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DENVER 2018 DISPARITY STUDY

February 28, 2019

As required by § 28-83, D.R.M.C., of the Denver city ordinance, the Division of Small Business Opportunity (DSBO) in the Office of Economic Development (OED) is required to conduct a disparity study approximately every 5 years to evaluate the utilization of minority and women-owned contractors in city procurement of construction, professional design, and goods and services. The results of the study are used to collect evidence of the city’s current contracting practices and assess the need for, and continuation of, the DSBO Minority and Women Business Enterprise (MWBE) program.

OED engaged BBC Research & Consulting (BBC) to conduct a 2018 Disparity Study that examined:

1) The city’s procurement of construction, professional design, goods and services from 2012-2016

2) DSBO’s goal-setting process for contracting with small, minority and woman-owned businesses from 2012-2016

3) Legal precedents and analysis of federal law, state law, Denver city ordinance and case law, including Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 (10th Cir. 2000); Concrete Works of Colorado, Inc. v. City and County of Denver, 321 F.3d 950 (2003), and any recent updates

4) Quantitative and qualitative analysis of the availability, utilization and disparity of minority and women-owned businesses

5) General market-conditions for the seven-county metro Denver business community The findings of the study demonstrate that a disparity still exists in the use of MWBE firms in city procurement practices--and affirms the need to continue DSBO’s use of programmatic measures that are race and gender conscious.

“Information from the disparity study will help the city to continue to encourage the participation of minority and women owned businesses in its contracting and procurement. In addition, it will help the city implement the MWBE and federal DBE programs effectively and in a legally-defensible manner.”

– BBC Research and Consulting, 2018 Disparity Study, City and County of Denver

Next Steps:

Business Equity Leadership Team

At the direction of Mayor Michael B. Hancock, the executive leadership of the largest city agencies and capital programs have convened to form the Business Equity Leadership Team (BELT). Public Works, Denver International Airport, Parks & Recreation, Arts & Venues, General Services, the Elevate Denver Bond project, Department of Finance, and the Mayor’s Office of the National Western Center compose BELT’s membership.

BELT is developing a Master Utilization Plan that will align recommendations from the community and the disparity study to ensure that small, minority and woman-owned businesses are engaged and afforded more opportunities for equitable participation in city contracts. Over the next two years, these agencies and programs will be accountable in implementing BELT’s strategies and tactics and will provide quarterly updates to the Mayor and community. BELT will be releasing the Master Utilization plan in the Spring of 2019.

2019 DSBO Priorities

In response to the results of the 2018 Disparity Study and in cooperation with the Mayor’s Office, Denver City Council, supporting agencies and community partners, DSBO has identified the following priorities for 2019:

1) DSBO Ordinance Extension – the DSBO ordinance will be extended for eight months, through December 1, 2019, to finalize changes to the ordinance, implement rules, regulations, policies and programs.

2) Restructure Goal Setting Procedures – DSBO will set project-specific goals based on scopes of work, market data/considerations and the availability of certified firms.

3) Develop and Implement a Mentor Protégé Program – In coordination with other agencies and programs, DSBO will develop a Mentor Protégé program that will allow small, minority and woman-owned businesses to build capacity and working relationships.

4) Selection Criteria and RFP Language – Re-evaluate and revise the selection criteria and RFP language to adhere to the city’s values supporting business equity.

5) Revising Goods and Services Ordinance – Revise the city’s ordinance to foster greater participation of small, minority and women owned businesses in General Services contracts for goods and services.

6) Unbundling Procurements – Create a pipeline of opportunities for small, minority and woman-owned businesses to prime on city contracts.

7) Contract Compliance – Formalize internal processes that will support the integrity of the DSBO program and ensure that small, minority and woman-owned businesses can perform successfully on contracts.

8) Education and Outreach to Small Business Community – Develop community-friendly tools to help small, minority and woman-owned businesses learn about city contracting processes and bid opportunities.

9) DSBO Staffing – Identify staff and other resources needed to ensure that DSBO’s 2019 priorities are met.

10) Construction Empowerment Initiative (CEI) Recommendations – Review, prioritize, and implement CEI’s recommendations that are in alignment with the city’s mission to create an equitable path to prosperity for all business and residents.

DSBO will continue to keep the community apprised and solicit feedback from stakeholders as it implements these priorities.

The City and County of Denver values the important role that minority, woman and small business enterprises play in the local economy. Their success is essential to job creation and economic growth. The Office of Economic Development’s Division of Small Business Opportunity is committed to advancing the policies, processes, training, compliance, certification and community engagement necessary to propel small businesses forward.

Our team is honored to lead this work and will continue advance a vibrant economy that works for everyone.

If you have any questions about the 2018 Disparity Study, please contact us at [email protected].

