The City of Charlotte Update Disparity Study
y
p
p
y
y
FINAL REPORT PRESENTATION
October 11, 2011
Presented to the Economic Development Committee
Submitted by:
g Guidelines and Methodology
gy
Legal
‡
Croson
‡
Strict Scrutiny Standard of Review
There must be a compelling
p
g interest,, such as remedying
y g
the present effects of past discrimination
¾ Compelling interest can be found in private sector
di i i i if lilinked
discrimination
k d to the
h public
bli sector
¾
‡
Under Narrow Tailoring an Agency
¾
¾
¾
¾
Must
M
st employ
em lo and eevaluate
al ate race ne
neutral
tral efforts first
Limit the burden on third parties
Set goals related to availability
Ensure program flexibility
g Guidelines – ((cont.))
Legal
In H.B. Rowe Decision (2010) Fourth Circuit accepted MGT
MGT’ss
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
i ll exclusive
l i networkk that
h systematically
i ll di
disadvantaged
d
d
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
MGT Conclusions
‡
To implement a race
based program, a City must
race- and gender
gender-based
demonstrate:
1. Statistical data showing disparity
2. Anecdotal evidence of discrimination
3. Race and gender neutral program not effective
‡
This study shows:
p y in Cityy contractingg
1. Statistical disparity
2. Insufficient anecdotal evidence
3. SBO Program has been effective
2011 Results – African Americans
Utilization $
Utilization %
Availability
y%
Disparity
p
y Index
Construction (Sub)
$11,619,931
5.41%
11.73%
46.11
Construction (Prime)
$10,136,200
0.99%
9.95%
$386 906
$386,906
2 63%
2.63%
10 94%
10.94%
A & E (Prime)
$2,549,185
1.38%
2.25%
Professional Services
$3,478,509
2.25%
2.25%
Other Services
$12,555,522
6.04%
3.11%
$739,370
0.36%
1.50%
A & E (Sub)
Goods & Supplies
(Substantial Disparity)
9.94
(Substantial Disparity)
24.07
(Substantial Disparity)
61.20
(Substantial Disparity)
100.24
(Overutilization)
194.03
(Overutilization)
23.83
(Substantial Disparity)
Anecdotal Results – African American
Total of 168 African American Respondents
– 41% of firms stated they were used when SBE goals applied,
but seldom or never, solicited for other contracts outside of
the SBO Program
– 33.4% of firms stated that there is an informal network that
excluded their firms
– 25% of firms were included for good faith efforts then
dropped after contract award
– 3.6%
3 6% off firms
fi
experienced
i
d discrimination
di i i i as a subcontractor
b
bidding/proposing Charlotte projects
– 7.7% of firms experienced discrimination as a prime
contractor bidding/proposing Charlotte projects
2003 v. 2011 African American
Utilization Comparison
2003 $
2003 %
2011 $
2011 %
Construction (Sub)
$9,736,811
3.24%
$11,619,931
5.41%
Construction (Prime)
$38,200,358
3.38%
$10,136,200
0.99%
A & E (Sub)
$60,110
1.20%
$386,906
2.63%
A & E (Prime)
(P i )
$99 702
$99,702
0 10%
0.10%
$2 549 185
$2,549,185
1 38%
1.38%
Professional Services
$984,757
1.08%
$3,478,509
2.25%
Other Services
$10,695,940
2.59%
$12,555,522
6.04%
Goods & Supplies
$4,874,809
2.22%
$736,370
0.36%
2011 Results – Asian Americans
Utilization $
Utilization %
Availability %
Disparity Index
Construction (Sub)
$1,487,988
0.69%
0.56%
123.99
Construction (Prime)
$57 096 322
$57,096,322
5 57%
5.57%
0 50%
0.50%
A & E (Sub)
$303,620
2.07%
1.56%
A & E (Prime)
$9,214,534
4.98%
2.35%
Professional Services
$85 243
$85,243
0 06%
0.06%
2 35%
2.35%
