Diversity up among city contractors

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Diversity up among city contractors

By The Charlotte Observer – October 3, 2011

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By Steve Harrison
sharrison@charlotteobserver.com

Minority- and women-owned firms are getting more work from city-issued contracts in Charlotte but some minorities, particularly African-Americans, still get far less than other groups, a consultant found in a recent study.

But the consultant, Tallahassee, Fla.-based MGT of America, doesn't recommend that the city restart a race-based program for awarding contracts, which it operated until 2003. The city scrapped that program after it was sued and started instead a program designed to help all small businesses win contracts.

The continuing disparities concern some city leaders, as well as minority contractors. But it's unclear whether council members will push to bring back a race- and gender-based program.

Charlotte City Council member James Mitchell said he thinks the city would do well to return to a race-based program. "I'm a fan of the race-conscious program," said Mitchell, a Democrat, who pushed for the study last fall.

He added that he was "perplexed" by the consultant's findings, which said there are still problems with awarding contracts and hiring subcontractors. "But on the same token, they say stay with the (small business opportunity program)," Mitchell said. "I found that very odd."

The consultant said it found disparity in the amount of work that minority firms received, either directly from city contracts or indirectly as subcontractors. But it said "the evidence does not support the restoration of race and gender-conscious subcontracting because the small business program was more effective than the previous program."

Because of that, MGT said, it didn't think a new race- and gender-based program could withstand a court challenge. One reason is that the city's new program for small businesses has shown improvement, the consultant said.

Whether a majority of council members will want a race-conscious program is not clear.

Charlotte Mayor Anthony Foxx, when asked by the Observer whether he would support trying to implement a race-based program, didn't answer directly.

He said in an e-mailed statement that: "...the findings and recommendations of the disparity study are both encouraging and disturbing. On one hand, the study tells us that M/WBEs (minority and women business enterprises) are getting more city contracts since the M/WBE program ended. Clearly, the city's small-business opportunity program has opened some doors, and that should be celebrated. On the other hand, the report finds that substantial disparities continue to exist while identifying no specific solutions to address them."

Years of contracts studied

MGT of America, which was paid $305,450 for the study, compared the five years before 2003 under the race- and gender-based program with the five years before 2011 under the small-business program.

It found that spending by large contractors with minority and women-owned businesses increased by 166.5 percent since the city moved away from the race- and gender-based program.

Other positive signs: The percentage of construction-subcontract money received by minority and women-owned businesses increased from 7.7 percent to 28.9 percent.

However, there was data that discouraged some council members.

The consultant measured how often firms were used in city contracts. A score of more than 100 suggests a racial or ethnic group is being overused. A score of less than 80 shows a "substantial disparity."

Among subcontractors, the score for African-American firms was a 46. Hispanic firms were a 25. Non-minority women (107) and Asian-American firms (124) had higher scores.

African-American architecture and engineers subcontractors did even worse, with a score of 24.

Despite the lower score overall, Hispanic architecture and engineering firms scored the highest, with a score of 415.

Some feel excluded

In addition, the consultant found that 33 percent of minority and women-owned businesses said they were seldom or never solicited for contracts outside of the small business program; 26 percent said there is an informal network that excluded their firms.

MGT also said there was an "overall decline in minority firms winning prime contract awards." One possible reason, it said, is that state law requires the city to award large, or prime, contracts to the lowest responsible bidder, giving the city no flexibility to steer contracts toward minorities.

Stephanie Berwald, the president of the Metrolina Minority Contractors Association, said the group was "disappointed" by the report.

"Our concern is that African-American participation is low," she said. "We feel that going back to a M/WBE would be more impactful."

Charlotte City Council member David Howard said he didn't know if council members would push for a return to the old program.

"We have to find a way to advance the ball," Howard said. "I have full faith in (James Mitchell). This is his passion."

The City Council's economic development committee will discuss the report at 3:30 p.m. Oct. 11 at the City Hall building, 600 East Trade St. in the Wilmore Room.

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