Best,

Eric Hiraga

Executive Director, Denver Office of Economic Development

mailto:[email protected]

BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER ES, PAGE 1

CHAPTER ES. Executive Summary

TheCityandCountyofDenver(TheCity)retainedBBCResearch&Consulting(BBC)toconductadisparitystudytohelprefinetheorganization’simplementationoftheMinority‐andWomen‐ownedBusinessEnterprise(MWBE)Program,theEmergingBusinessEnterprise(EBE)Program,andtheSmallBusinessEnterprise(SBE)Programforitslocally‐fundedcontractsandtheFederalDisadvantagedBusinessEnterprise(DBE)ProgramfortheFederalAviationAdministration(FAA)‐fundedcontractsthattheDenverInternationalAirport(DEN)awards.Theprimaryobjectivesofthoseprogramsrevolvearoundencouragingtheparticipationofsmallbusinessesandminority‐andwoman‐ownedbusinessesinCitycontracting.1Tomeetthatobjective,theCityusesacombinationofrace‐andgender‐neutralandrace‐andgender‐consciousprogrammeasuresaspartofitscontractingpractices.Inthecontextofcontracting,race‐andgender‐neutralmeasuresaremeasuresdesignedtoencouragetheparticipationofsmallbusinessesinagovernmentorganization’scontracting,regardlessoftherace/ethnicityorgenderofthebusinesses’owners.Incontrasttorace‐andgender‐neutralmeasures,race‐andgender‐consciousmeasuresaremeasuresspecificallydesignedtoencouragetheparticipationofminority‐andwoman‐ownedbusinessesingovernmentcontracting,suchasMWBEcontractgoals.

Aspartofthedisparitystudy,BBCassessedwhethertherewereanydisparitiesbetween:

ThepercentageofcontractdollarsthattheCityspentwithminority‐andwoman‐ownedbusinessesduringthestudyperiodbetweenJanuary1,2012andDecember31,2016(i.e.,utilization,orparticipation);and

Thepercentageofcontractdollarsthatminority‐andwoman‐ownedbusinessesmightbeexpectedtoreceivebasedontheiravailabilitytoperformspecifictypesandsizesoftheCity’sprimecontractsandsubcontracts(i.e.,availability).

Thedisparitystudyalsoexaminedotherquantitativeandqualitativeinformationrelatedto:

ThelegalframeworkrelatedtotheCity’simplementationoftheMWBE,EBE,SBE,andFederalDBEPrograms;

Localmarketplaceconditionsforminority‐andwoman‐ownedbusinesses;and

ContractingpracticesandbusinessassistanceprogramsthattheCitycurrentlyhasinplace.

TheCitycoulduseinformationfromthestudytohelprefineitsimplementationoftheMWBE,EBE,SBE,andFederalDBEPrograms,includingsettingaspirationalgoalsfortheparticipationofminority‐andwoman‐ownedbusinessesinCitycontracting;determiningwhichprogrammeasurestousetoencouragetheparticipationofminority‐andwoman‐ownedbusinessesin

1“Woman‐ownedbusinesses”referstonon‐Hispanicwhitewomanownedbusinesses.Informationandresultsforminoritywoman‐ownedbusinessesareincludedalongwiththeircorrespondingracial/ethnicgroups.


Citycontracting;and,ifappropriate,determiningwhichracial/ethnicandgendergroupswouldbeeligibletoparticipateinanyrace‐orgender‐consciousprogrammeasuresthattheCitymightcontinueusinginthefuture.

BBCsummarizeskeyinformationfromthe2018CityofDenverDisparityStudyinfiveparts:

A. Analysesinthedisparitystudy;

B. Availabilityanalysisresults;

C. Utilizationanalysisresults;

D. Disparityanalysisresults;and

E. Programimplementation.

A. Analyses in the Disparity Study

Alongwithmeasuringdisparitiesbetweentheparticipationandavailabilityofminority‐andwoman‐ownedbusinessesinCitycontracts,BBCalsoexaminedotherinformationrelatedtotheCity’simplementationoftheMWBE,EBE,SBE,andFederalDBEPrograms:

Thestudyteamconductedananalysisoffederalregulations,caselaw,andotherinformationtoguidethemethodologyforthedisparitystudy.Theanalysisincludedareviewoflegalrequirementsrelatedtosmallbusinessandminority‐andwoman‐ownedbusinessprograms,includingtheMWBE,EBE,SBE,andFederalDBEPrograms(seeChapter2andAppendixB).

BBCconductedquantitativeanalysesofoutcomesforminorities;women;andminority‐andwoman‐ownedbusinessesthroughouttherelevantgeographicmarketarea.2Inaddition,thestudyteamcollectedqualitativeinformationaboutpotentialbarriersfacedbyminorities;women;andminority‐andwoman‐ownedbusinessesinthelocalmarketplacethroughin‐depthinterviews,telephonesurveys,publicmeetings,andwrittentestimony(seeChapter3,AppendixC,andAppendixD).

BBCanalyzedthepercentageofrelevantCitycontractingdollarsthatminority‐andwoman‐ownedbusinessesareavailabletoperform.Thatanalysiswasbasedontelephonesurveysthatthestudyteamcompletedwithnearly900businessesthatworkinindustriesrelatedtothespecifictypesofconstruction;professionalservices;andgoodsandservicescontractsthattheCityawards(seeChapter5andAppendixE).

