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City of Fort WorthDisparity Study
2020
Colette Holt & AssociatesNervi’ Strategic Solutions, LLC
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Provide a legal defense if the program is challenged Meet constitutional requirements Provide policy and program recommendations Educate policy makers and stakeholders about
the legal and economic issues to build consensus
Disparity Study Objectives
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Quantitative data sources• City contract and vendor records• Contract information from prime vendors• M/W/DBE Directories• Hoovers/Dun & Bradstreet• U.S. Census Bureau• Scholarly research
Qualitative data sources• 80 Interviews Stakeholders Business Owners City staff
• Other Texas disparity studies
Disparity Study Data and Methods
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Legal review and analysis Utilization, availability and disparity analyses
• Determination of Fort Worth’s geographic & industry markets
• Determination of M/WBE utilization in these markets• Estimation of M/WBE availability in these markets• Calculation of disparity ratios
Economy-wide disparity analysis Anecdotal data collection and analysis Review of Fort Worth’s BDE program Recommendations
Disparity Study Elements
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Disparity Study Findings:Utilization
Study analyzed FY 2013-2018 contracts• Final Contract Data File 315 Prime contracts totaling $658.95M 1,841 Subcontracts totaling $218.88M
Geographic market• Tarrant, Dallas, and Johnson Counties captured
92.6% of Texas dollars Product market
• 15 NAICS codes made up 90.4% of City spend
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Disparity Study Findings:Utilization
Fort Worth’s utilization of M/WBEs M/WBEs: 22.1%
• Blacks: 2.4%• Hispanics: 10.0%• Asians: 2.5%• Native Americans: 0.4%• White women: 6.9%
Non-M/WBEs: 77.9%
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Disparity Study Findings:Availability
Weighted availability in Fort Worth’s marketplace M/WBEs: 25.4 %
• Blacks: 6.6%• Hispanics: 9.2%• Asians: 1.7%• Native American: 0.7% • White females: 6.9 %
Non-M/WBEs: 74.6%
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Disparity Study FindingsDisparity Ratios
Disparity ratio = M/WBE utilization ÷ availability• M/WBEs: 86.9% Blacks: 36.2% Hispanics: 108.0% Asians: 144.1% Native Americans: 53.8% White Women: 101.0%
• Non-M/WBEs: 104.5%
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Disparity Study FindingsDisparity Ratios
Hispanic, Asian and White women firms were highly concentrated in three NAICS codes with a high City spend and a small number of firms• Hispanic firms: engineering services (541330) 5.4% of City spending 28% utilization in NAICS code vs.10% overall 14 Hispanic vs. 27 Non-M/WBE firms
• Asian firms: highway, street, and bridge construction (237310) 32.3% of City spending 5.1% utilization in NAICS code vs. 2.5% overall 5 Asian vs. 58 Non-MWBE firms
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Disparity Study FindingsDisparity Ratios
• White women firms: commercial and institutional building construction (236220) 8.5% of City spending 14.1% utilization in NAICS code vs. 6.9% overall 3 White women vs. 9 Non-MWBE firms
• Small number of successful Hispanic, Asian and woman firms doesn’t mean all members of these groups have full and fair access to City prime contracts and associated subcontracts Results change when these firms are eliminated Economy-wide and anecdotal data suggest discrimination
still depresses opportunities to compete
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Disparity Study FindingsEconomy-Wide Analysis
Useful to evaluate the effectiveness of race-neutral measures American Community Survey
• Minorities and White women earned less from their businesses and formed fewer businesses than White males
Survey of Business Owners• Very large disparities in firm sales receipts between
M/WBEs and non-M/WBE firms Credit discrimination barriers remain high Human capital constraints continue to impede
success
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Disparity Study Findings:Anecdotal Findings
Qualitative evidence of disparities in Fort Worth’s market Interviewed 80 individuals
• Biased perceptions and stereotypes about competency and professionalism persist about M/WBEs
• Critical business and professional networks remain closed to M/WBEs
• Breaking into the network of Fort Worth vendors is especially difficult
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Disparity Study Findings:Anecdotal Findings
