Loading...
486692 Metropolitan St. Louis Sewer District Submitted by: Mason Tillman Associates, Ltd. December 2012 Draft Report Disparity Study Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Employment Study Report PREFACEPREFACEPREFACEPREFACE I.I.I.I. INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION The Metropolitan St. Louis Sewer District (MSD) commissioned in 2011 a disparity study because it is undertaking one of the largest construction projects in the St. Louis Region. MSD’s Capital Improvement and Replacement Plan (CIRP) is a $4.7 billion program to update and rehabilitate the wastewater collection and treatment system. This multi-decade program will reduce community health and safety risks by removing nearly 400 sewer overflows, which release untreated wastewater into the waterways. Interceptors, pump stations and force mains for the seven wastewater treatment plants in MSD’s 100-year-old sewer system are also part of the rehabilitation plan. A project of this scale and magnitude will create long-term economic and employment benefits within the region. The purpose of the Disparity Study was to determine whether or not a statistically significant disparity existed in MSD’s award of contracts to ready, willing, and able minority, women-owned business enterprises (M/WBEs). Under a fair and equitable system of awarding contracts, the proportion of contract dollars awarded to M/WBEs should be relatively close to the corresponding proportion of available M/WBEs1 in the relevant market area. If the available M/WBE prime contractors are underutilized, a statistical test is conducted to calculate the probability of observing the empirical disparity ratio or any event which is less probable. Croson states that an inference of discrimination can be made prima facie if the disparity is statistically significant. This analysis was applied to M/WBEs by ethnicity and gender within the five industries. Mason Tillman Associates, Ltd., a public policy consulting firm based in Oakland, California, was selected to perform the Disparity Study. Mason Tillman subcontracted with three local businesses, ADE Consulting Services, Davis Associates, CPAs, and Project Controls Group, Inc., to perform anecdotal interviews and assist with contract data collection. Vicki Taylor Edwards, Director of Human Resources managed the Study. Ramona Dickens and Todd Aschbacher were part of the management team. Ms. Edwards and the team facilitated Mason Tillman’s access to the Metropolitan St. Louis Sewer District (MSD) data needed to complete the Study. The extraordinary cooperation of the MSD staff and the business community should also be acknowledged. 1 Availability is defined as the number of ready, willing and able firms. The methodology for determining willing and able firms is detailed in Chapter 4. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study i CHAPTER 1: LEGAL ANALYSIS ............................................................................ 1-1 I. INTRODUCTION.............................................................................................. 1-1 II. STANDARD OFREVIEW ............................................................................... 1-2 A. RACE-CONSCIOUS PROGRAMS ...................................................................... 1-2 B. WOMEN BUSINESS ENTERPRISE PROGRAMS .................................................. 1-2 III. BURDEN OF PROOF ....................................................................................... 1-5 A. STRONG BASIS IN EVIDENCE ......................................................................... 1-5 B. ULTIMATE BURDEN OF PROOF ...................................................................... 1-6 IV. CROSON EVIDENTIARY FRAMEWORK ................................................... 1-7 A. ACTIVE OR PASSIVE PARTICIPATION ............................................................. 1-8 B. SYSTEMIC DISCRIMINATORY EXCLUSION .................................................... 1-11 C. ANECDOTAL EVIDENCE ............................................................................... 1-19 D. REMEDIAL STATUTORY SCHEME ................................................................. 1-24 V. CONSIDERATION OFRACE-NEUTRAL OPTIONS ............................... 1-27 VI. ENVIRONMENTAL PROTECTION AGENCY FAIRSHARE OBJECTIVE ........................................................................... 1-28 VII. CONCLUSION ................................................................................................ 1-29 VIII. LIST OFAUTHORITIES ............................................................................... 1-30 A. CASES ......................................................................................................... 1-30 B. STATUTES ....................................................................................................1-32 CHAPTER 2: CONTRACTING AND PROCUREMENT POLICIES ................... 2-1 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study ii I. INTRODUCTION............................................................................................... 2-1 II. GOVERNING LAWS AND REGULATIONS ................................................ 2-1 A. THE METROPOLITAN ST. LOUIS SEWER DISTRICT ADMINISTRATIVE ORDINANCES AND RESOLUTIONS ..................................... 2-2 B. FEDERAL LAWS AND REGULATIONS .............................................................. 2-3 III. DEFINITIONS .................................................................................................... 2-4 IV. PROCUREMENT PROCESS OVERVIEW .................................................... 2-4 A. INFORMAL PROCUREMENTS .......................................................................... 2-7 B. FORMAL PROCUREMENTS .............................................................................. 2-7 C. OTHER PROCUREMENTS ................................................................................ 2-9 V. M/WBE UTILIZATION PROGRAM ............................................................ 2-10 CHAPTER 3: PRIME CONTRACTOR UTILIZATION ANALYSIS ................... 3-1 I. INTRODUCTION............................................................................................... 3-1 II. PRIME CONTRACT DATA SOURCES ......................................................... 3-2 III. PRIME CONTRACTOR UTILIZATION THRESHOLDS ........................... 3-3 IV. PRIME CONTRACTOR UTILIZATION ....................................................... 3-4 A. ALL PRIME CONTRACTORS ........................................................................... 3-4 B. HIGHLY USED PRIME CONTRACTORS ............................................................ 3-5 C. ALL PRIME CONTRACTS BY INDUSTRY ........................................................ 3-13 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study iii D. ALL PRIME CONTRACTS UNDER $500,000 BY INDUSTRY ............................ 3-23 E. INFORMAL CONTRACTS BY INDUSTRY ......................................................... 3-33 V. SUMMARY ........................................................................................................ 3-36 CHAPTER 4: SUBCONTRACTOR UTILIZATION ANALYSIS .......................... 4-1 I. INTRODUCTION.................................................................................................. 4-1 II. SUBCONTRACTOR UTILIZATION DATA SOURCES ................................ 4-1 III. SUBCONTRACTOR UTILIZATION ................................................................. 4-2 A. ALL SUBCONTRACTS ..................................................................................... 4-2 B. ALL SUBCONTRACTS BY INDUSTRY ............................................................... 4-3 CHAPTER 5: MARKET AREA ANALYSIS ............................................................ 5-1 I. MARKET AREA DEFINITION .......................................................................... 5-1 A. LEGAL CRITERIA FOR GEOGRAPHIC MARKET AREA ..................................... 5-1 B. APPLICATION OF THE CROSON STANDARD .................................................... 5-2 II. MARKET AREA ANALYSIS .............................................................................. 5-5 III. METROPOLITAN ST. LOUIS SEWER DISTRICT MARKET AREA ....... 5-12 CHAPTER 6: PRIME CONTRACTOR AND SUBCONTRACTOR AVAILABILITY ANALYSIS ............................................................. 6-1 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study iv I. INTRODUCTION.................................................................................................. 6-1 II. PRIME CONTRACTOR AVAILABILITY DATA SOURCES .................... 6-2 A. IDENTIFICATION OF WILLING BUSINESSES WITHIN THE MARKET AREA .......................................................................... 6-2 B. PRIME CONTRACTOR SOURCES ..................................................................... 6-3 C. DETERMINATION OF WILLINGNESS ............................................................... 6-5 D. DISTRIBUTION OF AVAILABLE PRIME CONTRACTORS BY SOURCE, ETHNICITY, AND GENDER ......................................................... 6-6 III. CAPACITY ....................................................................................................... 6-12 A. SIZE OF CONTRACTS ANALYZED ................................................................. 6-12 B. LARGEST M/WBECONTRACT AWARDED BY MSD, BY INDUSTRY ............. 6-21 C. CERTIFICATION STANDARDS ....................................................................... 6-22 IV. PRIME CONTRACTOR AVAILABILITY ANALYSIS ............................ 6-22 A. PRIME CONTRACTOR AVAILABILITY – ALL INDUSTRIES ............................. 6-23 B. BUILDING CONSTRUCTION PRIME CONTRACTOR AVAILABILITY ................. 6-25 C. NON-BUILDING CONSTRUCTION PRIME CONTRACTOR AVAILABILITY ........ 6-27 D. ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACTOR AVAILABILITY ...................................................................... 6-29 E. NON-ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACTOR AVAILABILITY............................................................ 6-31 F. SUPPLIES AND CONTRACTUAL SERVICES PRIME CONTRACTOR AVAILABILITY............................................................ 6-33 V. SUBCONTRACTOR AVAILABILITY ANALYSIS .................................... 6-35 A. SOURCES OF POTENTIALLY WILLING AND ABLE SUBCONTRACTORS AND AVAILABILITY ...................................................... 6-35 B. DETERMINATION OF SUBCONTRACTOR WILLINGNESS AND CAPACITY ..................................................................... 6-35 C. SIZE OF SUBCONTRACTS ANALYZED ........................................................... 6-35 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study v D. BUILDING CONSTRUCTION SUBCONTRACTOR AVAILABILITY ..................... 6-42 E. NON-BUILDING CONSTRUCTION SUBCONTRACTOR AVAILABILITY ............. 6-44 F. ENGINEERING PROFESSIONAL SERVICES SUBCONTRACTOR AVAILABILITY ................................................................ 6-46 G. NON-ENGINEERING PROFESSIONAL SERVICES SUBCONTRACTOR AVAILABILITY ................................................................ 6-48 CHAPTER 7: PRIME CONTRACTOR DISPARITY ANALYSIS ........................ 7-1 I. STATISTICAL ANALYSIS OF DISPARITY ................................................ 7-1 A. INTRODUCTION ............................................................................................. 7-1 B. DISPARITY ANALYSIS .................................................................................... 7-3 C. DISPARITY ANALYSIS SUMMARY ................................................................ 7-23 CHAPTER 8: SUBCONTRACTOR DISPARITY ANALYSIS ............................... 8-1 I. INTRODUCTION.............................................................................................. 8-1 II. DISPARITY ANALYSIS .................................................................................. 8-2 III. DISPARITY ANALYSIS: ALL SUBCONTRACTS, BY INDUSTRY ........ 8-2 A. BUILDING CONSTRUCTION SUBCONTRACTS .................................................. 8-2 IV. SUBCONTRACTOR DISPARITY SUMMARY.......................................... 8-15 CHAPTER 9: REGRESSION ANALYSIS ................................................................ 9-1 I. INTRODUCTION.................................................................................................. 9-1 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study vi II. LEGAL ANALYSIS .......................................................................................... 9-2 A. PASSIVE DISCRIMINATION ............................................................................. 9-2 B. NARROW TAILORING ..................................................................................... 9-3 C. CONCLUSION ................................................................................................. 9-5 III. REGRESSION ANALYSIS METHODOLOGY ............................................ 9-5 IV. DATASETS ANALYZED ................................................................................. 9-5 V. REGRESSION MODELS DEFINED .............................................................. 9-6 A. BUSINESS OWNERSHIP ANALYSIS ................................................................. 9-6 B. EARNINGS DISPARITY ANALYSIS .................................................................. 9-7 C. BUSINESS LOAN APPROVAL ANALYSIS ......................................................... 9-9 VI. FINDINGS ........................................................................................................ 9-11 A. BUSINESS OWNERSHIP ANALYSIS ............................................................... 9-11 B. BUSINESS EARNINGS ANALYSIS .................................................................. 9-17 C. BUSINESS LOAN APPROVAL ANALYSIS ........................................................ 9-23 VII. CONCLUSION ................................................................................................ 9-30 A. BUSINESS OWNERSHIP ANALYSIS ............................................................... 9-30 B. BUSINESS EARNINGS ANALYSIS .................................................................. 9-31 C. BUSINESS LOAN APPROVAL ANALYSIS ....................................................... 9-32 D. REGRESSION FINDINGS ................................................................................ 9-33 CHAPTER 10: ANECDOTAL ANALYSIS ............................................................. 10-1 I. INTRODUCTION............................................................................................. 10-1 A. ANECDOTAL EVIDENCE OF DISCRIMINATION - ACTIVE AND PASSIVE PARTICIPATION ............................................................................................ 10-2 B. ANECDOTAL METHODOLOGY ...................................................................... 10-3 II. RACIAL BARRIERS, HARRASSMENT, AND SUBJECTED Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study vii TO AHIGHER STANDARD OFREVIEW .................................................. 10-4 III. DIFFICULTY WITH THE CONTRACTINGCOMMUNITY ................... 10-6 IV. DIFFICULTY WITH THE GOOD OLD BOYNETWORK ....................... 10-9 V. DIFFICULTIES INTHE CONTRACTING PROCESS ............................ 10-11 VI. DIFFICULTY MEETING PRE-QUALIFICATION REQUIRMENTS .. 10-14 VII. BID SHOPPINGAND INADEQUATE LEAD TIME TO RESPOND TO SOLICITATIONS ........................................................ 10-15 VIII. DIFFICUTLY NEGOTIATINGSUPPLIER AGREEMENTS ................ 10-17 IX. CERTIFICATION PROCESS CHALLENGES ......................................... 10-18 X. BARRIERS TO FINANCIAL RESOURCES .............................................. 10-21 XI. BARRIERS TO BONDING .......................................................................... 10-22 XII. LATE PAYMENTS FROMPRIME CONTRACTORS ............................ 10-23 XIII. COMMENTS ABOUT THE MWBE UTILIZATION PROGRAM ......... 10-25 XIV. EXEMPLARY BUSINESSPRACTICES ................................................... 10-32 XV. RECOMMENDATIONS TO INCREASEMWBE PARTICIPATION ... 10-34 A. PROGRAM RECOMMENDATIONS FROM BUSINESS OWNERS: ...................... 10-34 B. TRADE AND BUSINESS ASSOCIATION REPRESENTATIVES MWBE PROGRAM COMMENTS .............................................................................. 10-38 C. TRADE AND BUSINESS ASSOCIATION ........................................................ 10-39 XVI. SUMMARY .................................................................................................. 10-39 CHAPTER 11: RACE AND GENDER-SPECIFIC RECOMMENDATIONS ... 11-40 I. INTRODUCTION.......................................................................................... 11-40 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study viii II. STATISTICAL FINDINGS OVERVIEW ................................................... 11-41 A. PRIME CONTRACTS ................................................................................... 11-41 B. SUBCONTRACTS ........................................................................................ 11-42 C. PRIME CONTRACT DISPARITY FINDINGS ................................................... 11-43 D. SUBCONTRACT DISPARITY FINDINGS ........................................................ 11-46 III. RACE AND GENDER-CONSCIOUS REMEDIES .................................... 11-47 A. PRIME CONTRACT REMEDIES .................................................................... 11-48 B. SUBCONTRACT REMEDIES ......................................................................... 11-48 CHAPTER 12: RACE AND GENDER-NEUTRAL RECOMMENDATIONS .... 12-1 I. INTRODUCTION............................................................................................ 12-1 II. RACE AND GENDER-NEUTRAL RECOMMENDATIONS .................... 12-1 A. PRE-AWARD RECOMMENDATIONS .............................................................. 12-1 B. POST-AWARD RECOMMENDATIONS ............................................................ 12-8 III. CONTRACTINGAND ACQUISITION PROCESS RE COMMENDATIONS .................................................................................... 12-11 A. PROCUREMENT PROCESS ENHANCEMENTS ............................................... 12-11 B. MWBEPROGRAM ENHANCEMENTS ......................................................... 12-15 C. WEBSITE ENHANCEMENTS ........................................................................ 12-18 D. DATA MANAGEMENT ENHANCEMENTS ..................................................... 12-23 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study ix TABLE 2.01: GOVERNING LAWS AND REGULATIONS.................................................... 2-2 TABLE 2.02: DISTRICT PROCUREMENT PROCESS .......................................................... 2-5 TABLE 2.03: M/WBEUTILIZATION GOALS ................................................................ 2-10 TABLE 3.01: BUSINESS ETHNIC AND GENDER GROUPS ................................................. 3-1 TABLE 3.02: INFORMAL CONTRACT THRESHOLDS ........................................................ 3-4 TABLE 3.03: TOTAL PRIME CONTRACTS AND DOLLARS EXPENDED: ALL INDUSTRIES, JULY 1, 2007 THROUGH JANUARY 31, 2012 .................. 3-4 TABLE 3.04: TOTAL PRIME CONTRACTS ....................................................................... 3-5 TABLE 3.05: DISTRIBUTION OF ALL PRIME CONTRACTS BY NUMBER OF VENDORS ...... 3-5 TABLE 3.06: TOP 23 HIGHLY USED PRIME CONTRACTORS BY ETHNICITY AND GENDER ..................................................................... 3-6 TABLE 3.07: BUILDING CONSTRUCTION PRIME CONTRACTS ........................................ 3-6 TABLE 3.08: DISTRIBUTION OF BUILDING CONSTRUCTION PRIME CONTRACTS BY NUMBER OF VENDORS ......................................................................... 3-7 TABLE 3.09: TOP TWO HIGHLY USED BUILDING CONSTRUCTION PRIME CONTRACTORS ............................................................................... 3-7 TABLE 3.10: NON-BUILDING CONSTRUCTION PRIME CONTRACTS ................................ 3-7 TABLE 3.11: DISTRIBUTION OF NON-BUILDING CONSTRUCTION PRIME CONTRACTS BY NUMBER OF VENDORS ......................................... 3-8 TABLE 3.12: TOP SEVEN HIGHLY USED NON-BUILDING CONSTRUCTION PRIME CONTRACTORS ............................................................................... 3-8 TABLE 3.13: ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACTS ................... 3-9 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study x TABLE 3.14: DISTRIBUTION OF ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACTS ................................................................................... 3-9 TABLE 3.15: TOP TEN HIGHLY USED ENGINEERING PROFESSIONAL SERVICES........... 3-10 TABLE 3.16: NON-ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACTS ......... 3-10 TABLE 3.17: DISTRIBUTION OF NON-ENGINEERING PROFESSIONAL SERVICES ........... 3-11 TABLE 3.18: TOP FIVE HIGHLY USED NON-ENGINEERING PROFESSIONAL SERVICES . 3-11 TABLE 3.19: SUPPLIES AND CONTRACTUAL SERVICES PRIME CONTRACTS ................. 3-11 TABLE 3.20: DISTRIBUTION OF SUPPLIES AND CONTRACTUAL SERVICES ................... 3-12 TABLE 3.21: TOP SIXTY HIGHLY USED SUPPLIES AND CONTRACTUAL SERVICES ....... 3-12 TABLE 3.22: BUILDING CONSTRUCTION PRIME CONTRACTOR UTILIZATION: ALL CONTRACTS ..................................................................................... 3-14 TABLE 3.23: NON-BUILDING CONSTRUCTION PRIME CONTRACTOR UTILIZATION: ALL CONTRACTS ..................................................................................... 3-16 TABLE 3.24: ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACTOR UTILIZATION: .......................................................................................... 3-18 TABLE 3.25: NON-ENGINEERING PRIME CONTRACTOR UTILIZATION: ........................ 3-20 TABLE 3.26: SUPPLIES AND CONTRACTUAL SERVICES PRIME CONTRACTOR UTILIZATION: .......................................................................................... 3-22 TABLE 3.27: BUILDING CONSTRUCTION PRIME CONTRACTOR UTILIZATION: CONTRACTS UNDER $500,000 .................................................................. 3-24 TABLE 3.28: NON-BUILDING CONSTRUCTION PRIME CONTRACTOR UTILIZATION: CONTRACTS UNDER $500,000 ................................................................. 3-26 TABLE 3.29: ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACTOR UTILIZATION: CONTRACTS UNDER $500,000 ................................................................. 3-28 TABLE 3.30: NON-ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACTOR UTILIZATION: CONTRACTS UNDER $500,000 ......................................... 3-30 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study xi TABLE 3.31: SUPPLIES AND CONTRACTUAL SERVICES PRIME CONTRACTOR UTILIZATION: CONTRACTS UNDER $500,000 ......................................... 3-32 TABLE 3.32: SUPPLIES AND CONTRACTUAL SERVICES: CONTRACTS $25,000 AND UNDER .......................................................... 3-35 TABLE 4.01: TOTAL SUBCONTRACTS AWARDED AND DOLLARS EXPENDED, ALL INDUSTRIES, MAY 1, 2010 TO JANUARY 31, 2012 ............................ 4-2 TABLE 4.02: BUILDING CONSTRUCTION SUBCONTRACTOR UTILIZATION, MAY 1, 2010 TO JANUARY 31, 2012 ......................................................... 4-4 TABLE 4.03: NON-BUILDING CONSTRUCTION SUBCONTRACTOR UTILIZATION, MAY 1, 2010 TO JANUARY 31, 2012 ......................................................... 4-6 TABLE 4.04: ENGINEERING PROFESSIONAL SERVICES SUBCONTRACTOR UTILIZATION, MAY 1, 2010 TO JANUARY 31, 2012 .................................. 4-8 TABLE 4.05: NON-ENGINEERING PROFESSIONAL SERVICES SUBCONTRACTOR UTILIZATION, MAY 1, 2010 TO JANUARY 31, 2012 ................................ 4-10 TABLE 5.01: DISTRIBUTION OF ALL CONTRACTS AWARDED JULY 1, 2007 THROUGH JANUARY 31, 2012 .............................................. 5-5 TABLE 5.02: DISTRIBUTION OF NON-BUILDING SEWER CONSTRUCTION CONTRACTS AWARDED JULY 1, 2007 THROUGH JANUARY 31, 2012 ........ 5-7 TABLE 5.03: DISTRIBUTION OF BUILDING CONSTRUCTION CONTRACTS AWARDED JULY 1, 2007 THROUGH JANUARY 31, 2012 ............................ 5-8 TABLE 5.04: DISTRIBUTION OF ENGINEERING PROFESSIONAL SERVICES CONTRACTS AWARDED JULY 1, 2007 THROUGH JANUARY 31, 2012 ........ 5-9 TABLE 5.05: DISTRIBUTION OF NON-ENGINEERING PROFESSIONAL SERVICES CONTRACTS AWARDED JULY 1, 2007 THROUGH JANUARY 31, 2012 ........ 5-9 TABLE 5.06: DISTRIBUTION OF SUPPLIES AND CONTRACTUAL SERVICES CONTRACTS AWARDED JULY 1, 2007 THROUGH JANUARY 31, 2012 ...... 5-10 TABLE 5.07: MSD’S MARKET AREA CONTRACT DISTRIBUTION -ALL INDUSTRIES: JULY 1, 2007 THROUGH JANUARY 31, 2012 ............................................ 5-13 TABLE 6.01: PRIME CONTRACTOR AVAILABILITY DATA SOURCES ............................... 6-3 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study xii TABLE 6.02: DISTRIBUTION OF PRIME CONTRACTOR AVAILABILITY DATA SOURCES, ALL INDUSTRIES ............................................................ 6-6 TABLE 6.03: DISTRIBUTION OF PRIME CONTRACTOR AVAILABILITY DATA SOURCES, BUILDING CONSTRUCTION ............................................ 6-7 TABLE 6.04: DISTRIBUTION OF PRIME CONTRACTOR AVAILABILITY DATA SOURCES, NON-BUILDING CONSTRUCTION .................................... 6-8 TABLE 6.05: DISTRIBUTION OF PRIME CONTRACTOR AVAILABILITY DATA SOURCES, ENGINEERING PROFESSIONAL SERVICES ....................... 6-9 TABLE 6.06: DISTRIBUTION OF PRIME CONTRACTOR AVAILABILITY DATA SOURCES, NON-ENGINEERING PROFESSIONAL SERVICES ............. 6-10 TABLE 6.07: DISTRIBUTION OF PRIME CONTRACTOR AVAILABILITY DATA SOURCES, SUPPLIES AND CONTRACTUAL SERVICES..................... 6-11 TABLE 6.08: CONTRACTS BY SIZE, ALL INDUSTRIES, .................................................. 6-15 TABLE 6.09: BUILDING CONSTRUCTION CONTRACTS BY SIZE, ................................... 6-16 TABLE 6.10: NON-BUILDING CONSTRUCTION CONTRACTS BY SIZE, JULY 1, 2007 TO JANUARY 31, 2012 ....................................................... 6-17 TABLE 6.11: ENGINEERING PROFESSIONAL SERVICES CONTRACTS BY SIZE, JULY 1, 2007 TO JANUARY 31, 2012 ....................................................... 6-18 TABLE 6.12: NON-ENGINEERING PROFESSIONAL SERVICES CONTRACTS BY SIZE, JULY 1, 2007 TO JANUARY 31, 2012 ....................................................... 6-19 TABLE 6.13: SUPPLIES AND CONTRACTUAL SERVICES CONTRACTS BY SIZE, JULY 1, 2007 TO JANUARY 31, 2012 ....................................................... 6-20 TABLE 6.14: LARGEST M/WBECONTRACTS AWARDED BY MSD .............................. 6-21 TABLE 6.15: AVAILABLE PRIME CONTRACTORS – ALL INDUSTRIES ........................... 6-24 TABLE 6.16: AVAILABLE BUILDING CONSTRUCTION PRIME CONTRACTORS............... 6-26 TABLE 6.17: AVAILABLE NON-BUILDING CONSTRUCTION PRIME CONTRACTORS ...... 6-28 TABLE 6.18: AVAILABLE ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACTORS ............................................................................. 6-30 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study xiii TABLE 6.19: AVAILABLE NON-ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACTORS ............................................................................. 6-32 TABLE 6.20: AVAILABLE SUPPLIES AND CONTRACTUAL SERVICES PRIME CONTRACTORS ............................................................................. 6-34 TABLE 6.21: UNIQUE SUBCONTRACTOR AVAILABILITY DATA SOURCES .................... 6-35 TABLE 6.22: SUBCONTRACTS BY SIZE: ALL INDUSTRIES, MAY 1, 2010 TO JANUARY 31, 2012 ....................................................... 6-37 TABLE 6.23: BUILDING CONSTRUCTION SUBCONTRACTS BY SIZE: MAY 1, 2010 TO JANUARY 31, 2012 ....................................................... 6-38 TABLE 6.24: NON-BUILDING CONSTRUCTION SUBCONTRACTS BY SIZE: MAY 1, 2010 TO JANUARY 31, 2012 ....................................................... 6-39 TABLE 6.25: ENGINEERING PROFESSIONAL SERVICES SUBCONTRACTS BY SIZE: MAY 1, 2010 TO JANUARY 31, 2012 ....................................................... 6-40 TABLE 6.26: NON-ENGINEERING PROFESSIONAL SERVICES SUBCONTRACTS BY SIZE: MAY 1, 2010 TO JANUARY 31, 2012 .............. 6-41 TABLE 6.27: AVAILABLE BUILDING CONSTRUCTION SUBCONTRACTORS ................... 6-43 TABLE 6.28: AVAILABLE NON-BUILDING CONSTRUCTION SUBCONTRACTORS ........... 6-45 TABLE 6.29: AVAILABLE ENGINEERING PROFESSIONAL SERVICES SUBCONTRACTORS .................................................................................. 6-47 TABLE 6.30: AVAILABLE NON-ENGINEERING PROFESSIONAL SERVICES SUBCONTRACTORS .................................................................................. 6-49 TABLE 7.01: STATISTICAL OUTCOME DESCRIPTIONS .................................................... 7-4 TABLE 7.02: DISPARITY ANALYSIS: BUILDING CONSTRUCTION PRIME CONTRACTS UNDER $500,000, JULY 1, 2007 THROUGH JANUARY 31, 2012 ................. 7-6 TABLE 7.03: DISPARITY ANALYSIS: NON-BUILDING CONSTRUCTION PRIME CONTRACTS UNDER $500,000, JULY 1, 2007 THROUGH JANUARY 31, 2012 ................. 7-9 TABLE 7.04: DISPARITY ANALYSIS: ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACTS UNDER $500,000, JULY 1, 2007 THROUGH JANUARY 31, 2012 ............................................ 7-12 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study xiv TABLE 7.05: DISPARITY ANALYSIS: NON-ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACTS UNDER $500,000, JULY 1, 2007 THROUGH JANUARY 31, 2012 ............................................ 7-15 TABLE 7.06: DISPARITY ANALYSIS: SUPPLIES AND CONTRACTUAL SERVICES PRIME CONTRACTS UNDER $500,000, JULY 1, 2007 THROUGH JANUARY 31, 2012 ............................................ 7-18 TABLE 7.07: DISPARITY ANALYSIS: SUPPLIES AND CONTRACTUAL SERVICES PRIME CONTRACTS $25,000 AND UNDER, JULY 1, 2007 THROUGH JANUARY 31, 2012 ............................................ 7-21 TABLE 7.08: DISPARITY SUMMARY: BUILDING CONSTRUCTION PRIME CONTRACT DOLLARS, JULY 1, 2007 THROUGH JANUARY 31, 2012 ........ 7-23 TABLE 7.09: DISPARITY SUMMARY: NON-BUILDING CONSTRUCTION PRIME CONTRACT DOLLARS, JULY 1, 2007 THROUGH JANUARY 31, 2012 .................................................................. 7-24 TABLE 7.10: DISPARITY SUMMARY: ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACT DOLLARS, JULY 1, 2007 THROUGH JANUARY 31, 2012 ......... 7-25 TABLE 7.11: DISPARITY SUMMARY: NON-ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACT DOLLARS, JULY 1, 2007 THROUGH JANUARY 31, 2012 ............................................ 7-26 TABLE 7.12: DISPARITY SUMMARY: SUPPLIES AND CONTRACTUAL SERVICES PRIME CONTRACT DOLLARS, JULY 1, 2007 THROUGH JANUARY 31, 2012 .................................................................. 7-27 TABLE 8.01: STATISTICAL OUTCOME DESCRIPTIONS ..................................................... 8-2 TABLE 8.02: DISPARITY ANALYSIS: BUILDING CONSTRUCTION SUBCONTRACTS, MAY 1, 2010 TO JANUARY 31, 2012 ......................................................... 8-4 TABLE 8.03: DISPARITY ANALYSIS: NON-BUILDING CONSTRUCTION SUBCONTRACTS, MAY 1, 2010 TO JANUARY 31, 2012 .............................. 8-7 TABLE 8.04: DISPARITY ANALYSIS: ENGINEERING PROFESSIONAL SERVICES SUBCONTRACTS, MAY 1, 2010 TO JANUARY 31, 2012 ............ 8-10 TABLE 8.05: DISPARITY ANALYSIS: NON-ENGINEERING PROFESSIONAL SERVICES SUBCONTRACTS, MAY 1, 2010 TO JANUARY 31, 2012 ............ 8-13 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study xv TABLE 8.06: SUBCONTRACTOR DISPARITY SUMMARY, MAY 1, 2010 TO JANUARY 31, 2012 ....................................................... 8-15 TABLE 9.01: INDEPENDENT VARIABLES USED IN THE BUSINESS OWNERSHIP ANALYSIS ............................................................................. 9-7 TABLE 9.02: INDEPENDENT VARIABLES USED FOR EARNINGS DISPARITY ANALYSIS ............................................................................... 9-8 TABLE 9.03: INDEPENDENT VARIABLES USED FOR BUSINESS LOAN APPROVAL ANALYSIS ................................................................... 9-10 TABLE 9.04: CONSTRUCTION INDUSTRY LOGISTIC MODEL......................................... 9-12 TABLE 9.05: PROFESSIONAL SERVICES LOGISTIC MODEL ........................................... 9-14 TABLE 9.06: SUPPLIES AND CONTRACTUAL SERVICES LOGISTIC MODEL ................... 9-16 TABLE 9.07: CONSTRUCTION INDUSTRY OLS REGRESSION ........................................ 9-18 TABLE 9.08: PROFESSIONAL SERVICES OLS REGRESSION .......................................... 9-20 TABLE 9.09: SUPPLIES AND CONTRACTUAL SERVICES OLS REGRESSION .................. 9-22 TABLE 9.10: ORDERED LOGISTIC MODEL FOR THE BUSINESS LOAN APPROVAL ANALYSIS IN THE CONSTRUCTION INDUSTRY ............. 9-24 TABLE 9.11: ORDERED LOGISTIC MODEL FOR THE BUSINESS LOAN APPROVAL ANALYSIS IN THE PROFESSIONAL SERVICES INDUSTRY ....................................................... 9-26 TABLE 9.12: ORDERED LOGISTIC MODEL FOR THE BUSINESS LOAN APPROVAL ANALYSIS IN THE SUPPLIES AND CONTRACTUAL SERVICES INDUSTRY ... 9-28 TABLE 9.13: STATISTICALLY SIGNIFICANT BUSINESS OWNERSHIP DISPARITIES ......... 9-31 TABLE 9.14: STATISTICALLY SIGNIFICANT BUSINESS EARNINGS DISPARITIES ............ 9-32 TABLE 9.15: STATISTICALLY SIGNIFICANT BUSINESS LOAN APPROVAL DISPARITIES . 9-33 TABLE 11.01: TOTAL PRIME CONTRACTS AND DOLLARS EXPENDED: ALL INDUSTRIES, JULY 1, 2007 THROUGH JANUARY 31, 2012 .............. 11-42 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study xvi TABLE 11.02: TOTAL SUBCONTRACTS AWARDED AND DOLLARS EXPENDED, ALL INDUSTRIES, MAY 1, 2010 TO JANUARY 31, 2012 ........................ 11-42 TABLE 11.03: DISPARITY SUMMARY: BUILDING CONSTRUCTION PRIME CONTRACT DOLLARS, JULY 1, 2007 THROUGH JANUARY 31, 2012 ................................................................ 11-43 TABLE 11.04: DISPARITY SUMMARY: NON-BUILDING CONSTRUCTION PRIME CONTRACT DOLLARS, JULY 1, 2007 THROUGH JANUARY 31, 2012 ................................................................ 11-43 TABLE 11.05: DISPARITY SUMMARY: ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACT DOLLARS, JULY 1, 2007 THROUGH JANUARY 31, 2012 ................................................................ 11-44 TABLE 11.06: DISPARITY SUMMARY: NON-ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACT DOLLARS, JULY 1, 2007 THROUGH JANUARY 31, 2012 ................................................................ 11-45 TABLE 11.07: DISPARITY SUMMARY: SUPPLIES AND CONTRACTUAL SERVICES PRIME CONTRACT DOLLARS, JULY 1, 2007 THROUGH JANUARY 31, 2012 ................................................................ 11-45 TABLE 11.08: SUBCONTRACTOR DISPARITY SUMMARY, MAY 1, 2010 TO JANUARY 31, 2012 ..................................................... 11-46 TABLE 11.09: SUBCONTRACTOR AVAILABILITY.......................................................... 11-48 TABLE 12.01: STATISTICALLY SIGNIFICANT BUSINESS LOAN APPROVAL DISPARITIES ................................................................ 12-6 TABLE 12.02: QUANTIFIED GOOD FAITH EFFORT CRITERIA ........................................ 12-13 TABLE 12.03: CONTRACT SIZE DISTRIBUTION OF CONTRACTORS RECEIVING CONTRACTS $25,000 AND UNDER ....................................... 12-15 TABLE 12.04: CONTRACT SIZE DISTRIBUTION OF CONTRACTORS RECEIVING CONTRACTS $25,000 AND UNDER ....................................... 12-16 TABLE 12.05: CONTRACT SIZE DISTRIBUTION OF CONTRACTORS RECEIVING CONTRACTS $25,000 AND UNDER ....................................... 12-16 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study xvii CHART 7.01: DISPARITY ANALYSIS: BUILDING CONSTRUCTION PRIME CONTRACTS UNDER $500,000, JULY 1, 2007 THROUGH JANUARY 31, 2012 ............... 7-7 CHART 7.02: DISPARITY ANALYSIS: NON-BUILDING CONSTRUCTION PRIME CONTRACTS UNDER $500,000, JULY 1, 2007 THROUGH JANUARY 31, 2012 ............. 7-10 CHART 7.03: DISPARITY ANALYSIS: ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACTS UNDER $500,000, JULY 1, 2007 THROUGH JANUARY 31, 2012 ................................................................ 7-13 CHART 7.04: DISPARITY ANALYSIS: NON-ENGINEERING PROFESSIONAL SERVICES PRIME CONTRACTS UNDER $500,000, JULY 1, 2007 THROUGH JANUARY 31, 2012 ................................................................ 7-16 CHART 7.05: DISPARITY ANALYSIS: SUPPLIES AND CONTRACTUAL SERVICES PRIME CONTRACTS UNDER $500,000, JULY 1, 2007 THROUGH JANUARY 31, 2012 ................................................................ 7-19 CHART 7.06: DISPARITY ANALYSIS: SUPPLIES AND CONTRACTUAL SERVICES PRIME CONTRACTS $25,000 AND UNDER, JULY 1, 2007 THROUGH JANUARY 31, ......................................................................... 7-22 CHART 8.01: DISPARITY ANALYSIS: BUILDING CONSTRUCTION SUBCONTRACTS, MAY 1, 2010 TO JANUARY 31, 2012 ........................................................ 8-5 CHART 8.02: DISPARITY ANALYSIS: NON-BUILDING CONSTRUCTION SUBCONTRACTS, MAY 1, 2010 TO JANUARY 31, 2012 ........................................................ 8-8 CHART 8.03: DISPARITY ANALYSIS: ENGINEERING PROFESSIONAL SERVICES SUBCONTRACTS, MAY 1, 2010 TO JANUARY 31, 2012 ........................... 8-11 CHART 8.04: DISPARITY ANALYSIS: NON-ENGINEERING PROFESSIONAL SERVICES SUBCONTRACTS, MAY 1, 2010 TO JANUARY 31, 2012 ........... 8-14 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-1 CHAPTER 1: LEGAL ANALYSISLEGAL ANALYSISLEGAL ANALYSISLEGAL ANALYSIS I.I.I.I. INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION Two United States Supreme Court decisions, City of Richmond v. J.A. Croson Co.1 (Croson) and Adarand v. Pena2 (Adarand), raised the standard by which federal courts shall review both local and federal government minority business enterprise and disadvantaged business enterprise contracting programs. This chapter presents the state of the federal law applicable to public contracting affirmative action programs. It also includes a discussion of the Environmental Protection Agency’s (EPA) fair share objectives. Croson, decided in 1989, dealt with non-federally funded programs and established an evidentiary standard of review for race-based programs. The Court announced that programs employing racial classification would be subject to “strict scrutiny,” the highest legal standard. Broad notions of equity or general allegations of historical and societal discrimination against minorities fail to meet the requirements of strict scrutiny. Local governments, as set forth in Croson, may adopt race-conscious programs only as a remedy for identified statistical findings of discrimination, and the remedy must impose a minimal burden upon unprotected classes. Adarand, which the United States Supreme Court decided in 1995, directly challenged the USDOT’s Disadvantaged Business Enterprise (DBE) Program as set forth in statute and regulations. The Court found a compelling interest for the USDOT DBE Program but ruled, after applying the Croson required strict scrutiny standard to this federal program, that the DBE Program was not narrowly tailored. In response, the USDOT amended its regulations to include goals which can be met by race-neutral and race- specific means. The EPA’s Fair Share DBE goals are based on the USDOT DBE rules. 1 City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989). 2 Adarand Constructors, Inc. v. Federico Pena, 115 S.Ct. 2097 (1995). Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-2 II.II.II.II. STANDARD OF REVIEWSTANDARD OF REVIEWSTANDARD OF REVIEWSTANDARD OF REVIEW The standard of review represents the measure by which a court evaluates whether a particular legal claim meets a certain statute, rule, or precedent. The standard of review that the Supreme Court set in Croson for race-specific programs is applicable to meet constitutional muster. A.A.A.A. RaceRaceRaceRace----Conscious ProgramsConscious ProgramsConscious ProgramsConscious Programs In Croson the United States Supreme Court affirmed that pursuant to the 14th Amendment, the proper standard of review for state and local MBE programs, which are necessarily race-based, is strict scrutiny.3 Specifically, the government must show that the classification is narrowly tailored to achieve a compelling state interest.4 The Court recognized that a state or local entity may take action, in the form of an MBE program, to rectify the effects of identified, systemic racial discrimination within its jurisdiction.5 Justice O’Connor, speaking for the majority, articulated various methods of demonstrating discrimination and set forth guidelines for crafting MBE programs so that they are “narrowly tailored” to address systemic racial discrimination.6 B.B.B.B. Women Business Enterprise ProgramsWomen Business Enterprise ProgramsWomen Business Enterprise ProgramsWomen Business Enterprise Programs Since Croson, the U. S. Supreme Court has remained silent with respect to the appropriate standard of review for WBE programs and Local Business Enterprise (LBE) programs which are geographically based. Croson was limited to the review of a race- conscious plan. In other contexts, however, the U. S. Supreme Court has ruled that gender classifications are not subject to the rigorous strict scrutiny standard applied to racial classifications. Instead, gender classifications are subject only to an “intermediate” level of review, regardless of which gender is favored. Notwithstanding the U. S. Supreme Court’s failure thus far to rule on a WBE program, the consensus among the Circuit Courts of Appeals is that WBE programs are subject only to intermediate scrutiny, rather than the more exacting strict scrutiny to which race- conscious programs are subject.7 Intermediate review requires the governmental entity to 3 Croson, 488 U.S. at 493-95. 4 Id. at 493. 5 Croson, 488 U.S. at 509. 6 Id. at 501-02. Cases involving education and employment frequently refer to the principal concepts applicable to the use of race in government contracting: compelling interest and narrowly tailored remedies. The Supreme Court in Croson and subsequent cases provides fairly detailed guidance on how those concepts are to be treated in contracting. In education and employment, the concepts are not explicated to nearly the same extent. Therefore, references in those cases to “compelling governmental interest” and “narrow tailoring” for purposes of contracting are essentially generic and of little value in determining the appropriate methodology for disparity studies. 7 See e.g., Coral Constr. Co. v. King County, 941 F.2d 910 (9th Cir. 1991); Phila., 91 F.3d 586; Dade County, 122 F.3d 895; Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-3 demonstrate an “important governmental objective” and a method for achieving this objective that bears a fair and substantial relation to the goal.8 The Court has also expressed the test as requiring an “exceedingly persuasive justification” for classifications based on gender.9 The U. S. Supreme Court acknowledged that in limited circumstances a gender-based classification favoring one sex can be justified if it intentionally and directly assists the members of that sex who are disproportionately burdened.10 The Third Circuit in Contractors Association of Eastern Pennsylvania v. City of Philadelphia (Philadelphia) ruled in 1993 that the standard of review that governs WBE programs is different from the standard imposed upon MBE programs.11 The Third Circuit held that whereas MBE programs must be “narrowly tailored” to a “compelling state interest,” WBE programs must be “substantially related” to “important governmental objectives.”12 An MBE program would survive constitutional scrutiny only by demonstrating a pattern and practice of systemic racial exclusion or discrimination in which a state or local government was an active or passive participant.13 The Ninth Circuit in Associated General Contractors of California v. City and County of San Francisco (AGCC I) held that classifications based on gender require an “exceedingly persuasive justification.”14 The justification is valid only if members of the gender benefited by the classification actually suffer a disadvantage related to the classification, and the classification does not reflect or reinforce archaic and stereotyped notions of the roles and abilities of women.15 The Eleventh Circuit also applies intermediate scrutiny.16 The district court in Engineering Contractors Association of South Florida. v. Metropolitan Dade County (Dade County), which was affirmed by the Eleventh Circuit U.S. Court of Appeals, cited the Third Circuit’s 1993 formulation in Philadelphia: “[T]his standard requires the accord Concrete Works II, 321 F.3d at 959. 8 Craig v. Boren, 429 U.S. 190, 198-99 (1976). 9 Miss. Univ. for Women v. Hogan, 458 U.S. 718 (1982); see also Michigan Road Builders Ass’n., Inc. v. Milliken, 834 F.2d 583 (6th Cir. 1987). 10 Id. at 728. 11 Phila., 6 F.3d at 1000-01. 12 Id. at 1009. 13 Id. at 1002. 14 Associated Gen. Contractors of Cal. v. City & County of S. F., 813 F.2d 922, 940 (9th Cir. 1987). 15 Id. at 940. 16 Ensley Branch N.A.A.C.P. v. Seibels, 31 F.3d 1548, 1579-1580 (11th Cir. 1994). Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-4 [County] to present probative evidence in support of its stated rationale for the gender preference, discrimination against women-owned contractors.”17 Although the Dade County district court applied the intermediate scrutiny standard, it queried whether the U.S. Supreme Court decision in United States v. Virginia,18 finding the all-male program at Virginia Military Institute unconstitutional, signaled a heightened level of scrutiny. The U. S. Supreme Court held that parties who seek to defend gender-based government action must demonstrate an “exceedingly persuasive justification” for that action.19 While the Dade County appellate court echoed that speculation, it concluded that “[u]nless and until the U. S. Supreme Court tells us otherwise, intermediate scrutiny remains the applicable constitutional standard in gender discrimination cases, and a gender preference may be upheld so long as it is substantially related to an important governmental objective.”20 The Dade County appellate court noted that at the time, by articulating the “probative evidence” standard, the Third Circuit in Philadelphia was the only federal appellate court that explicitly attempted to clarify the evidentiary requirement applicable to gender- conscious programs.21 Dade County went on to interpret that standard to mean that “evidence offered in support of a gender preference must not only be ‛probative’ [but] must also be ‛sufficient.’”22 It also reiterated two principal guidelines of intermediate scrutiny evidentiary analysis: (1) under this test a local government must demonstrate some past discrimination against women, but not necessarily discrimination by the government itself;23 and (2) the intermediate scrutiny evidentiary review is not to be directed toward mandating that gender-conscious affirmative action is used only as a “last resort”24 but instead ensuring that the affirmative action is “a product of analysis rather than a stereotyped reaction based on habit.”25 This determination turns on whether there is evidence of past discrimination in the economic sphere at which the affirmative action program is directed.26 The court also stated that “a gender-conscious program need not closely tie its numerical goals to the proportion of qualified women in the market.”27 17 Dade County, 122 F.3rd at 909, (citing Phila., 6 F.3d at 1010 (3d Cir. 1993). 18 United States v. Virginia, 518 U.S. 515 (1996). 19 Dade County, 943 F.Supp. at 1556. 20 Id. at 908. 21 Id. at 909. 22 Id. 23 Id. at 910 (citing Ensley Branch, 31 F.3d at 1580). 24 Id. (citing Hayes v. N. State Law Enforcement Officers Ass’n., 10 F.3d 207, 217 (4th Cir. 1993) (racial discrimination case). 25 Id. (citing Phila., 6 F3d at 1010) (quoting Metro Broad., Inc. v. FCC, 497 U.S. 547, 582-583 (1990)). 26 Id. (citing Ensley Branch, 31 F.3d at 1581). 27 Dade County, 122 F.3d at 929. However, Judge Posner, in Builders Ass’n of Greater Chi. v. County of Cook, 256 F.3d 642 (7th Cir. 2001), questioned why there should be a lesser standard where the discrimination was against women rather than minorities. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-5 III.III.III.III. BURDEN OF PROOFBURDEN OF PROOFBURDEN OF PROOFBURDEN OF PROOF The procedural protocol established by Croson imposes an initial burden of proof upon the government to demonstrate that the challenged MBE program is supported by a strong factual predicate, i.e., documented evidence of past discrimination. Notwithstanding this requirement, the plaintiff bears the ultimate burden of proof to persuade the court that the MBE program is unconstitutional. The plaintiff may challenge a government’s factual predicate on any of the following grounds:28 · Disparity exists due to race-neutral reasons · Methodology is flawed · Data is statistically insignificant · Controverting data exists Thus, a disparity study must be analytically rigorous, at least to the extent that the data permits, if it is to withstand legal challenge.29 A.A.A.A. Strong Basis in EvidenceStrong Basis in EvidenceStrong Basis in EvidenceStrong Basis in Evidence Croson requires defendant jurisdictions to produce a “strong basis in evidence” that the objective of the challenged MBE program is to rectify the effects of discrimination.30 The issue of whether or not the government has produced a strong basis in evidence is a question of law.31 Because the sufficiency of the factual predicate supporting the MBE program is at issue, factual determinations relating to the accuracy and validity of the proffered evidence underlie the initial legal conclusion to be drawn.32 The adequacy of the government’s evidence is “evaluated in the context of the breadth of the remedial program advanced by the [jurisdiction].”33 The onus is upon the jurisdiction to provide a factual predicate which is sufficient in scope and precision to demonstrate that contemporaneous discrimination necessitated the adoption of the MBE program. 28 These were the issues on which the district court in Philadelphia reviewed the disparity study before it. 29 Croson, 488 U.S. 469. 30 Concrete Works of Colorado v. City and County of Denver, 36 F.3d 1513 at 1522 (10th Cir. 1994), (citing Wygant v. Jackson Board of Education, 476 U.S. 267, 292 (1986); see Croson 488 U.S. at 509 (1989)). 31 Id. (citing Associated General Contractors v. New Haven, 791 F.Supp. 941, 944 (D.Conn 1992)). 32 Concrete Works I, 36 F.3d at 1522. 33 Id. (citing Croson 488 U.S. at 498). Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-6 B.B.B.B. Ultimate Burden of ProofUltimate Burden of ProofUltimate Burden of ProofUltimate Burden of Proof The party challenging an MBE program will bear the ultimate burden of proof throughout the course of the litigation—despite the government’s obligation to produce a strong factual predicate to support its program.34 The plaintiff must persuade the court that the program is constitutionally flawed by challenging the government’s factual predicate for the program or by demonstrating that the program is overly broad. Justice O’Connor explained the nature of the plaintiff’s burden of proof in her concurring opinion in Wygant v. Jackson Board of Education (Wygant).35 She stated that following the production of the factual predicate supporting the program: [I]t is incumbent upon the non-minority [plaintiffs] to prove their case; they continue to bear the ultimate burden of persuading the court that the [government’s] evidence did not support an inference of prior discrimination and thus a remedial purpose, or that the plan instituted on the basis of this evidence was not sufficiently “narrowly tailored.” 36 In Philadelphia, the Third Circuit Court of Appeals clarified this allocation of the burden of proof and the constitutional issue of whether facts constitute a “strong basis” in evidence.37 That court wrote that the allocation of the burden of persuasion depends on the theory of constitutional invalidity that is being considered.38 If the plaintiff’s theory is that an agency has adopted race-based preferences with a purpose other than remedying past discrimination, the plaintiff has the burden of convincing the court that the identified remedial motivation is a pretext and that the real motivation was something else.39 The situation differs if the plaintiff’s theory is that an agency’s conclusions as to the existence of discrimination and the necessity of the remedy chosen have no strong basis in evidence. In such a situation, once the agency comes forward with evidence of facts alleged to justify its conclusions, the plaintiff has the burden of persuading the court that those facts are not accurate. However, the ultimate issue of whether a strong basis in evidence exists is an issue of law, and the burden of persuasion in the traditional sense plays no role in the court’s resolution of that ultimate issue.40 34 Id. (citing Wygant, 476 U.S. at 277-278). 35 Wygant v. Jackson Board of Education, 476 U.S. 267, 293 (1986). 36 Id. at 293 37 Philadelphia, 91 F.3d at 597. 38 Id. at 597 39 Id. at 597 40 At first glance, the position of the Third Circuit does not square with what the Eleventh Circuit announced as its standard in Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-7 Concrete Works II made clear that the plaintiff’s burden is an evidentiary one; it cannot be discharged simply by argument. The court cited its opinion in Adarand Constructors Inc. v. Slater, 228 F.3d 1147 (2000): “[g]eneral criticism of disparity studies, as opposed to particular evidence undermining the reliability of the particular disparity study is of little persuasive value.”41 The Supreme Court’s disposition of the plaintiff’s petition for certiorari strongly supports the conclusion that plaintiff has the burden of proof. Supreme Court review of appellate decisions is discretionary in that four justices have to agree, so normally little can be inferred from its denial. However, Concrete Works is not the typical instance. Justice Scalia concurred in Croson that strict scrutiny was required of race-conscious contracting programs. However, his antagonism there and over the years to the use of race is clear. Justice Scalia’s view is that governmental remedies should be limited to provable individual victims. That view is at the base of his written dissent, on which only Chief Justice Rehnquist joined, to the Court’s November 17, 2003 decision not to grant certiorari in Concrete Works.42 Justice Scalia would place the burden of proof squarely on the defendant jurisdiction when a plaintiff pleads unequal treatment. For him, the Tenth Circuit was simply wrong, because the defendant should have to prove that there was discrimination. He takes this position despite the case law in equal employment cases, from which Croson was derived, that the defendant has the burden of production. Once the defendant satisfies that, the burden of proof shifts to the plaintiff. Contrary to Scalia, the Tenth Circuit in Concrete Works II held that the defendant must show “a strong basis” for concluding that MBEs are being discriminated against. And, the plaintiff has to put in evidence that negates its validity. IV.IV.IV.IV. CROSON EVIDENTIARY FRAMEWORKCROSON EVIDENTIARY FRAMEWORKCROSON EVIDENTIARY FRAMEWORKCROSON EVIDENTIARY FRAMEWORK Government entities must construct a strong evidentiary framework to stave off legal challenges and ensure that the adopted MBE program comports with the requirements of the Equal Protection clause of the U.S. Constitution. The framework must comply with the stringent requirements of the strict scrutiny standard. Accordingly, there must be a reviewing whether a jurisdiction has established the “compelling interest” required by strict scrutiny. The Eleventh Circuit said the inquiry was factual and would be reversed only if it was “clearly erroneous.” However, the difference in formulation may have had to do with the angle from which the question was approached: If one starts with the disparity study — whether a compelling interest has been shown —factual issues are critical. If the focus is the remedy, because the constitutional issue of equal protection in the context of race comes into play, the review is necessarily a legal one. 41 Concrete Works II, 321 F.3d at 979. 42 Concrete Works of Colorado, Inc. v. City and County of Denver, Colorado, 321 F.3d 950 (10th Cir. 2003), petition for cert. denied, (U.S. Nov. 17, 2003) (No. 02-1673) (“Concrete Works II”). Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-8 strong basis in evidence, and the race-conscious remedy must be “narrowly tailored,” as set forth in Croson. A summary of the appropriate types of evidence to satisfy the first element of the Croson standard follows. A.A.A.A. Active or Passive ParticipationActive or Passive ParticipationActive or Passive ParticipationActive or Passive Participation Croson requires that the local entity seeking to adopt an MBE program must have perpetuated the discrimination to be remedied by the program. However, the local entity need not be an active perpetrator of such discrimination. Passive participation will satisfy this part of the Court’s strict scrutiny review.43 An entity will be considered an “active” participant if the evidence shows that it has created barriers that actively exclude MBEs from its contracting opportunities. In addition to examining the government’s contracting record and process, MBEs who have contracted or attempted to contract with that entity can be interviewed to relay their experiences in pursuing that entity’s contracting opportunities.44 An entity will be considered to be a “passive” participant in private sector discriminatory practices if it has infused tax dollars into that discriminatory industry.45 The Croson Court emphasized a government’s ability to passively participate in private sector discrimination with monetary involvement, stating, “[I]t is beyond dispute that any public entity, state or federal, has a compelling interest in assuring that public dollars, drawn from tax contributions of all citizens, do not serve to finance the evil of private prejudice.”46 Until Concrete Works I, the inquiry regarding passive discrimination was limited to the subcontracting practices of government prime contractors. In Concrete Works I, the Tenth Circuit considered a purely private sector definition of passive discrimination. Since no government funds were involved in the contracts analyzed in the case, the court questioned whether purely private sector discrimination is likely to be a fruitful line of inquiry.47 On remand, the district court rejected the three disparity studies offered to 43 Croson, 488 U.S. at 509. 44 Wygant v. Jackson Board of Education, 476 U.S. 267 at 275 (1985). 45 Croson, 488 U.S. at 492; Coral Construction, 941 F.2d at 916. 46 Croson, 488 U.S. at 492. 47 Concrete Works I, 36 F.3d at 1529. “What the Denver MSA data does not indicate, however, is whether there is any linkage between Denver’s award of public contracts and the Denver MSA evidence of industry-wide discrimination. That is, we cannot tell whether Denver indirectly contributed to private discrimination by awarding public contracts to firms that in turn discriminated against MBE and/or WBE subcontractors in other private portions of their business or whether the private discrimination was practiced by firms who did not receive any public contracts. Neither Croson nor its progeny clearly state whether private discrimination that is in no way funded with public tax dollars can, by itself, provide the requisite strong basis in evidence necessary to justify a municipality’s affirmative action program. A plurality in Croson simply suggested that remedial measures could be justified upon a municipality’s showing that ‘it had essentially become a “a passive participant” in a system of racial exclusion practiced by elements of the local construction industry’ [citing Croson]. Although we do not read Croson as requiring the municipality to identify an exact linkage between its award of public contracts and private discrimination, such Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-9 support the continuation of Denver's M/WBE program because each focused on purely private sector discrimination. Indeed, Denver’s focus on purely private sector discrimination may account for what seemed to be a shift by the court away from the standard Croson queries of: (1) whether there was a firm basis in the entity’s contracting process to conclude that discrimination existed; (2) whether race-neutral remedies would resolve what was found; and (3) whether any race-conscious remedies had to be narrowly tailored. The court noted that in the City of Denver’s disparity studies the chosen methodologies failed to address the following six questions: Was there pervasive discrimination throughout the Denver Metropolitan Statistical Area (MSA)? Were all designated groups equally affected? Was discrimination intentional? Would Denver’s use of such firms constitute “passive participation”? Would the proposed remedy change industry practices? Was the burden of compliance—which was on white male prime contractors in an intensely competitive, low profit margin business—a fair one? The court concluded that the City of Denver had not documented a firm basis of identified discrimination derived from the statistics submitted.48 However, the Tenth Circuit on appeal of that decision completely rejected the district court’s analysis. The district court’s queries required Denver to prove the existence of discrimination. Moreover, the Tenth Circuit explicitly held that “passive” participation included private sector discrimination in the marketplace. The court, relying on Shaw v. Hunt,49 a post-Croson Supreme Court decision, wrote as follows: The Shaw Court did not adopt any requirement that only discrimination by the governmental entity, either directly or by utilizing firms engaged in discrimination on projects funded by the entity, was remediable. The Court, however, did set out two conditions which must be met for the governmental entity to show a compelling interest. “First, the discrimination must be identified discrimination.” Id. at 910. The City can satisfy this condition by identifying the discrimination “public or private, with some specificity.” Id. (quoting Croson, 488 U.S. at 504 (emphasis added)). evidence would at least enhance the municipality’s factual predicate for a race- and gender-conscious program. The record before us does not explain the Denver government’s role in contributing to the underutilization of MBEs and WBEs in the private construction market in the Denver MSA, and this may well be a fruitful issue to explore at trial.” 48 Id. at 61. 49 517 U.S. at 519. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-10 The governmental entity must also have a “strong basis in evidence to conclude that remedial action was necessary.” Id.50 The Tenth Circuit therefore held that the City was correct in its attempt to show that it “indirectly contributed to private discrimination by awarding public contracts to firms that in turn discriminated against M/WBE subcontractors in other private portions of their business.”51 The court emphasized that its reading of Croson52 and its own precedents supported that conclusion. Also, the court pointed out that the plaintiff, which had the burden of proof, failed to introduce controverting evidence and merely argued that the private sector was out of bounds and that Denver’s data was flawed.53 The courts found that the disparities in MBE private sector participation, demonstrated with the rate of business formation and lack of access to credit which affected MBEs’ ability to expand in order to perform larger contracts, gave Denver a firm basis to conclude that there was actionable private sector discrimination. For technical legal reasons,54 however, the court did not examine whether the consequent public sector remedy — i.e., one involving a goal requirement on the City of Denver’s contracts — was “narrowly tailored.” The court took this position despite the plaintiff’s contention that the remedy was inseparable from the findings and that the court should have addressed the issue of whether the program was narrowly tailored. Ten months later, in Builders Association of Greater Chicago v. City of Chicago,55 the question of whether a public sector remedy is “narrowly tailored” when it is based on purely private sector discrimination was at issue. The district court reviewed the remedies derived from private sector practices with a more stringent scrutiny. It found that there was discrimination against minorities in the Chicago construction industry. However, it did not find the City of Chicago’s MBE subcontracting goal an appropriate remedy, because it was not “narrowly tailored” to address the lack of access to credit for MBEs which was the documented private discrimination. The court also criticized the remedy because it was a “rigid numerical quota,” and there was no individualized review of MBE beneficiaries, citing Justice O’Connor’s opinion in Gratz v. Bollinger.56 50 Concrete Works II, 321 F.3d at 975-76. 