sbeda policy matrix

8/19/2019 SBEDA Policy Matrix

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REMEDIAL POLICY OPTIONS FOR CITY OF SAN ANTONIO SMALL & MINORITY BUSINESS PROGRAM

(Prepared by Franklin M. Lee, Esquire 2-24-16)

Document is not final and is a draft.

Introduction

The following policy option matrices and recommendations are based upon our legal review of the October 26, 2015, BusinessDisparities in San Antonio, Texas Market Study Update performed by National Economic Research Associates, Inc. (“NERA”).Tables I-A and I-B below summarize the remedial industry-specific small (“SBE”) and /or minority/women business enterprise(“M/WBE”) policy options that may be legally defensible and somewhat effective in addressing barriers to M/WBE participation inCity of San Antonio (“COSA”) contracts. Table I-A reflects those recommendations for industry-specific remedial policy options that

are race- and gender-neutral. Table I-B reflects those recommendations for industry-specific remedial policy options that are race-and gender-conscious. (“R/N” references in the name of a policy option mean that the proposed policy is a “race- and gender-neutral”remedy. “R/C” references in the name of a policy option mean that the proposed policy is a “race- and gender-conscious” remedy.)

Table II summarizes miscellaneous administrative and procurement policy reforms and amendments to non-industry-specificsmall / minority / women business enterprise policies that are worthy of consideration by COSA based upon a review of the fullfactual predicate evidence gathered from this Study effort and during the public comment period. As a result of U.S. Supreme Court precedents requiring narrow tailoring of remedies under the “strict scrutiny” standard, the City should first consider the use of race-and gender-neutral remedial options as reflected in Tables I-A and II, and only resort to the race- and gender-conscious remedialoptions reflected in Tables I-B and II when it has reaso n to believe that neutral remedies, in and of themselves, will be insufficient tofully eliminate disparities resulting from discrimination.1

**Note: “Bold text” within the body of the following tables reflects new citations from the NERA Disparity Study Updatethat support or corroborate prior disparity study findings and recommendations, and / or proposed amendments to existing policyoptions and administrative practices that are part of the implementation of the current version of the SBEDA Ordinance.

1 Eight of the fourteen non-industry-specific policy options described in Table II are race- and gender-neutral. Six of the fourteen non-industry-specific policyoptions are race- and gender- conscious. Those six non-industry-specific race- and gender- conscious policy options either address administrative problems thatundermined the effectiveness of the SBEDA program, or address identified barriers to the business formation and growth of M/WBE firms that are influenced byrace or gender regardless of industry (e.g., unequal access to capital).

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TABLE I-A: RACE / GENDER-NEUTRAL POLICY OPTIONS FOR COSA S/M/WBE PROGRAM


Industry Specific

Programs

NERARecommendations Additional Options

Relevant Findings /

JustificationsPros & Cons

Construction

(R/N-1)

Small Business Enterprise

Prime ContractProgram

Two-tiered small

business enterprise program for small primecontracts with differentsize standard categoriesfor participating firms

• SBE – sizestandard equal to50% of SBA small business size

standard forconstruction(reserve subset ofsmaller contracts

• from $25,000 to$100,000 forestablished smallcontractors)

FML concurs. Significant disparity and

underutilization inCOSA M/WBEconstruction primecontract participation forall categories ofM/WBEs; there is a

strong basis in evidence(both anecdotal and

statistical findings) of

discriminatory

practices and attitudesthat impedeopportunities for

M/WBEs for Citycontracts and economy-wide. (Study Update

pp. 21, 200-201, 207,and 290)..

Pro: Enhances

capacity developmentand competition in prime contractingoverall; providesassistance foremerging firms, aswell as for moreestablished small firms; preventslarger established

small firms fromsqueezing outemerging newentrants; moreinclusive than singlesize standard.

Con: Short termreduction of

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Construction(R/N-1)

SBE Prime ContractProgram(continued)

• Emergingcontractors – size

standard equal to25% of SBA sizestandard forconstruction firms.

(Reserve subset of small prime contracts below$25,000 for emergingcontractors)

(See Study Update pp.

22 and 290-293)

competition onsmaller contracts; possible adverse costimpact; greater

administrativechallenge thanmanaging a singlesize standard;requires carefulconsideration ofselection of remedyon project-by-projectbasis.

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Industry Specific

Programs

NERA

Recommendations Additional Options

Relevant Findings /

Justifications

Pros & Cons

Construction(R/N-2)

SBE SubcontractingProgram

Two-tiered small business enterprise program for smallsubcontractors withdifferent size standardcategories for participating firms.

SBE – size standard

equal to 50% of SBAsmall business sizestandard for constructionfor established smallcontractors, and equal to25% of SBA small business size standardfor emerging contractors

• Set SBE

subcontractinggoals for emergingcontractors on prime contractsvalued above$100,000.

• Set SBEsubcontracting

FML concurs withadditional detailsregarding mandatorygood faith outreach by primes; centralized bidder registrationsystem can significantlyimprove outreach andfacilitate documentation

of availability by specifictrade; need to upgrade

CVR to incorporate

critical path plan of

construction projects toidentify projected start

and completion datesfor each

subcontractor’s scope

of work and adoption

of universal invoicingformat to betteridentify and track when

subcontractor payrequests are part of

prime’s monthly

invoice.

Currently, email alerts

to primes and subsregarding lack of

payments to subs areoften false alarms

simply because there is

no mechanismavailable to link

payment schedule to

subcontractorperformance schedulesand pay requests

submitted bysubcontractors. (See

Study Update pp. 22,280, and 290-293)

Pro: Enhancescapacity developmentand competition insub contractingoverall; providesassistance foremerging firms, aswell as for moreestablished small

firms; preventslarger establishedsmall firms fromsqueezing outemerging newentrants; moreinclusive than singlesize standard.

Con: Short term

reduction ofcompetition onsmaller subcontracts; possible adverse costimpact; greateradministrativechallenge thanmanaging a singlesize standard;

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Construction

(R/N-2)

SBE SubcontractingProgram

(continued)

goals for standardSBEs on contractsvalued at $500,000and above.

(See Study Update pp.

21-22, 201, 207, and290-293)

requires carefulconsideration ofselection of remedyon project-by-project

basis.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Construction(R/N-3)

SBE Joint Venture Incentives

For prime contractsvalued over $10 million,require joint ventureswith SBE firms at certain percentage level; count

joint venture prime

contract participationtowards satisfaction of

annual aspirational

goals.

(See Study Update pp.22 and 290-293)

FML concurs with race-neutral variation forSBEs instead ofM/WBEs; possiblereduction in thresholddollar level of eligible prime contracts (e.g.,apply to contracts valuedat greater than $5 million

or $2 million).

Significant disparity andunderutilization COSAin M/WBE construction prime contract participation for allcategories of M/WBEs;

there is a strong basisin evidence (both

anecdotal and

statistical findings) ofdiscriminatorypractices and attitudes

that impede

opportunities forM/WBEs for City

contracts and economy-wide. (Study Update

pp. 21, 200-201, 207,and 290).

Pro: Enhancescapacity developmentand competition in prime contractingoverall; providessome projectmanagementexperience and primecontracting

experience for small firms. May promotegreater competition for prime contractsin long run.

Con: Potentialshort-term adversecost consequences;bonding may be problematic for someSBE JV partners;monitoringcompliance withallocation of workand managementresponsibility may bedifficult. Greateradministrative

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Construction(R/N-3)

SBE Joint Venture Incentives(continued)

challenge for COSAand other primesthan asubcontracting goals

program.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Construction(R/N-4)

HUBZone Program

Reserve subset of primecontracts for competitionamong federal certifiedHUBZone firms, with atleast 35% of employeesresiding in COSAHUBZone, and principal place of business locatedin HUBZone.

