Controller Urges L.A. to Advance Equity for Small and Disadvantaged Businesses

LOS ANGELES — L.A. Controller Ron Galperin released a report today recommending improvements to City programs that help small businesses and businesses owned by women, people of color and others, earn contracts with Los Angeles. The City spends billions of dollars yearly contracting with private businesses for commodities, professional services and construction. In his report, “Seizing the Opportunity to Advance City Contracting Equity,” Galperin found that, although 6,000 businesses are certified to contract with the City, only a tiny fraction of small businesses and companies owned by women, people of color and LGBTQ+ people end up doing business with L.A.

“The movement for racial justice ignited a deep and necessary dialogue throughout this country and in Los Angeles over how to best confront systemic racism and prioritize greater inclusion,” said Controller Galperin. “One of the many issues that must be addressed locally is the need for a more equitable environment for small businesses to contract with the City. More can and must be done to help private companies owned by women, people of color, LGBTQ+ people and others do meaningful business with Los Angeles.”

The City’s main mechanism for connecting small and disadvantaged businesses to contracting opportunities is the Business Inclusion Program (BIP), which requires companies competing for contracts to reach out to certified businesses and make a good faith effort to develop more inclusionary subcontracting opportunities. But Galpern found that the BIP is not as effective as it could be. The City’s decentralized procurement process makes it challenging to administer, and the data on disadvantaged business participation in contracting has never fully been analyzed. Without this, the City cannot effectively remove barriers to more equitable and inclusive contracting.

Galperin recommended a series of changes to enhance City contracting equity:

  • Identify or create a City department or working group with the resources and authority to enforce BIP requirements. Mayor Eric Garcetti’s recent appointment of a Chief Equity Officer for the City with economic development experience can assist in this endeavor.
  • Establish a pilot program requiring small business participation in large City contracts.
  • Redesign the outreach process to target small businesses, local businesses, and businesses owned by women and people of color.
  • Standardize data collection by City departments and publish the findings online.

Read the full report here: lacontroller.org/contractingequity or https://lacontroller.org/audits-and-reports/contractingequity/

Follow L.A. Controller Ron Galperin at @LAController on Twitter, Facebook and Instagram.

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