• Many women business owners experienced sexism and gender bias
• Unequal access to business credit is an obstacle to obtaining City work
• Contract goals are necessary to ensure full and fair opportunities to compete
• Exclusion of White women from the program reduced their work on City projects
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Disparity Study Findings:Program review
Fort Worth’s Business Diversity Enterprise (BDE) Program• M/WBE Advisory Committee comprised of local
business and community organization representatives serves in a key advisory capacity
• Active and extensive outreach that includes partnering with local advocacy and business groups
• Subcontracting goals are set by broad industry category for contracts greater than $50,000
• Implementation of B2Gnow electronic data collection and monitoring system to support program
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Disparity Study Findings:Program Review
Experiences with Fort Worth’s BDE Program• Program generally works well and is essential to
obtain contracts• The City’s policy of limiting the program to
subcontracting work prevents M/WBEs from becoming prime contractors and growing their businesses
• Increased outreach tailored to specific industries, such as engineering, is needed
• Insurance, large contract sizes and long wait times for notices to proceed are impediments
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Disparity Study Findings:Program Review
• Timely payments were reported, but change orders create long delays
• Additional small business assistance services would be helpful
• The City’s prequalification requirement for some sub trade firms is a barrier
• A mentor protégé program was widely supported • Some majority contractors found compliance with the
program requirements to be burdensome• Exclusion of White women from the program is cited a
problem for women and prime firms
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Race- and gender-neutral measures• Implement additional features of the City’s electronic
contracting data collection and monitoring system• Increase outreach to M/WBEs and small firms• Increase contract “unbundling”• Review contracting requirements, particularly those
imposing experience and prequalification conditions• Provide training to City staff
Disparity Study Recommendations
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Quantitative and qualitative evidence supports the continued need for race- and gender-conscious measures Revise the Business Diversity Enterprise
Program• All groups should be eligible for full goal credit on all
types of contracts• Use the study to set the M/WBE annual goal• Use the study data to set narrowly tailored contract
specific goals
Disparity Study Recommendations
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• Count certified prime vendors’ dollars towards meeting contract goals
• Review program policies, procedures and forms• Implement the Mentor-Protégé Program
Conduct regular BDE Program reviews Develop performance measures for Program
success
Disparity Study Recommendations
16 Carriage Hills Drive • San Antonio, Texas 78257 773.255.6844 • [email protected] www.mwbelaw.com • Twitter: @mwbelaw
Department of Diversity and Inclusion
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Evolution: What’s in a name?
Disadvantaged Business Enterprise
(DBE)
Minority and Women
Business Enterprise (MWBE)
Business Diversity
(BD)
Business Equity (BE)
22
WHO1993
WHO1996
WHO2011
WHAT2020
Building on previous achievements
• Going paperless• B2GNow Contract Compliance Software• Enterprise Resource Planning (ERP) system• Compliance training for City buyers and project managers• Administrative Regulations for Procurement• Capital Delivery PM Manual• Process Maps • 77 outreach events • Annual goal setting and project goal setting
23
Implementing City Manager Recommendations to Build Capacity for Business EquityDepartments impactedThemes for changeMethods of change
Departments impacted
• All Departments, but especially• Contracting Departments
• TPW• Water• Property Management• Park and Recreation• Aviation
• Purchasing
25
AccountabilityContinuous ImprovementExceptional Customer ExperienceDiversityEthical BehaviorMutual Respect
Ineffective Process
Problem requires
quick resolution
Business Diversity
Goals Requested
Cost
Industry Standard
s
Specs
Policy
Process
Stop & Start
Waivers
Texas Local Govt Code
Regulations Contract
Closeout
Business Diversity
Goals Met?
Planning Contract Execution Contract Closeout
City Buyers & Project Managers & Contractors & Vendors
Lag Time. Wait Time. Delays.
