Stringer Gives City Government a "D" on M/WBE Procurement

Mayor Bill de Blasio may be talking a good game when it comes to bridging the income inequality gap, but as far as diversifying New York City's contract procurements, City Comptroller Scott Stringer wants the administration to put its money where its mouth is. 

Calling it the "civil rights issue of New York," Stringer released a report Wednesday issuing letter grades to 32 city agencies, including his own office, on how well each agenciy is procuring goods and services through miniroity- and women-owned business enterprises (M/WBEs). A tough grader, Stringer gave only two agencies, the Department of Cultural Affairs and the Landmarks Preservation Commission, a "B" grade, while 17 agencies received a "D" and four received an "F". Stringer gave his own office a "C", while the average grade, citywide, was a "D." Stringer said the goal of the grades is to push agencies to redouble their efforts and "get more contracts into the hands of crucial job creators."

"This is a watershed moment in New York City government; growing the pie for M/WBE firms will increase competition in procurement, drive down costs for taxpayers, and create jobs. But just as important, it will be a key weapon in our battle against income inequality," Stringer said. "The challenge of diversity in procurement is the next big civil rights issue that New York must confront, because in New York diversity isn’t some buzzword, it’s a fundamental economic development principle."

Stringer added that as of 2007, 3,800 businesses have been M/WBE certified but that the procurement share of city contracts for those firms has been less than stellar, even after the passage of Local Law 1 in 2013, which established new “citywide participation goals” in four industry classifications of city contracting. The M/WBE procurement share reached a high of five percent in 2012, then declined sharply to 2.7 percent in 2013, before showing a slight uptick this year to 3.9 percent.

The new standards for M/WBE participation served as the framework for Stringer's grading system. Using data from each agency's Fiscal Year 2014 spending on companies operated by black Americans, Asian Americans, Hispanic Americans, and women, Stringer's office first compared the total spending on contracts by each agency to each agency’s spending across each of the four industries targeted by Local Law 1: construction, professional services, standard services, and goods under $100,000. It then weighted the results based on which of the industries the agency spent the most money on with M/WBE firms. For instance, if an agency spent 50 percent of its M/WBE money on construction, 50 percent of its grade is based on construction spending. The grades for each industry were then averaged out to determine the agency's overall grade. 

Stringer also made a number of recommendations to improve the performance of each agency in hiring M/WBE firms, including expanding Local Law 1 to hold agencies accountable for spending further down their supply chain; increasing transparency by offering more robust information on city agency websites to guide business owners through the procurement process; and offering better classification of M/WBE contracts. As for constructive criticism of his own office, he said that it should expand its contracting with M/WBE firms to "serve as a model" for other agencies. 

Stringer said that, beginning tomorrow, his office would be meeting with some city agencies to discuss their procurement practices. He also seemed to issue a challenge to de Blasio, who has made addressing income inequality in the city his signature issue, to step up his administration's efforts to provide greater opportunity for M/WBE firms, saying, that everyone, including himself, should be held accountable: "You can’t champion this issue unless you’re ready to deliver in areas that you can."

"A lot of what I agree with, with the administration, is how do we deal with income inequality? And the fact that when you look at something like this, the real tragedy of this is so many of these firms, if they were able to access doing business with the city, many of these firms would be located in communities that need economic development, need more spending in terms of creating jobs and creating economic activity," Stringer said. "Through the lens of income inequality, it is important that within city government, where you can make fundamental change, this is a great place to start."

To read Stringer's full report, click here.