Shelby County government hasn’t been allowed to consider race when awarding contracts since late last year when it settled a lawsuit over its minority-and-women-owned business enterprises contracting program.
Last week, the county and the Atlanta-based consulting firm Griffin & Strong P.C. took their first public step toward reinstating such a program — a webinar with interested local business leaders.
The consulting firm walked attendees through how it plans to determine whether there’s a disparity between the county’s spending with MWBEs and the availability of such firms. A Supreme Court decision mandates that governments conduct a disparity study before enacting a program that gives explicit preference to minority-owned firms. The last such study — published by Shelby County in 2016 — has to be replaced after a lawsuit by the Mechanical Contractors Association of Memphis ended in a settlement.
“The problem with these disparity studies is [both times] the county has done one, some majority-owned construction company has sued us because they’ve resisted the goals related to construction,” said Shep Wilbun, administrator of the county’s equal opportunity compliance office, after the meeting.
Since the last study found the county was awarding 88% of its construction, commodities, and professional services contracts to firms owned by white men — and only 5.8% to Black-owned firms — Wilbun lamented the county’s current lack of an MWBE program.
Black wealth — and the persistent and sometimes violent barriers to destroy it — made major headlines earlier this month as the nation marked the 100th anniversary of the Tulsa Race Massacre, in which angry white mobs killed dozens of Black residents and destroyed businesses in what had been a thriving Black business district.
While President Joe Biden promised in his speech commemorating the anniversary to increase the federal government’s spending with minority-owned firms, Shelby County is left waiting on a study before it can attempt to do the same.
Why was the last study scrapped?
The 2016 study, conducted by Mason Tillman Associates, showed while there were a large number of available MWBEs the county could contract with, it was underutilizing MWBEs and, therefore, overusing firms owned by white men.
Based on their availability to fulfill commodities, construction and professional services contracts, Black firms would have been expected to receive $53.5 million of county spending from 2012-2014. Instead, they received $11.1 million in these three areas. Asian American-owned firms, Hispanic American-owned firms and Caucasian women-owned firms also didn’t receive the expected amount in one or two categories.
Firms owned by white men would have been expected to receive $107 million — based solely on availability — but instead received $168 million, according to the study.
The MWBE program based on the 2016 study more than doubled the county’s spending with MWBEs between 2017 and 2020, according to Wilbun.
MCAM sued Shelby County in January 2019, after the black-owned subcontractor Gipson Mechanical Contractors was awarded a county contract that one of its white woman-owned members, White Plumbing, allegedly provided a lower and better bid for.
During the suit, Mason Tillman refused to provide most of the study’s underlying data to MCAM, even after a judge told the firm to. In late 2020, Shelby County decided to settle for $331,950 plus court costs.
“We were ready to defend the lawsuit, but we didn’t have the data,” said Shelby County Commissioner Van Turner, who was also a named defendant in the lawsuit. “We had to settle … [because Mason Tillman] really put us in a bad position.” An expert witness for MCAM, George La Noue, also a professor emeritus at the University of Maryland Baltimore County, backed up Turner’s explanation of why the settlement occurred.
Shelby County paid Mason Tillman $300,000 for the study, according to the Memphis Business Journal. Turner said the county isn’t pursuing legal action against Mason Tillman, though he thinks it would be justified in doing so.
Mason Tillman did not return a request for comment for this article.
What to expect from the new disparity study
Shelby County hired Griffin & Strong to conduct a new study over the next year, so it can resume using an MWBE program in a way that can withstand legal challenges, Turner said.
Since Griffin & Strong conducted the City of Memphis’ most recent disparity study, which has held up in court thus far, Turner is confident it will deliver what the county needs.
Along with quantitatively determining the disparity between the availability of local MWBEs and the county’s spending with them, Griffin & Strong senior director Michele Clark Jenkins told webinar attendees that the firm will interview local business owners, conduct focus groups, and collect other forms of anecdotal evidence.
With all this information in hand, Griffin & Strong will make recommendations to the county, which could include the reinstatement of an MWBE spending program or other policies meant to increase MWBE inclusion, Jenkins said.
When the county announced its settlement with MCAM in November, Turner told the Commercial Appeal the government would enact a disadvantaged business enterprise program — a legal structure to purposely do business with minority-owned firms when distributing federal funds — until it could reinstate the MWBE program. However, he said Friday the county no longer plans to do this because it doesn’t distribute enough federal funds to make such a program worthwhile.
Without an MWBE or DBE program, Wilbun told webinar participants the county is still attempting to help small, minority-owned firms through its locally-owned small business program. The race-neutral program was expanded by the county commission in March.
Now, the county will only consider LOSBs for construction or services contracts under $50,000 if there are at least three certified LOSBs that are able to provide the work. For contracts over $50,000, the county will have the stated goal that 20% of the funds be spent with LOSBs.
During the question and answer portion of Thursday’s webinar, MWBE leaders spoke of past struggles with landing county contracts and sought information on how they can be more involved.
“How do we actually become a voice that’s heard when the people that have been providing those services for years and years and years always have the ear of the folks that are providing the funding?” asked participant Jane Abraham, a white woman.
MCAM executive director David Sink, who is white, followed these questions and frustrations by asking how Griffin & Strong will select firms for the interviews and focus groups. In his group’s lawsuit, it argued the 2016 study overstated the availability of MWBEs and wasn’t able to provide evidence of discrimination against minority firms.
Jenkins told Sink that, for the interviews, five local business owners will be chosen at random to represent six groups: African Americans, Hispanic Americans, Native Americans, Asian Americans, women, and white men. For the focus group, owners of MWBEs will be selected randomly. She also invited any interested individual to share his or her experience contracting with the county with her firm.
Ransomed Group owner Jennifer Ransom, a Black woman, said landing county contracts has been “very difficult” despite the fact her firm has worked with the City of Memphis. She also asked why the study was necessary at all, given the obvious disparities that exist between white-owned firms and minority-owned firms.
“[The study] seems like one extra thing we have to do to be treated fairly,” she said.
Jacob Steimer is a corps member with Report for America, a national service program that places journalists in local newsrooms. Email him at Jacob.Steimer@mlk50.com
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