Disparity study completed; executive order signed establishing goals for minority- and woman-owned businesses

Building on the City of Boston's commitment to reduce barriers and encourage more minority- and woman-owned businesses in Boston to compete for city contracts and procurements, Mayor Martin J. Walsh today announced the completion of a disparity study and an Executive Order designed to support equitable procurement policies. The Executive Order recognizes the results of the Disparity Study and establishes a Supplier Diversity Program with a $2 Million investment to implement new initiatives that expand opportunities for minority- and woman-owned businesses.

Until now, the City relied on race- and gender-neutral measures to encourage the participation of small businesses in municipal contracting. The Executive Order, which acknowledges that these measures alone are not enough to remedy discrimination, disparities, and barriers to participation by minority- and woman-owned businesses, creates the framework to enact race- and gender-conscious procurement goals to address existing inequities.

“My administration has prioritized equity across all aspects of city government since day one, and the results of this study, while unsurprising, confirm long-held concerns about disparities in municipal contracting,” said Mayor Walsh. “We launched the first disparity study in a generation because we needed an independent and objective analysis before we could legally establish goals that will help us level the playing field for minority- and woman-owned businesses. With the study now complete, we look forward to enacting meaningful reform and policy changes that will bolster opportunities for underrepresented businesses.”

The disparity study found that there is substantial underutilization of minority- and woman-owned businesses in City contracts across all industry types during the study period, between July 1, 2014 and June 30, 2019. While, on average, the City utilized minority- and woman-owned businesses in its contracting at a rate of 11%, the study’s analysis demonstrated a significantly higher availability of those businesses for City work at 16.9%. Although the City has programming in place to help small businesses grow and access contracting opportunities, the extensive anecdotal evidence showed that minority- and woman-owned businesses continue to face substantial barriers in the marketplace in general and specifically in competing for City contracting opportunities. 

The Executive Order will enact several key reforms to enhance equity and accountability in the procurement process. The order will:

• Immediately establish overall City goals for contracting with minority- and woman-owned businesses based on the disparity study findings. The City of Boston will make it a goal to utilize at least 25% minority- and woman-owned businesses across all contracts awarded in any fiscal year, with a goal of 15% utilization for woman-owned businesses and a goal of 10% utilization for minority-owned businesses. The City will seek to achieve these goals through the implementation of uniform procedures that apply to all procurements as well as contract-specific goals regarding the participation of such businesses in specific contracts. 
• Require goal tracking and reporting as part of the annual budget process. Beginning with the Fiscal Year 2023 process (using data from the upcoming fiscal year), the Office of Budget Management will require each department that engages in procurement to submit a written report summarizing its procurement activity of the prior fiscal year, whether the department met the contracting goals, and how it plans to meet said goals going forward. This will be in addition to the required Equitable Procurement Plan and will be developed and reviewed by staff from the Office of Budget Management, the Equity and Inclusion Unit, and each department itself.
• Institute a Supplier Diversity Program to oversee the implementation of this Executive Order along with a 2019 Executive order related to equitable procurement. The Supplier Diversity Program will work with City departments to ensure policies, practices and processes foster the full participation of minority- and woman-owned businesses in pursuing contracting opportunities. Additionally, the program will improve and expand technical assistance, business development, training, and mentoring programs for these businesses.

“Our spending should reflect our values as a city, and this Executive Order is a key step towards that mission,” said Celina Barrios-Millner, Director of Equity and Inclusion in the Office of Economic Development. “We look forward to continuing to work with City departments to engage diverse talent in our communities and support minority and women-owned businesses, not only in competing for contracts but in building and growing their business.” 

The City of Boston retained BBC Research & Consulting (BBC) to design and conduct the first disparity study in eighteen years in an effort to identify and address gaps, and ultimately strengthen the City's procurement practices across all departments by providing an enhanced platform for future equity-based policies. BBC examined the extent to which disparities exist in the City's utilization of available minority and woman-owned enterprises as contractors and subcontractors, through departmental procurement practices.

As part of the disparity study, BBC assessed whether there were any disparities between:

• The percentage of contract and procurement dollars that the City awarded to minority- and woman-owned businesses between July 1, 2014 and June 30, 2019 (i.e., utilization); and 
• The percentage of contract and procurement dollars that minority- and woman-owned businesses might be expected to receive based on their availability to perform specific types and sizes of City prime contracts and subcontracts (i.e., availability)

BBC also assessed other quantitative and qualitative information related to:

• The legal framework of the Small Local Business Enterprise Program;
• Local marketplace conditions for minority- and woman-owned businesses; and
• Contracting practices and business assistance programs that the City currently has in place.

Additionally, BBC in coordination with the City’s Equity and Inclusion Unit engaged over 570 local businesses, many of which were minority- and woman-owned, to learn about their experience with City contracting and local marketplace conditions through: 

• Seven public forums held in-person in Codman Square, Copley, East Boston, Fields Corner, Jamaica Plain, Mattapan, and Roxbury where oral or written testimony was collected;
• In-depth interviews and availability surveys;
• Electronically submitted written testimony; 
• Quarterly meetings with the Supplier Diversity Advisory Council, comprised of 24 local advocates and business owners

Today’s Executive Order is one of several steps towards ensuring participation of minority- and woman-owned businesses in City contracting across all City of Boston departments. The Mayor's Office of Economic Development is utilizing a $2 million investment to create a new Supplier Diversity Program. This team will increase capacity for goal enforcement and dedicate significant resources to pipeline development. The Supplier Diversity group will also launch a technical assistance program to support the development and growth of minority- and woman-owned businesses and establish a certified business fund to provide access to low-interest capital. 

In 2019, Mayor Walsh launched the Economic Development Center, establishing a foundation to deploy small business resources into every neighborhood and across all industries, working to further strengthen professional relationships, and ensure a diverse vendor pipeline. The Pathways to City Contracting series offers topical workshops to share knowledge about the City's procurement process and convenes top contracting departments and small businesses across the city in workshops for networking, training, and certification. In 2020, 576 business owners participated in the series, both in-person and online. Additionally, the City established the Certified Business Relief Fund and to date has distributed $1.8M to help 132 local certified businesses weather the economic impact of the COVID-19 pandemic.

The City will be hosting three community briefings to share the results of the Disparity Study as well as immediate next steps to address barriers identified by local minority- and woman-owned businesses during the study. All community briefings will be held virtually on Zoom, and simultaneous interpretation will be provided in Cantonese, Cape Verdean Creole, Haitian Creole, Portuguese, Spanish and Vietnamese: 

• Wednesday, March 3 - 12pm-2pm
• Wednesday, March 3 - 6pm - 8pm
• Friday, March 5 - 8am-10am

Information about these sessions and the Disparity Study overall can be found on boston.gov/disparity-study.

The Economic Development Cabinet's mission is to make Boston an appealing and accessible place for working families, entrepreneurs, businesses, and investors to innovate, grow, and thrive in a way that fosters inclusion, broadens opportunity, and shares prosperity, thereby enhancing the quality of life for all Bostonians and the experience for all visitors.