Other Services
$957,925
0.46%
3.86%
Goods & Supplies
$20,003
0.01%
5.36%
(Overutilization)
1,119.48
(Overutilization)
132.20
(Overutilization)
211.69
(Overutilization)
2.35
(Substantial Disparity)
11.93
(Substantial Disparity)
0.18
(Substantial Disparity)
Anecdotal Results – Asian American
Total of 49 Asian American Respondents
– 26.5% of firms stated they were used when SBE goals applied,
but seldom or never, solicited for other contracts outside of
the SBO Program
– 14.2% of firms stated that there is an informal network that
excluded their firms
– 10.2% of firms were included for good faith efforts then
dropped after contract award
– 4.1%
4 1% off firms
fi
experienced
i
d discrimination
di i i i as a subcontractor
b
bidding/proposing Charlotte projects
– 4.1% of firms experienced discrimination as a prime
contractor bidding/proposing Charlotte projects
2003 v. 2011 Asian American
Utilization Comparison
2003 $
2003 %
2011
20 $
2011
20 %
Construction (Sub)
$126,580
0.04%
$1,487,988
0.69%
Construction ((Prime))
$49,912,203
$
,
,
4.41%
$57,096,322
$
,
,
5.57%
A & E (Sub)
$78,275
1.56%
$303,620
2.07%
A & E (Prime)
$1,310,017
1.25%
$9,214,534
4.98%
Professional Services
$3,649,227
3.99%
$85,243
0.06%
Other Services
$5,876,271
1.42%
$957,925
0.46%
Goods & Supplies
$4 043 246
$4,043,246
1 84%
1.84%
$20 003
$20,003
0 01%
0.01%
2011 Results – Hispanic Americans
Utilization $
Utilization %
Availability %
Construction (Sub)
$4,188,450
1.95%
7.82%
Construction (Prime)
$4,644,237
0.45%
6.97%
A & E (Sub)
$952 736
$952,736
6 48%
6.48%
1 56%
1.56%
A & E (Prime)
$376,236
0.20%
1.10%
Professional Services
$3,564,806
2.31%
1.10%
Other Services
$800,528
0.38%
1.47%
Goods & Supplies
$552,604
0.27%
0.20%
Disparity Index
24.93
(Substantial Disparity)
6.50
(Substantial Disparity)
414.84
(Overutilization)
18.48
(Substantial Disparity)
210 20
210.20
(Overutilization)
26.25
(Substantial Disparity)
136.19
(Overutilization)
Anecdotal Results – Hispanic American
Total of 49 Hispanic American Respondents
– 28.6% of firms stated they were used when SBE goals applied,
but seldom or never, solicited for other contracts outside of
the SBO Program
– 20.4% of firms stated that there is an informal network that
excluded their firms
– 16.3% of firms were included for good faith efforts then
dropped after contract award
– 0% off firms
fi
experienced
i
d discrimination
di i i i as a subcontractor
b
bidding/proposing Charlotte projects
– 2.0% of firms experienced discrimination as a prime
contractor bidding/proposing Charlotte projects
2003 v. 2011 Hispanic American
Utilization Comparison
2003 $
2003 %
2011 $
2011 %
Construction (Sub)
$1,377,598
0.46%
$4,188,450
1.95%
Construction (Prime)
$581 010
$581,010
0 05%
0.05%
$4 644 237
$4,644,237
0 45%
0.45%
A & E (Sub)
$560,331
11.15%
$952,736
6.48%
A & E (Prime)
$425,339
0.41%
$376,236
0.20%
Professional Services
$626,231
0.68%
$3,564,806
2.31%
Other Services
$3,495,466
0.85%
$800,528
0.38%
Goods & Supplies
$708,664
0.32%
$552,604
0.27%
2011 Results – Native Americans
Utilization $
Utilization %
Availability %
Disparity Index
Construction (Sub)
$2,465,651
1.15%
1.68%
C t ti (Prime)
Construction
(P i )
$2 533 120
$2,533,120
0 25%
0.25%
1 99%
1.99%
A & E (Sub)
$89,860
0.61%
0.00%
N/A
A & E (Prime)
$45,077
0.02%
0.17%
14.39
Professional Services
$1,935,466
1.25%
0.17%
Other Services
$1,209,705
0.39%
0.39%
