Where Are The Minority Contractors?

The Board of Education planned to renew $8.7 million in maintenance contracts this year, with only a small share going to locally-owned businesses, and even less to those owned by women and racial minorities.

“We can cut through all the fluff: The question from us is that we want to make sure that we engage as many qualified small businesses as possible,” Tamiko Jackson-McArthur said at a meeting this week of the Board of Ed’s Finance & Operations Committee. ​“The issue is that we did not feel that engagement was happening as it should be, with minority and women owned businesses.”

But that’s not for lack of trying, insisted Michael Fumiatti, the city’s purchasing agent, and Lil Snyder, the head of the city’s small contractor development program.

Even with a special program for local contractors, several steps in the procurement process might still discourage an entrepreneur from bidding: onerous documentation, expensive insurance, thin profit margins and long payment delays.

Those city officials walked through the obstacles small businesses face at the Finance & Operations Committee meeting, which took place Monday at 54 Meadow St. While the back-and-forth showed the city has no easy fixes for the problem, Fumiatti and Snyder agreed to redouble their efforts as the school board puts out all this year’s facilities contracts to bid.

(Frank Redente, the committee’s chair; Jamell Cotto, the vice-chair; and Darnell Goldson, the board’s president, who’ve pounded the facilities manager in recent months about process and performance, were not present at the meeting, which board member Jackson-McArthur chaired.)

The procurement process, as set out in the city charter, is designed to allow public agencies to find companies who’re qualified to do the work, with prices, rather than preferences, guiding the process.

Typically, any project over $10,000 typically goes out to bid, meaning that the specifications are posted on the city’s website and in newspaper ads for anyone to submit a response.

If the work is expected to cost under $150,000, the city makes an effort to steer the contract to local small businesses. New Haven County businesses in the small contractor development program have the first crack at submitting a bid.

“We wanted the small guys to bid with small guys,” Snyder said.

If the city doesn’t get three quotes, then the big guys have a chance to bid. Yet even if an out-of-town business puts in the lowest price, local shops have the option to swoop in (if the difference wasn’t more than 10 percent) and claim the lower price too.

To get in the program, a small business must have been in operation for more than a year, and they must take in less than $3 million in revenue. Matching property tax assessments, the city checks that the businesses have actually located their headquarters, not just a post office box, within New Haven County.

(If a business meets those eligibility requirements, its owner can register by calling 203 – 946-6550.)

Currently, 123 businesses are in the small contractor development program, which has been around for almost two decades. A sizable proportion — 45 percent — are minority-owned. Yet it appears that the schools are still having trouble reaching those contractors.

Among the current crop of 31 contracts up for renewal, eight were supposed to go to New Haven County businesses participating in the small contractor development program. Of those, five are based within the city, two are owned by white women, and one is owned by a black man.

Calculated in dollars, though, only about 5.2 percent of the contracts are going to those small businesses.

The two female-owned businesses, East Shore Glass and Malangone Mechanical, won contracts worth $145,000, while the one black-owned business, White Owl Construction, won a contract for $25,000.

Four other businesses — Consolidated Electric, Concrete Creations, Cohen’s Key Shop and Tri-State Maintenance Services — nabbed another $285,000 in contracts.

Those outcomes aren’t because of any personal bias, Fumiatti said.

“We are required to award to the lowest responsive bidder. Some are small, some are minorities, some are women. They all bid against each other, and I am required by law to award to the lowest,” he explained. ​“Personally, I’m color and gender blind, when it comes to awarding contracts.”

But there are a number of structural reasons why minorities aren’t getting work, city officials added.

To sum it up: school contracts aren’t the home improvement projects that they’re used to.

“I can’t tell you how many contractors come in and say, ​‘I do it all.’ Well, you can’t do it all,” Snyder said. ​“You have to specialize in something. We don’t want a home improvement contractor. We want someone to come in and do plumbing, electrical, sheet rock. So, we start by asking, What is your speciality?”

Sometimes, Will Clark, the district’s chief operating officer pointed out, there’s just no local business with the right expertise.

City lists show plenty of competition among small businesses for carpentry, electrical and painting gigs. But no one’s registered to clean ducts, install computer networks, place rebar, design cabinets, or hook up toilets and water fixtures. In those cases, the city has no choice but to open up the bidding up to bigger companies from outside the area.

Another big issue is that some home repairmen might have worked off the books. But to join the small contractor development program, the companies need to have all their paperwork in order, Snyder said.

“We want to vet them,” she explained. ​“We want to make sure they’re a legitimate business registered with the secretary of the state or the city clerk, that they have copies of their drivers license, copies of their tax returns, copies of their vendor licenses, copies of all their professional training. We go through a whole assessment to make sure that they are all capable, eligible businesses.”

And if they get the work, there might be other issues that stop them from keeping up, like expected 45-day delays to get an invoice paid — a problem for which Goldson’s employer, RCN Capital, was paid by the city to give payday loans to a school contractor.

The city is in the process of switching over to electronic invoices to speed payment. Fumiatti can also prioritize some processing, if he knows there’s a problem.

“If you have a cash-flow problem, you have to tell us up front,” Snyder said. ​“You can’t wait until you’ve done the work, and now you’re dying to get paid on Friday.”

Some groups also perceive the procurement process as being only for insiders, even though open bidding is supposed to counteract that problem. ​“What I’ve found on the street is a perception that you [need to] know someone,” said Shawn Garris, the city’s procurement analyst.

That perception can become self-reinforcing, Fumiatti explained, because their non-participation skews the results. ​“They’ve got to bid to win,” he said.

How to fix the imbalance was a tougher question to answer: Did the school district need to do more outreach about the bidding process? Or did the city and other business associations need to do more to build the capacity for companies to be able to take on a contract?

Jackson-McArthur asked if the businesses simply don’t know about the city’s programs.

Fumiatti said that, in the past, they’d asked the city assessor for a list of all vendors who’ve registered their business, then sent out mailings to let them know about the small contractor development program. He added that he wasn’t sure when the last one went out, but said they could do one soon.

They also contact business associations and state agencies to help with outreach. On big projects, like the upcoming Strong School’s construction, they hold events to walk small businesses through the job opportunities and the process for getting them.

Joe Rodriguez, another committee member, said he needs more information to identify the problem. He asked how often minority-owned businesses are putting in bids and not getting the work.

“Looking at that number will identify to this body and others where we need to do the work. It’s clear that we have to do more work on outreach, but if I can see that the bids are there, that minority-owned businesses and women-owned businesses are not getting the contracts, then we can have a conversation internally and figure it out,” he said. ​“I want to see that number so we can figure out where the emphasis should be focused on.”