51 Slip opinion, pg. 20. 52 See also Shaw v. Hunt, 517 U.S. 899 (1996), which it cited. 53 Whether Denver had the requisite strong basis to conclude that there was discrimination was a question of law; it was for the Tenth Circuit to decide. The standard by which the factual record before it was reviewed was “clearly erroneous.” 54 Plaintiff had not preserved the issue on appeal; therefore, it was no longer part of the case. 55 298 F.Supp2d 725 (N.D.Ill. 2003). 56 123 S.Ct, 2411, 2431 (2003). Croson requires a showing that there was a strong basis for concluding that there was discrimination before a race-conscious remedy can be used in government contracting. In the University of Michigan cases that considered race- conscious admissions programs, a key element in the decisions is the Court acceptance of diversity as a constitutionally sufficient ground; it did not require a showing of past discrimination against minority applicants. If it had, the basis for a program would have disappeared. Discrimination is the historic concern of the 14th Amendment, while promoting diversity is of recent origin. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-11 The question of whether evidence of private sector practices met the Court standard also arose in Builders Ass’n of Greater Chicago v. County of Cook.57 In this case the Seventh Circuit cited Associated General Contractors of Ohio v. Drabik58 in throwing out a 1988 County ordinance under which at least 30 percent of the value of prime contracts was to go to minority subcontractors and at least ten percent to woman-owned businesses. Appellants argued that evidence of purely private sector discrimination justified a public sector program. The Court found that the County, in order to justify the public sector remedy, had to demonstrate that it had been at least a passive participant in the private discrimination by showing that it had infused tax dollars into the discriminatory private industry. B.B.B.B. Systemic Discriminatory ExclusionSystemic Discriminatory ExclusionSystemic Discriminatory ExclusionSystemic Discriminatory Exclusion Croson clearly established that an entity enacting a business affirmative action program must demonstrate identified systemic discriminatory exclusion on the basis of race or any other illegitimate criteria (arguably gender).59 Thus, it is essential to demonstrate a pattern and practice of such discriminatory exclusion in the relevant market area.60 Using appropriate evidence of the entity’s active or passive participation in the discrimination, as discussed above, the showing of discriminatory exclusion must cover each racial group to whom a remedy would apply.61 Mere statistics and broad assertions of purely societal discrimination will not suffice to support a race or gender-conscious program. The Court may have been disposed therefore to apply a more rigorous review of legislation based on diversity. The 14th Amendment’s prohibitions are directed against “state action.” The private sector behavior of businesses that contract with state and local governments is a conceptual step away from what it does in its public sector transactions. That distinction may lead courts to apply the Gratz approach of more searching scrutiny to remedial plans based on private sector contracting. 57 256 F.3d 642 (7th Cir. 2001). 58 214 F.3d 730 (6th Cir. 2000). 59 Croson, 488 U.S. 469. See also Monterey Mechanical v. Pete Wilson, 125 F.3d 702 (9th Cir. 1997). The Fifth Circuit Court in W.H. Scott Construction Co. v. City of Jackson, Mississippi, 199 F.3d 206 (1999) found that the City’s MBE program was unconstitutional for construction contracts because minority participation goals were arbitrarily set and not based on any objective data. Moreover, the Court noted that had the City implemented the recommendations from the disparity study it commissioned, the MBE program may have withstood judicial scrutiny (the City was not satisfied with the study and chose not to adopt its conclusions). “Had the City adopted particularized findings of discrimination within its various agencies and set participation goals for each accordingly, our outcome today might be different. Absent such evidence in the City’s construction industry, however, the City lacks the factual predicates required under the Equal Protection Clause to support the Department’s 15% DBE-participation goal.” In 1996, Houston Metro had adopted a study done for the City of Houston whose statistics were limited to aggregate figures that showed income disparity between groups, without making any connection between those statistics and the City's contracting policies. The disadvantages cited that M/WBEs faced in contracting with the City also applied to small businesses. Under Croson, that would have pointed to race-neutral remedies. The additional data on which Houston Metro relied was even less availing. Its own expert contended that the ratio of lawsuits involving private discrimination to total lawsuits and ratio of unskilled black wages to unskilled white wages established that the correlation between low rates of black self-employment was due to discrimination. Even assuming that nexus, there is nothing in Croson that accepts a low number of MBE business formation as a basis for a race-conscious remedy. 60 Id. at 509. 61 Id. at 506. As the Court said in Croson, “[t]he random inclusion of racial groups that, as a practical matter, may never have Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-12 Croson enumerates several ways an entity may establish the requisite factual predicate. First, a significant statistical disparity between the number of qualified minority contractors willing and able to perform a particular service and the number of such contractors actually engaged by an entity or by the entity’s prime contractors may support an inference of discriminatory exclusion.62 In other words, when the relevant statistical pool is used, a showing of gross statistical disparity alone “may constitute prima facie proof of a pattern or practice of discrimination.”63 The Croson Court made clear that both prime contract and subcontracting data was relevant. The Court observed that “[w]ithout any information on minority participation in subcontracting, it is quite simply impossible to evaluate overall minority representation in the city’s construction expenditures.”64 Subcontracting data is also an important means by which to assess suggested future remedial actions. Since the decision makers are different for the awarding of prime contracts and subcontracts, the remedies for discrimination identified at a prime contractor versus subcontractor level might also be different. Second, “evidence of a pattern of individual discriminatory acts can, if supported by appropriate statistical proof, lend support to a local government’s determination that broader remedial relief is justified.”65 Thus, if an entity has statistical evidence that non- minority contractors are systematically excluding minority businesses from subcontracting opportunities, it may act to end the discriminatory exclusion.66 Once an inference of discriminatory exclusion arises, the entity may act to dismantle the closed business system. In Coral Construction, the Ninth Circuit Court of Appeals further elaborated upon the type of evidence needed to establish the factual predicate that justifies a race-conscious remedy. The court held that both statistical and anecdotal evidence should be relied upon in establishing systemic discriminatory exclusion in the relevant marketplace as the factual predicate for an MBE program.67 The court explained that statistical evidence, suffered from discrimination in the construction industry in Richmond suggests that perhaps the city’s purpose was not in fact to remedy past discrimination.” See North Shore Concrete and Assoc. v. City of New York, 1998 U.S. Dist. LEXIS 6785 (EDNY 1998), which rejected the inclusion of Native Americans and Alaskan Natives in the City’s program, citing Croson. 62 Id. at 509. 63 Id. at 501 (citing Hazelwood School District v. United States, 433 U.S. 299, 307-08 (1977)). 64 Croson, 488 U.S. at 502-03. 65 Id. at 509. 66 Id. 67 Coral Construction, 941 F.2d at 919. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-13 standing alone, often does not account for the complex factors and motivations guiding contracting decisions, many of which may be entirely race-neutral.68 Likewise, anecdotal evidence, standing alone, is unlikely to establish a systemic pattern of discrimination.69 Nonetheless, anecdotal evidence is important because the individuals who testify about their personal experiences bring “the cold numbers convincingly to life.”70 1. Geographic Market Croson did not speak directly to how the geographic market is to be determined. In Coral Construction, the Court of Appeals held that “an MBE program must limit its geographical scope to the boundaries of the enacting jurisdiction.”71 Conversely, in Concrete Works I, the Tenth Circuit Court of Appeals specifically approved the Denver MSA as the appropriate market area since 80 percent of the construction contracts were let there.72 Read together, these cases support a definition of market area that is reasonable rather than dictated by a specific formula. Since Croson and its progeny did not provide a bright line rule for local market area, which determination should be fact-based. An entity may limit consideration of evidence of discrimination within its own jurisdiction.73 Extra- jurisdictional evidence may be permitted, when it is reasonably related to where the jurisdiction contracts.74 68 Id. 69 Id. 70 Id. (quoting International Brotherhood of Teamsters v. United States (Teamsters), 431 U.S. 324, 339 (1977)). 71 Coral Construction, 941 F.2d at 925. 72 Concrete Works of Colorado v. City and County of Denver, 823 F.Supp. 821, 835-836 (D.Colo. 1993); rev’d on other grounds, 36 F.3d 1513 (10th Cir. 1994). 73 Cone Corporation V. Hillsborough County, 908 F.2d 908 (11th Cir. 1990); Associated General Contractors v. Coalition for Economic Equity, 950 F.2d 1401 (9th Cir. 1991). 74 There is a related question of which firms can participate in a remedial program. In Coral Construction, the Court held that the definition of “minority business” used in King County’s MBE program was over-inclusive. The Court reasoned that the definition was overbroad because it included businesses other than those who were discriminated against in the King County business community. The program would have allowed, for instance, participation by MBEs who had no prior contact with the County. Hence, location within the geographic area is not enough. An MBE had to have shown that it previously sought business, or is currently doing business, in the market area. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-14 2. Current Versus Historical Evidence In assessing the existence of identified discrimination through demonstration of a disparity between MBE utilization and availability, it may be important to examine disparity data both prior to and after the entity’s current MBE program was enacted. This will be referred to as “pre-program” versus “post-program” data. On the one hand, Croson requires that an MBE program be “narrowly tailored” to remedy current evidence of discrimination.75 Thus, goals must be set according to the evidence of disparity found. For example, if there is a current disparity between the percentage of an entity’s utilization of Hispanic construction contractors and the availability of Hispanic construction contractors in that entity’s marketplace, then that entity can set a goal to bridge that disparity. It is not mandatory to examine a long history of an entity’s utilization to assess current evidence of discrimination. In fact, Croson indicates that it may be legally fatal to justify an MBE program based upon outdated evidence.76 Therefore, the most recent two or three years of an entity’s utilization data would suffice to determine whether a statistical disparity exists between current M/WBE utilization and availability.77 3. Statistical Evidence To determine whether statistical evidence is adequate to give rise to an inference of discrimination, courts have looked to the “disparity index,” which consists of the percentage of minority or women contractor participation in local contracts divided by the percentage of minority or women contractor availability or composition in the population of available firms in the local market area.78 Disparity indexes have been found highly probative evidence of discrimination where they ensure that the “relevant statistical pool” of minority or women contractors are being considered. 75 See Croson, 488 U.S. at 509-10. 76 Id. at 499 (stating that “[i]t is sheer speculation how many minority firms there would be in Richmond absent past societal discrimination”). 77 See AGCC II, 950 F.2d 1401 at 1414 (consultant study looked at City’s MBE utilization over a one year period). 78 Although the disparity index is a common category of statistical evidence considered, other types of statistical evidence have been taken into account. In addition to looking at Dade County’s contracting and subcontracting statistics, the district court also considered marketplace data statistics (which looked at the relationship between the race, ethnicity, and gender of surveyed firm owners and the reported sales and receipts of those firms), the County’s Wainwright study (which compared construction business ownership rates of M/WBEs to those of non-M/WBEs and analyzed disparities in personal income between M/WBE and non- M/WBE business owners), and the County’s Brimmer Study (which focused only on Black-owned construction firms and looked at whether disparities existed when the sales and receipts of Black-owned construction firms in Dade County were compared with the sales and receipts of all Dade County construction firms). The court affirmed the judgment that declared appellant's affirmative action plan for awarding county construction contracts unconstitutional and enjoined the plan's operation because there was no statistical evidence of past discrimination and appellant failed to consider race and ethic-neutral alternatives to the plan. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-15 The Third Circuit Court of Appeals, in Philadelphia, ruled that the “relevant statistical pool” includes those businesses that not only exist in the marketplace, but that are qualified and interested in performing the public agency’s work. In that case, the Third Circuit rejected a statistical disparity finding where the pool of minority businesses used in comparing utilization to availability were those that were merely licensed to operate in the City of Philadelphia. Merely being licensed to do business with the City does not indicate either a willingness or capability to do work for the City. As such, the Court concluded this particular statistical disparity did not satisfy Croson.79 Statistical evidence demonstrating a disparity between the utilization and availability of M/WBEs can be shown in more than one way. First, the number of M/WBEs utilized by an entity can be compared to the number of available M/WBEs. This is a strict Croson “disparity” formula. A significant statistical disparity between the number of M/WBEs that an entity utilizes in a given product/service category and the number of available M/WBEs in the relevant market area specializing in the specified product/service category would give rise to an inference of discriminatory exclusion. Second, M/WBE dollar participation can be compared to M/WBE availability. This comparison could show a disparity between the award of contracts by an entity in the relevant locality/market area to available majority contractors and the award of contracts to M/WBEs. Thus, in AGCC II, an independent consultant’s study compared the number of available MBE prime contractors in the construction industry in San Francisco with the amount of contract dollars awarded to San Francisco-based MBEs over a one-year period. The study found that available MBEs received far fewer construction contract dollars in proportion to their numbers than their available non-minority counterparts.80 Whether a disparity index supports an inference that there is discrimination in the market turns not only on what is being compared, but also on whether any disparity is statistically significant. In Croson, Justice O’Connor opined, “[w]here the gross statistical disparities can be shown, they alone, in a proper case, may constitute a prima facie proof of a pattern or practice of discrimination.”81 However, the Court has not assessed nor attempted to cast bright lines for determining if a disparity index is sufficient to support an inference of discrimination. Rather, the analysis of the disparity index and the finding of its significance are judged on a case-by-case basis.82 79 Philadelphia, 91 F.3d 586. The courts have not spoken to the non-M/WBE component of the disparity index. However, if only as a matter of logic, the “availability” of non-M/WBEs requires that their willingness to be government contractors be established. The same measures used to establish the interest of M/WBEs should be applied to non-M/WBEs. 80 AGCC II, 950 F.2d 1401 at 1414. Specifically, the study found that MBE availability was 49.5 percent for prime construction, but MBE dollar participation was only 11.1 percent; that MBE availability was 36 percent prime equipment and supplies, but MBE dollar participation was 17 percent; and that MBE availability for prime general services was 49 percent, but dollar participation was 6.2 percent. 81 Croson, 488 U.S. at 501 (quoting Hazelwood School District v. United States, 433 U.S. 299, 307-308 (1977)). 82 Concrete Works, 36 F.3d at 1522. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-16 Following the dictates of Croson, courts may carefully examine whether there is data that shows that MBEs are ready, willing, and able to perform.83 Concrete Works I made the same point: capacity—i.e., whether the firm is “able to perform”—is a ripe issue when a disparity study is examined on the merits: [Plaintiff] has identified a legitimate factual dispute about the accuracy of Denver’s data and questioned whether Denver’s reliance on the percentage of MBEs and WBEs available in the marketplace overstates “the ability of MBEs or WBEs to conduct business relative to the industry as a whole because M/WBEs tend to be smaller and less experienced than non- minority owned firms.” In other words, a disparity index calculated on the basis of the absolute number of MBEs in the local market may show greater underutilization than does data that takes into consideration the size of MBEs and WBEs.84 Notwithstanding that appellate concern, the disparity studies before the district court on remand did not examine the issue of M/WBE capacity to perform Denver’s public sector contracts. As mentioned above, they were focused on the private sector, using census- based data and Dun & Bradstreet statistical extrapolations. The Sixth Circuit Court of Appeals, in Drabik, concluded that for statistical evidence to meet the legal standard of Croson, it must consider the issue of capacity.85 The State’s factual predicate study based its statistical evidence on the percentage of MBE businesses in the population. The statistical evidence did not take into account the number of minority businesses that were construction firms, let alone how many were qualified, willing, and able to perform state contracts.86 The court reasoned as follows: Even statistical comparisons that might be apparently more pertinent, such as with the percentage of all firms qualified in some minimal sense, to perform the work in question, would also fail to satisfy the Court’s criteria. If MBEs comprise 10 percent of the total number of contracting firms in the State, but only get 3 percent of the dollar value of certain contracts, that does not alone show discrimination, or even disparity. It does not account for the relative size of the firms, either in terms of their 83 The Philadelphia study was vulnerable on this issue. 84 Concrete Works, 36 F.3d at 1528. 85 See Drabik, 214 F.3d 730. The Court reviewed Ohio’s 1980, pre-Croson, program, which the Sixth Circuit found constitutional in Ohio Contractors Ass’n v. Keip, 1983 U.S. App. LEXIS 24185 (6th Cir. 1983), finding the program unconstitutional under Croson. 86 Id. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-17 ability to do particular work or in terms of the number of tasks they have resources to complete.87 Further, Drabik also pointed out that the State not only relied upon the wrong type of statistical data but that the data was more than twenty years old. The appellate opinions in Philadelphia88 and Dade County,89 regarding disparity studies involving public sector contracting, are particularly instructive in defining availability. First, in Philadelphia, the earlier of the two decisions, contractors’ associations challenged a city ordinance that created set-asides for minority subcontractors on city public works contracts. Summary judgment was granted for the contractors.90 The Third Circuit upheld the third appeal, affirming that there was no firm basis in evidence for finding that race-based discrimination existed to justify a race-based program and that the program was not narrowly tailored to address past discrimination by the City.91 The Third Circuit reviewed the evidence of discrimination in prime contracting and stated that whether it is strong enough to infer discrimination is a “close call” which the court “chose not to make.”92 It was unnecessary to make this determination because the court found that even if there was a strong basis in evidence for the program, a subcontracting program was not narrowly tailored to remedy prime contracting discrimination. When the court looked at subcontracting, it found that a firm basis in evidence did not exist. The only subcontracting evidence presented was a review of a random 25 to 30 percent of project engineer logs on projects more than $30,000. The consultant determined that no MBEs were used during the study period based upon recollections regarding whether the owners of the utilized firms were MBEs. The court found this evidence insufficient as a basis for finding that prime contractors in the market were discriminating against subcontractors.93 87 Id. at 736. 88 Philadelphia, 6 F.3d 990 (3rd Cir. 1993), on remand, 893 F.Supp. 419 (E.D. Penn. 1995), aff’d, 91 F.3d 586 (3rd Cir. 1996). 89 Dade County, 943 F.Supp. 1546. 90 Philadelphia, 91 F.3d 586. 91 Id. at 586 92 Id. at 605. 93 Another problem with the program was that the 15 percent goal was not based on data indicating that minority businesses in the market area were available to perform 15 percent of the City’s contracts. The court noted, however, that “we do not suggest that the percentage of the preferred group in the universe of qualified contractors is necessarily the ceiling for all set-asides.” The court also found the program flawed because it did not provide sufficient waivers and exemptions, as well as consideration of race-neutral alternatives. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-18 The Third Circuit has recognized that consideration of qualifications can be approached at different levels of specificity, and the practicality of the approach also should be weighed. The Court of Appeals found that “[i]t would be highly impractical to review the hundreds of contracts awarded each year and compare them to each and every MBE”; and it was a “reasonable choice” under the circumstances to use a list of certified contractors as a source for available firms.94 Although theoretically it may have been possible to adopt a more refined approach, the court found that using the list of certified contractors was a rational approach to identifying qualified firms. Furthermore, the court discussed whether bidding was required in prime construction contracts as the measure of “willingness” and stated, “[p]ast discrimination in a marketplace may provide reason to believe the minorities who would otherwise be willing are discouraged from trying to secure work.”95 In addition, the court found that a program certifying MBEs for federal construction projects was a satisfactory measure of capability of MBE firms.96 In order to qualify for certification, the federal certification program required firms to detail their bonding capacity, size of prior contracts, number of employees, financial integrity, and equipment owned. According to the court, “the process by which the firms were certified [suggests that] those firms were both qualified and willing to participate in public work projects.”97 The court found certification to be an adequate process of identifying capable firms, recognizing that the process may even understate the availability of MBE firms.98 Therefore, the court was somewhat flexible in evaluating the appropriate method of determining the availability of MBE firms in the statistical analysis of a disparity. In Dade County, the district court held that the County had not shown the compelling interest required to institute a race-conscious program, because the statistically significant disparities upon which the County relied disappeared when the size of the M/WBEs was taken into account.99 The Dade County district court accepted the Disparity Study’s limiting of “available” prime construction contractors to those that had bid at least once in the study period. However, it must be noted that relying solely on bidders to identify available firms may have limitations. If the solicitation of bidders is biased, then the results of the bidding process will be biased.100 In addition, a comprehensive count of 94 Philadelphia, 91 F.3d at 603. 95 Id. at 603 96 Id. at 603 97 Id. at 603 98 Id. at 603 99 Engineering Contractors Association of South Florida, Inc. et al. v. Metropolitan Dade County, 943 F. Supp. 1546 (S.D. Florida 1996). 100 Cf. League of United Latin American Citizens v. Santa Ana, 410 F.Supp. 873, 897 (C.D. Cal. 1976); Reynolds v. Sheet Metal Workers, Local 102, 498 F.Supp 952, 964 n. 12 (D. D.C. 1980), aff’d, 702 F.2d 221 (D.C. Cir. 1981). (Involving the analysis of Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-19 bidders is dependent on the adequacy of the agency’s record keeping.101 The appellate court in Dade County did not determine whether the County presented sufficient evidence to justify the M/WBE program. It merely ascertained that the lower court was not clearly erroneous in concluding that the County lacked a strong basis in evidence to justify race-conscious affirmative action. The appellate court did not prescribe the district court’s analysis or any other specific analysis for future cases. C.C.C.C. Anecdotal EvidenceAnecdotal EvidenceAnecdotal EvidenceAnecdotal Evidence In Croson, Justice O’Connor opined that “evidence of a pattern of individual discriminatory acts can, if supported by appropriate statistical proof, lend support to a local government’s determination that broader remedial relief is justified.”102 Anecdotal evidence should be gathered to determine if minority contractors are systematically being excluded from contracting opportunities in the relevant market area. Remedial measures fall along a sliding scale determined by their intrusiveness on non-targeted groups. At one end of the spectrum are race-neutral measures and policies, such as outreach to the M/WBE community, which are accessible to all segments of the business community regardless of race. They are not intrusive, and in fact, require no evidence of discrimination before implementation. Conversely, race-conscious measures, such as set- asides, fall at the other end of the spectrum and require a larger amount of evidence.103 As will be discussed below, anecdotal evidence will not suffice standing alone to establish the requisite predicate for a race-conscious program. Its great value lies in pointing to remedies that are “narrowly tailored,” the second prong of a Croson study. The following types of anecdotal evidence have been presented and relied upon by the Ninth Circuit, in both Coral Construction and AGCC II, to justify the existence of an M/WBE program: · M/WBEs denied contracts despite being the low bidders —Philadelphia104 · Prime contractors showing MBE bids to non-minority subcontractors to find a available applicants in the employment context). 101 Cf. EEOC v. American Nat’l Bank, 652 F.2d 1176, 1196-1197 (4th Cir.), cert. denied, 459 U.S. 923 (1981). (In the employment context, actual applicant flow data may be rejected where race coding is speculative or nonexistent). 102 Croson, 488 U.S. at 509. The Court specifically cited to Teamsters, 431 U.S. at 338. 103 Cf. AGCC II, 950 F.2D at 1417-18 (in finding that an ordinance providing for bid preferences was narrowly tailored, the Ninth Circuit stated that the program encompassed the required flexibility and stated that “the burdens of the bid preferences on those not entitled to them appear relatively light and well distributed. . . . In addition, in contrast to remedial measures struck down in other cases, those bidding have no settled expectation of receiving a contract. [Citations omitted.]”). 104 Philadelphia, 6 F.3d at 1002. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-20 non-minority firm to underbid the MBEs —Cone Corporation v. Hillsborough County105 · M/WBEs’ inability to obtain contracts for private sector work — Coral Construction106 · M/WBEs told that they were not qualified, although they were later found to be qualified when evaluated by outside parties — AGCC 107 · Attempts to circumvent M/WBE project goals — Concrete Works I108 · Harassment of M/WBEs by an entity's personnel to discourage them from bidding on an entity's contracts — AGCC109 Courts must assess the extent to which relief measures disrupt settled “rights and expectations” when determining the appropriate corrective measures.110 Presumably, courts would look more favorably upon anecdotal evidence, which supports a less intrusive program than a more intrusive one. For example, if anecdotal accounts related experiences of discrimination in obtaining bonds, they may be sufficient evidence to support a bonding program that assists M/WBEs. However, these accounts would not be evidence of a statistical availability that would justify a racially limited program such as a set-aside. As noted above, in Croson, the Supreme Court found that the City of Richmond’s MBE program was unconstitutional, because the City lacked proof that race-conscious remedies were justified. However, the Court opined that “evidence of a pattern of individual discriminatory acts can, if supported by appropriate statistical proof, lend support to a local government’s determination that broader remedial relief is justified.”111 In part, it was the absence of such evidence that proved lethal to the program. The Supreme Court stated that “[t]here was no direct evidence of race discrimination on the 105 Cone Corporation v. Hillsborough County, 908 F.2d at 916 (11th Cir.1990). 106 For instance, where a small percentage of an MBE or WBE’s business comes from private contracts and most of its business comes from race or gender-based set-asides, this would demonstrate exclusion in the private industry. Coral Construction, 941 F.2d 910 at 933 (WBE’s affidavit indicated that less than 7 percent of the firm’s business came from private contracts and that most of its business resulted from gender-based set-asides). 107 AGCC II, 950 F.2d at 1415. 108 Concrete Works, 36 F.3d at 1530. 109 AGCC II, 950 F.2d at 1415. 110 Wygant, 476 U.S. at 283. 111 Croson, 488 U.S. at 509, citing Teamsters, 431 U.S. at 338. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-21 part of the city in letting contracts or any evidence that the city’s prime contractors had discriminated against minority-owned subcontractors.”112 This was not the situation confronting the Ninth Circuit in Coral Construction. There, the 700-plus page appellate records contained the affidavits of “at least 57 minorities or women contractors, each of whom complain in varying degrees of specificity about discrimination within the local construction industry. These affidavits certainly suggest that ongoing discrimination may be occurring in much of the King County business community.”113 Nonetheless, this anecdotal evidence standing alone was insufficient to justify King County’s MBE program since “[n]otably absent from the record, however, is any statistical data in support of the County’s MBE program.”114 After noting the Supreme Court’s reliance on statistical data in Title VII employment discrimination cases and cautioning that statistical data must be carefully used, the Court elaborated on its mistrust of pure anecdotal evidence: Unlike the cases resting exclusively upon statistical deviations to prove an equal protection violation, the record here contains a plethora of anecdotal evidence. However, anecdotal evidence, standing alone, suffers the same flaws as statistical evidence. Indeed, anecdotal evidence may even be less probative than statistical evidence in the context of proving discriminatory patterns or practices.115 The Court concluded its discourse on the potency of anecdotal evidence in the absence of a statistical showing of disparity by observing that “rarely, if ever, can such evidence show a systemic pattern of discrimination necessary for the adoption of an affirmative action plan.”116 Two other circuit courts also suggested that anecdotal evidence might be dispositive, while rejecting it in the specific case before them. For example, in Contractors Ass’n, the Third Circuit Court of Appeals noted that the Philadelphia City Council had “received testimony from at least fourteen minority contractors who recounted personal experiences with racial discrimination,” which the district court had “discounted” because it deemed this evidence to be “impermissible” for consideration under Croson.117 The circuit court 112 Id. at 480. 113 Coral Construction, 941 F.2d at 917-18. 114 Id. at 918 (emphasis added) (additional statistical evidence gathered after the program had been implemented was also considered by the court and the case was remanded to the lower court for an examination of the factual predicate). 115 Id. at 919. 116 Id. 117 Philadelphia, 6 F.3d at 1002. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-22 disapproved of the district court’s actions because in its view the court’s rejection of this evidence betrayed the court’s role in disposing of a motion for summary judgment.118 “Yet,” the circuit court stated: given Croson’s emphasis on statistical evidence, even had the district court credited the City’s anecdotal evidence, we do not believe this amount of anecdotal evidence is sufficient to satisfy strict scrutiny [quoting Coral, supra]. Although anecdotal evidence alone may, in an exceptional case, be so dominant or pervasive that it passes muster under Croson, it is insufficient here.119 The District of Columbia Circuit Court echoed the Ninth Circuit’s acknowledgment of the rare case in which anecdotal evidence is singularly potent in O’Donnell Construction v. District of Columbia.120 The court found that in the face of conflicting statistical evidence, the anecdotal evidence there was not sufficient: It is true that in addition to statistical information, the Committee received testimony from several witnesses attesting to problems they faced as minority contractors. Much of the testimony related to bonding requirements and other structural impediments any firm would have to overcome, no matter what the race of its owners. The more specific testimony about discrimination by white firms could not in itself support an industry-wide remedy [quoting Coral]. Anecdotal evidence is most useful as a supplement to strong statistical evidence—which the Council did not produce in this case.121 The Eleventh Circuit is also in accord. In applying the “clearly erroneous” standard to its review of the district court’s decision in Dade County, it commented that “[t]he picture painted by the anecdotal evidence is not a good one.”122 However, it held that this was not the “exceptional case” where, unreinforced by statistics, the anecdotal evidence was enough.123 In Concrete Works I, the Tenth Circuit Court of Appeals described the type of anecdotal 118 Id. at 1003. 119 Id. 120 963 F.2d at 427 (D.C. Cir.1992). 121 Id. 122 Engineering Conctractors Ass’n of South Florida v. Metropolitan Dade County, 943 F.Supp 1546 (S.D. Fla. 1996), aff’d, 122 F.3d 895 (11th Cir. 1997). 123 Id. at 926. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-23 evidence that is most compelling: evidence within a statistical context. In approving of the anecdotal evidence marshaled by the City of Denver in the proceedings below, the court recognized that “[w]hile a fact finder should accord less weight to personal accounts of discrimination that reflect isolated incidents, anecdotal evidence of a municipality’s institutional practices carries more weight due to the systemic impact that such institutional practices have on market conditions.”124 The court noted that the City had provided such systemic evidence. The Ninth Circuit Court of Appeals has articulated what it deems to be permissible anecdotal evidence in AGCC II.125 There, the court approved a “vast number of individual accounts of discrimination” which included numerous reports of MBEs denied contracts despite being the low bidder; MBEs told they were not qualified although they were later found qualified when evaluated by outside parties; MBEs refused work even after they were awarded the contracts as low bidder; and MBEs being harassed by city personnel to discourage them from bidding on city contracts. On appeal, the City points to numerous individual accounts of discrimination to substantiate its findings that discrimination exists in the city’s procurement processes; an “old boy’s network” still exists; and racial discrimination is still prevalent within the San Francisco construction industry.126 Based on AGCC II, it would appear that the Ninth Circuit’s standard for acceptable anecdotal evidence is more lenient than other Circuits that have considered the issue. Taken together, these statements constitute a taxonomy of appropriate anecdotal evidence. The cases suggest that, to be optimally persuasive, anecdotal evidence must satisfy six particular requirements.127 These requirements are that the accounts: · are gathered from minority contractors, preferably those that are “qualified”128 · concern specific, verifiable instances of discrimination129 · involve the actions of governmental officials130 · involve events within the relevant jurisdiction’s market area131 124 Concrete Works I, 36 F.3d at 1530. 125 AGCC II, 950 F.2d 1401. 126 Id. at 1415. 127 Philadelphia, 6 F.3d at 1003. The anecdotal evidence must be “dominant or pervasive.” 128 Philadelphia, 91 F.3d at 603. 129 Coral Construction, 941 F.2d at 917-18. But see Concrete Works II, 321 F.3d at 989. “There is no merit to [plaintiff’s] argument that the witnesses accounts must be verified to provide support for Denver’s burden.” 130 Croson, 488 U.S. at 509. 131 Coral Construction, 941 F.2d at 925. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-24 · discuss the harm that the improper conduct has inflicted on the businesses in question132 · collectively reveal that discriminatory exclusion and impaired contracting opportunities are systemic rather than isolated or sporadic.133 Given that neither Croson nor its progeny identifies the circumstances under which anecdotal evidence alone will carry the day, it is not surprising that none of these cases explicate bright line rules specifying the quantity of anecdotal evidence needed to support a race-conscious remedy. However, the foregoing cases and others provide some guidance by implication. Philadelphia makes clear that 14 anecdotal accounts will not suffice.134 While the matter is not free of countervailing considerations, 57 accounts, many of which appeared to be of the type referenced above, were insufficient to justify the program in Coral Construction. The number of anecdotal accounts relied upon by the district court in approving Denver’s M/WBE program in Concrete Works I is unclear, but by one count the number might have exceeded 139.135 It is, of course, a matter of speculation as to how many of these accounts were indispensable to the court’s approval of the Denver M/WBE program. In addition, as noted above, the quantum of anecdotal evidence that a court would likely find acceptable may depend on the remedy in question. The remedies that are least burdensome to non-targeted groups would likely require a lesser degree of evidence. Those remedies that are more burdensome on the non-targeted groups would require a stronger factual basis likely extending to verification. D.D.D.D. Remedial Statutory SchemeRemedial Statutory SchemeRemedial Statutory SchemeRemedial Statutory Scheme H.B. Rowe Company (Rowe) v. Tippett challenged the constitutionality of the North Carolina General Assembly’s Statute 136-28.4 (Statute), promulgated in 1983.136 The 132 O’Donnell, 963 F.2d at 427. 133 Coral Construction, 941 F.2d at 919. 134 Philadelphia, 6 F.3d. at 1002-03. 135 The Denver City Council enacted its M/WBE ordinance in 1990. The program was based on the results of public hearings held in 1983 and 1988 at which numerous people testified (approximately 21 people and at least 49 people, respectively), and on a disparity study performed in 1990. See Concrete Works of Colorado v. Denver, 823 F.Supp. 821, 833-34. The disparity study consultant examined all of this preexisting data, presumably including the anecdotal accounts from the 1983 and 1988 public hearings, as well as the results of its own 69 interviews, in preparing its recommendations. Id. at 833-34. Thus, short of analyzing the record in the case, it is not possible to determine a minimum number of accounts because it is not possible to ascertain the number of consultant interviews and anecdotal accounts that are recycled statements or statements from the same people. Assuming no overlap in accounts, however, and also assuming that the disparity study relied on prior interviews in addition to its own, the number of M/WBEs interviewed in this case could be as high as 139, and, depending on the number of new people heard by the Denver Department of Public Works in March 1988 (see id. at 833), the number might have been even greater. 136 H.B. Rowe Company v. Tippett, 615 F.3d 233, Court of Appeals, Fourth Circuit (N.C.), July 22, 2010 (NO. 09-1050). Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-25 Statute set forth a general policy to promote the use of small, minority, physically handicapped, and women contractors in non-federally funded State construction projects. The 1983 Statute directed NCDOT to encourage and promote the policy. Seven years later, in 1990, the Statute was amended to include specific participation goals on state funded transportation construction contracts for minority and women-owned businesses. As a result of the amendment, NCDOT created a Minority Business Enterprise and Women Business Enterprise Program (M/WBE Program) for non-federally funded highway and bridge construction contracts. The program for all intent and purpose mirrored the federal DBE Program pursuant to 49 CFR Part 26. In 1991, the Statute was challenged in District court regarding its constitutionality. The District court ruled in favor of the plaintiff, stating that in order to implement race-conscious measures to remedy discrimination the governmental entity must identify with “some specificity” the racial discrimination it seeks to remedy. As a result of the District court decision, NCDOT suspended its M/WBE program in 1991. In 1993 NCDOT commissioned a disparity study on state-funded transportation construction contracts. The study determined that minority and women subcontractors were underutilized at a statistically significant level and the M/WBE Program was re- implemented. In 1998, the North Carolina General Assembly again commissioned an update to the 1993 study. The 1998 update study concluded that minority and women- owned businesses continued to be underutilized in State-funded road construction contracts. In 2002, Rowe was denied a NCDOT contract because the company’s bid included 6.6 percent women subcontractor participation and no minority subcontractor participation. NCDOT claimed that Rowe failed to meet the good faith effort requirements. A third study was commissioned in 2004 to again study minority and women contractor participation on the State’s highway construction industry. In 2006, relying on the 2004 study, the North Carolina General Assembly amended Statute 136-28.4. The principal modifications were: · Remedial action should only be taken when there is a strong basis in evidence of ongoing effects of past or present discrimination that prevents or limits disadvantaged minority and women-owned businesses from participating as subcontractors in State-funded projects. · The minority/women classification was limited to those groups that suffered discrimination. · A disparity study should be performed every five years to respond to changing conditions. · Inclusion of a sunset provision was included. First, the court considered whether the statutory scheme as it relates to minorities survives the strict scrutiny standard. The circuit court reviewed the statistical evidence Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-26 detailed in the 2004 disparity study to determine if the statutory scheme was based on strong statistical evidence to implement race-conscious subcontractor goals. The statistical evidence was also examined to determine if the statute’s definition of minorities was over-inclusive by including minority groups that did not suffer discrimination pursuant to the statistical standards set forth in the 2004 disparity study. The court did not consider whether the statistical methodology employed in the 2004 disparity study was sufficient to support a compelling state interest. The court noted and accepted that the statistical measure to determine whether the underutilization of minorities on the State’s subcontracts was statistically significant was the disparity index. The 2004 disparity study calculated a disparity at .05 confidence level. A statistical calculation is significant at the .05 confidence level because the probability of that result occurring by chance is 5 percent or less.137 The .05 confidence level is used in social sciences as a marker of when a result is a product of some external influence, rather than ordinary variation or sampling error.138 While the circuit court admonished that ‘the study itself sets out the standard by which one could confidently conclude that discrimination was at work” but the standard was not followed in the State’s statutory scheme. The statistical evidence in the 2004 disparity study demonstrated that African American and Native American subcontractors were underutilized at a disparity index of .05 and Hispanic American and Asian American subcontractors were also underutilized but not at a .05 confidence level. The 2004 Study determined that underutilization was not statistically significant. Therefore, the statutory scheme was ruled narrowly tailored to achieve the State’s compelling interest as it relates to African American and Native American subcontractors but not Hispanic American and Asian American subcontractors. Thus the State provided a strong basis in evidence for minority subcontractor participation goals pertaining to African American and Native American subcontractors. Second, the court considered whether the statutory scheme as it relates to women survives the intermediate scrutiny standard. The evidence demonstrated that the State’s prime contractors “substantially over-utilized” women-owned businesses on public road construction projects. The 2004 disparity study calculated the overutilization of women subcontractors as statistically significant at a 96 percent confidence level. The circuit court further noted that the private sector evidence was insufficient to overcome the strong evidence of overutilization. Consequently, the circuit court determined that the evidence in the 2004 disparity study did not provide “exceedingly persuasive justification” to include women-owned businesses in gender-based remedies. 137 Fourth Circuit Court citing, Research Methods and Statistics: A Critical Thinking Approach, Sherri L. Jackson, (3ed. 2009). 138 Fourth Circuit Court citing, The Practice of Social Research, Earl Babbie, (12th ed. 2010). Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-27 In light of the Rowe decision, caution should be exercised when determining which minority or gender group is appropriate for race-conscious or gender-conscious remedies. For an MBE program to be narrowly tailored there must be a statistical finding of underutilization of minority subcontractors. Where the underutilization of a minority group is not found to be statistically significant, the minority group should not be included in race-conscious remedies. The intermediate scrutiny standard for gender classifications can be met with statistical evidence of underutilization that is not statistically significant. However, this does not apply when there is demonstrated overutilization. Women-owned businesses should be considered for gender-based remedies when the statistical evidence demonstrates that the overutilization is not statistically significant. V.V.V.V. CONSIDERATION OF RACECONSIDERATION OF RACECONSIDERATION OF RACECONSIDERATION OF RACE----NEUTRAL NEUTRAL NEUTRAL NEUTRAL OPTIONSOPTIONSOPTIONSOPTIONS A remedial program must address the source of the disadvantage faced by minority businesses. If it is found that race discrimination places MBEs at a competitive disadvantage, an MBE program may seek to counteract the situation by providing MBEs with a counterbalancing advantage.139 On the other hand, an MBE program cannot stand if the sole barrier to minority or woman-owned business participation is a barrier which is faced by all new businesses, regardless of ownership.140 If the evidence demonstrates that the sole barrier to M/WBE participation is that M/WBEs disproportionately lack capital or cannot meet bonding requirements, then only a race-neutral program of financing for all small firms would be justified.141 In other words, if the barriers to minority participation are race-neutral, then the program must be race-neutral or contain race-neutral aspects. The requirement that race-neutral measures be considered does not mean that they must be exhausted before race-conscious remedies can be employed. The district court recently wrote in Hershell Gill Consulting Engineers, Inc. v. Miami-Dade County: The Supreme Court has recently explained that although “narrow tailoring does not require exhaustion of every conceivable race-neutral alternative” it “does require serious, good faith consideration of workable race-neutral alternatives that will achieve ... diversity[.]” Grutter, 123 S.Ct, at 2344, 139 AGCC II, 950 F.2d at 1404. 140 Croson, 488 U.S. at 508. 141 Id. at 507. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-28 2345. The County has failed to show the necessity for the relief it has chosen, and the efficacy of alternative remedies has not been sufficiently explored.142 If the barriers appear race-related but are not systemic, then the remedy should be aimed at the specific arena in which exclusion or disparate impact has been found. If the evidence shows that in addition to capital and bonding requirements, which are race- neutral, MBEs also face race discrimination in the awarding of contracts, then a race- conscious program will stand, so long as it also includes race-neutral measures to address the capital and bonding barriers.143 The Ninth Circuit Court of Appeals in Coral Construction ruled that there is no requirement that an entity exhaust every possible race-neutral alternative.144 Instead, an entity must make a serious, good faith consideration of race-neutral measures in enacting an MBE program. Thus, in assessing MBE utilization, it is imperative to examine barriers to MBE participation that go beyond “small business problems.” The impact on the distribution of contracts programs that have been implemented to improve MBE utilization should also be measured.145 VI.VI.VI.VI. ENVIRONMENTAL PROTECTION AGENCY ENVIRONMENTAL PROTECTION AGENCY ENVIRONMENTAL PROTECTION AGENCY ENVIRONMENTAL PROTECTION AGENCY FAIR SHARE OBJECTIVE FAIR SHARE OBJECTIVE FAIR SHARE OBJECTIVE FAIR SHARE OBJECTIVE The Environmental Protection Agency (EPA) implemented its minority business and women-owned business program for States, local governments and Indian Tribes through its Uniform Administrative Requirements for Grants and Cooperative Agreements to State and local Governments, 40 CFR Part 31 and the Guidance for Utilization of Small, Minority and Women's Business Enterprises in Procurement Under Assistance Agreements (Guidance). The Guidance was promulgated via Public Law 101-507, Public Law 101-549, and Public Law 102-389. 142 Hershell Gill, 333 F.Supp. 2d 1305, 1330 (S.D.Fla. 2004). 143 Id. (upholding MBE program where it operated in conjunction with race-neutral measures aimed at assisting all small businesses). 144 Coral Construction Co. v. King County, 941 F.2d 910 (9th Cir. 1991). 145 Dade County, 122 F.3d at 927. At the same time, the Eleventh Circuit’s caveat in Dade County should be kept in mind: “Supreme Court decisions teach that a race-conscious remedy is not merely one of many equally acceptable medications that a government may use to treat race-based problems. Instead, it is the strongest of medicines, with many potentially harmful side- effects, and must be reserved to those severe cases that are highly resistant to conventional treatment.” For additional guidance, see supra the discussion of narrow tailoring in Concrete Works, Adarand,, County of Cook, and City of Chicago. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-29 1. Fair Share Policy The EPA initiated fair share objectives in its final rule set forth in 40 CFR Parts 30, 31, 33, 35, and 40 effective May 27, 2008 to ensure, Disadvantaged Business Enterprises (DBEs) are afforded the maximum practicable opportunity to participate in EPA-awarded financial assistance programs. The final rule removed EPA’s regulatory provisions for MBE and WBE fair share objectives and replaced them with DBE provisions codified in 40 CFR Part 33. The fair share policy is applicable to prime contractor and subcontractor procurements for supplies, construction, equipment and services under EPA grants, cooperative agreements, interagency agreements and loans. 2. Fair Share Objectives The fair share objectives for DBEs are negotiated with the States, Indian Tribes and under certain circumstances a regional fair share objective may also be negotiated with the state and local recipients within the respective region. Pursuant to Section 40 CFR Section 33.403 a fair share objective is “based on the capacity and availability of qualified, certified DBEs in the relevant geographic market. Enumerated businesses are those that provide the construction, equipment, services and supplies procured for EPA-assisted contracts. Fair share objectives are applicable to EPA’s Wastewater Treatment Construction Grants Program, Superfund Program, Clean Water State Revolving Fund (SRF) Program, and Drinking Water State Revolving Fund (SRF) Program. EPA’s Regional Administrator is responsible for negotiating an overall fair share objective with States receiving capitalization grants under the Clean Water State Revolving Fund Program, the Drinking Water State Revolving Fund Program, the Wastewater Treatment Construction Grants Program, and the Superfund Program. The methodology required to calculate DBE availability and the fair share objectives is set forth in 40 CFR Part 33, Subpart D. Recipients are required to submit documentation to reflect the data considered and the methods used to calculate the fair share objectives prior to EPA approval. The documentation is reviewed by the EPA to ensure that the method used to determine the proposed fair share is reasonable. VII.VII.VII.VII. CONCLUSIONCONCLUSIONCONCLUSIONCONCLUSION The decision of the U.S. Supreme Court in the Croson and Adarand cases changed the legal landscape for business affirmative action programs. The U.S. Supreme Court altered the authority of local government to use local and federal funds to institute Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-30 remedial race-conscious public contracting programs. This chapter has examined what Croson, Adarand, and their progeny require for MSD to institute a constitutional race and/or gender-conscious public contracting program. As discussed above, a disparity study must provide the factual predicate for any legal race and/or gender-conscious affirmative action contracting program. Depending on the Disparity Study findings, MSD may consider race-based remedies for its federally assisted contracts. VIII.VIII.VIII.VIII. LIST OF AUTHORITIES LIST OF AUTHORITIES LIST OF AUTHORITIES LIST OF AUTHORITIES A.A.A.A. CasesCasesCasesCases Adarand Constructors, Inc. v. Federico Pena, 115 S.Ct. 2097 (1995). Associated General Contractors of California v. City and County of San Francisco, 813 F.2d 922 (9th Cir. 1987). Associated General Contractors of California v. Coalition for Economic Equity and City and County of San Francisco, 950 F.2d 1401 (9th Cir. 1991). Associated General Contractors of Connecticut v. City of New Haven, 791 F.Supp. 941 (D. Conn. 1992). Associated General Contractors of Ohio v. Drabik, 50 F.Supp. 741 (S.D. Ohio 1999). Builders Ass’n of Greater Chicago v. City of Chicago, 298 F.Supp2d 725 (N.D.Ill. 2003). Builders Ass’n of Greater Chicago v. County of Cook, 256 F.3d 642 (7th Cir. 2001). C&C Construction v. Sacramento Municipal Utility District (SMUD), 122 Cal. App. 4th 284 (Cal. App. 2004). City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989). Concrete Works of Colorado v. City and County of Denver, 823 F.Supp. 821 (D. Colo. 1993). Concrete Works of Colorado v. City and County of Denver, 36 F.3d 1513 (10th Cir. 1994). “Concrete Works I” Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-31 Concrete Works of Colorado v. City and County of Denver, on remand, 86 F.Supp.2d 1042 (D. Colo 2000) Concrete Works of Colorado v. City and County of Denver, 321 F.3d 950 (10th Cir. 2003), petition for cert. denied, (U.S. Nov. 17, 2003) (No. 02-1673). “Concrete Works II” Cone Corporation v. Hillsborough County, 908 F.2d 908 (11th Cir. 1990). Contractors Association of Eastern Pennsylvania v. City of Philadelphia, 6 F.3d 990 (3rd Cir. 1993), on remand, 893 F.Supp. 419 (E.D. Penn. 1995), aff’d, 91 F.3d 586 (3rd Cir. 1996). Coral Construction Co. v. King County, 941 F.2d 910 (9th Cir. 1991), cert. denied, 112 S.Ct. 875 (1992). Coral Construction v. City and County of San Francisco, 116 Cal. App. 4th 6 (2004). Craig v. Boren, 429 U.S. 190 (1976). EEOC v. American Nat’l Bank, 652 F.2d 1176 (4th Cir. 1981), cert. denied, 459 U.S. 923 (1981). Engineering Contractors Ass’n of South Florida v. Metropolitan Dade County, 943 F. Supp. 1546 (S.D. Fla. 1996), aff’d, 122 F.3d 895 (11th Cir. 1997). Ensley Branch N.A.A.C.P. v. Seibels, 31 F.3d 1548 (11th Cir. 1994). Gratz v. Bollinger, 123 S.Ct, 2411 (2003). Hayes v. North State Law Enforcement Officers Ass’n, 10 F.3d 207 (4th Cir. 1993). Hazelwood School District v. United States, 433 U.S. 299 (1977). Hershell Gill Consulting Engineers, Inc. v. Miami-Dade County, 333 F.Supp. 2d 1305 (S.D.Fla. 2004). Hi-Voltage v. City of San Jose, 24 Cal. 4th 537 (Cal. 2000). International Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977). League of United Latin American Citizens v. Santa Ana, 410 F.Supp. 873 (C.D. Cal. 1976). Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 1-32 Michigan Road Builders Association v. Milliken, 834 F.2d 583 (6th Cir. 1987). Mississippi University for Women v. Hogan, 458 U.S. 718 (1982). Monterey Mechanical Co. v. Pete Wilson et al., 125 F.3d 702 (9th Cir. 1997). North Shore Concrete and Assoc. v. City of New York, 1998 U.S. Dist. LEXIS 6785 (EDNY 1998). O’Donnell Construction Company v. District of Columbia, 963 F.2d 420 (D.C. Cir. 1992). Ohio Contractors Ass’n v. Keip, 1983 U.S. App. LEXIS 24185 (6th Cir. 1983). Reynolds v. Sheet Metal Workers, Local 102, 498 F.Supp 952 (D. D.C. 1980), aff’d, 702 F.2d 221 (D.C. Cir. 1981). RGW Construction v. San Francisco Bay Area Rapid Transit District, No. C92-2938 THE (N.D. Cal. Sept. 18, 1992). H.B. Rowe Company v. North Carolina Department of Transportation, 615 F.3d 233, Court of Appeals, Fourth Circuit (N.C.), July 22, 2010 (NO. 09-1050). Shaw v. Hunt, 517 U.S. 899 (1996). S.J. Groves & Sons v. Fulton County, 920 F.2d 752 (11th Cir. 1991). United States v. Virginia, 116 S.Ct. 2264 (1996). Ward Connerly v. State Personnel Board, 92 Cal. App. 4th 16 (Cal. 2001). Wygant v. Jackson Board of Education, 476 U.S. 267 (1986). B.B.B.B. StatutesStatutesStatutesStatutes 42 U.S.C. Section 14000e et seq. 40 CFR Parts 30, 31, 33, 35, and 40. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 2-1 CHAPTER 2: CONTRACTING AND CONTRACTING AND CONTRACTING AND CONTRACTING AND PROCUREMENT POLICIESPROCUREMENT POLICIESPROCUREMENT POLICIESPROCUREMENT POLICIES I.I.I.I. INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION This chapter reviews the Metropolitan St. Louis Sewer District (District) contracting and procurement policies and federal regulations governing the District’s purchase of capital improvements and replacement plan (CIRP) projects, engineering professional services, non-engineering professional services, supplies, and contractual services during the period of July 1, 2007 through January 31, 2012. The District was chartered in 1954 as a political subdivision of the State of Missouri with a six member Board of Trustees (Board). Three members of the Board are appointed by the St. Louis County Executive and three by the Mayor of the City of St. Louis. The District is the fourth largest sewer system in the United States with a territory covering 525 square miles. This large system consists of 2,980 sewer miles of stormwater sewer lines, 4,741 miles of sanitary sewer lines, and 1,928 miles of combined sewer lines. The District’s Purchasing Division handles procurements under the management of the Purchasing Manager. The Director of Finance appoints the Purchasing Manager. District agencies and departments submit requisitions to the Purchasing Division to initiate the procurement process. The Purchasing Division oversees the solicitation process through the contract award. II.II.II.II. GOVERNING LAWS AND REGULATIONSGOVERNING LAWS AND REGULATIONSGOVERNING LAWS AND REGULATIONSGOVERNING LAWS AND REGULATIONS The applicable District and federal laws governing District purchasing are outlined in Table 2.01 below: Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 2-2 Table 2.01: Governing Laws and Regulations THE METROPOLITAN ST. LOUIS SEWER DISTRICT ADMINISTRATIVE ORDINANCES AND RESOLUTIONS The Metropolitan St. Louis Sewer District Board of Trustees, Ordinance 9845 The Metropolitan St. Louis Sewer District Board of Trustees, Ordinance 8879 The Metropolitan St. Louis Sewer Board of Trustees, General Management Policy/Procedure The Metropolitan St. Louis Sewer District Board of Trustees, Resolution No. 2717 FEDERAL LAWS AND REGULATIONS United States Environmental Protection Agency, Environmental Program Grants United States Environmental Protection Agency, Fair Share Objectives A.A.A.A. The MetropThe MetropThe MetropThe Metropolitan St. Louis Sewer District olitan St. Louis Sewer District olitan St. Louis Sewer District olitan St. Louis Sewer District Administrative Administrative Administrative Administrative OrdinancesOrdinancesOrdinancesOrdinances and Resolutionand Resolutionand Resolutionand Resolutionssss 1. The Metropolitan St. Louis Sewer District Board of Trustees, Ordinance 9845 Ordinance 9845, otherwise known as the Purchasing Code, was promulgated on April 18, 1996. The Purchasing Division is responsible for purchasing the necessary and appropriate supplies, materials, and other services, except insurance, construction, and personal services contracts. 2. The Metropolitan St. Louis Sewer District Board of Trustees, Ordinance 8879 Ordinance 8879 was promulgated on between February 10, 1993, amended June 9, 1993, and sets forth specific requirements for requirements for Capital Improvement and Replacement Plan (CIRP) projects. The CIRP applies to all projects involving capital improvements, except emergency work or repairs requiring prompt attention and ordinary maintenance. