Disparity Study — original pdf

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City of Austin Disparity Study 2022 Colette Holt & Associates Adisa Communications Cultural Strategies, Inc. Pink Consulting Disparity Study Legal Standards ▪ In 1989, US Supreme Court held race- and gender-conscious programs are subject to “strict scrutiny”, the highest level of judicial review ▪ M/W/DBE programs must meet two tests • Agency must prove it has a “compelling interest” based on “strong” statistical and anecdotal evidence of current discrimination or the effects of past discrimination in using race or gender in decision- making • Any remedies must be “narrowly tailored” to the evidence relied upon and regularly reviewed 2 Recent Legal Developments ▪ USDA “socially and economically disadvantaged” farmers program under American Rescue Plan struck down by three trial courts and class status granted ▪ Priority for grants to small restaurants owned by “socially and economically disadvantaged” persons, women and veterans struck down ▪ Oregon’s COVID relief fund for Blacks and Colorado’s fund for MBEs challenged and enjoined 3 Disparity Study Objectives ▪ Provide a legal defense for a government program 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 4 Disparity Study Data and Methods ▪ Quantitative data sources • City contract and vendor records • Contract information from prime vendors • M/W/DBE/HUB Directories • Hoovers/Dun & Bradstreet • U.S. Census Bureau • Scholarly research ▪ Qualitative data sources • Business owner and stakeholder interviews • Electronic survey • City staff 5 Disparity Study Elements ▪ Legal review and analysis ▪ MBE/WBE Program review ▪ Utilization, availability and disparity analyses • Determination of City’s geographic and industry • Determination of MBE/WBE utilization in these markets markets • Estimation of MBE/WBE availability in these markets • Calculation of disparity ratios ▪ Economy-wide disparity analysis ▪ Anecdotal data collection and analysis ▪ Recommendations 6 Disparity Study Findings: Utilization ▪ Study analyzed FYs 2013-2018 contracts $50,000 or greater • Final Contract Data File ▪ 1,002 prime contracts totaling $826,453,073.73 ▪ 842 subcontracts totaling $249,783,337.28 ▪ Geographic market • 19 counties with Austin, San Antonio, Dallas-Fort Worth and Houston metro areas captured 82.9% of the Final Contract Data File ▪ Product market • 204 NAICS codes in Final Contract Data File 7 Disparity Study Findings: Utilization ▪ City’s utilization of M/WBEs ▪ MBEs: 9.6% • Blacks: 1.7% • Hispanics: 5.8% • Asians: 2.0% • Native Americans: 0.1% ▪ White women: 6.8% ▪ M/WBEs: 16.4% ▪ Non-M/WBEs: 83.6% 8 Disparity Study Findings: Availability ▪ Weighted availability in City’s marketplace ▪ MBEs: 8.0% • Blacks: 1.5% • Hispanics: 4.7% • Asians: 1.4% • Native Americans: 0.4% ▪ White women: 6.5 % ▪ M/WBEs: 14.5% ▪ Non-M/WBEs: 85.5% 9 Disparity Study Findings: Disparity Ratios ▪ Disparity ratio = M/WBE utilization ÷ availability • MBEs: 119.5% ▪ Blacks: 118.0% ▪ Hispanics: 122.1% ▪ Asians: 142.5% ▪ Native Americans: 20.0%‡ • White Women: 104.4% • M/WBEs: 112.7% • Non-M/WBEs: 97.9% ‡ Indicates substantive significance 10 Disparity Study Findings: NAICS Code Importance- M/WBEs and Non-M/WBEs ▪ Contract dollars received by M/WBEs are much more concentrated in a small subset of codes than non-M/WBEs ▪ If there was parity: • The share of contract dollars that any NAICS code contributes to a M/WBE group would be approximately the same as the share of contract dollars contributed to non-M/WBEs. • The subsequent ratio of the two shares would be approximately 1:1 ▪ Ratios ranged from 2.0:1 for Hispanic firms to 25.3:1 for Black firms 11 Disparity Study Findings: Economy-Wide Analyses ▪ 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 comparable White males ▪ Annual Business Survey • Very large disparities in firm sales receipts between comparable M/WBEs and non-M/WBEs ▪ Credit discrimination barriers remain high ▪ Human capital constraints continue to impede success 12 Disparity Study Findings: Anecdotal Findings ▪ Interviewed 199 business owners and stakeholders and received 198 survey responses • M/WBEs suffer from biases, stereotypes and negative assumptions about their qualifications and competency • Being MBE or WBE certified can carry a stigma • Many M/WBEs experienced barriers to industry networks • Several women reported continuing gender bias and hostile environments; opportunities were sometime explicitly denied on the basis of gender 13 Disparity Study Findings: Anecdotal Findings • Systemic racial barriers remain for many MBEs • M/WBEs were not often solicited for contracts without goals • Many MBEs and WBEs reported difficulties obtaining financing and bonding • Some MBEs and WBEs said they were charged higher pricing because of race or gender 14 Recommendations ▪ Augment race- and gender-neutral measures • Develop an annual procurement forecast • Centralize the Program data collection and reporting vendors resources • Increase interdepartmental communication • Develop virtual training tools for City staff and • Increase awareness of existing City programs and • Conduct targeted outreach • Enhance opportunities on professional services projects DRAFT- PRIVILEGED AND CONFIDENTIAL Recommendations ▪ Continue to implement narrowly tailored race- and gender-conscious measures • Use the study data to set the overall annual aspirational MBE and WBE goals • Use the study data to set MBE and WBE • Update Program administration policies and contract goals procedures • Implement a comprehensive supportive services program • Adopt a mentor-protégé program DRAFT- PRIVILEGED AND CONFIDENTIAL Recommendations ▪ Develop additional performance measures for Program success ▪ Continue to conduct regular Program reviews DRAFT- PRIVILEGED AND CONFIDENTIAL 16 Carriage Hills • San Antonio, Texas 78257 773.255.6844 • colette.holt@mwbelaw.com www.mwbelaw.com • Twitter: @mwbelaw