NASHVILLE, TN – Metro’s Office of Minority and Women Business Assistance (BAO) has issued its report on the Equal Business Opportunity Program for FY2020.
“The EBO Program is setting industry standards not only because it is among the first, but also because it is delivering results. In the first year, 22 contracts were awarded under the program,” wrote Michelle Hernandez Lane, Chief Procurement Officer and Christopher S. Wood, Finance Manager.
Nashville is one of just a few cities that require race and gender subcontractors to participate on city projects. The BAO has been criticized in the past for stiffing Black contractors and subcontractors when it comes to awarding Metro contracts. (see Stiffed)
After two decades and several disparity studies documenting racial discrimination in contract letting, Metro changed from a race-neutral to a race-conscious BAO program to lessen the racial disparity in city business opportunities.
The first year of the program has shown progress. Metro increased spending with woman owned businesses (WBE) by $8.9 million and increased spending with minority owned businesses (MBE) by $7.2 million. Total spending with disadvantaged businesses in 2019 was about $111 million or 5.4% of $2 billion of total spending. In FY2020, it was about $155 million, or 10.2% of $1.5 billion in total contract spending. This is progress.
But the BAO’s estimates of minority business availability are much lower than reported in the 2018 disparity study by Griffith & Strong. In that report, total minority construction businesses make up 13.38% of all construction firms; the figure is 13.1% in architecture & engineering; in non-professional services it is 23.3 and in professional services the figure is 23.5%; in the goods category the total number of minority businesses equals 9.8%.
In the table below, the BAO number of minority businesses dealing in goods is about the same as G&S’s number. All the others are quite different. In the BAO table for women-owned businesses, only the construction category tracks with the numbers Griffith & Strong found.
We asked Lane and Wood where they got their availability numbers and to explain why they were so much lower than figures in the most recent disparity study.
“Goals are based on availability. Availability is determined by a combination of factors, including vendors in our database,” said Mary Jo Wiggins, Finance Deputy Director.
Wiggins said they use commodity codes and work item descriptions from the disparity study to make lists. “We update this file regularly as new vendors become available,” she said.
The NAACP looked at spending with minority firms in FY2019 and found MWBEs got $63 million of $1.34 billion or 4.7% of the total spend. In FY2020, the minority spend was $81.9 million of $771.6 million or 10.6%. Because of the pandemic and loss of revenues, 2020 spending was only about half the 2019 figure. Even so, this is progress.
However, if you look at minority spending between 2019 and 2020, it is clear that EBO’s progress has been mostly due to increased spending with white women-owned businesses.
“The goals are set too low to satisfy the disparity study on availability,” said Alex Coure, former chairman of the NAACP Economic Development Committee.
In FY2020 Metro offered 65 contract solicitations that had race and gender conscience goals. They were 7% for ethnic minorities and 9% for women owned businesses.
According to the first three quarterly reports in FY2021, total spending on minority business was $28.5 million or 2.89% of a total of about $989 million.
“They say they are doing well but the numbers don’t support that,” said Coure. He said that after almost 2 years, the EBO program reflects “the same lackluster performance” as the old procurement nondiscrimination program (PNP), which was race neutral.
The percentages of MBE spending for FY2016-FY2020 were: 3.26%, 3.13%, 2.53%, 2.215, and 4.58%. Even using the BAO’s lower availability numbers the EBO 7% goal with minority businesses has not been met.
Coure said that Metro is still awarding contracts without getting minority participation, a process called teaming. He said the BAO isn’t doing enough outreach to make sure prime contractors reach out to minority firms as subcontractors to share the work. Wiggins said that’s the prime contractors’ responsibility.
Under the PNP, prime contractors were required to reach out to at least three minority subcontractors. Wiggins said that there is no three-firm rule under the EBO.
“Metro is obligated to ensure that minorities have an opportunity and when primes submit with no ethnic minority participation that’s when the BAO should step up and make sure that they do,” Coure said.
