Practices that increased participation by minority- and women-owned underwriting firms in state-backed bond deals should made law, New York Gov. David Paterson said yesterday.
Minority and women-owned firms’ underwriting designations on New York’s state-backed bond deals grew to 29% last year from 4.3% in 2007, a state task force reported yesterday.
Paterson said he wanted “to even the playing field for so many qualified people, men and women, African-Americans, Hispanics, Asians, people who had fulfilled the requirements but weren’t receiving the opportunities from the state of New York.”
Paterson created the Minority and Women-Owned Business Enterprise Task Force in 2008 to develop practices to increase so-called MWBE firms’ share of business on state-backed bond issues. The task force approved a series of recommendations that fall that the public authorities adopted in the proceeding months. Originally focused on underwriting firms, the task force’s scope expanded to other areas including legal services and financial advisory services.
MWBE firms were involved in most state-backed bond deals the year before the task force was created, but they received few designations. In 2007, minority and women owned firms were lead managers on just 6.7% of state-backed bond deals.
That jumped to 43.5% in 2008 and 68.4% in 2009, according to the report. Underwriter designations on those deals rose to 34.2% last year from 3.2% in 2007. Participation as co-senior managers also increased: to 63.6% last year from 15.4% two years earlier.
The task force’s recommendations have exceeded their goals of 20% MWBE participation, in part by changing the request for proposals process, said task force chairman Paul Williams Jr. He is also executive director of the Dormitory Authority of the State of New York.
“There were a number of firms more than capable of competing that were locked out of the senior position in the syndicates because of our antiquated RFP processes that were in essence anti-competitive,” Williams said. “The most important [change] was the leveling of the playing field in connection with how the firms were to be evaluated. There had been ingrained in our RFP process a bias toward the status quo.”
Changes included shorter RFP cycles and considering firms’ experience outside of the state.
The proposed legislation, which is still being drafted, would require authorities and state agencies to establish MWBE participation goals in procurement contract awards and make firms’ diversity practices part of the evaluation criteria in awarding contracts.