Expected changes to the city’s minority business hiring rules

Planned changes to hire the city’s minority- and women-owned businesses will come before the City Council this spring or early summer, with consultants and a task force recommending 21 adjustments or significant improvements to hiring practices.

A memo published last week detailed the results of a two-year review of the city’s minority-owned and women-owned business procurement program ordinance. Key to those findings are the results of a 2022 diversity study by Colette Holt & Associates, which found that the city’s minority business hiring practices are largely successful and well-structured, with some suggested adjustments.

Among the proposed system changes: reduce the number of systems from four to two; To resolve confusion, remove the quantitative goals mentioned in the regulation; Verifying organizations in the local program using North American Industry Classification System (NAICS) codes; Implement a more extensive and detailed industry code review process when it’s time for an organization to seek recertification, and adopt a federal approach to revising the policy so that an organization’s certification remains certified until its disqualification, rather than “expiring.”

Also among the recommendations from staff in December were strategies to refine the MBE/WBE recruitment program. These recommendations include establishing written criteria for determining when to set nation-based goals, considering bidding without goals for certain contracts determined to have significant opportunities for MBE or WBE participation, dropping the requirement that bidders place advertisements in newspapers, and clarifying the criteria. To count the participation of certified organizations in joint venture agreements.

A February report from the city’s Small and Small Business Resource Department also included 20 recommendations from the task force that require better communications or minor or major improvements to existing city practices.

In September, the Council extended the current sunset date until August 31 this year. That extension will give staff more time to improve communications around the five existing practices identified and plan to make minor adjustments to six other practices.

The major changes are likely to be longer in the future, the report said, adding that those adjustments “will take additional time, effort and departmental coordination and may require outside agency cooperation to implement.” Staff have begun meeting with key partners and are eager to further finalize important planning efforts and implementation steps. It should be noted that the recommendations described as major reforms may require additional funding and manpower to fully implement and manage.

Changes to the rules and procedures covering minority business hiring are long overdue, with the House first requesting a study in late 2018 and approving $1 million in grants in early 2020 before the start of the Covid-19 pandemic.

That initial delay came when only three firms submitted bids to conduct the diversity study required every five years, the last of which was completed in 2015 by New York-based NERA Economic Consulting.

That work found evidence of business discrimination against MBEs and WBEs in the city’s private sector, suggesting that discrimination may be due to the fact that women and ethnic minorities are less likely to own their own businesses.

In January, the Mayor’s Committee on Disabilities pushed for the city to revise the MBE/WBE criteria to include people with disabilities as a preferred vendor category for contracting opportunities. At a meeting of the council’s Audit and Finance Committee in October, Councilwoman Alison Alter pushed for the inclusion of people with disabilities in small business hiring, although leaders of the Office of Small and Minority Business said those issues should be handled by the city’s procurement office.

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