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Less Than 1% of Providence Contract Spending Goes to Minority Firms

Thursday, January 10, 2013

 

Hispanic and black-owned businesses account for a third of all businesses in Providence, but less than one percent of minority firms win contracts with the city, according to a GoLocalProv review of city records.

In 2012, the Providence Board of Contract and Supply, which is chaired by the city’s first Hispanic mayor and oversees purchases worth $5,000 or more, awarded an estimated $185.8 million contracts for everything from textbooks and food service in schools to snowplowing and towing. Of that amount, an estimated $1.6 million was minority-earmarked.

The share of minority business could be even smaller than estimated, since some contracts, like the contract for a snowplowing vendor, did not have an estimated cost and were not factored into the total, which includes revisions to past deals and the full value of multi-year agreements.

Businesses owned by women—which also account for a nearly a third of businesses in Providence—barely even register when it comes to city contracts. Just one meeting out of about two dozen over the course of the entire year made any mention of whether a contractor was owned by women—and that one wasn’t.

City falls short of own ordinance

“If those numbers are correct they symbolize that we’re not doing enough to ensure that minority- and women-owned businesses can participate fully and are aware of the opportunity to do business with the city,” said Councilman Luis Aponte.

The low percentage of minority contracting runs afoul of a two decades-old city ordinance which mandates that the city try to make 10 percent of each contract go to a minority business, a requirement that could be met by having a general contractor subcontract a portion of its work. The 10-percent threshold could also be met by contractors who steer some of their work to employees of a minority background, according to Councilman Kevin Jackson, a former member of the Board of Contract and Supply.

But out of an estimated 363 contracts subject to the reporting requirement, just 24 had any minority participation above zero, city records show.

“I’m furious about that,” John Prince, a community organizer with the grassroots group, Direct Action for Rights and Equality. “The black contractors and everybody is getting shuffled off.”

Prince and Jackson compared the situation to the city’s well-publicized failure to enforce the First Source ordinance, which mandates that businesses receiving tax breaks hire local residents. Jackson said it “doesn’t matter” if the city has a particular ordinance or requirements if they aren’t enforced.

Lax enforcement became such a problem that activists and some council members took former Mayor David Cicilline to court in the mid-2000s, with a Superior Court judge eventually ruling in their favor. However, a GoLocalProv report found that little had changed five years later after new documents surfaced in 2011 showing that the majority of companies receiving breaks weren’t following local hiring requirements.

The problem with minority contractors is compounded by the fact that the same ordinance also stipulates a separate goal of 10 percent for women-owned businesses—unlike the state, which has an overall goal of having 10 percent of its contracts go to either minority and women-owned businesses.

The state isn’t meeting its goal either, but is much farther along than its capital city, with an estimated 6.5 percent of contracts going to minority- or women-owned businesses, according to Charles Newton, the administrator for the state Minority Business Enterprise Compliance Office.

“It’s a moving target,” Newton said.

Discrimination or poor networking?

Explanations for why minority firms get such a tiny share of city business varied widely in interviews with local officials, policymakers, and activists.

Prince blames outright discrimination for the problem, saying minority contractors have voiced their frustrations to DARE. “They’re complaining about it,” Prince said. “They feel that they’re getting pushed around.”

But others placed the blame elsewhere. Aponte said that if the city is serious about achieving its goal of having 10 percent of contracts go to minority businesses that it has to make sure those businesses are aware of what it takes to do business with the city. He said the city has to rethink how it advertises bid opportunities, suggesting that it should find new ways of getting the message out.

Council President Michael Solomon, who often chairs Board of Contract and Supply meetings, largely agreed. “We have to [bring] more awareness to minority contractors, that they have to aggressively seek these bids,” Solomon said. “A lot of them are probably not seeking the bids.”

Yet other explanations were cited by minority business advocates. Carmen Diaz-Jusino, the program director for the nonprofit Center for Women and Enterprise in Providence, said that minority businesses may not have received bid information in a timely fashion and did not have a full understanding of the guidelines for bidding on contracts. Jackson pointed to yet another area where communication may have broken down: between larger companies and smaller, minority-owned firms.

Mike Van Leesten, president of a local consulting group that specializes in urban management and planning, cast an even wider net of blame, saying that everyone involved in the process, from city officials to businesses owners—and beyond—is resistant to changing old ways. “It’s built into our overall culture,” he said. “It’s not just political people or business people. It’s people in positions of power and authority.”

A task force, then a commission tackle problem

Diaz-Jusino pointed to one other reason for the low rate of minority contracts: past mayors, she said, simply had not made it a priority. In fact, the ordinance on minority contracting first appears on the books in 1990—four mayors ago.

But she said that changed after Mayor Angel Taveras was elected. A year and a half ago, Taveras formed a task force to address the issue of minority contracts for city business. That task force issued a report in last spring, with a series of recommendations, including the establishment of a Commission on Minority and Women Business Development, which Diaz-Jusino now chairs and on which Van Leesten also serves.

Among the other task force recommendations were: setting up an online purchasing system, producing an annual progress report on minority and women business participation in bidding, and making specific changes to bidding procedures intended on boosting minority involvement. Notably, the task force also encouraged the city to raise the bar, suggesting that it should aim to have 40 percent of its contracts go to minority-owned businesses and 20 percent go to women-owned businesses by 2018.

An issue of fairness and economic development

For Diaz-Jusino the issue is personal. “I’m a woman. I’m an economic minority. I feel that we have a lot to offer. We have a lot to bring to the table,” she said.

“For me, it’s a question of equity,” Aponte said, adding that historically ethnic and racial minorities have been left out of the economic mainstream. “We have a sense of obligation to make sure [we’re] not unintentionally perpetuating that exclusion,” he said.

But Van Leesten said it’s about more than fairness. “It’s an important economic issue,” he said. “People look at it as just a social and affirmative action issue.”

Given, the city’s demographic trends, towards more diversity, he said it’s almost a matter of economic necessity to reach out to minority contractors. “It wouldn’t make sense not to incorporate strategic economic development planning with that population,” Van Leesten said.

“It presents a great possibility and a great opportunity for further development,” Newton added.

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