New York City has a new law, which goes into effect on July 1, 2013, amending the New York City Charter and the Administrative Code of the City of New York to strengthen the City’s program to increase participation by Minority-Owned Business Enterprises (MBEs), Women-Owned Business Enterprises (WBEs) and Emerging Business Enterprises (EBEs) in City procurement.

The new law, Local Law 1 of 2013, eliminates the $1 million cap on M/W/EBE program-eligible contracts that was set by the former Local Law of 2005 and allows for the inclusion of higher value contracts in the goals program. It also strengthens enforcement mechanisms to ensure that the City’s participation goals are met.

It is expected that the new law will increase the overall value of program-eligible contracts from an estimated $433 million to $2.2 billion.

New Participation Goals for City Agencies

Importantly, Local Law 1-2013 establishes new “citywide participation goals” in four (4) industry classifications of City contracting, which each City agency is required to consider when setting its own annual agency goals for participation by certified M/W/EBEs.

For construction contracts, the new law adds the new participation categories of Asian-Americans and Women. For Asian-Americans, the annual procurement goal is 8% of total annual agency expenditures. For Women, the annual procurement goal is 18% of total annual agency expenditures. The 2013 law revises downward the annual procurement goals for construction contracts for African-Americans from 12.63% to 8%, and for Hispanic-Americans from 9.06% to 4%. The annual procurement goal for construction contracts for EBEs remains the same under the 2013 law at 6% of total annual agency expenditures. Thus, the total citywide participation goal for MBEs, WBEs and EBEs will be 44%, up from 27.69% under the old law.

The new law also increases the annual procurement goals for MBEs and WBEs for professional services contracts (for example, contracts for architectural and engineering services and construction management services), standard services contracts, and goods contracts.

Each City agency is required to submit to the Commissioner of the Division of Economic and Financial Opportunity of the City’s Department of Small Business Services (SBS) an agency utilization plan for the upcoming fiscal year, which must include: information about the agency’s participation goals for M/W/EBEs for the year, and an explanation for any agency goal that is different than the citywide participation goal for the relevant group, and industry classification.

The Commissioner is required to publish on the Division’s website no later than July 31 of each year, a plan and schedule for each agency, which shall include information specific to each prospective agency solicitation, including: “the specific type and scale of the services and/or goods to be procured, the term of the proposed contract, the method of solicitation the agency intends to utilize, and the anticipated fiscal year quarter of the planned solicitation.”

Determining Credit for Participation

The new law provides that in establishing a goal for a particular procurement for construction, professional services, or standard services, an agency may achieve the goal “by a combination of prime contract and subcontract dollars, a combination of construction and services performed pursuant to the contract, and/or a combination of M/W/EBEs. Alternatively, an agency may establish specific goals for particular types of services, and/or goals for particular types of certified firms.”

For each contract that a contractor utilization plan has been submitted, an agency must require that the contractor submit at least once a year a list of its intended subcontractors. It may also require contractors to report periodically about contracts awarded by their direct subcontractors to indirect subcontractors. In addition, the new law requires contractors to submit, with each of their vouchers for payments, and/or periodically as the agency may require, certified statements containing the total amounts paid to their direct subcontractors, and the total amounts paid by their direct subcontractors to indirect subcontractors.

Improved Accountability and Enhanced Oversight

Under the new law, a mayoral representative will hold quarterly meetings with each agency to discuss the agency’s utilization goals and whether the agency has made substantial progress toward achieving its goals.

Additionally, the new law charges the Commissioner of the Division of Economic and Financial Opportunity with the powers and duties to establish criteria and procedures to recognize M/WBE certifications by other governmental entities, to conduct site visits at businesses seeking certification to verify their eligibility, and to increase information available on the Division’s website to include specific information about each M/W/EBE.

With respect to compliance by contractors, the new law provides that for each contract for which participation goals have been established, at least once annually during the contract term, the agency shall review the contractor’s progress towards attainment of its utilization plan, including reviewing the percentage of work the contractor has actually awarded to M/W/EBE subcontractors, and the payments that the contractor has made to those subcontractors.

Moving Forward

By removing the $1 million cap on contracts covered by the City of New York's participation goals for M/W/EBEs and strengthening the City's oversight function, new Local Law 1 of 2013 will help ensure that M/W/EBEs will be targeted for higher value contracts with the City of New York.

M/W/EBEs and contractors that utilize M/W/EBEs should familiarize themselves with the new law, particularly its recordkeeping and reporting requirements.

Contractors interested in utilizing M/W/EBEs should:

  • review agency plans and schedules for prospective solicitations published on the SBS’s website, and identify portions of work that can be performed by qualified M/W/EBEs;
  • refer to the City’s Online Directory of Certified Businesses;
  • access the resources of the SBS, which include networking events and targeted solicitations; and
  • keep complete and accurate records concerning M/W/EBE utilization.