(See MGTRecommendation 9-5.

Study Update pp. 22,290-293)

FML concurs. In state of Texas, thereare 813 M/WBEHUBZone firmsrepresenting 74% of allHUBZone firms; in SanAntonio MSA, there are140 M/WBEs whorepresent 80.9 % of allcertified HUBZone

firms.

Pro: Builds capacityof HUBZone primeson mid-sizedcontracts; providesmanagementexperience to HUBZone firms onmid-size primecontracts;

encouragescollaboration among HUBZone firms; Enhances economicdevelopmentattributes of programdue to employmentaspect.

Con: Some increasein costs may result. Many certified M/WBE firms are not HUBZone certified,and it is not known ifthey would beeligible to becertified as such.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Construction(R/N-5)

Small DeveloperOwnership

ConstructionProgram

Reserve certain smallerdevelopment projectsthat are financed byCOSA through TIFs forSBE developers thathave prime contractingexperience.Alternatively, RFPscontain language

requesting developers to propose strategies forincluding all segments ofS/M/WBEs into projectsin various roles,including equityownership, operationalmanagement, andconstructionopportunities.

(See MGTRecommendation 9-12;

Study Update, pp. 246and 290).

FML concurs. Findings 9-5, 9-7, 9-8,and 9-9 reflect M/WBEsmay be smaller thanothers due to decreasedearnings in private sectorin particular; moreover,unequal access to capitalmay thwart formation ofM/WBE developers that

then establishopportunities forM/WBE primecontractors. See also

Study Update, pp. 21,200-201, 207, 229, and

286-290.

Pro: Leverages public sector financing to openopportunities forsmaller M/WBEs to participate in privatesector construction projects andestablish track

record as developers.

Con: Administrativechallenges inmonitoring follow-through on developercommitments; whenliquidated damagesare built intodevelopmentagreements, somedevelopers may bediscouraged fromcompeting for morechallengingeconomicdevelopment projects.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Construction(R/N-6)

Bonding Assistance

Expand bonding

assistance program,review San Francisco

Surety Bond andfinancing assistance

program. (See Study

Update pp. 21, 219,241, and 286)

City establishes a pool ofup to $5 million for providing bondingassistance to SBEconstruction firms; fundsused to provide technicaland financial assistanceto SBE prime bidders tominimize risk of loss and

insure management offunds during projects;surety issues bonds atcompetitive rates with partial guarantee from pool; projectssegmented to reducerequired bonding limits.

(See San Diego CountyRegional AirportBonding AssistanceProgram).

Significant disparity andunderutilization inCOSA M/WBEconstruction primecontract participation forall categories ofM/WBEs; (Findings 9-2,9-3, 9-4). FormerSBEDA bonding

assistance program washelpful but wasterminated due to misuseof funds. (See SBACHearing Tr. 33-34)Lower earnings byM/WBE firms may alsoadversely affect capacityand ability to obtain bonding levels requiredfor larger contracts.(Findings 9-7 and 9-9).

Pro: Providesenhanced access to prime contracts forSBE and M/WBE firms; strengthensability to obtainbonds for SBE firms, while reducingrisk of loss through

technical assistanceand financialmanagement support.

Con: Initial $5million investment in program may be problematic due toCOSA budgetaryconcerns and privatesources for fundingmay also be limitedby recession.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Construction(R/N-7)

SBE Mentor –Protégé Program

Team up moreestablished andsuccessful constructionfirm mentors with lessestablished SBE firms to provide managementguidance and training.Existing tradeassociations may bevehicles for recruitingand pairing of mentorswith protégé firms. Also

expand mentor-protégé

programs beyond fieldof construction to

include professionalservices, A&E, goods,

and other services. (See

Study Update, p. 288)

FML concurs. May provide added incentiveto potential mentors byreserving some contractsfor pre-approved mentor- protégé teams. (See Cityof Columbia, SC mentor- protégé program) Also

review USDOT DBE

mentor-protégéprogram and other

federal mentor-protégémodels requiring

certain elements

regarding nature ofassistance provided and

commitments of partiesto be contained in

written agreement, and

also requiring periodicdocumentation of

assistance provided inreturn for eligibility of

approved mentor-protégé teams to

participate in certain

APIs with clearlydefined roles in

contract.

Relationship-building isa key component toopening up subcontractopportunities foremerging SBE firms thatare not known to primecontractor community.Also, training in suchmatters as safety programs, payroll,estimating and bidding,management of fundsand project managementis extraordinarilyvaluable to newer firms.Mentors benefit fromexpanded pool ofcompetent subs that aredependable and workwell with prime.

Pro: This approachto building capacityis favored by the AGC and may provide a win-winscenario if a long-term prime – subrelationship evolves;mentor will havegreater confidence inSBE subs that theyhave mentored.

Con: There may notbe enough mentors tomeet needs of SBEsubs; incentive for participation asmentor may not besufficient as some primes perceive protégés to be potentialcompetitors. There isalso a need to havesafeguards to ensurethat protégé is notbecoming a captive.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Construction(R/N-8)

SBE Low CostWrap-up Insurance

COSA negotiates withinsurance carriers forconstruction servicesfirms to provide policyto City that covers itsSBE construction firms.

(MGT Recommendation9-3)

FML concurs. Levels the playing fieldas all SBEs pay the sameor less than non-SBEfirms for workman’scomp insurance, generalliability, etc. (See SanDiego, CA MinorConstruction Program;see also SBAC Tr. 108).

See also Study Update

and pp. 21, 219 and286, re: unequal access

to insurance and

bonding by M/WBEs,and adverse impact

from unnecessarilyrestrictive insurance

and bonding

requirements by City.

Pro: Makes SBEconstruction firmsmore cost-competitive withlarger firms.

Con: May bedifficult to find acarrier willing towrite policy thatcovers firms with lessexperience and lesstrack record. Ratethat COSA pays maybe higher than someof largerconstruction firms. Inaddition, legality ofOwner Controlled Insurance Programsvaries by state-to-state and must beinvestigated.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Architectural &Engineering

(R/N-9)

SBE Vendor Rotation

Selective use of vendorrotation of pre-qualified panel of SBE A&E firmsfor smaller COSA design projects.

(See MGTRecommendation 9-2)

Continue SBE Programfor prime and sub A&E

firms. See StudyUpdate, pp. 21-22, 290-

293.

FML concurs. Significantunderutilization of MBEfirms in A&E primecontracts; prequalificationrequirements also hinderM/WBEs. There wasalso testimony fromM/WBE A&E firmsindicating thatsubcontracting programoften is not compliedwith by primes who endup self-performing scopeof work initiallyidentified by prime for performance by M/WBEsub.

(SBAC Tr. 23-30, 111;Exhibit 9-2; Finding 9-3). See also Study

Update, pp. 21-22, 200-201, and 289 re: need

for continuation of SBE

program for prime andsub A&E vendors.

Pro: Automatedcentralized bidderregistration systemcombined with pre-qualification processwill enable rotationof SBE firms to get a fair chance to provecapabilities onsmaller projects andovercome biasagainst unknown firms. Facilitatesbuilding a trackrecord andovercoming lack ofCOSA experiencebarrier.

Con: Reducescompetition in theshort-run and mayadversely affect cost.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


(R/N-10)

EvaluationPreference for SBE

Prime Bidders

Continue SBE Program.

Study Update, pp. 21-22, 200-201, and 289 re:

need for continuationof SBE program for

prime and sub A&E

vendors.