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 2-3 3. The Metropolitan St. Louis Sewer District Board of Trustees, General Management Policy/Procedure The General Management Policy/Procedure, issued on March 1, 2011, delineates the procedures for the procurement of engineering, architectural, and survey consultants for CIRP projects and engineering professional services contracts with the District. 4. The Metropolitan St. Louis Sewer District Board of Trustees, Resolution No. 27171 Resolution No. 2717, adopted on July 12, 2007, sets forth the Minority and Women- owned Business Enterprise (M/WBE) policy and goals as adopted by the Board of Trustees. The purpose of the M/WBE policy goals is to ensure that M/WBEs are afforded maximum opportunity to participate in District projects, including those funded all or in part by either the State of Missouri or the Federal Government. The M/WBE goals apply to the procurement of building construction, non-building construction, and professional services contracts. B.B.B.B. Federal Laws and RegulationsFederal Laws and RegulationsFederal Laws and RegulationsFederal Laws and Regulations 1. United States Environmental Protection Agency, Environmental Program Grants Title 40 Code of Federal Regulations Subpart 35, revised January 2001, sets forth the administrative requirements for grants awarded by the EPA. Subpart 35 codifies the policies and procedures for financial assistance awarded by the EPA to state, interstate, and local agencies for pollution abatement and control programs. The provisions supplement the EPA general assistance regulations contained in 40 CFR Part 31. 2. United States Environmental Protection Agency, Fair Share Objectives Title 40 Part 33, Subpart D, revised March 2008, sets forth the requirements for negotiating fair share objectives for MBE and WBE participation on EPA-funded contracts. EPA recipients must negotiate fair share objectives with EPA or negotiate separate fair share objectives with entities receiving identified loans, as long as the separate objectives are based on demonstrable evidence of availability of MBEs and WBEs in accordance with Subpart D. 1 In March 2012 the District adopted Resolution No. 3017 which revised interim M/WBE goals. Resolution No. 3017 is outside the time period of the Disparity Study, which cover the period from July 1, 2006 through June 30, 2011. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 2-4 III.III.III.III. DEFINITIONSDEFINITIONSDEFINITIONSDEFINITIONS The District’s procurement standards define five industries: · Capital Improvements and Replacement Plan (CIRP) projects, also known as building and non-building construction services, include all capital improvement projects, wastewater collection, and treatment facilities. · Contractual Services include all services not identified as professional services. · Engineering Professional Services include architecture, engineers, engineering design services, land surveyors, planning and management consultants, and construction management consultants. · Non-Engineering Professional Services include architectural services, armed security guard services, claims adjusters, computer facilities management, computer programming services, financial auditing, financial consulting services, general investment advisory or consulting services, insurance advisory/consulting services or insurance broker of record, landscape design services, lawyers, legal services, pension fund investment portfolio management, pension fund trustee services, pension plan actuarial services, public relations services, rates consulting, real estate appraisal services, and real estate brokerage services. · Supplies include all materials and equipment. IV.IV.IV.IV. PROCUREMENT PROCESS OVERVIEWPROCUREMENT PROCESS OVERVIEWPROCUREMENT PROCESS OVERVIEWPROCUREMENT PROCESS OVERVIEW Procurement methods depend on the dollar threshold of the solicitation and the industry. The procurement process is intended to provide the best value for the District, while providing an open and fair process for vendors. The District is also committed to increasing the involvement of M/WBEs in the procurement process and providing M/WBEs a fair opportunity to compete for all District contracts. Table 2.02 below summarizes the District’s procurement guidelines. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 2-5 Table 2.02: District Procurement Process PROCUREMENT CATEGORY DOLLAR THRESHOLD ADVERTISING REQUIREMENT SOLICITATION METHOD SELECTION PROCESS PROCUREMENT APPROVAL Informal Procurements Supplies and Contractual Services Less than $1,000 None None Purchases may be directly made by the department using a purchase order Manager of the Using Department, Purchasing Manager or Director of Finance Supplies and Contractual Services Between $1,000 and $24,999 None At least three telephone or written quotes Awarded to lowest, responsive, and responsible bidder Purchasing Manager or Director of Finance FORMAL PROCUREMENTS Supplies and Contractual Services Greater than $25,000 Yes, in one or more newspapers of general circulation in the District at least 7 days preceding the day set for receipt of proposals IFB Awarded to lowest, responsive, and responsible bidder Purchasing Manager or Director of Finance Non-Engineering Professional Services All Yes RFP Awarded to lowest, responsive, and responsible bidder Purchasing Manager or Director of Finance Capital Improvement and Replacement Plan (CIRP) Projects None Yes, in one daily or weekly newspaper of general circulation not less frequently than once a week for three week consecutive weeks with the last date of publication being not less than seven RFB to all prequalified contractors Awarded to lowest, responsive, and responsible bidder Board of Trustees Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 2-6 PROCUREMENT CATEGORY DOLLAR THRESHOLD ADVERTISING REQUIREMENT SOLICITATION METHOD SELECTION PROCESS PROCUREMENT APPROVAL days preceding the date bid end date Engineering Professional Services Less than $500,000 None RFPs will be sent to 3 bidders from pre-qualified list Awarded to the best and fairest rates Board of Trustees Engineering Professional Services Greater than $500,000 None RFQs, with a minimum of 3 bidders. RFPs will be sent to short listed bidders Awarded to the best and fairest rates Board of Trustees OTHER PROCUREMENTS Emergency Purchases (Declared) Between $1,000 and $24,999 None None Obtain a purchase order number from the Purchasing Division Purchasing Manager or Director of Finance Emergency Purchases (Declared) Greater than $25,000 None None Purchase order must be filed by the department Director to the Board of Trustees and Director Finance Board of Trustees and Director of Finance Immediate Need Purchases Greater than $25,000 None None Lowest lowest responsible and responsive bidder Purchasing Manager/Director of Finance Sole Source Purchase Greater than $25,000 None None None Director of Finance Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 2-7 A.A.A.A. Informal ProcurementsInformal ProcurementsInformal ProcurementsInformal Procurements The Purchasing Code requires that the District use the informal procurement process for all supplies and contractual services not exceeding $24,999. Contracts within this threshold require competition, but no formal advertisements. 1. All Supplies and Contractual Services under $1,000 The using department may use a purchase order when the value of supplies and services is less than $1,000. 2. All Supplies and Contractual Services from $1,000 to $24,999 Three telephone or written quotes are required when the value of supplies and services is from $1,000 to $24,999. B.B.B.B. Formal Formal Formal Formal ProcurementsProcurementsProcurementsProcurements The Purchasing Code requires the District to use the formal procurement process for supplies and contractual services at $25,000 or greater, and all CIRP, non-engineering, professional, and engineering services. Contracts within this threshold require advertisement and competitive solicitation. The formal procurement process is determined according to procurement category. There are three solicitation methods for formal procurements: Request for Qualifications (RFQ), Invitation for Bid (IFB), and Request for Proposal (RFP). Each method includes the following: 1) bid/proposal preparation; 2) advertisement and solicitation; 3) bid receipt and opening; 4) evaluation; and 5) contract award. Some solicitations may require a RFQ upon the approval of the Purchasing Division. The General Management Policy/Procedure requires all prime contractors submit a Qualification Form with the Engineering Department in order to be placed on a pre-qualification list to be used for considering for CIRP and engineering professional services contracts. 1. Competitive Sealed Bids for Supplies and Contractual Services Competitive sealed bids are used to solicit bids for supplies and contractual services using the IFB process. Solicitations are advertised in one or more newspapers of general circulation in the District at least once for seven days or more prior to the bid opening date. The Purchasing Manager or the Director of Finance awards competitive sealed bids to the lowest, responsive, and responsible bidder meeting or exceeding advertised specifications. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 2-8 The solicitation process includes the following general requirements: · The bid name and number must be placed on the envelope and delivered to the Purchasing Division. · The IFB must be opened in public at the location, date, and time specified on the solicitation. 2. Competitive Sealed Bids for Non-Engineering Professional Services Competitive sealed bids are solicited for non-engineering professional services using the RFP process. Non-engineering professional services are subject to evaluation by the Evaluation Team designated by the requesting department. The RFP is not opened in public. The Evaluation Team makes a recommendation to the directors of the requesting departments to award to the lowest responsive, responsible bidder meeting or exceeding advertised specifications. The Board of Trustees awards competitive sealed bids for all professional services to the lowest, responsive, and responsible bidder meeting or exceeding advertised specifications as evaluated using the criteria set forth in the RFP. 3. Competitive Sealed Bids for CIRP Projects Competitive sealed bids are solicited for CIRP contracts using the IFB process. Ordinance 8879 sets standards and regulations for the acquisition of CIRP project contracts. Ordinance 8879 requires the Procurement Department to make the IFB public and publish it in a daily or weekly newspaper of general circulation for at least once a week for three consecutive weeks with the last date of publication being not less than seven days prior to the bid end date set forth in the IFB. The Board of Trustees awards contracts, using competitive sealed bids to the lowest, responsive, and responsible bidder, meeting or exceeding advertised specifications. 4. Competitive Sealed Proposals for Engineering Professional Services The General Management Policy/Procedure sets the standards and regulations for the acquisition of engineering professional services contracts. Competitive sealed proposals are solicited for professional services contracts using the RFP process. A Short List Committee, consisting of the Director of Engineering, an Assistant Director of Engineering or Operations, the Director of Operations, and the Manager of Diversity Programs, prepares a short list of at least three (3) consultants from a list of pre-qualified consultants. RFPs are sent to the short-listed firms. The Selection Committee evaluates the firms and uses a point system to make recommendations to the Board of Trustees. The Board of Trustees awards contracts using competitive sealed proposals to the best and fairest bidder meeting or exceeding advertised specifications. In addition, the solicitation process includes the following requirements: · For projects over $500,000, a RFQ will be issued and a short list of at least three (3) consultants will be developed. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 2-9 C.C.C.C. Other ProcurementsOther ProcurementsOther ProcurementsOther Procurements 1. Emergency Purchases (Declared) Emergencies are defined as conditions or concerns likely to cause loss of life, personal injury, property damage, or serious consequence when failure would adversely affect the District. Any emergency purchase of supplies, equipment, and contractual services exceeding $1,000 cannot be made without first obtaining a purchase order number from the Purchasing Division. If there is not sufficient time for the Purchasing Division to issue a purchase order number, the Purchasing Manager or the Director of Finance can authorize the agency or department to make the purchase. A complete record of the reason for the emergency purchase, along with a copy of the requisition and delivery record, must be completed by the Department Manager and sent to the Purchasing Manager. A report of any emergency purchase exceeding $25,000 should be filed by the Manager with the Board of Trustees and the Director of Finance. 2. Immediate Need Purchases (Non-Emergency) Non-emergency immediate need purchases are purchases under conditions that do not qualify as an emergency, but the failure to take prompt action may result in an unnecessary delay that could cause the situation or condition to become an emergency. These purchases apply to supplies, equipment, or services that are required in less than 14 days. The Director of Finance authorizes the Purchasing Manager to secure by the open market procedure the immediate need purchase at the lowest possible price. A complete report with the reasons for the immediate need purchase exceeding $25,000 must be filed by the Purchasing Manager with the Director of Finance and be entered in the Board of Trustees meeting minutes. 3. Sole Source Purchases Sole source purchases include patented and manufactured products; technical services in connection with the assembly, installation, or servicing of highly technical or specialized equipment; and supplies, equipment, or services that are in the District’s best interests. Sole source purchases exceeding $25,000 must be authorized by the Director of Finance. The department must submit a written justification to the Director of Finance for each sole source purchase, including a sufficient explanation that the selected goods or services satisfactorily fulfill the need. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 2-10 V.V.V.V. M/WBE Utilization ProgramM/WBE Utilization ProgramM/WBE Utilization ProgramM/WBE Utilization Program The Board of Trustees adopted Resolution No. 2717 on July 27, 2007 to create the M/WBE Utilization Program. Responsibility for the M/WBE Utilization Program is delegated to the Executive Director. The Manager of Diversity Programs is responsible for overseeing the day-to-day operations of the M/WBE Utilization Program. M/WBE Utilization Goals are set by the Board of Trustees. The M/WBE goals apply to the procurement of building construction, non-building construction, and professional services contracts. In the event that contracts are federally funded, it is the District’s policy to adopt District goals because they exceed the federal requirements. The M/WBE Utilization Goals are summarized below in Table 2.03. Table 2.03: M/WBE Utilization Goals CONTRACT TYPE MINIMUM CONTRACT AMOUNT M/WBE % GOAL APPLIES TO TARGET GROUP All CIRP and Engineering Professional Services Contracts Building Construction $50,000 Overall 25% 10% MBE, 5% WBE minimum 10% MBE or WBE 5% WBE minimum 10% MBE or WBE 10% MBE minimum, 10% MBE or WBE Prime Contractors MBE Prime Contractors WBE Prime Contractors Non-Building Construction $50,000 Overall10% 5% MBE minimum, 5% MBE or WBE 5% WBE or MBE minimum 5% MBE minimum Prime Contractors MBE Prime Contractors WBE Prime Contractors All Professional Services $50,000 20% MBE and/or WBE All Contractors Other Contracts Purchases and Other Services $25,000 10% MBE or WBE All Contractors Federally Funded Projects $50,000 10% MBE, 5% WBE All Contractors Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-1 CHAPTER 3: PRIME PRIME PRIME PRIME CONTRACTOR CONTRACTOR CONTRACTOR CONTRACTOR UTILIZATION ANALYSISUTILIZATION ANALYSISUTILIZATION ANALYSISUTILIZATION ANALYSIS I.I.I.I. INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION The objective of the prime contractor utilization analysis is to determine the level of minority and woman-owned business enterprise (M/WBE) utilization as prime contractors. This analysis is the first step in a disparity study. This chapter documents the Metropolitan St. Louis Sewer District’s (MSD) utilization of M/WBEs as prime contractors during the study period, July 1, 2007 through January 31, 2012. MSD’s expenditures were classified into five industries – 1) building construction, 2) non-building construction, 3) engineering professional services, 4) non-engineering professional services, and 5) supplies and contractual services.1 The contract data is disaggregated into nine ethnic and gender groups. The nine groups are listed in Table 3.01. Table 3.01: Business Ethnic and Gender Groups Ethnicity and Gender Category Definition African American Businesses Businesses owned by male and female African Americans Asian American Businesses Businesses owned by male and female Asian Americans 1 Building construction included wastewater collection and treatment facilities. Building construction included new construction, remodeling, renovation, demolition, and repair of any public structure or building, and other public improvements. Engineering professional services included architecture, engineers, engineering design services, land surveyors, planning and management consultants, and construction management consultants. Non-engineering professional services included architectural services, armed security guard services, claims adjusters, computer facilities management, computer programming services, financial auditing, financial consulting services, general investment advisory or consulting services, insurance advisory/consulting services or insurance broker of record, landscape design services, lawyers, legal services, pension fund investment portfolio management, pension fund trustee services, pension plan actuarial services, public relations services, rates consulting, real estate appraisal services, and real estate brokerage services. Contractual services included all service not identified as professional services. Supplies services included all materials and equipment. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-2 Ethnicity and Gender Category Definition Hispanic American Businesses Businesses owned by male and female Hispanic Americans Native American Businesses Businesses owned by male and female Native Americans Caucasian Female Business Enterprises Businesses owned by Caucasian females Minority Business Enterprises Businesses owned by African American, Asian American, Hispanic American, and Native American males and females Women Business Enterprises Businesses owned by Caucasian Female Minority and Women Business Enterprises Businesses owned by Minority Males, Minority Females, and Caucasian Females Non-Minority Male Business Enterprises Businesses owned by Caucasian Males, businesses that declined to declare their ethnicity, or businesses that could not be identified as minority- or Female-Owned II.II.II.II. PRIME CONTRACT DATA SOURCESPRIME CONTRACT DATA SOURCESPRIME CONTRACT DATA SOURCESPRIME CONTRACT DATA SOURCES The prime contractor data, extracted from three database sources – Application Management Services (AMS), Companies and Intellectual Property Registration Office (CIPRO), and Oracle and included contracts, non-blanket purchase orders and blanket orders. In this chapter the data from each of the databases are referred to as contracts. Most records in the three database sources contained both payment and award data. The data extraction was limited to awards made during the July 1, 2007 to January 31, 2012 study period. The records in each of the three databases had a unique contract or purchase order number; however, there was no system that assigned a unique number to each record when combined. Therefore, when the three database sources were combined, a unique contract number was assigned to each of the records. The assignment of unique contract numbers required sorting and grouping prime contract and payment data by vendor ID, project description, prime contract number, prime award date, and award amount. When the unique combination of values constituted a unique agreement, a unique contract number was assigned. Each prime contract was then classified into one of the five industries. When the contract description was insufficient to assign an industry, Internet research was conducted. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-3 Mason Tillman staff worked closely with MSD using object and organization codes to classify the contracts into the appropriate industry. Cooperative agreements and contracts with non-profits, government agencies, and utilities were excluded from the study. The industry classifications were reviewed and approved by MSD. Once MSD approved the industry classifications, the ethnicity and gender of each prime contractor was verified with MSD data. For prime contractor records that were incomplete, an Ethnicity and Gender Survey was conducted to determine the ethnicity and gender of the business owner. The fact that MSD’s records did not have an ethnic and gender designation for each contractor was a finding consistent with most of Mason Tillman’s studies. It is common to find prime contract records where ethnicity and gender coding is either incomplete or unreliable. Before performing the Ethnicity and Gender Survey, the prime contractor business name was cross-referenced with the certification lists. Prime contractors whose ethnicity and gender could not be verified through a certification list were surveyed. Websites were reviewed for businesses which could not be reached through the survey. Additional Internet research of social media sites, telephone directories and search engines in an effort to identify the business owner’s ethnicity and gender was conducted as needed. When the contract records were cleaned and the prime contractor ethnicity and gender verified, the utilization analysis was performed. III.III.III.III. PRIME CONTRACTOR UTILIZATION PRIME CONTRACTOR UTILIZATION PRIME CONTRACTOR UTILIZATION PRIME CONTRACTOR UTILIZATION THRESHOLDSTHRESHOLDSTHRESHOLDSTHRESHOLDS All of the five industries’ contracts were analyzed at two dollar levels. One level included all contracts regardless of size. A second level included all contracts under $500,000. For supplies and contractual services there was a third threshold. The third threshold included informal contracts that did not require advertising. A $500,000 threshold was designated because there was demonstrated capacity, at this level, within the pool of willing M/WBEs. The informal contract threshold was set forth in MSD’s procurement policy. As described in Table 3.02, the informal contract threshold is $25,000 for supplies and contractual services. MSD’s procurement code does not include an informal threshold for building construction, non-building construction, engineering professional services, and non-engineering professional services. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-4 Table 3.02: Informal Contract Thresholds Industry Informal Contract Threshold Supplies and Contractual Services $25,000 IV.IV.IV.IV. PRIME CONTRACTOR UTILIZATIONPRIME CONTRACTOR UTILIZATIONPRIME CONTRACTOR UTILIZATIONPRIME CONTRACTOR UTILIZATION A.A.A.A. All Prime All Prime All Prime All Prime ContractorsContractorsContractorsContractors As depicted in Table 3.03, MSD issued 40,868 contracts during the July 1, 2007 through January 31, 2012 study period. The 40,868 contracts included 27 for building construction, 772 for non-building construction, 186 for engineering professional services, 337 for non-engineering professional services, and 39,546 for supplies and contractual services. The payments made by MSD during the study period totaled $914,888,875 for the 40,868 contracts. Payments included $265,714,726 for building construction, $288,669,563 for non-building construction, $90,658,256 for engineering professional services, $59,704,115 for non-engineering professional services, and $210,142,214 for supplies and contractual services. Table 3.03: Total Prime Contracts and Dollars Expended: All Industries, July 1, 2007 through January 31, 2012 Industry Number of Contracts Total Award Dollars Building Construction 27 $265,714,726 Non-Building Construction 772 $288,669,563 Engineering Professional Services 186 $90,658,256 Non-Engineering Professional Services 337 $59,704,115 Supplies & Contractual Services 39,546 $210,142,214 Total Expenditures 40,868 $914,888,875 Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-5 B.B.B.B. Highly Used Prime ContractorsHighly Used Prime ContractorsHighly Used Prime ContractorsHighly Used Prime Contractors As depicted in Table 3.04, MSD’s 40,868 prime contracts were awarded to 2,068 unique vendors. Table 3.04: Total Prime Contracts Prime Contracts/ Vendors/Dollars Number of Contracts/ Vendors/Dollars Total Prime Contracts 40,868 Total Utilized Vendors 2,068 Total Expenditures $914,888,875 An analysis was performed to determine the number of the 2,068 vendors that received at least 70 percent of the total prime contract dollars MSD awarded. The analysis determined that 23 vendors, representing 1.11 percent of the 2,068 vendors, received 71 percent of the total prime contract dollars. Table 3.05 below presents the distribution of MSD’s total prime contracts according to the number of vendors. Twenty-three of the 2,068 vendors received $648,397,408 or 71 percent of the total prime contract dollars. These numbers illustrate that a small group or prime contractors received the majority of dollars MSD spent. Table 3.05: Distribution of All Prime Contracts by Number of Vendors Vendor Total Award Dollars Percent of Dollars 23 Highly-Used Vendors $648,397,408 71% 2,068 Total Vendors $914,888,875 100% Table 3.06 presents the ethnic and gender profile of the 23 most highly used prime contractors, representing 71 percent of dollars spent. The highly used prime contractors included African Americans, Caucasian Females and Non-Minority Male businesses. The majority of the highly used prime contractor expenditures went to Non-Minority Male businesses. The size of the individual contracts received by the 23 vendors ranged from $24.55 to $95,485,550. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-6 Table 3.06: Top 23 Highly Used Prime Contractors by Ethnicity and Gender Ethnicity/ Gender Total Award Dollars Percent of Total Dollars African Americans $18,536,822 2.86% Caucasian Females $99,622,552 15.36% Non-Minority Males $530,238,034 81.78% Top 23 Highly Used Prime Contractors $648,397,408 100% As depicted in Table 3.07, MSD’s 27 building construction prime contracts were received by 15 vendors. Table 3.07: Building Construction Prime Contracts Building Construction Contract Awards Details Totals Total Prime Contracts 27 Total Utilized Vendors 15 Total Expenditures $265,714,726 An analysis was performed to determine the number of the 15 vendors that received at least 70 percent of the total building construction prime contract dollars MSD awarded. The analysis determined that 2 vendors, representing 13.33 percent of the 15 vendors, received 82 percent of the total building construction prime contract dollars. Table 3.08 below presents the distribution of MSD’s building construction prime contracts according to the number of vendors. Two of the 15 vendors received $217,460,222 or 82 percent of the total building construction prime contract dollars. These numbers illustrate that a small group of prime contractors received the majority of dollars MSD spent. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-7 Table 3.08: Distribution of Building Construction Prime Contracts by Number of Vendors Vendor Total Award Dollars Percent of Dollars 2 Highly-Used Vendors $217,460,222 82% 15 Total Vendors $265,714,726 100% Table 3.09 presents the ethnic and gender profile of the two most highly used building construction prime contractors, representing 82 percent of dollars spent. The highly used building construction prime contractors were Caucasian Females and Non-Minority Male businesses. The individual contracts received by the two businesses ranged from $1,793.16 to $95,485,550. Table 3.09: Top Two Highly Used Building Construction Prime Contractors by Ethnicity and Gender Ethnicity/ Gender Total Award Dollars Percent of Total Dollars Caucasian Females $99,622,552 45.81% Non-Minority Males $117,837,669 54.19% Top 2 Highly Used Vendors $217,460,222 100.00% As depicted in Table 3.10, MSD’s 772 non-building construction prime contracts were received by 75 vendors. Table 3.10: Non-Building Construction Prime Contracts Building Construction Contract Award Details Totals Total Prime Contracts 772 Total Utilized Vendors 75 Total Expenditures $288,669,563 Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-8 An analysis was performed to determine the number of the 75 vendors that received at least 70 percent of the total non-building construction prime contract dollars MSD awarded. The analysis determined that 7 vendors, representing 9.33 percent of the 75 vendors, received 71 percent of the total non-building construction prime contract dollars. Table 3.11 below presents the distribution of MSD’s non-building prime contracts according to the number of vendors. Seven of the 75 vendors received $206,011,795 or 71 percent of the total non-building construction prime contract dollars. These numbers illustrate that a small group of prime contractors received the majority of dollars MSD spent. Table 3.11: Distribution of Non-Building Construction Prime Contracts by Number of Vendors Vendor Total Award Dollars Percent of Dollars 7 Highly-Used Vendors $206,011,795 72% 75 Total Vendors $288,669,563 100% Table 3.12 presents the ethnic and gender profile of the seven most highly used non- building construction prime contractors representing 71 percent of dollars spent. The most highly used non-building construction prime contractors included African Americans and Non-Minority Male businesses. The majority of the highly used building construction prime contractor expenditures went to Non-Minority Male businesses. The individual contracts received by these seven businesses ranged from $1,862 to $11,542,614.89. Table 3.12: Top Seven Highly Used Non-Building Construction Prime Contractors by Ethnicity and Gender Ethnicity/ Gender Total Award Dollars Percent of Total Dollars African Americans $18,211,086 8.84% Non-Minority Males $187,800,709 91.16% Top 7 Highly Used Vendors $206,011,795 100.00% Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-9 As depicted in Table 3.13, MSD’s 186 engineering professional services prime contracts were received by 49 vendors. Table 3.13: Engineering Professional Services Prime Contracts Engineering Professional Services Contract Award Details Totals Total Prime Contracts 186 Total Utilized Vendors 49 Total Expenditures $90,658,256 An analysis was performed to determine the number of the 49 vendors that received at least 70 percent of the total engineering professional services prime contract dollars MSD awarded. The analysis determined that 10 vendors, representing 20.4 percent of the 49 vendors, received 72 percent of the total engineering professional services prime contract dollars. Table 3.14 below presents the distribution of MSD’s engineering professional services prime contracts according to the number of vendors. Ten of the 49 vendors received $64,871,028 or 72 percent of the total engineering professional services prime contract dollars. These numbers illustrate that a small group of prime contractors received the majority of dollars MSD spent. Table 3.14: Distribution of Engineering Professional Services Prime Contracts by Number of Vendors Vendor Total Award Dollars Percent of Dollars 10 Highly-Used Vendors $64,871,028 72% 49 Total Vendors $90,658,256 100% Table 3.15 presents the ethnic and gender profile of the 10 most highly used engineering professional services prime contractors, representing 72 percent of dollars spent. The most highly used engineering professional services prime contractors included African Americans and Non-Minority Male businesses. The majority of the highly used engineering professional services prime contractor expenditures went to Non-Minority Male businesses. The individual contracts received by the ten businesses ranged from $46,406.74 to $23,000,000. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-10 Table 3.15: Top Ten Highly Used Engineering Professional Services Prime Contractors by Ethnicity and Gender Ethnicity/ Gender Total Award Dollars Percent of Total Dollars African Americans $5,248,312 8.09% Non-Minority Males $59,622,716 91.91% Top 10 Highly Used Vendors $64,871,028 100.00% As depicted in Table 3.16, MSD’s 337 non-engineering professional services prime contracts were received by 35 vendors. Table 3.16: Non-Engineering Professional Services Prime Contracts Non-Engineering Professional Services Contract Award Details Totals Total Prime Contracts 337 Total Utilized Vendors 35 Total Expenditures $59,704,115 An analysis was performed to determine the number of the 35 vendors that received at least 70 percent of the total non-engineering prime contract dollars MSD awarded. The analysis determined that five vendors, representing 14.28 percent of the 35 vendors, received 72 percent of the total non-engineering professional services prime contract dollars. Table 3.17 below presents the distribution of MSD’s non-engineering professional services prime contracts according to the number of vendors. Five of the 35 vendors received $42,882,332 or 72 percent of the total non-engineering professional services prime contract dollars. These numbers illustrate that a small group of prime contractors received the majority of dollars MSD spent. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-11 Table 3.17: Distribution of Non-Engineering Professional Services Prime Contracts by Number of Vendors Vendor Total Award Dollars Percent of Dollars 5 Highly-Used Vendors $42,882,332 72% 35 Total Vendors $59,704,115 100% Table 3.18 presents the ethnic and gender profile of the five most highly used non- engineering professional services prime contractors, representing 75 percent of dollars spent. All of the highly used non-engineering professional services prime contractor expenditures went to Non-Minority Male businesses. The individual contracts received by the five businesses ranged from $21.20 to $6,698,315. Table 3.18: Top Five Highly Used Non-Engineering Professional Services Prime Contractors by Ethnicity and Gender Ethnicity/ Gender Total Award Dollars Percent of Total Dollars Non-Minority Males $42,882,332 100.00% As depicted in Table 3.19, MSD’s 39,546 supplies and contractual services prime contracts were received by 1,941 vendors. Table 3.19: Supplies and Contractual Services Prime Contracts Supplies and Contractual Services Contract Award Details Totals Total Prime Contracts 39,546 Total Utilized Vendors 1,941 Total Expenditures $210,142,214 An analysis was performed to determine the number of the 1,941 vendors that received at least 70 percent of the total supplies and contractual services prime contract dollars MSD awarded. The analysis determined that 60 vendors, representing 3.09 percent of the 1,941 vendors, received 70 percent of the total supplies and contractual services prime contract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-12 Table 3.20 below presents the distribution of MSD’s supplies and contractual services prime contracts according to the number of vendors. Sixty of the 1,941 vendors received $147,621,811 or 70 percent of the total supplies and contractual services prime contract dollars. These numbers illustrate that a small group of prime contractors received the majority of dollars MSD spent. Table 3.20: Distribution of Supplies and Contractual Services Prime Contracts by Number of Vendors Vendor Total Award Dollars Percent of Dollars 60 Highly-Used Vendors $147,621,811 70% 1,941 Total Vendors $210,142,018 100% Table 3.21 presents the ethnic and gender profile of the 60 most highly used supplies and contractual services prime contractors, representing 70 percent of dollars spent. The highly used prime contractors included African American, Hispanic American, Caucasian Female, and Non-Minority Male businesses. The majority of the highly used supplies and contractual services prime contractor expenditures went to Non-Minority Male businesses. The individual contracts received by these 60 businesses ranged from $1.23 to $29,300,300. Table 3.21: Top Sixty Highly Used Supplies and Contractual Services Prime Contractors by Ethnicity and Gender Ethnicity/Gender Total Award Dollars Percent of Total Dollars African Americans $4,033,431 2.73% Hispanic Americans $2,901,100 1.97% Caucasian Females $4,879,990 3.31% Non-Minority Males $135,807,290 92.00% Top Sixty Highly-Used Vendors $147,621,811 100.00% Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-13 C.C.C.C. All Prime Contracts by IndustryAll Prime Contracts by IndustryAll Prime Contracts by IndustryAll Prime Contracts by Industry 1. Building Construction Prime Contractor Utilization: All Contracts Table 3.22 summarizes all prime contract dollars expended by MSD on building construction prime contracts. Minority Business Enterprises received 0.12 percent of the building construction prime contract dollars; Women Business Enterprises received 38 percent; and Non-Minority Male Business Enterprises received 61.88 percent. African Americans received one or 3.7 percent of the building construction contracts during the study period, representing $309,173 or 0.12 percent of the contract dollars. Asian Americans received none of the building construction contracts during the study period. Hispanic Americans received none of the building construction contracts during the study period. Native Americans received none of the building construction contracts during the study period. Minority Business Enterprises received one or 3.7 percent of the building construction contracts during the study period, representing $309,173 or 0.12 percent of the contract dollars. Women Business Enterprises received 7 or 25.93 percent of the building construction contracts during the study period, representing $100,970,362 or 38 percent of the contract dollars. Minority and Women Business Enterprises received 8 or 29.63 percent of the building construction contracts during the study period, representing $101,279,534 or 38.12 percent of the contract dollars. Non-Minority Male Business Enterprises received 19 or 70.37 percent of the building construction contracts during the study period, representing $164,435,191 or 61.88 percent of the contract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-14 Table 3.22: Building Construction Prime Contractor Utilization: All Contracts Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 1 3.70% $309,173 0.12% Asian Americans 0 0.00%$0 0.00% Hispanic Americans 0 0.00%$0 0.00% Native Americans 0 0.00%$0 0.00% Caucasian Females 7 25.93% $100,970,362 38.00% Non-Minority Males 19 70.37% $164,435,191 61.88% TOTAL 27 100.00% $265,714,726 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African American Females 0 0.00%$0 0.00% African American Males 1 3.70% $309,173 0.12% Asian American Females 0 0.00%$0 0.00% Asian American Males 0 0.00%$0 0.00% Hispanic American Females 0 0.00%$0 0.00% Hispanic American Males 0 0.00%$0 0.00% Native American Females 0 0.00%$0 0.00% Native American Males 0 0.00% $0 0.00% Caucasian Females 7 25.93% $100,970,362 38.00% Non-Minority Males 19 70.37% $164,435,191 61.88% TOTAL 27 100.00% $265,714,726 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Females 0 0.00%$0 0.00% Minority Males 1 3.70% $309,173 0.12% Caucasian Females 7 25.93% $100,970,362 38.00% Non-Minority Males 19 70.37% $164,435,191 61.88% TOTAL 27 100.00% $265,714,726 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 1 3.70% $309,173 0.12% Women Business Enterprises 7 25.93% $100,970,362 38.00% Minority and Women Business Enterprises 8 29.63% $101,279,534 38.12% Non-Minority Male Business Enterprises 19 70.37% $164,435,191 61.88% TOTAL 27 100.00% $265,714,726 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-15 2. Non-Building Construction Prime Contractor Utilization: All Contracts Table 3.23 summarizes all prime contract dollars expended by MSD on non-building construction prime contracts. Minority Business Enterprises received 6.81 percent of the non-building construction prime contract dollars; Women Business Enterprises received 3.87 percent; and Non-Minority Male Business Enterprises received 89.32 percent. African Americans received 94 or 12.18 percent of the non-building construction contracts during the study period, representing $19,605,812 or 6.79 percent of the contract dollars. Asian Americans received one or 0.13 percent of the non-building construction contracts during the study period, representing $41,008 or 0.01 percent of the contract dollars. Hispanic Americans received none of the non-building construction contracts during the study period. Native Americans received none of the non-building construction contracts during the study period. Minority Business Enterprises received 95 or 12.31 percent of the non-building construction contracts during the study period, representing $19,646,820 or 6.81 of the contract dollars. Women Business Enterprises received 98 or 12.69 percent of the non-building construction contracts during the study period, representing $11,183,762 or 3.87 percent of the contract dollars. Minority and Women Business Enterprises received 193 or 25 percent of the non- building construction contracts during the study period, representing $30,830,582 or 10.68 percent of the contract dollars. Non-Minority Male Business Enterprises received 579 or 75 percent of the non-building construction contracts during the study period, representing $257,838,982 or 89.32 percent of the contract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-16 Table 3.23: Non-Building Construction Prime Contractor Utilization: All Contracts Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 94 12.18% $19,605,812 6.79% Asian Americans 1 0.13% $41,008 0.01% Hispanic Americans 0 0.00%$0 0.00% Native Americans 0 0.00%$0 0.00% Caucasian Females 98 12.69% $11,183,762 3.87% Non-Minority Males 579 75.00% $257,838,982 89.32% TOTAL 772 100.00% $288,669,563 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African American Females 7 0.91% $39,100 0.01% African American Males 87 11.27% $19,566,712 6.78% Asian American Females 0 0.00%$0 0.00% Asian American Males 1 0.13% $41,008 0.01% Hispanic American Females 0 0.00%$0 0.00% Hispanic American Males 0 0.00%$0 0.00% Native American Females 0 0.00%$0 0.00% Native American Males 0 0.00%$0 0.00% Caucasian Females 98 12.69% $11,183,762 3.87% Non-Minority Males 579 75.00% $257,838,982 89.32% TOTAL 772 100.00% $288,669,563 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Females 7 0.91% $39,100 0.01% Minority Males 88 11.40% $19,607,720 6.79% Caucasian Females 98 12.69% $11,183,762 3.87% Non-Minority Males 579 75.00% $257,838,982 89.32% TOTAL 772 100.00% $288,669,563 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 95 12.31% $19,646,820 6.81% Women Business Enterprises 98 12.69% $11,183,762 3.87% Minority and Women Business Enterprises 193 25.00% $30,830,582 10.68% Non-Minority Male Business Enterprises 579 75.00% $257,838,982 89.32% TOTAL 772 100.00% $288,669,563 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-17 3. Engineering Professional Services Prime Contractor Utilization: All Contracts Table 3.24 summarizes all contract dollars expended by MSD on engineering professional services prime contracts. Minority Business Enterprises received 9.78 percent of the engineering professional services prime contract dollars; Women Business Enterprises received 2.62 percent; and Non-Minority Male Business Enterprises received 87.6 percent. African Americans received 64 or 34.41 percent of the engineering professional services contracts during the study period, representing $7,709,697 or 8.5 percent of the contract dollars. Asian Americans received two or 1.08 percent of the engineering professional services contracts during the study period, representing $368,285 or 0.41 percent of the contract dollars. Hispanic Americans received four or 2.15 percent of the engineering professional services contracts during the study period, representing $785,799 or 0.87 percent of the contract dollars. Native Americans received none of the engineering professional contracts during the study period. Minority Business Enterprises received 70 or 37.63 percent of the engineering professional services contracts during the study period, representing $8,863,781 or 9.78 percent of the contract dollars. Women Business Enterprises received 9 or 4.84 percent of the engineering professional services contracts during the study period, representing $2,373,370 or 2.62 percent of the contract dollars. Minority and Women Business Enterprises received 79 or 42.47 percent of the engineering professional services contracts during the study period, representing $11,237,151 or 12.4 percent of the contract dollars. Non-Minority Male Business Enterprises received 107 or 53.57 percent of the engineering professional services contracts during the study period, representing $79,421,105 or 87.6 percent of the contract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-18 Table 3.24: Engineering Professional Services Prime Contractor Utilization: All Contracts Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 64 34.41% $7,709,697 8.50% Asian Americans 2 1.08% $368,285 0.41% Hispanic Americans 4 2.15% $785,799 0.87% Native Americans 0 0.00%$0 0.00% Caucasian Females 9 4.84% $2,373,370 2.62% Non-Minority Males 107 57.53% $79,421,105 87.60% TOTAL 186 100.00% $90,658,256 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African American Females 52 27.96% $454,967 0.50% African American Males 12 6.45% $7,254,730 8.00% Asian American Females 0 0.00%$0 0.00% Asian American Males 2 1.08% $368,285 0.41% Hispanic American Females 0 0.00%$0 0.00% Hispanic American Males 4 2.15% $785,799 0.87% Native American Females 0 0.00%$0 0.00% Native American Males 0 0.00%$0 0.00% Caucasian Females 9 4.84% $2,373,370 2.62% Non-Minority Males 107 57.53% $79,421,105 87.60% TOTAL 186 100.00% $90,658,256 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Females 52 27.96% $454,967 0.50% Minority Males 18 9.68% $8,408,814 9.28% Caucasian Females 9 4.84% $2,373,370 2.62% Non-Minority Males 107 57.53% $79,421,105 87.60% TOTAL 186 100.00% $90,658,256 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 70 37.63% $8,863,781 9.78% Women Business Enterprises 9 4.84% $2,373,370 2.62% Minority and Women Business Enterprises 79 42.47% $11,237,151 12.40% Non-Minority Male Business Enterprises 107 57.53% $79,421,105 87.60% TOTAL 186 100.00% $90,658,256 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-19 4. Non-Engineering Professional Services Prime Contractor Utilization: All Contracts Table 3.25 summarizes Professional Services all contract dollars expended by MSD on non-engineering professional services prime contracts. Minority Business Enterprises received 0.04 percent of the non-engineering professional services prime contract dollars; Women Business Enterprises received 0.00 percent; and Non-Minority Male Business Enterprises received 99.96 percent. African Americans received two or 0.59 percent of the non-engineering professional services contracts during the study period, representing $21,320 or 0.04 percent of the contract dollars. Asian Americans received none of non-engineering professional services contracts during the study period. Hispanic Americans received none of non-engineering professional services contracts during the study period. Native Americans received none of non-engineering professional services contracts during the study period. Minority Business Enterprises received two or 0.59 percent of the non-engineering professional services contracts during the study period, representing $21,320 or 0.04 percent of the contract dollars. Women Business Enterprises received none of the non-engineering professional services contracts during the study period. Minority and Women Business Enterprises received two or 0.59 percent of the non- engineering professional services contracts during the study period, representing $21,320 or 0.04 percent of the contract dollars. Non-Minority Male Business Enterprises received 335 or 99.41 percent of the non- engineering professional services contracts during the study period, representing $59,682,795 or 99.96 percent of the contract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-20 Table 3.25: Non-Engineering Professional Services Prime Contractor Utilization: All Contracts Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 2 0.59% $21,320 0.04% Asian Americans 0 0.00%$0 0.00% Hispanic Americans 0 0.00%$0 0.00% Native Americans 0 0.00%$0 0.00% Caucasian Females 0 0.00%$0 0.00% Non-Minority Males 335 99.41% $59,682,795 99.96% TOTAL 337 100.00% $59,704,115 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African American Females 1 0.30% $11,100 0.02% African American Males 1 0.30% $10,220 0.02% Asian American Females 0 0.00%$0 0.00% Asian American Males 0 0.00% $0 0.00% Hispanic American Females 0 0.00%$0 0.00% Hispanic American Males 0 0.00%$0 0.00% Native American Females 0 0.00%$0 0.00% Native American Males 0 0.00%$0 0.00% Caucasian Females 0 0.00%$0 0.00% Non-Minority Males 335 99.41% $59,682,795 99.96% TOTAL 337 100.00% $59,704,115 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Females 1 0.30% $11,100 0.02% Minority Males 1 0.30% $10,220 0.02% Caucasian Females 0 0.00%$0 0.00% Non-Minority Males 335 99.41% $59,682,795 99.96% TOTAL 337 100.00% $59,704,115 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 2 0.59% $21,320 0.04% Women Business Enterprises 0 0.00%$0 0.00% Minority and Women Business Enterprises 2 0.59% $21,320 0.04% Non-Minority Male Business Enterprises 335 99.41% $59,682,795 99.96% TOTAL 337 100.00% $59,704,115 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-21 4. Supplies and Contractual Services Prime Contractor Utilization: All Contracts Table 3.26 summarizes all contract dollars expended by MSD on supplies and contractual services prime contracts. Minority Business Enterprises received 4.53 percent of the supplies and contractual services prime contract dollars; Women Business Enterprises received 4.62 percent; and Non-Minority Male Business Enterprises received 90.85 percent. African Americans received 2,938 or 7.43 percent of the supplies and contractual services contracts during the study period, representing $5,987,459 or 2.85 percent of the contract dollars Asian Americans received 17 or 0.04 percent of the supplies and contractual services during the study period, representing $212,456 or 0.1 percent of the contract dollars Hispanic Americans received 101 or 0.26 percent of the supplies and contractual services contracts during the study period, representing $3,327,465 or 1.58 percent of the contract dollars. Native Americans received none of supplies and contractual services contracts during the study period. Minority Business Enterprises received 3,056 or 7.73 percent of the supplies and contractual services contracts during the study period, representing $9,527,380 or 4.53 percent of the contract dollars. Women Business Enterprises received 4,817 or 12.18 percent of the supplies and contractual services contracts during the study period, representing $9,699,714 or 4.62 percent of the contract dollars. Minority and Women Business Enterprises received 7,873 or 19.91 percent of the supplies and contractual services contracts during the study period, representing $19,227,094 or 9.15 percent of the contract dollars. Non-Minority Male Business Enterprises received 31,673 or 80.09 percent of the supplies and contractual services contracts during the study period, representing $190,915,119 or 90.85 percent of the contract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-22 Table 3.26: Supplies and Contractual Services Prime Contractor Utilization: All Contracts Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 2,938 7.43% $5,987,459 2.85% Asian Americans 17 0.04% $212,456 0.10% Hispanic Americans 101 0.26% $3,327,465 1.58% Native Americans 0 0.00% $0 0.00% Caucasian Females 4,817 12.18% $9,699,714 4.62% Non-Minority Males 31,673 80.09% $190,915,119 90.85% TOTAL 39,546 100.00% $210,142,214 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African American Females 20 0.05% $466,852 0.22% African American Males 2,918 7.38% $5,520,607 2.63% Asian American Females 15 0.04% $210,719 0.10% Asian American Males 2 0.01%$1,737 0.00% Hispanic American Females 7 0.02% $124,744 0.06% Hispanic American Males 94 0.24% $3,202,721 1.52% Native American Females 0 0.00%$0 0.00% Native American Males 0 0.00%$0 0.00% Caucasian Females 4,817 12.18% $9,699,714 4.62% Non-Minority Males 31,673 80.09% $190,915,119 90.85% TOTAL 39,546 100.00% $210,142,214 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Females 42 0.11% $802,315 0.38% Minority Males 3,014 7.62% $8,725,065 4.15% Caucasian Females 4,817 12.18% $9,699,714 4.62% Non-Minority Males 31,673 80.09% $190,915,119 90.85% TOTAL 39,546 100.00% $210,142,214 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 3,056 7.73% $9,527,380 4.53% Women Business Enterprises 4,817 12.18% $9,699,714 4.62% Minority and Women Business Enterprises 7,873 19.91% $19,227,094 9.15% Non-Minority Male Business Enterprises 31,673 80.09% $190,915,119 90.85% TOTAL 39,546 100.00% $210,142,214 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-23 D.D.D.D. All Prime Contracts under $500,000 by All Prime Contracts under $500,000 by All Prime Contracts under $500,000 by All Prime Contracts under $500,000 by IndustryIndustryIndustryIndustry 1. Building Construction Prime Contractor Utilization: Contracts under $500,000 Table 3.27 summarizes all contract dollars expended by MSD on building construction prime contracts under $500,000. Minority Business Enterprises received 11.38 percent of the building construction prime contract dollars; Women Business Enterprises received 30.23 percent; and Non-Minority Male Business Enterprises received 58.39 percent. African Americans received one or 7.14 percent of the building construction contracts under $500,000 during the study period, representing $309,173 or 11.38 percent of the contract dollars. Asian Americans received none of the building construction contracts under $500,000 during the study period. Hispanic Americans received none of the building construction contracts under $500,000 during the study period. Native Americans received none of the building construction contracts under $500,000 during the study period. Minority Business Enterprises received one or 7.14 percent of the building construction contracts under $500,000 during the study period, representing $309,173 or 11.38 percent of the contract dollars. Women Business Enterprises received four or 28.57 percent of the building construction contracts under $500,000 during the study period, representing $821,300 or 30.23 percent of the contract dollars. Minority and Women Business Enterprises received five or 35.71 percent of the building construction contracts under $500,000 during the study period, representing $1,130,473 or 41.61 percent of the contract dollars. Non-Minority Male Business Enterprises received nine or 64.29 percent of the building construction contracts under $500,000 during the study period, representing $1,586,640 or 58.39 percent of the contract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-24 Table 3.27: Building Construction Prime Contractor Utilization: Contracts under $500,000 Number of Percent Amount Percent Contracts of Contracts of Dollars of Dollars African Americans 1 7.14% $309,173 11.38% Asian Americans 0 0.00%$0 0.00% Hispanic Americans 0 0.00%$0 0.00% Native Americans 0 0.00%$0 0.00% Caucasian Females 4 28.57% $821,300 30.23% Non-Minority Males 9 64.29% $1,586,640 58.39% TOTAL 14 100.00% $2,717,113 100.00% Number of Percent Amount Percent Contracts of Contracts of Dollars of Dollars African American Females 0 0.00%$0 0.00% African American Males 1 7.14% $309,173 11.38% Asian American Females 0 0.00%$0 0.00% Asian American Males 0 0.00%$0 0.00% Hispanic American Females 0 0.00%$0 0.00% Hispanic American Males 0 0.00%$0 0.00% Native American Females 0 0.00%$0 0.00% Native American Males 0 0.00%$0 0.00% Caucasian Females 4 28.57% $821,300 30.23% Non-Minority Males 9 64.29% $1,586,640 58.39% TOTAL 14 100.00% $2,717,113 100.00% Number of Percent Amount Percent Contracts of Contracts of Dollars of Dollars Minority Females 0 0.00%$0 0.00% Minority Males 1 7.14% $309,173 11.38% Caucasian Females 4 28.57% $821,300 30.23% Non-Minority Males 9 64.29% $1,586,640 58.39% TOTAL 14 100.00% $2,717,113 100.00% Number of Percent Amount Percent Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 1 7.14% $309,173 11.38% Women Business Enterprises 4 28.57% $821,300 30.23% Minority and Women Business Enterprises 5 35.71% $1,130,473 41.61% Non-Minority Male Business Enterprises 9 64.29% $1,586,640 58.39% TOTAL 14 100.00% $2,717,113 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-25 2. Non-Building Construction Prime Contractor Utilization: Contracts under $500,000 Table 3.28 summarizes all contract dollars expended by MSD on non-building construction prime contracts under $500,000. Minority Business Enterprises received 13.22 percent of the non-building construction prime contract dollars; Women Business Enterprises received 17.62 percent; and Non-Minority Male Business Enterprises received 69.17 percent. African Americans received 84 or 12.41 percent of the non-building construction contracts under $500,000 during the study period, representing $4,676,685 or 13.1 percent of the contract dollars. Asian Americans received one or 0.15 percent of the non-building construction contracts under $500,000 during the study period, representing $41,008 or 0.11 percent of the contract dollars. Hispanic Americans received none of the non-building construction contracts under $500,000 during the study period. Native Americans received none of the non-building construction contracts under $500,000 during the study period. Minority Business Enterprises received 85 or 12.56 percent of the non-building construction contracts under $500,000 during the study period, representing $4,717,693 or 13.22 percent of the contract dollars. Women Business Enterprises received 95 or 14.03 percent of the non-building construction contracts under $500,000 during the study period, representing $6,289,512 or 17.62 percent of the contract dollars. Minority and Women Business Enterprises received 180 or 26.59 percent of the building construction contracts under $500,000 during the study period, representing $11,007,204 or 30.83 percent of the contract dollars. Non-Minority Male Business Enterprises received 497 or 73.41 percent of the building construction contracts under $500,000 during the study period, representing $24,691,623 or 69.17 percent of the contract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-26 Table 3.28: Non-Building Construction Prime Contractor Utilization: Contracts under $500,000 Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 84 12.41% $4,676,685 13.10% Asian Americans 1 0.15% $41,008 0.11% Hispanic Americans 0 0.00%$0 0.00% Native Americans 0 0.00%$0 0.00% Caucasian Females 95 14.03% $6,289,512 17.62% Non-Minority Males 497 73.41% $24,691,623 69.17% TOTAL 677 100.00% $35,698,827 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African American Females 7 1.03% $39,100 0.11% African American Males 77 11.37% $4,637,585 12.99% Asian American Females 0 0.00%$0 0.00% Asian American Males 1 0.15% $41,008 0.11% Hispanic American Females 0 0.00%$0 0.00% Hispanic American Males 0 0.00%$0 0.00% Native American Females 0 0.00%$0 0.00% Native American Males 0 0.00%$0 0.00% Caucasian Females 95 14.03% $6,289,512 17.62% Non-Minority Males 497 73.41% $24,691,623 69.17% TOTAL 677 100.00% $35,698,827 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Females 7 1.03% $39,100 0.11% Minority Males 78 11.52% $4,678,593 13.11% Caucasian Females 95 14.03% $6,289,512 17.62% Non-Minority Males 497 73.41% $24,691,623 69.17% TOTAL 677 100.00% $35,698,827 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 85 12.56% $4,717,693 13.22% Women Business Enterprises 95 14.03% $6,289,512 17.62% Minority and Women Business Enterprises 180 26.59% $11,007,204 30.83% Non-Minority Male Business Enterprises 497 73.41% $24,691,623 69.17% TOTAL 677 100.00% $35,698,827 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-27 3. Engineering Professional Services Prime Contractor Utilization: Contracts under $500,000 Table 3.29 summarizes all contract dollars expended by MSD on engineering professional services prime contracts under $500,000. Minority Business Enterprises received 15.62 percent of the engineering professional services prime contract dollars; Women Business Enterprises received 7.5 percent; and Non-Minority Male Business Enterprises received 76.89 percent. African Americans received 62 or 37.35 percent of the engineering professional services contracts under $500,000 during the study period, representing $2,461,385 or 10.63 percent of the contract dollars. Asian Americans received two or 1.2 percent of the engineering professional services contracts under $500,000 during the study period, representing $368,285 or 1.59 percent of the contract dollars. Hispanic Americans received four or 2.41 percent of the engineering professional services contracts under $500,000 during the study period, representing $785,799 or 3.39 percent of the contract dollars. Native Americans received none of the engineering professional services contracts under $500,000 during the study period. Minority Business Enterprises received 68 or 40.96 percent of the engineering professional services contracts under $500,000 during the study period, representing $3,615,469 or 15.62 percent of the contract dollars. Women Business Enterprises received eight or 4.82 percent of the engineering professional services contracts under $500,000 during the study period, representing $1,735,735 or 7.5 percent of the contract dollars. Minority and Women Business Enterprises received 76 or 45.78 percent of the engineering professional services contracts under $500,000 during the study period, representing $5,351,204 or 23.11 percent of the contract dollars. Non-Minority Male Business Enterprises received 90 or 54.22 percent of the engineering professional services contracts under $500,000 during the study period, representing $17,800,634 or 76.89 percent of the contract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-28 Table 3.29: Engineering Professional Services Prime Contractor Utilization: Contracts under $500,000 Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 62 37.35% $2,461,385 10.63% Asian Americans 2 1.20% $368,285 1.59% Hispanic Americans 4 2.41% $785,799 3.39% Native Americans 0 0.00%$0 0.00% Caucasian Females 8 4.82% $1,735,735 7.50% Non-Minority Males 90 54.22% $17,800,634 76.89% TOTAL 166 100.00% $23,151,838 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African American Females 52 31.33% $454,967 1.97% African American Males 10 6.02% $2,006,418 8.67% Asian American Females 0 0.00%$0 0.00% Asian American Males 2 1.20% $368,285 1.59% Hispanic American Females 0 0.00%$0 0.00% Hispanic American Males 4 2.41% $785,799 3.39% Native American Females 0 0.00%$0 0.00% Native American Males 0 0.00%$0 0.00% Caucasian Females 8 4.82% $1,735,735 7.50% Non-Minority Males 90 54.22% $17,800,634 76.89% TOTAL 166 100.00% $23,151,838 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Females 52 31.33% $454,967 1.97% Minority Males 16 9.64% $3,160,502 13.65% Caucasian Females 8 4.82% $1,735,735 7.50% Non-Minority Males 90 54.22% $17,800,634 76.89% TOTAL 166 100.00% $23,151,838 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 68 40.96% $3,615,469 15.62% Women Business Enterprises 8 4.82% $1,735,735 7.50% Minority and Women Business Enterprises 76 45.78% $5,351,204 23.11% Non-Minority Male Business Enterprises 90 54.22% $17,800,634 76.89% TOTAL 166 100.00% $23,151,838 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-29 4. Non-Engineering Professional Services Prime Contractor Utilization: Contracts under $500,000 Table 3.30 summarizes all contract dollars expended by MSD on non-engineering professional services prime contracts under $500,000. Minority Business Enterprises received 0.06 percent of the non-engineering professional services prime contract dollars; Women Business Enterprises received 0.00 percent; and Non-Minority Male Business Enterprises received 99.94 percent. African Americans received two or 0.63 percent of the non-engineering professional services contracts under $500,000 during the study period, representing $21,320 or 0.06 percent of the contract dollars. Asian Americans received none of the non-engineering professional services contracts under $500,000 during the study period. Hispanic Americans received none of the non-engineering professional services contracts under $500,000 during the study period. Native Americans received none of the non-engineering professional services contracts under $500,000 during the study period. Minority Business Enterprises received two or 0.63 percent of the non-engineering professional services contracts under $500,000 during the study period, representing $21,320 or 0.06 percent of the contract dollars. Women Business Enterprises received none of the non-engineering professional services contracts under $500,000 during the study period. Minority and Women Business Enterprises received two or 0.63 percent of the non- engineering professional services contracts under $500,000 during the study period, representing $21,320 or 0.06 percent of the contract dollars. Non-Minority Male Business Enterprises received 315 or 99.37 percent of the non- engineering professional services contracts under $500,000 during the study period, representing $36,176,426 or 99.94 percent of the contract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-30 Table 3.30: Non-Engineering Professional Services Prime Contractor Utilization: Contracts under $500,000 Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 2 0.63% $21,320 0.06% Asian Americans 0 0.00%$0 0.00% Hispanic Americans 0 0.00%$0 0.00% Native Americans 0 0.00%$0 0.00% Caucasian Females 0 0.00%$0 0.00% Non-Minority Males 315 99.37% $36,176,426 99.94% TOTAL 317 100.00% $36,197,746 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African American Females 1 0.32% $11,100 0.03% African American Males 1 0.32% $10,220 0.03% Asian American Females 0 0.00%$0 0.00% Asian American Males 0 0.00% $0 0.00% Hispanic American Females 0 0.00%$0 0.00% Hispanic American Males 0 0.00%$0 0.00% Native American Females 0 0.00%$0 0.00% Native American Males 0 0.00%$0 0.00% Caucasian Females 0 0.00%$0 0.00% Non-Minority Males 315 99.37% $36,176,426 99.94% TOTAL 317 100.00% $36,197,746 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Females 1 0.32% $11,100 0.03% Minority Males 1 0.32% $10,220 0.03% Caucasian Females 0 0.00%$0 0.00% Non-Minority Males 315 99.37% $36,176,426 99.94% TOTAL 317 100.00% $36,197,746 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 2 0.63% $21,320 0.06% Women Business Enterprises 0 0.00%$0 0.00% Minority and Women Business Enterprises 2 0.63% $21,320 0.06% Non-Minority Male Business Enterprises 315 99.37% $36,176,426 99.94% TOTAL 317 100.00% $36,197,746 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-31 5. Supplies and Contractual Services Prime Contractor Utilization: Contracts under $500,000 Table 3.31 summarizes all contract dollars expended by MSD on supplies and contractual services prime contracts under $500,000. Minority Business Enterprises received 5.99 percent of the supplies and contractual services prime contract dollars; Women Business Enterprises received 7.95 percent; and Non-Minority Male Business Enterprises received 86.06 percent. African Americans received 2,936 or 7.43 percent of the supplies and contractual services contracts under $500,000 during the study period, representing $4,865,044 or 4.26 percent of the contract dollars. Asian Americans received 17 or 0.04 percent of the supplies and contractual services contracts under $500,000 during the study period, representing $212,456 or 0.19 percent of the contract dollars. Hispanic Americans received 99 or 0.25 percent of the supplies and contractual services contracts under $500,000 during the study period, representing $1,759,371 or 1.54 percent of the contract dollars. Native Americans received none of the supplies and contractual services contracts under $500,000 during the study period. Minority Business Enterprises received 3,052 or 7.73 percent of the supplies and contractual services contracts under $500,000 during the study period, representing $6,836,872 or 5.99 percent of the contract dollars. Women Business Enterprises received 4,816 or 12.19 percent of the supplies and contractual services contracts under $500,000 during the study period, representing $9,082,914 or 7.95 percent of the contract dollars. Minority and Women Business Enterprises received 7,868 or 19.92 percent of the supplies and contractual services contracts under $500,000 during the study period, representing $15,919,786 or 13.94 percent of the contract dollars. Non-Minority Male Business Enterprises received 31,627 or 80.08 percent of the supplies and contractual services contracts under $500,000 during the study period, representing $98,274,704 or 86.06 percent of the contract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-32 Table 3.31: Supplies and Contractual Services Prime Contractor Utilization: Contracts under $500,000 Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 2,936 7.43% $4,865,044 4.26% Asian Americans 17 0.04% $212,456 0.19% Hispanic Americans 99 0.25% $1,759,371 1.54% Native Americans 0 0.00%$0 0.00% Caucasian Females 4,816 12.19% $9,082,914 7.95% Non-Minority Males 31,627 80.08% $98,274,704 86.06% TOTAL 39,495 100.00% $114,194,490 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African American Females 20 0.05% $466,852 0.41% African American Males 2,916 7.38% $4,398,192 3.85% Asian American Females 15 0.04% $210,719 0.18% Asian American Males 2 0.01% $1,737 0.00% Hispanic American Females 7 0.02% $124,744 0.11% Hispanic American Males 92 0.23% $1,634,627 1.43% Native American Females 0 0.00%$0 0.00% Native American Males 0 0.00%$0 0.00% Caucasian Females 4,816 12.19% $9,082,914 7.95% Non-Minority Males 31,627 80.08% $98,274,704 86.06% TOTAL 39,495 100.00% $114,194,490 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Females 42 0.11% $802,315 0.70% Minority Males 3,010 7.62% $6,034,556 5.28% Caucasian Females 4,816 12.19% $9,082,914 7.95% Non-Minority Males 31,627 80.08% $98,274,704 86.06% TOTAL 39,495 100.00% $114,194,490 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 3,052 7.73% $6,836,872 5.99% Women Business Enterprises 4,816 12.19% $9,082,914 7.95% Minority and Women Business Enterprises 7,868 19.92% $15,919,786 13.94% Non-Minority Male Business Enterprises 31,627 80.08% $98,274,704 86.06% TOTAL 39,495 100.00% $114,194,490 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-33 E.E.E.E. Informal Contracts by IndustryInformal Contracts by IndustryInformal Contracts by IndustryInformal Contracts by Industry 1. Building Construction Prime Contractor Utilization: Informal Contracts MSD does not have an informal contract level for building construction contracts. Therefore, utilization at the informal level is not presented for building construction. 