The Business Council of New York State, the state’s leading statewide business and industry association, opposes this legislation that would amend the Executive Law in regards to a re-authorization of the State’s Minority- and Women-owned business enterprise program (MWBE).
Over the past two legislative sessions there have been various proposals to re-authorize and update Article 15-A of the Executive Law. This section of law is responsible for the State’s MWBE program and its oversight by the Department of Economic Development. While The Business Council firmly supports the MWBE program, and is committed to help grow the MWBE universe of qualified contractors and firms, particularly in the area of construction, this legislation would likely result in a constitutional challenge, an overturning of the law, and set-backs to the program that no one – especially the business community – wishes to see happen.
This legislation has numerous flaws. The bill adopts the questionable 2016 disparity, places in law a 30% MWBE statewide mandate, imposes the 30% mandate on localities, replaces references to time specific disparity studies with “most recent disparity study” done by the Department of Economic Development (thus by-passing the Legislature), adds an unworkable workforce diversity program on contracts, and debars contractors deemed “non-compliant” with certain workforce diversity provisions that seem almost impossible with which to comply.
First and foremost, we continue to believe that if this bill is enacted into law it would not withstand judicial review and would be deemed unconstitutional in a court of law. Following the precedent in the 1989 case City of Richmond v. J.A. Crosson, the adoption of this bill would ensconce in State law provisions that do not narrowly tailor specific goals based on both capacity and availability of MWBE firms. It is well-established that a disparity study must be conducted to ascertain whether a disparity exists, and if it so, if it is the result of discrimination, and finally, what narrowly tailored remedies should be adopted to remedy such disparities. Instead, this law places into State law an arbitrary 30% MWBE goal for contracts without the prerequisite constitutionally-sound study as required under the Crosson decision. It should also be noted that the current 30% MWBE requirement by State agencies for participation in state contracts is not in state law.
In regards to the 2016 disparity study, we have consistently stated that there appears to be legitimate concerns with its findings and its accuracy. This is obvious in the case of construction contractors and sub-contractors, with that very industry disputing the claims of the disparity report that over 53% of the construction industry (both prime contractors and subcontractors) are comprised of MWBE firms. This bill would place that study into law despite the concerns over its accuracy, and in turn, use that study as a guide for the administration of the MWBE program.
Further, the bill changes the procedures for the authorization of future studies by changing the language to “the most recent disparity study.” Rather than having the legislature re-authorize the law periodically through a specific study for a set period of time, the law merely adopts the 2016 study and then allows the Department of Economic Development to commission a study at any time it so desires. This both removes the legislature from the equation, and places the MWBE program at the whims of executive branch employees who can commission new studies at any given time. This could create wide swings in the MWBE goals, uncertainty within the program and its administrators, and grave uncertainty within the contractor community that must comply with ever-changing goals and provisions.
This bill would also place the 30% goal on any “state-funded entity” or entities party to a “state contract” thus making this an unfunded mandate on counties, cities, villages, town, and school districts. This too raises constitutional issues since these bodies would be forced to carry out a 30% mandate for MWBE goals for which no local disparity study has been commissioned. This runs contrary to the Crosson decision and therefore the bill’s constitutionality.
This bill also contains a far-reaching workforce diversity program that will not only cause confusion, but an unworkable workforce mandate that could lead to contractor debarment despite their best efforts to comply with it. The workforce diversity program mandated under this bill would require contractors to comply with aspirational goals for participation of each minority group by race and sex (and Caucasian females) within each trade, profession and occupation. These goals, broken down by hour per employee on the contract, must total at least 30% of those employed on that specific project. Specific goals will also be determined on a county by county basis. If contractors cannot comply with this program, contractors must seek a waiver. A waiver would require the contractor to prove good faith efforts, “numerical evidence”, and documentation from its subcontractors. If for whatever reason the waiver is denied, that contractor will be deemed non-compliant by the Division of Minority and Women’s Business Development and will not be allowed to participate in public contracts. This director will determine how long the contractor is held in non-compliance.
Since The Business Council desires a renewal of Article 15-A, we suggest the following provisions be included to secure a reauthorization of the law. Supported by a cross-section of business and construction organizations a reauthorization should:
- Provide for at least a five year extension,
- Establish a commission to examine, evaluate and make recommendations to the program and its operations,
- Commission a new disparity study,
- Encourage and expand the MWBE contracting universe through such avenues as SUNY-sponsored industry training programs like those sponsored in the Capital region,
- Insure that narrowly tailored goal setting analysis, as currently required under law, is always available at the pre-bid.
The above suggested provisions will help insure a strong and vibrant MWBE program replete with capacity building within the MWBE segment, open and transparent goals as developed under a new disparity study, and on-going discussion about the operations and administration of the program within the Department of Economic Development.
Unfortunately S.6141 / A.7814 bill does not provide the needed reforms and improvements but rather places the program in jeopardy under almost certain judicial review.
For the above reasons, The Business Council strongly opposes S.6141 / A.7814.