Boston tries to boost local contract numbers
When Ronnette Taylor founded Fire Code Design in Roxbury 13 years ago, she became the first black woman to run a plumbing and fire protection company in Massachusetts. She was also the first to receive a master plumber’s license from the Local 12 gasfitters union. She has shown she can do the work, too, recently outfitting the sprinkler system for an 80-unit housing development in Roxbury.
Despite her credentials, Taylor said she still struggles to win contracts from the City of Boston, and has watched the business go to out-of-state companies.
“What am I doing wrong?” she asked.
Her plight is shared by countless other local businesses that have failed to win city contracts because they were outbid by a larger company or didn’t have the wherewithal to go through the lengthy bidding process.
Or, Taylor speculates, they were denied because they weren’t part of “the old boy network.”
In many cases, businesses have simply given up and don’t bother to bid, out of frustration with the system.
Despite Mayor Martin J. Walsh’s promises to use more women and minority vendors, and to diversify city construction contracts, Boston awarded less than 1 percent of $664 million in government work to such companies in 2018 — the first year the city was required to report such data under a new ordinance. That amount is far below what other big cities have awarded to businesses owned by women and minorities.
Released in early May, the statistic shocked many in the business community and may force City Hall to reassess the efforts that Walsh has championed since early in his first term.
“People knew it was a low number; they just didn’t know how low it was,” said Segun Idowu, executive director of the Black Economic Council of Massachusetts, who has since met with city officials to brainstorm new ways to diversify city contracting.
Part of problem appears to be Boston’s inability to make it easier for these businesses to navigate a process that includes a complex application system and burdensome paperwork.
Last year, according to city figures, small and locally based businesses won only 32 of the city’s 5,122 contracts; there was just one veteran-owned business awarded a contract.
Smaller businesses said they are often discouraged from bidding if they are competing against established out-of-state corporations that have the money to pay someone to shepherd the applications through the process.
“What is the mission — to support local companies, or bring bigger businesses in?” asked Sheldon Lloyd, the chief executive of City Fresh Foods, a Boston food provider.
Lloyd said he has seen city contracts he applied for awarded to out-of-state corporations that have already bought up the other locally based food providers. In other cases, Lloyd said, he could not even bid for a contract because it was beyond what his business could provide.
He suggested that city officials split up some contracts. For example, one big job for school food could be separated into smaller contracts — one for during the school year, another for during summer term.
“Things can be written so that there’s emphasis for local and minority-owned suppliers, and that’s part of the challenge,” he said. “If you only support the big company, where’s your local economy? It’s going to be gone.”
John Barros, Boston’s chief of economic development, acknowledged the contracting figures are troubling. He said the contract awards are constrained by state bidding laws, which require Boston to accept the lowest bid.
But the Walsh administration has taken steps to get more local businesses involved, Barros said, including by hosting workshops on the bidding process and requiring developers that build on city land to target local businesses for subcontracting work.
Boston was recently named a finalist for a national Living Cities accelerator program, which, if ultimately chosen, would allow it to partner with other cities to organize and fund programs that benefit residents and local businesses.
Barros said city officials are also helping more businesses become certified as minority- or women-owned, which is critical for the process.
The administration has conducted a separate review of city contracting that covers a longer timeframe, from 2012 to 2017, and Barros said preliminary results indicate women and minority businesses received more than 6 percent of the work during that period. He said that analysis counted minority businesses that had not been certified by the city at the time of their awards.
Still, he acknowledged that Boston needs to do more. The administration commissioned a study in 2016 to identify additional solutions, but it could take another year to complete the analysis.
“We get it; it’s a matter of emergency and priority, which is why we’re doing more,” Barros said. “We’ve got to reverse the trend of really low participation among minority and women companies.”
The 2017 ordinance that forced the administration to track and release the data on city contracts was cosponsored by City Councilor Michelle Wu. She said the results of the first-of-its-kind report were alarming and should jolt the city into action.
“Community members and entrepreneurs of color have been calling out these inequities for years, but there’s now a heightened public awareness centered on how stark the numbers still are in 2019,” she said.
The report, she added, identified “a huge missed opportunity to use our full city resources to address income inequality and create wealth right in our neighborhoods.”
The effort can have a lasting impact on local economies, said Nancy S. Lee, the director of research at Interise, a Boston-based nonprofit that works with small- and minority-owned businesses in disadvantaged areas to help them grow. Her organization recently partnered with the city and community groups to offer a Streetwise MBA program, a seven-month course that teaches businesses strategies such as how to apply for government contracts.
Lee called the importance of equity efforts a “contracting factor,” in which businesses that win government contracts can expand their capacity so they can compete for more contracts. They also reinvest those resources within their communities, by supporting other local businesses and helping the area’s economy.
She said Boston is not alone in its struggles to increase the diversity of its contracting, but called the effort critical. Communities that set goals do best, she said.
In New York City, 10 percent of contracts in 2017 for construction, services, and goods went to minority- and women-owned businesses, according to a study; in Los Angeles, that figure topped 20 percent, while in Charlotte, N.C., it was 14 percent, a figure that community advocates said was still insufficient.
“It means we’re investing in our small businesses, keeping those dollars in the local and regional economy, and letting those dollars work through the economy to build that resilience,” Lee said. “What we’re finding is, if we’re investing elsewhere, that’s not helping” local businesses.
Abraham Gonzalez, who founded his One Way Development contracting company in 2004, said he there are challenges in competing for city work, but also rewards: Those contracts have helped One Way grow into an $8 million company, with 35 employees, up from two.
Gonzalez said he got the work as a subcontractor to larger developers that had gone through the bidding process, and that his company does not have the capacity to navigate the system on its own.
(Importantly, the work Gonzalez’s company received was not included in the city’s 2018 data. Barros said the ongoing study should reveal which businesses are winning subcontracting work — and that the city is working to get more such businesses involved.)
“There are projects that are more profitable out there, and the city can be difficult,” Gonzalez said. But, he added, winning one contract created a “ripple effect” that led to more city contracts.
“It’s put me in a capacity that I wasn’t at before,” Gonzalez added. “I’ve seen a lot of other opportunities. It’s been a steppingstone.”