State agencies spent $ 4.8 billion in 2020, but black-owned businesses received only $ 11 million in state contracts and Hispanic businesses only received $ 12 million , according to a new state report obtained by GBH News.
The Supplier Diversity Office report says state agencies have exceeded their target of concluding 8% of their contracts with minority-owned businesses. This conclusion is based on the tally of the hundreds of millions of dollars the state has spent with nonprofit organizations run by minorities, as well as on the work that non-minority companies working for the state have passed on to the companies of the minorities. Without these categories, all minority-owned businesses combined received about 2% of state spending.
The new report – posted quietly on a state website in recent days – says that in fiscal 2020, the state spent just over $ 300 million on direct contracts with companies owned by minorities (called MBEs), but black-owned businesses got just $ 10.8 million in work; Hispanic-owned businesses got $ 11.5 million; and Asian companies got $ 71.1 million.
The vast majority of the state’s $ 301 million in direct “MBE spending” – $ 204 million – went to minority-run nonprofits such as Brockton Area Multi-Services, Inc. and Action for Boston Community Development, large social service organizations that provide a wide range of services from mental health care to housing assistance.
The state has reported spending by minority businesses every year for decades, but this is the first year that spending has been broken down by race, following the announcement by the GBH News Center for Investigative Reporting last year. that the state intentionally inflated the number of spending by minority companies. by including amounts that were not contracts with minority companies.
Travis Watson, chairman of the Boston Employment Commission that monitors the hiring of minorities in municipal jobs, said the lack of state contracts going to minority-owned businesses contributes to the racial wealth gap.
“The state spends 0.2% of all its money on black-owned businesses? You almost have to try not to give black people the opportunity to be so low, ”he said. “I just don’t understand. It is very frustrating.
Watson also criticized the Supplier Diversity Office’s practice of counting public funds or grants to minority-run nonprofits in its expense reporting with various suppliers.
“Minority-run nonprofits provide an invaluable service, but they don’t generate wealth like a typical business does,” he said. “I just don’t think it’s appropriate.”
Trevor Mattos, an economist at the Boston Indicators Research Center, said the state’s latest report revealed a major gap between the number of black and Latino entrepreneurs available to work in the state and the number actually doing business with the state. ‘State.
“The gap is really big,” Mattos told GBH News. “In Massachusetts we actually have a higher density of black-owned employer businesses than we have nationally. So it is not a question of whether these companies exist or not.
Blacks and Latinos own more than 3% of state businesses with employees, according to census data, but the Supplier Diversity Report shows only a fraction of them are actually registered with state and certified as minority-owned enterprises.
GBH News reported last year that the value of state contracts won by minority-owned companies has fallen by more than 20% over the past two decades. But that report was based on state reports that did not distinguish between payments to private companies and payments to nonprofits. Based on the separations of these totals in the 2020 report, minority-owned businesses appear to have received a much lower share of state contracts than previous public reports suggested.
In November, Governor Charlie Baker, facing criticism from minority business advocates, elevated the Supplier Diversity Office to the firm’s agency, more than doubling its budget and promising to focus on expanding opportunities. procurement for minority-owned businesses.
SDO officials did not immediately respond to a request for comment on this story. In the report’s introduction, Executive Director William McAvoy wrote that the Baker administration “has released legislative and policy changes for fiscal year 2021 that will have a huge impact on small and diverse businesses, including … requiring secretariats and agencies appoint SDO links and submit Expenditure / Procurement Plans, starting in FY 2022 [and] directing the SDO to aggressively and intentionally promote upcoming procurement opportunities to various and small businesses. “
Paul Singer contributed to this story.