Black- and Latino-owned firms landed just 1.2 percent of the $2.1 billion in contracts for construction and professional goods and services that the City of Boston awarded during the first term of the Walsh administration, according to a new report the city commissioned.
The study — aimed at uncovering disparities in the way the city spends its dollars — analyzed 47,801 contracts from 2014 to 2019 and found that businesses owned by white women and people of color were considerably underrepresented, according to a 703-page report obtained by the Globe.
For example, the city spent $185 million, or 8.5 percent of its contract and procurement dollars, with businesses owned by white women. With businesses owned by people of color, the city spent $53 million, or around 2.5 percent.
Black-owned businesses were awarded only $9.4 million, or 0.4 percent of total spending, while Latino-owned businesses garnered $18.2 million, or 0.8 percent. Asian-American-owned businesses received $22.7 million, or 1.1 percent of city contract dollars.
The study also analyzed the potential population of firms owned by women and people of color that could have done business with the city and found that hundreds more could have been available for these contracts. Black-owned businesses experienced the starkest gap, with the study finding that Boston could have steered 3.6 percent of its contract and procurement dollars to them.
“We should never use lack of capacity as an excuse as to why we’re not building wealth in communities of color in Boston,” said City Councilor and mayoral candidate Michelle Wu, who cosponsored a 2017 ordinance requiring the city to collect more data on these contracts. “The numbers clearly back up we are well below where we could be.”
The pending release of the report comes as Mayor Martin J. Walsh, who took office in 2014, is about to leave. He is expected to be confirmed as labor secretary by the Senate and could depart City Hall by the end of February.
It also emerges amid a renewed focus on systemic racism, in light of nationwide protests over the police killing of George Floyd last year.
The new report confirms in much greater detail, and for over a longer period of time, what previous analyses of city contracts have found. Walsh has previously issued executive orders to create a more equitable contracting process, but the city continues to lag its peers.
In a statement, Walsh spokesman Nicholas Martin said the mayor plans “actionable items” in the coming days to get “to the root of the issues around disparities in city contracting.”
“While the results of this study are not surprising, they reaffirm our belief that more work needs to be done to institutionalize these practices into the everyday business of city government, and reaffirm our commitment to getting the work done,” Martin said.
The new study indicates that Boston spent about $238 million, or 11 percent of its contracting dollars, on firms owned by white women and people of color. That overall figure is higher than previously reported.
Even so, Boston remains well behind other cities on the participation rates of diverse contractors: New York (19 percent), the Chicago area (29 percent), and Philadelphia (31 percent), according to an analysis done in 2019 by a coalition of activist groups, including Lawyers for Civil Rights, Massachusetts Minority Contractors Association, and the Greater Boston Latino Network.
The Boston study recommended a series of improvements including: setting participation goals, unbundling large contracts, expanding advertising and outreach, and increasing the minimum number of quotes for purchase orders. The study also highlighted how the city could hire more staff in its procurement office, create programs to further build capacity of diverse suppliers, and collect comprehensive data on subcontracts.
The city does not have race- or gender-conscious measures to help steer contracts to diverse suppliers because of legal concerns they would not hold up to a court challenge. The disparity study, which Walsh launched in 2018, was seen as a way to provide data and analysis to create new contracting policies that could stand legal challenge.
Segun Idowu, executive director of the Black Economic Council of Massachusetts, said he is not surprised by the dismal findings. Idowu, however, criticized Walsh for not doing more sooner to make the contracting process welcoming to people of color.
“The unfortunate thing to me is we have been waiting for this disparity study to act,” said Idowu.
Idowu called on Walsh to address the problems before he departs and not leave it to City Council president Kim Janey, who will become acting mayor, to handle. “This happened under his watch,” Idowu added. “I hope we see some action before he heads out to DC.”
Walsh, according to a person briefed on the matter, is drafting an executive order based on recommendations from the study.
Sheldon Lloyd, chief executive of City Fresh Foods in Roxbury, who has city contracts to provide to schools and senior centers, said he could do much more business if big contracts were broken into smaller jobs so a local player like him could compete against a bigger corporation.
Lloyd, who is Black, said refining the procurement process can help Boston businesses of color grow, an effort that ultimately is about “keeping jobs and money in the city.”
“The gap is getting wider, the city of Boston is changing, and communities of color are getting pushed out of the process,” said Lloyd.
Shirley Leung is a Business columnist. She can be reached at firstname.lastname@example.org.