‘The Old Boys Network Still Runs This City’

How Metro Stiffs Black Businesses

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Alex Coure, president of IT Solutions by Design, claims Ricoh-USA stiffed him and says the city’s nondiscrimination procurement program is a failure. Photo by: Clint Confehr

NASHVILLE, TN — Alex Coure is like a squeaky wheel that gets no grease.

A minority business owner, Coure helped Ricoh-USA win a contract with Metro schools in 2012, public records show. The bid was for $1.7 million to provide printers and copiers for Metro’s 153 schools. Under the terms of the 5-year con- tract Ricoh agreed to give 7.14 percent of the work in its bid to Coure’s company, IT Solutions by Design Inc. That amounts to $120,000.

It didn’t happen, so Coure asked Councilwoman Erica Gilmore for help.

In August 2013, Metro school officials met with Coure and two Ricoh representatives, David Dukes and Dave Brown.

At their meeting, Assistant Director of Schools Hank Clay and Purchasing Director Gary Appenfelder told Ricoh they were not in compliance with the contract. Subsequently, Robert Staton, Ricoh Area Director of Operations, wrote Coure a letter agreeing to place three $40,000 orders with him by October 2014.

Coure had filled one order from Ricoh for printer toner and staples in November 2013. The bill was $2,300. Coure says he received no orders since then.

“We issued a purchase order with him but he chose not to fill it,” said Tim McFall, CEO of Ricoh-USA. Kathryn Sinback, Metro schools lawyer, said Coure and Ricoh could not agree on a payment schedule, and she felt Ricoh made a good faith effort to fulfill its subcontract with Coure’s company, IT Solutions by Design. Coure confirmed he did not accept Ricoh’s payment terms of 45 days after delivery but he notes, as of Sept. 30, 2016, Ricoh has billed Metro Nashville Public Schools for almost $4 million in goods and services under the contract that has a limit of $5 million.

Those terms require payment within 30 days. “By now, Ricoh should have spent approximately $271,000 with me,” says Coure, not just $2,300. Metro’s legal eagles do not support the amount of Coure’s claim. They say Ricoh is on the hook for $120,000 worth of business to Coure under its subcontract with him even though the contract Ricoh signed with Metro schools was for $5 million, not the original bid of $1.7 million.

“That is what they do. They bid on a specific solution set but the contract is written for substantially more than the bid and minorities are typically excluded from the additional increase in the contract. So it’s basically bid and switch,” says Coure.

It doesn’t stop there. Metro Nashville, the city, separate from the school system, adopted a nondiscrimination procurement program in 2008 to level the playing field in the awarding of city contracts. But Metro used the same request for proposal by Metro Nashville Public Schools to write a $7 mil- lion no-bid contract with Ricoh in December 2012 and there are no minority subcontractors working that contract.

Ricoh’s success in getting the contract with the school system was at least in-part because it had Coure as a minority small business subcontractor and that enhanced status does not exist for Ricoh’s contract with the city as intended by a Metro Council policy.

Coure says the same prime vendor (Ricoh) was awarded a Metro government contract through a no bid, reference or reciprocal contract just four months after Ricoh was awarded the Metro schools contract. “This time my company was not contacted or given any consideration for participating in the award,” Coure says. Records from Metro’s Business Assistance Office show that during its first eight years, the nondiscrimination program has substantially increased the number of certified small businesses and minority vendors doing business with the city. The dollar amounts of contracts awarded in most categories have also increased, but the percentages of small, women-owned, and minority businesses has remained about the same.

For example, in 2013 woman owned businesses comprised 5 percent of the total and ethnic male minority businesses were 7 percent. In 2016, woman owned businesses were 3 percent and male ethnic minority businesses were 6 percent. In any case, Coure says the nondiscrimination program did not help him get the business he should have. “I hope other minority business people come for- ward with their complaints because I’m sure I’m not the only one,” Coure says. “How can they justify giving Ricoh a $7 million contract without a bidding process?” asks Coure.

Metro Purchasing Agent Jeff Gossage said he did not have to put the $7 million Ricoh contract out to bid because it was “piggybacked” on the school system’s contract. Under the terms of a reference contract, cooperative buying with other agencies is permitted. However, the $7 million Ricoh/Metro government contract did not have minority participation as the Metro schools’ contract did, and they are separate contracts. Metro officials also claim the $7 million Ricoh contract was not a sole-source contract and therefore could be signed without Metro Council’s approval which, by law, must approve any no-bid contract more than $250,000.

City procurement officials have been asked for, but have not re- leased, the names of other bidders on the contract, and Gossage did not submit a written justification for soliciting bids only from Ricoh. He did not provide any bid information about any other vendor like Hewlett Packard, for example.

Coure’s complaints are nothing new. Racial disparity in Metro’s hiring, contracting, and purchasing in several of its 50 departments has been a long-standing problem. Metro ordered a disparity study by an Oakland firm in 1999 and another one by an Atlanta consulting firm, Strong and Griffin, in 2004. That study looked at census data, racial percentages, and incomes of city workers between 1999- 2003. Both studies found Blacks over-represented in low paying jobs and underrepresented in jobs that paid more than $40,000 per year.

The Strong and Griffin study noted a pat- tern of passive discrimination regarding the disparities it found. Metro responded to its on-going bias against small and minority businesses by passing an ordinance in 2008 that established a procurement nondiscrimination program. A Business Assistance Office was set up to help minority and women-owned, and handicapped business owners compete for contracts with the city and Metro Nashville Public Schools, and the Airport Authority. The head of the Business Assistance Office was Michelle Hernandez Lane, who is now Mayor Megan Barry’s chief disparity officer.

Lane gets good marks from Michelle Jenkins who is working on a 2016 Benchmark Study of Nashville’s nondiscrimination program for Griffin & Strong. Jenkins says executive “buy-in” to promote more minority vendors is key to the success of non- discrimination programs like the one Nashville and several other cities have put in place.

However, the 2015 Benchmark Report prepared by Griffin & Strong concludes “it appears that in general, women and minority owned groups have not achieved parity with the benchmarks, based on availability that were set in 2012.”

The study found that since 2012, no category of minority or woman-owned firms reached the benchmark goals and in non-professional services, every category of minority and women owned businesses were underutilized from 2010-2013. Non-minority males were over-utilized.

The benchmark studies gauge the effectiveness of the city’s efforts to bring more minority and women-owned small businesses to the table of city contracting. Based on “good faith” efforts by prime and sub- contractors and city departments the nondiscrimination program is supposed to help minority businesses get more opportunities. There are no set-asides, or mandated quotas.

If minority contract participation does not improve, city officials could change the program into a race and gender conscious program that mandates more minority participation in city contracts. One way to do that, according to Jenkins, is to set aside certain contracts or a certain percentage of city expenditures to small businesses. That would avoid legal challenges because a lot of the categories being tracked would fit under the rubric of a small business and small business set asides would lift all boats in underutilized categories.

“We do a lot of recommending to do small business set asides because they are race neutral,” says Jenkins. “They benefit not just minority or women owned firms. A lot of times, they benefit any small business. What that battle is against is the generic good old boy network whether you are minority or women owned firm or just a new young firm…and you can’t get in because of the good old boy network. We have done small business studies and found that often the new entrants tend to be minority and women-owned firms, and when you’ve got a strong good old boys net- work, then they are not going to be able to get in. So, you can do a small business set aside,” she said.

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