City's Women and Minority Enterprise Program is Ineffective, Wendy Greuel Report Says

A city program aimed at giving women- and minority- owned firms special access to city contracts is ineffective because of slow processing time, poor outreach and an excess of waivers that have allowed department heads to avoid reaching out to the businesses, according to an audit released Wednesday.

The audit by City Controller Wendy Greuel found the city's Minority and Women Enterprise Contracting Program also suffers from a lack of central oversight and has a two-year backlog of businesses seeking to be certified.

Greuel, who is running for mayor in March 2013, said the backlog is causing small businesses opportunities to bid on contracts worth up to $100 million over a two-year period and is costing jobs at a time when the unemployment rate in Los Angeles County is above 11 percent.

"It's unacceptable that the city is not doing more to help businesses create jobs," Greuel said.

The audit found that between 2009-10, city departments were allowed 453 waivers, relieving staff from having to conduct outreach to alert women and minority-owned businesses that contracts were available.

Greuel said Mayor Antonio Villaraigosa's office set appropriate goals for awarding contracts to certified small businesses, but had no way of measuring results.

Villaraigosa's office took issue with the audit, describing it as backward looking. Mayoral press secretary Peter Sanders said the failures described by Greuel's audit describe a previous program that led Villaraigosa in January 2011 to create a successor initiative, dubbed the Business Inclusion Program, aimed at fixing the problems.

"The review of this new program was premature," Sanders said. "As we have moved forward with implementation, we made continuous improvements in processes, procedures and training to achieve the objectives laid out in the Business Inclusion Program."

Sanders said the former program did allow for a large number of waivers, but called it "unfair and misleading to assume that requiring outreach on these opportunities would have resulted in women and minority businesses receiving this work (worth up to $100 million)."

The mayor's office has not issued any waivers under the new program, Sanders said.

Asked about the backlog, Sanders said the city is one of very few, if not the only municipality, that certify businesses at no cost.

"While staffing reductions over the years have led to an increase in the time to certify businesses, businesses were offered alternatives, including certifications by entities who charge a fee," he said.

During a news conference to announce the audit, Greuel was flanked by the heads of Latino and black business associations expressing support for improving the program.

Ruben Guerra, chairman and chief executive officer of the Latin Business Association, called the report a shame.

"It's a real shame that now the truth comes out. For every time we're told yes, we're doing the best we can to involve our community and all of the small businesses we represent ... today we know it's a lie," Guerra said. "They're not doing their best, and they can do more."

Guerra said the City Council needs to put pressure on department heads to ensure that they're offering minority- and women-owned businesses the opportunities they are supposed to under the mayor's directive.