In June 2018, when the New York State legislative session ended with only a one-year extender of Article 15-A, legislation that created the New York State Minority and Women Owned Business Enterprises (MWBE) program, it left certified firms, public and private sectors decision makers and organizations like the Women Builders Council (WBC) wondering, what’s next?

Fast-forward to January 2019 – with a newly elected democratic majority in the State Senate, advocates and supporters of New York State MWBE Program were looking forward to not only a five-year extender of the program, but expanded provisions as well. As the legislative session progressed, a group of women, including small business owners, attorneys and executives began with a mission of building consensus – working with certified firms, general contractors, non-profit industry associations as well as the agencies and authorities they did business with. The main objective – to extend and improve the NYS MWBE Program, to grow small businesses and create a level playing field in State contracting.

“WBC has always been known for our advocacy and public policy outreach,” said Stephanie Burns, President of the Women Builders Council (WBC) and Vice President of Community and Citizenship at Turner Construction. “Our Board Members spent hours reviewing draft legislation, compiling data and taking the trips up to Albany to meet with Legislators and representatives from the Governor’s office. We are a solutions-oriented organization, and I’m incredibly proud of our ability to spark real change throughout the construction industry?”

Building Industry Consensus

WBC was created with the mission of increasing diversity and the role of women in the construction industry. Founded in 2004, WBC has become the leading association for women in the building industries. From certified MWBEs to women executives at major construction firms, WBC is committed to leveling the playing field for women in the construction, architecture, engineering and related professional services firm,  while creating increased opportunities for certified
small businesses.

“What sets WBC apart from other organizations during the Article 15-A negotiations, was our ability to bring together every significant  participant on a project,” said Lorraine D’Angelo, WBC’s Senior Policy Advisor and President of LDA Compliance Consulting, Inc., “From the investors to the designers, owners, general contractors, subcontractors and certified firms, our board members represented the full spectrum of the construction industry.”

For two years, WBC utilized their relationships and positions on other industry boards to create a working group and build consensus. WBC’s Public Policy Committee, chaired by Citnalta’s Vice President and General Counsel, Jayne Czik, worked in partnership with the certified small business community, industry associations and elected officials to provide feedback and tangible solutions to the concerns raised regarding the Reauthorization of Article 15-A. As the legislative process progressed, WBC was active and diligent in making sure that the implementation of new rules would benefit all members of the construction industry.

Special Industry-Wide MWBE Study Group

WBC’s Public Policy Committee got into the nitty gritty of policy by participating in an intensive multi-week Study Group that included hours of calls on a variety of topics related the program with other industry professionals as well as representatives from the NYS Senate and Assembly. Many of the suggestions from the Study Group were incorporated into the new Article15-A, with the goal of enhancing the program.  Both the Assembly and the Senate and the MWBE Leadership from both houses provided an open environment to review issues and concerns from MWBEs, primes and other industry professionals.

“It was important to bring together the various organizations that were going to be impacted by this legislation,” said Czik. “We wanted to have an honest and direct conversation about the importance of extending the program, and the ways in which its extension could create positive change throughout
the industry.”

A Game Changing Legislative Breakfast

Utilizing their more personal, hands-on approach, in early June, WBC members headed to Albany just days before the final MWBE bill was approved. Their goal was to reaffirm their talking points and provide key information and data. Kristine De Napoli, President of KND Electric, a WBC Member and also First Vice President at New York Electrical Contractors Association,  made the trip up to Albany to provide financial data on the cost of construction, information that impacted the final determination of a $15 million Personal Net Worth for MWBEs. WBC created such a well-prepared and unified voice for the MWBE community, that when they spoke, legislators listened, the Governor’s office listened, and the outcome changed.

A Commitment to Industry Education:
WBC Hosts Article 15-A Legislative Briefing

On September 18, 2019, WBC hosted a special legislative briefing for its members on the newly reauthorized Article 15-A and its impact on the construction industry.  The conversation was moderated by WBC Executive Director, Renee Sacks, Ph.D. and included presentations from New York State’s Deputy Secretary for Civil Rights Jonathan Smith and Acting First Assistant Counsel, Nadine Fontaine to Governor Andrew M. Cuomo who shared details about various parts of the new program and the ways in which WBC members could continue to be a part of the conversation.

