NYC minority- and women-owned businesses losing out on city contracts

Rev. Reginald Bachus knows how hard it is to land a contract with the city as a Black business owner.

In November 2022, his boutique computer firm U2opia pitched an idea to New York’s Office of Technology and Innovation to implement cutting-edge technology to help detect hacking into city computer servers.

Then he waited for five months.

His next meeting with the agency is scheduled for next week, but in the nearly half-year that he’s waited no money is coming for the 10-person company.

“The big challenge is just getting on the calendar, getting in front of the right person to make a decision,” he said.

City contracts are huge economic drivers, but minority- and women-owned businesses, known as MWBEs, have largely been cut out of the procurement process despite years of monitoring and reforms geared toward steering public monies to what are usually mom-and-pop operations.

Last year, New York doled out $44.5 billion in municipal contracts and purchase orders.

However, only 5.2% of the money made its way into the bank accounts of city MWBEs, according to a report put out last week by city Comptroller Brad Lander. Less than 2% went to Black-owned companies in 2022, the report found.

“It costs money to procure a contract,” said Bachus, who is also the pastor of the Mt. Ollie Baptist Church in Brownsville, Brooklyn. “We are already under-advantaged with less capital, resources and access. They don’t consider how much it costs us just to get to the next stage and then it’s three or four stages after that.”

The city certifies MWBEs under a stringent application process to ensure that they are truly minority- or women-owned, then monitors procurement to those companies by city agencies, setting goals and requirements for contracting.

These companies, which are also reliable employers in minority communities, often complain that the process is lengthy and plagued by red tape.

Carlos Cortés, the executive director of Chocobar Cortés, a 94-year-old, fourth-generation Caribbean chocolate company that opened a restaurant in Mott Haven, the Bronx, in 2021, said that he was baffled by the process — and he has an MBA.

“We’ve been trying to get the application for a year,” he told the Daily News. “The Bronx Chamber of Commerce had somebody that was helping us get all the necessary documents. But what I found was that I’m not sure if they even look at the documents.”

He said that at one point the city asked him for paperwork that he had already submitted.

Like many other companies, Chocobar Cortés is incorporated in Delaware, but his application was held up asking if he was incorporated in New York, which is not a requirement.

“I’m a smart person, I went to an Ivy League college and navigating the city’s application shouldn’t be that hard,” Cortés said. “There are a lot of MWBEs out there who don’t have an Ivy League education, and probably don’t even speak English as well. And that can be an even bigger hurdle for them.”

Things are improving. More contracts were issued to minority-owned companies last year than in previous years, but their average value — $670,000 — was a sixth of the average value of noncertified companies, which was about $5 million, the comptroller’s report found.

Companies owned by white women and Asian American men got 70% of the contracts set aside specifically for minority-owned companies.

“For far too long, the City of New York has failed to spend public dollars with Black and brown-owned businesses,” said Lander, who called the record “abysmal.”

Mayor Eric Adams also signaled that he recognizes the problem.

A year into his administration, he signed an executive order allowing city agencies to use noncompetitive bidding for contracts under $1 million and limiting the pool of eligible vendors to MWBEs for contracts under $500,000.

In his 2023 State of the City address, Adams vowed to double the rate of contracting with minority- and women-owned businesses. He set a goal of signing $25 billion in contracts to MWBEs by 2027 and $60 billion over the next eight years.

Ultimately, the hope is that spreading the money around more evenly will raise the fortunes of a greater swath of New Yorkers.

“This is one way that we can move towards making things a bit more equitable,” said Michael Brady of the Bronx Chamber of Commerce, which helps businesses navigate the process. “But we can only make it more equitable if we have systems and processes in place that really drive home that equity.

“It’s not just enough to give lip service by having an MWBE program,” Brady added. “We need to ensure that the process yields real results, which generates local wealth-building which generates community-building which generates ... a model of reparations where for a very long time people were denied the ability to even have a business.”