BBCanalyzedthedollarsthatminority‐andwoman‐ownedbusinessesreceivedonmorethan22,000construction;professionalservices;andgoodsandservicescontractsthattheCityawardedduringthestudyperiod(seeChapter6).

BBCexaminedwhethertherewereanydisparitiesbetweentheparticipationandavailabilityofminority‐andwoman‐ownedbusinessesonconstruction;professional

2BBCidentifiedtherelevantgeographicmarketareaforthedisparitystudyasAdams,Arapahoe,Boulder,Broomfield,Denver,Douglas,andJeffersonCountiesinColorado.


services;andgoodsandservicescontractsthattheCityawardedduringthestudyperiod(seeChapter7).

BBCreviewedthemeasuresthattheCityusestoencouragetheparticipationofminority‐andwoman‐ownedbusinessesinitscontractingaswellasmeasuresthatotherorganizationsintheregionuse(seeChapter8).

BBCprovidedguidancerelatedtoadditionalprogramoptionsandpotentialchangestocurrentcontractingpracticesfortheCity’sconsideration(seeChapter9).

B. Availability Analysis Results

BBCusedacustomcensusapproachtoanalyzetheavailabilityofminority‐andwoman‐ownedbusinessesforCityprimecontractsandsubcontracts.BBC’sapproachreliedoninformationfromsurveysthatthestudyteamconductedwithpotentiallyavailablebusinesseslocatedintherelevantgeographicmarketareathatperformworkwithinrelevantsubindustries.ThatapproachallowedBBCtodeveloparepresentativeandunbiaseddatabaseofpotentiallyavailablebusinessestoestimatetheavailabilityofminority‐andwoman‐ownedbusinessesinastatistically‐validmanner.

Overall.FigureES‐1presentsdollar‐weightedavailabilityestimatesbyrelevantracial/ethnicandgendergroupforallCitycontractsandprocurements.Overall,theavailabilityofminority‐andwoman‐ownedbusinessesforCitycontractsandprocurementsis23.7percent,indicatingthatminority‐andwoman‐ownedbusinessesmightbeexpectedtoreceive23.7percentofthedollarsthattheCityawardsinconstruction;professionalservices;andgoodsandservices.Non‐Hispanicwhitewoman‐ownedbusinesses(10.9%)andHispanicAmerican‐ownedbusinesses(6.2%)exhibitedthehighestavailabilitypercentagesamongallgroups.

Figure ES‐1. Overall availability estimates by racial/ethnic and gender group

Note:

Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.

For more detail and results by group, see Figure F‐2 in Appendix F.

Source:

BBC Research & Consulting availability analysis.

Contract goals.Duringthestudyperiod,theCityusedMWBEandDBEcontractgoalstoawardmanylocally‐fundedandfederally‐fundedcontracts,respectively,toencouragetheparticipationofminority‐andwoman‐ownedbusinesses.TheCity’suseofsuchcontractgoalsisarace‐andgender‐consciousmeasure.ItisusefultoexamineavailabilityanalysisresultsseparatelyforcontractsthattheCityawardswiththeuseofcontractgoals(goalscontracts)andcontractsthattheCityawardswithouttheuseofgoals(no‐goalscontracts).FigureES‐2presentsavailabilityestimatesseparatelyforgoalsandno‐goalscontracts.AsshowninFigureES‐2,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherisapproximatelyequalacrossgoalscontracts(23.1%)andno‐goalscontracts(24.1%).

Business group

Non‐Hispanic white woman‐owned 10.9 %

Asian American‐owned 3.2 %

Black American‐owned 3.3 %

Hispanic American‐owned 6.2 %

Native American‐owned 0.1 %

Total Minority‐ and Woman‐owned 23.7 %

Availability %


Figure ES‐2. Availability estimates by contract goal status

Note:

Numbers rounded to nearest tenth of 1 percent. Numbers may not sum exactly to totals.

For more detail, see Figures F‐16 and F‐17 in Appendix F.

Source:


Contract role. Manyminority‐andwoman‐ownedbusinessesaresmallbusinessesandthusoftenoperateassubcontractors.Becauseofthattendency,itisusefultoexamineavailabilityestimatesseparatelyforprimecontractsandsubcontracts.FigureES‐3presentsthoseresults.AsshowninFigureES‐3,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherissimilarforCityprimecontracts(23.6%)andsubcontracts(24.4%).

Figure ES‐3. Availability estimates by contract role

Note:



Source:


Industry.BBCexaminedavailabilityanalysisresultsseparatelyfortheCity’sconstruction;professionalservices;andgoodsandservicescontracts.TheprojectteamcombinedresultsforgoodsandservicescontractsbecausetheCityusessimilarprocurementprocessestoawardthosecontracts.AsshowninFigureES‐4,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherishighestfortheCity’sprofessionalservicescontracts(40.4%)andlowestforconstructioncontracts(19.0%).

