EuQuant’s CEO keynotes City & State New York event entitled Achieving 30% Aspirational MWBEs Goals

September 28, 2017

EuQuant’s CEO Dr. Thomas “Danny” Boston delivered a keynote address to a landmark gathering of over 150 New York City and State policymakers, MWBE entrepreneurs, government agency heads, contractors, and purchasing officers. The GazelleIndex is powered by EuQuant. The conference focused on strategies for achieving 30% aspirational MWBEs goals on tens of billions of contracting dollars being awarded by NYC and the State. The Building Trades Employers’ Association and City & State New York magazine sponsored the event on September 26, 2017at the New York University’s Kimmel Center.

City and State Editor-In-Chief, Jon Lentz kicked things off by introducing host Louis Colletti, CEO of BTEA. Colletti argued passionately for creating a win-win situation for prime contractors and MWBEs in seeking to achieve the aspirational goals. Dr. Boston’s keynote address followed. It was entitled “The Mandate to Build MWBE Capacity in NYC.” The exceptionally well-received speech summarized the findings of a recently completed EuQuant study that examined the capacity of MWBEs in New York.

Boston noted the difference between a “capacity study” and a “disparity study.” The latter is designed to determine whether or not discrimination has existed in the marketplace and if so, document its adverse effects on MWBEs and provide a framework to remedy its consequences. In contrast, a capacity study measures the volume of work a firm is capable of performing efficiently during a given period.

Capacity is seldom measured. However, the presentation emphasized that knowing the capacity of each MWBE has many beneficial outcomes. They include the following: increases the efficiency and effectiveness of MWBE programs; reduce risk incurred by prime contractors tasked with hiring MWBE subs; increases the transparency and accountability of good faith efforts; and allows agencies to better align MWBE aspirational goals with the capability of MWBEs in specific industries.

He noted that too often unnecessary polarization arises between MWBEs, prime contractors and program officers around aspirational goals. Understanding capacity reduces the likelihood of this occurring. Most importantly, Boston noted that the information allows MWBE program officers to target business development assistance to MWBEs who operate in industries where capacity gaps exist.

The EuQuant study estimated capacity for each of 3133 NYC MWBEs that worked in seven construction-related industries. Firms were classified by industry of operation, race, ethnicity, and gender of its owner.

The most important conclusion of the study is that New York City and the State of New York should devote much more resources to programs designed to enhance MWBE capacity. While congratulating the City for the capacity building programs it currently operates, Boston indicated the study gives a rationale to do more. It is also a mandate for City and State legislators to eliminate unnecessary regulations and provide more resources to MWBE program officers. It would allow programs to assist a larger number of MWBEs through their capacity building efforts.

The EuQuant research found that a minimal number of MWBEs can perform contracts in industries where large awarded are made, such as Heavy Construction Contracting.  In contrast, a significant number of MWBEs can execute contracts in industries where solicitations are much smaller, e.g., Special Trades Contracting, Electrical, and Plumbing Contracting, However when awards in those industries get larger the capability to perform drops off significantly. Among all groups, the most significant deficits in capacity occurred for Black contractors followed by Hispanics. The study noted the numerous regulatory requirements in NYC industries makes capacity building more challenging than in other regions of the Country.

A lively discussion and Q&A session followed the keynote presentation. The panelists were as follows:  Janelle Davis, Director of the Mayor’s Office for MWBE; Greg Bishop, Commissioner of NYC Department of Small Business Services; Wendy Garcia, NYC Chief Diversity Officer; and Attorney Charles Williams III, a partner in the Real Estate Law Practice of Pecker and Abramson. City representatives outlined the rationale for why NYC established aspirational goals, pointing to discriminatory practices in the marketplace that necessitate them. They also noted the methods being used to achieve aspirational goals and numerous capacity building efforts that are underway. Attorney Williams emphasized the adverse impact that many programs procedures have on prime contractors and the need to eliminate regulations and requirements that make it difficult to achieve the goals.

Dr. Boston concluded the event by highlighting the common interests of all stakeholders and the historic opportunity available to NYC to do things in a way not tried in other places in the Country. Specifically, the City should not just focus on implementing aspirational goals; it should also put greater emphasis on policies and programs designed to build larger MWBE capacity. MWBEs will be relegated continually to performing at the lowest end of the value chain unless they develop the ability to perform larger and larger subcontracts and prime contracts.

He noted that today 30% of the nation’s small businesses are owned by minorities, yet they provide employment for only 12% of the country’s workforce. As such, building MWBE capacity is no longer about social equity, but about preserving our future quality-of-life.

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