Evaluation point preferences (award up to10% of availableevaluation points) toSBE firms bidding asfirst-time A&E primeconsultants. Also provide up to 10% bonus points for SBE jointventures to performA&E contracts.

Significantunderutilization of MBEfirms in A&E primecontracts; prequalificationrequirements also mayhinder M/WBEs. Therewas also testimony fromM/WBE A&E firmsindicating thatsubcontracting programoften is not compliedwith by primes who endup self-performing scopeof work initiallyidentified by prime for performance by M/WBEsub.


Update, pp. 200-201.

Pro: Encouragesmore naturalevolution of SBE A&E firms into full-service A&E firmsthat bid as primes. Helps overcomenatural bias in favorof incumbent firmsthat repeatedly perform A&Econtracts for COSA.

Con: SBA sizestandards for SBEsmay not be workable for A&E firms, whichtypically may have fewer employees.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


(R/N-11)

SBE ReserveProgram

Study Update, pp. 21-

22, 200-201, and 289 re:need for continuation

of SBE program forprime and sub A&E

vendors.

Reserve smaller A&Econtracts (e.g., under$500,000) forcompetition among SBEA&E firms.

Subcontracting approachdoes not always work asthere is evidence primeA&E consultants self- perform work initiallyidentified as being performed by M/WBEsubs.


Update, pp. 200-201.

Pro: Encouragesmore naturalevolution of SBE A&E firms into full-service A&E firmsthat bid as primes. Helps overcomenatural bias in favorof incumbent firmsthat repeatedly perform A&Econtracts for COSA.

Con: Provides lesscompetition thandoes EvaluationPreference. SBA sizestandards for SBEsmay not be workable for A&E firms, whichtypically may have fewer employees.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

ProfessionalServices(R/N-12)

SBE ReserveContracts (up to$50,000 in value)

Reserve some smaller professional servicescontracts for competitionamong SBE professionalservices firms.


See also Study Updatepp. 21-22, 200-201, 207,

212, and 289 re: needfor continuation of SBE

Program for

Professional Servicescontracts.

FML concurs with$50,000 maximum limit.

Significantunderutilization of MBEfirms in professionalservices prime contracts; prequalificationrequirements also hinderM/WBEs. There wasalso testimony fromM/WBE firms indicatingthat subcontracting program often is notcomplied with by primeswho end up self- performing scope ofwork initially identified by prime for performance by M/WBEsub.

(SBAC Tr. 23-30, 111;Exhibit 9-2; Finding 9-3).

Pro: Encouragesmore naturalevolution of SBE professional services firms into full-service professional services firms that bid as primes. Helpsovercome naturalbias in favor ofincumbent firms thatrepeatedly perform professional servicescontracts for COSA.

Con: SBA sizestandards for SBEsmay not be workable for professionalservices firms, whichtypically may have fewer employees;reduces competition.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


SBE Reserve forSmall Financial

Services ConsultingContracts

Reserve some smallerfinancial servicescontracts for competitionamong SBE financialservices consultingfirms.

(See MGTRecommendation 9-2;see also Commendationand Recommendation 9-11 commending COSAfor RFP languageseeking S/M/WBE participation ininvestment banking andother nontraditionalareas of professionalservices.)


pp. 21-22, 200-201, 207,212, and 289 re: need

for continuation of SBEProgram for

Professional Services

contracts.

FML concurs. Significantunderutilization of MBEfirms in professionalservices prime contracts; prequalificationrequirements also hinderM/WBEs. There wasalso testimony fromM/WBE firms indicatingthat subcontracting program often is notcomplied with by primeswho end up self- performing scope ofwork initially identified by prime for performance by M/WBEsub.(SBAC Tr. 23-30, 111;Exhibit 9-2; Finding 9-3).See also Study

Update pp. 21-22, 200-

201, 207, 212, and 289re: need for

continuation of SBE

Program forProfessional Services

contracts.

Pro: Greaterdiversity among portfolio of participating firms in financial servicesindustry is especiallyimportant in theseturbulent economictimes. (Larger is notnecessarily safer asnoted in Lehman Bros. and Merrill Lynch disasters.)

Con: SBA sizestandards for SBEsmay not be workable for professionalservices firms, whichtypically may have fewer employees;reduces competition.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


SBE SubcontractingGoals on Large

Contracts

Good faith effort SBEsubcontracting goalsassigned to certain larger professional servicescontracts.

(See MGTRecommendations 9-3and 9-4)


pp. 21-22, 200-201, 207,212, and 289 re: need



contracts.

FML concurs withconsideration by a GoalSelection Committee ofwhether there is acommercially usefulfunction available to be performed by asubconsultant.

Significantunderutilization of MBEfirms in professionalservices prime contracts; prequalificationrequirements also hinderM/WBEs.

(Exhibit 9-2; Finding 9-3)


212, and 289 re: need



Pro: Enhancesability of SBE professional services firms to gainexperience on largercontracts andestablish a trackrecord with COSA. May also developreferral source with prime consultant.

Con: Not all professional servicescontracts havecommercially usefulsubcontractopportunities, soGoal SelectionCommittee will needto carefully evaluateeach prime contractopportunity.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons



On professional servicescontracts valued at $1million or more, considerapplication of SBE jointventure incentives toinclude up to 10%evaluation preference based upon percentage ofSBE participation, or to provide additional optionyear for contract whereinSBE joint venture partner has performedwork in first contractyear valued at more thanaspirational goal for professional services.

Significantunderutilization of MBEfirms in professionalservices prime contracts; prequalificationrequirements also hinderM/WBEs.

(Exhibit 9-2; Finding 9-3)


212, and 289 re: need



Pro: Enhancesopportunity of SBE professional services firms to gain trackrecord with COSA performing andmanaging largercontracts. Ultimatelyexpands supplierbase for professionalservices.

Con: Additionaloption years mayreduce annualnumber of contractopportunities fornon-incumbent firms,including non-incumbent SBE firms.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


SBE Pre-qualifiedPanel Rotation

Selective use of vendorrotation of pre-qualified panel of SBE professional servicesfirms for smaller COSA projects.



pp. 21-22, 200-201, 207,212, and 289 re: need



contracts.

FML concurs, andsuggests threshold ofcontracts valued at below$250,000 for applicationof this policy option.

Significantunderutilization of MBEfirms in professionalservices prime contracts; prequalificationrequirements also hinderM/WBEs. There wasalso testimony fromM/WBE firms statingthat subcontracting program often is notcomplied with by primeswho end up self- performing scope ofwork initially identified by prime for performance by M/WBEsub.(SBAC Tr. 23-30, 111;Exhibit 9-2; Finding 9-

3).See also StudyUpdate pp. 21-22, 200-

201, 207, 212, and 289re: need for

continuation of SBE


contracts.

Pro: Takes SBE Reserve policy (see R/N-12) one step further by requiringCOSA to determinecapability andcapacity of SBE professional services firms in advance;rotation of pre-qualified firmsinsures expansion ofsupplier base forroutine matters ofsmaller size.

Con: Pre-qualification processmust be carefullymanaged to avoid favoritism andassignments to firmsthat are ill-suited forthe needs of a particular contract. Routine matters arebest suited for thisoption.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Other Services(R/N-17)

Vendor Rotations

Selective use of vendorrotation of pre-qualified panel of SBE non- professional servicesfirms for smaller COSA projects.



pp. 21-22, 200-201, 207,212, and 289 re: need


Program for OtherServices contracts.

FML concurs, andsuggests threshold ofcontracts below$250,000 in value forapplication of this policyoption.

