To close the racial wealth gap in Boston, Mayor Marty Walsh has a big lever: city dollars to spend on minority-owned businesses.
New numbers the administration is presenting Monday to the City Council indicate a modest improvement in awarding contracts to businesses owned by women and people of color.
About 7 percent of the $571 million Boston has spent on construction and on professional goods and services went to minority- or women-owned businesses, according to data for the first three quarters of fiscal year 2020, which began last July.
The city seems to be on track to outpace FY 2019, when minority- and women-owned businesses accounted for 5.3 percent of contract spending. The previous year it was 4.5 percent, which was revised upward from about 1 percent.
“We’re happy with the trend,” said John Barros, Boston’s economic development chief. “We believe we have the right plan to continue to increase this number.”
But the president of the City Council, Kim Janey, who requested the hearing along with Councilor Michelle Wu, was not impressed.
“It’s always good to see improvement,” Janey said. “It’s hard to get excited when we’re still in single digits.”
She’s got a point. So how far behind is the City of Boston?
Here are the participation rates for diverse contractors in other cities: New York (19 percent), the Chicago area (29 percent), and Philadelphia (31 percent), according to an analysis done last year by a coalition of activist groups, including Lawyers for Civil Rights, Massachusetts Minority Contractors Association, and the Greater Boston Latino Network.
Since 2016, Walsh has issued two executive orders aimed at increasing city spending with minority- and women-owned firms. Businesses have long complained about an opaque bidding process that favors bigger companies. Walsh’s order in October focused on training city employees and departments to handle procurement, as well as updating the city’s website to make it easier for small businesses to find opportunities.
On Monday, Barros plans to introduce a $2 million fund to help minority- and women-owned businesses better position themselves to become bidders. Details are still be worked out, but the money could come in the form of forgivable loans or technical assistance.
The city’s record of using minority suppliers has come under intense scrutiny, thanks to a 2017 ordinance pushed through by Wu and then-councilor Ayanna Pressley. The administration is supposed to report quarterly on contracts awarded, but it has released the data only twice. Monday will be the third time. It matters because what gets measured, gets done.
More recently, Wu, along with Councilors Ricardo Arroyoand Julia Mejia, has been pressing the administration for a breakdown of COVID-19 related vendor spending since March. The councilors have been advocating for the city to come up with a “blueprint for an equitable COVID-19 recovery” to address the legacy of racial and economic disparities.
The data indicate that nearly 74 percent of the $7.7 million in contracts went to minority- or women-owned businesses — primarily to one minority-owned business, PJ Systems. The Medford company won about $5.4 million in contracts to supply Chromebooks to the Boston Public Schools as the pandemic forced the system to go to remote learning.
According to Wu’s analysis, only one Boston minority-owned firm, RTD Logistics, won COVID-19 related contracts from the city — accounting for about $225,000, or about 3 percent of the total.
Wu said the city needs to do a better job of dissecting the data because it’s critical that contract dollars go not only to minority- and women-owned businesses, but to companies based in Boston. The city also needs to track how many of its dollars are spent with Brown and black businesses.
“We have to be intentional on how we are spending our money,” Wu said. “The best bang for our buck is connecting municipal contracting and city spending tax dollars directly back into our communities to build wealth.”
Shirley Leung is a Business columnist. She can be reached at firstname.lastname@example.org.