TESTIMONY
Comptroller Brad Lander Delivers Report on MWBE Procurement and Equity
2:42:28
·
16 min
Comptroller Brad Lander presents a comprehensive report on the status of minority and women-owned business enterprises (MWBE) procurement in New York City, highlighting current disparities and making concrete recommendations for improvement. Lander emphasizes the need for greater transparency, efficiency in procurement processes, and proactive measures to improve MWBE participation in city contracts, including addressing late payment issues and optimizing the subcontracting process. The chapter concludes with perspectives directly from MWBEs through a short video presentation.
Speaker 17
2:42:28
Thank you so much.
2:42:30
Good afternoon.
2:42:31
Chair Brooks Powers, chair 1, majority leader, Frode Yos, wonderful to be with you guys.
2:42:35
Happy Valentine's Day.
2:42:38
Chair 1.
2:42:39
Very excited for you and your growing family.
2:42:42
Good luck in the in the coming few days.
2:42:46
I'm delighted to be here along with deputy control for contracting and Carmen Charlotte, home MGN, and appreciate the flexibility of the committee to make it so that we could do this hearing with the report in in hand, which as you know we've just released today.
2:43:00
We appreciate the opportunity to join this important discussion about how New York City can advance equity as we build the infrastructure required for more Justin, resilient future as the chief financial as Citi's chief financial and accountability officer, I take really seriously the responsibility of digging into the data.
2:43:17
And being honest about what it says.
2:43:19
Our office recently released a report on the racial wealth gap in New York, which highlights the stark disparities between white and black New Yorkers.
2:43:27
We found that the median household net worth of White New Yorkers is $276,900, nearly 5th fifteen times that of the medium black household at 18,0870, and the numbers are comparable for Hispanic families.
2:43:41
That's a wider racial wealth gap than United States as a whole.
2:43:45
And we find that these racial wealth gaps are perpetuated in many places, patterns of discrimination in homeownership, in education, in student loans, in investment holdings, in retirement security, and a lass in city contracting.
2:43:58
Contracting, and that's the whole reason you're having this hearing is a powerful tool to achieve New York's priorities, how we build our schools, repair our roads, upgrade our parks, provide services to our kids on and on.
2:44:10
This past fiscal year, the city spent roughly $40,000,000,000 on contracts for everything from office supplies to human services, to technology projects, to the construction of large scale infrastructure projects, the particular focus of today If those contracts were distributed proportionately to our population in a city where 29% of the folks are Latino or Hispanic, 20% black, 6 18% Asian and, of course, more than 50% women, then contracting would be an enormous force for reducing those wealth gaps and sharing prosperity more broadly.
2:44:46
Sadly, of course, that has long not been the case despite decades of efforts, disparities in the city's procurement.
2:44:53
Can you continue to exacerbate racial and gender disparities rather than narrow them.
2:44:58
So today, our office released the annual report on MWE Procurement The report measures MWE utilization in compliance with local law 174 of 2019, which authorized the city's current MWE program.
2:45:13
And do it tells in in-depth into agency by agency, across industry numbers, and evaluates the city's work to move the needle in the direction of greater equity and to make concrete recommendations for reform And I'll start by observing, we really share the spirit of collaboration and partnership that chief business diversity officer Michael Barner expressed earlier, we are working closely and productively with his office, and we acknowledge that they are making significant meaningful efforts that have resulted in some progress on prior recommendations.
2:45:48
Still, city agencies as detailed in the report continue to fall woefully short.
2:45:54
And I'll just note here.
2:45:55
These aren't our numbers.
2:45:56
These are just the numbers.
2:45:58
We draw them from FMS to Citi's financial management system.
2:46:02
Deputy controller, her manager and her team pulled the fiscal year 23 contracts.
2:46:07
They're all available in in checkbook NYC on our website as well.
2:46:13
And the administration has not put forward other numbers.
2:46:17
So, again, we we we are working constructively with them, and we welcome their and your feedback.
2:46:23
But these aren't our numbers.
2:46:24
They're just done numbers.
2:46:25
And we include an analysis of spending as well as contract value.
2:46:30
We look both at overall procurement and procurement subject to the local law So you can take a look at all that information in detail.
2:46:38
Just a few highlights and you have actually referred to these in the hearing already.
2:46:42
But MWD has continued to win only a very small share of city contracts, 5.3% of the value of all new city some purchase orders registered in fiscal year 23.
2:46:54
It was 5.2% in fiscal year 2022.
2:46:56
I suppose you could call that a very small percentage increase and just 9.8% of the narrower universe of city contracts subject to local law 174, which make up about 1 quarter of the city's procurement.
