covid19

STA LEGAL LOG – September 2020

 

Mayor de Blasio Increases City’s M/WBE
Utilization Quotas In Response To COVID-19 Pandemic

By Henry L. Goldberg, Esq., STA General Counsel and Robert J. Fryman, Esq

 



Henry L. Goldberg
Subcontractors Trade Association
Partner,

Moritt Hock & Hamroff LLP

Robert J. Fryman, Esq
Partner
Moritt Hock & Hamro

Finding that COVID-19 has had a “disproportionate effect” on minority and women owned business enterprises which have been exacerbated by their inability to proportionally access Federal Financial Assistance Program such as PPP Loans, New York City Mayor de Blasio issued Executive Order No.59 on July 28, 2020 “to attempt to create a level playing field” for M/WBEs.

 

The Mayor’s previous initiatives to strengthen M/WBEs have doubled the certified pool of M/WBEs since 2016, from 4.5K to 10K, awarding $3.8 billion in contracts to M/WBEs through both mayoral and non-mayoral agencies in Fiscal Year 2019, and reached a record 29.5% utilization in the first three quarters of FY 2020, totaling $964 million in prime and sub-contracts.  The City is more than halfway to achieving its 10-year goal of awarding $25 billion in contracts to M/WBEs by 2025, as the City has already awarded nearly $16 billion in contracts to M/WBEs since 2015, and is currently more than $1 billion ahead of schedule. Mayor de Blasio’s Executive Order No. 59 is expected to improve upon the City’s pre-Covid trajectory towards meeting this goal.

 

To increase M/WBE utilization City-wide, Executive Order 59 requires all agencies, whenever practicable, to procure, goods, services and construction for amount not exceeding $500,000 from businesses certified as M/WBEs without a formal competitive process.

 

In an effort to fully utilize this Mayoral exception to the competitive open bidding process, prior to any soliciting bids or proposals for capital projects valued at over twenty-five million dollars, an agency shall submit the solicitations for review to the Director of the Mayor’s Office of Contract Services (MOCS).  The Director of MOCS will make a determination as to whether it is practicable to divide the proposed contract into smaller contracts and whether agency-established M/WBE participation goals are appropriate.

 

Executive Order 59 also creates the Office of a Chief Diversity Officer for all mayoral agencies. No later than August 28, 2020, all agencies shall appoint a Chief Diversity Officer, with the appropriate experience and knowledge to oversee the agency’s M/WBE program. The Chief Diversity Officer shall report directly to the Agency Head.  When selecting a Chief Diversity Officer each Agency Head shall attempt to promote from within that agency.

 

In what may remind football fans of the “Rooney Rule”,  any City agency conducting a procurement that an agency head has determined in writing is necessary to respond to the ongoing State of Covid-19 Emergency must consider at least one quote from a business certified as an M/WBE before awarding the procurement, unless otherwise directed  by the Director of MOCS.

 

In addition to signing Executive Order 59, Mayor de Blasio announced a series of new programs with the Taskforce of Racial Inclusion and Equity to create unique business opportunities for Black and Latino entrepreneurs including access to consultants for non-certified businesses to learn how to do business with the City.

 

The City will recruit pro-bono business consultants to provide business and operations planning to businesses in Black and Latino communities.  The City will also help Black and Latino communities to create online and in person mentorship networks between entrepreneurs and small businesses of color.

 

With these programs, the City looks to establish business opportunities directly to diverse New Yorkers who provide the City with a variety of goods and services.

 

These new Mayoral programs will, the de Blasio administration expects, “help to level the playing field” for minority entrepreneurs who can build and grow local businesses thereby creating good-paying jobs, and will contribute to the growth of the City’s economy.

 

These new programs will be managed by the Department of Small Business Services (SBS) in coordination with the Office of Minority and Women Owned Business Enterprises.

 

The Mayor, by taking aggressive proactive steps, has strengthened M/WBEs participation and looks to ensure that the City’s procurement reflects its diverse business partners.

 

MHH COMMENTARY:

 

While the true motives behind implementation of Executive Order 59 are certainly debatable, what the contracting community should be guardedly optimistic about is rather than just increasing the quotas for M/WBE utilization, the City is promising concrete steps towards fostering that increased utilization.

 

From the establishment of a Chief Diversity Officer for all mayoral agencies, to recruiting consultants to provide business and operations planning assistance to M/WBE businesses in Black and Latino communities, to fostering mentorship networks between entrepreneurs and small businesses of color, the contracting community should not only hope, but rather hold the de Blasio administration to not only the promise, but also the implementation of the goals of Executive Order 59.

 

It is only by taking action on both fronts, not only increasing the quotas for utilization of M/WBEs, but also in taking affirmative steps to help ensure there are adequate resources for (and an adequate number of) competent and knowledgeable M/WBE contractors, does Executive Order 59 potentially fall into the realm of effectuating real change rather than being just political “talking points.”  Only time will tell, but the contracting community must be willing to seek to hold NYC to both the letter and spirit of Executive Order 59.

 

Brian P. Craig, Esq. is Of Counsel at Moritt Hock & Hamroff, LLP and assisted in the preparation of this article.