Figure ES‐4. Availability estimates by relevant industry

Note:


For more detail, see Figures F‐5, F‐6, and F‐7 in Appendix F.

Source:


Business group

Non‐Hispanic white woman‐owned 12.2 % 10.0 %

Asian American‐owned 2.0 % 4.0 %

Black American‐owned 2.3 % 4.1 %

Hispanic American‐owned 6.4 % 6.0 %

Native American‐owned 0.2 % 0.1 %

Total Minority‐ and Woman‐owned 23.1 % 24.1 %

Goal Status

Goals

contracts

No‐goals

contracts

Business group







Contract Role

Prime

contracts Subcontracts

Business group

Non‐Hispanic white woman‐owned 10.8 % 15.8 % 7.6 %

Asian American‐owned 1.6 % 2.6 % 8.5 %

Black American‐owned 1.9 % 11.5 % 2.2 %

Hispanic American‐owned 4.6 % 10.4 % 7.9 %

Native American‐owned 0.2 % 0.1 % 0.1 %

Total Minority‐ and Woman‐owned 19.0 % 40.4 % 26.3 %

Industry

Construction

Professional

services

Goods and

services


C. Utilization Analysis Results

BBCmeasuredtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractingintermsofutilization—thepercentageofdollarsthatthosebusinessesreceivedonCityprimecontractsandsubcontractsduringthestudyperiod.BBCmeasuredtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractsregardlessofwhethertheywerecertifiedassuchwiththeCity.

Overall.FigureES‐5presentsthepercentageofcontractingdollarsthatminority‐andwoman‐ownedbusinesses,consideredtogether,receivedonconstruction;professionalservices;andgoodsandservicescontractsandprocurementsthattheCityawardedduringthestudyperiod.AsshowninFigureES‐5,overall,minority‐andwoman‐ownedbusinessesconsideredtogetherreceived14.8percentoftherelevantcontractingdollarsthattheCityawardedduringthestudyperiod.HispanicAmerican‐ownedbusinesses(6.3%)andnon‐Hispanicwhitewoman‐ownedbusinesses(5.3%)exhibitedhigherlevelsofparticipationinCitycontractsthanallothergroups.

Figure ES‐5. Overall utilization results by racial/ethnic and gender group

Note:


For more detail, see Figure F‐2 in Appendix F.

Source:

BBC Research & Consulting utilization analysis.

Contract goals.Duringthestudyperiod,theCityusedMWBEandDBEcontractgoalstoawardmanylocally‐fundedandfederally‐fundedcontracts,respectively,toencouragetheparticipationofminority‐andwoman‐ownedbusinesses.Itisusefultoexamineutilizationanalysisresultsseparatelyforgoalscontractsandno‐goalscontracts,becausedoingsoprovidesinformationaboutoutcomesforminority‐andwoman‐ownedbusinessesoncontractsthattheCityawardedinarace‐andgender‐neutralenvironmentandtheefficacyofMWBEandDBEcontractgoalsinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractsandprocurements.

AsshowninFigureES‐6,minority‐andwoman‐ownedbusinessesconsideredtogethershowedhigherparticipationingoalscontracts(24.1%)thaninno‐goalcontracts(8.4%).Thoseresultsmightindicatetheeffectivenessofcontractgoalsinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractsandprocurements.However,examiningdisparityanalysisresultsprovidesabetterassessmentoftheefficacyofcontractgoals,becausethoseresultsalsotakeintoaccounttheavailabilityofminority‐andwoman‐ownedbusinessesforgoalsandno‐goalscontracts.

Business group

Non‐Hispanic white woman‐owned 5.3 %

Asian American‐owned 1.2 %

Black American‐owned 1.6 %

Hispanic American‐owned 6.3 %

Native American‐owned 0.5 %

Total Minority‐ and Woman‐owned 14.8 %

Utilization %


Figure ES‐6. Utilization results by contract goal status

Note:



Source:


Contract role.Manyminority‐andwoman‐ownedbusinessesaresmallbusinessesandthusoftenoperateassubcontractors.Becauseofthattendency,itisusefultoexamineutilizationresultsseparatelyforprimecontractsandsubcontracts.AsshowninFigureES‐7,theparticipationofminority‐andwoman‐ownedbusinessesconsideredtogetherwasmuchhigherintheCity’ssubcontracts(42.9%)thanintheCity’sprimecontracts(8.7%).ThevastmajorityofcontractingdollarsthattheCityawardedduringthestudyperiodwereassociatedwithprimecontracts.

Figure ES‐7. Utilization results by contract role

Note:



Source:


Industry.BBCexaminedutilizationresultsseparatelyfortheCity’sconstruction;professionalservices;andgoodsandservicescontracts.Theprojectteamcombinedresultsforgoodsandservicescontracts,becausetheCityusessimilarprocurementprocessestoawardthosecontracts.AsshowninFigureES‐8,theparticipationofminority‐andwoman‐ownedbusinessesconsideredtogetherwashighestintheCity’sprofessionalservicescontracts(19.4%)andlowestingoodsandgeneralservicescontracts(10.6%).ThemajorityofcontractingdollarsthattheCityawardedduringthestudyperiodwereinconstruction,inwhichtheparticipationofminority‐andwoman‐ownedbusinesseswas15.2percent.