Significantunderutilization ofAfrican American, AsianAmerican, and NativeAmerican firms in otherservices prime contracts.There was also testimonyfrom M/WBE firmsstatingsubcontracting programoften is not compliedwith by primes who endup self-performing scopeof work initiallyidentified by prime for performance by M/WBEsub.

(SBAC Tr. 23-30, 111;Exhibit 9-2; Finding 9-

3).See also Study Update

pp. 21-22, 200-201, 207,212, and 289 re: need



Pro: Takes SBE Reserve policy (see R/N-12) one step further by requiringCOSA to determinecapability andcapacity of SBEother “non- professional”services firms inadvance; rotation of pre-qualified firmsinsures expansion ofsupplier base forroutine matters ofsmaller size.

Con: Pre-qualification processmust be carefullymanaged to avoid favoritism andassignments to firmsthat are ill-suited forthe needs of a particular contract. Routine matters arebest suited for thisoption.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


SBE EvaluationPreference forPrime Bidders

Where RFP process isused to select non- professional servicesfirm, evaluation point preferences (award up to10% of availableevaluation points) aregranted to SBE firms bidding as prime. Also provide up to 10% bonus points for SBE jointventures to perform non- professional servicescontracts.

Significantunderutilization ofM/WBE firms in otherservices prime contracts.There was also testimonyfrom M/WBE firmsstatingsubcontracting programoften is not compliedwith by primes who endup self-performing scopeof work initiallyidentified by prime for performance by M/WBEsub.(SBAC Tr. 23-30, 111;Exhibit 9-2; Finding 9-3).




Pro: Takes SBE Reserve policy (see R/N-12) one step further by requiringCOSA to determinecapability andcapacity of SBEother “non- professional”services firms inadvance; rotation of pre-qualified firmsinsures expansion ofsupplier base forroutine matters ofsmaller size.

Con: Pre-qualification processmust be carefullymanaged to avoid

favoritism andassignments to firmsthat are ill-suited forthe needs of a particular contract. Routine matters arebest suited for thisoption.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


Mentor-ProtégéProgram

Expand mentor-

protégé program toinclude industries other

than construction. (SeeStudy Update pp. 22

and 288)

Economic DevelopmentOffice should facilitaterecruitment andmatching of protégé withappropriate mentor.Potential sources ofmentors should includeSCORE, tradeassociations, andchambers of commerce.

Also review USDOTDBE mentor-protégé

program and other

federal mentor-protégémodels requiring

certain elementsregarding nature of

assistance provided and


written agreement, andalso requiring periodic

documentation ofassistance provided in

return for eligibility of



Witnesses in bothconstruction and servicesindustries praised thevalue of mentoring withmore established firms.Anecdotal evidencesuggests informalnetworks andrelationships may be keyto obtaining COSAcontracts. (Finding 9-3)

(See also SBAC Tr. 108)

Pro: Unlike R/N-7above, this is merelya referral resourcewithout anyincentives; theburden is on the protégé and mentorto make the most outof the referral. Requires littleresources fromCOSA. Addedincentives may

attract more

participation by

mentors.

Con: Each protégéwill have todetermine its own

mentoring needs. Amatch may or maynot be available. Increased resources

for monitoring by

COSA will be

required is

recommended

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APIs with clearly

defined roles for each

team member incontract performance.

expansion of

program is

approved.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Goods & Supplies(R/N-20)

SBE Vendor Rotation

Selective use of vendorrotation of pre-qualifiedSBE vendors for smallerCOSA goods andsupplies contracts.Contract is automaticallyawarded if quoted pricedoes not exceed estimate by more than 10%. If itdoes exceed the estimate by more than 10%, thenopportunity rotates tonext qualified SBE onthe vendor rotation list.



pp. 21-22, 200-201, 207,212, and 289 re: need

for continuation of SBEProgram for Goods and

Supplies contracts.

FML concurs withsuggest for threshold ofcontracts valued below$25,000 for applicationof this policy option.

Significantunderutilization ofHispanic American, Native American, and Non-minority Women-owned firms in Goods &Supplies prime contracts.There was also testimonyfrom M/WBE firmsstatingsubcontracting programoften is not compliedwith by primes who endup self-performing scopeof work initiallyidentified by prime for performance by M/WBEsub.(SBAC Tr. 23-30, 111;Exhibit 9-2; Finding 9-

3).See also Study Update

pp. 21-22, 200-201, 207,212, and 289 re: need


Program for Goods andSupplies contracts.

Pro: As goods andsupplies contractsoften do not providecommercially usefulsubcontractopportunities,rotation of approvedsmall vendors to bidon smaller contractsif most cost-effectivemeans for expandingsupplier base andenhancing SBE and M/WBE participation.

Con: COSA may notalways obtain mostcompetitive price.Careful identification

of routine types ofsupply contractswhere there is ampleavailability ofqualified SBEsuppliers is requiredunder this option.

31


26/84

Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


SBE Reserve forPrime Supply

Contracts

Reserve competition forSBE firms on selectedCOSA small supplycontracts up to $50,000.



pp. 21-22, 200-201, 207,212, and 289 re: need

for continuation of SBEProgram for Goods and

Supplies contracts.

FML concurs. Significantunderutilization ofHispanic American, Native American, and Non-minority Women-owned firms in Goods &Supplies prime contracts.There was also testimonyfrom M/WBE firmsstatingsubcontracting programoften is not compliedwith by primes who endup self-performing scopeof work initiallyidentified by prime for performance by M/WBEsub.(SBAC Tr. 23-30,111; Exhibit 9-2; Finding9-3).



Program for Goods and

Supplies contracts.

Pro: Providesenhancedopportunity for SBE firms to successfullycompete for smallersupply contracts;builds volume andcapacity for moresuccessful SBE firms.

Con: Larger moresuccessful SBEs maydominate competitionand crowd outemerging firms;unlike SBE vendorrotation (see R/N-20), supplier base isnot as likely toexpand significantly.

32


27/84

Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


SBE BidPreferences

On selected COSAsupply contracts, provideSBE preference toreduce its bid by up to5% for bid evaluation purposes, but awardcontract at actual bid price.

(See MGT

Recommendation 9-3)

FML advises against thisrecommendation due to built-in higher cost andlimited evidencequantifying cost-disadvantage for SBEsuppliers on COSAcontracts.

Significantunderutilization ofHispanic American, Native American, and Non-minority Women-owned firms in Goods &Supplies prime contracts.There was also testimonyfrom M/WBE firmsstating

subcontracting programoften is not compliedwith by primes who endup self-performing scopeof work initiallyidentified by prime for performance by M/WBEsub.

(SBAC Tr. 23-30, 111;

Exhibit 9-2; Finding 9-3).

Pro: Enhancesability of SBEsupplier firms tocompetitively bidagainst larger firmsthat have benefit ofvolume discounts from manufacturersand distributors.

Con: Successful useof this policy optionalways costs COSAmore money than itotherwise wouldspend for goods andsupplies; for certainsupply contracts, 5%bid preference wouldbe meaningless to

result; in other kindsof supply contracts,5% bid preferencewould always lead toaward of contract toSBE. It is difficult togauge what isappropriate and fair.

33


28/84

Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons



Provide incentives tolarger suppliers to jointventure with SBEsuppliers, includingawarding of additionaloption year or limitcompetition to SBE jointventures. This API may

be particularly effective

in boosting S/M/WBEparticipation in large

concessions contracts.

Significantunderutilization ofHispanic American, Native American, and Non-minority Women-owned firms in Goods &Supplies prime contracts.There was also testimonyfrom M/WBE firms

statingsubcontracting programoften is not compliedwith by primes who endup self-performing scopeof work initiallyidentified by prime for performance by M/WBEsub.(SBAC Tr. 23-30, 111;

Exhibit 9-2; Finding 9-3).