Goods & Supplies
$3,530,231
1.71%
0.06%
68.48
(Substantial Disparity)
12 42
12.42
(Substantial Disparity)
(Substantial Disparity)
741.80
(O
(Overutilization)
tili ti )
147.86
(Overutilization)
2,958.01
(Overutilization)
Anecdotal Results – Native American
Total of 19 Native American Respondents
– 31.6% of firms stated they were used when SBE goals applied,
but seldom or never, solicited for other contracts outside of
the SBO Program
– 15.8% of firms stated that there is an informal network that
excluded their firms
– 15.8% of firms were included for good faith efforts then
dropped after contract award
– 0% off firms
fi
experienced
i
d discrimination
di i i i as a subcontractor
b
bidding/proposing Charlotte projects
– 0% of firms experienced discrimination as a prime contractor
bidding/proposing Charlotte projects
2003 v. 2011 Native American
Utilization Comparison
2003 $
2003 %
2011 $
2011 %
Construction (Sub)
$569,911
0.19%
$2,465,651
1.15%
Construction (Prime)
$3 140 291
$3,140,291
0 28%
0.28%
$2 533 120
$2,533,120
0 25%
0.25%
A & E (Sub)
$0.00
0.00%
$89,860
0.61%
A & E (Prime)
$2,653,976
2.54%
$45,077
0.02%
Professional Services
$1,417,293
1.55%
$1,935,466
1.25%
Other Services
$4,473,524
1.08%
$1,209,705
0.39%
Goods & Supplies
$81,655
0.04%
$3,530,231
1.71%
2011 Results – Nonminority Women
Utilization $
Utilization %
Availability %
Disparity Index
Construction (Sub)
$42,342,775
19.71
18.44
106.92
Construction (Prime)
$105,135,489
10.26
14.93
A & E (Sub)
$3,118,749
21.22
18.75
A & E ((Prime))
$8,257,868
4.46
9.29
Professional Services
$10,962,094
7.11
9.29
Other Services
$17 008 071
$17,008,071
8 18
8.18
11 01
11.01
Goods & Supplies
$10,250,242
4.96
7.62
(Overutilization)
68.71
(Substantial Disparity)
113.16
(Overutilization)
48.02
(Substantial Disparity)
76.51
(Substantial Disparity)
74.28
(Substantial Disparity)
65.08
(Substantial Disparity)
Anecdotal Results – Nonminority Women
Total of 117 African American Respondents
– 27.3% of firms stated they were used when SBE goals applied,
but seldom or never, solicited for other contracts outside of
the SBO Program
– 23.1% of firms stated that there is an informal network that
excluded their firms
– 15.4% of firms were included for good faith efforts then
dropped after contract award
– 3.4%
3 4% off firms
fi
experienced
i
d discrimination
di i i i as a subcontractor
b
bidding/proposing Charlotte projects
– 5.1% of firms experienced discrimination as a prime
contractor bidding/proposing Charlotte projects
2003 v. 2011 Nonminority Women
Utilization Comparison
2003 $
2003 %
2011 $
2011 %
Construction (Sub)
$11,485,451
3.82%
$42,342,775
19.71%
Construction (Prime)
$76 044 369
$76,044,369
6 72%
6.72%
$105 135 489
$105,135,489
10 26%
10.26%
A & E (Sub)
$1,426,983
28.39%
$3,118,749
21.22%
A & E ((Prime))
$5,994,994
$
,
,
5.74%
$8,257,868
$
,
,
4.46%
Professional Services
$8,004,453
8.75%
$10,962,094
7.11%
Other Services
$24,731,143
5.99%
$17,008,071
8.18%
Goods & Supplies
$5,749,246
2.62%
$10,250,242
4.96%
2003 v. 2011 Disparity Study Comparison
M/WBE Utilization Dollars-Subcontracting
Dollars Subcontracting
‡
‡
‡
‡
‡
‡
‡
‡
‡
Spending with M/WBE construction subcontractors increased from $23.2
million to $62.1 million, a 166.5 percent increase.
WBE construction subcontractor utilization increased 268.6 percent.
MBE construction subcontractor utilization increased 67.5 percent.