2:47:09
That was actually down from fiscal year 2022, and that's even after we took the the Brooklyn Burrow based jail out of the denomination later because it had a real big skewing impact.
2:47:22
You talked a lot about the disparity, the disparity, but it's just worth reporting these numbers out loud.
2:47:27
Only 1.16 percent of the value of contracts and purchase orders subject to local law 174 participation goals were registered to black MWE's 0.96 percent Hispanic MWE's and only a combined 1.03% to women of color owned MWE's.
2:47:51
As you guys discussed, MWE's are winning more contracts but they tend to be much, much smaller.
2:48:00
There's value in expanding and it would be non competitive, small procurement.
2:48:05
For sure, but the impact of the fact that MWE contracts are basically one eighth the size of contracts registered to non certified firms, 4,600,000 on average to non certified firms were is 511,000 for MWDEs means that even while many more, the volume and the number of contracts read by percentages going up.
2:48:30
The total value remains the numbers I cited.
2:48:35
Most m w b e is registered with City don't actually get a contract.
2:48:40
Only about 20% of city certified, MWE's got a contract in fiscal year 23.
2:48:49
And late payment remains a a significant issue.
2:48:52
For MWE's, for human service providers, across the board.
2:48:59
In addition to providing analysis, the overall state of city procurement, the report provides a snapshot for each agency.
2:49:06
Deputy controller from Amgen's team developed a new overall performance metric to account for differences among agencies, past reports really to treated all the agencies as comparable, but this is so different based on size, especially.
2:49:20
So we now examine the relative performance of agencies with other, comparing them to their peers with similarly sized portfolio subject to the local law and just quickly you know, with large large agencies, DEP was ranked 1st, and DOT last, and the office of technology and improvement, most improved, and you heard a lot about you know, like, I heard the chief business diversity officer, Garner, Speaks specifically to a very large OTI contractor was registered with an MWE firm.
2:49:52
Agencies with a moderate size contracting department of homeless services was both 1st and most improved from last year and Decast last amongst small contracting agencies, the law department was 1st and most improved, and Department of Finance ranked last amongst agencies with micro level purchase I'm happy to say the controller's office came in first and the CCRB last the Bigness Integrity Commission with the most improvement.
2:50:19
And for the first time, we include Department of Education numbers in here.
2:50:22
They're not subject to they're they weren't previously subject to local law 174 participation goals.
2:50:30
But in fiscal year 21, DOE's procurement policy and procedures were amended.
2:50:35
Implement an MWE goals program consistent with local law in 74.
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So this is the 1st fiscal year in which those rules were affected.
2:50:43
Were effective and MWE's accounted for 8.92 percent of DOE prime contracts or purchase order registrations about a percentage point below the city as a whole.
2:50:56
You're hearing, you know, one finding in the hearing that really said that this was the right hearing to have to focus construction and procurement is that we look by sector, and there, construction unfortunately is by far the worst.
2:51:09
While an impressive 63.6 percent of the value of contracts for goods went to MWA's and a respectable 21 point 6% for professional services like the technology contracts that Chief of Diversity Gar Garner cited.
2:51:25
Only 7.5 percent of construction services prime contracts registration values win to MWPEs.
2:51:33
And that's especially troubling on the large projects, as you mentioned, the largest procurement by far last year was the $3,000,000,000 contract entered by the Department of Design And Construction with a non certified firm for the design build construction of the Brooklyn Burrow Bay jail, that contract has a 30 percent WWE utilization goal, which if realized would deliver $900,000,000 That's nearly half the total value of local law compliant purchases for last year.
2:52:03
That contract will last more than 1 year, of course.
2:52:06
But a little less than a year into the 6 year contract term, just 1% of the value of the proofs of the contractor.
2:52:14
Were to MWPEs.
2:52:16
You had good back and forth, and I was actually encouraged to hear them acknowledge the problems with the payee information portal, but there really is a significant overlap with the hearing because of course subcontractors should be a source of significant contract value m w b e's.
2:52:32
There's a lot of subcontracting on construction projects.
2:52:35
Smaller firms can get a leg up, can have their insurance covered, can work with mentors, but you really need your subcontracting system to be working to utilize and capture value and the failure of pay information portal to capture and utilize subcontracting value.
2:52:53
Just makes it impossible for us to measure, but also for there to be real clarity about whether people are hitting their goals.
2:53:02
Merrell agencies approve subcontract records against just about 13%.
2:53:07
Of the 2927 local law eligible prime contracts, and we know that we're probably sub contractors on the vast, vast majority of the of them, but the other 87% registered no subcontractors within PIP, even though there are subcontracts on all or the vast majority of those projects.
