May 2, 2019

Councilor Michael F. Flaherty, Chairperson
Committee on Government Operations
Boston City Council
1 City Hall Square, 5th floor
Boston, MA 02110

Chairman Flaherty,

On behalf of the Board of Directors of the Black Economic Council of Massachusetts, Inc. (BECMA) and our individual and business members, I wish to thank you for the opportunity to provide testimony regarding Docket #0348, “Order for a hearing regarding equity in the City of Boston Procurement and Purchasing.”

I wish to also thank Councilors Michelle Wu and Kim Janey for sponsoring the order for this hearing and your continued advocacy in this space. Thank you, also, to Chief Barros, Director Barrios-Milner, Ms. Williams, and Mr. McFadden for your comments and the work you are doing.

The mission of BECMA is to advance the economic well being of Black businesses, organizations that serve the Black community, and Black residents of Massachusetts. We seek to fulfill this mission by convening solutions-oriented conversations that highlight people and organizations working to address the root causes of economic and racial disparities across the Commonwealth; advocating for better policies and practices that help grow and support Black businesses and Black workers; and connecting our business members to opportunities in the public and private sectors, as well as to one another.

BECMA was founded, in part, as a response to the Federal Reserve Bank of Boston’s Color of Wealth in Boston report and similar reports that shined a light on the ever-increasing wealth gap between Boston’s Black and white residents. We were also founded to address two frivolous yet oft-repeated tropes that have proven detrimental to the growth of Black business.

Despite making up 13% of the American population, 7% of the Commonwealth, and 23% of Boston’s population, to some we apparently make up 0% of the business-owners, for we are told that Black businesses cannot be found. With several hundred individual members – some of whom are joining us at this hearing in person and online – along with our list of 600+ certified Black-owned businesses in the Commonwealth, we are working to address this lack of knowledge. We would be happy to share this list with the city to further expand its pool of MBE’s (minority business enterprises).

When businesses are found, they are then told that are not capable of handling open contracts or are automatically barred from applications because of strict requirements that shut out growing enterprises and shut off opportunity. With the presence of – and in partnership with – the Business Equity Initiative at Eastern Bank, the Pacesetter’s Initiative at the Greater Boston Chamber of Commerce, the Boston Ujima Project, Interise, Initiative for a Competitive Inner City, and Boston Impact Initiative, we are also working to stamp out this second faulty notion and prove that Black businesses are, in fact, ready for large-scale opportunities today, and that many more are in the pipeline to handle new opportunities tomorrow.

As an advocate for Black businesses and Black workers, opportunities to invest in local businesses that are owned and operated by us, and ultimately employ us, is of primary concern for BECMA. And so, I am grateful for the chance to address this committee on the topic of equitable city investment in these businesses.

Experience of members

After reviewing the singular report that was produced by the Office of Economic Development in November 2018, it is clear that a monumental effort is needed and much work to be done.

Reading the report would make it seem like the first trope I mentioned is accurate – that Black and Brown businesses cannot be found, and therefore must not exist – for it shows that for FY18, out of 14,000 contracts with the city, 0.72% went to MBE’s. Said another way, this means that 99.26% of city contracts went to non-businesses of color.

An alarming figure. (NOTE: The city’s Office of Economic Development revised these numbers downward. New numbers were that for FY18, out of 5,122 contracts, 28 (.55%) were awarded to MBE’s. In dollar amounts, this means that only $4.3 million (.65%) of city spending went to businesses owned by people of color in Boston.)

The city shared with us what, from its perspective, the barriers have been to increasing these numbers. I want to add to this by sharing some of the experiences our business owners have either had with the process of bidding on a project or avoided altogether because of others’ experiences. These comments were collected by a recent survey of our members.

From the responses to this survey, the results found that:

• Only 25% of respondents applied for a city contract
• 50% say they had a very poor experience with the process
• 25% say they would not bid on a city project again based on their experience
• 25% say they perceive the parameters for MBE’s to shift, causing them to not win the bid
• Only 25% won an actual bid

One member said their experience was “Mixed, [but] not great” and found bids to be “cumbersome, expensive, and geared towards large companies without thought for small local companies who can do the job but don’t have the financial or administrative capacity to compete with national companies.”

At BECMA, we lauded the passage of the “Promoting Equity in City of Boston Contracting” ordinance particularly because of the reporting aspect. We believed then that it would help us to better understand where the problems lie and what we could offer to address them. We still believe it can helpful, so long as future reports include the following:

• A breakdown of the MBE designation by racial and ethnic categories
• A breakdown of the number of MBE contracts awarded by type
• A breakdown of the number of MBE contracts awarded by city department
• A breakdown of the number of MBE’s, by racial and ethnic categories, that applied for contracts and were denied said contracts
• A list of the top reasons that MBE’s did not receive contracts

We acknowledge the efforts of Mayor Walsh, as well as the Office of Economic Development and its sub-departments to increase their outreach efforts as well as the recent positive changes highlighted by this initial report, particularly the addition of equity and inclusion language in city RFP’s. We look forward to supporting this new policy along with partners like the Black Economic Justice Institute in order to ensure it reaches its fullest potential in bringing more Black businesses into the fold. Recommendations

Our members also shared recommendations for how to increase MBE participation in the procurement process. These recommendations included that:

• Goals must be put in place for M/WBE participation. This can be done prior to the results of a Disparity Study and can be shifted after its completion.
• Individual quality feedback should be shared with applicants as to why a bid was not granted
• Larger contracts must be broken up
• The timeframe for awareness and application submission must be extended
• The city should partner with and invest in existing technical assistance programs
• The Office of Economic Development and its sub-departments must expand their partnerships with community and business organizations to increase the number of businesses who are made aware of city resources and opportunities
• The city should set real spend requirements for large, national, and international bidders to subcontract with small local businesses of color
• The city should reduce the bond requirement to a more realistic risk based on industry
• The city should ensure that businesses are paid in a timely manner as some of our member businesses have experienced not receiving payment for months.

These are just some of the recommendations we received.

The November 2018 report and the update we received today tell us in stark terms that we have a critical issue that must be addressed with full urgency. If the city truly wants to achieve equity and eliminate the ever-increasing wealth gap, it must employ all of these recommendations and work with BECMA, our partners, and other organizations committed to achieving the same. If all do their duty and nothing is neglected, we will be able to ensure the production of a report in 2020 that shows we have made considerable progress toward true equity.

Thank you, once more, for hosting this hearing on this important topic and listening to our concerns. I look forward to the thoughtful testimony of our partners, our members, and the concerned public on this matter.