“As the implementation of new rules and the creation of new regulations occur, we will continue to be at the forefront of the issues,” noted WBC, Co-Founder and Past President and CEO of Bradford Construction Corp. Sandra Wilkin. “WBC has created a credible, strong and sustainable voice as advocates for equal opportunity in our industry. and we will continue our efforts as the rules and regulations are promulgated.”

Governor’s Program Bill #4-MWBE Reauthorization

Legislative History

Under Governor Mario Cuomo, Article 15-A of the Executive Law, was signed into law on July 19, 1988, authorizing the creation of an Office (now Division) of Minority and Women’s Business Development to promote employment and business opportunities on state contracts for minorities and women. Under this statute, state agencies are charged with establishing employment and business participation goals for minorities and women. Under Governor David A. Paterson, Article 15-A was reauthorized and set goals at 10 percent.

In 2019, New York State extended the MWBE program with passing of the Governor’s Program Bill #4 -MWBE Reauthorization. The bill is the most impactful policy initiative since Governor Andrew M. Cuomo increased the state’s MWBE goal to 20 percent in 2011 and to 30 percent in 2014. The new legislation is anticipated to significantly advance the State’s diversity initiative for MWBEs as well as in the workplace and workforce.

Today, New York State is leading the nation in its FY 2017-2018 performance with MWBEs winning over $2.5 billion in New York State contracts and representing 28.62 percent utilization. The new programs and initiatives outlined in the reauthorization will further the diversification of state contracting, and WBC expects the construction industry will also see significant benefits and returns on investment that will occur after the new policies set forth in the legislation are implemented.

Legislative Timeline and Intent

Under statute, Article 15-A of the Executive Law authorizes the Department of Economic Development’s Division of Minority and Women-Owned Business Development (DMWBD) to promote employment and business opportunities on state contracts for minorities and women owned businesses. This legislation directs state agencies and authorities with establishing business participation goals for minorities and women, with the intent of diversifying the companies that bid and win state contracts.  The new legislation also authorizes DMWBD to organize outreach events, training and educational opportunities for MWBE firms across the state. The authorization and the requirements of the current program will expire on December 31, 2019, and the Governor’s program bill will extend the sunset
provision to December 31, 2024.

In 2016, New York State released the findings of their 2016 Disparity Study, which evaluated the participation by MWBEs in government contracting compared to the availability of MWBEs in the marketplace. The Governor’s program bill expands upon the requirements of the MWBE program, based upon the findings of the Disparity Study, with the goal of enhancing and improving upon the program.

On June 16, 2019, Governor Cuomo’s program bill was introduced by Senator James Sanders, Jr. and Assembly Member Rodneyse Bichotte. The legislation was passed by both houses of the legislature and on July 15, 2019, Governor Cuomo signed S.6575/A.8414 into the law. The extension of the program and its expansion was a top priority for the Governor and his partners in the legislature and it provided Empire State Development (ESD) with the tools needed to continue to expand the NYS MWBE Program and further efforts to diversify the construction industry.

The legislation signed into law intends to address the recommendations proposed by various organizations and advocacy groups, as well as technical issues brought forth throughout the implementation of the program.  The new bill also seeks to make several amendments that will continue the State’s efforts to provide equal access to its contracting system and opportunities and yield outcomes for three important areas:

1. Capacity Building

Expanding Opportunities and Building Capacity for MWBEs

Discretionary Spending
The legislation increases agency and authority discretionary purchasing threshold to $500,000. This will enable smaller MWBEs to participate in larger contracts, building their capacity, experience and portfolio with an agency or in a new market sector.

Personal Net Worth (PNW)
The Governor’s program bill increases PNW from $3.5 million to $15 million, making more companies eligible to participate in the program.  The bill provides the Director with the authority to set the PNW requirement for MWBE certification via regulations and excludes certain holding companies from the PNW calculation.

Bidding Credits
The new legislation enhances opportunities for MWBE prime contractors by establishing bidding credits for low-bid construction projects of up to $1.4 million and increases the size of procurements that can include bidding credits each year with inflation.

Advancing Mentorship Opportunities

While providing access to contract opportunities is important to diversity in New York State, so is creating a more inclusive construction industry through focused diversity best practices and expanding the mentorship programs that are available
for MWBEs.

