An Act Relating to Public Property and Works – Contractors Bonds

Last updated: February 27, 2024

Testimony in support of HB7057
An Act Relating to Public Property and Works – Contractors Bonds Waive Bonding Requirement for Minority Businesses HOUSE Labor
February 1st, 2024
Kavya Gopinath, Policy Analyst, Economic Progress Institute

The Economic Progress Institute supports Representative Cherie Cruz’s HB7057, which provides that upon application, and good cause, the state may waive the bonding requirement for certified minority business enterprises (MBE) or women owned businesses (WBE).

MBEs and WBEs currently receive significantly fewer construction purchase orders than non-MBE/WBEs. According to a 2021 disparity study, MBEs received 2.25% of the construction purchase order dollars and WBE received 3.96% while non-minority male-owned businesses received 93.94%.(1) This bill aims to increase the number of MBEs and WBEs receiving contracting agreements by reducing their costs.

Rhode Islanders believe that everyone should have the same opportunities regardless of race or gender. The bonding requirement can cost contractors anywhere from $150 to $2,000 depending on personal and business financials.(2) Because of large disparities in access to wealth and resources, this cost is disproportionately more difficult for minority- and woman-owned businesses to pay. Hispanic/Latino families have 21 cents in wealth compared to the white family’s dollar and Black families only have 12 cents on that dollar.(3)

It’s easier to start businesses, make investments, and access loans when you have wealth. Black and Brown individuals are at a disadvantage when it comes to starting businesses. This bill would allow MBEs and WBEs to have access to contracting agreements without having to pay the additional cost of the bonding requirement. The risk of defaulting on the contract is unlikely because the state will review each individual case and only waive the bonding requirement if there is good cause to do so.

HB7057 would improve equity in Rhode Island by making it easier for certified minority- and woman-owned businesses with limited resources to not only compete but to thrive. The Economic Progress Institute strongly supports HB7057.

Back to all publications
You can help

Like this publication? Please consider supporting EPI.

Your support powers the research, communications, and partnership building necessary to make policy work for people, so every Rhode Islander can achieve their goal for a healthy and vibrant life.