2. Non-Building Construction Prime Contractor Utilization: Informal Contracts MSD does not have an informal contract level for non-building construction contracts. Therefore, utilization at the informal level is not presented for non-building construction. 3. Engineering Professional Services Prime Contractor Utilization: Informal Contracts MSD does not have an informal contract level for engineering professional services contracts. Therefore, utilization at the informal level is not presented for engineering professional services. 4. Non-Engineering Professional Services Prime Contractor Utilization: Informal Contracts MSD does not have an informal contract level for non-engineering professional services contracts. Therefore, utilization at the informal level is not presented for non-engineering professional services. 5. Supplies and Contractual Services Prime Contractor Utilization: Informal Contracts $25,000 and under Table 3.32 summarizes all contract dollars expended by MSD on supplies and contractual services prime informal contracts $25,000 and under. Minority Business Enterprises received 5.42 percent of the supplies and contractual services prime informal contract dollars; Women Business Enterprises received 10.82 percent; and Non-Minority Male Business Enterprises received 83.76 percent. African Americans received 2,903 or 7.5 percent of the supplies and contractual services contracts $25,000 and under during the study period, representing $1,453,799 or 3.91 percent of the contract dollars. Asian Americans received 17 or 0.04 percent of the supplies and contractual services contracts $25,000 and under during the study period, representing $212,456 or 0.57 percent of the contract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-34 Hispanic Americans received 89 or 0.23 percent of the supplies and contractual services contracts $25,000 and under during the study period, representing $347,456 or 0.94 percent of the contract dollars. Native Americans received none of the supplies and contractual services contracts $25,000 and under during the study period. Minority Business Enterprises received 3,009 or 7.77 percent of the supplies and contractual services contracts $25,000 and under during the study period, representing $2,014,205 or 5.42 percent of the contract dollars. Women Business Enterprises received 4,759 or 12.29 percent of the supplies and contractual services contracts $25,000 and under during the study period, representing $4,017,823 or 10.82 percent of the contract dollars. Minority and Women Business Enterprises received 7,768 or 20.07 percent of the supplies and contractual services contracts $25,000 and under during the study period, representing $6,032,028 or 16.24 percent of the contract dollars. Non-Minority Male Business Enterprises received 30,943 or 79.93 percent of the supplies and contractual services contracts $25,000 and under during the study period, representing $31,103,957 or 83.76 percent of the contract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-35 Table 3.32: Supplies and Contractual Services: Contracts $25,000 and Under Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 2,903 7.50% $1,453,799 3.91% Asian Americans 17 0.04% $212,456 0.57% Hispanic Americans 89 0.23% $347,950 0.94% Native Americans 0 0.00%$0 0.00% Caucasian Females 4,759 12.29% $4,017,823 10.82% Non-Minority Males 30,943 79.93% $31,103,957 83.76% TOTAL 38,711 100.00% $37,135,985 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African American Females 16 0.04% $33,716 0.09% African American Males 2,887 7.46% $1,420,083 3.82% Asian American Females 15 0.04% $210,719 0.57% Asian American Males 2 0.01%$1,737 0.00% Hispanic American Females 6 0.02% $26,971 0.07% Hispanic American Males 83 0.21% $320,979 0.86% Native American Females 0 0.00% $0 0.00% Native American Males 0 0.00%$0 0.00% Caucasian Females 4,759 12.29% $4,017,823 10.82% Non-Minority Males 30,943 79.93% $31,103,957 83.76% TOTAL 38,711 100.00% $37,135,985 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Females 37 0.10% $271,406 0.73% Minority Males 2,972 7.68% $1,742,799 4.69% Caucasian Females 4,759 12.29% $4,017,823 10.82% Non-Minority Males 30,943 79.93% $31,103,957 83.76% TOTAL 38,711 100.00% $37,135,985 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 3,009 7.77% $2,014,205 5.42% Women Business Enterprises 4,759 12.29% $4,017,823 10.82% Minority and Women Business Enterprises 7,768 20.07% $6,032,028 16.24% Non-Minority Male Business Enterprises 30,943 79.93% $31,103,957 83.76% TOTAL 38,711 100.00% $37,135,985 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 3-36 V. SUMMARYV. SUMMARYV. SUMMARYV. SUMMARY MSD’s prime contractor utilization analysis examined $914,888,875 expended on prime contracts awarded from July 1, 2007 to January 31, 2012. The $914,888,875 expended included $265,714,726 for building construction, $288,669,563 for non-building construction, $90,658,256 for engineering professional services, $59,704,115 for non- engineering professional services, and $210,142,214 for supplies and contractual services. A total of 40,868 contracts were analyzed, which included 27 for building construction, 772 for non-building construction, 186 for engineering professional services, 337 for non-engineering professional services, and 39,546 for supplies and contractual services. The utilization analysis was performed separately for informal and formal prime contracts. The informal levels included contracts $25,000 and under for supplies and contractual services. There was no informal level for MSD’s building construction, non- building construction contracts, engineering professional services, and non-engineering professional services contracts. The analysis of formal contracts was limited to contracts under $500,000 for each industry. Chapter 7: Prime Contractor Disparity Analysis presents the statistical analysis of disparity in each of the five industries. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 4-1 CHAPTER 4: SUBCONTRACTOR SUBCONTRACTOR SUBCONTRACTOR SUBCONTRACTOR UTILIZATION ANALYSISUTILIZATION ANALYSISUTILIZATION ANALYSISUTILIZATION ANALYSIS I.I.I.I. INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION As discussed in Chapter 3: Prime Contractor Utilization Analysis, a disparity study, as required under Croson, documents minority and woman-owned business enterprises’ (M/WBEs’) contracting history in the market area. The objective of this chapter is to determine the level of M/WBE subcontractor utilization by ethnicity and gender compared to Non-Minority Male subcontractor utilization. A finding of statistically significant disparity is required to implement a race-based M/WBE subcontracting program. In this Study, the subcontracts issued by Metropolitan St. Louis Sewer District (MSD) prime contractors during the May 1, 2010 to January 31, 2012 study period are analyzed. The analysis was under taken in order to determine whether there is underutilization of available M/WBE subcontractors in the building construction, non-building construction, engineering professional services, and non-engineering professional services industries. II.II.II.II. SUBCONTRACTOR UTILIZATION DATA SUBCONTRACTOR UTILIZATION DATA SUBCONTRACTOR UTILIZATION DATA SUBCONTRACTOR UTILIZATION DATA SOURCES SOURCES SOURCES SOURCES Extensive research was undertaken to reconstruct the building construction, non-building construction, engineering professional services, and non-engineering professional services subcontracts issued by MSD’s prime contractors. Subcontracts for supplies and contractual services contracts were not included in the analysis because prime contractors traditionally do not subcontract their work. The subcontract data was compiled by MSD. All identified subcontractors were contacted to verify their participation on each prime contract and the amount of their payment. Up to three attempts were made to contact each subcontractor by telephone. Once contacted, the subcontractor had the option of verifying data by telephone, email, fax, or U. S. mail. If the subcontractor could not be contacted, the original data from MSD was used in the utilization analysis. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 4-2 III.III.III.III. SUBCONTRACTOR UTILIZATIONSUBCONTRACTOR UTILIZATIONSUBCONTRACTOR UTILIZATIONSUBCONTRACTOR UTILIZATION A.A.A.A. All SubcontractsAll SubcontractsAll SubcontractsAll Subcontracts As depicted in Table 4.01 below, 1,489 subcontracts were analyzed, which included 389 building construction subcontracts, 1,031 non-building construction subcontracts, 51 engineering professional services subcontracts, and 18 non-engineering professional services subcontracts for the May 1, 2010 to January 31, 2012 study period. There were $143,099,473 total subcontract dollars expended during the May 1, 2010 to January 31, 2012 study period, which included $97,035,474 for building construction subcontracts, $42,383,416 for non-building construction subcontracts, $2,505,118 for engineering professional services subcontracts, and $1,175,465 for non-engineering professional services subcontracts. Table 4.01: Total Subcontracts Awarded and Dollars Expended, All Industries, May 1, 2010 to January 31, 2012 Industry Total Number of Subcontracts Total Amount Expended Building Construction 389 $97,035,474 Non-Building Construction 1,031 $42,383,416 Engineering Professional Services 51 $2,505,118 Non-Engineering Professional Services 18 $1,175,465 Total 1,489 $143,099,473 Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 4-3 B.B.B.B. All Subcontracts by IndustryAll Subcontracts by IndustryAll Subcontracts by IndustryAll Subcontracts by Industry 1. Building Construction Subcontracts Table 4.02 depicts the building construction subcontracts awarded by MSD’s prime contractors. Minority Business Enterprises received 8.16 percent of the building construction subcontract dollars; Women Business Enterprises received 12.37 percent; and Non-Minority Male Business Enterprises received 79.47 percent. These ethnic and gender groups are defined in Table 3.01 of Chapter 3: Prime Contractor Utilization Analysis. African Americans received 33 or 8.48 percent of MSD’s building construction subcontracts during the study period, representing $7,805,102 or 8.04 percent of the subcontract dollars. Asian Americans received none of MSD’s building construction subcontracts during the study period. Hispanic Americans received none of MSD’s building construction subcontracts during the study period. Native Americans received 1 or 0.26 percent of MSD’s building construction subcontracts during the study period, representing $112,443 or 0.12 percent of the subcontract dollars. Minority Business Enterprises received 34 or 8.74 percent of MSD’s building construction subcontracts during the study period, representing $7,917,545 or 8.16 percent of the subcontract dollars. Women Business Enterprises received 48 or 12.34 percent of MSD’s building construction subcontracts during the study period, representing $12,000,905 or 12.37 percent of the subcontract dollars. Minority and Women Business Enterprises received 82 or 21.08 percent of MSD’s building construction subcontracts during the study period, representing $19,918,450 or 20.53 percent of the subcontract dollars. Non-Minority Male Business Enterprises received 307 or 78.92 percent of MSD’s building construction subcontracts during the study period, representing $77,117,024 or 79.47 percent of the subcontract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 4-4 Table 4.02: Building Construction Subcontractor Utilization, May 1, 2010 to January 31, 2012 Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 33 8.48% $7,805,102 8.04% Asian Americans 0 0.00%$0 0.00% Hispanic Americans 0 0.00%$0 0.00% Native Americans 1 0.26%$112,443 0.12% Caucasian Females 48 12.34% $12,000,905 12.37% Non-Minority Males 307 78.92% $77,117,024 79.47% TOTAL 389 100.00% $97,035,474 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African American Females 3 0.77% $1,588,000 1.64% African American Males 30 7.71% $6,217,102 6.41% Asian American Females 0 0.00%$0 0.00% Asian American Males 0 0.00%$0 0.00% Hispanic American Females 0 0.00%$0 0.00% Hispanic American Males 0 0.00% $0 0.00% Native American Females 0 0.00%$0 0.00% Native American Males 1 0.26%$112,443 0.12% Caucasian Females 48 12.34% $12,000,905 12.37% Non-Minority Males 307 78.92% $77,117,024 79.47% TOTAL 389 100.00% 97,035,474 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Females 3 0.77% $1,588,000 1.64% Minority Males 31 7.97% $6,329,545 6.52% Caucasian Females 48 12.34% $12,000,905 12.37% Non-Minority Males 307 78.92% $77,117,024 79.47% TOTAL 389 100.00% $97,035,474 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 34 8.74% $7,917,545 8.16% Women Business Enterprises 48 12.34% $12,000,905 12.37% Minority and Women Business Enterprises 82 21.08% $19,918,450 20.53% Non-Minority Male Business Enterprises 307 78.92% $77,117,024 79.47% TOTAL 389 100.00% $97,035,474 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 4-5 2. Non-Building Construction Subcontracts Table 4.03 depicts the non-building construction subcontracts issued by MSD’s prime contractors. Minority Business Enterprises received 12.54 percent of the non-building construction subcontract dollars; Women Business Enterprises received 15.05 percent; and Non-Minority Male Business Enterprises received 72.41 percent. These ethnic and gender groups are defined in Table 3.01 of Chapter 3: Prime Contractor Utilization Analysis. African Americans received 117 or 11.35 percent of MSD’s non-building construction subcontracts during the study period, representing $5,073,322 or 11.97 percent of the subcontract dollars. Asian Americans received none of MSD’s non-building construction subcontracts during the study period. Hispanic Americans received 2 or 0.19 percent of MSD’s non-building construction subcontracts during the study period, representing $241,113 or 0.57 percent of the subcontract dollars. Native Americans received none of MSD’s non-building construction subcontracts during the study period. Minority Business Enterprises received 119 or 11.54 percent of MSD’s non-building construction subcontracts during the study period, representing $5,314,435 or 12.54 percent of the subcontract dollars. Women Business Enterprises received 172 or 16.68 percent of MSD’s non-building construction subcontracts during the study period, representing $6,377,218 or 15.05 percent of the subcontract dollars. Minority and Women Business Enterprises received 291 or 28.23 percent of MSD’s non-building construction subcontracts during the study period, representing $11,691,654 or 27.59 percent of the subcontract dollars. Non-Minority Male Business Enterprises received 740 or 71.77 percent of MSD’s non- building construction subcontracts during the study period, representing $30,691,762 or 72.41 percent of the subcontract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 4-6 Table 4.03: Non-Building Construction Subcontractor Utilization, May 1, 2010 to January 31, 2012 Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 117 11.35% $5,073,322 11.97% Asian Americans 0 0.00%$0 0.00% Hispanic Americans 2 0.19%$241,113 0.57% Native Americans 0 0.00%$0 0.00% Caucasian Females 172 16.68% $6,377,218 15.05% Non-Minority Males 740 71.77% $30,691,762 72.41% TOTAL 1,031 100.00% $42,383,416 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African American Females 30 2.91% $1,063,870 2.51% African American Males 87 8.44% $4,009,452 9.46% Asian American Females 0 0.00%$0 0.00% Asian American Males 0 0.00%$0 0.00% Hispanic American Females 0 0.00%$0 0.00% Hispanic American Males 2 0.19% $241,113 0.57% Native American Females 0 0.00%$0 0.00% Native American Males 0 0.00%$0 0.00% Caucasian Females 172 16.68% $6,377,218 15.05% Non-Minority Males 740 71.77% $30,691,762 72.41% TOTAL 1,031 100.00% 42,383,416 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Females 30 2.91% $1,063,870 2.51% Minority Males 89 8.63% $4,250,565 10.03% Caucasian Females 172 16.68% $6,377,218 15.05% Non-Minority Males 740 71.77% $30,691,762 72.41% TOTAL 1,031 100.00% $42,383,416 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 119 11.54% $5,314,435 12.54% Women Business Enterprises 172 16.68% $6,377,218 15.05% Minority and Women Business Enterprises 291 28.23% $11,691,654 27.59% Non-Minority Male Business Enterprises 740 71.77% $30,691,762 72.41% TOTAL 1,031 100.00% $42,383,416 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 4-7 3. Engineering Professional Services Subcontracts Table 4.04 depicts the engineering professional services subcontracts issued by MSD’s prime contractors. Minority Business Enterprises received 62.49 percent of the engineering professional services subcontract dollars; Women Business Enterprises received 21.54 percent; and Non-Minority Male Business Enterprises received 15.98 percent. African Americans received 26 or 50.98 percent of MSD’s engineering professional services subcontracts during the study period, representing $935,115 or 37.33 percent of the subcontract dollars. Asian Americans received 5 or 9.80 percent of MSD’s engineering professional services subcontracts during the study period, representing $482,553 or 19.26 percent of the subcontract dollars. Hispanic Americans received 1 or 1.96 percent of MSD’s engineering professional services subcontracts during the study period, representing $147,700 or 5.90 percent of the subcontract dollars. Native Americans received none of MSD’s engineering professional services subcontracts during the study period. Minority Business Enterprises received 32 or 62.75 percent of MSD’s engineering professional services subcontracts during the study period, representing $1,565,368 or 62.49 percent of the subcontract dollars. Women Business Enterprises received 10 or 19.61 percent of MSD’s engineering professional services subcontracts during the study period, representing $539,522 or 21.54 percent of the subcontract dollars. Minority and Women Business Enterprises received 42 or 82.35 percent of the MSD’s engineering professional services subcontracts during the study period, representing $2,104,890 or 84.02 percent of the subcontract dollars. Non-Minority Male Business Enterprises received 9 or 17.65 percent of MSD’s engineering professional services subcontracts during the study period, representing $400,228 or 15.98 percent of the subcontract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 4-8 Table 4.04: Engineering Professional Services Subcontractor Utilization, May 1, 2010 to January 31, 2012 Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 26 50.98%$935,115 37.33% Asian Americans 5 9.80%$482,553 19.26% Hispanic Americans 1 1.96%$147,700 5.90% Native Americans 0 0.00%$0 0.00% Caucasian Females 10 19.61%$539,522 21.54% Non-Minority Males 9 17.65%$400,228 15.98% TOTAL 51 100.00% $2,505,118 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African American Females 19 37.25%$622,493 24.85% African American Males 7 13.73%$312,622 12.48% Asian American Females 0 0.00%$0 0.00% Asian American Males 5 9.80%$482,553 19.26% Hispanic American Females 0 0.00%$0 0.00% Hispanic American Males 1 1.96% $147,700 5.90% Native American Females 0 0.00%$0 0.00% Native American Males 0 0.00%$0 0.00% Caucasian Females 10 19.61%$539,522 21.54% Non-Minority Males 9 17.65%$400,228 15.98% TOTAL 51 100.00%2,505,118 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Females 19 37.25%$622,493 24.85% Minority Males 13 25.49%$942,875 37.64% Caucasian Females 10 19.61%$539,522 21.54% Non-Minority Males 9 17.65%$400,228 15.98% TOTAL 51 100.00% $2,505,118 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 32 62.75% $1,565,368 62.49% Women Business Enterprises 10 19.61%$539,522 21.54% Minority and Women Business Enterprises 42 82.35% $2,104,890 84.02% Non-Minority Male Business Enterprises 9 17.65% $400,228 15.98% TOTAL 51 100.00% $2,505,118 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 4-9 4. Non-Engineering Professional Services Subcontracts Table 4.05 depicts the non-engineering professional services subcontracts issued by MSD’s prime contractors. Minority Business Enterprises received 59.18 percent of the non-engineering professional services subcontract dollars; Women Business Enterprises received 39.02 percent; and Non-Minority Male Business Enterprises received 1.79 percent. African Americans received 8 or 44.44 percent of MSD’s non-engineering professional services subcontracts during the study period, representing $695,693 or 59.18 percent of the subcontract dollars. Asian Americans received none of MSD’s non-engineering professional services subcontracts during the study period. Hispanic Americans received none of MSD’s non-engineering professional services subcontracts during the study period. Native Americans received none of MSD’s non-engineering professional services subcontracts during the study period. Minority Business Enterprises received 8 or 44.44 percent of MSD’s non-engineering professional services subcontracts during the study period, representing $695,693 or 59.18 percent of the subcontract dollars. Women Business Enterprises received 8 or 44.44 percent of MSD’s non-engineering professional services subcontracts during the study period, representing $458,681 or 39.02 percent of the subcontract dollars. Minority and Women Business Enterprises received 16 or 88.89 percent of MSD’s non- engineering professional services subcontracts during the study period, representing $1,154,374 or 98.21 percent of the subcontract dollars. Non-Minority Male Business Enterprises received 2 or 11.11 percent of MSD’s non- engineering professional services subcontracts during the study period, representing $21,091 or 1.79 percent of the subcontract dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 4-10 Table 4.05: Non-Engineering Professional Services Subcontractor Utilization, May 1, 2010 to January 31, 2012 Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 8 44.44%$695,693 59.18% Asian Americans 0 0.00%$0 0.00% Hispanic Americans 0 0.00%$0 0.00% Native Americans 0 0.00%$0 0.00% Caucasian Females 8 44.44%$458,681 39.02% Non-Minority Males 2 11.11%$21,091 1.79% TOTAL 18 100.00% $1,175,465 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African American Females 1 5.56%$8,900 0.76% African American Males 7 38.89%$686,793 58.43% Asian American Females 0 0.00%$0 0.00% Asian American Males 0 0.00%$0 0.00% Hispanic American Females 0 0.00%$0 0.00% Hispanic American Males 0 0.00% $0 0.00% Native American Females 0 0.00%$0 0.00% Native American Males 0 0.00%$0 0.00% Caucasian Females 8 44.44%$458,681 39.02% Non-Minority Males 2 11.11%$21,091 1.79% TOTAL 18 100.00%1,175,465 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Females 1 5.56% $8,900 0.76% Minority Males 7 38.89%$686,793 58.43% Caucasian Females 8 44.44%$458,681 39.02% Non-Minority Males 2 11.11%$21,091 1.79% TOTAL 18 100.00% $1,175,465 100.00% Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars Minority Business Enterprises 8 44.44%$695,693 59.18% Women Business Enterprises 8 44.44%$458,681 39.02% Minority and Women Business Enterprises 16 88.89% $1,154,374 98.21% Non-Minority Male Business Enterprises 2 11.11% $21,091 1.79% TOTAL 18 100.00% $1,175,465 100.00% Minority and Women Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 5-1 CHAPTER 5: MARKET AREA MARKET AREA MARKET AREA MARKET AREA ANALYSISANALYSISANALYSISANALYSIS I.I.I.I. MARKET AREA DEFINITIONMARKET AREA DEFINITIONMARKET AREA DEFINITIONMARKET AREA DEFINITION A.A.A.A. Legal Criteria for Geographic Market Area Legal Criteria for Geographic Market Area Legal Criteria for Geographic Market Area Legal Criteria for Geographic Market Area The Supreme Court’s decision in City of Richmond v. J.A. Croson Co.1 (Croson) sets the standard for the definition of a local government’s market area. The decision held that a local government’s program established to set goals for the participation of minority and woman-owned firms must be supported by evidence of past discrimination. Prior to the Croson decision, local governments could implement race-conscious programs without developing a detailed public record to document the underutilization of minority business enterprises. Until Croson, widely-recognized patterns of societal discrimination2 were adequate evidence. Croson established that a local government could not rely on societal discrimination as the basis for a race-based program but, instead, was required to identify discrimination within its own contracting jurisdiction.3 In Croson, the Court found the City of Richmond’s Minority Business Enterprise (MBE) construction program to be unconstitutional because there was insufficient evidence of discrimination in the local construction market. Croson was explicit in saying that the local construction market was the appropriate geographical framework within which to perform statistical comparisons of business availability and business utilization. Therefore, the identification of the local market area is particularly important because that factor establishes the parameters within which to conduct a disparity study. 1 City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989). 2 United Steelworkers v. Weber, 433 U.S. 193, 198, n. 1 (1979). 3 Croson, 488 U.S. at 497 (1989). Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 5-2 B.B.B.B. Application of the Croson StandardApplication of the Croson StandardApplication of the Croson StandardApplication of the Croson Standard While Croson emphasized the importance of the local market area, it provided little assistance in defining its parameters.4 However, it is informative to review the Court’s definition of the City of Richmond’s market area. In discussing the geographic parameters of the constitutional violation that must be investigated, the Court interchangeably used the terms “relevant market,”5 “Richmond construction industry,”6 and “city’s construction industry.”7 Thus, these terms were used to define the proper scope for examining the existence of discrimination within the City. This interchangeable use of terms lends support to a definition of market area that coincides with the boundaries of a contracting jurisdiction. An analysis of the cases following Croson reveals a pattern that provides additional guidance for defining the market area. The body of cases examining reasonable market area definition is, fact based rather than dictated by a specific formula.8 In Cone Corporation v. Hillsborough County,9 the Eleventh Circuit Court of Appeals considered a study in support of Florida’s Hillsborough County MBE Program, which used minority contractors located in the County as the measure of available firms. The program was found to be constitutional under the compelling governmental interest element of the strict scrutiny standard. Hillsborough County’s program was based on statistics indicating that specific discrimination existed in the construction contracts awarded by the County, not in the construction industry in general. Hillsborough County extracted data from within its own jurisdictional boundaries and assessed the percentage of minority businesses available in Hillsborough County. The Court stated that the study was properly conducted within the “local construction industry.”10 Similarly, in Associated General Contractors v. Coalition for Economic Equity (AGCCII),11 the United States Court of Appeals for the Ninth Circuit found the City and County of San Francisco’s MBE Program to have the factual predicate necessary to survive strict scrutiny. The San Francisco MBE Program was supported by a study that 4 Adarand, which extended Croson’s strict scrutiny standard to federal programs, did not change Croson’s approach to market area where federal funds are involved. 5 Croson, 488 U.S. at 471 (1989). 6 Id. at 500. 7 Id. at 470. 8 See e.g., Concrete Works of Colorado v. City of Denver, Colorado, 36 F.3d 1513, 1528 (10th Cir. 1994). 9 Cone Corporation v. Hillsborough County, 908 F.2d 908 (11th Cir. 1990). 10 Id. at 915. 11 Associated General Contractors of California v. Coalition for Economic Equity and City and County of San Francisco, 950 F.2d 1401 (9th Cir. 1991). Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 5-3 assessed the number of available MBE contractors within the City and County of San Francisco. The Court found it appropriate to use the City and County as the relevant market area within which to conduct a disparity study.12 In Coral Construction v. King County, the United States Court of Appeals for the Ninth Circuit held that “a set-aside program is valid only if actual, identifiable discrimination has occurred within the local industry affected by the program.”13 In support of its MBE Program, King County offered studies compiled by other jurisdictions, including entities completely within the County or coterminous with the boundaries of the County, as well as a separate jurisdiction completely outside of the County. The plaintiffs contended that Croson required King County to compile its own data and cited Croson as prohibiting data sharing. The Court found that data sharing could potentially lead to the improper use of societal discrimination data as the factual basis for a local MBE program and that innocent third parties could be unnecessarily burdened if an MBE program was based on outside data. However, the Court also found that the data from entities within the County and from coterminous jurisdictions was relevant to discrimination in the County. They also found that the data posed no risk of unfairly burdening innocent third parties. The Court concluded that data gathered by a neighboring county could not be used to support King County’s MBE Program. The Court noted, “It is vital that a race-conscious program align itself as closely to the scope of the problem legitimately sought to be rectified by the governmental entity. To prevent overbreadth, the enacting jurisdiction should limit its factual inquiry to the presence of discrimination within its own boundaries.”14 However, the Court did note that the “world of contracting does not conform itself neatly to jurisdictional boundaries.”15 There are other situations where courts have approved a definition of market area that extends beyond a jurisdiction’s geographic boundaries. In Concrete Works v. City and County of Denver,16 (Concrete Works) the United States Court of Appeals for the Tenth Circuit directly addressed the issue of whether extra-jurisdictional evidence of discrimination can be used to determine the “local market area” for a disparity study. In Concrete Works, the defendant relied on evidence of discrimination in the six-county Denver Metropolitan Statistical Area (MSA) to support its MBE program. Plaintiffs argued that the federal constitution prohibited consideration of evidence beyond jurisdictional boundaries. The Court of Appeals disagreed. 12 Id. at 1415. 13 Coral Construction Co. v. King County, 941 F.2d 910 (9th Cir. 1991), cert. denied, 112 S.Ct. 875 (1992). 14 Id. at 917. 15 Id. 16 Concrete Works, 36 F.3d 1513, 1528 (10th Cir. 1994). Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 5-4 Critical to the Court’s acceptance of the Denver MSA as the relevant local market, was the finding that more than 80 percent of construction and design contracts awarded by Denver were awarded to contractors within the MSA. Another consideration was that Denver’s analysis was based on U.S. Census data, which was available for the Denver MSA but not for the city itself. There was no undue burden placed on nonculpable parties, as Denver had conducted a majority of its construction contracts within the area defined as the local market. Citing AGCCII,17 the Court noted “that any plan that extends race-conscious remedies beyond territorial boundaries must be based on very specific findings that actions that the city has taken in the past have visited racial discrimination on such individuals.”18 Similarly, New York State conducted a disparity study in which the geographic market consisted of New York State and eight counties in northern New Jersey. The geographic market was defined as the area encompassing the location of businesses which received more than 90 percent of the dollar value of all contracts awarded by the agency.19 State and local governments must pay special attention to the geographical scope of their disparity studies. Croson determined that the statistical analysis should focus on the number of qualified minority business owners in the government’s marketplace.20 The text of Croson itself suggests that the geographical boundaries of the government entity comprise an appropriate market area and other courts have agreed with this finding. In addition, other cases have approved the use of a percentage of the dollars spent by an agency on contracting. It follows then that an entity may limit consideration of evidence of discrimination to discrimination occurring within its own jurisdiction. Under certain circumstances, extra- jurisdictional evidence can be used if the percentage of governmental dollars supports such boundaries. 17 AGCCII, 950 F.2d 1401 (9th Cir. 1991). 18 Concrete Works, 36 F.3d at 1528 (10th Cir. 1994). 19 Opportunity Denied! New York State’s Study, 26 Urban Lawyer No. 3, Summer 1994. 20 Croson, 488 U.S. at 501 (1989). Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 5-5 II.II.II.II. MARKET AREA ANALYSISMARKET AREA ANALYSISMARKET AREA ANALYSISMARKET AREA ANALYSIS Although Croson and its progeny do not provide a bright line rule for the delineation of the local market area, taken collectively, the case law supports a definition of market area as the geographical boundaries of the government entity. In the case of the Metropolitan St. Louis Sewer District (MSD) the market area would be its service area, City of St. Louis and St. Louis County. A review of the contracts awarded by MSD shows that the geographic area where MSD awarded most of its 40,868 contracts and the majority of the contract dollars is the same as its service area. 1. Summary of the Distribution of All Contracts Awarded MSD awarded 40,868 contracts valued at $914,888,874.68 during the July 1, 2007 through January 31, 2012 study period. Businesses based in MSD’s market area received 77.63 percent of these contracts and 71.67 percent of the dollars. The distribution of the contracts awarded and dollars received by all firms within and outside of MSD’s market area is depicted below in Table 5.01. Table 5.01: Distribution of All Contracts Awarded July 1, 2007 through January 31, 2012 Geographic Area Number of Contracts Percent of Contracts Total Dollars Percent of Dollars Saint Louis City 23,505 57.51% $413,546,248.97 45.20% Saint Louis County 8,222 20.12% $242,166,341.55 26.47% Saint Charles County 1,537 3.76% $125,914,496.88 13.76% Franklin County 571 1.40% $35,303,117.70 3.86% Out-Of-State-IL 2,321 5.68% $21,217,888.25 2.32% Out-Of-State-OR 25 0.06% $17,998,070.20 1.97% Lincoln County 26 0.06% $9,041,402.74 0.99% Jefferson County 823 2.01% $7,184,062.75 0.79% Out-Of-State-VA 131 0.32% $6,269,228.48 0.69% Out-Of-State-TX 357 0.87% $6,075,461.57 0.66% Out-Of-State-GA 94 0.23% $4,768,313.04 0.52% Out-Of-State-NY 129 0.32% $4,526,110.28 0.49% Jackson County 138 0.34% $3,271,173.31 0.36% Out-Of-State-PA 501 1.23% $3,209,945.74 0.35% Out-Of-State-FL 316 0.77% $2,255,756.62 0.25% Boone County 5 0.01% $1,372,295.79 0.15% Out-Of-State-KS 108 0.26% $885,439.58 0.10% Out-Of-State-CO 30 0.07% $832,251.61 0.09% Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 5-6 Geographic Area Number of Contracts Percent of Contracts Total Dollars Percent of Dollars Cole County 72 0.18% $815,016.01 0.09% Out-Of-State-IN 73 0.18% $799,984.58 0.09% Out-Of-State-CA 210 0.51% $653,560.29 0.07% Out-Of-State-NJ 102 0.25% $557,217.60 0.06% Out-Of-State-OH 242 0.59% $494,528.63 0.05% Out-Of-State-AR 38 0.09% $430,140.13 0.05% Out-Of-State-OK 27 0.07% $424,778.06 0.05% Warren County 22 0.05% $416,184.61 0.05% Out-Of-State-WI 108 0.26% $412,878.91 0.05% Out-Of-State-MI 158 0.39% $380,146.53 0.04% Out-Of-State-AZ 31 0.08% $378,297.18 0.04% Out-Of-State-NE 13 0.03% $347,290.63 0.04% Out-Of-Country-Canada 31 0.08% $311,848.25 0.03% Out-Of-State-DC 10 0.02% $287,948.00 0.03% Out-Of-State-CT 116 0.28% $248,719.62 0.03% Montgomery County 63 0.15% $193,791.17 0.02% Out-Of-State-NM 153 0.37% $179,557.48 0.02% Out-Of-State-IA 27 0.07% $166,398.34 0.02% Out-Of-State-NC 36 0.09% $159,586.86 0.02% Out-Of-State-MN 76 0.19% $154,163.72 0.02% Out-Of-State-MA 57 0.14% $137,417.22 0.02% Out-Of-State-KY 44 0.11% $135,179.98 0.01% Out-Of-State-WA 16 0.04% $133,081.99 0.01% Out-Of-State-DE 40 0.10% $119,959.59 0.01% Out-Of-State-TN 21 0.05% $107,387.47 0.01% Sainte Genevieve County 15 0.04% $96,132.05 0.01% Saint Francois County 8 0.02% $95,267.55 0.01% Out-Of-State-NV 24 0.06% $82,337.00 0.01% Cape Girardeau County 37 0.09% $71,401.24 0.01% Out-Of-State-UT 4 0.01% $69,844.94 0.01% Platte County 3 0.01% $42,980.00 0.00% Out-Of-State-ME 23 0.06% $36,822.99 0.00% Out-Of-State-VT 3 0.01% $24,306.60 0.00% Out-Of-State-NH 10 0.02% $18,817.75 0.00% Out-Of-State-MD 23 0.06% $12,407.66 0.00% Out-Of-State-AL 14 0.03% $11,355.26 0.00% Out-Of-State-MS 14 0.03% $8,506.05 0.00% Out-Of-State-LA 9 0.02% $6,750.12 0.00% Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 5-7 Geographic Area Number of Contracts Percent of Contracts Total Dollars Percent of Dollars Out-Of-State-WY 2 0.00% $6,711.70 0.00% Callaway County 20 0.05% $6,520.88 0.00% Out-Of-State-SC 12 0.03% $4,555.00 0.00% Camden County 3 0.01% $2,464.53 0.00% Buchanan County 3 0.01% $1,612.25 0.00% Cass County 1 0.00% $1,337.73 0.00% Washington County 2 0.00% $1,332.40 0.00% Out-Of-State-RI 3 0.01% $1,205.99 0.00% Christian County 3 0.01% $1,061.72 0.00% Scott County 1 0.00% $941.31 0.00% Out-Of-State-SD 1 0.00% $564.60 0.00% Out-Of-State-ID 1 0.00% $378.00 0.00% Clay County 1 0.00% $325.00 0.00% Pike County 2 0.00% $181.72 0.00% Out-Of-State-WV 1 0.00% $84.73 0.00% Total 40,868 100.00% $914,888,874.68 100.00% 2. Distribution of Non-Building Sewer Construction Contracts MSD awarded 772 non-building sewer construction contracts valued at $288,669,563.38 during the July 1, 2007 through January 31, 2012 study period. Businesses based in MSD’s non-building sewer construction market area received 49.61 percent of the non- building sewer construction contracts and 41.27 percent of the dollars. The distribution of the non-building sewer construction contracts awarded and dollars received by all firms within and outside of MSD’s construction market area is depicted below in Table 5.02. Table 5.02: Distribution of Non-Building Sewer Construction Contracts Awarded July 1, 2007 through January 31, 2012 Geographic Area Number of Contracts Percent of Contracts Total Dollars Percent of Dollars Saint Charles County 125 16.19% $121,133,986.91 41.96% Saint Louis County 123 15.93% $74,768,386.07 25.90% Saint Louis City 260 33.68% $44,365,947.79 15.37% Franklin County 139 18.01% $34,984,979.82 12.12% Lincoln County 13 1.68% $8,581,588.53 2.97% Jefferson County 100 12.95% $3,980,349.11 1.38% Warren County 3 0.39% $408,345.75 0.14% Out-Of-State-WI 1 0.13% $247,381.45 0.09% Saint Francois County 4 0.52% $88,535.00 0.03% Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 5-8 Geographic Area Number of Contracts Percent of Contracts Total Dollars Percent of Dollars Jackson County 2 0.26% $61,677.95 0.02% Out-Of-State-AR 1 0.13% $47,574.00 0.02% Out-Of-State-IL 1 0.13% $811.00 0.00% Total 772 100.00% $288,669,563.38 100.00% 3. Distribution of Building Construction Contracts MSD awarded 27 building construction contracts valued at $265,714,725.92 during the July 1, 2007 through January 31, 2012 study period. Businesses based in MSD’s building construction market area received 81.48 percent of the building construction contracts and 98.67 percent of the dollars. The distribution of the building construction contracts awarded and dollars received by all firms within and outside of MSD’s construction market area is depicted below in Table 5.03. Table 5.03: Distribution of Building Construction Contracts Awarded July 1, 2007 through January 31, 2012 Geographic Area Number of Contracts Percent of Contracts Total Dollars Percent of Dollars Saint Louis City 16 59.26% $144,212,238.94 54.27% Saint Louis County 6 22.22% $117,985,176.37 44.40% Out-Of-State-IL 1 3.70% $2,189,000.00 0.82% Jefferson County 2 7.41% $901,725.85 0.34% Saint Charles County 1 3.70% $309,172.76 0.12% Out-Of-State-TX 1 3.70% $117,412.00 0.04% Total 27 100.00% $265,714,725.92 100.00% 4. Distribution of Engineering Professional Services Contracts MSD awarded 186 engineering professional services contracts valued at $90,658,256.08 during the July 1, 2007 through January 31, 2012 study period. Businesses based in MSD’s engineering professional services market area received 98.38 percent of the engineering professional services contracts and 99.99 percent of the dollars. The distribution of the engineering professional services contracts awarded and dollars received by all firms within and outside of MSD’s engineering professional services market area is depicted below in Table 5.04. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 5-9 Table 5.04: Distribution of Engineering Professional Services Contracts Awarded July 1, 2007 through January 31, 2012 Geographic Area Number of Contracts Percent of Contracts Total Dollars Percent of Dollars Saint Louis City 159 85.48% $79,695,214.30 87.91% Saint Louis County 24 12.90% $10,957,037.83 12.09% Saint Charles County 3 1.61% $6,003.95 0.01% Total 186 100.00% $90,658,256.08 100.00% 5. Distribution of Non-Engineering Professional Services Contracts MSD awarded 337 non-engineering professional services contracts valued at $59,704,115.32 during the July 1, 2007 through January 31, 2012 study period. Businesses based in MSD’s non-engineering professional services market area received 80.42 percent of the non-engineering professional services contracts and 58.94 percent of the dollars. The distribution of the non-engineering professional services contracts awarded and dollars received by all firms within and outside of MSD’s non-engineering professional services market area is depicted below in Table 5.05. Table 5.05: Distribution of Non-Engineering Professional Services Contracts Awarded July 1, 2007 through January 31, 2012 Geographic Area Number of Contracts Percent of Contracts Total Dollars Percent of Dollars Saint Louis City 215 63.80% $27,765,484.23 46.51% Out-Of-State-OR 13 3.86% $17,875,853.54 29.94% Saint Louis County 56 16.62% $7,421,630.37 12.43% Jackson County 34 10.09% $3,153,164.04 5.28% Out-Of-State-NY 1 0.30% $3,049,278.08 5.11% Out-Of-State-VA 1 0.30% $148,687.99 0.25% Out-Of-State-Pa 5 1.48% $117,858.25 0.20% Out-Of-State-TN 2 0.59% $84,336.05 0.14% Out-Of-State-MA 9 2.67% $80,322.77 0.13% Out-Of-State-IL 1 0.30% $7,500.00 0.01% Total 337 100.00% $59,704,115.32 100.00% Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 5-10 6. Distribution of Supplies and Contractual Services Contracts MSD awarded 39,546 supplies and contractual services contracts valued at $210,142,213.98 during the July 1, 2007 through January 31, 2012 study period. Businesses based in MSD’s supplies and contractual services market area received 78.05 percent of the supplies and contractual services contracts and 70.69 percent of the dollars. The distribution of the supplies and contractual services contracts awarded and dollars received by all firms within and outside of MSD’s supplies and contractual services market area is depicted below in Table 5.06. Table 5.06: Distribution of Supplies and Contractual Services Contracts Awarded July 1, 2007 through January 31, 2012 Geographic Area Number of Contracts Percent of Contracts Total Dollars Percent of Dollars Saint Louis City 22,855 57.79% $117,507,363.71 55.92% Saint Louis County 8,013 20.26% $31,034,110.91 14.77% Out-Of-State-IL 2,318 5.86% $19,020,577.25 9.05% Out-Of-State-VA 130 0.33% $6,120,540.49 2.91% Out-Of-State-TX 356 0.90% $5,958,049.57 2.84% Out-Of-State-GA 94 0.24% $4,768,313.04 2.27% Saint Charles County 1,408 3.56% $4,465,333.26 2.12% Out-Of-State-PA 496 1.25% $3,092,087.49 1.47% Jefferson County 721 1.82% $2,301,987.79 1.10% Out-Of-State-FL 316 0.80% $2,255,756.62 1.07% Out-Of-State-NY 128 0.32% $1,476,832.20 0.70% Boone County 5 0.01% $1,372,295.79 0.65% Out-Of-State-KS 108 0.27% $885,439.58 0.42% Out-Of-State-CO 30 0.08% $832,251.61 0.40% Cole County 72 0.18% $815,016.01 0.39% Out-Of-State-IN 73 0.18% $799,984.58 0.38% Out-Of-State-CA 210 0.53% $653,560.29 0.31% Out-Of-State-NJ 102 0.26% $557,217.60 0.27% Out-Of-State-OH 242 0.61% $494,528.63 0.24% Lincoln County 13 0.03% $459,814.21 0.22% Out-Of-State-OK 27 0.07% $424,778.06 0.20% Out-Of-State-AR 37 0.09% $382,566.13 0.18% Out-Of-State-MI 158 0.40% $380,146.53 0.18% Out-Of-State-AZ 31 0.08% $378,297.18 0.18% Out-Of-State-NE 13 0.03% $347,290.63 0.17% Franklin County 432 1.09% $318,137.88 0.15% Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 5-11 Geographic Area Number of Contracts Percent of Contracts Total Dollars Percent of Dollars Out-Of-Country-Canada 31 0.08% $311,848.25 0.15% Out-Of-State-DC 10 0.03% $287,948.00 0.14% Out-Of-State-CT 116 0.29% $248,719.62 0.12% Montgomery County 63 0.16% $193,791.17 0.09% Out-Of-State-NM 153 0.39% $179,557.48 0.09% Out-Of-State-IA 27 0.07% $166,398.34 0.08% Out-Of-State-WI 107 0.27% $165,497.46 0.08% Out-Of-State-NC 36 0.09% $159,586.86 0.08% Out-Of-State-MN 76 0.19% $154,163.72 0.07% Out-Of-State-KY 44 0.11% $135,179.98 0.06% Out-Of-State-WA 16 0.04% $133,081.99 0.06% Out-Of-State-OR 12 0.03% $122,216.66 0.06% Out-Of-State-DE 40 0.10% $119,959.59 0.06% Sainte Genevieve County 15 0.04% $96,132.05 0.05% Out-Of-State-NV 24 0.06% $82,337.00 0.04% Cape Girardeau County 37 0.09% $71,401.24 0.03% Out-Of-State-UT 4 0.01% $69,844.94 0.03% Out-Of-State-MA 48 0.12% $57,094.45 0.03% Jackson County 102 0.26% $56,331.32 0.03% Platte County 3 0.01% $42,980.00 0.02% Out-Of-State-ME 23 0.06% $36,822.99 0.02% Out-Of-State-VT 3 0.01% $24,306.60 0.01% Out-Of-State-TN 19 0.05% $23,051.42 0.01% Out-Of-State-NH 10 0.03% $18,817.75 0.01% Out-Of-State-MD 23 0.06% $12,407.66 0.01% Out-Of-State-AL 14 0.04% $11,355.26 0.01% Out-Of-State-MS 14 0.04% $8,506.05 0.00% Warren County 19 0.05% $7,838.86 0.00% Out-Of-State-LA 9 0.02% $6,750.12 0.00% Saint Francois County 4 0.01% $6,732.55 0.00% Out-Of-State-WY 2 0.01% $6,711.70 0.00% Callaway County 20 0.05% $6,520.88 0.00% Out-Of-State-SC 12 0.03% $4,555.00 0.00% Camden County 3 0.01% $2,464.53 0.00% Buchanan County 3 0.01% $1,612.25 0.00% Cass County 1 0.00% $1,337.73 0.00% Washington County 2 0.01% $1,332.40 0.00% Out-Of-State-RI 3 0.01% $1,205.99 0.00% Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 5-12 Geographic Area Number of Contracts Percent of Contracts Total Dollars Percent of Dollars Christian County 3 0.01% $1,061.72 0.00% Scott County 1 0.00% $941.31 0.00% Out-Of-State-SD 1 0.00% $564.60 0.00% Out-Of-State-ID 1 0.00% $378.00 0.00% Clay County 1 0.00% $325.00 0.00% Pike County 2 0.01% $181.72 0.00% Out-Of-State-WV 1 0.00% $84.73 0.00% Total 39,546 100.00% $210,142,213.98 100.00% III.III.III.III. METROPOLITAN ST. LOUIS SEWER METROPOLITAN ST. LOUIS SEWER METROPOLITAN ST. LOUIS SEWER METROPOLITAN ST. LOUIS SEWER DISTRICT MARKET AREADISTRICT MARKET AREADISTRICT MARKET AREADISTRICT MARKET AREA During the study period MSD awarded 40,868 non-building sewer construction, building construction, engineering professional services, non-engineering professional services, and supplies and contractual services, valued at $914,888,874.68. MSD awarded 77.63 percent of these contracts and 71.67 percent of dollars to businesses located in the market area. Given the distribution of the contracts awarded by MSD and the conditions in the applicable case law, the Study’s market area is determined to be the same as MSD’s service area, City of St. Louis and St. Louis County. The analysis of discrimination has been limited to an examination of contracts awarded to available market area businesses. Table 5.07 below presents an overview of the number of non-building sewer construction, building construction, engineering professional services, non-engineering professional services, and supplies and contractual services contracts MSD awarded and the dollars spent in the market area during the July 1, 2007 through January 31, 2012 study period. Non-Building Sewer Contracts: 383 or 49.61 percent of these contracts were awarded to market area businesses. The dollar value of those contracts was $119,134,333.86 or 41.27 percent of the total construction dollars. Building Construction Contracts: 22 or 81.48 percent of these contracts were awarded to market area businesses. The dollar value of those contracts was $262,197,415.31 or 98.68 percent of the total construction dollars. Engineering professional Contracts: 183 or 98.39 percent of these contracts were awarded to market area businesses. The dollar value of those contracts was $90,652,252.13 or 99.99 percent of the total engineering professional services dollars. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 5-13 Non-Engineering professional Contracts: 271 or 80.42 percent of these contracts were awarded to market area businesses. The dollar value of those contracts was $35,187,114.60 or 58.94 percent of the total engineering professional services dollars. Supplies and Contractual Services Contracts: 30,868 or 78.06 percent of these contracts were awarded to market area businesses. The dollar value of those contracts was $148,541,474.62 or 70.69 percent of the total supplies and contractual services dollars. Table 5.07: MSD’s Market Area Contract Distribution - All Industries: July 1, 2007 through January 31, 2012 Geographic Area Number of Contracts Percent of Contracts Total Dollars Percent of Dollars Combined Industries Market Area 31,727 77.63% $655,712,590.52 71.67% Outside Market Area 9,141 22.37% $259,176,284.16 28.33% Total 40,868 100.00% $914,888,874.68 100.00% Non-Building Sewer Construction Market Area 383 49.61% $119,134,333.86 41.27% Outside Market Area 389 50.39% $169,535,229.52 58.73% Total 772 100.00% $288,669,563.38 100.00% Building Construction Market Area 22 81.48% $262,197,415.31 98.68% Outside Market Area 5 18.52% $3,517,310.61 1.32% Total 27 100.00% $265,714,725.92 100.00% Engineering Professional Services Market Area 183 98.39% $90,652,252.13 99.99% Outside Market Area 3 1.61% $6,003.95 0.01% Total 186 100.00% $90,658,256.08 100.00% Non-Engineering Professional Services Market Area 271 80.42% $35,187,114.60 58.94% Outside Market Area 66 19.58% $24,517,000.72 41.06% Total 337 100.00% $59,704,115.32 100.00% Supplies & Contractual Services Market Area 30,868 78.06% $148,541,474.62 70.69% Outside Market Area 8,678 21.94% $61,600,739.36 29.31% Total 39,546 100.00% $210,142,213.98 100.00% Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-1 CHAPTER 6: PRIME CONTRACTOR PRIME CONTRACTOR PRIME CONTRACTOR PRIME CONTRACTOR AND SUBCONTRACTOR AVAILABILITY AND SUBCONTRACTOR AVAILABILITY AND SUBCONTRACTOR AVAILABILITY AND SUBCONTRACTOR AVAILABILITY ANALYSISANALYSISANALYSISANALYSIS I.I.I.I. INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION Availability is defined, according to Croson, as the number of businesses in the jurisdiction’s market area that are willing and able to provide goods or services.1 To determine availability, minority and woman-owned business enterprises (M/WBEs) and non-M/WBEs within the jurisdiction’s market area that are ready, willing, and able to provide the goods and services need to be enumerated. The Metropolitan St. Louis Sewer District’s (MSD) market area for the five industries — building construction, non- building construction, engineering professional services, non-engineering professional services, and supplies and contractual services, as defined in Chapter 5: Market Area Analysis, is City of St. Louis and St. Louis County. When considering sources for determining the number of willing and able M/WBEs and non-M/WBEs in the market area, the selection must be based on whether two aspects about the population in question can be gauged from the sources. One consideration is a business’ interest in doing business with the jurisdiction, as implied by the term “willing,” and the other is its ability or capacity to provide a service or good, as implied by the term “able.” The compiled list of available businesses includes M/WBEs and non-M/WBEs in the building construction, non-building construction, engineering professional services, non- engineering professional services, and supplies and contractual services industries. Separate availability lists were compiled by industry for prime contractors and subcontractors. A distribution of the available businesses is presented in this chapter by ethnicity, gender, and industry. 1 City of Richmond v. J.A. Croson Co., 488 U.S. 469, 509 (1989). Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-2 II.II.II.II. PRIME CONTRACTOR AVAILABILITY DATA SOURCESPRIME CONTRACTOR AVAILABILITY DATA SOURCESPRIME CONTRACTOR AVAILABILITY DATA SOURCESPRIME CONTRACTOR AVAILABILITY DATA SOURCES A.A.A.A. Identification of Willing Businesses within the Identification of Willing Businesses within the Identification of Willing Businesses within the Identification of Willing Businesses within the Market AreaMarket AreaMarket AreaMarket Area Four sources were used to identify businesses in the market area that provide goods and services that MSD procures. One source was MSD’s utilized businesses, including the Capital Improvement and Replacement Plan (CIRP) pre-qualification contractors’ and consultants’ lists from MSD. Another source was local, state and federal government certification lists. The third source was business associations’ membership lists, and the fourth source was the business community meetings. Only businesses that were determined to be willing were added to the availability list. Any business identified as willing from more than one source was counted only once in an industry. A business that was willing to provide goods or services in more than one industry was listed in each relevant industry’s availability list. The four sources were ranked with the highest rank assigned to the utilized businesses and pre-qualification vendors’ lists. Government certification lists ranked second, business association membership lists ranked third, and business community meetings ranked fourth. Therefore, the first document used to build the availability list was the list of MSD utilized businesses. The pre-qualified contractors’ and consultants’ lists were added to the utilized businesses list. Businesses identified on certification lists were then appended to the list. The certification lists were collected from state and local government certification agencies. Businesses on association membership lists which affirmed their willingness through a survey of business association members were also added to the availability list. The business associations included trade and professional groups and Chambers of Commerce. Finally, businesses identified from the business community meetings were added to the list. Extensive targeted outreach to business associations in MSD’s market area was performed to identify and secure business membership lists. Business community meetings, letters, and telephone contact with the associations garnered a number of membership lists. From the four sources, 2,031 unique market area businesses that provided goods or services in one or more of the five industries were identified. An accounting of the willing businesses derived by source is listed below: 1. MSD’s Records All of MSD’s utilized businesses and MSD’s pre-qualified contractors and consultants were determined to be willing. There were 2,068 utilized businesses and 245 CIRP pre- qualified contractors and consultants. From these sources 1,248 unique market area businesses were added to the availability list. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-3 2. Government Certification Lists The market area businesses on the government certification lists were considered to be willing. There were 1,994 certified businesses in the market area. From these certification lists, 468 unique certified businesses were added to the availability list. 3. Business Association Membership Lists Membership lists were obtained from 22 business associations located in the market area. From the business association membership lists, 2,057 market area businesses in the five industries were identified. The composite list was queried for businesses with a telephone number. There were 1,351 businesses with telephone numbers. These businesses were surveyed to determine their willingness to contract with MSD. There were 310 unique willing businesses from the membership lists, added to the availability list. B.B.B.B. Prime Contractor SourcesPrime Contractor SourcesPrime Contractor SourcesPrime Contractor Sources Table 6.01: lists the sources from which the final list of willing businesses was compiled. Table 6.01: Prime Contractor Availability Data Sources Source Type of Information MSD Records CIRP Pre-Qualification Contractors and Consultants List M/WBEs and non-M/WBEs MSD Utilized Businesses M/WBEs and non-M/WBEs Government Certification Lists City of St. Louis DBEs and M/WBEs MoDOT DBE Directory DBEs ProNet-8a Program-Saint Louis City M/WBEs and non-M/WBEs ProNet-8a Program-Saint Louis County M/WBEs ProNet-Central Contractor Registration-Saint Louis City DBEs ProNet- Central Contractor Registration -Saint Louis County DBEs ProNet-Historically Underrepresented Businesses-Saint Louis City M/WBEs Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-4 Source Type of Information ProNet- Historically Underrepresented Businesses -Saint Louis County M/WBES ProNet-Small Business Association-Saint Louis City M/WBEs and non-M/WBEs ProNet-Small Business Association-Saint Louis County M/WBEs and non-M/WBEs ProNet-Small Disadvantaged Business-Saint Louis City M/WBEs ProNet-Small Disadvantaged Business-Saint Louis County M/WBEs St. Louis Minority Supplier Development Council MBEs State of Missouri M/WBE Certification List M/WBEs Business Association Membership Lists Air & Waste Management-Local and International Membership Directory M/WBEs and non-M/WBEs American Council of Engineering Companies of Missouri Membership Directory M/WBEs and non-M/WBEs American Society of Civil Engineers-St. Louis Section Membership Directory M/WBEs and non-M/WBEs Associated General Contractors of Missouri Membership Directory M/WBEs and non-M/WBEs Bricklayers Local 1 Membership Directory M/WBEs and non-M/WBEs Cement Mason Local 527 Membership Director M/WBEs and non-M/WBEs Flooring Industry Council of Greater St. Louis Membership Directory M/WBEs and non-M/WBEs International Brotherhood of Electrical Workers- Electrical Contractors Membership Director M/WBEs and non-M/WBEs International Right of Way Membership Directory M/WBEs and non-M/WBEs Lemay Chamber of Commerce Membership Directory M/WBEs and non-M/WBEs Mechanical Contractors Association of St. Louis Membership Directory M/WBEs and non-M/WBEs Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-5 Source Type of Information Missouri Association of Plumbing-Heating-Cooling- Contractors Membership Directory M/WBEs and non-M/WBEs Mound Bar Association Membership Directory M/WBEs and non-M/WBEs National Association of Women Business Owners Membership Directory M/WBEs and non-M/WBEs National Electrical Contractors Association Membership Directory M/WBEs and non-M/WBEs O’Fallon Chamber of Commerce Membership Directory M/WBEs and non-M/WBEs Painters District Council 2 List Membership Directory M/WBEs Plumbers and Pipefitters Membership Directory M/WBEs and non-M/WBEs Plumbing Industry Council Contractor Membership Directory M/WBEs and non-M/WBEs Sheet Metal Workers Local 36 Membership Directory M/WBEs Site Improvement Association of St. Louis Membership Directory M/WBEs and non-M/WBEs St. Louis Regional Chamber and Growth Association Membership Directory M/WBEs and non-M/WBEs Outreach Business Community Meetings M/WBEs and non-M/WBEs Willingness Survey M/WBEs and non-M/WBEs C.C.C.C. Determination of WillingnessDetermination of WillingnessDetermination of WillingnessDetermination of Willingness All businesses included in the availability analysis were determined to be willing to contract with MSD. Willingness is defined in Croson and its progeny as a business interested in doing government contracting. Businesses identified from the 40 sources listed in Table 6.01 demonstrated their willingness to perform on public contracts. To be classified as willing, the business either bid on a government contract, secured government certification, or was listed on a business organization or chamber of commerce’s membership list and affirmed an interest in contracting with MSD through the willingness survey. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-6 D.D.D.D. Distribution of AvailablDistribution of AvailablDistribution of AvailablDistribution of Available Prime Contractors e Prime Contractors e Prime Contractors e Prime Contractors by Source, Ethnicity, and Genderby Source, Ethnicity, and Genderby Source, Ethnicity, and Genderby Source, Ethnicity, and Gender Tables 6.02 through 6.05 present the distribution of willing prime contractors by source. The highest ranked source was the prime contractors utilized by MSD. Each ranked business is counted only once. For example, a utilized prime contractor counted in the prime contractor utilization source was not counted a second time as a bidder, certified business, or company identified from a business association list. As noted in Table 6.02, 84.49 percent of the businesses on the unique list of available prime contractors were obtained from MSD’s records and government certification lists. Companies identified through the business community meetings and willingness survey represents 15.51 percent of the willing businesses. Table 6.02: Distribution of Prime Contractor Availability Data Sources, All Industries Sources M/WBEs Percentage Non M/WBEs Percentage Source Percentage Prime Contractor Utilization 29.07% 68.75% 58.20% Pre-Qualified Firms 2.22% 3.62% 3.25% Certification Lists 63.89% 8.25% 23.04% Subtotal 95.19% 80.62% 84.49% Business Community Meeting Attendees 0.74% 0.07% 0.25% Willingness Survey 4.07% 19.32% 15.26% Subtotal 4.81% 19.38% 15.51% Grand Total* 100.00% 100.00% 100.00% *The percentages may not total 100 percent due to rounding. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-7 A distribution of available businesses by source also was calculated for each industry. As noted in Table 6.03, 68.56 percent of the building construction businesses identified were derived from MSD records and government certification lists. Companies identified through the business community meetings and willingness survey represents 31.44 percent of the willing businesses. Table 6.03: Distribution of Prime Contractor Availability Data Sources, Building Construction Sources M/WBEs Percentage Non M/WBEs Percentage Source Percentage Prime Contractor Utilization 6.93% 20.25% 15.15% Pre-Qualified Firms 4.95% 18.40% 13.26% Certification Lists 82.18% 14.11% 40.15% Subtotal 94.06% 52.76% 68.56% Business Community Meeting Attendees 0.99% 0.00% 0.38% Willingness Survey 4.95% 47.24% 31.06% Subtotal 5.94% 47.24% 31.44% Grand Total* 100.00% 100.00% 100.00% *The percentages may not total 100 percent due to rounding. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-8 Table 6.04 depicts the data sources for the available non-building construction prime contractors. As noted, 68.03 percent of the non-building construction businesses identified were derived from MSD records and government certification lists. Companies identified through the business community meetings and willingness survey represents 31.97 percent of the willing businesses. Table 6.04: Distribution of Prime Contractor Availability Data Sources, Non-Building Construction Sources M/WBEs Percentage Non M/WBEs Percentage Source Percentage Prime Contractor Utilization 45.45% 37.08% 39.34% Pre-Qualified Firms 3.03% 21.35% 16.39% Certification Lists 36.36% 3.37% 12.30% Subtotal 84.85% 61.80% 68.03% Business Community Meeting Attendees 3.03% 0.00% 0.82% Willingness Survey 12.12% 38.20% 31.15% Subtotal 15.15% 38.20% 31.97% Grand Total* 100.00% 100.00% 100.00% *The percentages may not total 100 percent due to rounding. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-9 Table 6.05 depicts the data sources for the available engineering professional services prime contractors. As noted, 76.54 percent of the engineering professional services businesses identified were derived from MSD records and government certification lists. Companies identified through the business community meetings and willingness survey represents 23.46 percent of the willing businesses. Table 6.05: Distribution of Prime Contractor Availability Data Sources, Engineering Professional Services Sources M/WBEs Percentage Non M/WBEs Percentage Source Percentage Prime Contractor Utilization 28.57% 35.35% 32.72% Pre-Qualified Firms 7.94% 20.20% 15.43% Certification Lists 55.56% 11.11% 28.40% Subtotal 92.06% 66.67% 76.54% Business Community Meeting Attendees 3.17% 0.00% 1.23% Willingness Survey 4.76% 33.33% 22.22% Subtotal 7.94% 33.33% 23.46% Grand Total* 100.00% 100.00% 100.00% *The percentages may not total 100 percent due to rounding. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-10 Table 6.06 depicts the data sources for the non-engineering professional services prime contractors. As noted, 76.96 percent of the non-engineering professional services businesses identified were derived from MSD records and government certification lists. Companies identified through the business community meetings and willingness survey represents 23.04 percent of the willing businesses. Table 6.06: Distribution of Prime Contractor Availability Data Sources, Non-Engineering Professional Services Sources M/WBEs Percentage Non M/WBEs Percentage Source Percentage Prime Contractor Utilization 3.39% 26.26% 13.82% Pre-Qualified Firms 0.85% 0.00% 0.46% Certification Lists 92.37% 27.27% 62.67% Subtotal 96.61% 53.54% 76.96% Business Community Meeting Attendees 0.00% 1.01% 0.46% Willingness Survey 3.39% 45.45% 22.58% Subtotal 3.39% 46.46% 23.04% Grand Total* 100.00% 100.00% 100.00% *The percentages may not total 100 percent due to rounding. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-11 Table 6.07 depicts the data sources for the available supplies and contractual services prime contractors. As noted, 92.34 percent of the supplies and contractual services businesses identified were derived from MSD records and government certification lists. Companies identified through the business association membership lists and the business community meetings represent 7.66 percent of the willing businesses. Table 6.07: Distribution of Prime Contractor Availability Data Sources, Supplies and Contractual Services Sources M/WBEs Percentage Non M/WBEs Percentage Source Percentage Prime Contractor Utilization 50.78% 85.44% 78.97% Pre-Qualified Firms 0.78% 0.00% 0.14% Certification Lists 45.74% 5.77% 13.22% Subtotal 97.29% 91.21% 92.34% Business Community Meeting Attendees 0.39% 0.00% 0.07% Willingness Survey 2.33% 8.79% 7.59% Subtotal 2.71% 8.79% 7.66% Grand Total* 100.00% 100.00% 100.00% *The percentages may not total 100 percent due to rounding. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-12 III.III.III.III. CAPACITYCAPACITYCAPACITYCAPACITY The second component of the availability requirement set forth in Croson is the capacity or ability of a business to perform the contracts the jurisdiction awards.2 However, capacity requirements are not delineated in Croson. The cases where capacity has been considered have involved large, competitively bid construction prime contracts. The capacity of willing market area businesses to do business with MSD was assessed using three approaches. · The size of all prime contracts awarded by MSD was analyzed to determine the capacity needed to perform the average awarded contract. · The largest contracts awarded to M/WBEs were identified to determine demonstrated ability to win large, competitively bid contracts. · All MSD accepted certifications processes, including the Missouri Department of Transportation (MoDOT), Illinois Department of Transportation (IDOT), METRO, Missouri Office of Equal Opportunity (OEO), Missouri Department of Administration, and the City of St. Louis Disadvantaged Business Enterprise (DBE) Program, were assessed to determine if those processes meet the standard set in Contractors Ass’n. of Eastern Pennsylvania v. City of Philadelphia (Philadelphia).3 Philadelphia found the U.S. Department of Transportation (USDOT) certification sufficient to measure capacity. A.A.A.A. Size of Contracts AnalyzedSize of Contracts AnalyzedSize of Contracts AnalyzedSize of Contracts Analyzed In Associated General Contractors of America v. City of Columbus and Engineering Contractors Ass’n. of South Florida v. Metropolitan Dade City, the courts were concerned with the capacity of the enumerated businesses to bid on large, competitively bid contracts. It should also be noted that the focus in both cases was on the bidder’s size and ability to perform on large, competitively bid construction contracts.4 MSD’s building construction, non-building construction, engineering professional services, non-engineering professional services, and supplies and contractual services 2 Croson, 488 U.S. 469. 3 Contractors Ass’n. of Eastern Pennsylvania v. City of Philadelphia, 6 F.3d 990 (3d Cir. 1993), on remand, 893 F. Supp. 419 (E.D. Penn. 1995), affd, 91 F.3d 586 (3d Cir. 1996). 4 Associated General Contractors of America v. City of Columbus, 936 F. Supp. 1363 (S.D. Ohio Eastern Division , decided August 26, 1996), and Engineering Contractors Ass’n. of South Florida v. Metropolitan Dade City, 943 F. Supp. 1546 (S.D. Fla. 1996), aff’d 122 F.3d 895 (11th Cir. 1997). Writ of certiorari denied Metropolitan Dade Participating Agencies v. Engineering Contrs. Ass'n, 523 U.S. 1004, 140 L. Ed. 2d 317, 118 S. Ct. 1186, (1998); Related proceeding at Hershell Gill Consulting Eng'rs, Inc. v. Miami-Dade Participating Agencies, 2004 U.S. Dist. LEXIS 17197 (S.D. Fla., Aug. 24, 2004). Decision was vacated by the 6th Circuit Court of Appeals. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-13 contracts were analyzed to determine the size of awarded contracts in order to gauge the capacity required to perform on MSD’s contracts. The size distribution illustrates the fact that the majority of MSD’s contracts were under $25,000. The distribution in Table 6.08 illustrates that limited capacity is needed to perform the majority of MSD’s contracts. For the size analysis, MSD’s contracts were grouped into nine dollar ranges.5 Each industry was analyzed to determine the number and percentage of contracts that fell within the nine size categories. The size distribution of contracts awarded to Non- Minority Males was then compared to the size distribution of contracts awarded to Caucasian Females, Minority Females, and Minority Males. Table 6.08, which presents the size distribution for contracts awarded within the nine dollar ranges in all industries combined, demonstrates that 96.61 percent of MSD’s contracts were less than $25,000; 97.63 percent were less than $50,000; 98.37 percent were less than $100,000; and 99.5 percent were less than $500,000. Only 0.5 percent of MSD’s contracts were $500,000 or more. The percentage of contracts MSD awarded to non-minority males, women-owned businesses, and minority male firms was comparable under $500,000. Therefore the formal prime contract analysis was limited to contracts under $500,000. This analysis addressed the concern that capping the capacity required to perform larger contracts had not been documented. 1. Building Construction Contracts by Size Table 6.09 depicts MSD’s building construction contracts awarded within the nine dollar ranges. Contracts valued at less than $25,000 were 7.41 percent; those less than $50,000 were 11.11 percent; those less than $100,000 were 14.81 percent; and those less than $500,000 were 51.85 percent. 2. Non-Building Construction Contracts by Size Table 6.10 depicts MSD’s non-building construction contracts within the nine dollar ranges. Contracts valued at less than $25,000 were 60.23 percent; those less than $50,000 were 67.74 percent; those less than $100,000 were 74.61 percent; and those less than $500,000 were 87.7 percent. 3. Engineering Professional Services Contracts by Size 5 The nine dollar ranges are $1 to $25,000; $25,001 to $50,000; $50,001 to $100,000; $100,001 to $250,000; $250,001 to $500,000; $500,001 to $750,000; $750,001 to $1,000,000; $1,000,001 to $3,000,000; and $3,000,001 and greater. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-14 Table 6.11 depicts MSD’s engineering professional services contracts within the nine dollar ranges. Contracts valued at less than $25,000 were 32.26 percent; those less than $50,000 were 36.02 percent; those less than $100,000 were 45.16 percent; and those less than $500,000 were 89.25 percent. 4. Non-Engineering Professional Services Contracts by Size Table 6.12 depicts MSD’s non-engineering professional services contracts within the nine dollar ranges. Contracts valued at less than $25,000 were 73 percent; those less than $50,000 were 76.26 percent; those less than $100,000 were 80.41 percent; and those less than $500,000 were 92.28 percent. 5. Supplies and Contractual Services Contracts by Size Table 6.13 depicts MSD’s supplies and contractual services contracts within the nine dollar ranges. Contracts valued at less than $25,000 were 97.89 percent; those less than $50,000 were 98.74 percent; those less than $100,000 were 99.29 percent; and those less than $500,000 were 99.87 percent. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-15 Table 6.08: Contracts by Size, All Industries, July 1, 2007 to January 31, 2012 Non-Minority Minority Females Males Females Males Freq Percent Freq Percent Freq Percent Freq Percent Freq Percent $1 - $25,000 4,812 97.59% 31,548 96.44% 94 92.16% 3,030 97.05% 39,484 96.61% $25,001 - $50,000 38 0.77% 348 1.06% 3 2.94% 25 0.80% 414 1.01% $50,001 - $100,000 27 0.55% 262 0.80% 2 1.96% 12 0.38% 303 0.74% $100,001 - $250,000 29 0.59% 236 0.72% 2 1.96% 19 0.61% 286 0.70% $250,001 - $500,000 17 0.34% 138 0.42% 1 0.98% 20 0.64% 176 0.43% $500,001 - $750,000 4 0.08% 49 0.15% 0 0.00% 6 0.19% 59 0.14% $750,001 - $1,000,000 0 0.00% 29 0.09% 0 0.00% 4 0.13% 33 0.08% $1,000,001 - $3,000,000 2 0.04% 55 0.17% 0 0.00% 4 0.13% 61 0.15% $3,000,001 and greater 2 0.04% 48 0.15% 0 0.00% 2 0.06% 52 0.13% Total 4,931 100.00% 32,713 100.00% 102 100.00% 3,122 100.00% 40,868 100.00% Size Total 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% $1 - $25,000 $25,001 - $50,000 $50,001 - $100,000 $100,001 - $250,000 $250,001 - $500,000 $500,001 - $750,000 $750,001 - $1,000,000 $1,000,001 - $3,000,000 $3,000,001 and greater Caucasian Females Non-Minority Males Minority Females Minority Males Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-16 Table 6.09: Building Construction Contracts by Size, July 1, 2007 to January 31, 2012 Non-Minority Minority Females Males Females Males Freq Percent Freq Percent Freq Percent Freq Percent Freq Percent $1 - $25,000 2 28.57% 0 0.00% 0 0.00% 0 0.00% 2 7.41% $25,001 - $50,000 0 0.00% 1 5.26% 0 0.00% 0 0.00% 1 3.70% $50,001 - $100,000 0 0.00% 1 5.26% 0 0.00% 0 0.00% 1 3.70% $100,001 - $250,000 0 0.00% 6 31.58% 0 0.00% 0 0.00% 6 22.22% $250,001 - $500,000 2 28.57% 1 5.26% 0 0.00% 1 100.00% 4 14.81% $500,001 - $750,000 1 14.29% 1 5.26% 0 0.00% 0 0.00% 2 7.41% $750,001 - $1,000,000 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% $1,000,001 - $3,000,000 0 0.00% 3 15.79% 0 0.00% 0 0.00% 3 11.11% $3,000,001 and greater 2 28.57% 6 31.58% 0 0.00% 0 0.00% 8 29.63% Total 7 100.00% 19 100.00% 0 0.00% 1 100.00% 27 100.00% Size Total 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% Caucasian Females Non-Minority Males Minority Females Minority Males Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-17 Table 6.10: Non-Building Construction Contracts by Size, July 1, 2007 to January 31, 2012 Non-Minority Minority Females Males Females Males Freq Percent Freq Percent Freq Percent Freq Percent Freq Percent $1 - $25,000 51 52.04% 350 60.45% 7 100.00% 57 64.77% 465 60.23% $25,001 - $50,000 12 12.24% 42 7.25% 0 0.00% 4 4.55% 58 7.51% $50,001 - $100,000 13 13.27% 38 6.56% 0 0.00% 2 2.27% 53 6.87% $100,001 - $250,000 11 11.22% 35 6.04% 0 0.00% 7 7.95% 53 6.87% $250,001 - $500,000 8 8.16% 32 5.53% 0 0.00% 8 9.09% 48 6.22% $500,001 - $750,000 1 1.02% 15 2.59% 0 0.00% 3 3.41% 19 2.46% $750,001 - $1,000,000 0 0.00% 11 1.90% 0 0.00% 4 4.55% 15 1.94% $1,000,001 - $3,000,000 2 2.04% 29 5.01% 0 0.00% 1 1.14% 32 4.15% $3,000,001 and greater 0 0.00% 27 4.66% 0 0.00% 2 2.27% 29 3.76% Total 98 100.00% 579 100.00% 7 100.00% 88 100.00% 772 100.00% Size Total 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% $1 - $25,000 $25,001 - $50,000 $50,001 - $100,000 $100,001 - $250,000 $250,001 - $500,000 $500,001 - $750,000 $750,001 - $1,000,000 $1,000,001 - $3,000,000 $3,000,001 and greater Caucasian Females Non-Minority Males Minority Females Minority Males Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-18 Table 6.11: Engineering Professional Services Contracts by Size, July 1, 2007 to January 31, 2012 Non-Minority Minority Females Males Females Males Freq Percent Freq Percent Freq Percent Freq Percent Freq Percent $1 - $25,000 0 0.00% 11 10.28% 49 94.23% 0 0.00% 60 32.26% $25,001 - $50,000 0 0.00% 6 5.61% 0 0.00% 1 5.56% 7 3.76% $50,001 - $100,000 0 0.00% 12 11.21% 1 1.92% 4 22.22% 17 9.14% $100,001 - $250,000 5 55.56% 25 23.36% 2 3.85% 7 38.89% 39 20.97% $250,001 - $500,000 3 33.33% 36 33.64% 0 0.00% 4 22.22% 43 23.12% $500,001 - $750,000 1 11.11% 5 4.67% 0 0.00% 0 0.00% 6 3.23% $750,001 - $1,000,000 0 0.00% 4 3.74% 0 0.00% 0 0.00% 4 2.15% $1,000,001 - $3,000,000 0 0.00% 4 3.74% 0 0.00% 2 11.11% 6 3.23% $3,000,001 and greater 0 0.00% 4 3.74% 0 0.00% 0 0.00% 4 2.15% Total 9 100.00% 107 100.00% 52 100.00% 18 100.00% 186 100.00% Size Total 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% $1 -$25,000 $25,001 - $50,000 $50,001 - $100,000 $100,001 - $250,000 $250,001 - $500,000 $500,001 - $750,000 $750,001 - $1,000,000 $1,000,001 - $3,000,000 $3,000,001 and greater Caucasian Females Non-Minority Males Minority Females Minority Males Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-19 Table 6.12: Non-Engineering Professional Services Contracts by Size, July 1, 2007 to January 31, 2012 Non-Minority Minority Females Males Females Males Freq Percent Freq Percent Freq Percent Freq Percent Freq Percent $1 - $25,000 0 0.00% 244 72.84% 1 100.00% 1 100.00% 246 73.00% $25,001 - $50,000 0 0.00% 11 3.28% 0 0.00% 0 0.00% 11 3.26% $50,001 - $100,000 0 0.00% 14 4.18% 0 0.00% 0 0.00% 14 4.15% $100,001 - $250,000 0 0.00% 30 8.96% 0 0.00% 0 0.00% 30 8.90% $250,001 - $500,000 0 0.00% 10 2.99% 0 0.00% 0 0.00% 10 2.97% $500,001 - $750,000 0 0.00% 6 1.79% 0 0.00% 0 0.00% 6 1.78% $750,001 - $1,000,000 0 0.00% 5 1.49% 0 0.00% 0 0.00% 5 1.48% $1,000,001 - $3,000,000 0 0.00% 9 2.69% 0 0.00% 0 0.00% 9 2.67% $3,000,001 and greater 0 0.00% 6 1.79% 0 0.00% 0 0.00% 6 1.78% Total 0 0.00% 335 100.00% 1 100.00% 1 100.00% 337 100.00% Size Total 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% $1 -$25,000 $25,001 - $50,000 $50,001 - $100,000 $100,001 - $250,000 $250,001 - $500,000 $500,001 - $750,000 $750,001 - $1,000,000 $1,000,001 - $3,000,000 $3,000,001 and greater Caucasian Females Non-Minority Males Minority Females Minority Males Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-20 Table 6.13: Supplies and Contractual Services Contracts by Size, July 1, 2007 to January 31, 2012 Non-Minority Minority Females Males Females Males Freq Percent Freq Percent Freq Percent Freq Percent Freq Percent $1 - $25,000 4759 98.80% 30,943 97.70% 37 88.10% 2,972 98.61% 38,711 97.89% $25,001 - $50,000 26 0.54% 288 0.91% 3 7.14% 20 0.66% 337 0.85% $50,001 - $100,000 14 0.29% 197 0.62% 1 2.38% 6 0.20% 218 0.55% $100,001 - $250,000 13 0.27% 140 0.44% 0 0.00% 5 0.17% 158 0.40% $250,001 - $500,000 4 0.08% 59 0.19% 1 2.38% 7 0.23% 71 0.18% $500,001 - $750,000 1 0.02% 22 0.07% 0 0.00% 3 0.10% 26 0.07% $750,001 - $1,000,000 0 0.00% 9 0.03% 0 0.00% 0 0.00% 9 0.02% $1,000,001 - $3,000,000 0 0.00% 10 0.03% 0 0.00% 1 0.03% 11 0.03% $3,000,001 and greater 0 0.00% 5 0.02% 0 0.00% 0 0.00% 5 0.01% Total 4817 100.00% 31673 100.00% 42 100.00% 3014 100.00% 39546 100.00% Size Total 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% $1 -$25,000 $25,001 - $50,000 $50,001 - $100,000 $100,001 - $250,000 $250,001 - $500,000 $500,001 - $750,000 $750,001 - $1,000,000 $1,000,001 - $3,000,000 $3,000,001 and greater Caucasian Females Non-Minority Males Minority Females Minority Males Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-21 B.B.B.B. Largest M/WBE Contract Awarded by MSD, by IndustryLargest M/WBE Contract Awarded by MSD, by IndustryLargest M/WBE Contract Awarded by MSD, by IndustryLargest M/WBE Contract Awarded by MSD, by Industry M/WBEs were awarded large contracts in each industry. The distribution of the largest contracts MSD awarded to M/WBEs is depicted in Table 6.14. In some industries, M/WBEs were awarded very large, competitively bid contracts. The utilization analysis shows that M/WBEs demonstrated the capacity to successfully compete for contracts as large as $95 million in building construction, $5.4 million in non-building construction, $2.7 million in engineering professional services, $11,100 in non-engineering professional services, and $1 million in supplies and contractual services. Table 6.14: Largest M/WBE Contracts Awarded by MSD Ethnic/Gender Group Building Construction Non-Building Construction Engineering Professional Services Non-Engineering Professional Services Supplies & Contractual Services African American Female ---- $14,800 $150,000 $11,100 $319,943 African American Male $309,173 $5,350,418 $2,658,946 $10,220 $564,921 Asian American Female ---- ---- ---- ---- $19,228 Asian American Male ---- $41,008 $278,285 ---- $1,615 Caucasian Female $95,485,550 $2,864,016 $637,635 ---- $616,800 Hispanic American Female ---- ---- ---- ---- $97,773 Hispanic American Male ---- ---- $236,763 ---- $1,000,718 Native American Female ---- ---- ---- ---- ---- Native American Male ---- ---- ---- ---- ---- Largest Dollar Amounts MBEs $309,173 $5,350,418 $2,658,946 $11,100 $1,000,718 Largest Dollar Amounts WBEs $95,485,550 $2,864,016 $637,635 $11,100 $616,800 (----) denotes a group that was not awarded any contracts within the respective industry. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-22 C.C.C.C. CertificationCertificationCertificationCertification StandardsStandardsStandardsStandards The Court has addressed the merits of certification as a measure of capacity.6 Philadelphia, an appellate court decision, found that a certification program which was based on USDOT standards satisfied the determination of a business’s capability. Thus, certification programs like MoDOT, OEO, and the City of St. Louis’ D/M/WBE Program, which adheres to the standards set forth in the USDOT regulations, 49 Code of Federal Regulations Part 26, is considered a documentation of M/WBE capacity. IV.IV.IV.IV. PRIME CONTRACTOR APRIME CONTRACTOR APRIME CONTRACTOR APRIME CONTRACTOR AVAILABILITY ANALYSISVAILABILITY ANALYSISVAILABILITY ANALYSISVAILABILITY ANALYSIS The size of MSD’s contracts demonstrates that the majority of the contracts are small, requiring limited capacity to perform. Furthermore, the awards MSD has made to M/WBEs demonstrate that the capacity of the available businesses is considerably greater than needed to bid on the majority of the contracts awarded in the five industries studied. Nevertheless, given the general concerns with capacity, prime contracts subject to the disparity analysis were limited to those under $500,000. The prime contractor availability findings for MSD’s market area are as follows: 6 Contractors Ass’n of Eastern Pennsylvania v. City of Philadelphia, 6 F.3d 990 (3d Cir. 1993), on remand, 893 F. Supp. 419 (E.D. Penn. 1995), affd, 91 F.3d 586 (3d Cir. 1996). Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-23 A.A.A.A. Prime Contractor Availability Prime Contractor Availability Prime Contractor Availability Prime Contractor Availability –––– All IndustriesAll IndustriesAll IndustriesAll Industries The distribution of available prime contractors for all industries is summarized in Table 6.15 below. These ethnic and gender groups are defined in Table 4.01 of Chapter 4: Prime Contractor Utilization Analysis. African Americans account for 11.42 percent of all businesses in the industries studied in MSD’s market area. Asian Americans account for 1.67 percent of all businesses in the industries studied in MSD’s market area. Hispanic Americans account for 1.38 percent of all businesses in the industries studied in MSD’s market area. Native Americans account for 0.2 percent of all businesses in the industries studied in MSD’s market area. Minority Business Enterprises account for 14.67 percent of all businesses in the industries studied in MSD’s market area. Women Business Enterprises account for 11.92 percent of all businesses in the industries studied in MSD’s market area. Minority and Women Business Enterprises account for 26.59 percent of all businesses in the industries studied in MSD’s market area. Non-Minority Male Business Enterprises account for 73.41 percent of businesses in the industries studied in MSD’s market area. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-24 Table 6.15: Available Prime Contractors – All Industries Percent of Businesses African Americans 11.42% Asian Americans 1.67% Hispanic Americans 1.38% Native Americans 0.20% Caucasian Females 11.92% Non-Minority Males 73.41% TOTAL 100.00% Percent of Businesses African American Females 2.61% African American Males 8.81% Asian American Females 0.44% Asian American Males 1.23% Hispanic American Females 0.30% Hispanic American Males 1.08% Native American Females 0.10% Native American Males 0.10% Caucasian Females 11.92% Non-Minority Males 73.41% TOTAL 100.00% Percent of Businesses Minority Females 3.45% Minority Males 11.23% Caucasian Females 11.92% Non-Minority Males 73.41% TOTAL 100.00% Percent of Businesses Minority Business Enterprises 14.67% Women Business Enterprises 11.92% Minority and Women Business Enterprises 26.59% Non-Minority Male Business Enterprises 73.41% TOTAL 100.00% Minority and Females Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-25 B.B.B.B. Building Construction Prime Contractor AvailabilityBuilding Construction Prime Contractor AvailabilityBuilding Construction Prime Contractor AvailabilityBuilding Construction Prime Contractor Availability The distribution of available building construction prime contractors is summarized in Table 6.16 below. These ethnic and gender groups are defined in Table 3.01 of Chapter 4: Prime Contractor Utilization Analysis. African Americans account for 23.86 percent of the building construction businesses in MSD’s market area. Asian Americans account for 1.14 percent of the building construction businesses in MSD’s market area. Hispanic Americans account for 1.89 percent of the building construction businesses in MSD’s market area. Native Americans account for 0.38 percent of the building construction businesses in MSD’s market area. Minority Business Enterprises account for 27.27 percent of the building construction businesses in MSD’s market area. Women Business Enterprises account for 10.98 percent of the building construction businesses in MSD’s market area. Minority and Women Business Enterprises account for 38.26 percent of the building construction businesses in MSD’s market area. Non-Minority Male Business Enterprises account for 61.74 percent of the building construction businesses in MSD’s market area. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-26 Table 6.16: Available Building Construction Prime Contractors Percent of Businesses African Americans 23.86% Asian Americans 1.14% Hispanic Americans 1.89% Native Americans 0.38% Caucasian Females 10.98% Non-Minority Males 61.74% TOTAL 100.00% Percent of Businesses African American Females 1.89% African American Males 21.97% Asian American Females 0.00% Asian American Males 1.14% Hispanic American Females 0.00% Hispanic American Males 1.89% Native American Females 0.38% Native American Males 0.00% Caucasian Females 10.98% Non-Minority Males 61.74% TOTAL 100.00% Percent of Businesses Minority Females 2.27% Minority Males 25.00% Caucasian Females 10.98% Non-Minority Males 61.74% TOTAL 100.00% Percent of Businesses Minority Business Enterprises 27.27% Women Business Enterprises 10.98% Minority and Women Business Enterprises 38.26% Non-Minority Male Business Enterprises 61.74% TOTAL 100.00% Minority and Females Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-27 C.C.C.C. NonNonNonNon----Building Construction Building Construction Building Construction Building Construction Prime Contractor AvailabilityPrime Contractor AvailabilityPrime Contractor AvailabilityPrime Contractor Availability The distribution of available non-building construction contractors is summarized in Table 6.17 below. These ethnic and gender groups are defined in Table 3.01 of Chapter 3: Prime Contractor Utilization Analysis. African Americans account for 14.75 percent of the non-building construction businesses in MSD’s market area. Asian Americans account for 1.64 percent of the non-building construction businesses in MSD’s market area. Hispanic Americans account for 0.82 percent of the non-building construction businesses in MSD’s market area. Native Americans account for none of the non-building construction businesses in MSD’s market area. Minority Business Enterprises account for 17.21 percent of the non-building construction businesses in MSD’s market area. Women Business Enterprises account for 9.84 percent of the non-building construction businesses in MSD’s market area. Minority and Women Business Enterprises account for 27.05 percent of the non- building construction businesses in MSD’s market area. Non-Minority Male Business Enterprises account for 72.95 percent of the non-building construction businesses in MSD’s market area. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-28 Table 6.17: Available Non-Building Construction Prime Contractors Percent of Businesses African Americans 14.75% Asian Americans 1.64% Hispanic Americans 0.82% Native Americans 0.00% Caucasian Females 9.84% Non-Minority Males 72.95% TOTAL 100.00% Percent of Businesses African American Females 2.46% African American Males 12.30% Asian American Females 0.00% Asian American Males 1.64% Hispanic American Females 0.00% Hispanic American Males 0.82% Native American Females 0.00% Native American Males 0.00% Caucasian Females 9.84% Non-Minority Males 72.95% TOTAL 100.00% Percent of Businesses Minority Females 2.46% Minority Males 14.75% Caucasian Females 9.84% Non-Minority Males 72.95% TOTAL 100.00% Percent of Businesses Minority Business Enterprises 17.21% Women Business Enterprises 9.84% Minority and Women Business Enterprises 27.05% Non-Minority Male Business Enterprises 72.95% TOTAL 100.00% Minority and Females Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-29 D.D.D.D. Engineering Professional Services Prime Contractor Engineering Professional Services Prime Contractor Engineering Professional Services Prime Contractor Engineering Professional Services Prime Contractor AvailabilityAvailabilityAvailabilityAvailability The distribution of available engineering professional services prime contractors is summarized in Table 6.18 below. These ethnic and gender groups are defined in Table 3.01 of Chapter 3: Prime Contractor Utilization Analysis. African Americans account for 15.43 percent of the engineering professional services businesses in MSD’s market area. Asian Americans account for 4.94 percent of the engineering professional services businesses in MSD’s market area. Hispanic Americans account for 3.09 percent of the engineering professional services businesses in MSD’s market area. Native Americans account for 0.62 percent of the engineering professional services businesses in MSD’s market area. Minority Business Enterprises account for 24.07 percent of the engineering professional services businesses in MSD’s market area. Women Business Enterprises account for 14.81 percent of the engineering professional services businesses in MSD’s market area. Minority and Women Business Enterprises account for 38.89 percent of the engineering professional services businesses in MSD’s market area. Non-Minority Male Business Enterprises account for 61.11 percent of the engineering professional services businesses in MSD’s market area. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-30 Table 6.18: Available Engineering Professional Services Prime Contractors Percent of Businesses African Americans 15.43% Asian Americans 4.94% Hispanic Americans 3.09% Native Americans 0.62% Caucasian Females 14.81% Non-Minority Males 61.11% TOTAL 100.00% Percent of Businesses African American Females 4.94% African American Males 10.49% Asian American Females 1.85% Asian American Males 3.09% Hispanic American Females 0.00% Hispanic American Males 3.09% Native American Females 0.62% Native American Males 0.00% Caucasian Females 14.81% Non-Minority Males 61.11% TOTAL 100.00% Percent of Businesses Minority Females 7.41% Minority Males 16.67% Caucasian Females 14.81% Non-Minority Males 61.11% TOTAL 100.00% Percent of Businesses Minority Business Enterprises 24.07% Women Business Enterprises 14.81% Minority and Women Business Enterprises 38.89% Non-Minority Male Business Enterprises 61.11% TOTAL 100.00% Minority and Females Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-31 E.E.E.E. NonNonNonNon----Engineering ProfessEngineering ProfessEngineering ProfessEngineering Professional Services Prime Contractor ional Services Prime Contractor ional Services Prime Contractor ional Services Prime Contractor AvailabilityAvailabilityAvailabilityAvailability The distribution of available non-engineering professional services prime contractors is summarized in Table 6.19 below. These ethnic and gender groups are defined in Table 3.01 of Chapter 3: Prime Contractor Utilization Analysis. African Americans account for 22.58 percent of the non-engineering professional services businesses in MSD’s market area. Asian Americans account for 4.15 percent of the non-engineering professional services businesses in MSD’s market area. Hispanic Americans account for 3.23 percent of the non-engineering professional services businesses in MSD’s market area. Native Americans account for 0.46 percent of the non-engineering professional services businesses in MSD’s market area. Minority Business Enterprises account for 30.41 percent of the non-engineering professional services businesses in MSD’s market area. Women Business Enterprises account for 23.96 percent of the non-engineering professional services businesses in MSD’s market area. Minority and Women Business Enterprises account for 54.38 percent of the non- engineering professional services businesses in MSD’s market area. Non-Minority Male Business Enterprises account for 45.62 percent of the non- engineering professional services businesses in MSD’s market area. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-32 Table 6.19: Available Non-Engineering Professional Services Prime Contractors Percent of Businesses African Americans 22.58% Asian Americans 4.15% Hispanic Americans 3.23% Native Americans 0.46% Caucasian Females 23.96% Non-Minority Males 45.62% TOTAL 100.00% Percent of Businesses African American Females 9.22% African American Males 13.36% Asian American Females 1.38% Asian American Males 2.76% Hispanic American Females 0.92% Hispanic American Males 2.30% Native American Females 0.00% Native American Males 0.46% Caucasian Females 23.96% Non-Minority Males 45.62% TOTAL 100.00% Percent of Businesses Minority Females 11.52% Minority Males 18.89% Caucasian Females 23.96% Non-Minority Males 45.62% TOTAL 100.00% Percent of Businesses Minority Business Enterprises 30.41% Women Business Enterprises 23.96% Minority and Women Business Enterprises 54.38% Non-Minority Male Business Enterprises 45.62% TOTAL 100.00% Minority and Females Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-33 F.F.F.F. Supplies and Contractual Services Prime Contractor Supplies and Contractual Services Prime Contractor Supplies and Contractual Services Prime Contractor Supplies and Contractual Services Prime Contractor AvailabilityAvailabilityAvailabilityAvailability The distribution of available supplies and contractual services prime contractors is summarized in Table 6.20 below. These ethnic and gender groups are defined in Table 3.01 of Chapter 3: Prime Contractor Utilization Analysis. African Americans account for 6.65 percent of the supplies and contractual services businesses in MSD’s market area. Asian Americans account for 1.08 percent of the supplies and contractual services businesses in MSD’s market area. Hispanic Americans account for 0.87 percent of the supplies and contractual services businesses in MSD’s market area. Native American Businesses account for 0.14 percent of the supplies and contractual services businesses in MSD’s market area. Minority Business Enterprises account for 8.74 percent of the supplies and contractual services businesses in MSD’s market area. Women Business Enterprises account for 9.9 percent of the supplies and contractual services businesses in MSD’s market area. Minority and Women Business Enterprises account for 18.64 percent of the supplies and contractual services businesses in MSD’s market area. Non-Minority Male Business Enterprises account for 81.36 percent of the supplies and contractual services businesses in MSD’s market area. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-34 Table 6.20: Available Supplies and Contractual Services Prime Contractors Percent of Businesses African Americans 6.65% Asian Americans 1.08% Hispanic Americans 0.87% Native Americans 0.14% Caucasian Females 9.90% Non-Minority Males 81.36% TOTAL 100.00% Percent of Businesses African American Females 1.59% African American Males 5.06% Asian American Females 0.22% Asian American Males 0.87% Hispanic American Females 0.29% Hispanic American Males 0.58% Native American Females 0.00% Native American Males 0.14% Caucasian Females 9.90% Non-Minority Males 81.36% TOTAL 100.00% Percent of Businesses Minority Females 2.10% Minority Males 6.65% Caucasian Females 9.90% Non-Minority Males 81.36% TOTAL 100.00% Percent of Businesses Minority Business Enterprises 8.74% Women Business Enterprises 9.90% Minority and Women Business Enterprises 18.64% Non-Minority Male Business Enterprises 81.36% TOTAL 100.00% Minority and Females Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-35 V.V.V.V. SUBCONTRACTOR AVAILABILITY ANALYSISSUBCONTRACTOR AVAILABILITY ANALYSISSUBCONTRACTOR AVAILABILITY ANALYSISSUBCONTRACTOR AVAILABILITY ANALYSIS A.A.A.A. Sources of Potentially Willing and Able Sources of Potentially Willing and Able Sources of Potentially Willing and Able Sources of Potentially Willing and Able Subcontractors and AvailabilitySubcontractors and AvailabilitySubcontractors and AvailabilitySubcontractors and Availability All available prime contractors were included in the calculation of subcontractor availability. Additional subcontractors in MSD’s market area were identified using the source listed in Table 6.21. Table 6.21: Unique Subcontractor Availability Data Sources Type of Record Type of Information Subcontract records provided by MSD M/WBEs and non-M/WBEs B.B.B.B. Determination of Subcontractor Willingness Determination of Subcontractor Willingness Determination of Subcontractor Willingness Determination of Subcontractor Willingness and Capacityand Capacityand Capacityand Capacity Subcontractor availability was limited to businesses determined to be willing and able to perform as prime contractors and businesses utilized as subcontractors; therefore, the determination of willingness was achieved. It is notable that using this method to identify subcontractors verified the business’ capacity, although Croson does not require a measure of subcontractor capacity. C.C.C.C. Size of Subcontracts AnalyzedSize of Subcontracts AnalyzedSize of Subcontracts AnalyzedSize of Subcontracts Analyzed MSD’s building construction, non-building construction, engineering professional services, and non-engineering professional services subcontracts were analyzed to determine the size of awarded contracts and, therefore, the capacity required to perform on MSD’s subcontracts. MSD’s subcontracts were analyzed during the May 1, 2010 to January 31, 2012 study period. The subcontract size distribution illustrates the fact that the majority of MSD’s subcontracts were under $25,000. This distribution also illustrates that limited capacity is needed to perform the overwhelming majority of MSD’s subcontracts. MSD’s subcontracts were grouped into eight dollar ranges.7 Each award was analyzed to determine the number and percentage of subcontracts that fall within the eight size 7 The eight dollar ranges are $1 to $24,999; $25,000 to $49,999; $50,000 to $99,999; $100,000 to $249,999; $250,000 to $499,999; $500,000 to $999,999; $1,000,000 to $2,999,999; and $3,000,000 and greater. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-36 categories. The size distribution of subcontracts awarded to Non-Minority Males was then compared to the size distribution of contracts awarded to Caucasian Females, Minority Females, and Minority Males. · MSD Subcontract Size Analysis: May 1, 2010 to January 31, 2012 The analysis in Table 6.22, which combines all industries, demonstrates that 74.55 percent of MSD’s subcontracts were less than $25,000; 88.18 percent were less than $100,000; and 96.85 percent were less than $500,000. Only 3.15 percent of MSD’s subcontracts were $500,000 or more. 1. Building Construction Subcontracts by Size Table 6.23 depicts MSD’s building construction subcontracts awarded within the eight dollar ranges where 59.38 percent of construction subcontracts were valued at less than $25,000; 76.35 percent were less than $100,000; and 91.78 percent were less than $500,000. 2. Non-Building Construction Subcontracts by Size Table 6.24 depicts MSD’s non-building construction subcontracts within the eight dollar ranges where 82.54 percent of non-building construction subcontracts were valued at less than $25,000; 92.82 percent were less than $100,000; and 98.54 percent were less than $500,000. 3. Engineering Professional Services Subcontracts by Size Table 6.25 depicts MSD’s engineering professional services subcontracts within the eight dollar ranges where 37.25 percent of engineering professional services subcontracts were valued at less than $25,000; 90.19 percent were less than $100,000; and 100.00 percent were less than $250,000. 4. Non-Engineering Professional Services Subcontracts by Size Table 6.26 depicts MSD’s non-engineering professional services subcontracts within the eight dollar ranges where 50 percent of non-engineering professional services subcontracts were valued at less than $25,000; 72.22 percent were less than $100,000; and 100.00 percent were less than $250,000. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-37 Table 6.22: Subcontracts by Size: All Industries, May 1, 2010 to January 31, 2012 Non-Minority Minority Females Males Females Males Freq Percent Freq Percent Freq Percent Freq Percent Freq Percent $1 - $25,000 169 71.01% 828 78.26% 32 60.38% 81 57.86% 1,110 74.55% $25,001 - $50,000 22 9.24% 60 5.67% 6 11.32% 17 12.14% 105 7.05% $50,001 - $100,000 22 9.24% 53 5.01% 10 18.87% 13 9.29% 98 6.58% $100,001 - $250,000 12 5.04% 53 5.01% 3 5.66% 21 15.00% 89 5.98% $250,001 - $500,000 5 2.10% 29 2.74% 1 1.89% 5 3.57% 40 2.69% $500,001 - $1,000,000 5 2.10% 14 1.32% 0 0.00% 1 0.71% 20 1.34% $1,000,001 - $3,000,000 2 0.84% 16 1.51% 1 1.89% 2 1.43% 21 1.41% $3,000,001 and greater 1 0.42% 5 0.47% 0 0.00% 0 0.00% 6 0.40% Total 238 100.00% 1058 100.00% 53 100.00% 140 100.00% 1489 100.00% Size Total 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% $1 - $25,000 $25,001 - $50,000 $50,001 - $100,000 $100,001 - $250,000 $250,001 - $500,000 $500,001 - $1,000,000 $1,000,001 - $3,000,000 $3,000,001 and greater Caucasian Females Non-Minority Males Minority Females Minority Males Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-38 Table 6.23: Building Construction Subcontracts by Size: May 1, 2010 to January 31, 2012 Non-Minority Minority Females Males Females Males Freq Percent Freq Percent Freq Percent Freq Percent Freq Percent $1 - $25,000 27 56.25% 189 61.56% 1 33.33% 14 45.16% 231 59.38% $25,001 - $50,000 5 10.42% 26 8.47% 0 0.00% 4 12.90% 35 9.00% $50,001 - $100,000 2 4.17% 25 8.14% 0 0.00% 4 12.90% 31 7.97% $100,001 - $250,000 6 12.50% 29 9.45% 0 0.00% 4 12.90% 39 10.03% $250,001 - $500,000 3 6.25% 14 4.56% 1 33.33% 3 9.68% 21 5.40% $500,001 - $1,000,000 2 4.17% 9 2.93% 0 0.00% 0 0.00% 11 2.83% $1,000,001 - $3,000,000 2 4.17% 11 3.58% 1 33.33% 2 6.45% 16 4.11% $3,000,001 and greater 1 2.08% 4 1.30% 0 0.00% 0 0.00% 5 1.29% Total 48 100.00% 307 100.00% 3 100.00% 31 100.00% 389 100.00% Size Total 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% $1 - $25,000 $25,001 - $50,000 $50,001 - $100,000 $100,001 - $250,000 $250,001 - $500,000 $500,001 - $1,000,000 $1,000,001 - $3,000,000 $3,000,001 and greater Caucasian Females Non-Minority Males Minority Females Minority Males Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-39 Table 6.24: Non-Building Construction Subcontracts by Size: May 1, 2010 to January 31, 2012 Non-Minority Minority Females Males Females Males Freq Percent Freq Percent Freq Percent Freq Percent Freq Percent $1 - $25,000 137 79.65% 632 85.41% 21 70.00% 61 68.54% 851 82.54% $25,001 - $50,000 14 8.14% 33 4.46% 1 3.33% 11 12.36% 59 5.72% $50,001 - $100,000 11 6.40% 26 3.51% 5 16.67% 5 5.62% 47 4.56% $100,001 - $250,000 5 2.91% 23 3.11% 3 10.00% 9 10.11% 40 3.88% $250,001 - $500,000 2 1.16% 15 2.03% 0 0.00% 2 2.25% 19 1.84% $500,001 - $1,000,000 3 1.74% 5 0.68% 0 0.00% 1 1.12% 9 0.87% $1,000,001 - $3,000,000 0 0.00% 5 0.68% 0 0.00% 0 0.00% 5 0.48% $3,000,001 and greater 0 0.00% 1 0.14% 0 0.00% 0 0.00% 1 0.10% Total 172 100.00% 740 100.00% 30 100.00% 89 100.00% 1031 100.00% Size Total 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% $1 - $25,000 $25,001 - $50,000 $50,001 - $100,000 $100,001 - $250,000 $250,001 - $500,000 $500,001 - $1,000,000 $1,000,001 - $3,000,000 $3,000,001 and greater Caucasian Females Non-Minority Males Minority Females Minority Males Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-40 Table 6.25: Engineering Professional Services Subcontracts by Size: May 1, 2010 to January 31, 2012 Non-Minority Minority Females Males Females Males Freq Percent Freq Percent Freq Percent Freq Percent Freq Percent $1 - $25,000 1 10.00% 5 55.56% 9 47.37% 4 30.77% 19 37.25% $25,001 - $50,000 3 30.00% 1 11.11% 5 26.32% 2 15.38% 11 21.57% $50,001 - $100,000 6 60.00% 2 22.22% 5 26.32% 3 23.08% 16 31.37% $100,001 - $250,000 0 0.00% 1 11.11% 0 0.00% 4 30.77% 5 9.80% $250,001 - $500,000 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% $500,001 - $1,000,000 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% $1,000,001 - $3,000,000 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% $3,000,001 and greater 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% Total 10 100.00% 9 100.00% 19 100.00% 13 100.00% 51 100.00% Size Total 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% $1 - $25,000 $25,001 - $50,000 $50,001 - $100,000 $100,001 - $250,000 $250,001 - $500,000 $500,001 - $1,000,000 $1,000,001 - $3,000,000 $3,000,001 and greater Caucasian Females Non-Minority Males Minority Females Minority Males Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-41 Table 6.26: Non-Engineering Professional Services Subcontracts by Size: May 1, 2010 to January 31, 2012 Non-Minority Minority Females Males Females Males Freq Percent Freq Percent Freq Percent Freq Percent Freq Percent $1 - $25,000 4 50.00% 2 100.00% 1 100.00% 2 28.57% 9 50.00% $25,001 - $50,000 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% $50,001 - $100,000 3 37.50% 0 0.00% 0 0.00% 1 14.29% 4 22.22% $100,001 - $250,000 1 12.50% 0 0.00% 0 0.00% 4 57.14% 5 27.78% $250,001 - $500,000 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% $500,001 - $1,000,000 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% $1,000,001 - $3,000,000 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% $3,000,001 and greater 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% Total 8 100.00% 2 100.00% 1 100.00% 7 100.00% 18 100.00% Size Total 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% $1 - $25,000 $25,001 - $50,000 $50,001 - $100,000 $100,001 - $250,000 $250,001 - $500,000 $500,001 - $1,000,000 $1,000,001 - $3,000,000 $3,000,001 and greater Caucasian Females Non-Minority Males Minority Females Minority Males Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-42 D.D.D.D. Building Construction SBuilding Construction SBuilding Construction SBuilding Construction Subcontractor ubcontractor ubcontractor ubcontractor AvailabilityAvailabilityAvailabilityAvailability The distribution of available building construction subcontractors is summarized in Table 6.27. African Americans account for 28.5 percent of the building construction firms in MSD’s market area. Asian Americans account for 0.72 percent of the building construction firms in MSD’s market area. Hispanic Americans account for 1.21 percent of the building construction firms in MSD’s market area. Native Americans account for 0.24 percent of the building construction firms in MSD’s market area. Minority Business Enterprises account for 30.68 percent of the building construction firms in MSD’s market area. Women Business Enterprises account for 10.87 percent of the building construction firms in MSD’s market area. Minority and Women Business Enterprises account for 41.55 percent of the building construction firms in MSD’s market area. Non-Minority Male Business Enterprises account for 58.45 percent of the building construction firms in MSD’s market area. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-43 Table 6.27: Available Building Construction Subcontractors Percent of Businesses African Americans 28.50% Asian Americans 0.72% Hispanic Americans 1.21% Native Americans 0.24% Caucasian Females 10.87% Non-Minority Males 58.45% TOTAL 100.00% Percent of Businesses African American Females 2.42% African American Males 26.09% Asian American Females 0.00% Asian American Males 0.72% Hispanic American Females 0.00% Hispanic American Males 1.21% Native American Females 0.24% Native American Males 0.00% Caucasian Females 10.87% Non-Minority Males 58.45% TOTAL 100.00% Percent of Businesses Minority Females 2.66% Minority Males 28.02% Caucasian Females 10.87% Non-Minority Males 58.45% TOTAL 100.00% Percent of Businesses Minority Business Enterprises 30.68% Women Business Enterprises 10.87% Minority and Women Business Enterprises 41.55% Non-Minority Male Business Enterprises 58.45% TOTAL 100.00% Minority and Females Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-44 E.E.E.E. NonNonNonNon----Building Construction Subcontractor Building Construction Subcontractor Building Construction Subcontractor Building Construction Subcontractor AvailabilityAvailabilityAvailabilityAvailability The distribution of available non-building construction subcontractors is summarized in Table 6.28. African Americans account for 17.3 percent of the non-building construction firms in MSD’s market area. Asian Americans account for 0.63 percent of the non-building construction firms in MSD’s market area. Hispanic Americans account for 0.63 percent of the non-building construction firms in MSD’s market area. Native Americans account for none of the non-building construction firms in MSD’s market area. Minority Business Enterprises account for 18.55 percent of the non-building construction firms in MSD’s market area. Women Business Enterprises account for 11.95 percent of the non-building construction firms in MSD’s market area. Minority and Women Business Enterprises account for 30.5 percent of the non-building construction firms in MSD’s market area. Non-Minority Male Business Enterprises account for 69.5 percent of the non-building construction firms in MSD’s market area. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-45 Table 6.28: Available Non-Building Construction Subcontractors Percent of Businesses African Americans 17.30% Asian Americans 0.63% Hispanic Americans 0.63% Native Americans 0.00% Caucasian Females 11.95% Non-Minority Males 69.50% TOTAL 100.00% Percent of Businesses African American Females 2.20% African American Males 15.09% Asian American Females 0.00% Asian American Males 0.63% Hispanic American Females 0.00% Hispanic American Males 0.63% Native American Females 0.00% Native American Males 0.00% Caucasian Females 11.95% Non-Minority Males 69.50% TOTAL 100.00% Percent of Businesses Minority Females 2.20% Minority Males 16.35% Caucasian Females 11.95% Non-Minority Males 69.50% TOTAL 100.00% Percent of Businesses Minority Business Enterprises 18.55% Women Business Enterprises 11.95% Minority and Women Business Enterprises 30.50% Non-Minority Male Business Enterprises 69.50% TOTAL 100.00% Minority and Females Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-46 F.F.F.F. Engineering Professional Services Engineering Professional Services Engineering Professional Services Engineering Professional Services Subcontractor AvailabilitySubcontractor AvailabilitySubcontractor AvailabilitySubcontractor Availability The distribution of available engineering professional services subcontractors is summarized in Table 6.29. African Americans account for 17.99 percent of the engineering professional services firms in MSD’s market area. Asian Americans account for 5.29 percent of the engineering professional services firms in MSD’s market area. Hispanic Americans account for 2.65 percent of the engineering professional services firms in MSD’s market area. Native Americans account for 1.06 percent of the engineering professional services firms in MSD’s market area. Minority Business Enterprises account for 26.98 percent of the engineering professional services firms in MSD’s market area. Women Business Enterprises account for 19.05 percent of the engineering professional services firms in MSD’s market area. Minority and Women Business Enterprises account for 46.03 percent of the engineering professional services firms in MSD’s market area. Non-Minority Male Business Enterprises account for 53.97 percent of the engineering professional services firms in MSD’s market area. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-47 Table 6.29: Available Engineering Professional Services Subcontractors Percent of Businesses African Americans 17.99% Asian Americans 5.29% Hispanic Americans 2.65% Native Americans 1.06% Caucasian Females 19.05% Non-Minority Males 53.97% TOTAL 100.00% Percent of Businesses African American Females 5.29% African American Males 12.70% Asian American Females 2.12% Asian American Males 3.17% Hispanic American Females 0.00% Hispanic American Males 2.65% Native American Females 0.53% Native American Males 0.53% Caucasian Females 19.05% Non-Minority Males 53.97% TOTAL 100.00% Percent of Businesses Minority Females 7.94% Minority Males 19.05% Caucasian Females 19.05% Non-Minority Males 53.97% TOTAL 100.00% Percent of Businesses Minority Business Enterprises 26.98% Women Business Enterprises 19.05% Minority and Women Business Enterprises 46.03% Non-Minority Male Business Enterprises 53.97% TOTAL 100.00% Minority and Females Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-48 G.G.G.G. NonNonNonNon----Engineering Professional Services Engineering Professional Services Engineering Professional Services Engineering Professional Services Subcontractor AvailabilitySubcontractor AvailabilitySubcontractor AvailabilitySubcontractor Availability The distribution of available non-engineering professional services subcontractors is summarized in Table 6.30. African Americans account for 26.44 percent of the non-engineering professional services firms in MSD’s market area. Asian Americans account for 4.98 percent of the non-engineering professional services firms in MSD’s market area. Hispanic Americans account for 2.68 percent of the non-engineering professional services firms in MSD’s market area. Native Americans account for 0.38 percent of the non-engineering professional services firms in MSD’s market area. Minority Business Enterprises account for 34.48 percent of the non-engineering professional services firms in MSD’s market area. Women Business Enterprises account for 27.2 percent of the non-engineering professional services firms in MSD’s market area. Minority and Women Business Enterprises account for 61.69 percent of the non- engineering professional services firms in MSD’s market area. Non-Minority Male Business Enterprises account for 38.31 percent of the non- engineering professional services firms in MSD’s market area. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 6-49 Table 6.30: Available Non-Engineering Professional Services Subcontractors Percent of Businesses African Americans 26.44% Asian Americans 4.98% Hispanic Americans 2.68% Native Americans 0.38% Caucasian Females 27.20% Non-Minority Males 38.31% TOTAL 100.00% Percent of Businesses African American Females 9.96% African American Males 16.48% Asian American Females 1.53% Asian American Males 3.45% Hispanic American Females 0.77% Hispanic American Males 1.92% Native American Females 0.00% Native American Males 0.38% Caucasian Females 27.20% Non-Minority Males 38.31% TOTAL 100.00% Percent of Businesses Minority Females 12.26% Minority Males 22.22% Caucasian Females 27.20% Non-Minority Males 38.31% TOTAL 100.00% Percent of Businesses Minority Business Enterprises 34.48% Women Business Enterprises 27.20% Minority and Women Business Enterprises 61.69% Non-Minority Male Business Enterprises 38.31% TOTAL 100.00% Minority and Females Ethnicity Ethnicity and Gender Minority and Gender Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 7-1 CHAPTER 7: PRIME CONTRACTOR PRIME CONTRACTOR PRIME CONTRACTOR PRIME CONTRACTOR DISPARITY ANALYSISDISPARITY ANALYSISDISPARITY ANALYSISDISPARITY ANALYSIS I.I.I.I. STATISTICAL ANALYSIS OF DISPARITYSTATISTICAL ANALYSIS OF DISPARITYSTATISTICAL ANALYSIS OF DISPARITYSTATISTICAL ANALYSIS OF DISPARITY A.A.A.A. IntroductionIntroductionIntroductionIntroduction The objective of the disparity analysis is to determine the levels at which Minority and Woman-owned Business Enterprises (M/WBEs) are utilized on Metropolitan St. Louis Sewer District (MSD) contracts. Under a fair and equitable system of awarding contracts, the proportion of contract dollars awarded to M/WBEs should be relatively close to the proportion of available M/WBEs1 in the relevant market area. If the ratio of utilized M/WBE prime contractors to available M/WBE prime contractors is less than one, a statistical test is conducted to calculate the probability of observing the empirical disparity ratio or any event which is less probable. This analysis assumes a fair and equitable system.2 Croson states that an inference of discrimination can be made prima facie if the disparity is statistically significant. Under the Croson model, Non-Minority Male business enterprises are not subjected to a statistical test. The first step in conducting the statistical test is to calculate the contract value that each ethnic and gender group is expected to receive. This value is based on each group’s availability in the market area, and shall be referred to as the expected contract amount. The next step computes the difference between each ethnic and gender group’s expected contract amount and the actual contract amount received by each group. Then, the disparity ratio is computed by dividing the actual contract amount by the expected contract amount. 1 Availability is defined as the number of ready, willing, and able firms. The methodology for determining willing and able firms is detailed in Chapter 6. 2 When conducting statistical tests, a confidence level must be established as a gauge for the level of certainty that an observed occurrence is not due to chance. It is important to note that a 100 percent confidence level or a level of absolute certainty can never be obtained in statistics. A 95 percent confidence level is considered by the courts to be an acceptable level in determining whether an inference of discrimination can be made. Thus, the data analyzed here was done within the 95 percent confidence level. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 7-2 In practice, a disparity ratio of less than 0.8 indicates a relevant degree of disparity. To test the significance of a disparity ratio, a P-value must be calculated.3 All disparity findings less than 1 are subject to analysis, which tests statistical significance. The three methods employed to calculate statistical significance include a parametric analysis,4 a non-parametric analysis,5 and a simulation analysis. A parametric analysis is most commonly used when the number of contracts is sufficiently large and the variation of the contract dollar amounts is not too large. When the variation in contract dollar amounts is large, a disparity may not be detectable using a parametric analysis. Therefore, a non-parametric analysis would be employed to analyze the contracts ranked by dollar amount. Both parametric and non-parametric analyses are effective due to the central limit theorem, which is strongest when the number of contracts is large and the data is not skewed. When there are too few contracts,6 or the contract dollar data is skewed, a simulation analysis is employed. The utility of the simulation analysis is also dependent on the severity of the disparity when there are too few contracts. The simulation analysis utilizes randomization to simulate a distribution for the contracts.7 By conducting multiple trials in the simulation, the empirical data can be used to test the distribution of contract awards for significance. For parametric and non-parametric analyses, the P-value takes into account the number of contracts, amount of contract dollars, and variation in contract dollars. If the difference between the actual and expected number of contracts and total contract dollars has a P- value equal to or less than 0.05, the difference is statistically significant.8 In the simulation analysis, the P-value takes into account a combination of the distribution formulated from the empirical data and the contract dollar amounts or contract rank. If the actual contract dollar amount, or contract rank, falls below the fifth percentile of the distribution, it denotes a P-value less than 0.05, which is statistically significant. This statistical model applies all three methods simultaneously to each industry. Findings from one of the three methods are reported. If the P-value from any one of the three methods is less than 0.05, the finding is reported in the disparity tables as statistically 3 P-value is a measure of statistical significance. 