NY’s MWBE Program Is Problematic, But What Is the Solution?

The current Minority and Women-Owned Business Enterprise (MWBE) program in New York State isn’t working as it was intended. It has created obstacles and difficulties for both general contractors and MWBEs. Proponents and critics can often agree on that. There is debate, however, about which part of the program is most problematic and to whom.

Are the 30 percent MWBE goals a burden on general contractors who say they can’t find qualified MWBEs to meet the quota and end up forced to hire a company that ends up too small or inexperienced to properly do the work or must file a waiver and delay the process?

Or is it more onerous on women and minority owned businesses who can’t get certification to qualify, saying the process is too difficult and the state needs to provide assistance to businesses trying to apply?

In 2014, Governor Andrew Cuomo increased the goal for using MWBE businesses on state contracts from 20 to 30 percent. That is the highest percentage in the nation. Under that current state law, MWBE goals only apply to state-funded contracts issued by state agencies and authorities. Cuomo pushed for expansion for 2019 that would have expanded the program to local contracts or any funded by the state. It also would have provided annual goals for specific minority groups. But those changes were not in the approved budget. As a matter of fact, the MWBE Article 15 program, scheduled to expire at the end of this year, was only extended for one year, instead of the previously expected five. That has some proponents of the program fearing it might be gone altogether soon.

The N.Y. State Senate is holding hearings “to examine the Minority and Women-Owned Business Enterprises program, and consider potential legislative solutions to create a more effective and efficient program to enhance New York’s business climate.”

People from both side of the issues have attended the hearings and testified to the difficulties with the program and proposed their ideas for a solution. Some suggest adjusting the goals by region, pointing out that demographic disparities from one area to another make a statewide mandate impractical.  Or as one person said at the hearing in Watertown, “Brooklyn and Watertown are not the same.”

Another issue creating problems, according to Crain’s New York Business, is that “unlike the largely white-owned incumbent construction firms, MWBEs are rarely unionized though they must pay prevailing wages on state-subsidized work.”

One area contractor says he doesn’t think MWBEs can find or know where to look for the jobs in many cases. He proposes general contractors find a way to help them know about projects out to bid, even if it costs them a little money to do it. Regular events designed to have GCs meet MWBEs rarely result in working relationships, he says.

The New York State Contract System (https://ny.newnycontracts.com/) website has a directory of certified businesses. It also has information to help businesses apply for certification, and on trainings and grant opportunities.

As the debate continues and 30 percent statewide goal remains—at least through the 2019 budget—the state senate will continue to listen to the industry’s issues with the program. The remaining hearings are:

September 26 at 2 p.m. Stage 14, Finger Lakes Community College, 3325 Marvin Sands Drive, Canandaigua. For more information, contact Kristin Frank at (518) 455-2366

October 16 at 11 a.m. Senate Hearing Room, 250 Broadway, 19th Floor, New York. For more information, contact Graham Wise at (518) 455-1765 or Anthony Capozzi (607) 773-8771.

Oral testimony is given by invitation only.

By Chris Colabella and Kara Yorio

4 thoughts on “NY’s MWBE Program Is Problematic, But What Is the Solution?

  1. Fredo

    The problem is system from the top down, not well thought out, and gets even messier the further you delve.

    First – NY capital spending on major construction projects is split between OGS, SUCF & DASNY (generally speaking). We won’t get into the fact that they could all be consolidated in to one agency and save the taxpayers billions annually, billions. They all have their own M/WBE approval boards, what is good for one goose is not good for the gander, per se. Would it not make more sense to have just one approved vendor list instead of wasting countless dollars on hiring people to do what one agency already does and them continuing to pay them to monitor said system?

    Secondly – Specialty contractors were not considered when drawing up this mandate. A general contractor has much more opportunity to find qualified subcontractors and suppliers than a specialty contractor and yet they are held to the same standard. For instance, say you have two contracts each for a million dollars(s) one is GC prime and one is a roofing prime, who has more opportunity for goal attainment? Of course the GC has much more opportunity as he employs multiple trades and uses less specialty materials. The roofer however, self-performs his work and has very specific materials he must by from licensed resellers. There is not much M/WBE opportunity available to the roofer as his work does not dictate there be. Regardless of the best thinking of the person who thought of this plan they are flawed in not taking into consideration the people who perform most all of the construction work world-wide, small specialty contractors.

    I could go on and on but basically I would say that the current structure of the construction government in New York is fundamentally flawed to it’s core. Prevailing wage rates are driven by unions for heaven’s sake, not a determined wage by government, a theoretical wage set by Hoffa-esque union officials, give me a break. The actual cost of construction compared to what the taxpayers pay for is almost criminal due to amount of overhead.

    It’s a mess, the whole thing. I would love to see the actual numbers of ROI on this plan but I fear that any number I would be given is politically skewed.

    Reply
    1. Chris Colabella Post author

      Thank you Fredo. You’ve made some very well thought out and important points that were not addressed in the initial article. May I submit your reply as a separate post so others can benefit from your point of view?

      Reply
  2. Holly A. House

    I have been WBE certified since 2015. It took 2 weeks. I am a wholesale supplier of fire protection sprinkler system materials to contractors, building owners and end users. I also fabricate/manufacturer the sprinkler piping systems. I have 30 years of experience in this technical industry. I have direct accounts with the 5 global manufacturers of fire protection sprinkler system materials. I have these accounts due to the fact I purchased from these manufacturers for the 20 of my 26 years working for an installing contractor. Once ESD implemented the new supplier verses broker certifications codes in 2016, my company was re-certified as a broker/agent. In the last 2 1/2 years I have given ESD ample information regarding my warehouse, inventory and process of how I sell and deliver materials. With being certified as a broker I have been blocked from selling materials all New York State Construction projects. Personnel at ESD have made comments “she is just working out of her garage in upstate”. I was asked to testify at the Watertown, NY debate in July. I was hoping it would give light to the reason why GCs state they cannot find legitimate and growing MWBE companies. Since my re-certification I have watched equipment rental and HVAC plumbing supply companies sell fire protection sprinkler heads, valves, misc accessories and fabricated sprinkler piping to New York State Construction projects, 25 minutes from my location. These companies have some sort of supplier code, but have no experience in the fire protection industry and they do not stock or sell even one sprinkler head from their location. The contractors would like to buy materials from my company, because they have a comfort in the fact I have product knowledge and I am not just flipping an invoice to sell products outside of my certification description.

    If you know of any other mwbe companies who are experiencing the same difficulties of the supplier verses broker codes, please forward my information and ask them to reach out to me.

    Reply
    1. Chris Colabella Post author

      Thank you Holly, for sharing your story. I do know other companies who are experiencing similar issues and will forward your info. The structure of the system right now makes it very difficult for both the MWBE’s and the GC’s. I hope they find a solution soon. Good luck to you and your company.

      Reply

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