The Office of Economic Opportunity has begun to press contractors who do business with the city to make sure they include minority-, women- and disabled-owned businesses in a way that can generate jobs and real business for MWD-owned companies.
“We have been looking more closely at the suppliers, and then identifying those that are non-stocking,” said Angela Dowd-Burton, executive director of the OEO, as she released first quarter participation rates.
The report was the second first-quarter report issued since the inception of the Office of Economic Opportunity, and so it was the first time Dowd-Burton could compare numbers between quarters in different years.
“We can now begin to build a pattern of the city’s purchasing activities,” she said.
With a new cache of data, the department has begun to study the numbers and participating businesses more closely in an effort to force broader participation.
In an effort to weed out companies that don’t really provide labor or materials for the contract they are listed on — non-stocking suppliers — OEO has begun to report participation in terms of completed transactions only.
“Historically, when contractors have reported their participation, we have looked at the companies they’ve committed to using, looked at the dollar value of that commitment and the percentage of it. And, we’ve noted it as a part of the participation,” she said.
That meant that an MWD-owned business could essentially serve as an answering service.
“They don’t have the inventory, and the probability is they’re just picking up the phone and collecting a fee,” she said. So, we’ve decided that whatever commission you get from making that call, that’s the only participation we’re going to report on.”
That will lower minority participation rates, which are measured in terms of dollars, on contracts — and force contractors to include companies that actually do the work.
“Contractors will ultimately have to find participation from minority- and women-owned businesses that actually hire people and use contractors that do work, as opposed to someone that is providing more of a clerical function,” said Dowd-Burton.
The ultimate goal is to help these smaller contracting firms that do work to develop opportunities, to grow and to hire people, she said.
As far as first-quarter FY12 numbers go, participation rates continued to rise.
Compared to the previous year, participation rates for minority-, women- and disabled-owned businesses rose in the first quarter of fiscal year 2012 — hitting a high of 27.1 percent, according to numbers released this week by the Office of Economic Opportunity.
That figure, which exceeded the city’s 25 percent goal, included contracts let by the city and quasi-government agencies. In the first quarter for fiscal 2011, the participation rate was 26.7 percent.
In city spending alone, first quarter numbers showed 26.4 percent participation. That was up from the same quarter last year, when participation was recorded at 23.2 percent.
Overall, minority-owned businesses captured $39 million in city contracts, out of a total of $147.8 million spent by individual city departments and in citywide contracts.
When the $98.6 million spent by quasi-government agencies was factored in, the total spend rose to $246.4 million.
It total, the city and related city agencies, as well as federal spending in the city, spent $313 million in for-profit contracts awarded between July and September 2011. During the same quarter last year, the city spent $38 million with minority-owned companies.
Approximately $53.3 million was subtracted from the $313 million total for 2012, in what Dowd-Burton called “no opportunity” spend contracts. Those are large contracts for things like fuel, oil, water treatment chemicals and pharmaceutical supplies, where the city has been unable to find a minority-owned bulk supplier.
Participation rates have been edging up for the last two years with minority-, women- and disabled-owned firms across city and quasi-governmental city agencies capturing 25.6 percent of contracts in all of 2011. That represented an increase from 23.7 percent in 2010
For city spending alone the participation rate was 24.4 percent in 2011, up from 20.9 percent in 2010.