Program for Goods and

Supplies contracts.

Pro: Encouragesmanufacturers,wholesalers, to formdistributorships andauthorized dealerrelationships withSBEs; expands COSAsupplier base.Permits SBEs to bid

on larger bundledsupply contractswhere they only cansupply a portion ofthe required productline.

Con: Requirescareful monitoring toinsure that SBE

suppliers are notserving merely as a pass-through forlarger JV partner;must limit use toinstances where SBEis performing acommercially useful function.

34


29/84

TABLE I-B: RACE / GENDER-CONSCIOUS POLICY OPTIONS FOR COSA S/M/WBE PROGRAM


Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Construction(R/C-1)

Annual M/WBE

Aspirational Goals

Establishment of annualaspirational goals forM/WBE participation inCOSA construction

contracts (rangingbetween 44-53% for

prime and subcontract

dollars combined basedupon the difference

between best estimatesof current M/WBE

availability and

expected M/WBEavailability in the

absence ofdiscrimination). Thesegoals are not to benecessarily applied toindividual contracts, butrather serve as aguidepost to evaluate theeffectiveness of the SBE

FML concurs, and

suggests that COSA

begin with settinginitial Annual M/WBE

Aspirational Goals atthe low end of the

range suggested by

NERA in year one ofthe renewed

Ordinance, graduallyincreasing the annual

aspirational goal each

year thereafterassuming progress is

made in reducing thedisparity.

Flexible benchmarks areimportant to managingthe M/WBE program andfinding the appropriate

mix of race- and gender-neutral and race- andgender- conscious policies. Annual goalsalso provide an up-to-date measure ofavailability by overallindustry categories, andcan be useful foroutreach purposes. (See

Exhibit 9-7 and Chapter3.0 of MGT DisparityStudy Report)


pp. 200-201, 207, and

212.

Pro: Provides a usefultool for evaluatingsuccess of program andmaking necessary

adjustments toaggressiveness ofremedies and outreachefforts. The proposed range in annual goals

provides greater

flexibility in achieving

remedy and avoids

merely putting an

artificial cap on goals

that merely perpetuates the status

quo and limits full

remedy of adverse

effects of

discrimination.

Con: Must guard

35


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Construction(R/C-1)

Annual M/WBE Aspirational Goals

(continued)

and M/WBE programsand to make adjustmentsas necessary to the mixand aggressiveness of policy options.



pp. 200-201, 207, and212.

against reflex to applyannual goals to specific projects without justification. If notupdated periodically,can also provideanother avenue of legalattack against the program on narrowtailoring grounds. Relying upon notions

of “expected

availability” in setting

a range for annual

aspirational goals is

logical, but somewhatuntested in legal

environment in Texas.

Some non-M/WBE

firms have already

complained that

COSA’s more

conservative goals not

based upon custom-

census approach of

estimating M/WBE availability, at times,

seemed unrealistic.

36


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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Construction(R/C-2)

M/WBE JointVenture Incentives

(Contracts > $10million)

Reserve some larger prime contracts valued inexcess of $10 million forcompetition by jointventures between non-M/WBE firms andM/WBE firms.

(See MGTRecommendation 9-9;

see also City of Atlanta’sJoint Venture IncentiveProgram)

See Study Update pp.195-210, 200-201, and

212; see also pp. 288-289 re: need to

continue technical

assistance services insupport of such JV

collaboration; and pp.22, 290-293 re: need to

renew M/WBEprograms for

construction.

FML proposesconsideration of thisoption only in the eventthat COSA has severalM/WBE primecontractors of sufficientsize and capacity tomeaningfully jointventure on contracts ofthis magnitude.

Alternatively, dollarthreshold for contractsfor application of thisremedy may need to beadjusted.

There is significantdisparity in theutilization of M/WBEfirms in COSA primeconstruction contracts.There is also significantunderutilization ofM/WBE firms in primecontracts in the privatesector. (See Exhibit 9-2,

Findings 9-2, 9-5, 9-6, 9-7, 9-9, and Exhibit 9-4)See also SBAC Tr. 42,101-102.

See Study Update pp.

195-210, 200-201, and212; see also pp. 288-

289 re: need to

continue technicalassistance services in

support of such JVcollaboration; and pp.

22, 290-293 re: need torenew M/WBE

programs for

construction

Pro: Provides a strongincentive forcollaboration acrosslines of race andgender in bidding onlarger constructioncontracts; enhancesopportunities for M/WBEs to gain project managementand prime contract

experience on larger projects.

Con: Requires carefulmonitoring of role of M/WBE in contract toinsure legitimate shareof project managementand contribution to joint venture scope of

work; not certain ifthere are sufficientnumbers of M/WBE primes of significantsize and capacity tomatch up with othernon-M/WBE bidders

37


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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Construction(R/C-3)

M/WBESubcontracting

Plans

Mandatory submissionof M/WBEsubcontracting plans by prime contractors bidding on COSAconstruction contracts.Good faith efforts tosolicit M/WBEsubcontractors to satisfycontract-specific goals

should apply to bothM/WBE prime biddersand non-M/WBE bidders. Project-specificgoals should vary by project and be basedupon realisticmeasurement ofavailable M/WBE firmsfor the particular project.

Documented excessive prices or poor performance by M/WBEsubcontractors is basisfor exclusion from bid.(See MGTRecommendation 9-10).

FML concurs withsuggestion that a GoalSetting Committee beformed to undertakeanalysis to setsubcontracting goals on a project-specific basis.

MGT Study concludesthere is significantdisparity in subcontractutilization of M/WBEs inCOSA contracts andvery low M/WBEutilization in privatesector constructioncontracts, even aftercontrolling for capacity

and other race-neutralvariables. There wasalso testimony indicatingthat M/WBE firms have been improperlyremoved fromsubcontracts once the prime has been awardeda contract. (Findings 9-4,and 9-5, Exhibit 9-3; see

also SBAC Tr. 35-36,and 77).

See Study Update, pp.22, 290-293 re: need to

renew M/WBE

programs forconstruction; see also p.

201 re: significant

Pro: Providesnarrowly tailoredapproach to settingrealistic M/WBEsubcontract goals;built-in flexibility withconsideration of good faith effortsdocumentation; follows federal government

model for DBE program which islegally defensible.

Con: Is moreadministrativelyburdensome toimplement; requirescareful considerationin goal-setting stage for

each and every project, and also requires

increased staffing

resources for SBO to

monitor compliance

with Joint Venture

agreements.

38


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Construction(R/C-3)

M/WBESubcontracting

Plans (continued)

drop-off in M/WBE

subcontract

participation inabsence of application

of subcontract goals to

COSA constructioncontracts.

39


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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Construction(R/C-4)

M/WBEParticipation

Requirements forTIF Economic Development

Projects

Enhance M/WBEinclusion on privateeconomic development projects that COSAfinances through TaxIncrement Financing(“TIFs”) through use oflanguage in RFPrequesting bidders tooutline strategy for

recruiting and utilizingM/WBE primecontractors andsubcontractors on project.(See MGTRecommendation 9-12);

see also Study Update

at p. 290.

FML concurs. AlthoughNERA also suggeststhat CVR reporting

requirements should beapplied and enforced

on TIF projects, this

may be difficult toachieve since COSA

does not controlinvoicing and payment

process on TIF projectswhere private

developers are the

project owners.

