“The City has created and maintained a public contracting system that disproportionately funnels taxpayer dollars.”
A group of minority-owned business advocates called on the City of Boston to end its favoritism toward white-owned businesses in a complaint to the US Departments of Justice and Transportation.
The Black Economic Council of Massachusetts, Greater Boston Latino Network, and Amplify Latinx filed their complaint on Feb. 17, following the release of a damning study of the city’s contract spending from 2014-2019.
“The City has created and maintained a public contracting system that disproportionately funnels taxpayer dollars into an exclusionary system that shuts Black- and Latinx-owned businesses out of contracting opportunities almost entirely,” said the 43-page complaint.
The study found that only 1.2% of the $2.1 billion the city spends on contracts went to Black- or Latinx-owned businesses (0.4% and 0.8%, respectively). Asian-owned businesses received 1.1%, while white women-owned businesses received 8.5%. This left about 89% of the city’s contracting dollars for businesses owned by white men.
Based on the city’s procurement standards, eligible woman- and minority-owned businesses could have been awarded 16.9% in total, and 11.2% and 5.7%, respectively.
The complaint claims that the City of Boston is in violation of Title VI of the Civil Rights Act of 1964 through discriminatory contracting practices. The group demands that the federal government suspend any grants to the city until Boston’s contracting practices can be corrected.
Mayor Marty Walsh signed an executive order on Thursday, Feb. 18 in response to the dismal report. The order calls for a $2 million investment into a program that will “implement new initiatives that expand opportunities for minority- and women-owned businesses.” Basically, Walsh pledged $2 million toward his intention of better contracting practices with no specific plan to reach that goal.
Walsh plans to leave office in less than a month for his new gig in DC, but not before promising that his successor will fix his administration’s contracting bias problem.
Governor Charlie Baker, who has his own problems with racially-biased state contracts, recently elevated the state department that oversees diversity in contracting within the Office of Administration and Finance to its own separate executive office.
When Baker took office in 2015, one of his early moves was to allow state contractors to then subcontract services from minority-owned businesses as a means to fulfill the original contractor’s diversity requirement.
Last fall, a GBH investigative report found numerous companies that existed as subcontractors to help larger companies meet diversity requirements. The report also found numerous examples of subcontractors incorrectly identified as woman- or minority-owned.
In November, Baker submitted a bill to the legislature to separate the Supplier Division Office from the Office of Administration and Finance. The change officially went into effect in January.
A few days after Baker announced his intention to make the Supplier Diversity Office its own separate executive office, the office issued a memorandum vowing to improve verification of subcontractors for the sake of diversity. The office also said that it “intended” to increase funding for its supplier diversity program.
Unlike Walsh, Baker has more than a year and a half to answer for his intentions, and that is if he does not run for reelection. Whether or not the new oversight department implements any actual state contracting change may depend on if anyone is still paying attention this summer when the “intended” reforms begin.
President Joe Biden has only been in office about a month, so it is still too soon to predict where his attention is going to be in terms of racial bias in federal spending, especially since he has already backpedaled on promised action to increase the minimum wage and forgive student debt.
The Center for Responsible Lending called on the federal government to implement stronger rules under the Community Reinvestment Act (CRA) to improve the government’s record on racial bias in lending, in a press release on Feb. 18.
“We need a CRA with more teeth. A greater emphasis must be placed on advancing racial equity and ensuring that financial institutions address the credit needs of Black, Latino, Asian American and Pacific Islander, and Native American communities,” Mellisa Stegman, senior policy counsel at the Center for Responsible Lending, wrote in a released statement. “We need a CRA regulation that prevents lenders from receiving high scores for weak performance, includes stronger fair lending measures, collects better data and demonstrates data transparency, and encourages investments that provide real benefits for low-income communities and communities of color.”
Gibson Dunn, an international law firm that specializes in corporate and government work expects that Biden’s forthcoming nomination to the Office of the Comptroller of the Currency (OCC) could determine his administration’s willingness to combat bias in funding.
“The Administration’s focus on racial justice will likely lead to increased enforcement activities,” said an unsigned open letter from the firm on Feb. 16.”