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Legislative Memo

Ken Pokalsky
Vice President
T 518.465.7511
www.bcnys.org

BILL:

S.7508-A / A.9508-A (Budget, Part Q)

Support

SUBJECT:

MWBE Revisions in Article 15-A of Executive Law

 

DATE:

March 20, 2018

 

The Business Council of New York State, the State’s leading business and industry trade association representing over 2,400, strongly recommends that reauthorization of Article 15-a of the Executive Law should include meaningful reforms that makes the program more flexible and workable, while supporting the policy objective of supporting minority and women-owned firms. However, we do not support the Executive Budget proposal as it fails to address basic concerns raised by contractors, and instead makes the program even more difficult to manage.

The Business Council and other business organizations have raised concerns about the ongoing implementation of the state’s MWBE contracting program, and are calling for reforms as part of any extension legislation in 2018. The program, set forth in Article 15-A of the state’s Executive Law, expires at the end of 2018. Governor Cuomo has proposed a five year extension in his Executive Budget, but instead of addressing business concerns, it proposes new and unworkable requirements on state and local government contractors. As The Business Council has consistently stated, we support New York State’s efforts to promote minority and women businesses’ participation in government contracting However, we find that there are numerous problems in both the current system and the changes being proposed in the Executive Budget.

Key concerns include the ability to obtain waivers from contract-specific MWBE participation targets, a process that our members say is slow and inconsistently applied. Likewise, many contractors have stated they were unable to obtain a rationale for the MWBE participation targets set for specific projects, despite repeated requests for such information. In response to these types of concerns, the Associated General Contractors of New York State filed numerous Freedom of Information requests with state agencies to obtain more information. When information was not forthcoming, the AGC filed Article 78 lawsuits to obtain documentation denied under FOIL requests; The Business Council joined these suits as an amicus.

In addition to a lack of transparency in the setting of contract-specific participation targets, there are major concerns regarding the data used in the state’s 2016 Disparity Study (released to the public in June of 2017). Mandated by statute, that report determined that 53% of the state’s prime construction contractors and 53.48% of construction subcontractors are MWBE firms. Since these figures appears to be significantly inflated many have also asked for the data supporting this finding. To date, the data on which the disparity study findings are based have not been released to the public. This has led to significant concerns about the accuracy of the disparity study, as well as the methodology it employed.

These questions regarding the disparity study are troubling since the legislature’s review of proposed extension and amendments of the MWBE statute are already underway, and could be finalized as early as April 1. With recommendations as to the form of the new law being based on recommendations of the 2016 study, we would expect the State-sponsored report to be as accurate as possible.

In regards to the proposals within the Executive Budget, S.7508-A / A.9508-A, Part Q, that are based on recommendations of the 2016 Disparity Study, we see the following as among the most significant issues for our members engaged in public contracting:

Generally, the Executive Budget proposal for a new iterations of Executive Law Article 15-A will created new and significant issues for contractors.  Rather than concentrating on improving the current system and insuring the timely designations and re-authorizations of state certified MWBE companies and their entry into the universe of state contracting, the law increases the arbitrary power of the director of the program while complicating the reporting systems required of contractors.

Further, the entire issue of increasing the levels of MWBE participation in the workforce through targeted workforce development and apprenticeship programs is ignored. In that vein, access to capital, bonding, and other business development tools needed by fledgling MWBEs are not addressed.

For the reason outlined above, The Business Council opposes the inclusion of these provisions in the State Budget and will advocate for meaningful reform rather than authorization of 15-A that will cripple the New York State bidding and contracting process.