It’s been more than a year since New York City Mayor Michael Bloom-berg signed off on an historic edict that requires all New York City agencies to award a reasonable number of construction and service contracts to minority and women-owned businesses. Yet, it still is unclear if the highly touted initiative is working for M/WBEs hoping to tap into multibillion-dollar design, building, construction and related contracts in the Big Apple.
Signed in December 2005, Local Law 129 effectively established a goals-based program for contract granting by city agencies. City agencies now must submit annual procurement plans highlighting the use of certified M/WBEs as vendors in all aspects of service and product enterprises. The Department of Small Business Services was given the unenviable task of establishing the goals-based plan and monitoring its effectiveness. While statistics for fiscal 2006 (ended June 30, 2006) are unavailable, various documents and releases show that the agency at least has been instrumental in “making the certification process of M/WBE firms easier and eliminating bureaucratic hurdles.”
Freedom Tower questions
New York’s City’s building frenzy continues unabated. In late February, the Port Authority of New York and New Jersey Board of Commissioners approved nearly $500 million worth of construction projects for the Freedom Tower at Ground Zero, site of the fallen World Trade Center. New York Gov. Eliot Spitzer initially debunked the project, but he has since reversed that stance, paving the way for M/WBEs to nab some of the lucrative contracts with the Port Authority. Whether M/WBEs, particularly construction industry related businesses, will be included in the mix in appreciable numbers remains questionable. To date, only one African-American-owned business, Burwell and Associates of Great Neck, N.Y., has participated in the project, providing electrical supplies services to prime contractors.
Lash Green, general manager for small business programs at the Port Authority of New York and New Jersey, insists that minority vendor participation in the Freedom Tower project will be significant. “Our expected goal is about 17 percent M/WBE participation,” Green says. “But due to the newness of the project and contracts, we are still crunching the numbers.”
With many of the contracts likely to be assigned as early as this summer, the Port Authority is working with Tischman Construction Corp. to find minority vendors. Green says the two have a long-standing relationship and in the past, Tischman has exceeded M/WBE participation goals.
Michael Jones-Bey, director of the division of minority and women’s business development for the state of New York, says his office has received inquiries from M/WBEs about Freedom Tower contracts and other major construction projects in the state. Jones-Bey is spearheading Lt. Gov. David Patterson’s campaign to bring M/WBEs back into New York State’s vendor database. “The previous administration was hostile and not at all supportive to M/WBEs. Gov. Spitzer and Lt. Gov. Patterson are determined to change this image of M/WBEs at the state level,” he says.
Hispanics and African-American business enterprises combined received less than 2 percent of all state contracts during that administration, he says.
Back to the basics
Michael Garner, senior director at the New York City School Construction Authority and an outspoken advocate for M/WBEs, says the city has wracked up an atrocious record in awarding substantial service contracts to minority businesses. Still, Black firms comprise nearly one-fifth of all New York construction companies, but not a single Black firm in the city has the finances, bonding or union relationships to build a $20 million-$30 million project as a general contractor, he says. Mentoring programs for M/WBEs at the SCA, the Port Authority and other agencies can change that, he contends.
“Funding vehicles, increasing bonding capacity and guiding M/WBEs through the certification process are what we provide to minority-owned businesses. Without acquiring these basic fundamentals, M/WBE active participation in city and state multimillion dollar projects will continue to be non-existent,” he says.
In the next five to seven years, meanwhile, the SCA plans to build more than 100 new schools at a staggering cost over $13 billion, Garner says. “Our goal is to award at least 20 percent of that amount to SCA-certified minority businesses,” Garner says.
Construction management firms
Unlike Black general contractors, Black-owned construction management firms appear to be flourishing. Indeed, CMs, as they are called in construction industry lingo, have nabbed major projects in the region. According to the Construction Management Association of America, the industry trade group, CMs manage the planning, design and construction of projects from inception to completion, while general contractors, or GCs, are the actual builders for a project.
Howell Industries, a construction-management firm in New York headed by Bill Howell, is involved in the $140 million renovation of Harlem Hospital. The firm serves as a mentor to smaller contractors. “We want to bring more Black businesses onboard to serve as general contractors on multimillion dollar construction projects,” says Howell, who chairs the SCA’s Equal Employment Opportunity Advisory Committee. “The way to start to do this is by actively promoting mentoring programs.”
In New Jersey, The CM Consortium, a venture of Tishman Construction, Parsons Brinckerhoff and ARUP, an international engineering and global design company, was tapped late last year to provide construction management services for NJ Transit. The contract is worth more than $5 million. CM Consortium will oversee the building of the new trans-Hudson tunnel and related projects.
The set-aside debate
California tycoon and anti-affirmative action proponent Ward Connerly, who is on a mission to get all government set-aside programs repealed, reportedly has his eyes set on New York following his successes in California and Michigan. In 1996, California enacted Proposition 209, essentially eliminating all set-aside programs in education and business. Last year, Michigan voters passed Proposition 2, which effectively abolished set-aside programs in the state. Connerly’s campaign could result in similar consequences for elsewhere, including New York and New Jersey, some contend.
Kenneth Neal, director of the office of Civil Rights for New York City’s Metropolitan Transportation Authority, says Connerly should redirect his focus. “The issue should be why are all non-small businesses getting 90 percent of all the contracts and M/WBEs getting less than 10 percent,” Neal says. “Primary contracts are going to friends and connections and not being bid.”
Green of the Port Authority of New York and New Jersey says, set-aside programs are essential, at least for the time being, in order to bring more minority-owned businesses into the nation’s economy. “I don’t think we should have set-asides forever. M/WBEs should utilize the tools provided by the programs and then eventually be allowed to effectively compete for bids,” he says. The Port sets aside approximately 40 – 50 contracts annually for M/WBEs, Green says.
Connerly’s supporters are calling for greater emphasis on social programs. “Federal agencies should consider race-neutral alternatives,” says Ira Davidson, director of the Small Business Dev-elopment Center at Pace University in New York.
For Rita Gunther McGrath, an associate professor of business at Columbia Business School, social programs, such as training or working through the Small Business Development Center (part of the U.S. Small Business Administration are more pragmatic than set-asides. “Set-asides burden the purchasing process and increase the cost of the government’s public procurement process for social ends,” she says. “The increased cost is from higher prices paid to favored vendors.”
Such arguments may be based on false assumptions, says Jones-Bey of the New York State Department of Economic Development. “It’s racist to assume that M/WBE firms that are receiving contracts are not qualified and driving up costs. If anything, M/WBEs are major contributors to economic growth and jobs, many of which are in urban communities,” he says.
Denying minority enterprises access to the city’s design, building and construction-related contracts, and therefore their ability to provide work for urban youth, could lead to dire social consequences, warns Garner of the SCA. “If we do not find a way to engage the minority population in the building of our schools {and businesses} in the immediate months and years ahead, we will be building prisons in the next 10 or 20 years,” he says.
By Glenn Townes