Minority business advocates call for reforms to troubled MBE program

Discussion centers on legislation to increase state contract dollars awarded to women, minority firms

By: - May 18, 2023 5:00 am

Vennicia Kingston, who owns a state-certified woman and minority-owned construction company, speaks to Senate lawmakers at a State House hearing on Wednesday. (Photo by Nancy Lavin/Rhode Island Current)

Five years have passed since Vennicia Kingston registered her construction firm as a state-certified woman- and minority-owned company.

Yet only now has Kingston started to see benefits from the state designation, winning five recent or upcoming government subcontracts for her seven-person construction company, Eagle Eye Post-Construction Services.

Still, it’s a struggle, as Kingston told Senate lawmakers in a State House hearing Wednesday. 

“I am the bench player who never gets a chance to get in the game,” she said, recounting the many times her business was passed over as a potential subcontractor on state contracts. Not to mention financing woes, lack of prompt payments and the many other hurdles suppressing growth for minority-owned businesses like hers.

Which is why Kingston and other minority business advocates are backing a proposal to increase the minimum percentage of state contract dollars and purchase orders awarded to certified minority and women-owned businesses. The Senate bill introduced by Pawtucket Democrat Sandra Cano would raise the existing 10% cap to 20%. Of that, there would be separate 10% each minimums for women and minority companies (The current law lumps both together in a single 10% minimum).

While not the only solution to combating structural inequity that has plagued Rhode Island’s state contracting system for decades, it is an important signal that the state is ready and willing to invest in its minority business community, said Kristina Contreras Fox, policy director for the Rhode Island Black Business Association.

Keeping the status is only going to ensure that Rhode Island goes backwards,” Contreras Fox said Wednesday. “Minority business owners are very hungry and ready to compete for these contracts, but the problem is they’re not getting a bite of the apple.”

History of falling short of benchmarks

Indeed, the state’s Minority Business Enterprise program is riddled with red tape and laden with loopholes, which in combination with access and awareness problems have resulted in a pattern of failure to meet the state’s own benchmarks. Data from the Rhode Island Office of Diversity, Equity and Opportunity, which administers the program, shows the state has only met or exceeded its existing 10% participation law three times – in fiscal years 2018, 2019 and 2022 – since the 1986 law was passed.

Increasing the minimum threshold alone, when the state can’t even meet the existing, lower minimum, must be coupled with other reforms to help minority entrepreneurs start and grow their businesses, said Contreras Fox. She repeated a request the Black Business Association made earlier this year, asking the state to commit $100 million over the next 10 years to provide loans and offer support services to minority businesses. 

No legislation has been introduced based on this proposal as of Wednesday. 

Minority business owners are very hungry and ready to compete for these contracts, but the problem is they’re not getting a bite of the apple.

– Kristina Contreras Fox, policy director for the Rhode Island Black Business Association

Reforming the beleaguered program has been a battle cry among minority business groups for years, intensifying after a state-commissioned study backed up their calls for action with hard data. The 2021 study showed that the state statistically discriminated against minority-owned businesses, awarding contracts and purchase orders to them far less frequently than their availability within the state would suggest they could procure.

Increasing the minimum percentage of contract dollars and purchases awarded to women and minority businesses was one of a host of recommendations included in the study, though it called for raising the minimum from 10% to 15% (as put forth in Gov. Dan McKee’s proposed fiscal 2024 budget.)

The  study also recommended better tracking of dollars awarded to women and minority contractors and subcontractors, and better enforcement for contractors.

A second bill, also sponsored by Cano, tackles the lack of compliance by contractors using minority or women-owned subcontractors by requiring the Rhode Island Department of Administration to give every state contractor a list of state-certified, minority and women-owned businesses to use as potential subcontractors. The legislation also requires the state to document any waivers issued to contractors who have gotten a pass on meeting the MBE requirements after a “good faith effort.”

Ambiguity around what constitutes a good faith effort has been a source of contention. 

Lenette Forry-Menard, a lobbyist for the Rhode Island chapter of the American Council of Engineering Companies, opposed the proposal to increase minority and women-owned business participation because she said it was too difficult to find licensed, qualified engineering subcontractors as it is.

Contreras Fox in a response after the hearing pointed out that both Forry-Menard and Anthony Cherry of statewide trade association BuildRI who also opposed the legislation, were white, whereas the three supporters of the bill all identified as women of color.

“It should matter to the state to not only be listening to people from white-led organizations,” Contreras Fox said.

Kingston also stressed the importance of hearing from, and helping minority business owners like her – not just through increasing the mandated participation, but through reforms to address financing gaps, payment delays and other hurdles

“It’s not that we can’t do the work, or don’t know how,” she said. “I know I can handle it. But the financial piece is where I might not be able to step up.”

Both of Cano’s bills were held for further study by the Senate Labor Committee. Companion legislation on both bills, both sponsored from Rep. Joshua J. Giraldo, a Central Falls Democrat, remains in the House Labor Committee following a March 15 hearing. 

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Nancy Lavin
Nancy Lavin

Nancy Lavin is senior reporter covering state politics, energy and environmental issues for the Rhode Island Current.