New York City businesses owned by women or minorities historically have won a smaller share of city contracts relative to their share of the market than companies with white male owners. More than 56 percent of the market’s construction firms are minority- or women-owned, for example, but those companies won just 28 percent of prime construction contracts between 1997 and 2002 – missing out on $440 million worth of work – according to a 2005 analysis commissioned by the city.
The study, by the research firm Mason Tillman Associates in Oakland, Ca., found disparities in public contract awards across nearly every sector researchers examined, for both prime and subcontracts. The law requires such research before governments can set goals for awards to minority- and women-owned business enterprises, known as MWBEs.
Authors of the 294-page report took pains to make sure the disparity didn’t simply reflect that MWBEs might be less equipped to take on public contracts. Researchers examined companies “willing and able” to take on contracts: firms that had expressed interest in selling to the city and had the capacity to do so. More than 90 percent of the city’s contracts are worth less than $25,000, and the report excluded awards above $1 million. “The fact that the majority of the City’s contracts are small suggests that the capacity needed to perform most of the contracts awarded during the study period was minimal. Furthermore, evidence is substantial that willing firms have the capacity to perform contracts in excess of the $1,000,000 level,” the report found.
In fact, says Marla G. Simpson, director of the Mayor's Office of Contract Services, a new disparity study now in the works might end up documenting just that. In fiscal 2007, MWBEs captured 7 percent of all city money spent on contracts – but if MWBE capacity can be certified at, say, $3 million, "that would roughly double the size of the program," Simpson says.
Over the year the new law has been in effect, "the program has had some modest successes," she said. But given the existing capacity cap on participation, "It's understandable that the advocacy community is not satisfied with that."
Roughly $15.7 billion in city money flowed back to the private sector in the 2007 fiscal year, according to city procurement data. The purchases cover everything from paving roads and building playgrounds to buying paperclips and toilet paper. With that much money – roughly equal to the gross domestic product of Iceland – flowing from the public to private sector each year, access to the public market can determine whether businesses owned by women or minorities grow or fail.
“The programs that are set up are very, very helpful in that the door is open for firms that perhaps would never have the opportunity to work on major public projects,” says Sandra Wilkin, president of construction management firm Bradford Construction. But Wilkin, who is also president of the Women Builders Council, says further steps are needed. “There are barriers, in particular barriers with insurance, barriers with financing, barriers with bonding, that make it very, very difficult for small firms to expand in the New York market," she says.
