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Study backs minority goals for system contracting in NY.

New York State will soon insist that a percentage of subcontractors on State awarded contracts be minority and woman owned firms. The action came after a State study proved the need for intervention and during an interim voluntary program even fewer of these firms received contracts.

The State conducted a survey to determine a pattern of discrimination in response to a recent Supreme court decision in Virginia. The survey confirmed discrimination in the awarding. of State contracts to minority and women owned firms and provided a reason for "compelling State interest" and intervention.

According to Lynn Canton, director of the Division of Minority and Women's Business Development for the State Department of Economic Development, whenever there is a preference program now, there first has to be a study.

Women and minority owned firms obtained only 7.9 percent of $4.89 billion in state contracts although they make up nearly 25 percent of the bidders, the State study revealed. Additionally, the study found most state contracts received by women and minority owned businesses were awarded as subcontracts and only 1.2 percent were awarded directly to minority businesses while 1 percent went to women owned firms.

An earlier New York City study found that while minority and women owned firms make up 25 percent of the business community, they received only 7 percent of the $2.3 billion in city contracts that were analyzed.

Canton said they were all very surprised when the numbers came out so similar since the surveys had been conducted with different methodology. She noted that the number of women owned firms was far greater than anyone had suspected and the agencies will increase the goals for this segment. "The real difference is that we have underestimated the availability of women," she said. "We should be targeting 12 to 13 percent. We vastly underestimated that women."

Lenore Janis, president of Professional Women in Construction, said she does not know whey they were surprised. "We have always told them the previous goals were separate and unequal," she said. "It stunted the growth of women owned businesses because we became unimportant on major contracts. We look forward to a goal that has some meaning to it."

Mayor Dinkins has already announced goals to have 20 percent of all contracts dollars to go to these groups. The city policy went into effect on August 1, 1992 and Janis said the City will accept all firms which have been in the past certified by the State of New York.

Heather Hatfield, vice president of the Building Congress, said they were formulating a set of practical recommendations for goal-setting with the Regional Alliance to eliminate barriers to construction for minority and women owned businesses. "This is something we expected so hopefully our suggestions will be taken into consideration when the State has to meet its goals," she said.

The percentage of subcontractors for each State contract will be determined on an agency by agency basis with the primary contract still being awarded on a lowest responsible bid basis. Each agency has been required to submit a goal plan since 1988, but after the Supreme Court decision, sanctions were suspended and only 60 percent of goals were achieved.

Janis said the utilization of women owned businesses dropped over 50 percent when general contractors were on the honor system over the past two years.

Canton said each agency will state in the bid document the goals that are expected on the contract. For example, she said, it could state goals of 12 percent minority and 13 percent women owned firms. If the lowest bid does not meet this term, Canton said, the bidder can be considered "irresponsible" even though they are the lowest bidder. "It's a valid term and condition," she said.

The firm can say, however, that they made a good faith effort and could not meet the goals for 'such and such' a reason and that provision could be waived. "That's why it's not a quota," Canton explained, "because it's very flexible. The only quota here is that we've done 98 percent of our business with white males," she added.

A directory of over 4,000 minority and women owned firms is available for contractors to use to make contracts.

Once a job is in progress and it is found the women and minorities are not actually on the job, Canton said it become an issue of contracts compliance and the agency can sanction the contractor and turn to the courts.

Each agency will review goals plans that will be due no later than October 1. If the goal plan is adequate the agency will determine a date for enforcement. With 97 agencies, Canton said, it will be fall before enforcement can begin. "Some agencies are ready to go and others will have to scramble," she added.

Janis said the statistical study proves that women and minority businesses have not been given a fair shake and an opportunity to share in the pie. "While many of us decry government intervention in our business and personal lives, the women applaud the goals system which will mandate our participation and growth in the construction industry which has traditionally shut us out," she said.

"Despite their publicity and sound bites to the contrary," Janis continued, "corporate America has failed to include us in the mainstream without being prodded in the pocketbook by government." The idea behind the goals system, she said, is to create viable, competitive small businesses, adding, "This is the American dream."
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Title Annotation:New York State insists percentage of state contracts go to women-owned and minority-owned businesses
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Aug 26, 1992
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