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FOR
IMMEDIATE RELEASE July 30, 2007
Contact: Sarah Krauss
(212) 669-4193; (917) 541-0936
Release #: 038-2007
New Gotbaum Report Finds the City's Effort to Support Women and Minority Businesses Falling Short
- Of city’s 600,000 Women and Minority Businesses, only 1,114 are certified by the city -
MANHATTAN –The city’s program to support women and minority entrepreneurs is failing at its basic task of helping them reach certification and gain more opportunities to compete for city contracts, according to a new report released by Public Advocate Betsy Gotbaum today. In fact, the new report found that, while the city had more than 600,000 women and minority businesses in 2002 according to the latest available census estimates, as of April 2007, only 1,114 of these businesses – less than 0.2 percent of all the women and minority businesses in the city – were certified by the city.
The city’s Department of Small Business Services (SBS) currently manages the Minority- and Women-owned Business Enterprise (M/WBE) Program. The program is supposed to encourage minorities and women to certify with SBS so that they are eligible for specific benefits, such as greater procurement opportunities with the city, free one-on-one bidding assistance with a procurement counselor, and networking opportunities with city agencies’ buyers.
In FY 2006, the city procured $11.2 billion in goods and services, but according to SBS, only $55 million went to certified M/WBEs. In the first half of FY 2007, M/WBE utilization rates were nowhere close to the city’s M/WBE goals. For example, the city mandates a goal of 17.87 percent for Caucasian women in the goods industry, but the current utilization rate for this category was only 1.01 percent.
Public Advocate Gotbaum said, “Women and minorities deserve every opportunity to compete for city contracts. But while this program is supposed to level the playing field for these business owners, our investigation shows that it just isn’t getting the job done. Minority- and women-owned businesses are burdened by excessive paperwork, lack of information and red tape. By implementing some straightforward reforms and improving outreach, the city can ensure this critical program is working for the people and businesses that it was designed to help, while also benefiting the city.”
Minority- and women-owned firms are more likely to certify with New York State’s M/WBE program than with the city’s program. Furthermore, while programs in other cities have re-certification rates for firms with expiring certification of 75 to 80 percent, New York City’s M/WBE program has a re-certification rate of only slightly more than 50 percent.
Among other things, the new investigation found that:
• The city’s M/WBE program is generally perceived as ineffective for M/WBEs, and firms are more likely to certify with New York State’s M/WBE program;
• SBS does not inform M/WBEs that provide goods that procurement opportunities are limited by requirements contracts;
• SBS fails to fully provide advertised benefits, such as meaningful assistance locating procurement opportunities and regular networking events with city agencies; and
• The M/WBE initial and re-certification applications are difficult and time-consuming.
In order to improve the effectiveness of the M/WBE program, Public Advocate Gotbaum recommends that the city:
• Create a pre-screening website to advise firms considering M/WBE certification on whether or not certification would be beneficial to them.
• Focus resources on registering more M/WBEs in particular racial/sex categories and industries in which certified M/WBE numbers are low.
• Increase the number of procurement counselors to meaningfully assist certified M/WBEs.
• Streamline the initial and re-certification M/WBE applications.
• Work with city agencies that issue licenses and permits to businesses to help conduct outreach about the M/WBE program.
Multiple requests were made by constituents to the Office of the Public Advocate to examine problems with the SBS M/WBE Program. In September 2006, the Office convened a roundtable discussion with several minority and women business leaders to discuss their experience with the SBS M/WBE program. Following the roundtable discussion and telephone interviews with additional minority and women business owners, a survey was created to collect input about the M/WBE program from a larger sample of owners. The survey included one hundred and twenty-one women and minority business owners across the city. Forty-four chambers of commerce, economic development corporations, and business/professional organizations located in New York City agreed to assist the office by distributing the survey via e-mail to their members. In addition, the SBS M/WBE initial and re-certification applications were compared to the applications from 14 cities and certification agencies with M/WBE programs.
Click here for the report.
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