4 Parametric analysis is a statistical examination based on the actual values of the variable. In this case, the parametric analysis consists of the actual dollar values of the contracts. 5 Non-parametric analysis is a method to make data more suitable for statistical testing by allowing one variable to be replaced with a new variable that maintains the essential characteristics of the original one. In this case, the contracts are ranked from the smallest to the largest. The dollar value of each contract is replaced with its rank order number. 6 Note: a relatively small availability population size decreases the reliability of the statistical results; therefore, any availability percentage under one percent cannot be labeled as statistically significant. 7 The simulation analysis can be conducted using contract dollar amounts or contract rankings. 8 A statistical test is not performed for Non-Minority Males or when the ratio of utilized to available is greater than one for M/WBEs. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 7-3 significant. If the P-value is greater than 0.05, or there are too few available firms, the finding is reported as not statistically significant. B.B.B.B. Disparity AnalysisDisparity AnalysisDisparity AnalysisDisparity Analysis A prime contract disparity analysis was performed on building construction, non-building construction, engineering professional services, non-engineering professional services, and goods and contractual services contracts awarded between July 1, 2007 and January 31, 2012. As demonstrated in Chapter 6: Prime and Subcontractor Availability Analysis, the majority of MSD’s contracts were small. Building construction prime contracts valued at less than $25,000 constituted 7.41 percent, and those valued at less than $500,000 constituted 51.85 percent. Non-building construction prime contracts valued at less than $25,000 constituted 60.23 percent, and those valued at less than $500,000 constituted 87.7 percent. Engineering professional services prime contracts valued at less than $25,000 represented 32.26 percent, and those valued at less than $500,000 constituted 89.25 percent. Non-engineering professional services prime contracts valued at less than $25,000 represented 73 percent, and those valued at less than $500,000 constituted 92.28 percent. Supplies and contractual services prime contracts valued at less than $25,000 represented 97.89 percent, and those valued at less than $500,000 constituted 99.87 percent. The threshold levels of formal contracts for the disparity analysis were set to ensure that within the pool of willing businesses there was documented capacity to perform the contracts analyzed. The formal threshold for the five industries: building construction, non-building construction, engineering professional services, non-engineering professional services, and supplies and contractual services were limited to the $500,000 level. The $500,000 threshold was designated because at this level there was a demonstrated capacity within the pool of M/WBEs willing to perform MSD’s contracts.9 The informal contract analysis was performed at the $25,000 threshold level for supplies and contractual services stipulated in MSD’s procurement policy. Supplies and contractual services is the only industry with an informal threshold level. The findings from the three methods employed to calculate statistical significance, as discussed on page 7-2, are presented in the following sections. The outcomes of the analyses of statistical significance are presented in the disparity column of the tables. There are ethnic groups where the statistical test cannot be performed due to too few available firms. A description of the statistical outcomes in the disparity tables is presented below in Table 7.01. 9 See Chapter 6: Prime and Subcontractor Availability Analysis – Section III for a discussion of M/WBE capacity. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 7-4 Table 7.01: Statistical Outcome Descriptions P-Value Outcome Description of P-Value Outcome < .05 * The underutilization is statistically significant not significant; The analysis is not statistically significant ---- There are too few available firms to test statistical significance ** The statistical test is not performed for the overutilization of M/WBEs or the underutilization of Non-Minority Males < .05 † The overutilization is statistically significant 1. Disparity Analysis: All Prime Contracts under $500,000, by Industry a. Building Construction Prime Contracts under $500,000 The disparity analysis of all building construction prime contracts under $500,000 is described below and depicted in Table 7.02 and Chart 7.01. African American Businesses represent 23.86 percent of the available building construction businesses and received 11.38 percent of the building construction prime contracts under $500,000. This underutilization is not statistically significant. Asian American Businesses represent 1.14 percent of the available building construction businesses and received none of the dollars for building construction prime contracts under $500,000. This underutilization is not statistically significant. Hispanic American Businesses represent 1.89 percent of the available building construction businesses and received none of the dollars for building construction prime contracts under $500,000. This underutilization is not statistically significant. Native American Businesses represent 0.38 percent of the available building construction businesses and received none of the dollars for building construction prime contracts under $500,000. While this group was underutilized, there were too few available firms to determine statistical significance. Minority Business Enterprises represent 27.27 percent of the available building construction businesses and received 11.38 percent of the dollars for building construction prime contracts under $500,000. This underutilization is not statistically significant. Women Business Enterprises represent 10.98 percent of the available building construction businesses and received 30.23 percent of the dollars for building construction prime contracts under $500,000. This study does not test statistically the overutilization of minority groups. Mason Tillman Associates, Ltd. February 20132 Draft Metropolitan St. Louis Sewer District Disparity Study 7-5 Minority and Women Business Enterprises represent 38.26 percent of available building construction businesses and received 41.61 percent of the dollars for building construction prime contracts under $500,000. This study does not test statistically the overutilization of minority groups. Non-Minority Male Business Enterprises represent 61.74 percent of the available building construction businesses and received 58.39 percent of the dollars for building construction prime contracts under $500,000. This study does not test statistically the underutilization of non-minority males. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-6 Table 7.02: Disparity Analysis: Building Construction Prime Contracts under $500,000, July 1, 2007 through January 31, 2012 Ethnicity Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African Americans $309,173 11.38% 23.86% $648,402 -$339,229 0.48 not significant Asian Americans $0 0.00% 1.14% $30,876 -$30,876 0.00 not significant Hispanic Americans $0 0.00% 1.89% $51,460 -$51,460 0.00 not significant Native Americans $0 0.00% 0.38% $10,292 -$10,292 0.00 ---- Caucasian Females $821,300 30.23% 10.98% $298,471 $522,829 2.75 ** Non-Minority Males $1,586,640 58.39% 61.74% $1,677,612 -$90,971 0.95 ** TOTAL $2,717,113 100.00% 100.00% $2,717,113 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African American Females $0 0.00% 1.89% $51,460 -$51,460 0.00 not significant African American Males $309,173 11.38% 21.97% $596,942 -$287,769 0.52 not significant Asian American Females $0 0.00% 0.00% $0 $0 ---- ---- Asian American Males $0 0.00% 1.14% $30,876 -$30,876 0.00 not significant Hispanic American Females $0 0.00% 0.00% $0 $0 ---- ---- Hispanic American Males $0 0.00% 1.89% $51,460 -$51,460 0.00 not significant Native American Females $0 0.00% 0.38% $10,292 -$10,292 0.00 ---- Native American Males $0 0.00% 0.00% $0 $0 ---- ---- Caucasian Females $821,300 30.23% 10.98% $298,471 $522,829 2.75 ** Non-Minority Males $1,586,640 58.39% 61.74% $1,677,612 -$90,971 0.95 ** TOTAL $2,717,113 100.00% 100.00% $2,717,113 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Females $0 0.00% 2.27% $61,753 -$61,753 0.00 not significant Minority Males $309,173 11.38% 25.00% $679,278 -$370,106 0.46 not significant Caucasian Females $821,300 30.23% 10.98% $298,471 $522,829 2.75 ** Non-Minority Males $1,586,640 58.39% 61.74% $1,677,612 -$90,971 0.95 ** TOTAL $2,717,113 100.00% 100.00% $2,717,113 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Business Enterprises $309,173 11.38% 27.27% $741,031 -$431,858 0.42 not significant Women Business Enterprises $821,300 30.23% 10.98% $298,471 $522,829 2.75 ** Minority and Women Business Enterprises $1,130,473 41.61% 38.26% $1,039,502 $90,971 1.09 ** Non-Minority Male Business Enterprises $1,586,640 58.39% 61.74% $1,677,612 -$90,971 0.95 ** ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) this study does not test statistically the overutilization of M/WBEs or the underutilization of non-minority males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-7 Chart 7.01: Disparity Analysis: Building Construction Prime Contracts under $500,000, July 1, 2007 through January 31, 2012 $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 African AmericansAsian AmericansHispanic AmericansNative AmericansCaucasian FemalesNon-Minority MalesDollarsEthnic/Gender GroupsActual DollarsExpected Dollars Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-8 b. Non-Building Construction Prime Contracts under $500,000 The disparity analysis of all non-building construction prime contracts under $500,000 is described below and depicted in Table 7.03 and Chart 7.02. African American Businesses represent 14.75 percent of the available non-building construction businesses and received 13.1 percent of the dollars for non-building construction businesses under $500,000. This underutilization is statistically significant. Asian American Businesses represent 1.64 percent of the available non-building construction businesses and received 0.11 percent of the dollars for non-building construction businesses under $500,000. This underutilization is statistically significant. Hispanic American Businesses represent 0.82 percent of the available non-building construction businesses and received none of the dollars for non-building construction businesses under $500,000. While this group was underutilized, there were too few available firms to determine statistical significance. Native American Businesses represent none of the non-building construction businesses and received none of the dollars for non-building construction businesses under $500,000. Minority Business Enterprises represent 17.21 percent of the available non-building construction businesses and received 13.22 percent of the dollars for non-building construction businesses under $500,000. This underutilization is statistically significant. Women Business Enterprises represent 9.84 percent of the available non-building construction businesses and received 17.62 percent of the dollars for dollars for non- building construction businesses under $500,000. This study does not test statistically the overutilization of minority groups. Minority and Women Business Enterprises represent 27.05 percent of available non- building construction businesses and received 30.83 percent of the dollars for non- building construction businesses under $500,000. This study does not test statistically the overutilization of minority groups. Non-Minority Male Business Enterprises represent 72.95 percent of the available non- building construction businesses and received 69.17 percent of the dollars for non- building construction businesses under $500,000. This study does not test statistically the underutilization of non-minority males. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-9 Table 7.03: Disparity Analysis: Non-Building Construction Prime Contracts under $500,000, July 1, 2007 through January 31, 2012 Ethnicity Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African Americans $4,676,685 13.10% 14.75% $5,267,040 -$590,355 0.89 < .05 * Asian Americans $41,008 0.11% 1.64% $585,227 -$544,219 0.07 < .05 * Hispanic Americans $0 0.00% 0.82% $292,613 -$292,613 0.00 ---- Native Americans $0 0.00% 0.00% $0 $0 ---- ---- Caucasian Females $6,289,512 17.62% 9.84% $3,511,360 $2,778,152 1.79 ** Non-Minority Males $24,691,623 69.17% 72.95% $26,042,587 -$1,350,964 0.95 ** TOTAL $35,698,827 100.00% 100.00% $35,698,827 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African American Females $39,100 0.11% 2.46% $877,840 -$838,740 0.04 < .05 * African American Males $4,637,585 12.99% 12.30% $4,389,200 $248,385 1.06 ** Asian American Females $0 0.00% 0.00% $0 $0 ---- ---- Asian American Males $41,008 0.11% 1.64% $585,227 -$544,219 0.07 < .05 * Hispanic American Females $0 0.00% 0.00% $0 $0 ---- ---- Hispanic American Males $0 0.00% 0.82% $292,613 -$292,613 0.00 ---- Native American Females $0 0.00% 0.00% $0 $0 ---- ---- Native American Males $0 0.00% 0.00% $0 $0 ---- ---- Caucasian Females $6,289,512 17.62% 9.84% $3,511,360 $2,778,152 1.79 ** Non-Minority Males $24,691,623 69.17% 72.95% $26,042,587 -$1,350,964 0.95 ** TOTAL $35,698,827 100.00% 100.00% $35,698,827 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Females $39,100 0.11% 2.46% $877,840 -$838,740 0.04 < .05 * Minority Males $4,678,593 13.11% 14.75% $5,267,040 -$588,447 0.89 not significant Caucasian Females $6,289,512 17.62% 9.84% $3,511,360 $2,778,152 1.79 ** Non-Minority Males $24,691,623 69.17% 72.95% $26,042,587 -$1,350,964 0.95 ** TOTAL $35,698,827 100.00% 100.00% $35,698,827 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Business Enterprises $4,717,693 13.22% 17.21% $6,144,880 -$1,427,187 0.77 < .05 * Women Business Enterprises $6,289,512 17.62% 9.84% $3,511,360 $2,778,152 1.79 ** Minority and Women Business Enterprises $11,007,204 30.83% 27.05% $9,656,240 $1,350,964 1.14 ** Non-Minority Male Business Enterprises $24,691,623 69.17% 72.95% $26,042,587 -$1,350,964 0.95 ** ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) this study does not test statistically the overutilization of M/WBEs or the underutilization of non-minority males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-10 Chart 7.02: Disparity Analysis: Non-Building Construction Prime Contracts under $500,000, July 1, 2007 through January 31, 2012 $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 African AmericansAsian AmericansHispanic AmericansNative AmericansCaucasian FemalesNon-Minority MalesDollarsEthnic/Gender GroupsActual DollarsExpected Dollars Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-11 2. Engineering Professional Services Prime Contracts under $500,000 The disparity analysis of all engineering professional services prime contracts under $500,000 is described below and depicted in Table 7.04 and Chart 7.03. African American Businesses represent 15.43 percent of the available engineering professional services businesses and received 10.63 percent of the dollars for engineering professional services prime contracts under $500,000. This underutilization is not statistically significant. Asian American Businesses represent 4.94 percent of the available engineering professional services businesses and received 1.59 percent of the dollars for engineering professional services prime contracts under $500,000. This underutilization is statistically significant. Hispanic American Businesses represent 3.09 percent of the available engineering professional services businesses and received 3.39 percent of the dollars for engineering professional services prime contracts under $500,000. This study does not test statistically the overutilization of minority groups. Native American Businesses represent 0.62 percent of the available engineering professional services businesses and received none of the dollars for engineering professional services prime contracts under $500,000. While this group was underutilized, there were too few available firms to determine statistical significance. Minority Business Enterprises represent 24.07 percent of the available engineering professional services businesses and received 15.62 percent of the dollars for engineering professional services prime contracts under $500,000. This underutilization is statistically significant. Women Business Enterprises represent 14.81 percent of the available engineering professional services businesses and received 7.5 percent of the dollars for engineering professional services prime contracts under $500,000. This underutilization is statistically significant. Minority and Women Business Enterprises represent 38.89 percent of the available engineering professional services businesses and received 23.11 percent of the dollars for engineering professional services prime contracts under $500,000. This underutilization is statistically significant. Non-Minority Male Business Enterprises represent 61.11 percent of the available engineering professional services businesses and received 76.89 percent of the dollars for engineering professional services prime contracts under $500,000. This overutilization is statistically significant. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-12 Table 7.04: Disparity Analysis: Engineering Professional Services Prime Contracts under $500,000, July 1, 2007 through January 31, 2012 Ethnicity Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African Americans $2,461,385 10.63% 15.43% $3,572,814 -$1,111,430 0.69 not significant Asian Americans $368,285 1.59% 4.94% $1,143,301 -$775,016 0.32 < .05 * Hispanic Americans $785,799 3.39% 3.09% $714,563 $71,236 1.10 ** Native Americans $0 0.00% 0.62% $142,913 -$142,913 0.00 ---- Caucasian Females $1,735,735 7.50% 14.81% $3,429,902 -$1,694,167 0.51 < .05 * Non-Minority Males $17,800,634 76.89% 61.11% $14,148,345 $3,652,288 1.26 < .05 † TOTAL $23,151,838 100.00% 100.00% $23,151,838 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African American Females $454,967 1.97% 4.94% $1,143,301 -$688,334 0.40 not significant African American Males $2,006,418 8.67% 10.49% $2,429,514 -$423,096 0.83 not significant Asian American Females $0 0.00% 1.85% $428,738 -$428,738 0.00 not significant Asian American Males $368,285 1.59% 3.09% $714,563 -$346,278 0.52 not significant Hispanic American Females $0 0.00% 0.00% $0 $0 ---- ---- Hispanic American Males $785,799 3.39% 3.09% $714,563 $71,236 1.10 ** Native American Females $0 0.00% 0.62% $142,913 -$142,913 0.00 ---- Native American Males $0 0.00% 0.00% $0 $0 ---- ---- Caucasian Females $1,735,735 7.50% 14.81% $3,429,902 -$1,694,167 0.51 < .05 * Non-Minority Males $17,800,634 76.89% 61.11% $14,148,345 $3,652,288 1.26 < .05 † TOTAL $23,151,838 100.00% 100.00% $23,151,838 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Females $454,967 1.97% 7.41% $1,714,951 -$1,259,984 0.27 < .05 * Minority Males $3,160,502 13.65% 16.67% $3,858,640 -$698,138 0.82 not significant Caucasian Females $1,735,735 7.50% 14.81% $3,429,902 -$1,694,167 0.51 < .05 * Non-Minority Males $17,800,634 76.89% 61.11% $14,148,345 $3,652,288 1.26 < .05 † TOTAL $23,151,838 100.00% 100.00% $23,151,838 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Business Enterprises $3,615,469 15.62% 24.07% $5,573,591 -$1,958,122 0.65 < .05 * Women Business Enterprises $1,735,735 7.50% 14.81% $3,429,902 -$1,694,167 0.51 < .05 * Minority and Women Business Enterprises $5,351,204 23.11% 38.89% $9,003,492 -$3,652,288 0.59 < .05 * Non-Minority Male Business Enterprises $17,800,634 76.89% 61.11% $14,148,345 $3,652,288 1.26 < .05 † ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) this study does not test statistically the overutilization of M/WBEs or the underutilization of non-minority males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-13 Chart 7.03: Disparity Analysis: Engineering Professional Services Prime Contracts under $500,000, July 1, 2007 through January 31, 2012 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 African AmericansAsian AmericansHispanic AmericansNative AmericansCaucasian FemalesNon-Minority MalesDollarsEthnic/Gender GroupsActual DollarsExpected Dollars Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-14 3. Non-Engineering Professional Services Prime Contracts under $500,000 The disparity analysis of all non-engineering professional services prime contracts under $500,000 is described below and depicted in Table 7.05 and Chart 7.04. African American Businesses represent 22.58 percent of the available non-engineering professional services businesses and received 0.06 percent of the dollars for non- engineering professional services businesses under $500,000. This underutilization is statistically significant. Asian American Businesses represent 4.15 percent of the available non-engineering professional services businesses and received none of the dollars for non-engineering professional services businesses under $500,000. This underutilization is statistically significant. Hispanic American Businesses represent 3.23 percent of the available non-engineering professional services businesses and received none of the dollars for non-engineering professional services businesses under $500,000. This underutilization is statistically significant. Native American Businesses represent 0.46 percent of the available non-engineering professional services businesses and received none of the dollars for non-engineering professional services businesses under $500,000. While this group was underutilized, there were too few available firms to determine statistical significance Minority Business Enterprises represent 30.41 percent of the available non-engineering professional services businesses and received 0.06 percent of the dollars for non- engineering professional services businesses under $500,000. This underutilization is statistically significant. Women Business Enterprises represent 24.42 percent of the available non-engineering professional services businesses and received none of the dollars for non-engineering professional services businesses under $500,000. This underutilization is statistically significant. Minority and Women Business Enterprises represent 54.84 percent of the available non- engineering professional services businesses and received 0.06 percent of the dollars for non-engineering professional services businesses under $500,000. This underutilization is statistically significant. Non-Minority Male Business Enterprises represent 45.16 percent of the available non- engineering professional services businesses and received 99.94 percent of the dollars for non-engineering professional services businesses under $500,000. This overutilization is statistically significant. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-15 Table 7.05: Disparity Analysis: Non-Engineering Professional Services Prime Contracts under $500,000, July 1, 2007 through January 31, 2012 Ethnicity Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African Americans $21,320 0.06% 22.58% $8,173,685 -$8,152,364 0.00 < .05 * Asian Americans $0 0.00% 4.15% $1,501,289 -$1,501,289 0.00 < .05 * Hispanic Americans $0 0.00% 3.23% $1,167,669 -$1,167,669 0.00 < .05 * Native Americans $0 0.00% 0.46% $166,810 -$166,810 0.00 ---- Caucasian Females $0 0.00% 24.42% $8,840,924 -$8,840,924 0.00 < .05 * Non-Minority Males $36,176,426 99.94% 45.16% $16,347,369 $19,829,056 2.21 < .05 † TOTAL $36,197,746 100.00% 100.00% $36,197,746 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African American Females $11,100 0.03% 9.22% $3,336,198 -$3,325,098 0.00 < .05 * African American Males $10,220 0.03% 13.36% $4,837,487 -$4,827,266 0.00 < .05 * Asian American Females $0 0.00% 1.38% $500,430 -$500,430 0.00 < .05 * Asian American Males $0 0.00% 2.76% $1,000,859 -$1,000,859 0.00 < .05 * Hispanic American Females $0 0.00% 0.92% $333,620 -$333,620 0.00 ---- Hispanic American Males $0 0.00% 2.30% $834,049 -$834,049 0.00 < .05 * Native American Females $0 0.00% 0.00% $0 $0 ---- ---- Native American Males $0 0.00% 0.46% $166,810 -$166,810 0.00 ---- Caucasian Females $0 0.00% 24.42% $8,840,924 -$8,840,924 0.00 < .05 * Non-Minority Males $36,176,426 99.94% 45.16% $16,347,369 $19,829,056 2.21 < .05 † TOTAL $36,197,746 100.00% 100.00% $36,197,746 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Females $11,100 0.03% 11.52% $4,170,247 -$4,159,147 0.00 < .05 * Minority Males $10,220 0.03% 18.89% $6,839,205 -$6,828,985 0.00 < .05 * Caucasian Females $0 0.00% 24.42% $8,840,924 -$8,840,924 0.00 < .05 * Non-Minority Males $36,176,426 99.94% 45.16% $16,347,369 $19,829,056 2.21 < .05 † TOTAL $36,197,746 100.00% 100.00% $36,197,746 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Business Enterprises $21,320 0.06% 30.41% $11,009,453 -$10,988,132 0.00 < .05 * Women Business Enterprises $0 0.00% 24.42% $8,840,924 -$8,840,924 0.00 < .05 * Minority and Women Business Enterprises $21,320 0.06% 54.84% $19,850,377 -$19,829,056 0.00 < .05 * Non-Minority Male Business Enterprises $36,176,426 99.94% 45.16% $16,347,369 $19,829,056 2.21 < .05 † ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) this study does not test statistically the overutilization of M/WBEs or the underutilization of non-minority males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-16 Chart 7.04: Disparity Analysis: Non-Engineering Professional Services Prime Contracts under $500,000, July 1, 2007 through January 31, 2012 $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 African AmericansAsian AmericansHispanic AmericansNative AmericansCaucasian FemalesNon-Minority MalesDollarsEthnic/Gender GroupsActual DollarsExpected Dollars Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-17 4. Supplies and Contractual Services Prime Contracts under $500,000 The disparity analysis of all supplies and contractual prime contracts under $500,000 is described below and depicted in Table 7.06 and Chart 7.05. African American Businesses represent 6.65 percent of the available supplies and contractual services businesses and received 4.26 percent of the dollars for supplies and contractual services businesses under $500,000. This underutilization is statistically significant. Asian American Businesses represent 1.08 percent of the available supplies and contractual services businesses and received 0.19 percent of the dollars for supplies and contractual services businesses under $500,000. This underutilization is statistically significant. Hispanic American Businesses represent 0.87 percent of the available supplies and contractual services businesses and received 1.54 percent of the dollars for supplies and contractual services businesses under $500,000. This study does not test statistically the overutilization of minority groups. Native American Businesses represent 0.14 percent of the available supplies and contractual services businesses and received none of the dollars for supplies and contractual services businesses under $500,000. While this group was underutilized, there were too few available firms to determine statistical significance. Minority Business Enterprises represent 8.74 percent of the available supplies and contractual services businesses and received 5.99 percent of the dollars for supplies and contractual services businesses under $500,000. This underutilization is statistically significant. Women Business Enterprises represent 9.9 percent of the available supplies and contractual services businesses and received 7.95 percent of the dollars for supplies and contractual services businesses under $500,000. This underutilization is statistically significant. Minority and Women Business Enterprises represent 18.64 percent of available supplies and contractual services businesses and received 13.94 percent of the dollars for supplies and contractual services businesses under $500,000. This underutilization is statistically significant. Non-Minority Male Business Enterprises represent 81.36 percent of the available supplies and contractual services businesses and received 86.06 percent of the dollars for supplies and contractual services businesses under $500,000. This overutilization is statistically significant. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-18 Table 7.06: Disparity Analysis: Supplies and Contractual Services Prime Contracts under $500,000, July 1, 2007 through January 31, 2012 Ethnicity Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African Americans $4,865,044 4.26%6.65%$7,590,963 -$2,725,919 0.64 < .05 * Asian Americans $212,456 0.19%1.08%$1,237,657 -$1,025,201 0.17 < .05 * Hispanic Americans $1,759,371 1.54%0.87%$990,126 $769,246 1.78 ** Native Americans $0 0.00%0.14%$165,021 -$165,021 0.00 ---- Caucasian Females $9,082,914 7.95%9.90%$11,303,934 -$2,221,020 0.80 < .05 * Non-Minority Males $98,274,704 86.06%81.36%$92,906,789 $5,367,915 1.06 < .05 † TOTAL $114,194,490 100.00%100.00%$114,194,490 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African American Females $466,852 0.41%1.59%$1,815,230 -$1,348,378 0.26 < .05 * African American Males $4,398,192 3.85%5.06%$5,775,733 -$1,377,541 0.76 not significant Asian American Females $210,719 0.18%0.22%$247,531 -$36,812 0.85 ---- Asian American Males $1,737 0.00%0.87%$990,126 -$988,389 0.00 ---- Hispanic American Females $124,744 0.11%0.29%$330,042 -$205,298 0.38 ---- Hispanic American Males $1,634,627 1.43%0.58%$660,084 $974,543 2.48 ** Native American Females $0 0.00%0.00%$0 $0 ---- ---- Native American Males $0 0.00%0.14%$165,021 -$165,021 0.00 ---- Caucasian Females $9,082,914 7.95%9.90%$11,303,934 -$2,221,020 0.80 < .05 * Non-Minority Males $98,274,704 86.06%81.36%$92,906,789 $5,367,915 1.06 < .05 † TOTAL $114,194,490 100.00%100.00%$114,194,490 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Females $802,315 0.70%2.10%$2,392,804 -$1,590,488 0.34 < .05 * Minority Males $6,034,556 5.28%6.65%$7,590,963 -$1,556,407 0.79 not significant Caucasian Females $9,082,914 7.95%9.90%$11,303,934 -$2,221,020 0.80 < .05 * Non-Minority Males $98,274,704 86.06%81.36%$92,906,789 $5,367,915 1.06 < .05 † TOTAL $114,194,490 100.00%100.00%$114,194,490 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Business Enterprises $6,836,872 5.99%8.74%$9,983,767 -$3,146,895 0.68 < .05 * Women Business Enterprises $9,082,914 7.95%9.90%$11,303,934 -$2,221,020 0.80 < .05 * Minority and Women Business Enterprises $15,919,786 13.94%18.64%$21,287,701 -$5,367,915 0.75 < .05 * Non-Minority Male Business Enterprises $98,274,704 86.06%81.36%$92,906,789 $5,367,915 1.06 < .05 † ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) this study does not test statistically the overutilization of M/WBEs or the underutilization of non-minority males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-19 Chart 7.05: Disparity Analysis: Supplies and Contractual Services Prime Contracts under $500,000, July 1, 2007 through January 31, 2012 $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 $90,000,000 $100,000,000 African AmericansAsian AmericansHispanic AmericansNative AmericansCaucasian FemalesNon-Minority MalesDollarsEthnic/Gender GroupsActual DollarsExpected Dollars Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-20 5. Disparity Analysis: All Prime Contracts $25,000 and under, by Industry The disparity analysis of supplies and contractual services businesses prime contracts $25,000 and under is described below and depicted in Table 7.07 and Chart 7.06. African American Businesses represent 6.65 percent of the available supplies and contractual services businesses and received 3.91 percent of the dollars for supplies and contractual services prime contracts $25,000 and under. This underutilization is statistically significant. Asian American Businesses represent 1.08 percent of the available supplies and contractual services businesses and received 0.57 percent of the dollars for supplies and contractual services prime contracts $25,000 and under. This underutilization is statistically significant. Hispanic American Businesses represent 0.87 percent of the available supplies and contractual services businesses and received 0.94 percent of the dollars for supplies and contractual services prime contracts $25,000 and under. This study does not test statistically the overutilization of minority groups. Native American Businesses represent 0.14 percent of the available supplies and contractual services businesses and received none of the dollars for supplies and contractual services prime contracts $25,000 and under. While this group was underutilized, there were too few available firms to determine statistical significance. Minority Business Enterprises represent 8.74 percent of the available supplies and contractual services businesses and received 5.42 percent of the dollars for supplies and contractual services prime contracts $25,000 and under. This underutilization is statistically significant. Women Business Enterprises represent 9.9 percent of the available supplies and contractual services businesses and received 10.82 percent of the dollars for supplies and contractual services prime contracts $25,000 and under. This study does not test statistically the overutilization of minority groups. Minority and Women Business Enterprises represent 18.64 percent of the available supplies and contractual services businesses and received 16.24 percent of the dollars for supplies and contractual services prime contracts $25,000 and under. This underutilization is statistically significant. Non-Minority Male Business Enterprises represent 81.36 percent of the available supplies and contractual services businesses and received 83.76 percent of the dollars for supplies and contractual services businesses $25,000 and under. This overutilization is statistically significant. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-21 Table 7.07: Disparity Analysis: Supplies and Contractual Services Prime Contracts $25,000 and under, July 1, 2007 through January 31, 2012 Ethnicity Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African Americans $1,453,799 3.91%6.65%$2,468,577 -$1,014,7780.59 < .05 * Asian Americans $212,456 0.57%1.08%$402,485 -$190,0290.53 < .05 * Hispanic Americans $347,950 0.94%0.87%$321,988 $25,9621.08 ** Native Americans $0 0.00%0.14%$53,665 -$53,6650.00 ---- Caucasian Females $4,017,823 10.82%9.90%$3,676,033 $341,7901.09 ** Non-Minority Males $31,103,957 83.76%81.36%$30,213,236 $890,7211.03 < .05 † TOTAL $37,135,985 100.00%100.00%$37,135,985 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African American Females $33,716 0.09%1.59%$590,312 -$556,5960.06 < .05 * African American Males $1,420,083 3.82%5.06%$1,878,265 -$458,1820.76 < .05 * Asian American Females $210,719 0.57%0.22%$80,497 $130,2222.62 ** Asian American Males $1,737 0.00%0.87%$321,988 -$320,2510.01 ---- Hispanic American Females $26,971 0.07%0.29%$107,329 -$80,3580.25 ---- Hispanic American Males $320,979 0.86%0.58%$214,659 $106,3201.50 ** Native American Females $0 0.00%0.00%$0 $0---- ---- Native American Males $0 0.00%0.14%$53,665 -$53,6650.00 ---- Caucasian Females $4,017,823 10.82%9.90%$3,676,033 $341,7901.09 ** Non-Minority Males $31,103,957 83.76%81.36%$30,213,236 $890,7211.03 < .05 † TOTAL $37,135,985 100.00%100.00%$37,135,985 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Females $271,406 0.73%2.10%$778,138 -$506,7320.35 < .05 * Minority Males $1,742,799 4.69%6.65%$2,468,577 -$725,7790.71 < .05 * Caucasian Females $4,017,823 10.82%9.90%$3,676,033 $341,7901.09 ** Non-Minority Males $31,103,957 83.76%81.36%$30,213,236 $890,7211.03 < .05 † TOTAL $37,135,985 100.00%100.00%$37,135,985 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Business Enterprises $2,014,205 5.42%8.74%$3,246,715 -$1,232,5110.62 < .05 * Women Business Enterprises $4,017,823 10.82%9.90%$3,676,033 $341,7901.09 ** Minority and Women Business Enterprises $6,032,028 16.24%18.64%$6,922,749 -$890,7210.87 < .05 * Non-Minority Male Business Enterprises $31,103,957 83.76%81.36%$30,213,236 $890,7211.03 < .05 † ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) this study does not test statistically the overutilization of M/WBEs or the underutilization of non-minority males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-22 Chart 7.06: Disparity Analysis: Supplies and Contractual Services Prime Contracts $25,000 and under, July 1, 2007 through January 31, $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 African AmericansAsian AmericansHispanic AmericansNative AmericansCaucasian FemalesNon-Minority MalesDollarsEthnic/Gender GroupsActual DollarsExpected Dollars Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-23 C.C.C.C. Disparity Disparity Disparity Disparity AnalysisAnalysisAnalysisAnalysis SummarySummarySummarySummary 1. Building Construction Prime Contracts As indicated in Table 7.08, there were no findings of statistically significant disparity in the building construction industry for contracts $500,000 and under. Table 7.08: Disparity Summary: Building Construction Prime Contract Dollars, July 1, 2007 through January 31, 2012 Ethnicity/Gender Contracts under $500,000 African Americans No Asian Americans No Hispanic Americans No Native Americans No Minority Business Enterprises No Women Business Enterprises ** Minority and Women Business Enterprises ** Yes = The analysis is statistically significant. No = The analysis is not statistically significant or there are too few available firms to test statistical significance. (**) = The analysis does not statistically test the overutilization of M/WBEs. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-24 2. Non-Building Construction Prime Contracts As indicated in Table 7.09, disparity was found for African American, Asian American and Minority Business Enterprise non-building construction contractors for contracts under $500,000. Table 7.09: Disparity Summary: Non-Building Construction Prime Contract Dollars, July 1, 2007 through January 31, 2012 Ethnicity/Gender Contracts under $500,000 African Americans Yes Asian Americans Yes Hispanic Americans No Native Americans No Minority Business Enterprises Yes Women Business Enterprises ** Minority and Women Business Enterprises ** Yes = The analysis is statistically significant. No = The analysis is not statistically significant or there are too few available firms to test statistical significance. (**) = The analysis does not statistically test the overutilization of M/WBEs. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-25 4. Engineering Professional Services Prime Contracts As indicated in Table 7.10 below, disparity was found for Asian American, Women Business Enterprise, Minority Business Enterprise and Minority and Women Business Enterprise, engineering professional services prime contractors for contracts under $500,000. Table 7.10: Disparity Summary: Engineering Professional Services Prime Contract Dollars, July 1, 2007 through January 31, 2012 Ethnicity/Gender Contracts under $500,000 African Americans No Asian Americans Yes Hispanic Americans ** Native Americans No Minority Business Enterprises Yes Women Business Enterprises Yes Minority and Women Business Enterprises Yes Yes = The analysis is statistically significant. No = The analysis is not statistically significant or there are too few available firms to test statistical significance. (**) = The analysis does not statistically test the overutilization of M/WBEs. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-26 5. Non-Engineering Professional Services Prime Contracts As indicated in Table 7.11 below, disparity was found for African American, Asian American, Hispanic American, Minority Business Enterprise, Women Business Enterprise, and Minority and Women Business Enterprise non-engineering professional services prime contractors for contracts under $500,000. Table 7.11: Disparity Summary: Non-Engineering Professional Services Prime Contract Dollars, July 1, 2007 through January 31, 2012 Ethnicity/Gender Contracts under $500,000 African Americans Yes Asian Americans Yes Hispanic Americans Yes Native Americans No Minority Business Enterprises Yes Women Business Enterprises Yes Minority and Women Business Enterprises Yes Yes = The analysis is statistically significant. No = The analysis is not statistically significant or there are too few available firms to test statistical significance. (**) = The analysis does not statistically test the overutilization of M/WBEs. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 7-27 6. Supplies and Contractual Services Prime Contracts As indicated in Table 7.12 below, disparity was found for African American, Asian American, Minority Business Enterprise, Women Business Enterprise, and Minority Business Enterprise supplies and contractual services prime contractors at the formal contract level. Disparity was found for African American, Asian American, and Minority Business Enterprise Minority and Women Business Enterprise supplies and contractual services prime contractors at the informal contract level. Table 7.12: Disparity Summary: Supplies and Contractual Services Prime Contract Dollars, July 1, 2007 through January 31, 2012 Ethnicity/Gender Supplies and Contractual Services Contracts under $500,000 Contracts $25,000 and under African Americans Yes Yes Asian Americans Yes Yes Hispanic Americans ** ** Native Americans No No Minority Business Enterprises Yes Yes Women Business Enterprises Yes ** Minority and Women Business Enterprises Yes Yes Yes = The analysis is statistically significant. No = The analysis is not statistically significant or there are too few available firms to test statistical significance. (**) = The analysis does not statistically test the overutilization of M/WBEs. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 8-1 CHAPTER 8: SUBCONTRACTOR SUBCONTRACTOR SUBCONTRACTOR SUBCONTRACTOR DISPARITY ANALYSISDISPARITY ANALYSISDISPARITY ANALYSISDISPARITY ANALYSIS I.I.I.I. INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION The objective of this chapter is to determine the levels at which minority and woman- owned business enterprise (M/WBE) subcontractors are utilized on Metropolitan St. Louis Sewer District (MSD) contracts. A detailed discussion of the statistical procedures for conducting a disparity analysis is set forth in Chapter 7: Prime Contractor Disparity Analysis. The same analytical procedures are used to perform the subcontractor disparity analysis. Under a fair and equitable system of awarding subcontracts, the proportion of subcontractors and subcontract dollars awarded to M/WBEs should be relatively close to the proportion of available M/WBEs1 in the relevant market area. If the ratio of utilized M/WBE subcontractors to available M/WBE subcontractors is less than one, a statistical test is conducted to calculate the probability of observing the empirical disparity ratio or any event which is less probable.2 Croson states that an inference of discrimination can be made prima facie if the disparity is statistically significant. Under the Croson model, Non-Minority Male business enterprises are not subjected to a statistical test. 1 Availability is defined as the number of willing and able businesses. The methodology for determining willing and able businesses is detailed in Chapter 6. 2 When conducting statistical tests, a confidence level must be established as a gauge for the level of certainty that an observed occurrence is not due to chance. It is important to note that a 100 percent confidence level or a level of absolute certainty can never be obtained in statistics. A 95 percent confidence level is considered by the courts to be an acceptable level in determining whether an inference of discrimination can be made. Thus, the data analyzed here was done within the 95 percent confidence level. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 8-2 II.II.II.II. DISPARITY ANALYSISDISPARITY ANALYSISDISPARITY ANALYSISDISPARITY ANALYSIS As detailed in Chapter 4: Subcontractor Utilization Analysis, extensive efforts were undertaken to obtain subcontractor records for MSD’s building construction, non- building construction, engineering professional services, and non-engineering professional services contracts. The disparity analysis was performed on subcontracts issued between May 1, 2010 and January 31, 2012. The subcontract disparity findings in the four industries under consideration are summarized below. The outcomes of the statistical analyses are presented in the “Disparity” column of the tables. There are ethnic groups for which the statistical test could not be performed due to too few available firms. A description of the statistical outcomes in the disparity tables are presented below in Table 8.01. Table 8.01: Statistical Outcome Descriptions P-Value Outcome Definition of P-Value Outcome < .05 * The underutilization is statistically significant not significant The analysis is not statistically significant. ---- There are too few available firms to test statistical significance. ** The statistical test is not performed for the overutilization of DBEs or the underutilization of Non-Minority Males < .05 † The overutilization is statistically significant III.III.III.III. DISPARITY ANALYSIS: ALL SUBCONTRACTS, DISPARITY ANALYSIS: ALL SUBCONTRACTS, DISPARITY ANALYSIS: ALL SUBCONTRACTS, DISPARITY ANALYSIS: ALL SUBCONTRACTS, BY INDUSTRYBY INDUSTRYBY INDUSTRYBY INDUSTRY A.A.A.A. Building Construction Building Construction Building Construction Building Construction SubcontractsSubcontractsSubcontractsSubcontracts The disparity analysis of building construction subcontracts is described below and depicted in Table 8.02 and Chart 8.01. African American Businesses represent 28.50 percent of the available building construction businesses and received 8.04 percent of the dollars for building construction subcontracts. This underutilization is statistically significant. Asian American Businesses represent 0.72 percent of the available building construction businesses and received none of the dollars for building construction subcontracts. There are too few Asian American businesses to test the statistical significance of this underutilization. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 8-3 Hispanic American Businesses represent 1.21 percent of the available building construction businesses and received none of the dollars for building construction subcontracts. This underutilization is statistically significant. Native American Businesses represent 0.24 percent of the available building construction businesses and received 0.12 percent of the dollars for building construction subcontracts. There are too few Native American businesses to test the statistical significance of this underutilization. Minority Business Enterprises represent 30.68 percent of the available building construction businesses and received 8.16 percent of the dollars for building construction subcontracts. This underutilization is statistically significant. Women Business Enterprises represent 10.87 percent of the available building construction businesses and received 12.37 percent of the dollars for building construction subcontracts. This analysis does not statistically test the overutilization of M/WBEs. Minority and Women Business Enterprises represent 41.55 percent of the available building construction businesses and received 20.35 percent of the dollars for building construction subcontracts. This underutilization is statistically significant. Non-Minority Male Business Enterprises represent 58.45 percent of the available building construction businesses and received 79.47 percent of the dollars for building construction subcontracts. This overutilization is statistically significant. Mason Tillman Associates, Ltd. February 2013 Draft Metropolitan St. Louis Sewer District Disparity Study 8-4 Table 8.02: Disparity Analysis: Building Construction Subcontracts, May 1, 2010 to January 31, 2012 Ethnicity Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African Americans $7,805,102 8.04%28.50%$27,657,454 -$19,852,352 0.28 < .05 * Asian Americans $0 0.00%0.72%$703,156 -$703,156 0.00 ---- Hispanic Americans $0 0.00%1.21%$1,171,926 -$1,171,926 0.00 < .05 * Native Americans $112,443 0.12%0.24%$234,385 -$121,942 0.48 ---- Caucasian Females $12,000,905 12.37%10.87%$10,547,334 $1,453,571 1.14 ** Non-Minority Males $77,117,024 79.47%58.45%$56,721,219 $20,395,805 1.36 < .05 † TOTAL $97,035,474 100.00%100.00%$97,035,474 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African American Females $1,588,000 1.64%2.42%$2,343,852 -$755,852 0.68 not significantAfrican American Males $6,217,102 6.41%26.09%$25,313,602 -$19,096,500 0.25 < .05 * Asian American Females $0 0.00%0.00%$0 $0 ---- ---- Asian American Males $0 0.00%0.72%$703,156 -$703,156 0.00 ---- Hispanic American Females $0 0.00%0.00%$0 $0 ---- ---- Hispanic American Males $0 0.00%1.21%$1,171,926 -$1,171,926 0.00 < .05 * Native American Females $0 0.00%0.24%$234,385 -$234,385 0.00 ---- Native American Males $112,443 0.12%0.00%$0 $112,443 ---- ** Caucasian Females $12,000,905 12.37%10.87%$10,547,334 $1,453,571 1.14 ** Non-Minority Males $77,117,024 79.47%58.45%$56,721,219 $20,395,805 1.36 < .05 † TOTAL $97,035,474 100.00%100.00%$97,035,474 Minority and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Females $1,588,000 1.64%2.66%$2,578,237 -$990,237 0.62 not significantMinority Males $6,329,545 6.52%28.02%$27,188,684 -$20,859,138 0.23 < .05 * Caucasian Females $12,000,905 12.37%10.87%$10,547,334 $1,453,571 1.14 ** Non-Minority Males $77,117,024 79.47%58.45%$56,721,219 $20,395,805 1.36 < .05 † TOTAL $97,035,474 100.00%100.00%$97,035,474 Minority and Females Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Business Enterprises $7,917,545 8.16%30.68%$29,766,921 -$21,849,376 0.27 < .05 * Women Business Enterprises $12,000,905 12.37%10.87%$10,547,334 $1,453,571 1.14 ** Minority and Women Business Enterprises $19,918,450 20.53%41.55%$40,314,255 -$20,395,805 0.49 < .05 * Non-Minority Male Business Enterprises $77,117,024 79.47%58.45%$56,721,219 $20,395,805 1.36 < .05 † ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) denotes that this study does not test statistically the overutilization of M/WBEs or the underutilization of non-minority males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. Mason Tillman Associates, Ltd. February 2013 Draft Metropolitan St. Louis Sewer District Disparity Study 8-5 Chart 8.01: Disparity Analysis: Building Construction Subcontracts, May 1, 2010 to January 31, 2012 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 8-6 1. Non-Building Construction Subcontracts The disparity analysis of non-building construction subcontracts is described below and depicted in Table 8.03 and Chart 8.02. African American Businesses represent 17.3 percent of the available non-building construction businesses and received 11.97 percent of the dollars for non-building construction subcontracts. This underutilization is statistically significant. Asian American Businesses represent 0.63 percent of the available non-building construction businesses and received none of the dollars for non-building construction subcontracts. There are too few available firms to test the statistical significance of this underutilization. Hispanic American Businesses represent 0.63 percent of the available non-building construction businesses and received 0.57 percent of the dollars for non-building construction subcontracts. There are too few available firms to test the statistical significance of this underutilization. Native American Businesses represent none of the available non-building construction businesses and received none of the dollars for non-building construction subcontracts. There are too few available firms to test the statistical significance of this underutilization. Minority Business Enterprises represent 18.55 percent of the available non-building construction businesses and received 12.54 percent of the dollars for non-building construction subcontracts. This underutilization is statistically significant. Women Business Enterprises represent 11.95 percent of the available non-building construction businesses and received 15.05 percent of the dollars for non-building construction subcontracts. This analysis does not test statistically the overutilization of M/WBEs. Minority and Women Business Enterprises represent 30.5 percent of the available non- building construction businesses and received 27.59 percent of the dollars for non- building construction subcontracts. This underutilization is not statistically significant. Non-Minority Male Business Enterprises represent 69.5 percent of the available non- building construction businesses and received 72.41 percent of the dollars for non- building construction subcontracts. This overutilization is not statistically significant. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 8-7 Table 8.03: Disparity Analysis: Non-Building Construction Subcontracts, May 1, 2010 to January 31, 2012 Ethnicity Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African Americans $5,073,322 11.97%17.30% $7,330,465 -$2,257,1430.69 < .05 * Asian Americans $0 0.00%0.63% $266,562 -$266,5620.00 ---- Hispanic Americans $241,113 0.57%0.63% $266,562 -$25,4490.90 ---- Native Americans $0 0.00%0.00% $0 $0---- ---- Caucasian Females $6,377,218 15.05%11.95% $5,064,685 $1,312,5341.26 ** Non-Minority Males $30,691,762 72.41%69.50% $29,455,141 $1,236,6211.04 not significant TOTAL $42,383,416 100.00%100.00% $42,383,416 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African American Females $1,063,870 2.51%2.20% $932,968 $130,9021.14 ** African American Males $4,009,452 9.46%15.09% $6,397,497 -$2,388,0450.63 < .05 * Asian American Females $0 0.00%0.00% $0 $0---- ---- Asian American Males $0 0.00%0.63% $266,562 -$266,5620.00 ---- Hispanic American Females $0 0.00%0.00% $0 $0---- ---- Hispanic American Males $241,113 0.57%0.63% $266,562 -$25,4490.90 ---- Native American Females $0 0.00%0.00% $0 $0---- ---- Native American Males $0 0.00%0.00% $0 $0---- ---- Caucasian Females $6,377,218 15.05%11.95% $5,064,685 $1,312,5341.26 ** Non-Minority Males $30,691,762 72.41%69.50% $29,455,141 $1,236,6211.04 not significant TOTAL $42,383,416 100.00%100.00% $42,383,416 Minority and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Females $1,063,870 2.51%2.20% $932,968 $130,9021.14 ** Minority Males $4,250,565 10.03%16.35% $6,930,621 -$2,680,0560.61 < .05 * Caucasian Females $6,377,218 15.05%11.95% $5,064,685 $1,312,5341.26 ** Non-Minority Males $30,691,762 72.41%69.50% $29,455,141 $1,236,6211.04 not significant TOTAL $42,383,416 100.00%100.00% $42,383,416 Minority and Females Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Business Enterprises $5,314,435 12.54%18.55% $7,863,590 -$2,549,1540.68 < .05 * Women Business Enterprises $6,377,218 15.05%11.95% $5,064,685 $1,312,5341.26 ** Minority and Women Business Enterprises $11,691,654 27.59%30.50% $12,928,275 -$1,236,6210.90 not significantNon-Minority Male Business Enterprises $30,691,762 72.41%69.50% $29,455,141 $1,236,6211.04 not significant ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) denotes that this study does not test statistically the overutilization of M/WBEs or the underutilization of non-minority males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 8-8 Chart 8.02: Disparity Analysis: Non-Building Construction Subcontracts, May 1, 2010 to January 31, 2012 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 8-9 2. Engineering Professional Services Subcontracts The disparity analysis of all engineering professional services subcontracts is described below and depicted in Table 8.04 and Chart 8.03. African American Businesses represent 17.99 percent of the available engineering professional services businesses and received 37.33 percent of the dollars for engineering professional services subcontracts. This analysis does not test statistically the overutilization of M/WBEs. Asian American Businesses represent 5.29 percent of the available engineering professional services businesses and received 19.26 percent of the dollars for engineering professional services subcontracts. This analysis does not test statistically the overutilization of M/WBEs. Hispanic American Businesses represent 2.65 percent of the available engineering professional services businesses and received 5.90 percent of the dollars for engineering professional services subcontracts. This analysis does not test statistically the overutilization of M/WBEs. Native American Businesses represent 1.06 percent of the available engineering professional services businesses and received none of the engineering professional services subcontracts. This underutilization is not statistically significant. Minority Business Enterprises represent 26.98 percent of the available engineering professional services businesses and received 62.49 percent of the dollars for engineering professional services subcontracts. This analysis does not test statistically the overutilization of M/WBEs. Women Business Enterprises represent 19.05 percent of the available engineering professional services businesses and received 21.54 percent of the dollars for engineering professional services subcontracts. This analysis does not test statistically the overutilization of M/WBEs. Minority and Women Business Enterprises represent 46.03 percent of the available engineering professional services businesses and received 84.02 percent of the dollars for engineering professional services subcontracts. This analysis does not test statistically the overutilization of M/WBEs. Non-Minority Male Business Enterprises represent 53.97 percent of the available engineering professional services businesses and received 15.98 percent of the dollars for engineering professional services subcontracts. This analysis does not test statistically the underutilization of non-minority males. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 8-10 Table 8.04: Disparity Analysis: Engineering Professional Services Subcontracts, May 1, 2010 to January 31, 2012 Ethnicity Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African Americans $935,115 37.33% 17.99% $450,656 $484,459 2.08 ** Asian Americans $482,553 19.26% 5.29% $132,546 $350,007 3.64 ** Hispanic Americans $147,700 5.90% 2.65% $66,273 $81,427 2.23 ** Native Americans $0 0.00% 1.06% $26,509 -$26,509 0.00 not significant Caucasian Females $539,522 21.54% 19.05% $477,165 $62,357 1.13 ** Non-Minority Males $400,228 15.98% 53.97% $1,351,968 -$951,741 0.30 ** TOTAL $2,505,118 100.00% 100.00% $2,505,118 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African American Females $622,493 24.85% 5.29% $132,546 $489,947 4.70 ** African American Males $312,622 12.48% 12.70% $318,110 -$5,488 0.98 not significant Asian American Females $0 0.00% 2.12% $53,018 -$53,018 0.00 not significant Asian American Males $482,553 19.26% 3.17% $79,528 $403,025 6.07 ** Hispanic American Females $0 0.00% 0.00% $0 $0 ---- ---- Hispanic American Males $147,700 5.90% 2.65% $66,273 $81,427 2.23 ** Native American Females $0 0.00% 0.53% $13,255 -$13,255 0.00 ---- Native American Males $0 0.00% 0.53% $13,255 -$13,255 0.00 ---- Caucasian Females $539,522 21.54% 19.05% $477,165 $62,357 1.13 ** Non-Minority Males $400,228 15.98% 53.97% $1,351,968 -$951,741 0.30 ** TOTAL $2,505,118 100.00% 100.00% $2,505,118 Minority and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Females $622,493 24.85% 7.94% $198,819 $423,674 3.13 ** Minority Males $942,875 37.64% 19.05% $477,165 $465,710 1.98 ** Caucasian Females $539,522 21.54% 19.05% $477,165 $62,357 1.13 ** Non-Minority Males $400,228 15.98% 53.97% $1,351,968 -$951,741 0.30 ** TOTAL $2,505,118 100.00% 100.00% $2,505,118 Minority and Females Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Business Enterprises $1,565,368 62.49% 26.98% $675,984 $889,384 2.32 ** Women Business Enterprises $539,522 21.54% 19.05% $477,165 $62,357 1.13 ** Minority and Women Business Enterprises $2,104,890 84.02% 46.03% $1,153,149 $951,741 1.83 ** Non-Minority Male Business Enterprises $400,228 15.98% 53.97% $1,351,968 -$951,741 0.30 ** ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) denotes that this study does not test statistically the overutilization of M/WBEs or the underutilization of non-minority males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 8-11 Chart 8.03: Disparity Analysis: Engineering Professional Services Subcontracts, May 1, 2010 to January 31, 2012 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 8-12 3. Non-Engineering Professional Services Subcontracts The disparity analysis of all non-engineering professional services subcontracts is described below and depicted in Table 8.05 and Chart 8.04. African American Businesses represent 26.44 percent of the available non-engineering professional services businesses and received 59.18 percent of the dollars for non- engineering professional services subcontracts. This analysis does not test statistically the overutilization of M/WBEs. Asian American Businesses represent 4.98 percent of the available non-engineering professional services businesses and received none of the dollars for non-engineering professional services subcontracts. This underutilization is not statistically significant. Hispanic American Businesses represent 2.68 percent of the available non-engineering professional services businesses and received none of the dollars for non-engineering professional services subcontracts. This underutilization is not statistically significant. Native American Businesses represent 0.38 percent of the available non-engineering professional services businesses and received none of the non-engineering professional services subcontracts. There were too few firms available to determine statistical significance. Minority Business Enterprises represent 34.48 percent of the available non-engineering professional services businesses and received 59.18 percent of the dollars for non- engineering professional services subcontracts. This analysis does not test statistically the overutilization of M/WBEs. Women Business Enterprises represent 27.2 percent of the available non-engineering professional services businesses and received 39.02 percent of the dollars for non- engineering professional services subcontracts. This analysis does not test statistically the overutilization of M/WBEs. Minority and Women Business Enterprises represent 61.69 percent of the available non- engineering professional services businesses and received 98.21 percent of the dollars for non-engineering professional services subcontracts. This analysis does not test statistically the overutilization of M/WBEs. Non-Minority Male Business Enterprises represent 38.31 percent of the available non- engineering professional services businesses and received 1.79 percent of the dollars for non-engineering professional services subcontracts. This analysis does not test statistically the underutilization of non-minority males. