MWBE Proposal in Executive Budget and Background on Disparity Study

Staff Contact: Johnny Evers
February 23, 2018

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 three year extension in his Executive Budget, but instead of addressing business concerns, this proposal contains new and unworkable provisions that would apply to businesses bidding on and receiving state and local government contractors for all categories of government procurement. As The Business Council has consistently stated, we support the 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 amendments being proposed in the Executive Budget.

A key concern is 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 contracts, 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. Since the Executive Budget’s MWBE proposal is based on recommendations of the 2016 study, it is essential that the State-sponsored report 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.