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 • colette.holt@mwbelaw.com 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)

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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

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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

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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

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Methods for Change

Ordinance Policy Process

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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

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*Subject to change

Q&AThank you.

16 Carriage Hills Drive • San Antonio, Texas 78257 773.255.6844 • colette.holt@mwbelaw.com www.mwbelaw.com • Twitter: @mwbelaw