Preckwinkle Removes Barriers To Small Business Growth
Cook County Board President Toni Preckwinkle today announced new initiatives aimed at removing barriers for small, minority and women owned businesses and stimulating economic growth.
At a news conference Tuesday, President Preckwinkle announced three policy initiatives focused on building the capacity for small businesses to create jobs and grow, to do more business with Cook County and private sector entities, and to improve their general financial condition. Preckwinkle outlined an Owner-Controlled Insurance Program (OCIP), a Bond Alternative Request for Information (RFI), and new subcontractor payment terms for all County contracts, new policies expected to be a boost to small businesses throughout the region.
“Small businesses are the engine of the economic recovery, and these policy changes will eliminate barriers to entry for local businesses and promote economic growth,” said Cook County Board President Toni Preckwinkle. “These steps will help create jobs and strengthen our local small business community for years to come.”
The OCIP is expected to be used primarily for projects comprising the County’s Capital Improvement Plan and other County construction projects. Historically, contractors performing work on Cook County construction projects have been required to provide evidence of certain types of insurance coverage, including builder’s risk, worker’s compensation, commercial general liability, and contractor’s pollution liability. The costs of securing these various types of coverage for construction projects can be burdensome for smaller contractors, who have fewer resources than their larger counterparts. The OCIP is a program through which the County would purchase various types of insurance coverage for all contractors working on specific project sites. The contractors, in turn, would be relieved of the burden of purchasing this insurance coverage themselves. This relief from insurance expenses will allow these contractors to allocate their financial resources to create jobs, build capacity and grow their business in Cook County. President Preckwinkle will seek approval for the OCIP from the Cook County Board next week.
The second policy Preckwinkle announced is a Request for Information for a Bond Alternative program. The inability to procure traditional surety bonding, a contractual guarantee that your firm can complete work, has been a longstanding barrier to entry for otherwise qualified small businesses. Many small businesses have particularly escalated bonding costs because they lack the project experience that generates higher bonding capacity. While the County’s bonding requirements for construction projects are discrete, there are many different methods of meeting such requirements. The County will be issuing a request for information (RFI) to solicit the public for ideas on alternative means of meeting the County’s bonding requirements. The intended effect is for bonding to be lowered as a barrier to entry for small businesses.
In addition to the OCIP and Bond Alternative RFI, Preckwinkle announced new language for all County contracts. In order to further accelerate payment to companies working on County projects, the County will incorporate language that requires prime vendors to pay their subcontractors within 14 days of receiving payment from the County. This access to funds is expected to improve the financial condition of many smaller businesses that need cash flow in order to satisfy short term business needs. During the last eighteen months, President Preckwinkle has supported changes to the County’s procurement and payment processes that have condensed payment periods by over 50 percent. Whereas there were previously approximately five steps in the process requiring board approval, board approval is now required only at the contract execution stage for contracts of $150,000 or more.
“By removing significant barriers to entry, Cook County is becoming a model for promoting small business growth in our communities,” said Andrea L. Zopp, President and CEO of the Chicago Urban League, an organization dedicated to promoting educational equality, economic development and social justice to African Americans. “The steps President Preckwinkle are taking today are significant not only for African-American businesses, but to all small businesses throughout Cook County.”
In addition to representatives from the Chicago Urban League, President Preckwinkle was joined at the announcement by the Chicagoland Chamber of Commerce, African American Contractors Association (AACA), the Alliance of Business Leaders & Entrepreneurs (ABLE), Association of Asian Construction Enterprises (AACE), Black Contractors United, Inc. (BCU), Business Leadership Council (BLC), Chicago Minority Business Development Council, Inc. (CMBDC), Hispanic American Construction Industry (HACIA), Women's Business Development Center (WBDC), and the Federation of Women Contractors (FWC).
“These groups know firsthand the importance of promoting small business growth and I’m grateful for their support as we work to implement these important policy changes,” Preckwinkle said.
These policy changes come roughly a month after President Preckwinkle announced the Small Business Financing Initiative, a $200 million partnership with local lending institutions to promote and strengthen opportunities for small, minority, and women owned businesses. One of the most significant hurdles for small businesses is accessing capital to finance projects and staffing at the early stages of a contract. To remove this barrier, President Preckwinkle has partnered with lending institutions throughout the region to ensure that businesses that have contracts with Cook County will have the resources they need while also demonstrating to banks that the County is a reliable business partner.