Minority and Women Businesses Left Out of Recovery Act Contracts in New York
For Immediate Release
June 29, 2009
WASHINGTON, DC – Congresswoman Nydia M. Velázquez (D-N.Y.) has sent a letter to New York State Governor David Paterson and New York City Mayor Michael Bloomberg, urging the leaders to include minority- and women-owned businesses in contracting opportunities made available through the American Recovery and Reinvestment Act. These firms have been left out of billions of dollars of Recovery Act contracts already distributed in New York, despite protections included in the legislation. Velázquez, who is chair of the U.S. House Committee on Small Business, called on Paterson and Bloomberg to maximize taxpayer dollars by increasing the participation of minority- and women-owned businesses.
The following is the text of Congresswoman Velázquez’s letter:
June 26, 2009
Dear Governor Paterson and Mayor Bloomberg,
As you know, the State of New York is as diverse a geographic area as any in the United States. We now boast substantial populations of African-Americans, Asians, and Hispanics – and these communities are growing every day. With this demographic shift also come changes, including the challenge of integrating these new individuals as well as women into our local business communities. An important tool to accomplish this are the programs operated by the State’s Division of Minority and Women-Owned Business Development and the City’s Department of Small Business Services. With the recent passage of the American Recovery and Reinvestment Act (P.L. 111-5, hereafter “ARRA”), these initiatives are now more critical than ever before.
The State of New York and MWOB Procurement Under ARRA
The work of the State’s Division of Minority and Women-Owned Business Development should be singularly focused on one goal, which is the incorporation of minority- and women-owned businesses (MWOBs) into ARRA procurement actions. ARRA is a once-in-a-generation federal investment in transportation, energy, and infrastructure system, and with it comes the opportunity to use it as a catalyst for economic development.
With nearly $10 billion in funding allocations already made to the State of New York pursuant to ARRA, it is crucial that MWOBs are a primary part of contracts let under this authority. Given the speed in which ARRA contracts are being entered into, however, there is a great concern that minority vendors without historical relationships with the State are not being included. Efforts must be made to certify more MWOBs for ARRA work quickly and to incorporate MWOBs into subcontracts for larger prime awards. While outreach is important, greater resources must be devoted immediately to making tangible and statistically measurable progress on this front.
Application of Federal Small Business Protections to New York State ARRA Contracts
Notably, Congress implicitly applied federal small business protections and goaling requirements in ARRA. Federal law provides that acquisitions exceeding $3,000 but less than $100,000 should automatically consider small businesses first if two or more interested small businesses could fulfill the contract. In addition, as part of the consideration in awarding a contract to a large company, the company and the government procurement officer negotiate a subcontracting plan, which is supposed to ensure that small businesses receive a fair proportion of the subcontract work available. Finally, agencies are encouraged, by statute, to award 23 percent of contract dollars to small companies. It is my hope that the State’s use of funds made available under ARRA embodies the spirit of these federal requirements and protections.
New York City and MWOB Procurement
The City’s effort to promote minorities in its procurement activities significantly lags behind the demographic reality of our community. The Preliminary Report on Minority and Women Business Enterprises provides troubling details on the lack of progress the City has made in reaching out to these contractors and vendors. Overall, through the first half of FY 2009, the City’s efforts have resulted in an extremely low number and dollar amount of contracts being awarded to minority and women businesses.
Executive Order 71 and Local Law 129 have paved the way for minority- and women-owned firms to play a greater role in New York City’s economy. However, the implementation of these reforms has not resulted in the tangible progress so many had hoped for. The initiatives established by Local Law 129, most notably, the goals and agency enforcement mechanisms, have been underutilized to the point of becoming irrelevant. It is not surprising that the actions taken by the Department of Small Business Services in implementing this law have been criticized as being overtly cosmetic, rather than substantive in nature. Real change will only occur when the City is able to increase the amount of business they do with local minority and women companies – and this can only be measured through hard procurement data – not a few anecdotes.
The State and the City’s effort to maximize participation by our minority and women firms will not only benefit this sector, but it also makes good business sense. By using these companies – many of which are the best and brightest in their field – we can ensure that the State and the City are drawing on the highest quality companies to maximize tax payer dollars. This truly results in a “win-win” situation for everyone involved.
Thank you for your attention to this matter, and we look forward to working with you to increase opportunities for New York’s minority and women businesses.
Nydia M. Velázquez