Lightfoot proposes minority contracting reforms
The reforms include helping contractors obtain affordable financing, as well as making sure minority-and women-owned firms are paid on time for goods and services they provide to the city.
Mayor Lori Lightfoot tried Wednesday to level the playing field for minority-and women-owned companies to give them the capital they need to survive and a bigger piece of the contracting pie.
Over the years, Chicago mayors have produced a seemingly never-ending parade of minority contracting reforms only to have the share of city contracts awarded to firms owned by Blacks, Hispanics and women remain stubbornly static.
At times, Black contracting fell to a single-digit percentage of overall city spending, infuriating African American aldermen who bring up the issue every chance they get.
At one point, Lightfoot’s now-former Corporation Counsel Mark Flessner even warned them to back off because they were crossing a legal line he wouldn’t be able to defend.
Flessner is long gone, the fall guy for trying to block WBBM-TV (Channel 2) from airing bodycam video of the botched raid on the home of Anjanette Young. But the minority contracting issue remains.
Lightfoot’s array of reforms to remedy that disparity is being unveiled as she prepares to launch a five-year, $3.7 billion capital plan and receive an unprecedented $1.8 billion infusion of federal coronavirus relief funds.
“The change we need and the change we want doesn’t just happen. We have to make it happen,” Lightfoot said.
“At its core, what we’re announcing today will help level the playing field for both current and future businesses that do business with the city of Chicago.”
Proposed changes include:
• A new, $25 million Vendor Impact Fund to guarantee companies owned by minorities, women, veterans and people with disabilities receive access to affordable financing. The fund will give qualified and city-certified vendors preference in accessing Small Business Administration loans and tapping into Payroll Protection Program funds included in both rounds of federal COVID-19 relief. Particular preference will be given to Chicago companies with more than half of their employees living in the city.
All but $1 million of the $25 million fund will be “seed money” provided by Goldman Sachs and the Community Reinvestment Fund.
• A Prompt Payment Working Group to ensure minority- and women-owned companies operating on a shoestring receive timely payment for goods and services they provide the city. The group includes representatives from key infrastructure departments as well as the Departments of Law, Finance and Procurement Services.
They will examine “opportunities for upfront or other alternative payment options.” They also have until June 30 to “review enhancements to existing payment systems and analyze and develop process improvement to help track and monitor invoices and further streamline payments.”
Lightfoot said the city has had a reputation for slow payment since her days as deputy procurement officer for former Mayor Richard M. Daley in 2005.
“I aim to end that problem. No small or medium-sized business can afford to carry a debt 60, 90 [days] or longer when they have to continue meeting payroll and buying materials to get an existing job done,” she said.
“The city’s mantra must be when you deliver the work on time, it’s only right that you get paid on time.”
• An executive order enhancing reporting requirements. To get a better handle on performance, Lightfoot has mandated that city contractors “submit projections as to when and to what extent they expect to use certified” minority firms to meet the city’s set-aside goals. That will be followed by quarterly reports on actual use for the duration of the contract.
Contractors having agreements with the city will be required to submit annual reports that contain a description of their business diversity program or report the lack thereof and include any available spending information for goods and services from minority-and women-owned firms on non-city work during the prior calendar year.
Lightfoot noted the racial reckoning after the death of George Floyd prompted many corporate chieftains to talk a good game about ending structural racism in America.
“That’s great. But what we are now saying is, prove it. ... We want companies to go beyond statements and put their money where their mouth is,” she said.
“This transparency will give us, for the first time, a glimpse of who we are doing business with and whether they share our values around building an equitable and inclusive economy.”
Ald. Gilbert Villegas (36th), the former Lightfoot floor leader who chairs the City Council’s Economic and Capital Development Committee, praised the mayor’s contracting reforms. But they do not go as far as he has proposed.
Villegas wants Chicago to raise the bar on minority set-asides to 30% (from 26%) for companies owned by minorities and 10% (from 6%) for firms controlled by women. He also wants to raise caps on gross income and personal net worth that have forced construction companies owned by women and minorities out of Chicago’s set-aside program.
Companies are now forced to “graduate” from the set-aside program when their average gross receipts exceed $33 million over the previous three fiscal years and when the owner’s personal net worth tops $2.4 million.
“I can compromise,” Villegas said Wednesday.