The MGT Studyconcludes there issignificant disparity in prime and subcontractutilization of M/WBEs inCOSA contracts andvery low M/WBEutilization in privatesector constructioncontracts, even after

controlling for capacityand other race-neutralvariables. There wasalso testimony indicatingthat M/WBE firms have been improperlyremoved fromsubcontracts once the prime has been awardeda contract. (Findings 9-4,

9-5, 9-6, and 9-9,Exhibits 9-2, 9-3; seealso SBAC Tr. 35-36,and 77). See also Study

Update, pp. 21-22, 200-

201, 207, 229, 286-290,and 290-293 re: need

to renew M/WBE

Pro: Will enableCOSA to leverage public financingdollars to encouragegreater M/WBE participation in private sector.

Con: Liquidateddamages clauses in

developmentagreements arerequired to enforce M/WBE participationrequirements.Projects typicallytake years tocomplete andmonitoring issomewhat

problematic until endof project since Cityis not paying monthlyinvoices.

40


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Construction(R/C-4)

M/WBEParticipation

Requirements forTIF Economic Development

Projects (continued)

program for

construction contracts

because of barriers toM/WBE participation

in COSA contracts and

in private sector.

41


36/84

Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Construction(R/C-5)

Two-tieredCertification for

M/WBEs(small andemerging)

and GraduationProvision

For constructioncontracts, MGTrecommends a two-tieredapproach to certifyingM/WBE constructionfirms, one based uponthe SBA size standardfor small constructionfirms, and the other based upon 50% of that

size standard foremerging M/WBE firms.The larger size standardwould be applied tosubcontract goals onlarger constructioncontracts above$500,000. In additionany M/WBE thatreceives $15 million in

construction contractswithin last three years isgraduated from M/WBE program.


FML concurs, but prefers reliance upongraduation provision based upon $15 millioncumulative dollarsreceived from COSAconstruction projects asmeans of weeding outlarger M/WBEs thathave crowded out

smaller emerging firms.This will be lessadministratively burdensome thanmaintaining twodifferent size standardsfor SBE certification andM/WBE certification.

Larger and moresuccessful M/WBE prime contractors candominate M/WBE program and preventsmaller emergingM/WBE firms fromobtaining work andgrowing.

See also Study Update,

pp. 21-22, 200-201, 207,229, 286-290, and 290-

293 re: need to renew

M/WBE program forconstruction contracts

because of barriers toM/WBE participation

in COSA contracts and

in private sector.

Pros: Enhancesnarrow tailoring of program to ensurethat larger M/WBE firms that no longerneed remedial reliefare removed frombenefits of program;enables smaller M/WBE construction

firms to gain entry toCOSA contractingopportunities so theycan grow anddevelop.

Con: None.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Construction(R/C-6)

Segmented M/WBESubcontracting

Goals

FML recommendscontinuation of theavailability of this API

with close scrutiny ofstrong patterns of

exclusion of certain

segments of M/WBEpopulation within

CVR. Aggregatedsubcontracting data is

clear that M/WBEfirms as a whole receive

considerably less in

subcontract dollarswhen M/WBE

subcontracting goalsare not used.

See Study Update, pp.21-22, and 200-201 re:significant drop-off in

M/WBE subcontractutilization on non-goal

projects.

Pro: Provides morenarrowly tailoredsubcontracting goalsand more evenlydistributes remedialbenefits of M/WBE program.

Con: Moreadministratively

burdensome toimplement. Somecontracts may nothave ampleavailability ofsubcontractopportunities for twodifferent segments of M/WBEs; Must rely heavily on CVR for

patterns of exclusion for certain ethnic /

gender segments.

43


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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Construction(R/C-7)

M/WBE Mentor-Protégé Program

Improve currentM/WBE Mentor-Protégé Program by

giving clear directionon assistance to be

given to protégé firms

by mentors, and bygiving some advantage

or incentive toprospective mentor

firms and / or mentor-protégé teams.

Consider USDOT DBE

Program model wheredocumented expenses

of mentoring of protégéfirms are reimbursed

by government.

(See Study Update atpp. 275 and 288).

Team up moreestablished andsuccessful constructionfirm mentors with lessestablished M/WBEfirms to providemanagement guidanceand training. Existingtrade associations may be vehicles for recruiting

and pairing of mentorswith protégé firms.

Provide added

incentive to potentialmentors by reserving

some contracts for pre-approved mentor-protégé teams. (SeeCity of Columbia, SCMentor-Protégé

Program) Also requirewritten agreements

between mentors andprotégés that detail

roles and

responsibilities ofparties, and identify

how contracts will be

In the event the SBE program version of thementor-protégé program(see R/N-7) is unable torecruit enough mentors,then this M/WBEMentor Protégé Programshould be implemented.It is presumed that therewill be more certified

SBE construction firmsthan M/WBE firms.

Pro: This approachto building capacityis favored by the AGC and may provide a win-winscenario if a long-term prime – subrelationship evolves;mentor will havegreater confidence in

S/M/WBE subs thatthey have mentored.

Con: Incentive for participation asmentor may not besufficient as some primes perceive protégés to be potential

competitors. There isalso a need to havesafeguards to ensurethat protégé is notbecoming a captive,and maintainsmanagement andcontrol of its firm.

44


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Construction(R/C-7)

M/WBE Mentor-

Protégé Program (continued)

used to enhance

capacity and

competitiveness ofprotégé firms.

Requires additional

staffing in SBO to

monitor compliance

with mentor-protégé

agreements and to

certify eligibility of mentor-protégé

teams for API

incentives.

45


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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


(R/C-8)

Annual Aspirational M/WBE Goals

Establishment of annualaspirational goals forM/WBE participation inCOSA A&E contracts(ranging between 31%

and 36% for prime

contract andsubcontract dollars

combined based uponthe difference between

best estimates ofcurrent M/WBE

availability and


absence ofdiscrimination). Thisannual goal is not to benecessarily applied toindividual contracts, but

rather serves as aguidepost to evaluate theeffectiveness of theM/WBE programs and tomake adjustments asnecessary to the mix andaggressiveness of policyoptions.

FML concurs, andsuggests that COSAbegin with setting

initial Annual M/WBEAspirational Goals at

the low end of the

range suggested byNERA in year one of

the renewedOrdinance, and then

gradually increasingthe annual aspirational

goal each year

thereafter assumingprogress is made in

reducing the disparity.

Flexible benchmarks areimportant to managingthe M/WBE program andfinding the appropriatemix of race- and gender-neutral and race- andgender- conscious policies. Annual goalsalso provide an up-to-date measure of

availability by overallindustry categories, andcan be useful foroutreach purposes. (SeeExhibit 9-7 and Chapter3.0 of MGT DisparityStudy Report)


pp. 200-201, 207, and212.

Pro: Provides auseful tool forevaluating success of program and makingnecessaryadjustments toaggressiveness ofremedies andoutreach efforts. The proposed range in

annual goals provides greater

flexibility in

achieving remedy

and avoids merely

putting an artificial

cap on goals that

merely perpetuates

the status quo and

limits full remedy of

adverse effects of discrimination.

Con: Must guardagainst reflex toapply annual goals tospecific projectswithout justification.

46


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(R/C-8)

Annual Aspirational M/WBE Goals

(continued)

(See MGTRecommendation 9-7,and Chapter 3.0)


pp. 200-201, 207, and

212.

If not updated periodically, can also provide anotheravenue of legalattack against the

program on narrowtailoring grounds. Relying upon

notions of “expected

availability” in

setting a range for

annual aspirational

goals is logical, but

somewhat untested

in legal environment

in Texas. Some non-M/WBE firms

have already

complained that

COSA’s more

conservative goals

not based upon

custom-census

approach of

estimating M/WBE

availability, at times, seemed unrealistic.

47


42/84

Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


(R/C-9)

M/WBE Vendor Rotation

Selective use of vendorrotation of pre-qualified panel of M/WBE A&Efirms for smaller COSAdesign projects.


