Latino Minority Businesses Grow – But Not Fast Enough

Argentinean entrepreneur Daniel Levy, at his Manhattan Office Design headquarters. (Photo by Mariela Lombard via El Diario)

People sitting in Bryant Park are making use of the city contract that an Argentinean entrepreneur won to provide seating for the recreational space. That would be Daniel Levy, the founder of Manhattan Office Design, a company dedicated to commercial interior design and planning that sells furniture for offices and other work spaces.

The venture began in 2005, as Levy’s furniture sales through eBay started to grow. His current sales revenue is at around $3 million annually. Last year, the company was included among Inc.’s list of the 5,000 fastest-growing enterprises. The business now has five employees and a customer service center in India.

Obtaining contracts with the city, the state and the federal government has been crucial to the company’s evolution. Getting certified as a minority-owned business, which can be done if more than 50 percent of the company is owned by a Latino, African American, Asian or a woman, grants access to competing for public and private contracts that have been especially reserved for such minority or women-owned businesses, or M/WBEs.

“Getting certified is tedious, certainly, but once you overcome that barrier, there is a world of opportunities, or at least that is what it seems to me,” said Levy, adding that his young company already has 400 contracts under its belt. The first one was small – a few desks for the NYPD in 2015 – and he recently delivered another request from a U.S. military base in Korea, as he also has contracts with the federal government through his company’s Government Office Furniture division.

These contracts offer stability to companies and help maintain incoming cash flow even in times of crisis. “In 2008 [during the crisis], we were headed in a direction we did not like, but then the city and federal contracts began to emerge,” said Levy.

However, the benefits of getting certified are not felt immediately. Levy admits that it takes a while, two to three years, “because you also need to understand the relationships between the agencies, the portals used by providers, you need to learn the codes, etc. That took me some time,” he said. “You have to study every program and the contracts’ specifications.”

Minimal growth

Similarly, it is taking other Latino entrepreneurs some time to stand out and grow in the city and state despite the fact that both administrations are working to increase the number of contracts and the amounts offered in the next few years. “There are more contracts, but not as many as we thought would happen. Growth has been less than expected. It is not moving fast enough,” explained New York State Coalition of Hispanic Chambers of Commerce Chairman Frank García in an interview with El Diario.

García, along with other members of local chambers of commerce and entrepreneurs, recently met with City Comptroller Scott Stringer to discuss the impact the city’s annual report on M/WBE contracts has had on the business community. Its latest issue divulged the data that worried García. In fiscal year 2017, according to the comptroller’s office, the city granted 1.3 percent of all the money it spent on contracts to Latino businesses. Some growth has occurred in the last four years, but it has been minimal. In addition, Asian and female entrepreneurs surpass their numbers by a long way.

The criteria used in Stringer’s office to tally public contracts are different than those used by the city, which stated that last year, for the first time, more than $1 billion in public contracts were granted to minority businesses in general. As for contracts given to Hispanics, there were 1,123 primary contractors – not subcontractors – from a total of 9,760 M/WBEs. That is, they are still a small percentage, compared to other minorities and women. However, the value of the contracts Hispanic companies were granted totals $137.4 million, a 153-percent increase.

Even though these figures are much higher than those seen in previous years, under the city’s metric the participation rate of Latino primary contractors has not moved significantly in the last three years.

The Mayor’s Office of Minority and Women-owned Business Enterprises, which is relatively new, admits that there is still work to do to reach the goals set by Mayor Bill de Blasio of having 9,000 M/WBEs registered by 2019. The other goal is to give 30 percent of all public contracts to these companies.

In 2017, 11.4 percent of all primary and subcontracts were granted to these businesses. The same year, 930 new Latino enterprises became certified, 12 percent more than in 2016.

García concedes that improvements have been made to the certification process, while the Mayor’s Office admits that it has cut down red tape by 30 percent due to complaints. “There will be further improvements,” they added.

These upgrades will be welcomed by entrepreneurs, as the number of certifications is starting to go down, according to Quenia Abreu, president of the New York Women’s Chamber of Commerce, which assists entrepreneurs in their certification applications. Abreu explained that she had detected a decreased number of recertification applications. “This may be due to the fact that, after all that effort, these contracts fail to arrive and entrepreneurs become disheartened,” said García.

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The year started with promising news. On the one hand, the city has obtained the state’s authorization to directly approve – that is, without public bidding – contracts of $150,000 or less exclusively for M/WBEs. Previously, it was only allowed to give direct contracts of $20,000, which was too low. The state is able to grant direct contracts of less than $200,000, which is what the city wanted. In addition, the city has closed a deal with Amalgamated Bank, Bank of America and TD Bank to create loans for programs supporting these companies for three times the amount it used to award.

Other ideas discussed at the meeting with the comptroller included considering the direct renewal of contracts after a satisfactory outcome to avoid having to bid again, simplifying certifications and having staff in charge of diversity from each agency reporting to the mayor’s office.

Daniel Levy had a long resume before being certified as a minority-owned businessman. Some of the jobs this Argentinean entrepreneur has performed include studying humpback whales in Antarctica, washing dishes, painting houses, walking dogs and cleaning boats in New Jersey. He arrived in New York in 2001, not even 30 years old and with barely $400 in his pocket.

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Levy says that the city pays promptly and quickly, which allows him to manage his capital efficiently, and added that, when a company gets certified, it becomes visible to larger corporations contracting through the M/WBE office.

“There is a lot of money available, and all those companies have diversity supplier programs. Two years ago, I started to go to the conventions and was surprised at how easy it was for me to meet the person who does global contracting for Apple. Where else was that going to happen to me?” he said, laughing.

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