City revisits program for minority, women contractors

By Greg Lacour

Charlotte city officials are considering resurrecting a program designed to steer a percentage of city contracts to minority and women-owned firms.

Such programs are common in local and state government; North Carolina and Mecklenburg County already have them. But Charlotte dropped its gender and race-based program in 2002 after a lawsuit challenged its constitutionality. Since then, the city has run a program to ensure small, locally owned businesses win city work, but the program doesn’t consider race or gender in contract awards.

They might come back into play depending on the results of a study the city has budgeted $310,000 for this year. The “disparity study” is designed to measure whether minority and women-owned companies win a disproportionately low percentage of city contract dollars compared with the overall market.

The city’s last disparity study was in 2003. A 15-member task force that Mayor Anthony Foxx appointed in January to review the city’s Small Business Opportunity Program recommended that the city take a fresh look at whether a race or gender gap exists, using data from 2006 through this year.

“A lot of folks in the community have been saying for the past couple of years that it’s time for a new disparity study,” said Cindy White, a senior assistant city attorney who advises the city’s neighborhood and business services department. “The ethnic and racial mix changes over time, so you really need to update it periodically to determine if there is a disparity in contracting.”

The city has tried to measure participation by minority and women contractors under the SBO program, and the latest data indicate a growing disparity in the past year, White said. Over the past seven years, for the most part, data show they’ve done just as well as before. But the market data the city uses as a measuring stick dates back to the last disparity study, which is one reason why the city needs a new one, she said.

Legal challenge

The legal challenge to Charlotte’s old Minority Women Business Development program was based on a 1989 U.S. Supreme Court ruling from a case in Richmond, Va. The court said that in order to run a minority or gender-based business program, governments must demonstrate, based on up-to-date information, that companies owned by minorities and women receive a low percentage of government contract money.

That’s what a disparity study is supposed to show. In 2002, the city hadn’t performed such a study in nine years. City officials hired a Florida consulting firm to do a new one. On the firm’s advice, they decided the results didn’t warrant a new race and gender-based program. As part of the settlement from the lawsuit, the city had agreed to set up a small-business program that didn’t consider race or gender, and officials chose in 2003 to keep it.

But the Metrolina Minority Contractors Association, a Charlotte-based trade organization, has pushed city officials recently for a new study. Camisha Farris, who sits on the organization’s board of directors, said opportunities for minority and women-owned firms to win city contracts or subcontracts have shriveled in the recession.

“I believe it’s needed,” said Farris, who owns a flooring-installation company. Often, she said, general contractors gravitate to the subcontractors they’ve worked with before, “so that definitely makes it more difficult for some of the (minority and women) contractors to get work.”

Study to provide input

The city is taking steps toward hiring a consulting firm to perform the study. City officials haven’t decided whether a new race and gender-based program would supplant or complement the existing small-business program. If the study finds no disparity, then the city could just keep what it has, White said.

The original program ran for 20 years, from 1981 to 2001. Unlike the state’s program, which sets a goal of 10 percent for participation by minority contractors on state building projects, the city’s goal varied from contract to contract, White said. But the general thrust was the same: to require the government and government contractors to hire minority or women-owned firms at a rate roughly equal to their share of the market — or at least make “good-faith efforts” to hire them.

City officials reserved the right to deny a contractor, even a low bidder, if they believed the contractor didn’t try hard enough to hire minority or women-owned firms as subcontractors. That’s exactly what happened in 2001, when Charlotte-based United Construction Co. bid on a $2.5 million city road project and was rejected in favor of another company.

United Construction sued the city. As part of the resulting settlement, the city agreed that before it began a new program for minorities and women, it had to establish a race and gender-neutral program and measure whether it made any difference for minority and female contractors. That led to the creation of the current small-business program in 2003. The new disparity study is expected to determine whether minority and female contractors have done a lower percentage of city work under the small-business program.

‘A closed system’

Michael High can’t prove it, but he believes they have. High used to manage the city’s old minority and women program and now owns a consulting firm that specializes in helping clients meet minority hiring goals. He’s also president of the Metrolina Minority Contractors Association.

“My experience is that people reached out more before they shut down the program,” High said. “Our experience is that we can bid on jobs and still don’t get utilized very often. Often, we don’t even hear about jobs. In Charlotte, it’s still more of a closed system, and we want it to be more of an open system.

“I think the economy is tough on everybody, but I believe it affects us disproportionately, and that’s the reason the study is needed.”

City officials have kept track of the amount of money minority and women-owned firms have made since 2005 from city contracts or from subcontracting work under city-hired companies. The amount rose from $45.1 million in fiscal 2005 to a peak of $60 million in 2007 before dipping again to $51.4 million in 2009.

Those amounts are largely because of major construction projects like the NASCAR Hall of Fame, EpiCentre and Time Warner Cable Arena, said Alban Burney, the city’s small business development coordinator. There’s no way to measure whether those amounts kept pace with the overall market without a new disparity study, Burney said.

Gerald Carr is curious to learn what the new study finds, too. Carr owns a building and restoration company in Charlotte. He said that without a program ensuring opportunities for minorities and women, it’s easy for them to get cut out of contracting and subcontracting work — even if it’s not intentional.

“It would be good to find out” what the study shows, Carr said. Under programs like the state’s, he said, “it doesn’t guarantee you’re going to win the bid, but it gives you an opportunity, and that’s all you can ask for.”

Reprogrammed

2001

The last year the city of Charlotte operated a program to steer a certain number of city contracts to minority- and female-owned businesses, consistent with the diversity of the market.

A lawsuit challenged the constitutionality of Charlotte’s gender- and race-based program.

2002

The city dropped its program in favor of a program that directs contracts to small, local businesses without regard to race or gender.

2003

Officials chose to keep the small-business program after the results of a study done by a Florida consulting firm.

Source: Mecklenburg Times staff research