Nassau contract data for women- and minority-owned firms prompts concern

Less than 7% of nearly $2 billion spent on a major share of Nassau County contracts went to minority- and women-owned firms from 2014 through 2019 , according to new county data obtained by Newsday, illustrating a continued lack of diversity in Nassau’s lucrative contracting process.

Nassau provided the review of spending by the Department of Public Works, which is responsible for awarding many of the county's multimillion-dollar contracts for infrastructure and construction projects.

While the state sets a goal of 30% participation for minority- and women-owned businesses on contracts funded by state dollars, Nassau and Suffolk officials say they have no goals for locally funded contracts. The officials said they only have to pursue "good faith" efforts to secure contracts with minority- or women-owned firms.

"We can only request that our contractors use minority- and women-owned businesses as a subcontractor," said John Chiara, Nassau deputy county executive for compliance.

The share of department dollars paid to minority- and women-owned firms was 1.86% in 2014, 2.45% in 2015, and 2.23% in 2016 and has been rising since. The figure reached 12.61% in 2017, 10.11% in 2018, and 13.99% in 2019, according to a review of department of public works spending. The county did not provide data for other departments' spending on minority and women-owned business enterprises, known in government as MWBEs.

The analysis includes all contracts, including those with federal and state requirements for minority- and women-owned firms, and county contracts without the requirements.

Nassau County Executive Laura Curran plans a new study on the issue of contracts to minority- and women-owned firms. It comes 16 years after a "disparity study" of Nassau contracts revealed that 96% of construction vendor payments went to white-owned businesses.

"It begins and ends with a disparity study," said Margo Cargill, a certified MWBE vendor who sits on the Nassau County comptroller's steering committee for contracting reform on the issue. "We have to have the data in order to justify the legislation" to set contracting goals, Cargill said. "And without that data, if we don't have the numbers, we can't advocate for this on behalf of the businesses."

Suffolk County, which has never conducted a disparity study, is also starting an official review. Suffolk officials have begun holding meetings with a vendor to conduct the disparity study.

Curran and Suffolk County Executive Steve Bellone, both Democrats, have approved hiring a consulting firm, Mason Tillman Associates of Oakland, California, to conduct the study under separate contracts.

Nassau and Suffolk are turning to the statistical analysis for help. The "disparity study" must be done before a municipality could set requirements for contracting.

"The vendor pool in Nassau County has been extremely insular for a very long period of time, and part of that was self-imposed by I think how things were done here, but also part of it is due to geography, and also, it’s often how municipal government operates," said Chiara, who joined Curran's administration when Curran took office in 2018.

Suffolk officials said its public works department paid 16% of contract awards to minority- and women-owned vendors between 2015 and 2019, but their review only looked at contracts bound by federal and state goals, along with some county contracts that used MWBE vendors.

Vanessa Baird-Streeter, a Suffolk deputy county executive, said the county is turning to "those contracts that are not being funded by the federal and state" government. "We want to make sure we’re being fair and equitable in allowing businesses to participate in the county contracting."

Establishing requirements could be considered discriminatory and not defensible in court if a county hasn’t established an exact measurement of the disparity. That means figuring out how many minority- and women-owned firms are available in the county's boundaries and comparing that with the share of contract dollars that go to those firms.

"If you wish to provide a competitive advantage for a certain group of contractors, based on historical discrimination, the disparity study is necessary to study that what you're doing isn’t arbitrary, but rather that the utilization is not consistent with the marketplace’s capacity," said Steven Schooner, a professor of government procurement law at George Washington University law school.

Nassau’s last disparity study was in 2003 and focused on contract awards from 1998 through 2002, mostly during the final term of former County Executive Thomas Gulotta, a Republican. Those numbers are "so far from current," Chiara said.

Nassau is executing the contract for the study about a year and a half after the county legislature authorized funds for the review, officials said, citing delays because of the coronavirus pandemic.

