Minorities and women have been largely locked out of Cambridge city contracts, study shows

Out of all the money the city of Cambridge spent on goods and services from July 2016 through June 2021, just over 1% went to minority- or women-owned businesses, according to a new study commissioned by the city.

The study, released Thursday, found that the city spent $260 million in city contracts over the course of those five years. But in that period, only about $1.7 million went to businesses owned by white women; about $1 million went to Asian-owned firms; just over $300,000 went to Hispanic-owned firms; less than $60,000 went to Black-owned businesses; and less than $7,000 to Native American–owned businesses.

“You’re trying really hard not to hire Black people in that situation,” said Travis Watson. He serves on the Boston Employment Commission and works at the Massachusetts Housing Investment Corporation, bringing minority-owned businesses into affordable housing development.

The “disparity study” is the first of its kind in Cambridge, designed to measure the disparity between availability of minority- and women-owned businesses to provide goods and services to the city and the share of the contracts those businesses actually win. Any city wishing to implement programs to specifically benefit minority-owned businesses need to have a study that proves there is a disparity that their program would address.

The report finds that the city’s race- and gender-neutral “efforts have not been effective in resolving the identified disparities.” Beyond the data, the study surveys minority- and women-owned businesses who said that “there is an informal network of businesses that have relationships with the City and represent a closed circle of businesses that have access to contracting opportunities within the City.”

The report concluded that Black-, Hispanic- and women- owned businesses were being overlooked for contracts across the board — except for Hispanic-owned firms in professional services, which covers medical services, legal services, financial services and more.

Pardis Saffari, who is the city’s director of Economic Opportunity and Development, says the study will be a tool for Cambridge to include more disadvantaged businesses in city contracts.

“City staff were very excited with the opportunity to do this type of study so we could have some data and understand where we are so we can move forward to get higher participation rates,” she told GBH News.

In a press release Thursday, the city highlighted efforts underway to bring in more minority- and women-owned businesses that include trainings for businesses to get certified as minority- or women-owned as well as education and outreach on government contracting processes.

Saffari said she was glad to see that three-quarters of the city’s spending was with local businesses, “meaning we're doing a lot of work with our local businesses in the county and otherwise.”

But with minority- and women-owned businesses, “obviously we’re still pretty low,” she said.

The Cambridge study follows efforts across Massachusetts to increase minority participation in government contracts at both the state and local level. After a 2020 investigation by the GBH News Center for Investigative Reporting revealed that the value of government contracts won by minority owned businesses had declined over the previous two decades, then-Gov. Charlie Baker elevated the office that manages minority contracting to a standalone agency with much greater power to force state officials to meet minority inclusion goals.

In that context, Cambridge’s tiny share of minority contracts “blows my mind a bit,” Watson said. He says there’s a progressive community in the state that “talks a really big game about access and opportunity and the racial wealth gap and the gender wealth gap ... but they all still kind of do business on the golf course.”

Minority-owned businesses are “excluded from informal contracting networks that may enhance success in winning public contracts with the City of Cambridge,” the study found.

The study could set Cambridge on the path of implementing what’s called a “sheltered market program” that would favor minority- and women-owned businesses in some areas of government procurement.

Boston launched its own “sheltered market program” soon after Mayor Michelle Wu took office in November 2021. New numbers put out earlier this fall showed that the city spent 14% of all contracting dollars with minority-owned businesses in the 2023 fiscal year — up from just 6% the year before. Watson noted that the Cambridge disparity study excluded construction-related spending, which had accounted for roughly half of all Boston spending in its own disparity study.

Watson says that, in government contracting, often a small group of firms will get city contracts. But not only does that shut out firms owned by people of color, he says that’s also not in the best interest of taxpayers.

“If we can create a system where we're catching a wider net — we're catching some veteran-owned businesses, we're catching some Black-owned businesses, we’re catching some women-owned businesses — when you expand that pool,” he said, “[those] other bidders, there's a good chance they’re going to have the same quality product — but possibly a little bit less money to the municipality, which is actually going to save taxpayers money.”