Study Update, pp. 21-22, 200-201, and 289 re:

need for continuationof M/WBE program for

prime and sub A&E

vendors.

FML concurs. Significantunderutilization of MBEfirms in A&E primecontracts; prequalificationrequirements also hinderM/WBEs. There wasalso testimony fromM/WBE A&E firmsindicating that

subcontracting programoften is not compliedwith by primes who endup self-performing scopeof work initiallyidentified by prime for performance by M/WBEsub.(SBAC Tr. 23-30, 111;Exhibit 9-2; Finding 9-

3).See also Study Update,

pp. 21-22, 200-201, and289 re: need for

continuation of

M/WBE program forprime and sub A&E

vendors.

Pro: Automatedcentralized bidderregistration systemcombined with pre-qualification processwill enable rotationof SBE firms to get a fair chance to provecapabilities onsmaller projects and

overcome biasagainst unknown firms. Facilitatesbuilding a trackrecord andovercoming lack ofCOSA experiencebarrier.

Con: Reduces

competition in theshort-run and mayadversely affect cost

48


43/84

Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


(R/C-10)

M/WBE EvaluationPreferences forPrime Bidders

Continue this provision.See Study Update, pp.21-22, 200-201, and 289

re: need forcontinuation of

M/WBE program for

prime and sub A&Evendors.

Evaluation point preferences (award up to10% of availableevaluation points) toM/WBE firms bidding asfirst-time A&E primeconsultants. Also provide up to 10% bonus points for M/WBE jointventures to perform

A&E contracts.

Significantunderutilization of MBEfirms in A&E primecontracts; prequalificationrequirements also mayhinder M/WBEs. Therewas also testimony fromM/WBE A&E firmsindicating that

subcontracting programoften is not compliedwith by primes who endup self-performing scopeof work initiallyidentified by prime for performance by M/WBEsub.(SBAC Tr. 23-30, 111;Exhibit 9-2; Finding 9-

3).See Study Update, pp.

21-22, 200-201, and 289re: need for

continuation of

M/WBE program forprime and sub A&E

vendors.

Pro: Encouragesmore naturalevolution of M/WBE A&E firms into full-service A&E firmsthat bid as primes. Helps overcomenatural bias in favorof incumbent firmsthat repeatedly

perform A&Econtracts for COSA.

Con: Biasedevaluation panelmembers mayeventually adjustscoring to negateeffects of bonus points to hire

preferred incumbent firms.

49


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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


(R/C-11)

M/WBE Mentor-

Protégé Program

Expand mentor-protégé programsbeyond field of

construction to includeprofessional services,

A&E, goods, and other

services. ConsiderUSDOT DBE Program

model wheredocumented expenses


by government.


FML concurs. Provideadded incentive to potential mentors byreserving some contractsfor pre-approved mentor- protégé teams. (See Cityof Columbia, SC mentor- protégé program) Also

review USDOT DBEmentor-protégé

program and otherfederal mentor-protégé

models regarding

nature of assistanceprovided and



also requiring periodicdocumentation of

assistance provided inreturn for eligibility of



APIs with clearlydefined roles in

contract.

Relationship-building isa key component toopening up subcontract

opportunities foremerging SBE firms

that are not known to

prime contractorcommunity. Also,

training in suchmatters as payroll,

estimating and bidding,management of funds

and project

management isextraordinarily

valuable to newerfirms. Mentors benefit

from expanded pool of

competent subs that aredependable and work

well with prime, andperhaps from

application of APIs toeligible M/WBE

Mentor-Protégé Teams.


SBE subs that theyhave mentored.



50


45/84

Architectural &

Engineering(R/C-11)

M/WBE Mentor- Protégé Program

(continued)

Requires additional

staffing in SBO to

monitor compliance


agreements and to


teams for API

incentives.

51


46/84

Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

ProfessionalServices(R/C-12)


Establishment of annualaspirational goal forM/WBE participation inCOSA ProfessionalServices contracts(ranging between 40%

and 55% for primecontract and

subcontract dollarscombined based upon

the difference betweenbest estimates of

current M/WBE

availability andexpected M/WBE

availability in theabsence ofdiscrimination). Thisgoal is not to benecessarily applied to

individual contracts, butrather serve as aguidepost to evaluate theeffectiveness of the SBEand M/WBE programs,and to make adjustmentsas necessary to the mixand aggressiveness of



the low end of the


the renewedOrdinance, and then

gradually increasingthe annual aspirational

goal each year

thereafter assumingprogress is made in

reducing the disparity.




pp. 200-201, 207, and212.

Pro: Provides auseful tool forevaluating success of program and makingnecessaryadjustments toaggressiveness ofremedies andoutreach efforts The proposed range in


flexibility in

achieving remedy

and avoids merely


cap on goals that

merely perpetuates

the status quo and


adverse effects of discrimination. .

Con: Must guardagainst reflex toapply annual goals tospecific projects

52


47/84



(continued)

policy options.(See MGTRecommendation 9-8)


pp. 200-201, 207, and

212.

without justification. If not updated periodically, can also provide anotheravenue of legal

attack against the program on narrowtailoring grounds. Relying upon


availability” in

setting a range for

annual aspirational


somewhat untested

in legal environmentin Texas. Some

non-M/WBE firms

have already

complained that

COSA’s more

conservative goals

not based upon

custom-census

approach of


seemed unrealistic.

53


48/84

Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


M/WBE Pre-qualified Panel

Rotation

Selective use of vendorrotation of pre-qualified panel of M/WBE professional servicesfirms for smaller COSA projects.



pp. 21-22, 200-201, and289 re: need for

continuation of

M/WBE program forprime and sub

professional servicesvendors.


Significantunderutilization ofM/WBE firms in professional services prime contracts; prequalificationrequirements also hinderM/WBEs. There wasalso testimony fromM/WBE firms stating

that subcontracting program often is notcomplied with by primeswho end up self- performing scope ofwork initially identified by prime for performance by M/WBEsub. (SBAC Tr. 23-30,111; Exhibit 9-2; Finding

9-3). See also StudyUpdate, pp. 21-22, 200-

201, and 289 re: needfor continuation of

M/WBE program for

prime and subprofessional services

vendors.

Pro: Takes SBE Reserve policy (see R/N-12) one step further by requiringCOSA to determinecapability andcapacity of M/WBE professional services firms in advance;rotation of pre-

qualified firmsinsures expansion ofsupplier base forroutine matters ofsmaller size.



54


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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


M/WBESubcontractingGoals on Large

Contracts

Good faith effortM/WBE subcontractinggoals assigned to certainlarger professionalservices contracts.

(See MGTRecommendations 9-3and 9-4)


pp. 21-22, 200-201, 207,212, and 289 re: need

for continuation of

M/WBE Program forProfessional Services

contracts.

FML concurs withconsideration by a GoalSelection Committee ofwhether there is acommercially usefulfunction available to be performed under by asub-consultant.

Significantunderutilization ofM/WBE firms in professional services prime contracts; prequalificationrequirements also hinderM/WBEs.

(Exhibit 9-2; Finding 9-

3)See also Study Update

pp. 21-22, 200-201, 207,



contracts.

Pro: Enhancesability of M/WBE professional services firms to gainexperience on largercontracts andestablish a trackrecord with COSA. May also developreferral source with

prime consultant.

Con: Not all professional servicescontracts havecommercially usefulsubcontractopportunities, soGoal SelectionCommittee will need

to carefully evaluateeach prime contractopportunity.

