. Create a more comprehensive, all-inclusive M/WBE development program across all City agencies. At minimum, this program should consist of:
   1. Pre-qualification for small businesses and M/WBEs to compete against similarly-sized firms for a dedicated pool of appropriately-sized contracts;
   2. A true mentorship program that provides oversight, guidance, and support for M/WBEs throughout the lifecycle of a contract – not just during the bidding process;
   3. A mechanism to ensure prompt payment to M/WBE firms, which typically have greater cash-flow burdens than more-established firms.
2. Appoint a full-time Chief Diversity Officer to develop strategy across City government and further accountability regarding M/WBE spending.
3. Streamline the certification process and create a universal certification application across local, state, and federal M/WBE programs.

“After three years of poor grades on M/WBE spending, it’s time to get to work on an agenda that will deliver real change. If we continue at the pace we’re going, New York City won’t see a difference for many, many years, and that is simply unacceptable for our small business owners. By holding agencies accountable for their spending – or lack thereof – we can give these firms a fair shot at economic growth,” Comptroller Stringer said.

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