Themes for Change
Analysis• Ensure accurate data inputs produce meaningful analysis for decision making
Efficiency• Create efficient processes that reduce cost and time
Equity• Achieve equity in contract awards and build capacity of minority and women
businesses over time
28
Methods for Change
Ordinance Policy Process
29
Culture
Themes and RecommendationsAnalysis
Ensure accurate data inputs produce meaningful analysis for decision making
Replace broad goal-setting categories
with narrowly tailored goal-setting
categories
Collect necessary information during
Vendor Registration
Standardize data collection across
planning, contract execution, and
contract closeout
Count MBE participation in all contracting tiers
Adopt NAICS in addition to
UNSPSC commodity code
system to calculate utilization
Standardize forecast reporting
across all contracting
departments and purchasing
Define geographic and
industry marketplace for
tracking outcomes
Ordinance X X XPolicy X X X X X X X
Process X X X X X X X
Efficiency Create efficient processes that reduce cost and time
Add Department of Diversity and
Inclusion as point of contact for Business
Equity
Require offerors and bidders to submit
waivers and exception requests, and good faith
efforts with bid submission
Review Business Equity Staff position
descriptions
Apply appropriate standards to MBE and SBE programs
separately
Standardize pre-qualifications
requirements for consistency
Centralize MBE Capacity Building
Require proactive
planning on capital projects
Ordinance X X X X XPolicy X X X X X X X
Process X X X X X X X
EquityAchieve equity in contract awards
Add Discrimination in Procurement and
Contracting complaint process
Remove $100,000 cap on MBE Prime contracts
program
Replace "preference points" in bid
evaluation with narrowly tailored criteria to achieve equity objectives
Standardize forecast reporting across all
contracting departments and
purchasing
Count MBE participation in all contracting tiers
Standardize pre-qualifications
requirements for consistency
Require proactive
planning on capital projects
Ordinance X X X X XPolicy X X X X X X X
Process X X X X X X X
Proposed New Process
Capital Projects Forecast
one Fiscal Year in
Advance
Goals Procurement Contracting
MethodPre-
qualifications Unbundling
Bid LanguageRegulationsOutreach
Rewards & Sanctions
Goal Metrics-Satisfaction,
Performance, Cost
SurveysData
Collection Outcome Tracking
Planning Contract Execution Contract Closeout
Business Equity & City Buyers & Project Managers & Contractors & Vendors
Offeror or Bidder
Responsibilities
City Responsibilities
With Bid Submissio
n
Exception & Waiver Request
Utilization Plan(s)
During Submitted
Bid Review
Exception & Waiver Decision
Utilization Plan(s)
Approval
After Award
Proactive Communicatio
n
After Award
Proactive Support
Support for our success
• New Business Equity Ordinance• New Business Equity Program Plan• New support role of Business Equity Division Staff• New proactive planning process• New contract closeout analysis process• New Consolidated Form(s)• New Data Collection Method and Tracking Process• New Training Modules for City Buyers and Project Managers• New Training Modules for Offerors, Bidders, Vendors, Contractors• New Cheat Sheets and Templates• New Discrimination Complaint Process
AccountabilityIndividual—Staff Performance EvaluationsDepartmental—Business Performance PlanCity-wide—Annual Business Equity Report
Timeline
MAY 4 & 18 BRIEF CMO
MAY 28 BRIEF DEPARTMENT HEADS
June 1-19 BRIEF BUSINESS EQUITY ADVISORY COMMITTEE & OTHER COMMUNITY STAKEHOLDER GROUPS
JUNE 16 BRIEF COUNCIL ON BUSINESS EQUITY ORDINANCE AMENDMENTS
AUGUST 4* BUSINESS EQUITY ORDINANCE BEFORE COUNCIL
34
*Subject to change
Q&AThank you.
16 Carriage Hills Drive • San Antonio, Texas 78257 773.255.6844 • [email protected] www.mwbelaw.com • Twitter: @mwbelaw