Background

The City authorized an extensive, year-long disparity study completed in 2018 that analyzed procurement and contracting barriers for small, disadvantaged, minority, and women-owned businesses in construction, architecture and engineering, services, and goods. This study determined that there exists a statistically significant underutilization by the City of minority and women-owned businesses in these contract categories.

Results of the last Disparity Study indicated that the City's Small Business Enterprise Program had not effectively reduced barriers or increased opportunities for businesses owned by women or people of color. 

The City's Equity in Contracting (EIC) program was developed to address these issues, with the aim of improving equity in contracting. 

More information is available in this final report by Griffin & Strong, P.C. (GSPC), the consultant awarded the contract for the 2018 Disparity Study. 

2018 Disparity Study Recommendations

1. Allocation of Resources, Including Staffing
2. Forecast Opportunities
3. Supportive Services
4. Small Business Reserve Program
5. Reform Data Infrastructure
6. Establish Policy to Investigate Possible Discrimination
7. Economic Development Projects
8. Vendor Rotation
9. Institute Race and Gender-Based Subcontracting Goals

The Consultant, Griffin & Strong, P.C. recommended that the City should not only commit to increasing participating of small, minority and women-owned businesses, but should also commit real resources to make change happen.

Staffing recommendations included (3) three positions:

• Chief Diversity Officer
• Contract Compliance Officer
• Contract Administration Officer

Griffin & Strong, P.C. recommended the City forecast and communicate potential bidding opportunities for a full fiscal year. This allows firms to understand early on what projects are anticipated in the coming year, and provides firms time to prepare for upcoming projects. 

Griffin & Strong, P.C. also recommended the City increase outreach through automated bid notifications for registered firms and small works roster firms based upon targeted work categories. In conjunction with increased outreach, the City can provide tailored training workshops for firms on the bid process to assist with their understanding of City of Tacoma processes.

Through feedback from City staff and small, minority, and women-owned firms, Griffin & Strong, P.C. recommended the City focus its efforts on capacity building in public contracting to assist firms in preparing to bid. 

Often times, firms are educated in how to provide their service or goods, but do not know how to certify or enter the public contracting arena. 

Supportive services may be offered internally or externally in conjunction with other agencies. 

The City can increase participation of small, minority, and women-owned firms by adopting a small business reserve program where awards can only be bid by small businesses. 

1. Adopt NIGP Procurement Code: City of Tacoma should consider inclusion of the National Institute of Government Purchasing (NIGP) code or other commonly adopted code used in procurement and contracting practices. Use of the NIGP coding system, in particular, will enable Tacoma to properly classify and categorize procurement activities while bringing uniformity in reporting by various departments.
2. Awarded and Paid Subcontract Data: Tacoma should consider collecting both award and paid subcontract data on all contracts. It is further recommended that subcontract data include both minority and nonminority subcontractors.

This Study has determined that the level of subcontractor participation of MWBEs is statistically significantly underutilized (except for Hispanic American owned businesses in Construction and Nonminority Female owned businesses in Construction subcontracting). This means that there may be intentional discrimination occurring in subcontracting.

It is GSPC's recommendation that the City of Tacoma implement a policy permitting a pre-award investigation into possible intentional discrimination in cases where the lowest bidding prime contractor has failed to reach a reasonable percentage of availability in subcontracting in each ethnicity and gender group (including Non-MWBEs).

By investigating such underutilization, for all ethnicities and genders, the City will not run afoul of Initiative 200. This recommendation is intended to prevent the City from passively and/or unwittingly participating in or funding private discriminatory conduct.

This tool does not have to be used for every projects, but particularly for larger projects for which bidders submit little to no proposed MWBE utilization.

GSPC suggests that bidders be required to list all firms that were contacted and that provided subcontract bids, along with the bid amounts, with an indication of which firms were selected as subcontractors. This would provide a preliminary indication as to whether an investigation is warranted.

On certain private sector projects, the City extends land, tax incentives, infrastructure improvements, or other pecuniary value to the overall project.

This Study has already determined that there is discriminatory activity in private sector procurements based upon the low private sector utilization in Construction.

Therefore, it is appropriate for the City to require that such projects be subject to the same contract compliance oversight as its own projects with regard to MWBE participation. 

GSPC recommends that the City institute both annual aspirational goals and a contract goal program based upon race and gender in order to address the disparities found in the Study, provided that they do not require prime contractors to select a less qualified contractor over a more qualified contractor and do not otherwise run afoul of the language in Initiative 200.

The annual goals should be calculated using the availability percentages for each race and gender group in the Study until the next disparity study is completed.

Aspirational goals are used as a benchmark to determine whether the City is utilizing race and gender groups as should be expected according to their availability by work category in the Relevant Market.

GSPC further recommends separate MBE, WBE, and non-MWBE goals to separate the issues of race and gender discrimination. Project goals should also be set based on the availability of firms in various race and gender groups in the available subcontracting trades for each project.

However, there are several administrative issues that would make immediate implementation of this type of program difficult. In order to set project goals, you must have a clear identification of what type of work your registered vendors do so you can set specific trade goals.

Once the City adopts full use of five-digit NIGP Codes it will be able to accurately identify the availability of firms in each trade.

Any race or gender based goal program must have a “sunset date” in accordance with Croson. GSPC recommends a five-year sunset date to coincide with a disparity study every five years.