the city of charlotte update disparity study presented to the economic development committee...
TRANSCRIPT
The City of Charlotte Update Disparity Study
Presented to the Economic Development Committee
Submitted by:
FINAL REPORT PRESENTATION
October 11, 2011
Croson Strict Scrutiny Standard of Review
There must be a compelling interest, such as remedying the present effects of past discrimination
Compelling interest can be found in private sector discrimination if linked to the public sector
Under Narrow Tailoring an Agency Must employ and evaluate race neutral
efforts first Limit the burden on third parties Set goals related to availability Ensure program flexibility
Legal Guidelines and Methodology
In H.B. Rowe Decision (2010) Fourth Circuit accepted MGT’s approach on: (involved NCDOT)
Focused on subcontracting disparity because there was no prime contracting M/WBE program
Anecdotal: The survey in the 2004 study exposed an informal, racially exclusive network that systematically disadvantaged minority subcontractors
Program suspension: the fall in M/WBE subcontractor utilization of 38 percent when SBE program substituted for M/WBE program is evidence of discrimination
Legal Guidelines – (cont.)
To implement a race- and gender-based program, a City must demonstrate:
1. Statistical data showing disparity2. Anecdotal evidence of discrimination3. Race and gender neutral program not effective
This study shows:
1. Statistical disparity in City contracting2. Insufficient anecdotal evidence 3. SBO Program has been effective
MGT Conclusions
2011 Results – African Americans
Utilization $ Utilization % Availability
%Disparity
Index
Construction (Sub) $11,619,931 5.41% 11.73%
46.11(Substantial Disparity)
Construction (Prime)
$10,136,200 0.99% 9.95%
9.94(Substantial Disparity)
A & E (Sub) $386,906 2.63% 10.94%24.07
(Substantial Disparity)
A & E (Prime) $2,549,185 1.38% 2.25%
61.20(Substantial Disparity)
Professional Services
$3,478,509 2.25% 2.25% 100.24
(Overutilization)
Other Services $12,555,522 6.04% 3.11% 194.03
(Overutilization)
Goods & Supplies $739,370 0.36% 1.50%23.83
(Substantial Disparity)
Anecdotal Results – African American
Total of 168 African American Respondents– 41% of firms stated they were used when SBE
goals applied, but seldom or never, solicited for other contracts outside of the SBO Program
– 33.4% of firms stated that there is an informal network that excluded their firms
– 25% of firms were included for good faith efforts then dropped after contract award
– 3.6% of firms experienced discrimination as a subcontractor bidding/proposing Charlotte projects
– 7.7% of firms experienced discrimination as a prime contractor bidding/proposing Charlotte projects
2003 v. 2011 African American Utilization Comparison
2003 $ 2003 % 2011 $ 2011 %
Construction (Sub) $9,736,811 3.24% $11,619,931 5.41%
Construction (Prime) $38,200,358 3.38% $10,136,200 0.99%
A & E (Sub) $60,110 1.20% $386,906 2.63%
A & E (Prime) $99,702 0.10% $2,549,185 1.38%
Professional Services $984,757 1.08% $3,478,509 2.25%
Other Services $10,695,940 2.59% $12,555,522 6.04%
Goods & Supplies $4,874,809 2.22% $736,370 0.36%
2011 Results – Asian Americans
Utilization $ Utilization %
Availability %
Disparity Index
Construction (Sub) $1,487,988 0.69% 0.56% 123.99
(Overutilization)
Construction (Prime)
$57,096,322 5.57% 0.50% 1,119.48
(Overutilization)
A & E (Sub) $303,620 2.07% 1.56% 132.20(Overutilization)
A & E (Prime) $9,214,534 4.98% 2.35% 211.69(Overutilization)
Professional Services $85,243 0.06% 2.35%
2.35(Substantial Disparity)
Other Services $957,925 0.46% 3.86%11.93
(Substantial Disparity)
Goods & Supplies $20,003 0.01% 5.36%0.18
(Substantial Disparity)
Anecdotal Results – Asian American
Total of 49 Asian American Respondents– 26.5% of firms stated they were used when SBE
goals applied, but seldom or never, solicited for other contracts outside of the SBO Program
– 14.2% of firms stated that there is an informal network that excluded their firms
– 10.2% of firms were included for good faith efforts then dropped after contract award
– 4.1% of firms experienced discrimination as a subcontractor bidding/proposing Charlotte projects
– 4.1% of firms experienced discrimination as a prime contractor bidding/proposing Charlotte projects
2003 v. 2011 Asian American Utilization Comparison
2003 $ 2003 % 2011 $ 2011 %
Construction (Sub) $126,580 0.04% $1,487,988 0.69%
Construction (Prime)
$49,912,203 4.41% $57,096,32
2 5.57%
A & E (Sub) $78,275 1.56% $303,620 2.07%
A & E (Prime) $1,310,017 1.25% $9,214,534 4.98%
Professional Services $3,649,227 3.99% $85,243 0.06%
Other Services $5,876,271 1.42% $957,925 0.46%
Goods & Supplies $4,043,246 1.84% $20,003 0.01%
2011 Results – Hispanic Americans
Utilization $
Utilization %
Availability %
Disparity Index
