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City of Austin Small and Minority Business Resources Update MBE/WBE Procurement Program MBE/WBE and Small Business Enterprise Procurement Advisory Committee Edward Campos, Director, SMBR Objectives MBE/WBE Procurement Program Ordinance and Program Administrative Rules Personal Net Worth Aspirational Goals City of Austin | SMBR 2 City of Austin | SMBR 3 MBE/WBE Program Administrative Rules • Council approved Ordinance No. 20230720-113, which guides SMBR in administering the MBE/WBE Procurement Program – July 2023 • Revisions to the MBE/WBE Administrative Program Rules were posted on the City Clerk's website for stakeholder and public review and comment – October 2023 • Revisions made to the rules are reflective of both the 2022 Disparity Study and the IPWG’s recommendations, and align with adopted program ordinances, current program administration, and departmental processes • Public comment period and no comments received – October 11 through November 13, 2023 • Stakeholders were notified about the rule revision process – October 10, October 24, and November 3 • Final Administrtative Rules posted on City Clerk's website and SMBR's website – December 2023 City of Austin | SMBR 4 City of Austin | SMBR 5 How Did We Get Here? Inclusive Procurement Working Group (IPWG) – tasked by Council with reviewing the continuation of a PNW threshold. Committee Recommendations • Keep PNW but modify/revisit the structure. • • The City should review its use of the South Region Consumer Price Index (CPI) in establishing its PNW to Is the PNW low for Austin area. determine if this index accurately reflects the unique Austin economic marketplace. SMBR engaged TXP, Inc., to review the current PNW process and possibly update and refine the methodology used to calculate the personal wealth definition of economically disadvantaged, which in turn determines eligibility and access to City/SMBR programs. City of Austin | SMBR 6 PNW History • MBE/WBE Ordinances establishes the Economic Disadvantage requirement or PNW limit. • PNW Ordinance was adopted in 2006 • Began as a certification requirement in 2007 • The amount was indexed annually based on the South Region Consumer Price Index (CPI) published by the US Department of Labor, Bureau of Labor Standards • The PNW limit has increased each year • Current PNW $2.2M Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 PNW Limit % Change $942,000 $955,000 $1,326,000 $1,341,000 $1,391,000 $1,413,000 $1,434,000 $1,454,000 $1,457,000 $1,480,000 $1,511,000 $1,540,000 $1,565,000 $1,583,000 $1,697,000 $1,828,000 1.38% 38.85% 1.13% 3.73% 1.58% 1.49% 1.39% 0.21% 1.58% 2.09% 1.92% 1.62% 1.15% 7.20% 7.72% City of Austin | SMBR 7 Question 1 and TXP Analysis/Response Does the current PNW threshold ($1.697M at the time) meet the “economic market conditions” for Austin? Is it too high or too low? TXP Analysis/Response: the current PNW limit is too low. City of Austin | SMBR 8 Question 2 Does the South Region Consumer Price Index (CPI), used in establishing the PNW, accurately reflect the economic marketplace and conditions of Austin? If not, what Index should the City look to or use to assist us in establishing an annual PNW threshold? TXP Analysis/Response: The Consumer Price Index is a measure of inflation, which reflects the rising cost of goods and services. The continued use of this index is practical and should be continued to be used. TXP’s suggestion is to consider incorporating measures of income and assets along with prices in the calculations, specifically 12-month changes in wages, median home price, and a broad measure of the stock market. City of Austin | SMBR 9 Recommended Approach to Establish PNW Limit In addition to the current use of the consumer price index, TXP recommends SMBR use: • Employment Survey from the Bureau of Labor Statistics/Texas Workforce Commission • S&P 500 • Texas A&M Real Estate Research (A&M) • Austin Board of Realtors Members of the IPWG were briefed by SMBR and TXP on the new proposed approach Staff utilized the new indexes for 2024 and have contracted with TXP to establish the annual PNW moving forward. City of Austin | SMBR 10 City of Austin | SMBR 11 MBE/WBE Aspirational Goals • Annual aspirational goals (goals) are established for the annual aggregate participation of MBE and WBE certified firms. • Goals are based on tentative procurement opportunities identified by the Financial Services Department in their annual procurement forecast. • Goals are based on the availability of MBEs and WBEs in the City’s marketplace as required by federal and state law. • Goal methodology follows the federal annual Disadvantage Business Development goal calculation methodology and industry best practices. • Due to constraints with data and actual procurement release dates, SMBR staff will be establishing quarterly aspirational goals City of Austin | SMBR 12 Aspirational Goals FY 2024 – Q1 Aspirational Goal • • 7.28% - MBE Goal 2.13% - WBE Goal FY 2024 – Q2 Aspirational Goal • 7.39% - MBE • 2.24% - WBE Next Steps: Refinement: Our intent is to further refine this initial attempt at aspirational goal development and work with our partners at FSD to further refine their annual procurement forecast. Staff will provide annual updates on initial goal attainment at time of Council award, as well as updates on progress on actual attainment based on payments. City of Austin | SMBR 13 Thank You City of Austin | SMBR 14