Business group







Goal Status

Goals

contracts

No‐goals

contracts

Business group







Contract Role

Prime

contracts Subcontracts


Figure ES‐8. Utilization results by relevant industry

Note:



Source:


D. Disparity Analysis Results

Althoughinformationabouttheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractsisusefulonitsown,itisevenmoreusefulwhencomparedwiththelevelofparticipationthatmightbeexpectedbasedonthesebusinesses’availabilityforCitywork.BBCcalculateddisparityindicesforeachrelevantbusinessgroupandforvariouscontractsetsbydividingpercentparticipationbypercentavailabilityandmultiplyingby100.Adisparityindexof100indicatesanexactmatchbetweenparticipationandavailabilityforaparticulargroupforaparticularcontractset(referredtoasparity).Adisparityindexoflessthan100indicatesadisparitybetweenparticipationandavailability.Adisparityindexoflessthan80indicatesasubstantialdisparitybetweenparticipationandavailability.

Overall.FigureES‐9presentsdisparityindicesforallrelevantprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Thelinedownthecenterofthegraphshowsadisparityindexlevelof100,whichindicatesparitybetweenparticipationandavailability.Forreference,thereisalinedrawnatadisparityindexof100(lineofparity)andatadisparityindexlevelof80(lineofsubstantialdisparity).AsshowninFigureES‐9,overall,theparticipationofminority‐andwoman‐ownedbusinessesincontractsthattheCityawardedduringthestudyperiodwassubstantiallylowerthanwhatonemightexpectbasedontheiravailabilityforthatwork.Thedisparityindexof63indicatesthatminority‐andwoman‐ownedbusinessesreceivedapproximately$0.63foreverydollarthattheymightbeexpectedtoreceivebasedontheiravailabilityfortherelevantprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Disparityanalysisresultsbyindividualgroupindicatedthat:

Threegroupsexhibiteddisparityindicessubstantiallybelowparity:non‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof48),AsianAmerican‐ownedbusinesses(disparityindexof38),andBlackAmerican‐ownedbusinesses(disparityindexof48).

HispanicAmerican‐ownedbusinesses(disparityindexof102)andNativeAmerican‐ownedbusinesses(disparityindexof200+)didnotexhibitadisparity.

Business group

Non‐Hispanic white woman‐owned 4.9 % 6.5 % 5.5 %

Asian American‐owned 0.6 % 2.0 % 2.9 %

Black American‐owned 0.7 % 7.3 % 0.4 %

Hispanic American‐owned 8.3 % 3.6 % 1.7 %

Native American‐owned 0.8 % 0.0 % 0.1 %

Total Minority‐ and Woman‐owned 15.2 % 19.4 % 10.6 %

Industry

Construction

Professional

services

Goods and

services


Figure ES‐9. Disparity indices by racial/ ethnic and gender group

Note:

Numbers rounded to nearest whole number.

For more detail, see Figure F‐2 in Appendix F.

Source:

BBC Research & Consulting disparity analysis.

Contract goals.Duringthestudyperiod,theCityusedMWBEandDBEcontractgoalstoawardmanylocally‐fundedandfederally‐fundedcontracts,respectively,toencouragetheparticipationofminority‐andwoman‐ownedbusinesses.Itisusefultoexaminedisparityanalysisresultsseparatelyforgoalscontractsandno‐goalscontracts.Assessingwhetheranydisparitiesexistforno‐goalcontractsprovidesusefulinformationaboutoutcomesforminority‐andwoman‐ownedbusinessesoncontractsthattheCityawardedinarace‐andgender‐neutralenvironmentandwhetherthereisevidencethatcertaingroupsfacebarriersaspartoftheagency’scontracting.AsshowninFigureES‐10,minority‐andwoman‐ownedbusinessesconsideredtogethershowedparityongoalscontracts(disparityindexof104),butexhibitedasubstantialdisparityonno‐goalscontracts(disparityindexof35).Disparityanalysisresultsbyindividualgroupindicatedthat:

Non‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof67)andAsianAmerican‐ownedbusinesses(disparityindexof59)exhibitedsubstantialdisparitiesongoalscontracts.BlackAmerican‐ownedbusinessalsoexhibitedadisparitythatwasclosetothethresholdofbeingconsideredsubstantial(disparityindexof82)ongoalscontracts;and

AllgroupsexceptNativeAmerican‐ownedbusinesses(disparityindexof200+)exhibitedsubstantialdisparitiesonno‐goalscontracts.