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 8-13 Table 8.05: Disparity Analysis: Non-Engineering Professional Services Subcontracts, May 1, 2010 to January 31, 2012 Ethnicity Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African Americans $695,693 59.18% 26.44% $310,755 $384,938 2.24 ** Asian Americans $0 0.00% 4.98% $58,548 -$58,548 0.00 not significant Hispanic Americans $0 0.00% 2.68% $31,526 -$31,526 0.00 not significant Native Americans $0 0.00% 0.38% $4,504 -$4,504 0.00 ---- Caucasian Females $458,681 39.02% 27.20% $319,762 $138,919 1.43 ** Non-Minority Males $21,091 1.79% 38.31% $450,370 -$429,279 0.05 ** TOTAL $1,175,465 100.00% 100.00% $1,175,465 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African American Females $8,900 0.76% 9.96% $117,096 -$108,196 0.08 not significant African American Males $686,793 58.43% 16.48% $193,659 $493,134 3.55 ** Asian American Females $0 0.00% 1.53% $18,015 -$18,015 0.00 not significant Asian American Males $0 0.00% 3.45% $40,533 -$40,533 0.00 not significant Hispanic American Females $0 0.00% 0.77% $9,007 -$9,007 0.00 ---- Hispanic American Males $0 0.00% 1.92% $22,518 -$22,518 0.00 not significant Native American Females $0 0.00% 0.00% $0 $0 ---- ---- Native American Males $0 0.00% 0.38% $4,504 -$4,504 0.00 ---- Caucasian Females $458,681 39.02% 27.20% $319,762 $138,919 1.43 ** Non-Minority Males $21,091 1.79% 38.31% $450,370 -$429,279 0.05 ** TOTAL $1,175,465 100.00% 100.00% $1,175,465 Minority and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Females $8,900 0.76% 12.26% $144,118 -$135,218 0.06 not significant Minority Males $686,793 58.43% 22.22% $261,214 $425,578 2.63 ** Caucasian Females $458,681 39.02% 27.20% $319,762 $138,919 1.43 ** Non-Minority Males $21,091 1.79% 38.31% $450,370 -$429,279 0.05 ** TOTAL $1,175,465 100.00% 100.00% $1,175,465 Minority and Females Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value Minority Business Enterprises $695,693 59.18% 34.48% $405,333 $290,360 1.72 ** Women Business Enterprises $458,681 39.02% 27.20% $319,762 $138,919 1.43 ** Minority and Women Business Enterprises $1,154,374 98.21% 61.69% $725,095 $429,279 1.59 ** Non-Minority Male Business Enterprises $21,091 1.79% 38.31% $450,370 -$429,279 0.05 ** ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) denotes that this study does not test statistically the overutilization of M/WBEs or the underutilization of non-minority males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 8-14 Chart 8.04: Disparity Analysis: Non-Engineering Professional Services Subcontracts, May 1, 2010 to January 31, 2012 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 8-15 IV.IV.IV.IV. SUBCONTRACTOR DISPARITY SUMMARYSUBCONTRACTOR DISPARITY SUMMARYSUBCONTRACTOR DISPARITY SUMMARYSUBCONTRACTOR DISPARITY SUMMARY As indicated in Table 8.06, disparity was found for African American and Hispanic American building construction subcontractors. Disparity was also found for African American non-building construction subcontractors. Table 8.06: Subcontractor Disparity Summary, May 1, 2010 to January 31, 2012 Ethnicity / Gender Building Construction Non- Building Construction Engineering Professional Services Non- Engineering Professional Services African Americans Yes Yes ** ** Asian Americans No No ** No Hispanic Americans Yes No ** No Native Americans No No No No Minority Business Enterprises Yes Yes ** ** Women Business Enterprises ** ** ** ** Minority and Women Business Enterprises Yes No ** ** Yes = The analysis is statistically significant. No = The analysis is not statistically significant or there are too few available firms to test statistical significance. ** = The analysis does not statistically test the overutilization of M/WBEs. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-1 CHAPTER 9: REGRESSION ANALYSISREGRESSION ANALYSISREGRESSION ANALYSISREGRESSION ANALYSIS I.I.I.I. INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION Private sector business practices which are not subject to government minority and woman-owned business enterprise (M/WBE) or disadvantaged business enterprise (DBE) requirements are indicators of marketplace conditions which could affect the formation and growth of M/WBEs. Concrete Works of Colorado v. City of Denver1 (Concrete Works II) set forth a framework for considering a passive participant model for an analysis of discrimination in private sector business practices. In accordance with Concrete Works II, regression analyses were conducted to examine three outcome variables—business ownership rates, business earnings, and business loan approval. Each regression analysis compared minority group members2 and Caucasian females to Caucasian males by controlling for race and gender-neutral explanatory variables such as age, education, marital status, and access to capital. The impact of the explanatory variables on the outcome variables is described in this chapter. The U.S. Census American Community Survey Public Use Microdata Sample (PUMS) data was used to compare minority and Caucasian Females’ probability of owning a business to the probability of Caucasian Males owning a business. Logistic regression was used to determine if race and gender have a statistically significant effect on the probability of business ownership. The PUMS data was also used to compare the business earnings of M/WBEs to Caucasian Male-owned Businesses. Ordinary Least Squares (OLS) analysis was utilized to analyze the PUMS data for disparities in business earnings after controlling for race and gender-neutral factors. The Federal Reserve Board’s National Survey of Small Business Finances (NSSBF) dataset was used to compare M/WBEs’ business loan approval probabilities to Caucasian Male-owned Businesses’ loan approval probabilities, while controlling for other business explanatory variables. 1 Concrete Works of Colo., Inc. v. City of Denver, 86 F. Supp. 2d 1042, 1073 (D. Colo. 2000), rev'd on other grounds, 321 F.3d 950 (10th Cir. 2003), cert. denied, 540 U.S. 1027 (2003). 2 Minority group members include both males and females. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-2 The applicable limits of the private sector discrimination findings are set forth in Builders Association of Greater Chicago v. City of Chicago3 (City of Chicago), where the court established that even when there is evidence of private sector discrimination, the findings cannot be used as the factual predicate for a government sponsored, race-conscious M/WBE or DBE program unless there is a nexus between the private sector data and the public agency actions. The private sector findings, however, can be used to develop race- neutral programs to address barriers to the formation and development of M/WBEs. Given the case law, caution must be exercised in the interpretation and application of the regression findings. Case law regarding the application of private sector discrimination is discussed below in detail. II.II.II.II. LEGAL ANALYSISLEGAL ANALYSISLEGAL ANALYSISLEGAL ANALYSIS A.A.A.A. Passive DiscriminationPassive DiscriminationPassive DiscriminationPassive Discrimination The controlling legal precedent set forth in the 1989 City of Richmond v. J.A. Croson Co.4 decision authorized state and local governments to remedy discrimination in the award of subcontracts by its prime contractors on the grounds that the government cannot be a “passive participant” in such discrimination. In January 2003, Concrete Works II and City of Chicago extended the private sector analysis to the investigation of discriminatory barriers that M/WBEs encountered in the formation and development of businesses and their consequence for state and local remedial programs. Concrete Works II set forth a framework for considering such private sector discrimination as a passive participant model for analysis. The obligation of presenting an appropriate nexus between the government remedy and the private sector discrimination was addressed in City of Chicago. The Tenth Circuit Court decided in Concrete Works II that business activities conducted in the private sector, if within the government’s market area, are also appropriate areas to explore the issue of passive participation. However, the appropriateness of the City of Denver’s remedy, given the finding of private sector discrimination, was not at issue before the court. The question before the court was whether sufficient facts existed to determine if the private sector business practices under consideration constituted discrimination. For technical legal reasons5 the court did not examine whether a consequent public sector remedy, i.e., one involving a goal requirement on the City of Denver’s contracts, was “narrowly tailored” or otherwise supported by the City’s private sector findings of discrimination. 3 Builders Association of Greater Chicago v. City of Chicago, 298 F.Supp.2d 725 (N.D. III. 2003). 4 488 U.S. 469 (1989). 5 Plaintiff had not preserved the issue on appeal. Therefore, it was no longer part of the case. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-3 B.B.B.B. Narrow TailoringNarrow TailoringNarrow TailoringNarrow Tailoring The question of whether a particular public sector remedy is narrowly tailored when it is based solely on business practices within the private sector was at issue in City of Chicago. City of Chicago, decided ten months after Concrete Works II, found that certain business practices constituted discrimination against minorities in the Chicago market area. However, the District Court did not find the City of Chicago’s M/WBE subcontracting goal to be a remedy “narrowly tailored” to address the documented private discriminatory business practices that had been discovered within the City’s market area. The court explicitly stated that certain discriminatory business practices documented by regression analyses constituted private sector discrimination. It is also notable that the documented discriminatory business practices reviewed by the court in the City of Chicago were similar to those reviewed in Concrete Works. Notwithstanding the fact that discrimination in the City of Chicago’s market area was documented, the court determined that the evidence was insufficient to support the City’s race-based subcontracting goals. The court ordered an injunction to invalidate the City of Chicago’s race-based program. Note the following statements from that opinion: Racial preferences are, by their nature, highly suspect, and they cannot be used to benefit one group that, by definition, is not either individually or collectively the present victim of discrimination. There may well also be (and the evidence suggests that there are) minorities and women who do not enter the industry because they perceive barriers to entry. If there is none, and their perception is in error, that false perception cannot be used to provide additional opportunities to M/WBEs already in the market to the detriment of other firms who, again by definition, neither individually nor collectively are engaged in discriminatory practices.6 Given these distortions of the market and these barriers, is the City’s program narrowly tailored as a remedy? It is here that I believe the program fails. There is no "meaningful individualized review" of M/WBEs, Gratz v. Bollinger, 539 U.S. 244, 156 L. Ed. 2d 257, 123 S.Ct. 2411, 2431 (2003) (Justice O’Connor concurring). Chicago’s program is more expansive and more rigid than plans that have been sustained by the courts. It has no termination date, nor has it any means for determining a termination date. The ‘graduation’ revenue amount is very high, $27,500,000, and very few have graduated. There is no net worth threshold. A third generation Japanese-American from a wealthy family, and with a graduate degree from MIT, qualifies (and an Iraq immigrant does not). Waivers are rarely or never granted on 6 Builders Association of Greater Chicago v. City of Chicago, 298 F.Supp.2d 725 (N.D. III. 2003). Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-4 construction contracts, but “regarding the availability of waivers is of particular importance... a ‘rigid numerical quota’ particularly disserves the cause of narrow tailoring” Adarand Constructors v. Slater, supra, at 1177. The City’s program is “rigid numerical quota,” a quota not related to the number of available, willing and able firms but to concepts of how many of those firms there should be. Formalistic points did not survive strict scrutiny in Gratz v. Bollinger, supra, and formalistic percentages cannot survive scrutiny.7 The federal circuit appellant decision in Rothe Development Corp. v. U.S. Department of Defense8 (Rothe) involved the issue of capacity. There were two earlier appeals prior to the appellant court’s holding in November 2008 that the Department of Defense’s (DOD) small disadvantaged business program was unconstitutional on its face. One of the arguments proffered by Rothe on appeal was that the district court erred by relying on six disparity studies which failed to establish that DOD played any role in the discriminatory exclusion of minority-owned contractors. The court acknowledged that two of the studies relied on by congress attempted to deal with capacity. The New York City study limited prime contracts to those valued at $1 million and under and the firms in the Dallas study had a “demonstrated capacity to win large competitively bid contracts.” Thus, the court concluded that several studies that were relied upon demonstrated the firms had the capacity to perform a contract. The court expressed an additional concern as to whether the firms could do more than one contract a time and deduced that a regression analysis was recommended as the corrective for going forward.9 Caution should also be exercised when determining which minority or gender group is appropriate for race-conscious or gender-conscious remedies. For an M/WBE program to be narrowly tailored, there must be a statistical finding of underutilization of minority subcontractors. Where the underutilization of a minority group is not found to be statistically significant, the minority group should not be included in race-conscious remedies. 10 7 Id. 8 545 F.3d 1023 (Fed. Cir. 2008). 9 Id. 10 H.B. Rowe Company v. Tippett, 615 F.3d 233, Court of Appeals, Fourth Circuit (N.C.), July 22, 2010 (NO. 09-1050). The Rowe Court also ruled that statistical evidence of overutilization of women business enterprises that is not statistically significant is sufficient factual predicate for gender-based remedies. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-5 C.C.C.C. ConclusionConclusionConclusionConclusion As established in City of Chicago, private sector discrimination cannot be used as the factual basis for a government sponsored, race-based M/WBE program without a nexus to the government's actions. Therefore, the disparity findings that might be revealed in the regression analyses are not sufficient factual predicate for a race-based M/WBE Program by the Metropolitan St. Louis Sewer District (MSD) since a nexus cannot be established between MSD and the private sector data. These economic indicators documented in the regression analyses, albeit not a measure of passive discrimination, are illustrative of private sector discrimination and can support the MSD-sponsored, race- neutral programs. III.III.III.III. REGRESSION ANALYSIS METHODOLOGYREGRESSION ANALYSIS METHODOLOGYREGRESSION ANALYSIS METHODOLOGYREGRESSION ANALYSIS METHODOLOGY Regression analysis is the methodology employed to ascertain whether there are private sector economic indicators of discrimination in MSD’s market area that could impact the formation and development of M/WBEs. The industries of focus for the three regression analyses are construction, professional services, and goods and other services. Due to sample size issues, the professional services industry includes architecture and engineering businesses. These three industries most closely represent the four industries studied in the Metropolitan St. Louis Sewer District Disparity Study (Study) while allowing for inconsistencies between the PUMS and NSSBF datasets. As noted, three separate regression analyses are used. They are the Business Ownership Analysis, the Earnings Disparity Analysis, and the Business Loan Approval Analysis. All analyses takes into consideration race and gender-neutral factors such as age, education, and creditworthiness in assessing whether the explanatory factors examined are disproportionately affecting minorities and females when compared to similarly situated Caucasian Males. IV.IV.IV.IV. DATASETS ANALYZEDDATASETS ANALYZEDDATASETS ANALYZEDDATASETS ANALYZED The 2008 through 2010 PUMS datasets produced by the United States Census Bureau were compiled and used to analyze business ownership and earnings disparities within the Study’s market area. The market area consists of the City of St. Louis and St. Louis County. The data were identified using Public Use Microdata Areas (PUMA), a variable within the PUMS dataset that reports data for counties and independent cities within states. The dataset includes information on personal profile, industry, work characteristics, and family structure. The PUMS data allowed for an analysis by an individual’s race and gender. The 2003 NSSBF was utilized to examine business loan approval rates in the Business Loan Approval Analysis. The NSSBF dataset contains observations for business and Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-6 owner characteristics including the business owner’s credit and resources, and the business’s credit and financial health. The NSSBF records the geographic location of the business by Census Division, instead of city, county, or state. While the NSSBF data is available by Census Division, the subdivision containing the State of Missouri or the West North Central Division11 lacked sufficient data to perform an accurate regression analysis by minority status, gender, and industry. Therefore, the sample was expanded to the entire United States. The 2003 NSSBF contains the most recent available data on access to credit for the West North Central Division. The dataset allowed for an analysis of all minority groups combined by industry. V.V.V.V. REGRESSION MODELS DEFINEDREGRESSION MODELS DEFINEDREGRESSION MODELS DEFINEDREGRESSION MODELS DEFINED A.A.A.A. Business Ownership AnalysisBusiness Ownership AnalysisBusiness Ownership AnalysisBusiness Ownership Analysis The Business Ownership Analysis examines the relationship between the probability of being a business owner and independent socio-economic variables. Business ownership, the dependent variable, includes business owners of incorporated and non-incorporated firms. The business ownership variable only utilizes two values. A value of "1" indicates that a person is a business owner, whereas a value of "0" indicates that a person is not a business owner. When the dependent variable is defined this way, it is called a binary variable.12 In this case, a logistic regression model is utilized to predict the probability of business ownership using independent socio-economic variables. Three logistic models are run to predict the probability of business ownership in the construction, professional services, and supplies and contractual services industries. Categories of the independent variables analyzed include educational level, citizenship status, personal characteristics, and race/gender. In the tables below, a finding of disparity is denoted by an asterisk (*) when the independent variable has a p-value at or below .05. A finding of disparity indicates that there is a non-random relationship between the probability of owning a business and the independent variable. Tables of regression results indicate the sign of each variable’s coefficient from the regression output. If the coefficient sign is positive, it indicates that there is a positive relationship between the dependent variable and the independent variable. For example, having an advanced degree is positively related to the probability of being a business owner, holding all other variables constant. If the coefficient sign for the independent variable is negative, this implies an inverse relationship between the dependent variable and the independent variable. For instance, if Caucasian Females 11 The West North Central, a subset of the Midwest Region, includes North Dakota, South Dakota, Nebraska, Kansas, Missouri, Iowa, and Minnesota. 12 In this case, the standard Ordinary Least Squares (OLS) Regression model cannot be employed and a logistic model is utilized to predict the probability of business ownership. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-7 have a negative coefficient, then they have a lower probability of owning a business, holding all other variables constant. For each of the three industries, the logistic regression is used to identify the probability that an individual owns a business given his or her background including race, gender, and race and gender-neutral factors. The dependent variable in this model is binary, coded as "1" for individuals who are self-employed and "0" for individuals who are not self-employed.13 Table 9.01 presents the independent variables used for the Business Ownership Analysis. Table 9.01: Independent Variables used in the Business Ownership Analysis Personal Characteristics Educational Attainment Race Gender Age Age Squared Home Owner Home Value Finances Speaking English at Home Children Under The Age of Six Marital Status Bachelor’s Degree Advanced Degree African American Asian American Hispanic American Native American Other Minority14 Female B.B.B.B. Earnings Disparity AnalysisEarnings Disparity AnalysisEarnings Disparity AnalysisEarnings Disparity Analysis The Earnings Disparity Analysis examines the relationship between annual self- employment income and independent socio-economic variables. Wages are defined as the individual’s total dollar income earned in the previous twelve months. Categories of independent socio-economic variables analyzed include educational level, citizenship status, personal characteristics, business characteristics, and race/gender. All of the independent variables are regressed against wages in an Ordinary Least Squares (OLS) regression model. The OLS model estimates a linear relationship between the independent variables and the dependent variable. This multivariate regression model estimates a line similar to the standard y = mx+b format but with additional independent variables. The mathematical purpose of a regression analysis is to estimate a best fit line for the model and assess which findings are statistically significant. 13 Note: The terms “business owner” and “self-employed” are used interchangeably throughout the chapter. 14 Other Minority includes individuals who belong to two or more racial groups. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-8 In the tables below, a finding of disparity is denoted by an asterisk (*) when the independent variable has a p-value at or below .05. A finding of disparity indicates that there is a non-random relationship between wages and the independent variable. Tables of regression results indicate the sign of each variable's coefficient from the regression output. If the coefficient sign is positive, it means there is a positive relationship between the dependent variable and the independent variable. For example, if age is positively related to wages, this implies that older business owners tend to have higher business earnings, holding all other variables constant. If the coefficient sign for the independent variable is negative, this implies an inverse relationship between the dependent variable and the independent variable. For example, if being Caucasian Female is negatively related to wages, then business owners who are Caucasian Female tend to have lower business earnings. An OLS regression analysis is used to assess the presence of business earning disparities. OLS regressions have been conducted separately for each industry. Table 9.02 presents the independent variables used for the Earnings Disparity Analysis.15 Table 9.02: Independent Variables Used for Earnings Disparity Analysis Personal Characteristics Educational Attainment Race Gender Age Age Squared Business Type Home Owner Home Value Finances Speaking English at Home Children Under The Age of Six Marital Status Bachelor's Degree Advanced Degree African American Asian American Native American Hispanic American Other Minority Female 15 If an independent variable is a binary variable, it will be coded as "1" if the individual has that variable present and "0" if otherwise (i.e. for the Hispanic American variable, it is coded as "1" if the individual is Hispanic American and "0" if otherwise). If an independent variable is a continuous variable, a value will be used (i.e. one’s age can be labeled as 35). Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-9 C.C.C.C. Business Loan Approval AnalysisBusiness Loan Approval AnalysisBusiness Loan Approval AnalysisBusiness Loan Approval Analysis The Business Loan Approval Analysis examines the relationship between the probability of obtaining a business loan and variables related to socio-economic factors and business characteristics. The model is an ordered logistic model where the dependent variable is the reported probability of obtaining a business loan. The NSSBF data was collected by the U.S. Federal Reserve. The NSSBF collects information on small businesses (fewer than 500 employees) in the United States such as owner characteristics, firm size, use of financial services, and the income and balance sheets of the firm. The 2003 NSSBF dataset is the most recently released dataset. In the tables below, a finding of disparity is denoted by an asterisk (*) when the independent variable has a p-value at or below .05. A finding of disparity indicates that there is a non-random relationship between obtaining a business loan and each independent variable. The tables containing the regression results also indicate the sign of each variable's coefficient from the regression output. If the coefficient sign is positive, it means there is a positive relationship between the independent and dependent variables. For example, if having a bachelor’s degree has a positive coefficient, then business owners with a bachelor’s degree are more probable to obtain a business loan, holding all other variables constant. If the sign of the coefficient for the independent variable is negative, this implies an inverse relationship between the independent and dependent variables. For instance, if a business with a female owner has a negative coefficient, this implies an indirect relationship between a female owner and obtaining a business loan. Therefore, a business whose owner is female has a decreased probability of obtaining a business loan (or a higher probability of being denied a business loan). An ordered logistic regression is used to examine the factors that might explain loan approvals for the business owners. The dependent variable is a categorical variable where "2" denotes never being denied a business loan, "1" denotes sometimes being denied a business loan, and "0" denotes always being denied a business loan. 16 The independent variables describe three sets of factors: · Business owner’s minority and gender group classification · Business owner’s credit and resources · Business’ credit and financial health 16 An ordered logistic model could be used differently for this model by assessing the numbers: 1= always denied a loan, 2= sometimes denied a loan, and 3= never denied a loan. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-10 Table 9.03 presents the independent variables used for the Business Loan Approval Analysis. 17 Table 9.03: Independent Variables Used for Business Loan Approval Analysis Business Owner’s Characteristics Business’s Credit and Financial Health Race Gender Bachelor’s Degree Advanced Degree Use of Personal Credit Card for Business Age of Business Capital Leases Vehicle Loans Stockholder Loans Location Credit Score Organization Type Total Mortgage Principal Owned Minority Caucasian Female It should be noted that, due to data constraints, not all variables could be included in each industry specification. For example, certain types of loans or the use of personal credit cards for business are more common in certain industries. Therefore, while the theoretical underpinnings of the model are applied uniformly for each industry, some of the independent variables may differ in each industry specification. 17 If an independent variable is a binary variable, it will be coded as "1" if the individual has that variable present and "0" if otherwise (i.e. for the Hispanic American variable, it is coded as "1" if the individual is Hispanic American and "0" if otherwise). If an independent variable is a continuous variable, a value will be used (i.e. one’s age can be labeled as 35). Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-11 VI.VI.VI.VI. FINDINGSFINDINGSFINDINGSFINDINGS A.A.A.A. Business Ownership AnalysisBusiness Ownership AnalysisBusiness Ownership AnalysisBusiness Ownership Analysis The business ownership variable is defined by the number of individuals reporting self- employment. The analysis considered incorporated and non-incorporated businesses. The data in this section comes from the City of St. Louis and St. Louis County. The geographic was specified using PUMA, a variable within the PUMS dataset that can specify the different counties within states.18 Previous studies have shown that many non-discriminatory factors such as education, age, and marital status are associated with self-employment. In this analysis, race and gender-neutral factors are combined with race and gender-specific factors in a logistic regression model to determine whether observed race or gender disparities are independent of the race and gender-neutral factors known to be associated with self- employment. It must be noted that many of these variables, such as having an advanced degree, while seeming to be race and gender-neutral, may in fact be correlated with race and gender. For example, if females are less probable to have advanced degrees, and the regression results show that individuals with advanced degrees are significantly more probable to own a business, females may be disadvantaged in multiple ways. First, females may have statistically significant lower business ownership rates; therefore, they face a direct disadvantage as a group. Second, they are indirectly disadvantaged as they tend to have less advanced degrees, which significantly increase one’s chances of owning a business. 18 The PUMS data were collected by the U.S. Census Bureau from a five percent sample of U.S. households. The observations were weighted to preserve the representative nature of the sample in relation to the population as a whole. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-12 1. Logistic Model Results for Construction Business Ownership Probabilities Table 9.04 presents the logistic regression results for the probability of owning a business in the construction industry, based on the 20 variables analyzed in this model. Table 9.04: Construction Industry Logistic Model Business Ownership Model Coefficient Significance Standard Error z z>|P-value| Age 0.052 0.037 1.400 0.162 Age Squared 0.000 0.000 -0.720 0.470 Bachelor degree (a) 0.037 0.201 0.180 0.854 Advanced degree -0.131 0.400 -0.330 0.743 Home Owner 0.249 0.259 0.960 0.336 Home Value 0.000 0.000 0.660 0.508 Interest and Dividends 0.000 0.000 1.070 0.283 Monthly Mortgage Payment 0.000 0.000 -0.030 0.975 Speaks English at home -0.408 0.351 -1.160 0.246 Having a child under the age of six -0.785 1.096 -0.720 0.474 Married -0.007 0.200 -0.040 0.971 Caucasian Female -0.846 * 0.334 -2.540 0.011 African American -0.180 0.283 -0.640 0.524 Asian American 1.451 * 0.741 1.960 0.050 Hispanic American -0.404 0.487 -0.830 0.407 Native American 0.698 1.283 0.540 0.586 Other Minority 0.259 0.855 0.300 0.762 Year 2009 (b) 0.051 0.209 0.240 0.807 Year 2010 0.119 0.216 0.550 0.583 Constant -2.500 * 0.881 -2.840 0.005 (a) For the variables Bachelor’s degree and advanced degree, the baseline variable is High School. (b) For the year variables, the baseline variable is year 2008. Note: z > |p-value| of less than 0.05 denote findings of statistical significance. * identifies statistically significant variables. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-13 The construction industry logistic regression results indicate:19 · The probability of construction business ownership is positively associated with increased age; older individuals are more probable to be business owners in the construction industry, but not at a statistically significant level. · Caucasian Females are significantly less probable to be business owners in the construction industry than Caucasian Males. · Asian Americans are significantly more probable to be business owners in the construction industry than Caucasian Males. · African Americans and Hispanic Americans are less probable than Caucasian Males to be business owners in the construction industry, but not at a significant level. 19 For the Business Ownership Analysis, the results are presented for age, education, race, and gender variables only. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-14 2. Logistic Model Results for Professional Services Business Ownership Probabilities Table 9.05 presents the logistic regression results for the probability of owning a business in the professional services industry using the 20 variables analyzed in this model. Table 9.05: Professional Services Logistic Model Business Ownership Model Coefficient Significance Standard Error z z>|P-value| Age 0.041 0.029 1.430 0.153 Age Squared 0.000 0.000 0.170 0.864 Bachelor degree (a) 0.071 0.169 0.420 0.673 Advanced degree 0.740 0.166 4.450 0.000 Home Owner 0.361 0.203 1.780 0.075 Home Value 0.000 * 0.000 2.060 0.040 Interest and Dividends 0.000 0.000 1.550 0.122 Monthly Mortgage Payment 0.000 0.000 1.780 0.076 Speaks English at home -0.252 0.227 -1.110 0.269 Having a child under the age of six 0.136 0.313 0.430 0.664 Married -0.075 0.146 -0.510 0.608 Caucasian Female -0.607 * 0.136 -4.480 0.000 African American -0.809 * 0.244 -3.320 0.001 Asian American -0.881 * 0.364 -2.420 0.015 Hispanic American 0.372 0.598 0.620 0.535 Native American (omitted) -- -- -- -- -- Other Minority -0.325 0.639 -0.510 0.611 Year 2009 (b) 0.020 0.145 0.140 0.890 Year 2010 -0.329 * 0.152 -2.170 0.030 Constant -3.815 * 0.759 -5.030 0.000 (a) For the variables Bachelor’s degree and advanced degree, the baseline variable is High School. (b) For the year variables, the baseline variable is year 2008. Note: z > |p-value| of less than 0.05 denote findings of statistical significance. Native Americans were omitted because of too few observations * identifies statistically significant variables. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-15 The professional services industry logistic regression results indicate: · The probability of business ownership is positively associated with an increase in age; older individuals are more probable to be business owners in the other professional services industry, but not at a significant level. · Caucasian Females are significantly less probable to be business owners in the professional services industry than Caucasian Males. · African Americans and Asian Americans are significantly less probable to be business owners in the professional services industry than Caucasian Males. · Other Minorities are less probable to be business owners in the professional services industry, but not at a significant level. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-16 3. Logistic Model Results for Supplies and Contractual Services Business Ownership Probabilities Table 9.06 presents the logistic regression results for the probability of owning a business in the other supplies and contractual services industry using the 20 variables analyzed in this model. Table 9.06: Supplies and Contractual Services Logistic Model Business Ownership Model Coefficient Significance Standard Error z z>|P-value| Age 0.106 * 0.017 6.310 0.000 Age Squared -0.001 * 0.000 -3.680 0.000 Bachelor degree (a) 0.240 * 0.108 2.210 0.027 Advanced degree -0.333 0.192 -1.730 0.083 Home Owner 0.018 0.141 0.130 0.896 Home Value 0.000 * 0.000 4.550 0.000 Interest and Dividends 0.000 * 0.000 4.000 0.000 Monthly Mortgage Payment 0.000 * 0.000 2.330 0.020 Speaks English at home -0.612 * 0.200 -3.070 0.002 Having a child under the age of six 0.651 * 0.226 2.880 0.004 Married 0.105 0.115 0.920 0.358 Caucasian Female -0.285 * 0.116 -2.450 0.014 African American -0.299 * 0.150 -1.990 0.047 Asian American 0.230 0.264 0.870 0.384 Hispanic American -0.529 0.513 -1.030 0.302 Native American (omitted) -- -- -- -- -- Other Minority -0.179 0.440 -0.410 0.685 Year 2009 (b) -0.117 0.117 -1.000 0.316 Year 2010 -0.086 0.113 -0.770 0.444 Constant -5.710 * 0.436 -13.080 0.000 (a) For the variables Bachelor’s degree and advanced degree, the baseline variable is High School. (b) For the year variables, the baseline variable is year 2008. Note: z > |p-value| of less than 0.05 denote findings of statistical significance. Native Americans were omitted because of too few observations * identifies statistically significant variables. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-17 The supplies and contractual services industry logistic regression results indicate: · The probability of business ownership is positively associated with an increase in age; older individuals are significantly more probable to be business owners in the supplies and contractual services industry. · Having a bachelor’s degree significantly increases the probability of being a business owner in the supplies and contractual services industry. · Caucasian Females are significantly less probable to be business owners in the supplies and contractual services industry than Caucasian Males. · African Americans are significantly less probable to be business owners in the supplies and contractual services industry than Caucasian Males. · Hispanic Americans and Other Minority groups are less probable than Caucasian Males to be business owners in the supplies and contractual services industry, but not at a significant level. B.B.B.B. Business Earnings AnalysisBusiness Earnings AnalysisBusiness Earnings AnalysisBusiness Earnings Analysis The business earnings variable is identified by self-employment income20 from the years 2007 through 2010 for the three industries: construction, professional services, and supplies and contractual services. The analysis considered incorporated and non- incorporated businesses. Previous studies have shown that many non-discriminatory factors such as education, age, and marital status are associated with self-employment income. In this analysis, race and gender-neutral factors are combined with race and gender groups in an OLS regression model to determine whether observed race or gender disparities were independent of the race and gender-neutral factors known to be associated with self- employment income. 20 The terms “business earnings” and “self-employment income” are used interchangeably. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-18 1. OLS Regression Results for Business Earnings in the Construction Industry Table 9.07 depicts the results of the OLS regression for business earnings in the construction industry based on the 21 variables analyzed in this model. Table 9.07: Construction Industry OLS Regression Earnings Disparity Model Coefficient Significance Standard Error t t>|P-value| Age 1281.241 * 423.071 3.030 0.003 Age Squared -13.701 * 4.068 -3.370 0.001 Incorporated business -23275.420 * 3102.882 -7.500 0.000 Bachelor degree 8334.027 5669.167 1.470 0.143 Advanced degree -3392.219 4329.845 -0.780 0.434 Home Owner -781.341 3766.494 -0.210 0.836 Home Value 0.005 0.010 0.520 0.602 Interest and Dividends -0.227 0.095 -0.240 0.812 Monthly Mortgage Payment 3.890 3.611 1.080 0.282 Speaks English at home -15041.590 16076.910 -0.940 0.350 Having a child under the age of six -26128.910 14240.390 -1.830 0.068 Married 9234.961 * 3347.999 2.760 0.006 Caucasian Female 2257.305 6345.085 0.360 0.722 African American -4300.314 3526.304 -1.220 0.224 Asian American 1429.568 19930.210 0.070 0.943 Hispanic American -16180.020 13147.500 -1.230 0.220 Native American -13834.210 7160.006 -1.930 0.054 Other Minority -7249.862 5142.176 -1.410 0.160 Year 2009 1520.481 4165.235 0.370 0.715 Year 2010 547.927 3724.700 0.150 0.883 Constant -1487.651 11748.210 -0.130 0.899 Note: t > |p-value| of less than 0.05 denote findings of statistical significance. * identifies statistically significant variables. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-19 The OLS regression results for business earnings in the construction industry indicate the following: · Older business owners are significantly more probable to have higher business earnings in the construction industry. · African American, Hispanic American, Native American, and Other Minority business owners are more probable to have lower business earnings in the construction industry than Caucasian Males, but not at a significant level. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-20 2. OLS Regression Results for Business Earnings in the Professional Services Industry Table 9.08: depicts the results of the OLS regression for business earnings in the professional services industry based on the 20 variables analyzed in this model. Table 9.08: Professional Services OLS Regression Earnings Disparity Model Coefficient Significance Standard Error t t>|P-value| Age 1500.161 * 760.582 1.970 0.049 Age Squared -18.722 * 7.045 -2.660 0.008 Incorporated business -55170.900 * 6150.272 -8.970 0.000 Bachelor degree 13966.810 * 4457.324 3.130 0.002 Advanced degree 37495.460 * 5694.993 6.580 0.000 Home Owner -2102.716 8452.741 -0.250 0.804 Home Value 0.011 0.008 1.400 0.163 Interest and Dividends 0.027 0.122 0.220 0.825 Monthly Mortgage Payment 0.158 2.215 0.070 0.943 Speaks English at home 6610.176 5624.240 1.180 0.240 Having a child under the age of six -11187.270 8018.819 -1.400 0.164 Married 7165.594 5786.458 1.240 0.216 Caucasian Female -13418.620 * 6011.280 -2.230 0.026 African American -3826.086 5866.084 -0.650 0.515 Asian American 11195.840 15712.420 0.710 0.476 Hispanic American 4638.459 9460.250 0.490 0.624 Native American (omitted) -- -- -- -- -- Other Minority -36166.690 * 12097.280 -2.990 0.003 Year 2009 9706.630 5843.272 1.660 0.097 Year 2010 2556.905 5141.629 0.500 0.619 Constant -6109.343 20605.330 -0.300 0.767 Native Americans were omitted because of too few observations Note: t > |p-value| of less than 0.05 denote findings of statistical significance. * identifies statistically significant variables. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-21 The OLS regression results for business earnings in the other professional services industry indicate the following: · Older business owners are significantly more probable to have higher business earnings in the other professional services industry. · Business owners with a bachelor’s or an advanced degree are significantly more probable to have higher business earnings in the other professional services industry. · Caucasian Female business owners are significantly more probable to have lower business earnings in the other professional services industry than Caucasian Males. · Other Minority business owners are significantly more probable to have lower business earnings in the other professional services industry than Caucasian Males. · African American business owners are more probable to have lower business earnings in the other professional services industry than Caucasian Males, but not at a significant level. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-22 3. OLS Regression Results for Business Earnings in the Supplies and Contractual Services Industry Table 9.09: depicts the results of the OLS regression for business earnings in the other supplies and contractual services industry based on the 20 variables analyzed in this model. Table 9.09: Supplies and Contractual Services OLS Regression Earnings Disparity Model Coefficient Significance Standard Error t t>|P-value| Age 932.880 606.733 1.540 0.125 Age Squared -7.281 5.993 -1.210 0.225 Incorporated business -33583.010 * 4239.479 -7.920 0.000 Bachelor degree 5251.029 3994.893 1.310 0.189 Advanced degree 8708.591 7289.813 1.190 0.233 Home Owner -1000.847 4266.160 -0.230 0.815 Home Value 0.011 0.008 1.460 0.146 Interest and Dividends 0.060 0.123 0.490 0.628 Monthly Mortgage Payment 6.240 * 2.756 2.260 0.024 Speaks English at home -2871.643 4136.347 -0.690 0.488 Having a child under the age of six -7149.938 4387.870 -1.630 0.104 Married 3426.252 3224.081 1.060 0.288 Caucasian Female -15953.030 * 3801.324 -4.200 0.000 African American -10899.990 * 3767.750 -2.890 0.004 Asian American -16653.540 * 7851.294 -2.120 0.034 Hispanic American -14089.920 7599.208 -1.850 0.064 Native American (omitted) -- -- -- -- -- Other Minority 5712.496 14340.210 0.400 0.690 Year 2009 417.221 5026.722 0.080 0.934 Year 2010 -9191.151 * 3705.283 -2.480 0.013 Constant 5373.018 13546.420 0.400 0.692 Native Americans were omitted because of too few observations Note: t > |p-value| of less than 0.05 denote findings of statistical significance. * identifies statistically significant variables. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-23 The OLS regression results for business earnings in the supplies and contractual services industry indicate the following: · Older business owners are more probable to have higher business earnings in the supplies and contractual services industry, but not at a statistically significant level. · Caucasian Female business owners are significantly more probable to have lower business earnings in the supplies and contractual services industry than Caucasian Males. · African American and Asian American business owners are significantly more probable to have lower business earnings in the supplies and contractual services industry than Caucasian Males. · Hispanic American business owners are more probable to have lower business earnings in the supplies and contractual services industry than Caucasian Males, but not at a statistically significant level. C.C.C.C. Business Loan Approval AnalysisBusiness Loan Approval AnalysisBusiness Loan Approval AnalysisBusiness Loan Approval Analysis Access to business capital in the form of loans is measured by the Business Loan Approval Analysis. The probability of business loan approval variable is a score that reflects the reported probability of experiencing loan approval. The data in this section comes from the 2003 NSSBF dataset. Previous studies have shown that many non- discriminatory factors such as education, experience of the business owner, and firm characteristics could lead to differences in a business owner’s loan approval rate. In this analysis, race and gender-neutral factors are combined with race and gender groups in an ordered logistic regression model to determine whether observed race or gender disparities were independent of the race and gender-neutral factors known to be associated with business loan approval. Access to business capital in the form of loans is measured by the probability of obtaining a business loan among the 4,240 business owners in the three industries. It should be noted that the dataset does not contain sufficient information on all ethnic groups to allow for a separate examination of each group. Therefore, results are provided for all minorities and Caucasian Females, referred to as Minority Business Enterprises (MBEs) and Woman-owned Business Enterprises (WBEs) or collectively as M/WBEs. The NSSBF records the geographic location of the firm by Census Division instead of city, county, or state. Due to insufficient data in the construction, professional services, and supplies and contractual services industries, the sampling region was expanded to include the entire United States, with independent variables indicating the effect on a business’s loan approval when located in the St. Louis Metropolitan Statistical Area and the Census’ Midwest Region. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-24 The results of the ordered logistic regression for each set of factors are presented in the tables below. 1. Ordered Logistic Regression Results for Business Loan Approval in the Construction Industry The ordered logistic regression results for business loan approval in the construction industry based on the 12 variables analyzed in this model are depicted in Table 9.10. Table 9.10: Ordered Logistic Model for the Business Loan Approval Analysis in the Construction Industry Loan Denial Model Coefficient Significance Standard Error z z>|P- value| Business Owner's Minority Group Caucasian Female -0.838 * 0.320 -2.610 0.009 Minority 0.753 0.414 0.180 0.856 Business Owner’s Credit and Resources Bachelor's degree 0.733 * 0.308 2.380 0.017 Advanced degree 16.344 * 0.299 54.570 0.000 Use of owner’s personal credit card for business -0.322 0.236 -1.360 0.173 Firm’s Credit and Financial Health Midwest 16.285 * 0.209 77.780 0.000 Firm has existing capital leases 0.528 0.314 1.680 0.093 Located in MSA -0.978 * 0.302 -3.240 0.001 Firm has vehicle loans -0.124 0.265 -0.470 0.640 Low D&B credit score -1.161 * 0.286 -4.050 0.000 Age of Firm 0.075 * 0.020 3.810 0.000 Corporation 0.360 0.281 1.280 0.200 Note: z>|P-value| of less than 0.05 denote findings of statistical significance. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-25 Statistically significant ordered logistic regression results for the construction industry Business Loan Approval Analysis indicate the following: a. Business Owner’s Minority Group and Gender Classification · Caucasian Females have a significantly lower probability of obtaining a business loan in the construction industry than Caucasian Males. · Minority groups have a higher probability of obtaining a business loan in the construction industry than Caucasian Males, but not at a significant level. b. Business Owner’s Characteristics · Business owners with a bachelor’s degree have a significantly higher probability of obtaining a business loan in the construction industry. · Business owners with an advanced degree have a significantly higher probability of obtaining a business loan in the construction industry. c. Firm’s Credit and Financial Health · Businesses domiciled in the Midwest Region have a significantly higher probability of obtaining a business loan in the construction industry. · Businesses domiciled in the St. Louis Metropolitan Statistical Area have a significantly lower probability of obtaining a business loan in the construction industry. · Businesses with a low Dunn and Bradstreet credit score have a significantly lower probability of obtaining a business loan in the construction industry. · Older businesses have a significantly higher probability of obtaining a business loan in the construction industry. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-26 2. Ordered Logistic Regression Results for Business Loan Approval in the Professional Services Industry The ordered logistic regression results for business loan approval in the professional services industry based on the 12 variables analyzed in this model are depicted in Table 9.11. Table 9.11: Ordered Logistic Model for the Business Loan Approval Analysis in the Professional Services Industry Loan Denial Model Coefficient Significance Standard Error z z>|P- value| Business Owner's Minority Group Caucasian Female -0.173 0.295 -0.590 0.558 Minority -1.008 * 0.231 -4.350 0.000 Business Owner’s Credit and Resources Bachelor's degree 0.032 0.253 0.130 0.898 Advanced degree 0.353 0.273 1.290 0.196 Use of owner’s personal credit card for business -0.239 0.189 -1.260 0.206 Firm’s Credit and Financial Health Midwest 16.771 * 0.195 85.920 0.000 Firm has existing capital leases -0.143 0.247 -0.580 0.562 Located in MSA -0.570 0.341 -1.670 0.095 Firm has vehicle loans 0.230 0.214 1.080 0.281 Low D&B credit score -1.512 * 0.208 -7.260 0.000 Age of Firm 0.005 0.009 0.500 0.614 Corporation -0.450 0.231 -1.950 0.051 Note: z>|P-value| of less than 0.05 denote findings of statistical significance. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-27 Statistically significant ordered logistic regression results for the professional services industry Business Loan Approval Analysis indicate the following: a. Business Owner’s Minority Group and Gender Classification · Caucasian Females have a lower probability of obtaining a business loan in the professional services industry than Caucasian Males, but not at a significant level. · Minority groups have a significantly lower probability of obtaining a business loan in the professional services industry than Caucasian Males. b. Business Owner’s Characteristics · Business owners with a bachelor’s degree have a higher probability of obtaining a business loan in the professional services industry, but not at a significant level. · Business owners with an advanced degree have a higher probability of obtaining a business loan in the professional services industry, but not at a significant level. c. Firm’s Credit and Financial Health · Businesses domiciled in the Midwest Region have a significantly higher probability of obtaining a business loan in the professional services industry. · Businesses with a low Dunn and Bradstreet credit score have a significantly lower probability of obtaining a business loan in the professional services industry. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-28 3. Ordered Logistic Regression Results for Business Loan Approval in the Supplies and Contractual Services Industry The ordered logistic regression results for business loan approval in the supplies and contractual services industry based on the 13 variables analyzed in this model are depicted in Table 9.12. Table 9.12: Ordered Logistic Model for the Business Loan Approval Analysis in the Supplies and Contractual Services Industry Loan Denial Model Coefficient Significance Standard Error z z>|P- value| Business Owner's Minority Group Caucasian Female 0.386 0.214 1.810 0.070 Minority -0.977 * 0.235 -4.150 0.000 Business Owner’s Credit and Resources Bachelor's degree 0.001 0.188 0.000 0.997 Advanced degree 0.523 0.274 1.910 0.057 Use of owner’s personal credit card for business -0.620 * 0.159 -3.900 0.000 Firm’s Credit and Financial Health Midwest 1.229 * 0.524 2.340 0.019 Firm has existing capital leases -0.357 * 0.165 -2.160 0.031 Located in MSA -0.195 0.187 -1.040 0.297 Firm has vehicle loans -0.184 0.168 -1.090 0.274 Total mortgage principle owned (in millions) 0.042 0.058 0.710 0.477 Low D&B credit score -0.844 * 0.161 -5.250 0.000 Age of Firm 0.038 * 0.008 4.510 0.000 Corporation 0.346 0.198 1.740 0.081 Note: z>|P-value| of less than 0.05 denote findings of statistical significance. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-29 Statistically significant ordered logistic regression results for the supplies and contractual services industry Business Loan Approval Analysis indicate the following: a. Business Owner’s Minority Group and Gender Classification · Females have a higher probability of obtaining a business loan in the supplies and contractual services industry than Caucasian Males, but not at a significant level. · Minority groups have a significantly lower probability of obtaining a business loan in the supplies and contractual services industry than Caucasian Males. b. Business Owner’s Characteristics · Business owners with a bachelor’s degree have a higher probability of obtaining a business loan in the supplies and contractual services industry, but not at a significant level. · Business owners with an advanced degree have a higher probability of obtaining a business loan in the supplies and contractual services industry, but not at a significant level. · Business owners that use a personal credit card for business have a significantly lower probability of obtaining a business loan in the supplies and contractual services industry. c. Firm’s Credit and Financial Health · Businesses domiciled in the Midwest Region have a significantly higher probability of obtaining a business loan in the supplies and contractual services industry. · Businesses with existing capital leases have a significantly lower probability of obtaining a business loan in the supplies and contractual services industry. · Businesses with a low Dunn and Bradstreet credit score have a significantly lower probability of obtaining a business loan in the supplies and contractual services industry. · Older businesses have a significantly higher probability of obtaining a business loan in the supplies and contractual services industry. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-30 VII.VII.VII.VII. CONCLUSIONCONCLUSIONCONCLUSIONCONCLUSION Three regression analyses were conducted to determine whether there were factors in the private sector which might help explain any statistical disparities between M/WBE availability and utilization identified in the Disparity Study. The three analyses examined the following outcome variables—business ownership, business earnings, and business loan approval. These analyses were performed for three industries—construction, professional services, and supplies and contractual services. The regression analyses examined the effect of race and gender on the three outcome variables. The Business Ownership Analysis and the Earnings Disparity Analysis used data from the 2007 through 2010 PUMS datasets for the City of St. Louis and St. Louis County, and compared business ownership rates and earnings for M/WBEs to those of similarly situated Caucasian Males. The Business Loan Approval Analysis used the 2003 NSSBF dataset and compared business loan approval rates for M/WBEs to those of similarly situated Caucasian Males. A.A.A.A. Business Ownership AnalysisBusiness Ownership AnalysisBusiness Ownership AnalysisBusiness Ownership Analysis The Business Ownership Analysis examined the impact of different explanatory variables on an individual’s probability of owning a business. Controlling for race and gender- neutral factors, the Business Ownership Analysis results show statistically significant disparities in the probability of owning a business for minorities and females when compared to similarly situated Caucasian Males. Caucasian Females experience the greatest disparity as they are significantly less probable to own a business in all industry specifications. African Americans and Asian Americans are significantly less probable to own a business in two of the industries; professional services and goods and other services for African Americans, and construction and professional services for Asian Americans. Hispanic Americans, Native Americans, and Other Minorities did not have any statistically significant findings. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-31 Table 9.13 depicts the Business Ownership regression analysis results by race, gender, and industry. Table 9.13: Statistically Significant Business Ownership Disparities Race / Gender Construction Professional Services Supplies and Contractual Services Caucasian Female Yes Yes Yes African American Yes Yes Asian American Yes Yes Hispanic American Native American Other Minority B.B.B.B. Business Earnings AnalysisBusiness Earnings AnalysisBusiness Earnings AnalysisBusiness Earnings Analysis Controlling for race and gender-neutral factors, the Business Earnings Analysis documented statistically significant disparities in business earnings for minorities and females when compared to similarly situated Caucasian Males. Caucasian Females have lower business earnings at a statistically significant level for two of the industries – professional services and supplies and contractual services. African Americans and Asian Americans have significantly lower business earnings in the supplies and contractual services industry. Finally, Other Minorities have significantly lower business earnings in the professional services industry. Hispanic Americans and Native Americans had no statistically significant findings. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-32 Table 9.14 depicts the Earnings Disparity regression results by race, gender, and industry. Table 9.14: Statistically Significant Business Earnings Disparities Race / Gender Construction Professional Services Supplies and Contractual Services Caucasian Female Yes Yes African American Yes Asian American Yes Hispanic American Native American Other Minority Yes C.C.C.C. Business Loan Approval AnalysisBusiness Loan Approval AnalysisBusiness Loan Approval AnalysisBusiness Loan Approval Analysis Controlling for race and gender-neutral factors, the Business Loan Approval Analysis reveals statistically significant disparities for M/WBEs when compared to similarly situated Caucasian Males. Caucasian Females had a statistically significant disparity in the construction industry, and minorities had statistically significant disparities in the professional services and supplies and contractual services industry. The statistically significant disparity documented for M/WBEs when compared to similarly situated Caucasian Males points to the presence of race and gender-based discrimination as a factor in access to business capital. Access to business capital in the private sector constitutes a major factor in business development, continuity, and growth. The documented disparity in M/WBEs’ access to business capital may have adversely impacted the number of these businesses in the construction, professional services, and other supplies and contractual services industries available to perform MSD’s contracts during the Study period. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 9-33 Table 9.15 depicts the Business Loan Approval Analysis regression results by race, gender, and industry. Table 9.15: Statistically Significant Business Loan Approval Disparities Race / Gender Construction Professional Services Supplies and Contractual Services Caucasian Female Yes Minority Yes Yes D.D.D.D. Regression FindingsRegression FindingsRegression FindingsRegression Findings The analyses of the three outcome variables document disparities that could adversely affect the formation and growth of M/WBEs within the construction, professional services, and supplies and contractual services industries. In the absence of a race and gender-neutral explanation for the disparities, the regression findings point to racial and gender discrimination that leads to depressed business ownership, business earnings, and business loan approval rates. Such discrimination creates economic conditions in the private sector that impede minorities and females’ efforts to create and grow businesses. An impact of these private sector conditions is manifested in M/WBEs’ lower business formation rates. It is important to note there are limitations to the application of the regression findings. No matter how discriminatory the private sector may be, the findings cannot be used as the factual basis for a government-sponsored, race-conscious M/WBE or DBE program. Therefore, caution must be exercised in the interpretation and application of the regression findings. Nevertheless, the findings can be a formula for developing race- neutral programs to eliminate identified barriers to the formation and development of M/WBEs. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-1 CHAPTER 10: ANECDOTAL ANALYSISANECDOTAL ANALYSISANECDOTAL ANALYSISANECDOTAL ANALYSIS I.I.I.I. INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION This chapter presents anecdotal testimony gathered through in-depth one–on-one interviews in a fair and equitable manner. This anecdotal testimony was analyzed to supplement the statistical findings and disclose any societal or procurement practices that might affect Minority and Women-owned Business Enterprises’ (M/WBEs’) access to the Metropolitan St. Louis Sewer District (MSD) contracts. The importance of anecdotal testimony in determining evidence of discrimination was established in the landmark case of City of Richmond v. J.A. Croson Co.,1 The United States Supreme Court, in its 1989 Croson2 decision, specified the use of anecdotal testimony as a means to determine whether remedial race-specific relief may be justified in a particular market area. Croson stated that “evidence of a pattern of individual discriminatory acts can, if supported by appropriate statistical proofs, lend support to a [local entity’s] determination that broader remedial relief [be] justified.”3 Anecdotal testimony of individual discriminatory acts can, when paired with statistical data, document the routine practices affecting M/WBEs’ access to contracting opportunities within a given market area. The statistical data can quantify the impact of discriminatory practices, while anecdotal testimony provides the human context through which the numbers can be understood. Anecdotal testimony from business owners provides information on the kinds of barriers that they believe exist within the market area, including who perpetrates them and their effect on M/WBE development. Outreach was conducted to secure the participation of business owners as anecdotal interviewees. Outreach consisted of contacting prime contractors, subcontractors, and suppliers to determine their willingness to participate in an interview. An anecdotal interview questionnaire was utilized to standardize the information elicited from business owners who agreed to participate in an in-depth interview. 1 City of Richmond v. J.A. Croson Co., 488 U.S. at 509 (1989). 2 City of Richmond v. J.A. Croson Co., 488 U.S. at 509 (1989). 3 Id. