Chicago Mayor Rahm Emanuel plans to announce a new program Thursday that gives minority and women-owned businesses seeking city contracts extra support.

Emanuel is establishing a “phase-out graduation” program to give businesses additional support as they outgrow the women and minority program.

Jamie Rhee, the commissioner of procurement in Chicago, said the vendor community complained that they are penalized once they are finished with the program. Many businesses that graduate reapply for certification within a few years.

“What we consistently kept getting back from our vendor community is listen if we graduate, it’s sort of like you’re kicking us out of the program and we have the ability to fail,” Rhee said.

Emanuel’s new ordinance would allow those small businesses to continue getting subcontracts at a reduced rate for three years even though they aren’t on the city contract list.

A 2010 city inspector general report on the minority and women business program highlighted fraud, abuse and mismanagement.

Mayor Harold Washington started the affirmative action program for city contracts in 1985. In 2010, the city inspector general highlighted fraud, abuse and mismanagement of the program.

An analysis of 2008 contracts found that payments to MWBEs and Disadvantaged Business Enterprises were more than 15 percent less than the city’s publicly reported statistics.