2:53:27
So it was useful to hear them talk about the fact that it needs to be replaced and that there are plans to put it into passport, although we didn't get a deadline on when that a date on when that will be.
2:53:39
We highlight other findings that I won't read here.
2:53:42
We go into more in the report.
2:53:43
We did evaluate their efforts to move the needle, and we found meaningful effort some progress on recommendations from last year and, of course, still substantial areas for improvement.
2:53:53
You heard about the capital process reform force, which we're proud to be a member of.
2:53:57
We joined them in lobbying for that increase to 1,500,000, a real significant victory I want to give them credit for.
2:54:04
And we worked with them to quickly implement that threshold, which required, you know, changes at the at the PPP.
2:54:11
And in momentation work that went real well together.
2:54:15
We really respect the work on insurance and mentorship that they won and are back up there again on some other things, including more alternative delivery methods.
2:54:26
We give credit to city hall for making some progress in its establishing more prequalified lists, utilizing better utilizing best value procurement, achieving modestly higher dollar use of the non competitive small procurement method, directing micro purchases to MWEs, updating some of their training and guidance, to agencies and making relevant data more accessible.
2:54:49
Unfortunately, no progress was made over the last year since the report in visible progress, at least in reforming that subcontracting process, better enabling MWDEs to find agencies with the contracts, that there can supply.
2:55:04
I'll talk a a little more about this and improving the timeliness of contract registration.
2:55:09
So that's really what we focus on in our in our recommendations.
2:55:13
They could do a lot more to match the right agency what they're looking for with the vendor who can provide it.
2:55:21
Right now, everything is in basically just one giant space.
2:55:24
So if you're a transportation vendor looking for an agency with a transportation contract, not easy to find.
2:55:30
You're looking at every other kind of human service and construction contract.
2:55:35
You know, the data systems exist to help you say, here's what I can provide.
2:55:39
The agency could say, here's what I'm looking for so that if you're looking for an m w b e, you're gonna have an event and you want the food catering what you want is a good list of MWPEs who provide that service.
2:55:50
It's easy to get and vice versa so that an MWA says, don't show me every single kind of contract the city has.
2:55:58
Show me the ones that I've actually registered and qualified to provide the services for.
2:56:02
So that's an area where we think they could do a lot better.
2:56:06
We have some other register recommendations about surveying under utilized firms.
2:56:11
Improving their goal setting procedures on oversight, and then especially focused on subcontractors in construction and all So especially in human services.
2:56:21
Actually, I wanna underline this point because even though that we're mostly talking about infrastructure, we mostly think of human services as something out side of MWE because they're largely non profit contractors.
2:56:32
However, as we're seeing with the asylum seekers emergency contracts, a lot of those contracts are now going to for profit, businesses, very, very few of the MWDEs.
2:56:42
And even when they go to nonprofits, there are many subcontracts because on a shelter contract, for example, it's probably the case that the cleaning contractor, the security subcontractor, the food subcontractor, the transportation subcontractor, are not nonprofits, but are profit businesses.
2:57:00
But right now, WWE Eagles don't apply there.
2:57:05
Even if they did, it would be hard to see the subcontracts because of the problems of PIP, but they should apply, and they should be visible, and we could make a lot.
2:57:16
Progress if we did it there.
2:57:18
Finally, just want to acknowledge and speak briefly to intro 23 sponsored by Cheyenne Brooks Powers, which would require the Joy to perform an annual audit of MWD procurement.
2:57:27
We applaud the intent of the legislation to guarantee transparency in accountability recognizing that the current report is voluntary and would not be required to be continued by future controllers as witnessed by the report reassuring today.
2:57:40
Our office through our contract review, access to FMS and checkbook and related oversight powers is well positioned to conduct this important work.
2:57:49
We welcome feedback on the report, including suggestions for how we can make it even more useful.
2:57:55
I will note we have some learns about the specific language of the bill and look forward to further discussion to make sure we can best achieve our shared goals through it.
2:58:04
And finally, in addition to all this data analysis, we organized a series of roundtable discussions in neighborhoods across the city, in East New York, Jamaica, the North Bronx, and the North Shore Staten Island to hear directly from MWA's and that we heard a lot of frustration about some of the pain points, but a lot of hope about what city government could do.
2:58:25
And we made a short video of the folks from those roundtables that I think we have queued up to play here, and we thought it would be great to conclude by hearing from MWDEs themselves.
Speaker 10
2:58:44
Thank you.
Speaker 17
2:59:12
Optimized for mobile.
2:59:13
So unfortunately, it's more people will see it that way.