“Diversity practices” will now also mean the utilizing or mentoring MWBEs in contracts awarded by a state agency or other public corporations, such as subcontractors and suppliers. The director may also identify and establish mentorship opportunities with other businesses development programs to increase capacity and better prepare MWBEs for bidding on contracts with state agencies upon successful completion of the mentorship opportunity. Mentorship opportunities will be intended to ensure mentor and mentee are connected based on a commercially useful function. While WBC embraces mentorship as a valuable tool to increase capacity, ESD must clearly address if and how mentoring will be accomplished on projects, including how diversity practices will be measured where the mentee is a subcontractor to the mentor prime contractor.

Providing the Director with enhanced authority to define Commercially Useful Function (CUF)

Also, ESD is authorized to establish criteria for agencies to credit MWBE participation towards goals based on the CUF provided by an MWBE. This enhanced authority to define CUF appears to be a response to concerns from contractors and MWBEs about the inability to assist an MWBE because of strict interpretations about violating the CUF standard. Clear direction and guidelines will be required, and state agencies and authorities must be mandated to provide timely guidance in writing.

2. Creating Jobs

Article 28, Workforce Diversity Program, is one of the more ambitious initiatives in the new law. Although aspirational, it establishes a new protocol for evaluating workforce diversity for a project. The “aspirational” workforce participation goals will set forth the expected participation by hours worked by gender, race and ethnicity and by each construction trade, profession and occupation. Information will come from DOL website. For each government contract in excess of $100,000 in the construction industry, the contractor and its subcontractors must make every effort through documented good faith efforts to meet pre-established worker diversity goals or request a waiver of its inability to do so.

State Goal Setting, Project by Project
Each state agency shall establish in the state contract the expected level of participation by minority group members and women in each of the construction trades, professions and occupations required in performance of the work of the state contract.  In cases where the goal is not feasible, the state agency shall document numerical evidence demonstrating that the application of the aspirational goal would not be practical, feasible or appropriate.

While WBC embraces workforce diversity, especially for the inclusion and increase of women construction workers and women construction professionals, it questions how the new program will work.  While we have many questions,  specifically in the area of workforce diversity, the real question is how do contractors and subcontractors prevent an itinerant workforce?

There’s a value to both employers and employees to having a stable job at a company and going from project to project as opposed to companies laying off workers at the end of each project and hiring new workers for each project based upon gender, race and ethnicity and by each construction trade, profession and occupation. Also, how will a company recruit skilled and trained labor and talent without violating Equal Employment Opportunity regulations? The need to increase workforce and workplace diversity throughout the construction industry is a valid one; however, the means may not accomplish the intended measure without practical consideration of the unique nature of the workforce required to build in New York State.

3. Programmatic Sustainability

Programmatic sustainability is another important outcome of the new Reauthorized Article 15A. The new legislation substantially expands the role of Empire State Development thought its Director and statewide advocate to review MWBE utilization, conduct audits, investigate MWBE complaints and, overall ensure that documentation confirming good faith efforts are valid – all with an eye on maximizing MWBE participation in New York State.

The new legislation strengthens the certification program by specifically allowing revocation of a certification for convictions for misrepresenting the ownership status of the company. However, ESD must embark on an even stronger course to ensure a robust certification program, which will now include the extension of certification from three to five years. At present, issues related to processing time to be certified and re-certified and to appeal a denial take far too long and impact an MWBE’s ability to do business in the public sector.

Goal Setting. The legislation also requires agencies to consider findings of the most recent Study in setting goals and removes references to the 2010 Study. Every four years, beginning September 2020, each contracting state agency must submit a four-year growth plan as part of its annual report to the governor and legislature pursuant to section 164 of Article 15-A.

The new legislation amends the goal setting language through its emphasis in several places the need to consider the findings of the disparity study and limit the consideration of the availability of MWBEs to only those MWBEs ‘reflected in the directory of certified MWBEs’.  WBC encourages Empire State Development of to take steps to improve the accuracy of the directory that continues to include incomplete information that often precludes the selection of MWBEs with the capabilities and financial capacity to perform services.

Transparency. The new legislation facilitates increased transparency, both for MWBEs who apply to the program as well as primes who must comply with the program. Each business applying for MWBE certification pursuant to 2-c section must agree to allow the NYS Department Tax and Finance to share its tax information with the NYS Department of Labor to share its tax and employer information with the Division.  In addition, the new legislation requires all waivers to be made public on both ESD’s website and on the contracting agency’s website. That transparency of financial data needed for certification along with the publication of waivers will increase the transparency of the certification and good faith effort processes.