This example provides an examination by the City of Memphis of its existing Minority/Women Business Enterprise (MWBE) Program after their 1994 Disparity Study and whether or not a 2010 Disparity Study will show a need to continue the program.
The answer as you will see is: Even though progress was made the MWBE program must continue!
Memphis Disparity Study Information
The purpose of this site is to provide vital information and updates regarding the City of Memphis' Disparity Study ("Study"). This site will contain pertinent information regarding progress related to current initiatives, any news regarding the Study and its related recommendation implementation. The 1994 Study, 2010 Study and the Executive Summary are all available for your review.
What is a Disparity Study?
The purpose of a disparity study is to determine if the City of Memphis still has a compelling interest in continuing the Minority and Women Business Enterprise ("MWBE") Program. A disparity study is a fact-based technique used to establish whether or not underutilization of minorities and women exists in the purchasing practices of an entity. This fact based approach must be developed in order to establish the legal validity of any minority or woman owned business program.
In 1989, the Supreme Court ruling in the case of City of Richmond v. J.A. Croson resulted in new standards on how local governmental entities may increase the participation of Minority and Woman owned businesses through the use of "programs". The ruling required the employment of a fact based approach to determine whether or not actual underutilization of qualified firms ready, willing and able to contract with a governmental entity has occurred. Disparity studies are generally that fact-based approach. Disparity studies look at the percentage of minority and woman owned businesses in the relevant market that are qualified to do work and compares that to the percentage of contract dollars awarded to the same kinds of businesses.
Disparity Study History
The City adopted its current MWBE program in 1996 as a result of the findings in the 1994 Disparity Study, conducted by D.J. Miller & Associates. The Memphis City Council adopted two primary findings to support establishment of the MWBE Program under the Memphis City Code §2-325: first, that construction, professional services and supply firms owned by MWBEs in the Memphis MSA were disproportionately underutilized in City of Memphis contracts and in the Memphis private marketplace; and secondly, that the City of Memphis had been a direct and passive participant in the system of discrimination present in the private marketplace. As such, the City Council found that the City had a compelling interest in remedying the present and past effects of discrimination against African American and women business owners. Additionally, the City Council stated in the ordinance that its affirmative duty to remedy the effects of the past and present discrimination also extended to the development of initiatives which encouraged the development of local small businesses. During November 2007, the City contracted with Griffin & Strong, P.C. ("GSPC") to conduct a comprehensive Study, which included all City departments except Memphis Light, Gas & Water. The purpose of the disparity study is to determine if the City of Memphis still has a compelling interest in continuing the MWBE Program for the City.
The study is designed to determine whether existing City efforts have eliminated active and passive discrimination; to analyze City procurement trends and practices for the five (5) year period beginning July 1, 2002 and ending June 30, 2007 ("Study Period"); and to evaluate various options for future program development. The study also addresses and recommends solutions for the concerns expressed by the U.S. Supreme Court in City of Richmond v. J.A. Croson, 488 U.S. 469 with regard to procurement programs for Minority and Woman owned firms. Governmental entities, such as the City, have authorized disparity studies in response to City of Richmond v. J.A. Croson Co. and the cases which followed, to determine whether there has been a compelling interest for remedial procurement programs, based upon ethnicity, race, and gender.
Next Steps
In an effort to keep you fully informed of the City's progress, the Office of Contract Compliance will do the following in the near future:
1. Present a new proposed MWBE Program
2. Present a new proposed Small Business Enterprise (SBE) Program
3. Present an opportunity for the public to preview and comment on the Disparity Study, recommendations and new proposed programs.
Check back frequently for updates on the relevant dates and times of upcoming events and discussions. For additional information, please feel free to contact us at 901.576.6210.
Scope of Study
The purpose of this study is to examine any existing disparity between the availability of minority owned and woman owned businesses for participation in the City of Memphis, Tennessee’s procurement process and their actual utilization by the City during the study period, in order to determine if a factual predicate exists to support the existing MWBE program or the creation of new programs.
FINDINGS
Since the 1994 Memphis Disparity Study, the City has:
_Improved utilization of MWBEs during the course of the Study Period;
_Consistently set and met aspiration goals;
_Established a strong local business program;
_Provided outstanding management and technical assistance to MWBEs;
_Collaborated with existing financial assistance providers to assist MWBEs in strengthening their contracting power;
_Provided MWBE outreach workshops and seminars;
_Issued contracts in smaller dollar amounts, thus expanding the opportunity for small businesses.
Sufficient Basis to Support a Statistical Inference of Discrimination
The evidence in this study, taken as a whole, gives rise to an inference of discrimination and/or the continuing effects of past discrimination against minorities and women in business transactions in the City of Memphis, Tennessee. Accordingly, the study team finds that the City of Memphis, Tennessee has a strong basis in evidence to take measures to ensure that it is not a passive participant in a private scheme of discrimination against
women and minorities. Further, the City of Memphis, Tennessee has a strong basis in evidence to take proactive measures to prevent discrimination based on race, ethnicity, or gender against women and minority contractors.
Recommendations
1. Continue the Current Program and Set Annual Aspirational MWBE Goals
2. Strengthen MWBE and SBE Outreach, Particularly to Hispanic American
Owned Firms
3. Increase Staff, Training and Resources of Contract Compliance Office
4. Institute Additional Criteria to Determine Whether Projects can be Divided and Consider Limiting the Use of Contract Bundling
5.Promote MWBE Collaboration
6. Consider a System of Bidder Rotation
7. Establish Uniform Procedures for Department Solicitation of MWBE and
SBE Bids
8. Increase the Frequency of Debriefing Sessions After Contract Awards are made
9. Require Evaluation of Employees with Procurement Responsibilities to
Include MWBE and SBE Utilization
10. Narrowly Tailor MWBE Program
10. Establish Annual Aspirational MWBE Goals for Construction Subcontracting: GSPC suggests 80% of Availability
11. Set Project Goals Separate from Overall Aspirational Goals
12. Impose Mandatory Subcontracting for Some Areas of Contracting
13. Implement a Declining Schedule of Race Conscious Remedies
14. Accept Reciprocal Certification
15.Create a Steering Committee
16. Set SBE Goals
17. Establish a Mentor-Protégé Program
18. Create a HUBZone Type Program
19. Use a Two-Tier Size Standard
20. Establish Commercial Antidiscrimination Rules
21. Create Private Sector Initiatives
22. Outsource Management and Technical Services
23. Provide Surety Assistance and Wrap-Up Insurance
24. Closely Monitor and Track Utilization
25. Require Listing of Subcontractors
26. Encourage Awards to Historically Underutilized Subcontractors
27. Evaluate New Ways to Assist Firms in Accessing Capital
28. Establish a Prompt Payment Policy
29. Create an Oversight Committee
30. Add Additional Features to MWBE Website
31. Broaden Distribution of Program Requirements
32. Develop Additional Measures to Gauge Effectiveness of Efforts
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