The MTA is calling on the feds to open up availability of government contracts to more millionaires as a means of growing its pool of minority-and-women-owned business enterprise (MWBE) vendors.
MTA contractors certified under the MWBE program must be women and/or a member of a recognized racial or ethnic minority group, but firm principals also cannot have a personal net worth of more than $15 million per authority procurement rules.
That cap was raised in recent years up from $3 million, but the issue becomes thornier for the sprawling transit agency because of the feds’ much lower personal net worth cap of a measly $1.32 million, given the intricate song-and-dance played by the different levels of government.
On Wednesday, MTA Chair Janno Lieber told assembled dignitaries at the Conference of Minority Transportation Officials’ legislative breakfast in Midtown that he believes the feds’ cap is too low and effectively limits the pool of MWBE contractors that can be hired.
“We’re trying not to exclude companies, rather than to push them out,” Lieber told the room as attendees munched on scrambled eggs and sipped coffee. “Now that’s why we support what COMTO has put on its legislative agenda, to get that cap raised. Because it needs in the DBE category, which is the federal projects, a lot more folks to participate with our programs.”
When the MTA accepts federal funds for a capital project, it has to follow federal procurement rules. The authority often relies to an extent on federal money for some of its biggest projects, like the Second Avenue Subway, East Side Access, and the revitalization of Penn Station.
The federal Department of Transportation has proposed raising the net worth cap for federal disadvantaged-business-enterprise (DBE) contractors from $1.32 million to $1.6 million. But those in the industry say that having a puny seven-figure net worth excludes too many people in the contracting sphere, and doesn’t account for the high cost of doing business in New York relative to the rest of the country.
“We support efforts to increase the personal net worth cap and think it’s the right direction the federal government is heading in,” said Felice Farber, senior policy director at the General Contractors Association of New York. “If anything, they should make it a larger personal net worth cap in the metropolitan area, because the cost of doing business here is so much higher. It’s not the same doing business in New York as it is doing business in the middle of the country, where the wage rates and cost structure are very different.”
An MTA spokesperson declined to comment beyond Lieber’s Tuesday remarks, including as to whether the MTA is lobbying the federal government on behalf of the proposed cap increase.
The MTA ranks number 1 among state agencies in dollars paid to certified MWBEs in the Big Apple, Lieber said at the breakfast, with $1.38 billion being doled out to its pool of contractors in the 2020-21 fiscal year.
Overall, the transit authority has had what some might describe as a notorious history of contract overruns and ballooning project costs, though the MTA says that all changed under Lieber’s watch over the past five years in his various roles within the authority.
Nevertheless, government watchdogs say that opening up to more firms, even wealthier ones, could make the bidding process more competitive and thus more transparent.
“You want to have as many people bidding on contracts as possible, because that lowers the cost for the MTA and therefore that lowers the cost for the riders,” said Rachael Fauss, policy advisor at the watchdog group Reinvent Albany. “If they raise the threshold for MWBE vendors, that actually means more MWBE can bid on the contracts. And that’s not necessarily a bad thing.”
