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MONITORING STATE BUDGET MWBE INITIATIVE

By Hank Kita, STA Executive Director

In addition to developing and advocating for state legislation that is advantageous to subcontractors, the STA does have to play defense, opposing legislation that might be injurious to the operational and financial well-being of its members.  In that regard, the STA is currently assessing the proposal in Governor Cuomo’s Executive Budget which would extend for five more years Article 15-A of the New York State Executive Law.

Article 15-A authorizes the Department of Economic Development’s Division of Minority and Women-owned Business Enterprises (MWBE) to promote employment and business opportunities on state contacts for minorities and women owned businesses.  The Governor’s bill would extend the sunset provision of the current law from December 31, 2019 to December 31, 2024.  In addition, the bill would expand upon the requirements of the New York State MWBE program based upon the findings of the state’s 2016 Disparity Study.  This bill seeks to make several amendments to the current MWBE legislation including but not limited to the following:

  • Updates diversity practices definition to include diverse leadership of businesses and MWBE mentorship;
  • Increases agency and authority discretionary purchasing threshold to $400,000;
  • Expands program requirements to include all municipalities on contracts let with appropriated state dollars and requires units of local government subject to Article 15-A to set goals on contracts and submit reports to the Director;
  • Provides the Director the authority to set the person net worth (PNW) requirement for MWBE certification via regulation, excludes holding companies from PNW, replaces exclusion of equity in personal residence exclusion with cash value of home;
  • Creates a workforce program with goals for minority group members and women;
  • Enhances opportunities for MWBE prime contractors by establishing bidding credits for low-bid construction projects of up to $1.4 million and increases the size of procurements that can include bidding credits each year with inflation;
  • Expands the authority of the Statewide Advocate to audit agencies and investigate complaints from MWBEs of violations of Article 15-A by agencies and contractors;
  • Requires agencies to take into account findings of most recent Disparity Study in setting goals and removes references to the 2010 Disparity Study;
  • Provides the Director with enhanced authority to define the concept of commercially useful function;
  • Requires Tax & Finance and the Department of labor to share records;
  • Establishes MWBE fraud as a criminal offense and;
  • Makes other additional technical changes.

The Building Trades Employers’ Association (BTEA) is taking the lead in developing recommendations for amending the Governor’s 15-A Budget proposals on behalf of the union contractor association community in New York City.  As a member of the BTEA, the STA is currently reviewing the proposals and recommendations being put forth by this umbrella association.  Among the BTEA’s recommendation on 15-A are the following:

  • Reform and provide adequate resources to the certification process to eliminate delays, inefficiencies, and inaccurate information that hinder compliance and the provision of opportunity to certified firms;
  • Require all public agencies to establish pre-qualification list of MWBE contractors and subcontractors;
  • Require prompt payment to contractors and subcontractors of all tiers for work they have completed to provide cash flow essential to business, project stability and revenue;
  • Eliminate or significantly increase the Personal Net Worth cap that unnecessarily impedes growth of certified firms;
  • Significantly increase programs that offer access to low cost capital for small contractors to reflect the scale of the New York market;
  • Promote minority and women workforce participation by allowing certain goals to be satisfied by contractors that provide diverse employment opportunities;
  • Apply goals on a project by project basis to the value of available contracts based on the cost of construction for which certified firms exist to perform respective project elements;
  • Eliminate liquidated damages and consider credits for exceeding goals to increase opportunity for certified firms;
  • Establish and fund regional MWBE councils consistent with regional economic development councils to review and report on MWBE programs to establish mentoring, business management and development programs for certified firms;
  • Address executive concerns with damage for delay legislation to enact reforms that will prevent contractors from incurring costs due to delays and other disruption caused by the public project owner.

In addition to the BTEA’s proposals, the STA will also be working with and monitoring the position of other industry partners such as the Empire State Subcontractors Association as well as other groups so as to impact the Governor’s MWBE proposals to the benefit of our subcontractor members.

Please monitor further communications from the STA on this issue and let us know your thoughts and positions on this legislation.