Figure ES‐10. Disparity indices by contract goal status

Note:



Source:


Takentogether,theresultspresentedinFigureES‐10showthattheCity’suseofMWBEandDBEcontractgoalsissomewhateffectiveinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinitscontracts.Moreover,theresultsindicatethatwhentheCitydoesnotuserace‐andgender‐consciousmeasures,nearlyallrelevantbusinessgroupssufferfromsubstantialunderutilizationinCitycontractingandprocurement.

Contract role. Subcontractstendtobemuchsmallerinsizethanprimecontracts.Asaresult,subcontractsareoftenmoreaccessiblethanprimecontractstominority‐andwoman‐ownedbusinesses.Inaddition,theCityusedMWBEandDBEcontractgoalswhenawardingmanycontractsduringthestudyperiod,whichprimarilyaffectsubcontractopportunitiesforminority‐andwoman‐ownedbusinesses.Thus,itmightbereasonabletoexpectbetteroutcomesforminority‐andwoman‐ownedbusinessesonsubcontractsthanonprimecontracts.FigureES‐11presentsdisparityindicesforallrelevantgroupsseparatelyforprimecontractsandsubcontracts.AsshowninFigureES‐11,minority‐andwoman‐ownedbusinessesconsideredtogethershowedasubstantialdisparityforprimecontracts(disparityindexof37)butnotforsubcontracts(disparityindexof176).Resultsforindividualgroupsindicatedthat:

AllgroupsshowedsubstantialdisparitiesonprimecontractsexceptforNativeAmerican‐ownedbusinesses(disparityindexof200+).

Nogroupsexhibitedsubstantialdisparitiesonsubcontracts.


Figure ES‐11. Disparity indices by contract role

Note:



Source:


Industry.BBCexamineddisparityanalysisresultsseparatelyfortheCity’sconstruction;professionalservices;andgoodsandservicescontracts.TheprojectteamcombinedresultsforgoodsandservicescontractsbecausetheCityusessimilarprocurementprocessestoawardthosecontracts.FigureES‐12presentsdisparityindicesforallrelevantgroupsbycontractingarea.Disparityanalysesresultsdifferedbycontractingareaandgroup:

Minority‐andwoman‐ownedbusinessesconsideredtogethershowedadisparityonconstructioncontracts(disparityindexof80).Threeindividualgroupsshowedsubstantialdisparities:non‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof45),AsianAmerican‐ownedbusinesses(disparityindexof36),andBlackAmerican‐ownedbusinesses(disparityindexof37).

Minority‐andwoman‐ownedbusinessesconsideredtogethershowedasubstantialdisparityonprofessionalservicescontracts(disparityindexof48).Allindividualgroupsshowedsubstantialdisparitiesonthosecontracts.

Minority‐andwoman‐ownedbusinessesconsideredtogethershowedasubstantialdisparityongoodsandservicescontracts(disparityindexof40).AllindividualgroupsshowedsubstantialdisparitiesexceptforNativeAmerican‐ownedbusinesses(disparityindexof105).


Figure ES‐12. Disparity indices by relevant industry

Note: Numbers rounded to nearest whole number.


Source: BBC Research & Consulting disparity analysis.

E. Program Implementation

TheCityshouldreviewstudyresultsandotherrelevantinformationinconnectionwithmakingdecisionsconcerningitsimplementationoftheMWBE,EBE,SBE,andFederalDBEPrograms.Keyconsiderationsofpotentialrefinementarediscussedbelow.Inmakingthoseconsiderations,theCityshouldalsoassesswhetheradditionalresources,changesininternalpolicy,orchangesinstatelawmayberequired.

Aspirational MWBE and DBE goals.TheCityestablishesaspirationalannualgoalsfortheparticipationofcertifiedMBEsandWBEsaspartoftheMWBEProgramandfortheparticipationofcertifiedDBEsaspartofitsimplementationoftheFederalDBEProgram.Resultsfromthedisparitystudy—particularlytheavailabilityanalysisandanalysesofmarketplaceconditions—canbehelpfultotheCityinsettingitsnextaspirationalMWBEandDBEgoals.

Aspirational MWBE goals.TheCitysetsaspirationalannualMWBEgoalsseparatelyforitslocally‐fundedconstruction;professionalservices;andgoodsandservicescontractsandprocurements.Currently,theCityhassetthosegoalsat24percentforconstruction,33percent


forprofessionalservices,and8percentforgoodsandservices.InformationfromtheavailabilityanalysisprovidedinformationthattheCitycanuseasabasisforitsaspirationalMWBEgoals.Forthepurposesofaspirationalgoal‐setting,BBCcalculatedtheavailabilityofpotentialMWBEs—minority‐andwoman‐ownedbusinessesthatarecurrentlyMWBE‐certifiedorappearthattheycouldbeMWBE‐certifiedbasedonrevenuerequirementssetforthintheCity’sMWBEProgram—forlocally‐fundedprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.ThatanalysisindicatedthatpotentialMWBEsmightbeexpectedtoreceive20.5percentoftheCity’slocally‐fundedcontractingdollarsbasedontheiravailabilityforthatwork.TheavailabilityofpotentialMWBEsis16.5percentforlocally‐fundedconstructioncontracts;39.5percentforlocally‐fundedprofessionalservicescontracts;and19.8percentforlocally‐fundedgoodsandgeneralservicescontracts.TheCityshouldconsiderthatinformationasitsetsitsnextaspirationalMWBEgoals.