M/WBE construction subcontracting as a percentage of the total prime
contracts tripled.
Th percentage
The
t
off construction
t ti subcontract
b t td
dollars
ll
received
i d bby M/WBE
M/WBEs
increased from 7.7 percent to 28.9 percent
The number of M/WBE construction subcontractors increased 27.2
percent.
Spending with WBE A&E subcontractors increased 118.5 percent.
MBE A&E subcontractor utilization increased 148.0 percent.
p
The number of M/WBE A&E subconsultants utilized increased 82.0
percent.
Disparity Findings at Sub Level –
M/WBE Co
Construction
st ctio
200.00
180.00
160.00
140.00
123.99
120.00
Overutilization
= > 100.00
106.92
100.00
80.00
60.00
46.11
68.48
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 A
Architecture
chitect e & Engineering
E i ee i
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
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%
118 5%
MBE
‡
MBE construction subcontractor utilization increased 67.5%
67 5%
‡
MBE A&E subconsultant utilization increased 148.0%
‡
M/WBE construction
t ti subcontracting
b t ti as a percentage
t
off the
th
total prime contracts tripled
Private Sector M/WBE Construction
Subcontractor
S b t t Utilization
Utili ti
‡
MBE subcontractors were issued permits for projects totaling
$22.2 million (1.20%).
‡
WBE subcontractors received $33.5 million in subcontracting
projects (1.82 %).
‡
This lack of use of M/WBE subcontractors in the absence of
SBE subcontracting
b
i goals
l was consistent
i
with
i h what
h M/WBEs
M/WBE
stated in the survey.
Disparity Findings at Prime Level –
M/WBE Co
Construction
st ctio
1,119.48
200.00
180.00
160.00
140.00
Overutilization
= > 100.00
120.00
100.00
80.00
68.71
Substantial
Disparity
p y=
< 80.00
60.00
40.00
20.00
9.94
12.42
6 50
6.50
0.00
African American
Hispanic American
Asian American
Native American
Nonminority Women
Disparity Findings at Prime Level –
M/WBE A&E
211.69
200.00
180.00
160.00
140.00
Overutilization
= > 100.00
120.00
100.00
80.00
61.20
60.00
60 00
Substantial
Disparity
Di
it =
< 80.00
48.02
40.00
18.48
14.39
20.00
0.00
African American
Hispanic American
Asian American
Native American
Nonminority Women
Disparity Findings at Prime Level –
M/WBE PProfessional
ofessio al Services
Se ices
210.20
200.00
741.80
180.00
160.00
140.00
Overutilization
= > 100.00
120.00
100.24
100.00
76.51
80.00
Substantial
Disparity
p y=
< 80.00
60.00
60 00
40.00
20.00
2.35
0.00
African American
Hispanic American
Asian American
Native American
Nonminority Women
Disparity Findings at Prime Level –
M/WBE Othe
Other Services
Se ices
200.00
194.03
180.00
160.00
147.86
140.00
Overutilization
= > 100.00
120.00
100.00
74.28
80.00
Substantial
Disparity
p y=
< 80.00
60.00
60 00
40.00
26.25
11.93
20.00
0.00
African American
Hispanic American
Asian American
Native American
Nonminority Women
Disparity Findings at Prime Level –
M/WBE Goods & Supplies
S pplies
2,958.01
200.00
180.00
160.00
136.19
140.00
Overutilization
= > 100.00
120.00
100 00
100.00
80.00
65.08
Substantial
Di
Disparity
it =
< 80.00
60.00
40.00
23.83
20.00
0.18
0.00
African American
Hispanic American
Asian American
Native American
Nonminority Women
MGT Conclusions
This study finds disparity in City contracting.
However, evidence does not support the restoration of raceand gender-conscious subcontracting goals because:
9
9
9
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
Th
d l evidence
d
off raciall exclusion
l
was lless in
this study than the evidence in the H.B. Rowe case
Keyy Recommendations
Options to Consider:
‡
Raise the informal threshold for construction
‡
Vendor rotation
‡
Mandatory joint ventures on large construction projects
‡
IInclude
l d SBE subcontracting
b
i goals
l iin categories
i other
h than
h
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