Because state law mandates that government contracts go to the lowest responsible bidder, the city cannot simply award more contracts to M/WBEs. So it has to create an environment where disadvantaged businesses can bid competitively.
In the early years of the program, the city focused on outreach and certification—merely getting M/WBE firms to sign up and demonstrate that they qualify for city work. Certification is voluntary and since only businesses that choose to certify with the city count toward participation goals, the city has tried to encourage every minority and woman who does contracting work for the city to certify.
“Under Mayor Bloomberg, the city has increased the number of certified firms from 700 to more than 3,800, and SBS continues to work hard to encourage more firms to certify and enroll in the city’s M/WBE program because a robust supply chain of competitive bidders is essential to the program’s success," wrote Anne Rascon, deputy commissioner at the Department of Small Business Services, in response to questions about the program.
More recently, under an initiative called Compete to Win, the city has created mentoring programs and offered classes to help certified business owners overcome obstacles and win bids.
There have been success stories. Stacy Seecharan is one. Seecharan, a black woman, started B & S Iron Works in the Bronx in 2003 and she said about 80 percent of her more than $1 million annual revenue comes from government contracts. She also said the programs the city runs to help certified business owners have helped her tremendously.
"I have everything good to say," she said. "They've always supported me. They have a system where I can call up, they give me answers."
Other certified business owners interviewed said they still had problems getting city jobs because of obstacles like surety bonding (insurance that protects the customer if a contractor fails to complete a job), lack of access to capital, insurance and lack of union affiliation. Many complained the city was still not doing enough to help and that the classes are at inconvenient times far away in Manhattan.
(See full statistics on the city's MWBE performance here.)
Samuel Gbajumo, a black man who owns Diamond Security Services, says he's had trouble getting big contracts because his company does not have a bonding level as high as bigger, more established companies. And the only way to increase bond capacity is to have a track record of completing large projects.
"The bids out there that require payment bonding, [based on] a percentage of the work, small companies don't have this kind of money. So right there, you're disqualified because you can't post the bonding," says Gbajumo.
Gesthimani Kouloukis, owner of the Queens interior painting company Modine Contracting Corp., says she cannot get jobs because she is not affiliated with a union.
"To work for the city, if you really want opportunities out there, you have to be union," she says. "I think that WBE is just a mask. You can get a small job, but when it comes to million-dollar contracts you can't, even if you are able to. Even as a subcontractor, the prime [contractor] says, 'Oh you're not union. Don’t bid on it.'"
Londel Davis, owner of American Fire Control, Inc., a company that sells, services, recharges and inspects fire extinguishers, was cited by the mayor as an example of an M/WBE success story during a speech in 2012. But Davis says sometimes he can't win city contracts even when he is the lowest bidder and isn't sure why.
"I don’t know. I just know I've been in circumstances where I was the lowest bidder and didn't win," he says.
But contractors whom the city has pushed for more M/WBE subcontracts have their own concerns. James Kenneally of Harris, O'Brien, Laurent & Chaudhry LLP, a law firm that represents major contractors, says companies are pressured by the city to build and to build quickly while simultaneously told to hit certain M/WBE goals without guidance on how to do that.
"'OK here's your number and here's the book of everyone who is certified and try to find as many people as you can to hit the number,'" is the city's mantra, he says. "It seems grossly inefficient."
He argues the city's pressure to get the job done paired with setting flat goals for M/WBEs with little support from city agencies in meeting those goals results in "corner cutting" and "loophole seeking."
An update to the M/WBE law in 2013 did give agencies some leeway on tailoring goals for specific jobs based on availability. But there are plenty of questions about how those goals were set.
Questions about the goals
Because the business world changes as companies fail and new ones are created every year, the goals in the M/WBE law are not supposed to be set in stone.
Getting the goals right is important. Not only are goals essential to the public concluding whether the program has succeeded or failed, but in order for M/WBE programs to sustain legal challenges, governments must be able to back up their percentage goals with evidence that they are addressing significant disparities. If the goals are not backed up with relevant and comprehensive data, a court could rule the program unlawful if anyone were to challenge it.
A year after the city M/WBE law went into effect and every two years after, the city was required to conduct a disparity study and, based on its results, offer recommendations to the City Council to change the goals. But it's unclear whether the city has undertaken this research consistently, or whether its conclusions have been sound when it did.
In 2006, the Department of Small Business Services (SBS) contracted Miller3 Consulting (a consulting firm known for its work in researching disparities) to conduct a new study looking at minority- and woman-led business contracting in fiscal years 2005 through 2007. The study was due to SBS on January 31, 2009. In May 2009, the comptroller's office (under Bill Thompson) asked SBS for the report; SBS said it had not received it and it was working with Miller on a time extension.