Overall DBE goal.TheCityalsosetsanoverallannualDBEgoalfortheFAA‐fundedcontractsthatDENawards.Currently,theCityhassetthatgoalat14.04percent.ForthepurposesofhelpingtheCitydetermineabasisforitsoverallDBEgoal,BBCcalculatedtheavailabilityofpotentialDBEs—minority‐andwoman‐ownedbusinessesthatarecurrentlyDBE‐certifiedorappearthattheycouldbeDBE‐certifiedbasedonrevenuerequirementssetforthin49CodeofFederalRegulationsPart26.65—forFAA‐fundedprimecontractsandsubcontractsthatDENawardedduringthestudyperiod.ThatanalysisindicatedthatpotentialDBEsmightbeexpectedtoreceived16.2percentoftheCity’sFAA‐fundedprimecontractandsubcontractdollarsbasedontheiravailabilityforthatwork.TheCityshouldconsiderthatinformationasitsetsitsnextoverallDBEgoalsforDEN’sFAA‐fundedcontracts.

Goal adjustments. Insettingaspirationalannualgoals,organizationsoftenexamineavailableevidencetodeterminewhetheranadjustmenttoavailabilityisnecessarytoaccountforpastparticipationofminority‐andwomanownedbusinessesintheircontracting;currentconditionsinthelocalmarketplaceforminorities,women,minority‐ownedbusinesses,andwoman‐ownedbusinesses;andotherrelevantfactors.TheFederalDBEProgram—whichorganizationsoftenuseasamodeltosetandadjusttheiraspirationalannualgoals—outlinesseveralfactorsthatorganizationsmightconsiderwhenassessingwhethertoadjusttheirgoals:

1. Volumeofworkminority‐andwoman‐ownedbusinesseshaveperformedinrecentyears;

2. Informationrelatedtoemployment,self‐employment,education,training,andunions;

3. Informationrelatedtofinancing,bonding,andinsurance;and

4. Otherrelevantdata.3

BBCcompletedananalysisofeachoftheabovefactors.MuchoftheinformationthatBBCexaminedwasnoteasilyquantifiablebutisstillrelevanttotheCityasitdetermineswhethertoadjustitsaspirationalMWBEandDBEgoals.DetailedinformationaboutthoseanalysesarepresentedinChapter9.

349CFRSection26.45.


Data collection.TheCitymaintainscomprehensivedataontheprimecontractsandprocurementsthatitawardsandmaintainsthosedatainawell‐organizedandintuitivemanner.However,theCityonlymaintainsdataonthosesubcontractsthatareassociatedwithprimecontractsthatitawardsusingMWBEorDBEcontractgoals.TheCityshouldconsidercollectingcomprehensivedataonallsubcontracts,regardlessofwhethertheyareperformedbyminority‐andwoman‐ownedbusinessesandregardlessofwhethertheyareassociatedwithgoalscontracts.CollectingdataonallsubcontractswillhelpensurethattheCitymonitorstheparticipationofminority‐andwoman‐ownedbusinessesasaccuratelyaspossible.Collectingthefollowingdataonallsubcontractswouldbeappropriate:

Subcontractorname,address,phonenumber,andemailaddress;

Typeofassociatedwork;

Subcontractawardamount;and

Subcontractpaidamount.

TheCityshouldconsidercollectingthosedataaspartofbidsbutalsorequiringprimecontractorstosubmitdataonsubcontractsaspartoftheinvoicingprocessforallcontracts.TheCityshouldtrainrelevantdepartmentstafftocollectandentersubcontractdataaccuratelyandconsistently.

Monitoring minority‐ and woman‐owned business participation. TheCityonlymonitorsminority‐andwoman‐ownedbusinessparticipationongoalscontracts,whichresultsinaskewedrepresentationoftheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractingoverall.Disparitystudyresultsindicatethat,duringthestudyperiod,theparticipationofminority‐andwoman‐ownedbusinesseswasmuchlowerincontractsthattheCityawardedwithouttheuseofMWBEorDBEcontractgoalsthaningoalscontracts,despitetheavailabilityofminority‐andwoman‐ownedbusinessesbeingverysimilarforbothcontractsets.ThatresultunderscorestheimportancefortheCitytomonitortheparticipationofminority‐andwoman‐ownedbusinessesinallcontracts,regardlessofwhethercontractgoalsareusedtoawardthem.DoingsowillhelpensurethattheCitymonitorstheparticipationofminority‐andwoman‐ownedbusinessesasaccuratelyaspossible.

