Making the Grade

Making The Grade 2015

October 17, 2015

New York City is home to the largest and most diverse cluster of businesses in the United States: some 305,000 women-owned firms and 403,000 minority-owned firms that help to power the City’s economic engine.

The fact remains, however, that minority and women-owned business enterprises (M/WBEs) continue to receive an unacceptably small slice of the City’s procurement budget. As set forth in the Fiscal Year (FY) 2015 Procurement Indicators Report released last month by the Mayor’s Office of Contract Services, only 5.3 percent of the City’s $13.8 billion procurement budget was spent with M/WBEs.

In an effort to boost agency M/WBE spending and increase transparency, Comptroller Stringer introduced Making the Grade in 2014—an annual report card that grades mayoral agencies on their M/WBE spending in the prior fiscal year. In Comptroller Stringer’s initial Making the Grade report last year, the City received an overall grade of “D” with 21 of 32 agencies reviewed receiving a “D” or “F” grade.

This year’s Making the Grade report suggests that some progress has been made, with nearly half of the 32 agencies reviewed receiving grades between “A” and “C.” Eight agencies received a higher grade this year than last year, while only four agencies saw their grade decline. Despite this progress, the citywide grade for FY15 is a paltry “D+.”

Though this year’s grades reflect a small step in the right direction, the City has a long way to go when it comes to economic diversity and inclusion. While the Administration and several city agencies have taken concrete steps to enhance the M/WBE program and level the playing field for all who wish to do business with the City, more can—and must—be done.

This report includes the following recommendations for continued reform:

  • Increase Transparency in M/WBE Procurement Citywide, with a Focus on Subcontractor Information

Most mayoral agencies are failing to hold prime contractors accountable for entering subcontractor data into the City’s online vendor portal. This makes it impossible to accurately measure spending with M/WBE subcontractors and takes a valuable tool away from the M/WBE community. Agencies must rectify this situation to ensure full transparency around M/WBE spending at all levels.

  • Ensure that the Next M/WBE Disparity Study is Conducted in Accordance with Best Practices

Given the importance of the disparity study to the constitutionality of New York City’s M/WBE program and the need for updated goals pursuant to Local Law 1 of 2013, the accuracy of the study in the determination of availability of M/WBEs who are qualified, willing, and able to compete is imperative.

  • Explore “Tier II” Spending to Further Expand Opportunities for M/WBEs

To expand opportunities for M/WBEs, the City should consider expanding the program to track M/WBE spending further down the supply chain of vendors (also known as “Tier II” spending).

In a city like New York, diversity isn’t just a buzzword—it’s a foundational pillar of economic development. The Comptroller will continue to hold City agencies accountable for spending with minority and women-owned businesses and work to ensure this spending is maximized.