Construction (Sub) $4,188,450 1.95% 7.82%24.93
(Substantial Disparity)
Construction (Prime) $4,644,237 0.45% 6.97%
6.50(Substantial Disparity)
A & E (Sub) $952,736 6.48% 1.56% 414.84(Overutilization)
A & E (Prime) $376,236 0.20% 1.10%18.48
(Substantial Disparity)
Professional Services $3,564,806 2.31% 1.10% 210.20
(Overutilization)
Other Services $800,528 0.38% 1.47%26.25
(Substantial Disparity)
Goods & Supplies $552,604 0.27% 0.20% 136.19(Overutilization)
Anecdotal Results – Hispanic American
Total of 49 Hispanic American Respondents– 28.6% of firms stated they were used when SBE
goals applied, but seldom or never, solicited for other contracts outside of the SBO Program
– 20.4% of firms stated that there is an informal network that excluded their firms
– 16.3% of firms were included for good faith efforts then dropped after contract award
– 0% of firms experienced discrimination as a subcontractor bidding/proposing Charlotte projects
– 2.0% of firms experienced discrimination as a prime contractor bidding/proposing Charlotte projects
2003 v. 2011 Hispanic American Utilization Comparison
2003 $ 2003 % 2011 $ 2011 %
Construction (Sub) $1,377,598 0.46% $4,188,450 1.95%
Construction (Prime) $581,010 0.05% $4,644,237 0.45%
A & E (Sub) $560,331 11.15% $952,736 6.48%
A & E (Prime) $425,339 0.41% $376,236 0.20%
Professional Services $626,231 0.68% $3,564,806 2.31%
Other Services $3,495,466 0.85% $800,528 0.38%
Goods & Supplies $708,664 0.32% $552,604 0.27%
2011 Results – Native Americans
Utilization $ Utilization % Availability %
Disparity Index
Construction (Sub) $2,465,651 1.15% 1.68%
68.48(Substantial Disparity)
Construction (Prime) $2,533,120 0.25% 1.99%
12.42(Substantial Disparity)
A & E (Sub) $89,860 0.61% 0.00%* N/A
A & E (Prime) $45,077 0.02% 0.17%14.39
(Substantial Disparity)
Professional Services $1,935,466 1.25% 0.17% 741.80
(Overutilization)
Other Services $1,209,705 0.39% 0.39% 147.86(Overutilization)
Goods & Supplies $3,530,231 1.71% 0.06% 2,958.01(Overutilization)
*Using custom census measure of availability
Anecdotal Results – Native American
Total of 19 Native American Respondents– 31.6% of firms stated they were used when SBE
goals applied, but seldom or never, solicited for other contracts outside of the SBO Program
– 15.8% of firms stated that there is an informal network that excluded their firms
– 15.8% of firms were included for good faith efforts then dropped after contract award
– 0% of firms experienced discrimination as a subcontractor bidding/proposing Charlotte projects
– 0% of firms experienced discrimination as a prime contractor bidding/proposing Charlotte projects
2003 v. 2011 Native American Utilization Comparison
2003 $ 2003 % 2011 $ 2011 %
Construction (Sub) $569,911 0.19% $2,465,651 1.15%
Construction (Prime) $3,140,291 0.28% $2,533,120 0.25%
A & E (Sub) $0.00 0.00% $89,860 0.61%
A & E (Prime) $2,653,976 2.54% $45,077 0.02%
Professional Services $1,417,293 1.55% $1,935,466 1.25%
Other Services $4,473,524 1.08% $1,209,705 0.39%
Goods & Supplies $81,655 0.04% $3,530,231 1.71%
2011 Results – Nonminority Women
Utilization $ Utilization %
Availability %
Disparity Index
Construction (Sub)
$42,342,775 19.71 18.44 106.92
(Overutilization)
Construction (Prime)
$105,135,489 10.26 14.93
68.71(Substantial Disparity)
A & E (Sub) $3,118,749 21.22 18.75 113.16(Overutilization)
A & E (Prime) $8,257,868 4.46 9.2948.02
(Substantial Disparity)
Professional Services
$10,962,094 7.11 9.29
76.51(Substantial Disparity)
Other Services $17,008,071 8.18 11.01
74.28(Substantial Disparity)
Goods & Supplies $10,250,242 4.96 7.62
65.08(Substantial Disparity)
Anecdotal Results – Nonminority Women
Total of 117 Nonminority Women Respondents– 27.3% of firms stated they were used when SBE
goals applied, but seldom or never, solicited for other contracts outside of the SBO Program
– 23.1% of firms stated that there is an informal network that excluded their firms
– 15.4% of firms were included for good faith efforts then dropped after contract award
– 3.4% of firms experienced discrimination as a subcontractor bidding/proposing Charlotte projects
– 5.1% of firms experienced discrimination as a prime contractor bidding/proposing Charlotte projects
2003 v. 2011 Nonminority Women Utilization Comparison
2003 $ 2003 % 2011 $ 2011 %
Construction (Sub) $11,485,451 3.82% $42,342,77
5 19.71%
Construction (Prime) $76,044,369 6.72% $105,135,4
89 10.26%
A & E (Sub) $1,426,983 28.39% $3,118,749 21.22%
A & E (Prime) $5,994,994 5.74% $8,257,868 4.46%
Professional Services $8,004,453 8.75% $10,962,09
4 7.11%
Other Services $24,731,143 5.99% $17,008,071 8.18%
Goods & Supplies $5,749,246 2.62% $10,250,242 4.96%
Spending with M/WBE construction subcontractors increased from $23.2 million to $62.1 million, a 166.5 percent increase.