Prime contract opportunities.Disparityanalysisresultsindicatedsubstantialdisparitiesformostracial/ethnicandgendergroupsontheprimecontractsthattheCityawardedduringthestudyperiod.TheCityhasestablishedaDefinedSelectionPoolProgram,whichlimitscompetitiononcertainconstructionandgoodsandservicesprimecontractstocertifiedSBEsorEBEs.TheCityshouldconsidercontinuingandevenexpandingtheuseoftheprogramtofurtherencouragetheparticipationofsmallbusinesses,includingmanyminority‐andwoman‐ownedbusinesses.

Subcontract opportunities.Overall,minority‐andwoman‐ownedbusinessesdidnotshowdisparitiesonthesubcontractsthattheCityawardedduringthestudyperiod.However,subcontractingaccountedforarelativelysmallpercentageofthetotalcontractingdollarsthattheCityawardedduringthestudyperiod.Toincreasethenumberofsubcontractopportunities,theCitycouldconsiderimplementingaprogramthatrequiresprimecontractorstosubcontractacertainamountofprojectworkaspartoftheirbidsandproposals,regardlessofthe


race/ethnicityorgenderofsubcontractorowners.Forspecifictypesofcontractswheresubcontractingorpartnershipopportunitiesmightexist,theCitycouldsetaminimumpercentageofworktobesubcontracted.Primecontractorswouldthenhavetomeetorexceedthisthresholdinorderfortheirbidstobeconsideredresponsive.IftheCityweretoimplementsuchaprogram,itshouldincludeflexibilityprovisionssuchasagoodfaitheffortsprocess.

Contract goals.TheCityusesMWBEandDBEcontractgoalsonmanyofthecontractsthatitawards.PrimecontractorscanmeetthosegoalsbyeithermakingsubcontractingcommitmentswithcertifiedMWBEorDBEsubcontractorsatthetimeofbidorbysubmittingwaiversshowingthattheymadereasonablegoodfaitheffortstofulfillthegoalsbutcouldnotdoso.Disparityanalysisresultsshowedthatoutcomesforminority‐andwoman‐ownedbusinesseswerebetterongoalscontractsthanno‐goalscontractsduringthestudyperiod,indicatingthattheuseofcontractgoalsisaneffectivemeasureinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontracts,particularlyforHispanicAmerican‐ownedbusinesses.TheCityshouldconsidercontinuingitsuseofMWBEandDBEcontractgoalsinthefuture.TheCitywillneedtoensurethattheuseofthosegoalsisnarrowlytailoredandconsistentwithotherrelevantlegalstandards(fordetails,seeChapter2andAppendixB).ItisalsoimportantfortheCitytocontinuetotreatcontractgoalsasonlyonetacticamongmanytoencourageminority‐andwoman‐ownedbusinessparticipationinitscontractingandtonottreattheuseofsuchgoalsasasubstituteforothermeasuresthatmighthelpbuildthecapacityofminority‐andwoman‐ownedbusinessesforCitywork,suchastechnicalassistanceprograms,mentor‐protégéprograms,andfinancialassistance.

Unbundling large contracts.Ingeneral,minority‐andwoman‐ownedbusinessesexhibitedreducedavailabilityforrelativelylargecontractsthattheCityawardedduringthestudyperiod.Inaddition,aspartofin‐depthinterviewsandpublicforums,severalminority‐andwoman‐ownedbusinessesreportedthatthesizeofgovernmentcontractsoftenservesasabarriertotheirsuccess(fordetails,seeAppendixD).Tofurtherencouragetheparticipationofsmallbusinesses,includingmanyminority‐andwoman‐ownedbusinesses,theCityshouldconsidermakingeffortstounbundlerelativelylargeprimecontractsandevensubcontractsintoseveralsmallercontracts.Forexample,theCityofCharlotte,NorthCarolinaencouragesprimecontractorstounbundlesubcontractingopportunitiesintosmallercontractpiecesthataremorefeasibleforsmallbusinessesandminority‐andwoman‐ownedbusinessestoworkonandacceptssuchattemptsasgoodfaithefforts.Doingsowouldresultinthatworkbeingmoreaccessibletosmallbusinesses,whichinturnmightincreaseopportunitiesforminority‐andwoman‐ownedbusinessesandresultingreaterminority‐andwoman‐ownedbusinessparticipation.

Prompt payment.Aspartofin‐depthinterviews,severalbusinesses,includingmanyminority‐andwoman‐ownedbusinesses,reporteddifficultieswithreceivingpaymentinatimelymanneronCitycontracts,bothwhenworkingasprimecontractorsandassubcontractors(fordetails,seeAppendixD).Manybusinessesalsocommentedthathavingcapitalonhandiscrucialtosmallbusinesssuccess.TheCityshouldconsiderreinforcingitspromptpaymentpolicieswithitsprocurementstaffandprimecontractorsandcouldalsoconsiderautomatingpaymentsdirectlytosubcontractors.Doingsomighthelpensurethatbothprimecontractorsandsubcontractorsreceivepaymentinatimelymanner.Itmayalsohelpensurethatminority‐andwoman‐ownedbusinesseshaveenoughoperatingcapitaltoremainsuccessful.

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