More of the Same for Metro’s Minority Businesses

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From l-r, Richard Beasley, Don Majors, Ludye Wallace, and Alex Coure discuss ways to re-vamp Metro’s minority business program. Photo submitted

By Peter White

NASHVILLE, TN – Metro General Government spent $623 million in 2015. One hundred seventy million, about 27%, went to minority subcontractors. In 2016, Metro government spent  $624.5 million and minority firms got much less, $30.9 million, or about 5%.

“We are going in the wrong direction,” said Alex Coure. He is co-chair of the NAACP Nashville Economic Development Committee.

After waiting seven months, Metro Procurement finally released a 2016 Benchmark Report last week. For Nashville’s minority business community it’s déjà vu all over again.

Biennial benchmark reports track Metro’s contracts in construction, professional, and non-professional services. The latest study shows discrimination is still widespread against women and minority-owned firms, especially black-owned businesses, regarding the city’s purchase orders and service contracts.

“The game is rigged and only non-ethnic males are winning,” said former Councilman Don Majors, who is co-chair of the NAACP Economic Development Committee.

Except for businesses owned by white women, who got $17 million worth of city contracts in 2015 and 2016, the situation hasn’t changed much since 1999 when a disparity study found Nashville government agencies discriminated against women and minority-owned businesses. A 2005 disparity study came to the same conclusion.

The city council passed a Procurement Non-Discrimination ordinance in 2008 to address the on-going failure of Metro government to treat all businesses fairly. It hasn’t helped.

“The PNP program has been an abject failure,” said Coure.

Benchmark Reports in 2012 and 2014 showed the Procurement Non-discrimination   Program (PNP) wasn’t increasing city contracts to minority firms. The Business Assistance Office (BAO) and Metro’s Contracts Office, both part of the Finance Department, administer the program.

Using the Freedom of Information Act (FOIA) the local chapter of NAACP is analyzing financial reports from Metro government and six agencies operating within Davidson County that have their own governing boards and separate financial operations.

Those six quasi-governmental organizations are: Metro Public Schools, the Nashville Airport Authority, Metro Transit Agency (MTA), Nashville Electric Service (NES), Metro Development and Housing Authority (MDHA), and the Music City Center.

Using Metro’s own data to research contracts and purchase orders, the NAACP  concluded African American businesses got just 2.88% of Metro General Government business in the last five years. Metro schools awarded black firms $958,000 in construction contracts in 2016. That is 1.89% of the total $247 million spent on school construction last year.

The Music City Center’s DBE Participation report shows African American firms got $46.5 million, or about 10% of the $467 million project. That is much better than the city’s overall rate of about 3%. But, according to the NAACP analysis, the percentage is actually closer to 7% and may even be lower.

“Three of the seven largest minority contracts that went to firms identified as African-American owned were not, in fact, owned by African Americans,” said Majors.

Majors asked DBE Coordinator Roxanne Bethune about the error. She said it was either a typo or there was an error in the business certification.

There are several ways to be certified as a minority or DBE business. You must be disabled, a veteran, minority, small, or women-owned. And you have to be on one of the lists compiled by TN Department of Transportation, the Governor’s Office of Diversity, the federal Small Business Administration, Department of Transportation, or one of several third party certifiers like the Women’s Business Enterprise National Council.

Metro’s Business Assistance Office is supposed to promote business opportunities for minority firms with MDBE certifications. NAACP says the BAO’s lackluster performance is due to weak leadership and understaffing. Majors, who served on the council in 1995 and Beasley who was involved with the issue in those days, say things haven’t changed in 22 years.

“The city council needs to put pressure on the Mayor’s office to do more business with minority firms,” said Beasley.

The 2016 Benchmark Report was prepared by the Atlanta firm, Griffin & Strong. It also did the 2012 and 2014 reports.  Each cost about $100,000.  The consulting firm found disparities in all three categories. In construction, women-owned and Native American firms did well but all others were underutilized.

In professional services, Native American firms did well but all others did not. In non-professional services all MWBE groups did poorly.  The report suggested Procurement should track firms who bid on subcontracts with prime contractors.

Secondly, Metro should collect more data on the type of work and the kind of MWBE firms who do it. Third, Metro should maintain an electronic file of all expenditures paid to subcontractors by prime contractors. Lastly, the report concludes Metro should do a comprehensive review of its procurement regulations.

Griffin & Strong was not hired to suggest changes to the PNP ordinance and did not make any. However, they noted a big problem with the city’s minority business program: it is a subcontract-based program and Metro only requires reporting of MWBE subcontractors. The disparities Griffin & Strong identified are with the city’s prime contracts, not subcontracts.

“Without knowing all subcontracting dollars, the percentage that is being awarded to MWBEs cannot accurately be determined,” the report said. Without better reporting and better records there is no way to know how effective the program is for minority subcontractors.

The PNP program is voluntary and its critics say prime contractors play games with minority subcontractors by inviting them to bid on work they don’t do or inviting qualified subcontractors to bid at the last minute. Both tactics discourage minorities from bidding on Metro contracts.

The NAACP provided copies of its research to the minority caucus of the city council last month. Researchers found some agencies like MTA, MDHA, and the Airport Authority have better DWBE programs and monitor them better than Metro Government because they receive federal money.

Nevertheless, the NAACP report concluded that Metro-wide “there are substantial disparities between availability and utilization in most categories with respect to most ethnic groups in most years. “ Griffin & Strong’s three benchmark reports and two disparity studies showed the same thing.

The NAACP Economic Development Committee wants a civilian oversight committee to review all contracts over $100,000. They want the Metro council to pass a new ordinance that is race-conscious in awarding city contracts. They want companies that don’t play fair with subcontractors to be fined.

“We can’t continue to do this,” said Ludye Wallace, President of NAACP’s Nashville Chapter.  “We aren’t going to let them get away with discriminating against minorities anymore,” he said.

District 28 Councilwoman Tanaka Vercher said there has been progress made with city contracts to MWBEs but the city can do better.

“We need to strengthen the attainment and lessen the gap between MBEs and WBEs.  Yes, legislation will be introduced once the public input period for the proposed benchmarks ends on December 7th,” she wrote.

“I think the city needs to fix this badly broken program.  We should be honest about the program’s failures and welcome improvement.  It is important to get this done before the city spends billions on transit,” said At Large Councilman John Cooper.

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