Walsh issues executive order after civil rights complaint alleging discrimination in contract awards

Boston Mayor Martin J. Walsh.Stuart Cahill/Pool

Boston Mayor Martin J. Walsh on Thursday afternoon announced new city procurement goals for businesses owned by people of color and women, in response to a study that showed such firms were vastly underrepresented in contracts awarded by the City of Boston.

“This is the most structural reform city contracting has had in over a generation,” said Walsh during his regular City Hall COVID-19 briefing.

But some critics said the order did not go far enough to address the problem.

Walsh’s announcement came a day after a trio of Black and Latino organizations filed a federal civil rights complaint against the city, alleging its public contracting system engages in a pattern of discrimination against Black- and Latino-owned businesses.

Iván Espinoza-Madrigal, executive director of Lawyers for Civil Rights Boston, who is representing the plaintiffs in the federal complaint, criticized the order as “vague” and said that it is “insufficient to address the racial crisis surrounding the City of Boston’s public contracting.”

Local advocates have called for a formal investigation of the city’s contracting process, and Espinoza-Madrigal said Thursday that “federal intervention is still needed.” He pushed for more aggressive contracting goals, and said in certain instances where firms fail to meet diversity goals or don’t show “good faith outreach efforts,” such companies should have their contract bids rejected.

“The executive order is much too vague to address the entrenched problem,” he said in a statement. “This ongoing crisis requires deliberate, intentional, and concrete action.”

City Councilor Andrea Campbell, one of three councilors who are running for mayor, also said Walsh’s order fell short.

“Instead of another executive order, we need transformative, systemic change to close the profound racial wealth gap and eradicate inequities that make Boston one of the most unequal cities in the country, and leadership that will hold us accountable to meeting and exceeding our diversity goals,” she said in a statement.

In his press conference Thursday, Walsh said the executive order establishes procurement goals, tracking, and accountability measures, as well as a “supplier diversity program” to expand opportunities.

Companies owned by people of color landed just 2.5 percent of the $2.1 billion in contracts for construction and professional goods and services that Boston awarded during Walsh’s first term, according to a freshly completed report the city commissioned. Fewer than half of the city’s residents are white, according to US census data.

The study — aimed at uncovering disparities in the way the city spends its dollars — analyzed 47,801 contracts from 2014 to 2019. It showed the city spent $185 million, or 8.5 percent of its contract and procurement dollars, with businesses owned by white women.

Thursday’s order sets a goal for the city to use businesses owned by people of color and women for at least a quarter of its contracting. Other goals outlined in the order include rewarding at least 15 percent of city contracts to women-owned businesses and at least 10 percent to businesses owned by people of color.

Walsh said Thursday that the study gives the city a detailed roadmap and a legal tool to “attack those inequities at the root.”

“We knew going into the study that the results were not going to be good,” said Walsh, who noted that the last disparity study performed by the city occurred in 2003.

This will be the third executive order Walsh has issued to improve contracting participation rates in the city. Previously, the city relied the on race- and gender-neutral measures “to encourage the participation of small businesses in municipal contracting,” according to Walsh’s office. On Thursday, his administration acknowledged that those measures alone had proven inadequate “to remedy discrimination, disparities, and barriers to participation by minority- and woman-owned businesses.”

Walsh’s order calls for tracking and reporting of the procurement goals as part of the city’s annual budget process. Departments that engage in procurement will be required to produce a written report summarizing their procurement activity of the prior fiscal year, whether the department met the contracting goals, and how it plans to meet the goals in the future, according to the Walsh administration.

In a release, the Walsh administration said the study’s authors and city personnel engaged with more than 570 local businesses “to learn about their experience with City contracting and local marketplace conditions” for the report.

Walsh’s effort to address the stark disparities in the way the city spends its dollars could be one of the last major actions the mayor takes before he heads off to Washington. The Senate is expected to vote to confirm Walsh’s nomination to be the nation’s next labor secretary in the coming days. Councilor Kim Janey, the City Council president, will become acting mayor once Walsh leaves.

City Councilor Annissa Essaibi George, another candidate for mayor, said Thursday’s executive order “will improve outcomes, but our work cannot stop there.”

“More tools are needed to change this system that keeps leading to these disparities,” she said in a statement. “I believe that a Home Rule Petition that can make actual legislative changes to the procurement process will lead to better, more equitable results.”

Home rule petitions need local and State House approvals to become reality. In this instance, such a proposal would change state requirements for Boston and allow the city to “unbundle these large contracts to ensure minority- and female-owned businesses can fairly compete,” Essaibi George has previously said.

Shirley Leung of Globe staff contributed to this report.