Labor Nominee Faces Scrutiny Over Boston’s Contracting Practices

Boston has “created and maintained a public contracting system that disproportionately funnels taxpayer dollars into an exclusionary system that shuts Black- and Latinx-owned businesses out of contracting opportunities almost entirely,” the complaint said. It alleges the city’s contracting practices violate federal civil-rights law and asks for a formal investigation by the Justice and Transportation departments, among other remedies.

The complaint, filed with the Justice Department’s Civil Rights Division in Washington, D.C., comes as Mr. Walsh awaits Senate confirmation for a cabinet role in an administration that has vowed to give priority to racial equity in its policies and practices. Mr. Walsh’s nomination advanced easily from the Senate Committee on Health, Education, Labor and Pensions on an 18-4 vote. A full Senate vote hasn’t yet been scheduled.

Mr. Walsh, who became Boston mayor in 2014, commissioned the contracting study in 2018, and it was conducted by an outside consulting firm. Along with the study’s release, Mr. Walsh signed an executive order changing the city’s contracting policies by setting goals for how much in contracting funds should be directed toward women- and minority-owned firms. The city’s contracting policies can be shaped by both the mayor and the city council, according to Nicholas Martin, chief communications officer in Mayor Walsh’s office.

Before Mr. Walsh’s executive order in Boston, the city used race- and gender-neutral measures to encourage small businesses’ participation in city contracting. The executive order sets an explicit goal for the city each fiscal year to award 10% of its contract and procurement spending to minority-owned businesses and 15% to women-owned businesses. The disparity study had recommended the city consider awarding at least 16.9% of its contract dollars to these firms combined.

“This has never been an issue he has run away from, as much as his detractors are trying to frame that narrative,” said Mr. Martin, of Mr. Walsh’s office.

“The only way that we could confidently put forth race- and gender-conscious goals was to do a disparity study,” he added. “I’m not sure how the groups that are criticizing the process thought that we could set goals without doing a study first.”

Mr. Walsh declined an interview through his office. During a press conference last month, he said he embraced the study’s findings. “We knew we were using the study as a powerful tool to make the changes needed and to make them effective and sustainable. That’s why we did the study in the very beginning,” he said.

A Labor Department spokeswoman said, “Mayor Walsh has worked to build and expand ladders of opportunity to underrepresented communities throughout his career, both before and during his tenure as mayor. That’s one of the reasons President Biden nominated Mayor Walsh.”

The White House declined to comment further.

The spokeswoman said Mr. Walsh would work as Labor secretary to help promote a recovery from the coronavirus pandemic that creates a more equitable economy.

If confirmed, Mr. Walsh would have some oversight of diversity and discrimination matters at companies that are federal contractors or subcontractors. The Labor Department’s Office of Federal Contract Compliance Programs is responsible for ensuring federal contractors comply with antidiscrimination laws on issues such as employee hiring, pay and promotion. The office also helps federal contractors develop and maintain affirmative-action programs.

Mr. Walsh’s recent executive order requires each city department, as part of the city’s annual budgeting process, to begin tracking and reporting how well it is meeting diversity contracting goals starting with fiscal 2023. It also mandates the creation of a program to assist minority- and women-owned firms in pursuing city contracting opportunities.

Mr. Walsh had previously signed a 2019 executive order aimed at promoting equity in the city’s contracting practices.

Segun Idowu, chief executive at the Black Economic Council of Massachusetts, an advocacy organization for Black-owned businesses and one of the groups that filed the complaint, said that racial equity in public contracting is key for closing wealth gaps and providing opportunities for minority-owned businesses to grow.

“These contracts are what help any small business scale up,” Mr. Idowu said. “It’s literally how you open the door to other wealth opportunities, and we keep being shut out of that.”

The Greater Boston Latino Network, an umbrella organization for community groups focused on Latino issues, and advocacy group Amplify Latinx joined Becma in the complaint.

Ivan Espinoza-Madrigal, executive director of Lawyers for Civil Rights, which filed the complaint on behalf of the community groups, said the focus is on “holding the Walsh administration accountable for its constant failure to provide opportunities for minority-owned businesses.”

The community groups are calling for federal intervention, including an investigation of the city’s contracting practices. Mr. Espinoza-Madrigal said such help was necessary to make certain the city follows through on changes.

“What the mayor gave us were simply the targets,” he said. “But there isn’t a specific protocol or process created for ensuring that those targets are being met, so it leaves a lot of things up in the air.”

Celina Barrios-Millner, director of equity and inclusion in Boston’s Office of Economic Development, said the city will soon hold community meetings to share more broadly the study results and the plan to address the findings.

Regarding minority- and women-owned firms, “what’s really fascinating about the study is that we now know there is availability in the areas that we’re contracting in,” she said. “And so now we want to work with advocates so they can help build those bridges and help find those businesses.”

The city hasn’t filed a formal response to the complaint, but is prepared to respond if contacted by the federal agencies, Mr. Martin said.

Mr. Biden, meanwhile, has repeatedly said racial equity will be a priority for his administration, including in contracting-related issues.

His administration appointed Jenny Yang as director of the Labor Department’s Office of Federal Contract Compliance Programs. Ms. Yang brings a history of antidiscrimination work, including having served as commissioner of the Equal Employment Opportunity Commission during the Obama administration.

Ms. Yang’s appointment “was a powerful signal that equal employment opportunity will be a key concern and key focus and priority of the administration,” said Craig Leen, who served as OFCCP director during the Trump administration.

Mr. Biden on his first day in office signed an executive order directing federal agencies to conduct reviews assessing barriers “underserved communities and individuals may face in taking advantage of agency procurement and contracting opportunities.” He also revoked a Trump-era executive action that restricted how the federal government and its contractors could conduct diversity training.

Mr. Walsh has expressed a commitment to combating racism and discrimination both before and since his nomination for Labor secretary. Last year, he declared racism a public-health crisis in Boston and established a chief of equity position in his cabinet.

“We need to work collectively as a federal government to increase opportunities for women and people of color,” Mr. Walsh said last month during his confirmation hearing. “We need to close economic gaps. We need to close racial gaps. And that’s the work I’ve been doing for the last seven years as mayor of the city of Boston.”

Write to Amara Omeokwe at [email protected]