WBE construction subcontractor utilization increased 268.6 percent.
MBE construction subcontractor utilization increased 67.5 percent.
M/WBE construction subcontracting as a percentage of the total prime contracts tripled.
The percentage of construction subcontract dollars received by M/WBEs increased from 7.7 percent to 28.9 percent
The number of M/WBE construction subcontractors increased 27.2 percent.
Spending with WBE A&E subcontractors increased 118.5 percent.
MBE A&E subcontractor utilization increased 148.0 percent. The number of M/WBE A&E subconsultants utilized
increased 82.0 percent.
2003 v. 2011 Disparity Study ComparisonM/WBE Utilization Dollars-Subcontracting
Disparity Findings at Sub Level – M/WBE Construction
African American Hispanic American Asian American Native American Nonminority Women0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
46.11
24.93
123.99
68.48
106.92
Overutilization = > 100.00
Substantial Disparity =
< 80.00
Disparity Findings at Sub Level – M/WBE Architecture & Engineering
African American Hispanic American Asian American Native American Nonminority Women0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
24.07
414.84
132.20
0.00
113.16
Overutilization = > 100.00
Substantial Disparity =
< 80.00
WBE WBE construction subcontractor utilization
increased 268.6% WBE A&E subconsultant utilization increased
118.5%
MBE MBE construction subcontractor utilization
increased 67.5% MBE A&E subconsultant utilization increased
148.0% M/WBE construction subcontracting as a
percentage of the total prime contracts tripled
Subcontractor Utilization: 2011 Disparity Study Compared to 2003 Disparity Study
MBE subcontractors were issued permits for projects totaling $22.2 million (1.20%).
WBE subcontractors received $33.5 million in subcontracting projects (1.82 %).
This lack of use of M/WBE subcontractors in the absence of SBE subcontracting goals was consistent with what M/WBEs stated in the survey.
Private Sector M/WBE Construction Subcontractor Utilization
Disparity Findings at Prime Level – M/WBE Construction
African American Hispanic American Asian American Native American Nonminority Women0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
9.946.50
1119.48
12.42
68.71Substantial Disparity =
< 80.00
Overutiliza-tion = > 100.00
Disparity Findings at Prime Level – M/WBE A&E
African American Hispanic American Asian American Native American Nonminority Women0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
61.20
18.48
211.69
14.39
48.02
Substantial Disparity =
< 80.00
Overutilization = > 100.00
Disparity Findings at Prime Level – M/WBE Professional Services
African American Hispanic American Asian American Native American Nonminority Women0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
100.24
210.20
2.35
741.80
76.51
Substantial Disparity =
< 80.00
Overutilization = > 100.00
Disparity Findings at Prime Level – M/WBE Other Services
African American Hispanic American Asian American Native American Nonminority Women0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00 194.03
26.25
11.93
147.86
74.28
Substantial Disparity =
< 80.00
Overutilization = > 100.00
Disparity Findings at Prime Level – M/WBE Goods & Supplies
African American Hispanic American Asian American Native American Nonminority Women0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
23.83
136.19
0.18
2958.01
65.08Substantial Disparity =
< 80.00
Overutilization = > 100.00
This study finds disparity in City contracting.However, evidence does not support the restoration of race- and gender-conscious subcontracting goals because:
SBO Program has been more effective in M/WBE utilization than the previous M/WBE Program
SBO Program as effective as other M/WBE programs in the Charlotte area
The anecdotal evidence of racial exclusion was less in this study than the evidence in the H.B. Rowe case
MGT Conclusions
Options to Consider: Raise the informal threshold for construction Vendor rotation Mandatory joint ventures on large construction
projects Include SBE subcontracting goals in categories
other than construction and A&E Include RFP provision requiring proposers to
report prior M/WBE utilization and future strategy
Raise the personal net worth threshold
Key Recommendations
Questions