ALBANY — Despite results of an exhaustive disparity study by BBC Research & Consulting of Denver that show there is not a statistical disparity in the utilization of small and disadvantaged businesses in government-funded projects here, some who attended a review of the study’s results Wednesday were not satisfied with what they heard.
BBC Managing Director David Keen showed data that indicated 12.7 percent ($18 million) of the money utilized by a consortium consisting of Dougherty County, the city of Albany, the Dougherty County School System, the Albany Water, Gas & Light Commission and Albany Tomorrow Inc. on local government projects for the past three years was awarded to minority- and women-owned businesses.
“If you look at all the registered minority firms available, you’d expect about 10.4 percent of the dollars to go to MBEs and WBEs (minority and women business enterprises),” Keen said. “So, statistically, you are in line with expectations. From this perspective, you don’t see a disparity in utilization compared to availability.
“But there is supportive evidence that shows it’s not a level playing field for MBEs and WBEs. Our data show that 27 percent of the firms in the region are minority firms, and in a perfect world it would not be wrong to expect at least 27 percent of procurement dollars to go to minority- and women-owned businesses.”
Attendees William Wright and Arthur Williams argued, however, that in a county that has an overwhelmingly African-American population, it is not unreasonable to expect more minority participation.
Wright, who said his data showed black participation in local projects had declined from 60 percent in the 1960s to around 6 percent in recent years, said the problem was the concept of a race-neutral approach to minority utilization.
“What does neutral mean?” Wright asked. “Go out in the parking lot, crank up your car, put the gearshift in neutral and push the gas pedal. When you run out of gas at the end of the day, see where you are. In neutral, you get nowhere.”
But City Manager Alfred Lott said BBC’s findings indicate that the consortium, in order to stay on legal ground, would be better served by removing race and gender from the equation entirely and approaching its procurement practices from a “purely small-business approach.”
“I got some peliminary data and took part in some interim meetings, so I’ve gotten a little deeper involved in the findings of BBC’s study,” Lott said. “Frankly, I’m surprised at the direction the courts have gone. A couple of years ago when this study was commissioned, there was speculation that we might move away from race-neutral to race-conscious utilization that would allow us to enforce certain goals based on race or gender participation.
“This study surprisingly has swung way to the right. They’re saying that to meet legal requirements, we should take race and gender out of the mix and base our goals on small businesses, on economics. I think where we have legal leeway is in defining ‘small’ and ‘local’ businesses.”
BBE researcher Amanda Gessert discussed data that showed Georgia businesses outside the Southwest Georgia region and in other states had accounted for $91 million in spending during the July 2004-June 2007 study period, as compared to $157 million in spending by local firms.
“Around 90 percent of the largest expenditure, construction, went to local firms, but in the next two largest areas of expenditure — goods and professional services — 64 percent and 81 percent of the dollars (respectively) went to non-local firms,” Gessert said. “That is another area where local MBEs and WBEs lose out.”
While noting that the local consortium’s minority- and women-based utilization was in compliance with federal law, Keen and attorney Keith Wiener with the Atlanta law firm Holland & Knight, which with Albany consulting firm Global Matrix assisted in the study, said there were areas where improvement was needed.
Among the areas of concern were majority-run businesses that listed spouses or minority employees as principles as “fronts” to earn minority status; contractors who list subcontractors to earn minority participation but do not use the minority firms; contracts that do not offer subcontract opportunities; bid shopping, and the weakness of the local Small and Disadvantaged Business Utilization office in tracking and enforcing abuses.
Local architect David Maschke, who is also a Dougherty School Board member, said practices such as using fronts for DBE designation, overutilization of out-of-town firms and the brokering of jobs by minority contractors are among the rampant abuses of the current system employed by the consortium.
“We have the remnants here of a good-old-boy network that has to be done away with,” Maschke said.
Wiener said after the review that firms utilizing fronts to garner minority designation risk sanctions, as well as potential legal action.
“Certainly persons who intentionally misrepresent themselves to a government entity for financial gain stand to face sanctions,” he said. “Existing laws do provide for suspension (from bidding on jobs), disbarment (loss of license), civil penalties and in some cases criminal penalties.”
Funding for the study, which cost some $350,000 and was the first in the county since 2001, came from Special-Purpose Local-Option Sales Tax V funds. Both Lott and Dougherty County Administrator Richard Crowdis said the money was well spent.
“From the standpoint of compliance, this was certainly a beneficial study,” Crowdis said. “If we find there are areas in which we are in noncompliance, we must make changes to protect the various entities (in the consortium) from liability.
“This was a well-done presentation that we will review and take back to our respective entities with recommendations based on the information brought to us today.”
Among the recommendations from the BBC study are reclassification of “small” businesses from those doing $17.4 million in business to those doing $1 million to $5 million. “The $17 million is a federal number,” Keen said, “but it doesn’t make sense for Albany.”
BBC also recommended improved tracking of payment to subcontractors; a regularly updated list of small minority- and women-owned businesses; regulations “with teeth” for rules violators, such as fronts; elimination of the current so-called “good-faith efforts” required of businesses, and limiting qualified firms to those within the Southwest Georgia region.
“This is the end of this study,” Gregory Bell with Global Matrix said. “But it is the beginning of a new world of how we choose to do business.”