The City of Charlotte Update Disparity Study
FINAL REPORT PRESENTATION
September 26, 2011
Presented to the Charlotte City Council
Submitted by:
MGT Background
Litigation Experience
Jurisdictions
Outcomes

North Carolina DOT (Rowe)

M/WBE Program Upheld

Nebraska Department of Roads (Gross Seed Co.)

M/WBE Program Upheld

City of Baltimore (Associated Utility Contractors) II

Settled – Program Intact

Kansas DOT (Klavier)

Suit Dismissed

Colorado DOT (Adarand)

M/WBE Program Upheld

South Florida Water Management District (IT Corp.)

Settled – M/WBE Program Intact

Phoenix (Arizona AGC)

Settled –M/WBE Program Intact

Florida DOT (Phillips and Jordan)

Remedy Suspended – Balance of
M/WBE Program Intact

Florida DOT (Cone Construction)

Settled –M/WBE Program Intact

North Carolina DOT (Dickerson)

M/WBE Program Reinstated
MGT Conclusions

To implement a race- and gender-based program, a City must
demonstrate:
1. Statistical data showing disparity
2. Anecdotal evidence of discrimination
3. Race and gender neutral program not effective

This study shows:
1. Statistical disparity in City contracting
2. Insufficient anecdotal evidence
3. SBO Program has been effective
Legal Guidelines and Methodology

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
Narrow Tailoring




Must employ and evaluate race neutral efforts first
Limit the burden on third parties
Set goals related to availability
Ensure program flexibility
Legal Guidelines – (cont.)
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
Disparity Findings at Sub Level –
M/WBE Construction
200.00
180.00
160.00
140.00
123.99
120.00
Overutilization
= > 100.00
106.92
100.00
80.00
68.48
60.00
46.11
Substantial
Disparity =
< 80.00
40.00
24.93
20.00
0.00
African American
Hispanic American
Asian American
Native American
Nonminority Women
Disparity Findings at Sub Level –
M/WBE Architecture & Engineering
414.84
200.00
180.00
160.00
140.00
120.00
132.20
Overutilization
= > 100.00
113.16
100.00
80.00
Substantial
Disparity =
< 80.00
60.00
40.00
24.07
20.00
0.00
0.00
African American
Hispanic American
Asian American
Native American
Nonminority Women
Anecdotal Findings

33.4% of M/WBEs were seldom or never solicited for contracts
outside of the SBO Program

25.6 % of M/WBEs stated that there is an informal network that
excluded their firms

18.9% of M/WBEs were included for good faith efforts then
dropped after contract award

5.5% of M/WBEs experienced discrimination as a prime
contractor on Charlotte projects

3.0% of M/WBEs experienced discrimination as a subcontractor
on Charlotte projects
Subcontractor Utilization: 2011 Disparity Study
Compared to 2003 Disparity Study

Spending with M/WBE construction subcontractors
increased 166.5%.

Percentage of construction subcontract dollars received by
M/WBEs increased from 7.7% to 28.9%

Number of M/WBE construction subcontractors utilized
increased 27.2%

Number of M/WBE subconsultants utilized in A&E
increased 82%
Subcontractor Utilization: 2011 Disparity Study
Compared to 2003 Disparity Study
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%

MBE construction subcontracting as a percentage of the total
prime contracts tripled
MBE Utilization Comparison of
2011 Charlotte Disparity Study and other Local Agencies

Collected M/WBE utilization reports from CharlotteMecklenburg Schools, CPCC and Mecklenburg County

Charlotte ranked first in Construction

Charlotte ranked second in A&E, Other Services, and Goods
and Supplies
MGT Conclusions
This study finds disparity in City contracting.
However, evidence does not support the restoration of raceand 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
Key Recommendations
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
Questions