Firm contracting requirements have never been implemented, a Nassau County spokeswoman confirmed, and none exist for county contracts that are not funded with federal or state dollars. After the 2003 study, the Office of Minority Affairs "published MWBE rules establishing certain 'aspirational goals' for participation by MWBE firms in county contracts and subcontracts for construction, professional services, other services and goods purchases," according to a request for expressions of interest put out in June 2019.

Separately, a 2016 Nassau County law requires county agencies to make "good faith efforts" to improve participation of Service-Disabled Veteran-Owned Businesses, "by aiming for at least a 6% participation rate" on county contracts, the county wrote in the request.

If the county is spending money from the state or federal government on projects, it has to follow specific goals. But the county is not required to meet such targets when it comes to spending its own dollars.

In 2011, Gov. Andrew M. Cuomo set a state goal of 20% for participation in contracts by minority- and women-owned businesses. In 2014, his administration boosted the goal to 30%. During the 2019-20 fiscal year, New York State paid 29.51% of all claims to minority- and women-owned firms, roughly $3.14 billion, the governor's office said in early December.

The state's 2016 Disparity Study, done by Mason Tillman, found that Minority and Women-owned Business Enterprise "utilization as prime contractors ranged from a high of 32.54% in non-construction services, to a low of 13.84% in construction-related services," according to a state fact sheet.

Mason Tillman also determined that "subcontractor participation ranged from a high of 28.84% in construction-related services to a low of 22.96% in non-construction services."

The federal government's goal is to award at least 5% of federal contracting dollars to women-owned small businesses each year and at least 5% to "disadvantaged" small businesses.

For years, representatives of minority and women-owned firms have said they have felt left out of the county’s contracting process.

Cargill expressed concern with the "stop and start and stalling" that is a hallmark of changing political administrations in county government.

"Unfortunately, the Office of Minority Affairs is not a static office; with each turnover of an administration it's almost as if any progress was made they have to start over from scratch," said Cargill, who is also vice president of the Nassau Council of Chambers of Commerce. "That is a stop and start and stalling of that department. It doesn’t have to keep having that turnover where we have to start from scratch and not have the information and the data turned over to the next office, so there’s continuity."

Consultant MGT of America Inc. found evidence in the 2004 disparity study of underutilization of minority- and women-owned firms and documented the frustrations of business owners.

MGT set out to hear from representatives of 300 firms but was only able to conduct interviews with 78, reflecting "unusually high rate of refusal in our solicitation efforts," the report said.

"Most firms that refused to participate in the interviews attributed their reluctance to a fear of retribution by the County."

The report noted the concerns of one business owner, who had 20 years of "direct experience" and had submitted 20 bids or quotes to the county over the years, who said: "The biggest hurdle is getting the opportunity to bid. Many contracts are awarded based on relationships."

Lionel Chitty, executive director of the Office of Minority Affairs, said the county has made big strides in removing barriers. One effort, removing a $125 annual vendor fee to register as a vendor with the county, has led to a flood of new businesses registering.

"It goes back to educating people. The county doesn't want to be this big monolith. We take a look at barriers, we want to remove some of those barriers, educate people, show them the process," Chitty said.

Nassau Legis. Steve Rhoads (R-Bellmore), who chairs the Minority Affairs Committee, expressed concern with the delay in starting the disparity study.

Rhoads said: "We passed the funding and the contract for this well over a year ago. COVID can't be the pat excuse for anything. The reality is this doesn't seem to be a priority for this administration."

Nassau Comptroller Jack Schnirman issued a report over the summer, noting that the "availability of data is key to reform. The Disparity Study will clearly and concisely outline the data that informs our decision-makers of next steps and allows the County to set MWBE/SDVOB goals. Only with this evidence of underutilization can the County set participation goals."

Schooner said municipalities should invest in training and mentoring the local minority- and women-owned businesses.

"Most of the empirical research however suggests that the better thing for governments to do is invest in training and mentoring of targeted interest groups," he said. "Programs create opportunities for experts in the game, rather than the market itself."

By Scott Eidler

scott.eidler@newsday.com@ScottEidler

Scott Eidler is a deputy editor for the towns department at Newsday. Scott has worked at Newsday since 2012 and previously covered municipal government and education.