A Model Agency for M/WBEs

Rev. Jacques Andre DeGraff, who has been advocating for more M/WBE contracting in New York City, heads a diversity council that helps match smaller firms with larger companies to navigate the contracting process. (Photo: Andrew Schwartz)

One criticism of Mayor Michael Bloomberg’s tenure has been the share of contracting opportunities going to minority and women-owned business enterprises, or M/WBEs.

“The city’s efforts have been dismal,” former city comptroller and mayoral candidate Bill Thompson said last month, echoing a line of attack made by some of the other leading candidates to replace Bloomberg. “The city has failed miserably in that regard. There has been no focus from the top in trying to help minority- and women-owned businesses achieve in New York City.”

While Bloomberg has responded by pointing to the billions of dollars invested in M/WBE businesses, he simply could have held up one city agency that has been a model for M/WBE collaboration: the School Construction Authority.

According to the city comptroller’s M/WBE report card, which tabulates city expenditures with M/WBE vendors, the School Construction Authority is the city’s leading agency in partnering with M/WBEs in terms of total dollars spent. The agency’s success in contracting with these companies is predicated on several key aspects: solid leadership, thorough outreach and a consistent need for contracting work.

“To build a program like this takes hard work, it takes partnership and it takes time,” said Lorraine Grillo, the president and CEO of the School Construction Authority. “Our folks here in business development, they’re out in communities, doing job fairs, really recruit[ing] the best of the best.”

Grillo said that developing such a robust partnership requires a multifaceted approach. The authority reaches out to prospective M/WBE contractors through job fairs, and it conducts a rigorous background check on each firm, which includes an assessment of the companies’ financial capabilities and safety records.

“We work in schools, so our work has to be of a higher level than most other businesses,” Grillo said. “When a company is doing well and their bids are competitive, they’re going to get the work.”

But what sets the School Construction Authority apart in terms of M/WBE activity is its mentor program—a sort of feeder initiative for less established M/WBE contractors that leads to them getting regular work with the agency. These contractors are recruited by the Diversity Advisory Council, a group of community and business leaders that can tap into their vast networks of community groups and associations to engage contracting firms.

As part of the program, an M/WBE firm partners with a larger construction company that provides business training and contracting opportunities. The program targets smaller construction contracts of up to $750,000 for mentor program participants to bid on, and the winning company partners with a construction management firm that oversees that project and provides technical assistance. After companies graduate from the four-year mentor program, they are eligible to bid on larger scale projects from $750,000 to $1 million, which they complete with no supervision.

“What we’re really trying to do in the broadest context is have an economic empowerment impact on our community,” said Rev. Jacques Andre DeGraff, who heads the diversity council. “We don’t want to just give firms a series of job opportunities; we want them to grow their businesses so they can compete in the open market while still doing public work on schools. They can become not just contractors but entrepreneurs.”

Even companies that do not go through the mentor program find that working with the School Construction Authority is a mutually beneficial relationship. Samuel Padilla, also a member of the diversity council and the president of Padilla Construction Services—the leading spender of all the M/WBE vendors that do business with the SCA—said that the primary benefit of contracting with the agency is that there is never a shortage of work.

Padilla’s company had been active with other agencies for years before regular work began to subside as the city’s financial situation worsened. Through his own research, he honed in on the SCA, viewing the business of school construction and repairs as a recession-proof industry.

“I knew that a steady flow of revenues was being allocated by the School Construction Authority,” Padilla said. “It helped my business because we were able to do work when the economy started to dry up.”

It’s not always an easy process, however. For M/WBE contractors, getting certified by the SCA requires a separate application, and the vetting can take up to six months.

And some companies have not had as rewarding an experience working with the SCA. The Urban Group, which was the No. 2 M/WBE spender with the agency this year, recently terminated its relationship with the SCA because of delays in receiving payment.

Grillo is the first to admit that there is always room to improve the agency’s M/WBE program. She said that one of the SCA’s goals is to have a company that graduates from the mentor program win a big capacity project, such as building a new school.

For Grillo, the city’s push for business diversity is far more significant than just providing a leg up for M/WBEs.

“We’re all altruistic about this, and we’re doing great work for the community, but [the M/WBE contractors] are also doing great work for us,” she said. “If you look at schools in New York City, all of the schools are extremely diverse, and having these contractors doing great work in these schools presents a great role model for our agency.”