55


50/84

Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


M/WBE JointVenture Incentives

On professional servicescontracts valued at $1million or more, considerapplication of M/WBE joint venture incentivesto include up to 10%evaluation preference based upon percentage ofM/WBE participation, orto provide additional

option year for contractwherein M/WBE jointventure partner has performed work in firstcontract year valued atmore than aspirationalgoal for professionalservices.

Significantunderutilization ofM/WBE firms in professional services prime contracts; prequalificationrequirements also hinderM/WBEs.

(Exhibit 9-2; Finding 9-

3)See also Study Update

pp. 21-22, 200-201, 207,



contracts.

Pro: Enhancesopportunity of M/WBE professionalservices firms to gaintrack record withCOSA performingand managing largercontracts. Ultimatelyexpands supplierbase for professional

services.

Con: Additionaloption years mayreduce annualnumber of contractopportunities fornon-incumbent firms,including non-incumbent M/WBE

firms.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


EvaluationPreference for

M/WBE Prime Bidders

Evaluation point preferences (award up to10% of availableevaluation points) toM/WBE firms bidding asfirst-time primeconsultants. Also provide up to 10% bonus points for M/WBE jointventures to perform

professional servicescontracts.

Significantunderutilization ofM/WBE firms in professional services prime contracts; prequalificationrequirements also mayhinder M/WBEs. Therewas also testimony fromM/WBE firms indicating

that subcontracting program often is notcomplied with by primeswho end up self- performing scope ofwork initially identified by prime for performance by M/WBEsub.(SBAC Tr. 23-30, 111;

Exhibit 9-2; Finding 9-2)See also Study Update

pp. 21-22, 200-201, 207,212, and 289 re: need

for continuation of


contracts.

Pro: Encouragesmore naturalevolution of M/WBE professional services firms into full-service firms that bid as primes. Helpsovercome naturalbias in favor ofincumbent firms that

repeatedly perform professional servicescontracts for COSA.

Con: Administrativelydifficult to monitor joint venturerelationships androle of M/WBE firm;

eventually,evaluation panelsmay adjust scoring tonegate value ofbonus pointincentives.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


M/WBE Mentor-

Protégé Program







by government.



FML concurs. Provideadded incentive to

potential mentors by

reserving somecontracts for pre-

approved mentor-protégé teams. (See

City of Columbia, SC

mentor-protégéprogram) Also review

USDOT DBE mentor-protégé program and

other federal mentor-protégé models

regarding nature of

assistance provided andcommitments of parties

to be contained in

Relationship-building isa key component toopening up subcontract

opportunities foremerging M/WBE

firms that are not

known to primecontractor community.

Also, training in suchmatters as payroll,

estimating and bidding,management of funds

and project

management isextraordinarily

valuable to newerfirms. Mentors benefit

from expanded pool of

competent subs that aredependable and work

well with prime, andperhaps from

application of APIs toeligible M/WBE

Mentor-Protégé Teams.





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M/WBE Mentor-Protégé Program

(continued)


also requiring periodic

documentation ofassistance provided in

return for eligibility of

approved mentor-protégé teams toparticipate in certain

APIs with clearly

defined roles incontract.

Requires additional

staffing in SBO to

monitor compliance


agreements and to


teams for API

incentives.

59


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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Other Services(R/C-18)


Establishment of annualaspirational goal forM/WBE participation inCOSA non-professionalservices contracts(ranging between 55%

and 76% for primecontract and

subcontract dollarscombined based upon

the difference betweenbest estimates of

current M/WBE

availability andexpected M/WBE

availability in theabsence ofdiscrimination). Thisgoal is not to benecessarily applied to

individual contracts, butrather serve as aguidepost to evaluate theeffectiveness of the SBEand M/WBE programs,and to make adjustmentsas necessary to the mixand aggressiveness of



the low end of the


the renewed Ordinanceand then gradually

increasing the annualaspirational goal each

year thereafter

assuming progress ismade in reducing the

disparity.




pp. 200-201, 207, and212.

Pro: Provides auseful tool forevaluating success of program and makingnecessaryadjustments toaggressiveness ofremedies andoutreach efforts. The proposed range in


flexibility in

achieving remedy

and avoids merely


cap on goals that

merely perpetuates

the status quo and


adverse effects of discrimination.

Con: Must guardagainst reflex toapply annual goals tospecific projects

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Annual M/WBE

Aspirational Goals (continued)

policy options.



pp. 200-201, 207, and212.

without justification. If not updated periodically, can also provide anotheravenue of legal

attack against the program on narrowtailoring grounds. Relying upon


availability” in

setting a range for

annual aspirational


somewhat untested

in legal environmentin Texas. Some

non-M/WBE firms

have already

complained that

COSA’s more

conservative goals

not based upon

custom-census

approach of


seemed unrealistic.

61


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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


M/WBE Mentor-

Protégé Program







by government.



Provide added incentiveto potential mentors byreserving some contractsfor pre-approved mentor- protégé teams. (See Cityof Columbia, SC mentor- protégé program) Also

review USDOT DBE

mentor-protégéprogram and other

federal mentor-protégémodels regarding

nature of assistanceprovided and

commitments of parties

to be contained inwritten agreement, and

also requiring periodic

Witnesses in bothconstruction and servicesindustries praised thevalue of mentoring withmore established firms.Anecdotal evidencesuggests informalnetworks andrelationships may be keyto obtaining COSA

contracts. (Finding 9-3)(See also SBAC Tr. 108)





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M/WBE Mentor- Protégé Program

(continued)

documentation of

assistance provided in

return for eligibility ofapproved mentor-

protégé teams to

participate in certainAPIs with clearlydefined roles in

contract.

Requires additional

staffing in SBO to

monitor compliance


agreements and to


teams for API

incentives.

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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons


M/WBE Pre-qualified Panel

Rotation

Selective use of vendorrotation of pre-qualified panel of M/WBE non- professional servicesfirms for smaller COSA projects.



pp. 21-22, 200-201, and289 re: need for

continuation of

M/WBE program forprime and sub other

services vendors.


Significantunderutilization ofM/WBE firms in otherservices prime contracts; prequalificationrequirements also hinderM/WBEs. There wasalso testimony fromM/WBE firms statingthat subcontracting

program often is notcomplied with by primeswho end up self- performing scope ofwork initially identified by prime for performance by M/WBEsub.(SBAC Tr. 23-30, 111;Exhibit 9-2; Finding 9-

3). See also StudyUpdate, pp. 21-22, 200-


M/WBE program for

prime and sub otherservices vendors.

Pro: Takes SBE Reserve policy (see R/N-12) one step further by requiringCOSA to determinecapability andcapacity of M/WBEnon-professionalservices firms inadvance; rotation of

pre-qualified firmsinsures expansion ofsupplier base forroutine matters ofsmaller size.



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Industry Specific

Programs

NERA


Relevant Findings /

Justifications

Pros & Cons

Goods & Supplies(R/C-21)


Establishment of annualaspirational goal forM/WBE participation inCOSA goods & suppliescontracts (ranging

between 42% and 59%

for prime contract andsubcontract dollars

combined based uponthe difference between

best estimates ofcurrent M/WBE

availability and


absence ofdiscrimination). Thisgoal is not to benecessarily applied toindividual contracts, but

rather serve as aguidepost to evaluate theeffectiveness of the SBEand M/WBE programs,and to make adjustmentsas necessary to the mixand aggressiveness of policy options.



the low end of the


the renewed Ordinanceand then gradually

increasing the annualaspirational goal each

year thereafter

assuming progress ismade in reducing the

disparity.


availability by overallindustry categories, andcan be useful foroutreach purposes. (SeeExhibit 9-7 and Chapter3.0 of MGT Disparit

sbeda policy matrix

Documents