When Gov. Kathy Hochul gave her State of the State address, she spoke about rebuilding New York’s economy. One way she said that would help was to make it easier for New York’s minority- and women-owned business enterprises, often referred to as MWBEs, to be certified with the state. A proposal in her briefing book included allocating up to $11 million to improve the efficiency and timeliness of processing applications from businesses seeking that designation. This came just weeks after she told the state’s MWBE community some thrilling news: In 2021, the state had reached its contract target goal by giving 30.5% of its contracts to MWBE firms and awarding them $3 billion in state contracts.
“We surpassed our nation’s leading goal of 30% utilization,” Hochul told the attendees at an MWBE forum. “We’re at 30.5%, I believe it is. Yes, we did it. We did it together.”
The news was equally exciting for many involved with the state’s MWBE program, such as Hope Knight, the president and CEO-designate of Empire State Development, which oversees the MWBE program.
“We were striving to achieve the goal, so we were ecstatic about it,” Knight said. “I think there was a lot of interest in seeing whether or not we would or would not reach the goal, but we did. And we did it in a year of unprecedented economic challenges, due to COVID-19. So, we’re especially proud of that.”
Now, with the possibility of using $11 million, which Knight confirmed would help process certifications as well as create a new unit meant to process appeals, the state might be able meet its MWBE goal again in 2022. There are some challenges standing in the way, including the ongoing pandemic, which did not stop the program last year but could still cause ripple effects in the MWBE community.
Lourdes Zapata, the president and CEO of the South Bronx Overall Economic Development Corp., said the pandemic harmed MWBE firms, which tend to be smaller than other businesses. And because of that, those firms could continue to struggle as long as COVID-19 is slowing down the state’s growth.
“I think we’re going to see the ramifications of COVID,” she said. “The labor issue is affecting all businesses, not just minority- and women-owned businesses, but for-profit businesses in general facing labor shortages. All of those challenges that come with labor being able to find qualified folks, being able to pay those competitive salaries that you’re going to need to pay to attract employees are magnified when you’re talking about smaller firms that already are having challenges competing with the big guys.”
There were other problems that emerged as a result of the pandemic, such as supply chain issues, inflation and the labor shortage.
Phil Andrews, the president of the Long Island African American Chamber of Commerce, said one example of the labor shortage being an obstacle was that there were not enough state workers to clear the backlog in getting such firms certified. Knight confirmed that was an issue but said Empire State Development would be able to address the problems with additional funding.
The construction industry got the most MWBE state contracts, making up about two-thirds of the state’s MWBE utilization last year. With the need for improved infrastructure and other construction demands, this sector could be kept busy this year.
Lu Engineers, a Rochester-based engineering firm that was certified as an MWBE in 2017, told City & State that the labor shortage in its industry was not a new problem.
“In our industry, we are affected by labor shortages, but not much else,” said Marketing Director Judy Beckwith. “Professional engineers are in high demand, as are experienced construction inspectors, but these issues are always ongoing and should not hold the state back from reaching these goals in 2022.”
According to Zacha Tuttle – an MWBE specialist at the Women’s Enterprise Development Center, which serves Westchester and the Hudson Valley region – the pandemic has not slowed down anything.
“(New York) reached (its goal) last year, and a lot of things wouldn’t be as bad as they were in 2021, as far as the supply chain demand,” she said. “You never know, but I do think the state is making all these resources more accessible to people; they’re probably going to certify even more businesses.”
Tuttle added that not enough business owners fully grasp the importance of having an MWBE certification and how to make sure their MWBE applications would not be incomplete. While her role is to help them, she said there needed to be more resources and more awareness of people like her who can help minority- and women-owned businesses.
Andrews would like to see a pipeline to develop smaller firms so they could have access to capital and technical assistance that would help them evolve and compete with larger firms. He also said minority firms were hurt the most from the pandemic because of poor access to capital.
Despite the improvements that still need to be done, there was optimism that the state would reach its MWBE contract goal again this year.
“I do think that the table has already been set,” Zapata said. “The expectations are there. I think Gov. Hochul is right on the money in trying to help our businesses get through the certification process. I think the focus is there, and there’s going to be a lot of work to do to try to get there.”
Optimism was particularly strong in regard to the state’s aim to fix its infrastructure – and the business opportunities that will come with the many related projects.
“There will be increased opportunity to engage new firms with more opportunities,” Beckwith said. “The new state budget has targeted infrastructure that, along with the federal infrastructure bill, will see a positive impact on the economy and have a positive impact on both the design, engineering and construction sectors.”
Knight said the state will continue to build on what it has accomplished through its MWBE program.
“There is also tremendous opportunity to do business with the state,” she said. “And we will continue to advance.”