COMPTROLLER LIU: CITY IGNORES ITS OWN PROGRAM TO HELP STRUGGLING SMALL BUSINESSES
After Six Years, City Has Registered Just Three "Socially and Economically Disadvantaged" Companies, Audit Finds
NEW YORK, N.Y. – A program designed to help increase City contracts with small businesses owned by persons who are socially and economically disadvantaged is failing to do the job for which it was created, City Comptroller John C. Liu announced yesterday. The Emerging Business Enterprise (EBE) program, created in 2006 by Local Law 12, to date has certified just three businesses, a new audit by the Comptroller's office of the City's Department of Small Business Services (DSBS) has found.
"When Mayor Bloomberg signed this into law, he promised a level playing field for returning veterans, the disabled, and others who have the entrepreneurial spirit but face distinct disadvantages," Comptroller Liu said. "The City needs to restore that promise and level the playing field when it comes to awarding the City's billions in contracts."
In 2006, the City Council passed and the Mayor signed legislation creating a DSBS program to increase City contracting with qualified "socially and economically disadvantaged" EBEs. The Council's goal was to boost small businesses owned by persons meeting the requirements for being socially and economically disadvantaged, such as a person with a disability and with little access to credit. The law was a companion to the City's Minority and Women-Owned Business Enterprise (MWBE) law, which encouraged City contracting with women- and minority-owned businesses.
"Veterans of the wars in Iraq and Afghanistan are returning home with high rates of disability but they are also well trained and highly skilled individuals," said Terry Moakley, Chair, VetsFirst Committee, United Spinal Association. "They should be the first citizens whom City government agencies seek out for the EBE program because of their skills and their selfless service to our nation."
"The unemployment rate for people with disabilities is 22 percent; it seems obvious the City should have reached out to our community," said Edith M. Prentiss, Vice President of Legislative Affairs, Disabled In Action. "The federal government is encouraging self-employment and entrepreneurship as paths to joining the workforce for Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) recipients, but the City seems not to be reaching out to that population and the Mayor's Office for People with Disabilities seems to have no role in the EBE program."
"There are plenty of small business owners who would qualify as disadvantaged in the EBE program if the City would bother to ask," said Joan Peters, Executive Director, Brooklyn Center for Independence of the Disabled. "Many of them undoubtedly have disabilities, and all who qualify would benefit from a more level playing field. Being overlooked is an unfortunate occurrence that no one should tolerate."
The full audit is attached and available for download here: http://www.comptroller.nyc.gov/bureaus/audit/audits_2013/06-06-13-MD13-077A.shtm
Background
In May 2006, when Mayor Bloomberg signed Local Law 12, he noted that "the City will be held accountable for progress toward these goals, through regular reporting. Eliminating disparities in contracting benefits all New Yorkers by leveling the playing field and increasing competition for City contracts."
Comptroller Liu's audit found that DSBS had fulfilled only one provision of the law: the requirement to keep and update an EBE directory. The audit also faulted the agency for providing minimal evidence of its efforts to identify or recruit qualified businesses into the program. For example, the agency's promotional materials barely refer to the EBE program, and primarily focus on the MWBE program. A link on the City's 311 website defines the EBE program, but clicking on it sends browsers to a DSBS webpage that describes the MWBE program; there is no mention of the EBE program. The agency also had not fulfilled the law's requirement that the agency report on its EBE program efforts and activities to the Mayor's office and the City Council, according to the audit.
Agency Response
The DSBS disagreed with the audit finding that it did little to promote the EBE program and countered that its low enrollment of businesses may reflect a reluctance on the part of companies to certify as disadvantaged. The agency failed to provide any evidence in support of its theory, however.
In response to the audit finding that DSBS has not reported to City Hall or the Council on its EBE efforts, the agency noted that there was not much to report because "given the limited number of certified EBE companies, there has been minimal substantive information to report specifically on EBEs."