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Disparity Studies can improve Business Activity

Beyond the Rhetoric

By Harry C. Alford

For the last few years, most states and major populations have had Disparity Studies done to ensure that no apparent discrimination is happening in the procurement activities. They aren’t doing it to be fair. It is the law! A few challenges against minority business programs cases were presented to the US Supreme Court. The first one, Croson Decision from Richmond, VA, appeared to go against our programs. This wasn’t a loss. The decision gave local governments advice on how to construct a proper plan. It took a while for all of us to understand this advice. The term “Strict Scrutiny” was the tool that is required when constructing a viable plan. For instance, if a city sets contracting goals of 30 percent Blacks and 10 percent Hispanics, the city should be able to show that it has similar percentages in business ownership. A government cannot demand those percentages if there are only 15 percent and 2 percent in business ownership.

The next court challenge to a minority business program was the Adarand Decision out of the State of Colorado’s Department of Transportation. The Supreme Court was brilliant in explaining their decision. Again, Strict Scrutiny was the major issue. Under Title VI of the Civil Rights Act of 1964, if an entity receives federal money or is regulated or if it benefits from the money or regulations then it must not discriminate in its business activities. In order to comply a disparate impact analysis must be performed and updated every five years. It took a while but with the State of Colorado leading the way via a court settlement from the Adarand case most states began their Disparity Study. Today, the US Department of Transportation demands all states, counties and cities utilizing USDOT funding and/or regulation must do a Disparity Study every five years. Working under the state’s umbrella this includes all cities, counties, airports, rail and bus systems, universities, Public Housing complexes and public colleges.

There can be one catch to this. The federal agency responsible for enforcing Title VI is the US Attorney General. If the Attorney General turns his/her head away from the subject at hand, there is nothing we can do but go to the President or elect a new and better administration. Right now the current administration is not going to enforce Title VI when it comes to complaints against strongly democratic states such as California, Minnesota, etc. Recalcitrant states, cities, airports, etc. should become political issues. Believe me, we have tried.

There are good examples coming from various states. The State of Indiana includes their gaming casinos in their Disparity Study. The State of Illinois has taken it another step forward. Not only do they include their casinos, but every procurement entity which the State overseas but they all must have at least a 20 percent goal. If some industries seem to be lacking in their goal performance then it is claimed as a “Sheltered Market.” Which means that set-asides can be enacted and remain until it reaches 20 percent. As an example: “The University of Illinois has issued the state’s first “sheltered market” request-for-proposal (RFP), for temporary information technology systems and services, in an effort to attract greater contract participation by businesses owned by minorities and females.” This is serious! Governor Bruce Rauner is fulfilling his commitment. Do any of you have a governor who has shown such commitment? If you do then we want to know about it.

Now, please be aware that some powers that be will assign a “fox” to oversee the “hen house.” Who will be the consulting firm that manages your Disparity Study? Since compliance with the Adarand Decision such consulting firms have become a growing industry. There are some who will downsize the disparities. Some will read into low numbers of contracts as low availability and will justify low goal setting. The problem could really be that there is oppressive discrimination. It is important that you do a background check on each competing consultant. Be sure you don’t hire a “monster.” Study one of their completed Disparity Studies (don’t try a rookie). They are typically 700 – 900 pages for a statewide study. Google for any complaints or contact an applicable elected official.

A bigger problem will be to insert white women businesses into a sheltered class. This will open up a can of worms. What reason should white women businesses be protected? From my experience the vast majority of such businesses are directly tied to a relative doing the same type of work. Many even have the same address and employees as their female counterpart. In most government entities that choose to include white women owned businesses into their protected business programs their contract numbers will dominate those of Blacks, Hispanic, Asians, etc. Those who manage or oversee these programs must be vigilant.

If done properly, business growth and jobs will improve and that enhances our quality of life and future for our children.

Mr. Alford is the co-founder, President/CEO of the National Black Chamber of Commerce. Website: Email: [email protected]


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