For the eighth year in a row, the City of New York has scored an 'F' grade for its failure to spend with African American-owned businesses and contractors.
The dismal grade was published Monday in City Comptroller Scott Stringer's annual Making the Grade Report on the City's spending with Minority/Women-owned Business Enterprises (M/WBEs).
Despite New Yorkers taking to the streets from May last year to demand racial justice for Black Americans, Asian-Americans and other minorities, the City scored a 'C-' grade in 2021 for its spending with M/WBEs overall, Stringer said.
The 'C-' grade represents a fall from the passing 'C' grade of the past two years. The report also revealed that the City fails to do business with 84% of M/WBEs.
"Over the last eight years, my office has given voice to solutions from M/WBEs directly on how the City can better connect them with opportunities, which has led to real change," Stringer said.
"But there is still room for significant improvement."
What's happened in the past year?
The City runs its M/WBE program in order to promote City government contracting and subcontracting opportunities for businesses certified as minority and women-owned.
Since taking office as Comptroller in 2014, Stringer has published an annual evaluation of the program.
The pandemic has been particularly difficult for minority-owned businesses due to institutional racism.
As Stringer points out, research has shown Hispanic-owned businesses are 60% less likely to get loans from major banks than white-owned businesses. Asian American-owned businesses have lost more revenue than any other ethnic group. And more than a third of Black entrepreneurs say businesses conditions are worsening.
This is not helped by the fact that the City has failed M/WBE in contracting with women and people of color during the pandemic. In Fiscal Year 2021, the City awarded $30.4 billion in contracts, of which only $1.166 billion (or 3.8%) were awarded to M/WBEs.
Some departments better than others
While the City has improved its grades with Asian Americans, Hispanic Americans and women-owned businesses since 2014, it has been unable to improve its “F” grade with African American-owned businesses.
In Fiscal Year 2021, the City earned a “B” grade with Asian American-owned businesses, a “D” with Hispanic American- and women-owned businesses, and an “F” with African American- owned businesses.
Certain City Departments are better than others at contracting with M/WBES.
For example, the Commission on Human Rights and Department for the Aging earned their fifth consecutive “A” grades. Both spent more than 50% of their Local Law 1-eligible dollars with M/WBEs.
However, the Department of Transportation received an “F” grade, spending less than 5% of its Local Law 1-eligible dollars with M/WBEs.
During the pandemic, the Department of Parks and Recreation, Financial Information Services Agency, Department of Consumer and Worker Protection, Health and Hospitals Corporation and the Department of Small Business Services dealt exclusively with non-M/WBEs for their COVID-19-related contracts.
Meanwhile, as of July 2021, New York City only certified four Native American-owned firms and spent all of $0 with these companies.
Recommendations
As Stringer's administration plans to leave the office for the incoming Comptroller, he has recommendations for the City of New York to improve its dealings with M/WBEs moving forward.
First, he is calling for all incoming citywide officials to appoint executive-level Chief Diversity Officers. He says all City leaders should adopt the Rooney Rule, which requires them to include women and people of color in every future CEO search.
Stringer is also calling for the next comptroller to conduct a racial equity audit of the City’s agencies. He says the next mayor should create a plan to close the gap between certification and receiving City spending for M/WBEs.
Finally, Stringer believes the New York City Council should reassess M/WBE legislation with a targeted focus on goals.
"The Council should review ways that the City can use its full purchasing power to set aggressive M/WBE goals wherever there is M/WBE availability," he said.