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-2 Business and trade association representatives were recruited through community meetings, utilized businesses, and targeted outreach. The list of organizations was also compiled during the availability research. A questionnaire was developed to standardize the information elicited from the association representatives. A.A.A.A. Anecdotal Evidence of Discrimination Anecdotal Evidence of Discrimination Anecdotal Evidence of Discrimination Anecdotal Evidence of Discrimination ---- Active Active Active Active and Passive Participationand Passive Participationand Passive Participationand Passive Participation Croson authorizes anecdotal inquiries along two lines. The first approach investigates active government discrimination or acts of exclusion committed by representatives of the governmental entity. The purpose of this examination is to determine whether the government has committed acts that prevented M/WBEs from obtaining contracting opportunities. The second line of inquiry examines the government’s “passive” support of exclusionary practices that occur in the market area into which its funds are infused. “Passive” exclusion results from government officials knowingly using public monies to contract with companies that discriminate against M/WBEs, or failing to take positive steps to prevent discrimination by contractors who receive public funds.4 Anecdotal accounts of passive discrimination mainly delve into the activities of private-sector entities. The Tenth Circuit Court of Appeals has cautioned that anecdotal accounts of discrimination are entitled to less evidentiary weight because the accounts concern more private than government-sponsored activities.5 Nonetheless, when paired with appropriate statistical data, anecdotal evidence of either active or passive forms of discrimination can support the imposition of a race- or gender-conscious remedial program.6 Anecdotal testimony that is not sufficiently compelling in combination with statistical data to support a race or gender-conscious program has value in the Croson framework. As Croson points out, jurisdictions have at their disposal “a whole array of race-neutral devices to increase the accessibility of city contracting opportunities to small entrepreneurs of all races.”7 Anecdotal accounts can paint a finely detailed portrait of the practices and procedures that generally govern the award of public contracts in the relevant market area. These narratives, according to Croson, can identify specific generic 4 Croson, 488 U.S. at 491-93, 509. 5 Concrete Works of Colorado v. City and County of Denver, 36 F.3d at 1530 (10th Cir. 1994): "while a fact finder should accord less weight to personal accounts of discrimination that reflect isolated incidents, anecdotal evidence of a municipality’s institutional practices carry more weight due to the systemic impact that such institutional practices have on market conditions.” 6 Croson, 488 U.S. at 509. 7 Croson, 488 U.S. at 509. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-3 practices that can be implemented, improved, or eliminated in order to increase contracting opportunities for businesses owned by all citizens. This chapter presents anecdotal testimony from interviews with 37 business owners and representatives from 15 trade and business associations domiciled in MSD’s market area. The business owners described accounts of barriers encountered while working or seeking work directly with MSD, and the trade and business association representatives reported experiences of their members. B.B.B.B. Anecdotal MethodologyAnecdotal MethodologyAnecdotal MethodologyAnecdotal Methodology 1. In-Depth Interviews Potential business interviewees were pre-screened to determine if they were domiciled within the market area during the study period and offered the services and goods that MSD procures. The trade and business association representative interviewees were identified from community meetings and the availability research. Trade and business associations were pre-screened to determine their business members’ interest in working with MSD. Thirty-seven business owners and fifteen representatives from trade and business associations participated in one-on-one, in-depth interviews. The business owners were African American, Asian American, Hispanic American, and Caucasian Males and Females. The trade and business association representatives were either officers or staff of minority and woman-owned business organizations. The interview questionnaire included probes which elicited accounts of the interviewee’s experience in business formation and development. Both public and private sector experiences were garnered through the interviews. Completed interviews were transcribed and coded by type of comment. The anecdotal report describes general market conditions, prime contractor barriers, and the range of experiences encountered by interviewees attempting to do business with MSD. The interview responses are categorized in the report as racial barriers, harassment, subjected to higher standards of review; difficulty with the contracting community, difficulty with the good old boys network, difficulties in the contracting process, difficulty meeting pre-qualification requirements; bid shopping and inadequate lead time to respond to solicitations; negotiating supplier agreements; certification process challenges; knowledge of companies acting as fronts; barriers to financial resources; barriers to bonding, late payments from prime contractors, comments about the M/WBE Utilization Programs, exemplary MSD business practices, and recommendations to increase M/WBEs participation on MSD contracts. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-4 II.II.II.II. RACIAL BARRIERS, HARRASSMENT, AND SUBJECTED TO A HIGHER STANDARD OF REVIEW A Minority Male owner of a construction company that provides services for capital improvements and replacement plan (CIRP) projects reported that he believes that his race has impacted his business negatively especially in trying to get change orders approved: MSD does not have many Black contractors. Sometimes I sit in their meetings trying to negotiate my overages. But I’m sitting with the prime at a table full of White boys and not one is talking about giving me my money. [They say], “So what, that’s your problem.” And that doesn’t happen to other contractors who are the large prime contractors. I have to fight for pennies when trying to get overages from the prime contractors. This same business owner reported that he believes that an MSD inspector treated him differently because of his race: As far as inspectors, I only know two Black MSD inspectors. Most of the inspectors we deal with are White. I’ve been cursed out by the inspectors. I complained to MSD and told [name withheld] “Hey man, I got an inspector out here who cursed me out.” And I asked him point blank, “Do you curse out your White contractors?” But this inspector still inspects my jobs. I told them [that] he shouldn’t be out here. He does not turn in my paperwork or invoices in timely. I’ve told these people about these racist inspectors on our jobs. I only had one Black inspector the whole time that I worked and he was very fair. A Minority Male owner of a construction company that provides services for CIRP projects believed that MSD actively discriminates against African Americans: There is no prejudice against White women in contracting. That’s been proven. The fourth circuit court in Charlotte, North Carolina just completed a study that proved it is a falsehood. There is no discrimination against Hispanics and they are getting twice what they should get in the St. Louis Missouri area. The discrimination is Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-5 basically against African Americans. I think the opportunities are manipulated by majority White Male businesses. They choose to work with Hispanics. A Minority Male owner of a contractual services company reported that he experienced verbal harassment while protesting the exclusion of minority contractors on a job: There was a contract that I was trying to get and they were excluding minority contractors which led to a protest. And in the process of the protesting the general manager along with some of his crew members were hurling racial slurs. It made me think that this is the reason why I protested. A Minority Male owner of a non-engineering professional services company reported that he has heard derogatory language aimed at minority contractors: I had White clients tell me about contractors that have absolutely no commitment and would never adhere to the M/WBE program. I’ve been in meetings with White contractors who say the program is just a goal and all they have to do is recognize it as a goal. One comment that was made to me often was that “well, we tried that minority thing and it didn’t work.” Unfortunately, they use salacious language to describe minority contractors. Not only in racial terms but also derogatory terms, such as questioning people’s intelligence and ability to work. A Minority Male owner of a construction company that provides services for CIRP projects described a situation where he felt that his employees were harassed by a union local: Harassment is a systemic issue that I experienced with the Iron Workers Union Local 396 here in St. Louis. My experience with Local 396 has been a negative experience in that they have alleged that I hire only criminals, dope dealers, and dope addicts. But they fail to mention that the sources they are speaking of are African Americans. At the end of the day they refer to them as Black iron workers. I was told that I must hire from a particular group that did not include African Americans. At the time I challenged them. And for that I was retaliated against both here and outside of the state. This same business owner reported on another incident of harassment: I would also characterize treatment by MSD’s [position name withheld] as harassment. She contacted me with a third party on the Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-6 phone. She had the company on the phone and advised me not to call the company again and that they did not have to give my company work, and they did not have to allow me to bid, and for me to not call them again. And if I called, then I would be eliminated from receiving bid opportunities from MSD. A Minority Male owner of a non-engineering professional services company reported that his company is held to a higher standard than more established companies: Sometimes I have to help a customer by acquiring supplies from certain suppliers. And in doing so, they make you bring the supplies in. They want to make sure they are of quality, but they are the exact same products they buy from the majority companies. So, even when I give them the brand name, and everything else, they say, well we're already buying that, but we want you to bring it in any way to make sure it is not going to be a switch and bait. That's insulting to even assume that every minority that comes in the door may switch and bait a product to reduce cost. That's not an assumption that the buyer should immediately made. A Minority Male owner of a contractual services company reported that he feels like minority companies are held to a higher standard, since they must be certified to be hired under M/WBE program requirements: There are times where we are asked as a minority company to show or prove our ability to do the work because of our minority certification. And if we can’t prove it we don't qualify for the job. And in my estimation I think that is a higher standard being imposed upon certain minority company. III.III.III.III. DIFFICULTY WITH THE CONTRACTING DIFFICULTY WITH THE CONTRACTING DIFFICULTY WITH THE CONTRACTING DIFFICULTY WITH THE CONTRACTING COMMUNITYCOMMUNITYCOMMUNITYCOMMUNITY A Minority Male owner of a construction company that provides services for CIRP projects reported that he has bid on MSD contracts over 40 times without success: I have bid MSD at least 40 to 45 times and never received an opportunity. At some point I stopped [bidding], but what keeps me going is the viability of the M/WBE program. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-7 A Minority Male owner of a non-engineering professional services company believes that personal relationships with key decision makers are needed to break into the contracting community: At that time they had a procurement manager, who has since retired, and he had his favorite companies and he made it known that he had no intention of ever changing. So I bid on some office supplies and I never heard anything. And then I heard from one of my competitors who got the contract. And I'm like, well how did you get it? And at that time the statement was made, “we don't have to notify any of who wins, only when they ask who won is when we respond. I also bided on a couple of other things just to see what would happen and I asked who won. This is when I learned that relationships were key because although I spoke to the individual, I did not have a relationship. And the company that continually won the bid had a relationship with the individual. I don't think it was like giving money under the table or anything like that, but he knew the individual wouldn't fail him and he did not have a reason to change. A Minority Female owner of an engineering professional services company explained why it is difficult for small businesses to break into the contractor community: The word on the street is that if you need work and want to grow your company, there are some programs that can help you grow. It is not easy or cheap to get registered. Every organization has their own registration process, so you might as well multiply the cost times a hundred. But when we go get the work we are basically told you’re too small, don’t qualify, or you can’t compete. And we’re not going to break down the projects so that you can compete and qualify. Basically they put it in the hands of the other big boys and you have to take it up with them. A Minority Male owner of a non-engineering professional services company reported that the lack of political and personal connections has prevented him from breaking into the contracting community: My business is a relation based business. Race impacts it to some degree but connectivity makes a big difference such as political and social connections. I don’t necessarily have the same network others do which does not bode well for me. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-8 This same business owner also reported that MSD utilizes the same consultants on their professional services projects: I approached two individuals at MSD, [names withheld] and offered my services and made it clear that if they were interested in procuring services then I was interested in pursuing that opportunity. They never responded after the conversation. It was pretty much business as usual. I was disappointed and felt it was a lack of commitment to provide services and opportunities for the entire region. MSD are pretty much an exclusive shop and on the professional services side they always use the same companies over and over again. They have a rotation system, or less. A Minority Male owner of a contractual services company described a situation where he was excluded from a network because of his ethnicity: It was a conference out in Westport. At that conference there was some people that worked in my field. They were sharing information and exchanging cards. I had asked one of the guys to give me their card, which he did. When I started to contact them they told me there was a specific group that works together. I told them that we are in the same profession and I would like to work together. He said “no, it's a specific group of us that works together, it's our group.” I took that to mean that we don't have Blacks in our group so don't come out here trying to associate with us. That's how I took that. A Minority Female owner of an engineering professional services company reported on a networking group whose membership is limited to Caucasian Female business owners: There is a group called the Consortium of Women Engineers which is an all-White women’s engineering group who lobby MSD to eliminate the 25 percent MBE and 5 percent WBE goals. They want a blended goal so that they can continue to get more than 5 percent of contracts. They are an exclusive group. I mean White only and no minorities are allowed to participate so they lobby for White women. They don’t lobby for anybody else. This same business owner explained why she believes it would be a conflict for her to join this networking group: I have talked to them and expressed my concerns about them having an exclusive group. I think if I were to join this group it would only give them some legitimacy, but their goal is to make sure that the Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-9 White woman engineering company are protected at the expense of minority engineering company. This would be too much of a conflict for me to be part of that group. A Caucasian Male owner of an engineering professional services company explained why it is difficult to obtain work on MSD’s watershed projects: A watershed can be explained by a drop of rain falling on one side of a ridge that flows one way until it ultimately gets out to the Mississippi River. The ridge is the edge of that watershed. There are five watersheds in the MSD district boundaries. They select consultants on a project-by-project basis which is very cumbersome and time-consuming process. They now have a consent decree where they are required to do sanitary system upgrades on a very tight schedule. So they selected a team of consultants for each one of the watersheds and that team handles anything within that watershed over the next 10 year period. Once the watershed consultant is selected they will do the work on that watershed for 10 years. The problem is the watershed team is eating up most of the design work. So if are not on a watershed team, the amount of MSD work that is available is drastically diminished. The short answer is that there are people who received a whole bunch of work and there are people who are sitting outside watching. And that’s just the nature of how they select for the watershed projects. IV.IV.IV.IV. DIFFICULTY WITH THE GOOD OLD BOY DIFFICULTY WITH THE GOOD OLD BOY DIFFICULTY WITH THE GOOD OLD BOY DIFFICULTY WITH THE GOOD OLD BOY NETWORKNETWORKNETWORKNETWORK A Minority Male owner of a non-engineering professional services company described a situation where an unqualified bidder was awarded a contract because of the good old boy network: You will never get rid of the good old boy network in St. Louis. They never die; they just multiply. I had bid on a contract and did not get it. And I was perfect for the opportunity because I brought technology to it. Well one day I was golfing and a buddy of mine said, “Hey, I need you to help me with something.” I'm like, “Hey, what's up?” “Can you show me how you do A, B, C, D?” I'm like, “Why would I do that?” He said, “Because I won a contract with so and so.” And I'm like, “How did you do that? You don't even have Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-10 a building.” “Oh, my dad knew the guy and told him that he was going to put me in business, and he told him to wait six months. And I went in and learned everything I needed to do and I don't need a warehouse.” Well, as part of the RFP you needed a warehouse. A Caucasian Male owner of a non-engineering professional services company reported that the good old boys network is at work at MSD: As far as the old boy’s network, I’ve definitely experienced that. I wish that system didn’t exist. I also have knowledge where people bring in those whom they’ve always done business with or because they want to work with people who are most like them; or because they are closed-minded and that’s unfortunate. A Minority Female owner of an engineering professional services company described how members of the good old boys network benefits from personal relationships: You need relationships with the owners or decision-makers. They have relationships outside of business which means that these people knew each other on a first name basis. And it also means they do outside activities. And those activities often might be anything from baseball games, hunting, and golf, which are historically not really female. If you try to create a relationship by the time the RFP is out its too late. Someone already has that relationship. A Minority Male owner of a contractual services company reported that the good old boys network comes into play with larger company: St. Louis is small and when it comes to most of the larger contracts the good old boys network shows up. I see the connection because most of them are on most of the larger jobs. They have the working capital, machinery, equipment, labor, and the financial backing where they can dictate the flow of a contract. And if you are not a part of that system there are not going to be any adjustments made for you. There are no set-asides. A Minority Male owner of a non-engineering professional services company reported that while the good old boys network is a fact of life, it does prevent his company from growing: St. Louis is a region probably like many other regions in the United States that are concerned with relationship building. So based on Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-11 relationships in the St. Louis area, I think a lot of people get work and opportunities based on the relationship they have. A Minority Male owner of a construction company that provides services for CIRP projects described how the good old boys network was at play in a construction organization: I used to be a member of the AGC. I wanted to build relationships and I knew that in order to be a part of the construction industry I had to be a part of an organization. So I joined AGC and realized everything was relationship related. But I saw the good old boy network. This contractor said, “Hey are you [name withheld]? You did a good job for him, so I’ll meet with you.” That’s good old boy to me. Or, “Oh, he did a horrible job on my project; I’ll never use him again.” It happens because I’ve had many conversations with others and Seventy-five percent of them were African Americans. V.V.V.V. DIFFICULTIES IN THE CONTRACTING DIFFICULTIES IN THE CONTRACTING DIFFICULTIES IN THE CONTRACTING DIFFICULTIES IN THE CONTRACTING PROCESSPROCESSPROCESSPROCESS A Minority Male owner of a construction company that provides services for CIRP projects reported that he believes he has been blacklisted by MSD: I was disciplined by MSD to not contact this particular prime anymore. But this was the prime who was winning all the jobs over $50 million. I refuted that and challenged MSD. So, MSD retaliated against me by cutting me off from bidding. I stopped bidding MSD until of late. The last two years, I have submitted approximately ten bids with no success. I think I have been blacklisted from MSD. This same business owner reported that he has had difficulty receiving bid notices: The issue I have with MSD is we are typically not notified of bids. The bid notifications appear to go to certain company and other company are not aware. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-12 A Caucasian Male owner of an engineering professional services company reported that compiling the documentation required on MSD contracts is time consuming and oftentimes MSD’s drawings are not as clear as other municipalities: It probably cost us $75 to $80 an hour to respond to a bid. Our project managers spend a lot of time doing estimates. The biggest issue is MSD’s documentation is not clear, their scope of work is not clear. So we have to keep paging through the specifications and drawings trying to get a clear answer. I compare them to other municipalities we work for and their drawings are not as good. This same business owner stated that MSD contracts often stipulate that the contractor use a specific vendor: It seems like on MSD work in other sewage treatment type work, there’s specialty equipment that they’ve already pre-negotiated with a particular vendor up front. They’ll say, “We’ve already pre- negotiated a price with this vendor up front; his price is in the specifications; you have to use him; and his price is already in there.” That’s when I’ve seen that happen. A Caucasian Male owner of a non-engineering professional services company reported that preparing a MSD proposal is time consuming and expensive. He goes on to recommend that MSD prepare scopes of work in a more detailed fashion and to fast-track the pre-qualification process for minority companies. We track our proposal preparation process which consists of a man month of hours to prepare a proposal for MSD whether it be one or multiple individuals, which is about 160 hours or $16,000 to $30,000, depending on the resources used. They should prepare the scope in a little more detailed fashion and possibly have a fast-track pre-qualification process. In the professional services world, sometimes their proposals are not as detailed to actually identify what true resource is required and allowing enough time to identify the source of that resource and its cost to the organization. So, a more finite defined proposal set of scope requirements would be advantageous to speed the proposal. Also a large part of the proposal process is locating the proper minority company with the proper qualifications. This can take up to two weeks or 80 hour of work. That has a cost associated with it. Once again, if there was a mechanism to go to the qualified company immediately, if the company were pre-qualified by MSD or Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-13 by another agency that was available to us would speed the process along and reduce the cost. A Minority Female owner of an engineering professional services company reported the cost to respond to proposals has been a barrier for her small company: We have had a lot of different issues with the proposal process; mainly, the cost because we are a small company. We don’t have a separate marketing department and proposing department, so it takes a lot of time. A Minority Male owner of a construction company that provides services for CIRP projects believes minority contractors are not wanted at pre-bid meetings: It seems like they rather not have minority contractors at their pre bid meetings because we might ask questions that they don’t want to answer. A lot of times, there will be people at the meetings that are private citizens that are there to listen. And I think they try to limit the individuals that they want to come to the meetings because some of their tactics or ideals might be exposed to the public and they could get some repercussion from the public about the way they solicit their services. A Minority Female owner of a non-engineering professional services company stated that she feels that MSD’s restricted list is arbitrary and should be lifted. Nobody wants to confront MSD in writing. But they need to lift it. There is no reason to have a restricted list. If I can meet the requirements as a prime on a project, then I should be allowed to bid. If that means that I have to add staff then that’s what I’m supposed to do. A Caucasian Male owner of an engineering professional services company reported that it has taken him up to 100 hours to prepare a proposal for MSD: MSD’s proposals require a lot of information. They take a lot of time and effort on my part. I would say overall it’s probably somewhere in the neighborhood of 40 hours. The level of effort need to put together a proposal depends on the ultimate scope of the proposal and engineering services required. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-14 VI.VI.VI.VI. DIFFICULTY MEETING PREDIFFICULTY MEETING PREDIFFICULTY MEETING PREDIFFICULTY MEETING PRE----QUALIFICATION QUALIFICATION QUALIFICATION QUALIFICATION REQUIRMENTSREQUIRMENTSREQUIRMENTSREQUIRMENTS A Minority Male owner of an engineering professional services company reported that pre-qualification requirements often include unnecessary specialization specifications: The proposals almost always ask you for work experience that is exactly like what they are requesting. And that’s difficult unless you are specialized only in that one category. From an architectural standpoint, sometimes you don’t need that kind of specialization to be qualified to do the work. RFPs and the qualifications are written sometimes for somebody they already know. A Minority Male owner of a contractual services company reported that many contracts require excessive insurance coverage: Insurance prices are beginning to really affect the bottom line. They increase Workman's Compensation premiums and general liability premiums. It's beginning to become difficult because certain contracts require additional insurance. There may be a contract that requires a certain amount of dollars if you're bringing a truck on site. Or you might have a contract that requires equipment on site that has to be insured, along with additional insurance that is required. So you might have enough insurance for your trucks, but they want additional insurance. Also, the insurance premium you currently have is too low and they want you to raise it. A Minority Male owner of a non-engineering professional services company reported that insurance requirements are often excessive for small companies: Occasionally the insurance requirements are over a million dollars for a project and it requires us to pay more for our general liability and professional liability insurance. It’s an unpredictable expense for a project that you may not get. A Minority Female owner of an engineering professional services company believes MSD’s pre-qualification requirements are too stringent: If you haven’t done exactly what they are asking for five times, in the last three years then you aren’t competent to do the work. I think that’s not true or fair. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-15 VII.VII.VII.VII. BID SHOPPING AND INADEQUATE LEAD BID SHOPPING AND INADEQUATE LEAD BID SHOPPING AND INADEQUATE LEAD BID SHOPPING AND INADEQUATE LEAD TIME TO RESPOND TO SOLICITATIONS TIME TO RESPOND TO SOLICITATIONS TIME TO RESPOND TO SOLICITATIONS TIME TO RESPOND TO SOLICITATIONS A Minority Male owner of an engineering professional services company reported that bid shopping is a common practice in his field: We turn in bids and some contractors try to shop our price. They try to talk us down after they get an award. There are no laws about it that I'm aware of, but it does happen. And it has happened to us. A Minority Male owner of a construction company that provides services for CIRP projects reported that prime contractors have shopped his bid: They shopped our bids. They looked at all the bids and they came up with a neutral number that was beneficial to them and they literally told us that in order to get the job, this is the number you have to meet. A Minority Male owner of a construction company that provides services for CIRP projects reported that he does not have adequate time to contact prime contractors on MSD contracts: The biggest issue I have experience with MSD is identifying the prime contractors who are bidding. Most of the prime contractors who bid MSD work don’t divulge whether they are bidding or not until the very last minute. A Minority Male owner of a construction company that provides services for CIRP projects reported that he does not receive bid notices from MSD in a timely manner: I think three weeks is pretty much the rule of thumb the response time for bidding jobs. But with the MSD I’m not getting my notices in a time where I’m getting three weeks. Sometimes I get three days or a week. A Minority Male owner of a construction company that provides services for CIRP projects reported that some prime contractors only provides a couple of days to respond to a bid: First of all, you got to get the information about the bids. If you don’t get the information, then you can’t bid. Our information comes from MOKAN and the newspaper. The newspaper does Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-16 provide a deadline on the bids. But when we call the contractors it could take them two or three days before the bid if they even chose you. This way they can say they did their good faith effort. Once we only had a day-and-a-half or two days to get the bid in and I couldn’t do it. I wasn’t prepared to fabricate a bid. A Minority Male owner of a construction company that provides services for CIRP projects reported that he is usually given one or two days to put a bid together: We are given a day or two prior to the bid being due. Being a hauler, I need adequate time to determine the type of material that needs to be delivered, where to get the material, and where to deliver it. A Minority Male owner of a contractual services company reported that some contractors use tactics to purposely limit the response time for subcontractors: I submitted bids to some general contractors who would ask for specific information and then turnaround and include additional addendums to the same information they previously asked. This would cause a problem getting the information in on a timely basis. It consequently becomes like a deterrent for you to move forward in submitting a response or it may cause a delay in the bid being submitted because of the additional time needed to get the information that they are asking for in the addendum. A Minority Male owner of a construction company that provides services for CIRP projects reported that oftentimes he does not have adequate time to reach out to prime contractors to try to get work on MSD contracts: Our only issue is the timing. We are unaware of bids and that creates a problem for us. They have found a way to keep me off of the pre-qualification list, so I never receive calls from any of the primes. I always have to do the leg work myself and reach out to the primes. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-17 VIII.VIII.VIII.VIII. DIFFICUTLY NEGOTIATING SUPPLIER DIFFICUTLY NEGOTIATING SUPPLIER DIFFICUTLY NEGOTIATING SUPPLIER DIFFICUTLY NEGOTIATING SUPPLIER AGREEMENTSAGREEMENTSAGREEMENTSAGREEMENTS A Minority Male owner of a non-engineering professional services company reported that supplier agreements inhibit his ability to successfully bid on MSD contracts: When I buy products from a supplier and because I am not a manufacturer, I'm charged a little bit more. Due to the volume that I'm buying, there are no volume discounts like the majority companies. Also, the majority owned companies work with the suppliers or the manufacturers to make sure that small to medium- sized companies cannot become a distributor for some products. So, the small to medium-sized company have to go to the larger suppliers that are competitors. And the competitor knows that you are selling to someone that they could be selling to, so they, in turn, charge you more. A Minority Male owner of a construction company that provides services for CIRP projects reported that he does not have the access to materials as prime contractors because of supplier agreements: The biggest problem is that the prime contractors have the relationships with the suppliers and vendors. And it can include concrete, ready-mix, metal studs, dry wall, and fabricating steel. We don’t have the access that they do. They come with a list of people that they have done business with over the years. How can we perform our work if we can’t get the studs or drywall to the job? A Caucasian Male owner of a construction company that provides services for CIRP project reported that he has agreements with vendors that give him a discounted rate: If we pay our invoices within a certain amount of time, we get a discounted rate. So, if you have cash coming in and can pay the invoices within a certain period, they give you a discounted rate. If you have the cash flow, it is a big advantage. I guess that goes back to having access to capital, if a company has access to capital and are able to pay their invoices on time are afforded advantages. That is why we try to pay the minority or woman-owned companies weekly so that they can make their payroll and pay their vendors. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-18 IX.IX.IX.IX. CERTIFICATION PROCESS CHALLENGESCERTIFICATION PROCESS CHALLENGESCERTIFICATION PROCESS CHALLENGESCERTIFICATION PROCESS CHALLENGES A Caucasian Male owner of a non-engineering professional services company reported that the certification process takes three months or longer and is a barrier for his company hiring subcontractors: The barriers in this area appear to be the long lead time to award certifications which can take up to one year after submittal of the application. We are aware of vendors in the marketplace that are qualified to do the work, [who are] nationally known and are the best company to do the work but they are in the certification process for up to three months to a year. That has been a barrier in proposal process. A Minority Male owner of a construction company that provides services for CIRP projects reported that he has had difficulty being certified as a supplier for MSD: I’ve tried on numerous occasions to get certified as a supplier, but the rules and regulations stipulate that the product must be the main product that you store. In other words if you sold oil or gas to the filling stations or even to other construction company for their equipment, you could count the haul because you have the trucks. But it’s kind of impossible for you to store those types of commodities in your place of business. It’s easier for you to go to another supplier and pick those commodities up and take them directly to your customer. A Minority Male owner of a construction company that provides services for CIRP projects described a situation where a company got certified as a minority-owned business even though they were not a bone fide M/WBE: The good old boy network has gotten more White contractors certified as minorities than there are actual minority contractors. They are running us all out of business. They prop some black guy up saying he owns 51 percent of the company and now all of a sudden they are a minority business. There was a company [name withheld] that couldn’t get a certification as a minority contractor. They airport would not certify them. They saw through that mess they were doing. The only work that they could do as a minority company was down at MSD. I never could understand this. How is MSD allowing them to get certified as a minority? Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-19 A Minority Male owner of a construction company for provides services for CIRP projects described situations where a front was used on a large MSD contract: I know of a company that’s certified as a minority contractor that does not have any African-Americans working for them. They have one African-American claiming that he owns 51 percent of the company. I can’t believe MSD is allowing that kind of stuff to go on. They just let a contract for infrastructure repair and the subcontractor a so-called woman-owned business is a front. This woman has been dead for 20 years and they still have a woman- owned establishment. It’s white-owned with no Blacks. A Minority Male owner of a construction company that provides services for CIRP projects described a situation where a front company was used on a MSD project: For the Coldwater project, MSD was willing to use a front business to install the steel. They teamed with my former joint venture partner. It was a White female painter that they were using to install steel. They removed the reinforcing steel part of the work from the M/WBE participation and allowed it to go to a front business. The White painter they listed as the steel contractor was a violation of the NAICS Code regulations. This same business owner believes that non-minority-owned company only want to work with minority companies who are willing to act as fronts: With the non-minority company in St. Louis, they simply do not want to work with you if you’re not willing to front. In my own experience, the companies that I have worked with, some have asked me to allow them to use my name and that I did not have to perform any work. I declined that opportunity and then I was told that too. And then I was simply told that they would find someone else. A Minority Male owner of an engineering professional services company reported that he has knowledge of women and minority businesses operating as fronts: There are company out there that set their wives up in a WBE capacity. And I think that there are company that where the MBE claimant does not have control of the company or any experience in the industry. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-20 A Minority Male owner of a contractual services company reported on a business that was used as a “pass-through” for a majority-owned company: There was a business classified as a minority company and they didn’t know anything about the industry, but were given contracts. They have a consultant team around them that they actually work through. There are also companies that minorities own where they don't have the capacity to be able to do the work. The contractor acts as a pass-through. The prime contractor has a payroll going to the minority company. I think that fronts are a maneuver that prime contractors use to get around policies and to make sure that he meets his bottom line. That's the way I look at it you know. And you've got people that kind of bite the bait on that and have no ethical values about their industry or community. They allow things like that to happen because of greed. Fronts screw the minority contractors that actually might get the jobs and they may increase its capacity, bonding capability and labor force, however a typical minority company can't compete. It has a very negative impact. This same contractor reported on an incident where he was approached to work as a front for a minority-owned company: I have been approached by a contractor that wanted to do a joint venture which would provide me with the capacity to be able do a certain amount of work. But their men would be working for me and I would get a portion of the contract. And I gave them some choice words. I'm not a curser and I don't use a lot of profanity, but I said a couple of words to them. I'm not a pass-through or a front company. Don't try to use me like that. A minority owner of a construction company that provides services for CIRP projects reported on his knowledge on fronts: There are companies that will work for a non-minority hauler. And that non-minority contractor has connections so he can get the jobs. He has one guy that is his front who might have one truck and the rest of the trucks are the non-minority contractors. When they go on a job it is not monitored and no one is looking at these jobs to count the actual for minority participation. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-21 A Minority Male owner of a construction company that provides services for CIRP projects reported that he is aware of fraudulent women-owned businesses: Front companies definitely are real whereby White women own the company but their husband are behind the scene controlling and making the day-to-day operational decisions. X.X.X.X. BARRIERS TO FINANCIAL RESOURCES BARRIERS TO FINANCIAL RESOURCES BARRIERS TO FINANCIAL RESOURCES BARRIERS TO FINANCIAL RESOURCES A Minority Male owner of a construction company that provides services for CIRP projects reported that he has experienced difficulty obtaining financing, which has impeded the growth of his company: Lack of financing stunts your growth as a business. Right now I’m facing the fact that we have done so many projects, but I’m waiting for people to pay me back so we can finance other projects. It puts you in a situation where you are leasing and renting large item equipment instead of purchasing it. A line of credit would free up money to finish projects and when they finally pay off, we could invest back into the business. A Minority Male owner of a construction company that provides services for CIRP projects reported that his bank cut his line of credit after the recession: When the economy changed in 2008, a lot of banks pulled their lines of credit. I had such a small line of credit of only $25,000 they decided that I was more of a risk. One day I got a letter indicating that they we’re going to cancel my line of credit. It wasn’t because of late payment because we rarely used it. But they decided to shut it down, so I haven’t had a line of credit since 2008. A Minority Male owner of a construction company that provides services for CIRP projects believed that African American companies, in particular, have had difficulty obtaining financing and lines of credit: Most minority businesses have problems obtaining financing, particularly African Americans. And one of the obstacles seems that they want you to risk all your assets including your house. If you have to put it all on the line for a hope, that creates a real problem for the average business owner. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-22 A Minority Male owner of a construction company that provides services for CIRP projects reported that he only had success in obtaining financing when partnering with a non-minority company: My company was able to receive financing as long as we joint- ventured with a non-minority company. When I bid as an individual and not as a joint venture, we were denied. I was told that we did not have a track record. We later found was that the president of the bank and my joint-venture partner were best of friends. A Minority Female owner of a non-engineering professional services company reported that she has had difficulty obtaining a line of credit since she started her company. We have been trying to get a line of credit since we started the company. When we get hired to do work we don’t receive payment for 60 days. So, we have tried to get a line of credit. Every year we try and every year we’re turned down. A Minority Male owner of a construction company that provides services for CIRP projects reported that he is unable to meet payroll on a regular basis because of his difficulty in obtaining financing. He goes on to describe the myriad of payments he must make to keep his company viable. I was told on several occasions by other company that they were unable to get a line of credit especially with African American company. It has affected my business in that I am unable to meet payroll on a weekly basis. We have to set up special pay arrangements with general contractors to meet payroll. XI.XI.XI.XI. BARRIERS TO BONDINGBARRIERS TO BONDINGBARRIERS TO BONDINGBARRIERS TO BONDING A Minority Male owner of a construction company that provides services for CIRP projects reported that he is unable to bid on larger contracts because of lack of bonding: I had to obtain a bond for the union and I did not have a problem with it. But right now, I cannot get bonded because the insurance companies and the bonding agencies have been hit hard from large construction companies who default on $5 and $10 million projects. They walk away. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-23 A Minority Male owner of a construction company that provides services for CIRP projects believes that bonding requirements are used to prevent Minority Company from participating on projects: Bonding is used as an obstacle to keep minorities off the project. The initial prime contractor has to have 100 percent bond. So the project is bonded twice. But when minorities are forced to obtain a bond, it’s only because they don’t want them on the project. This is a tool that they use as an obstacle for minority business participation. A Minority Male owner of a construction company that provides services for CIRP projects reported that he has had difficulty in obtaining bonding: I have had problems obtaining bonding depending on the size of the contract. I mean I’ve had many conversations with contractors in St. Louis and that is one of the top five things that they bring up, is the inability to secure a bond to perform work. XII.XII.XII.XII. LATE PAYMENTS FROM PRIME LATE PAYMENTS FROM PRIME LATE PAYMENTS FROM PRIME LATE PAYMENTS FROM PRIME CONTRACONTRACONTRACONTRACTORSCTORSCTORSCTORS A Minority Female owner of an engineering professional services company reported that late payments by prime contractors impact her ability to pay her employees: I can’t make payroll because of late payments. I have a revolving line of credit, but I have a $50,000 cap on that revolving line of credit. A Minority Male owner of an engineering professional services company reported that he has been paid late by prime contractors, which affects the cash flow in his business: Because they pay slowly it can kill you. It affects us significantly; and we manage cash very tightly. But I think it affects other companies that have virtually no credit lines out there. A small minority business may get its first $250,000 contract, but will need to put up $50,000 to make payroll over the next few weeks until he gets paid. I don't think the lenders support that. This same business owner reported that certain projects allow prime contractors to avoid paying their subcontractors: Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-24 One of the problems with MSD is that if we work for a majority contractor on a large sewer line project, MSD typically pays the prime contractor but they do not pay us. But you can't file a lien on an MSD easement. And the pipe is in an easement. It's not on a piece of property, it's in an easement. And so that takes one tool away from a subcontractor to be able to collect their money. A Minority Male owner of a contractual services company reported on the difficulty he experienced attempting to seek payment from a prime contractor: With small companies cash flow is very important. Without a cash flow you might as well shut down and just go home. And there have been times when contractors who told me they would pay on a 30 day cycle failed to do so. I had to go to their office four or five times just to get paid. This, in turn, puts a strain on the business and the morale goes down with the employees because they don't know whether or not they will be laid off. Also, we can't go after any other contracts because we are strapped for cash. So when you're a small business, you need your cash immediately, as quick as possible. A Minority Male owner of a non-engineering professional services company reported that late payments impact his ability to operate his business on a day-to-day basis: Late payments make it hard to get the equipment to go catch more fish. It becomes another facet of my job and collecting money is the last thing I need to do after we performed a service. Late payments have impacts our ability to operate and maintain a structured environment for our business. A Minority Male owner of a construction company that provides services for CIRP projects believes that MSD should assist subcontractors in seeking payment from prime contractors: MSD needs to be held accountable for allowing their prime contractors to pay us late. It does nothing but put us in a hole. Weekly pays the tradesmen and tradeswomen on their projects. A Minority Male owner of a construction company that provides services for CIRP projects reported that he often receives late payments from prime contractors: The large companies don’t pay the fastest. But they say, “When we get paid, we’ll pay you.” And that hurts us because they don’t turn their invoices in regularly to MSD. It’s better to keep the minority Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-25 companies paid versus letting them sit out and wait on money which puts us in a bind. A Minority Male owner of a construction company that provides services for CIRP projects reported that he often receives late payments from prime contractors: For the smaller-scale projects MSD is fair about their turn-around when they pay. When you turn your invoice in and within 10 days MSD will pay you. But when you work as a subcontractor to one of the general contractors on the larger contracts, we had to wait six months before we got a payment. Because they say they lost our invoice. We stay on them and they give you that old routine: “Well we don’t have it.” Then you send them another one. Then you send them an email of the one that you sent originally and they say, “We didn’t get it.” They go into that routine. And MSD does not do anything to them. And with MODOT they do not pay the prime contractor until he pays his subcontractors. This same business owner believed that MSD could do more to assist minority contractors in receiving payments in a timely manner: I think that MSD could assist the minority contractors a lot more. When I brought this to [name withheld]’s attention, she said, “Why would you sign a contract with them that does not allow you to be paid the way you think you should be paid?” And my response to [name withheld] was, “what choice do we have?” I don’t have any negotiating power. Either you sign this contract or either you don’t. So we’ll sign the contract and just hope to get paid timely. When MSD negotiates with their generals they should include in their contract that their minority contractors are paid within a certain time. XIII.XIII.XIII.XIII. COMMENTS ABOUT THE COMMENTS ABOUT THE COMMENTS ABOUT THE COMMENTS ABOUT THE M/WBEM/WBEM/WBEM/WBE UTILIZATION PROGRAM UTILIZATION PROGRAM UTILIZATION PROGRAM UTILIZATION PROGRAM A Minority Male owner of a construction company that provides services for CIRP projects reported that the participation of minorities should reflect their availability in the market area: The first thing that they can do is hire more Black contractors. You can’t put the fox in charge of the hen house and expect everything to be okay. If 37 percent of your customer base is African American, then that should be reflected in MSD’s contracting. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-26 This same business further elaborated that: When a contract is awarded they should make sure the contract indicates that minority contractors are paid within 15 days. They can take advantage of the leverage that they have with the prime contractors because when it comes to us as minority contractors we at their mercy. A Minority Male owner of a construction company that provides services for CIRP projects reported that he believes that there should be minority participation requirements on emergency contracts: If they care about M/WBEs whether it be financing, getting paid on time or availability to contracts, we wouldn’t have these issues. A real big issue is the emergency contracts that they come up with. Some of them are big money contracts but minorities are not used on them because they say it’s an emergency. Well that should not make a difference. Any service valued over $50, 000 to $75,000 is supposed to have minority participation. They don’t have anything set up for emergencies, so that’s a lot of money African Americans are not even entitled to because they call it emergency jobs. A Minority Male owner of a construction company that provides services for CIRP projects believed that the M/WBE Program is valuable but needs some outside help to make the program truly effective: I think it’s valuable. Something is better than nothing. But there is a lot of work that needs to be done. They need to enforce the regulations which monitor the program. If you have a program with a goal, then there should be a M/WBE percentage on the project. But they need to put the tools in place to make sure this happens. A Minority Male owner of a construction company that provide services for CIRP projects reported that he has received poor service from the MSD staff when inquiring about plans and specifications: The folks who should help seem to have a very negative attitude toward me and my company. I don’t know if they treat everyone like that. [Title withheld] has a very nasty disposition. The [title withheld] is very negative. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-27 A Non-Minority Male owner of a construction company that provides services for CIRP projects reported that his company has difficulty fulfilling M/WBE requirements on larger projects because there are not enough M/WBE companies pre-qualified. I think the M/WBE program could be valuable. It makes it difficult because we don’t have enough of the disadvantaged companies to make up some of percentages on these bigger jobs. I think that’s the think biggest problem. There are not enough companies out there that can take on the work. This is why general contractors struggle because there’s not enough disadvantaged companies out there that have the capability to do what you really need them to do. When you’re trying to hit those percentages and you can’t, it makes people cheat and use pass through companies. And then, we’re a reputable company, we don’t want to do that. A Caucasian Male owner of a non-engineering professional services company reported that he has difficulty finding qualified M/WBEs: We are minority, disadvantaged and woman-owned business friendly companies. We would encourage the use of more of those types of companies. But it is an obstacle in finding qualified minority and woman-owned businesses to support our contract and do a good job. A Caucasian Male owner of a non-engineering professional services company described an experience where he could not find an adequate list of certified M/WBE contractors from MSD: We asked for a list of available company, and it was not available to us publicly because the District felt that it would be prejudicial and would almost be a recommendation of those companies. They recommended that we look at the St. Louis Airport Authority for a list of those companies. We did that and the St. Louis Airport Authority would not provide a public list of M/WBE company by type of industry code so that we could contact them to participate. So, we really had two obstacles during that process, and it’s all related to lack of knowledge of the individuals that are certified and willing and able to do the work. This same business owner further elaborated that: The nature of our business being highly technical, requiring technical certifications, like certified public accounting or certified information technology professionals, we find it hard to find a Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-28 minority or woman-owned company. It’s difficult to find those companies in the St. Louis area with those proper qualifications and professional certifications to perform that type of work. A Minority Male owner of a non-engineering professional services company reported that M/WBE Program lacks compliance monitoring: The M/WBE Program certainly doesn’t follow the model that has already been established in the market. MSD really does not have compliance monitors in place. This same business owner reported that a minority subcontractor was asked to misrepresent its team as a one hundred percent minority-owned business: MSD recently chose a professional services company that had a minority subcontractor. The minority subcontractor said, “MSD indicated that you have to count this as a 100 percent minority team.” And their response was, “well, it’s not, I’m only 25 percent of the project.” That vendor was told, “if you don’t do it then you’re not going to be a part of this project.” A Minority Female owner of an engineering professional services company reported that the M/WBE Program has been beneficial for her company and she believes that the separated participation goals should be continued: I don’t think we’d have a company if they didn’t have the M/WBE a program. We would be half the size of what we are now. It’s helped us to grow these first three years. I know there is some talk about MSD separating goals for construction and for professional services. As a minority-owned company, I didn’t want the WBE status because I didn’t want to be stuck in that 5 percent participation category. But as a minority-owned company, the 25 percent works great for us. Having a 25 percent minority goal on a project helps us. We still have to compete with other minorities to get some of that 25 percent, but having one goal lessens the amount that’s set aside for minorities. A Minority Male owner of a construction company that provides services for CIRP projects reported that the M/WBE Program should be revised to be more successful: The MSD program is valuable, but it can be tweaked. What I mean by tweaked is they need a little bit more control over that department to reinforce the inclusion of MBEs. What I mean by that is how do good faith efforts prevent opportunities for minorities? Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-29 A Minority Male owner of a construction company that provides services for CIRP projects reported that the M/WBE Program is valuable: I prefer to say the M/WBE program is valuable. The program should be strengthen and put some teeth in it. A Minority Male owner of a non-engineering professional services company reported that MSD needs to have better communication throughout the contracting process for the M/WBE Program to be successful: It needs better communication throughout the entire contracting process. Again, in the region that I live in has a Black and White culture. The White culture fears any minority participation, because they look at it as taking money out of their pocket or you're taking food out of their mouth. A Caucasian Male owner of a non-engineering professional services company also believes the M/WBE Program is valuable for M/WBEs: I recognize that historically there are challenges that disadvantaged, minority, and woman-owned businesses face and putting a program in place is a good idea. A Caucasian Male owner of a non-engineering professional services company explained that the goal of the M/WBE Program, in his opinion, is to employ locals and grow businesses: The reason the program exists in the state of Missouri is to create a level playing field for majority companies. MSD represents the broader population with their dollars and having systems in place to encourage the economic development within their market including small, woman-owned, and minority-owned companies makes sense. I am not convinced that having a 30 percent pool dedicated to M/WBEs or a five percent women and 25 percent minority goal is good. I think that you start slicing things a little too thinly and you lose the efficacy and the overall intent of the program. You start managing the details rather than looking more strategically about what the program is really trying to do. As a prime contractor our goal is to help grow businesses in our market. The intent of the program is to help employ local folks and grow local businesses. That is great, worthwhile, especially when you’re looking at spending taxpayer federal dollars in the marketplace. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-30 A Minority Male owner of an engineering professional services company believes the Diversity Programs leadership has been strong: I think [name withheld] has been around for a long time. She is knowledgeable and she has the support of MSD management. I think having the support of the M/WBE Program is very important. I think that she's earned respect for what she has implemented. A Minority Male owner of a contractual services company believes the M/WBE Program is valuable, but he thinks the certification process could be simplified to include more companies: I believe it's valuable because it does provide a set-aside approach for businesses to be able to have access to contracts. It's a valuable program, but because they have adopted the same policy that has been adopted by the Department of Transportation. A Minority Male owner of a non-engineering professional services company believes the M/WBE Program is valuable, but admits it has not been beneficial to him: I think it’s valuable because anytime you have opportunities where businesses that are not represented get an opportunity to bid and work on projects is a good thing. But, it hasn’t necessarily been helpful to me, but I assume it’s been helpful to other companies. They should incorporate some of the technology work as part of the participation requirements which would allow us to bid on them with general contractors would provide us more opportunities. A Minority Male owner of a construction company that provides services for CIRP projects doesn’t think the M/WBE Program is valuable: They really don’t have a program. I mean they need have anything serious. They need to look as other agencies that do have viable programs for ideas. At least get a general idea of what’s been successful for minority contractors. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-31 This same business owner also believes the M/WBE participation is unfairly applied: One of my colleagues who own a steel erection company bid on a job for steel erection and they lost the bid to a company that does “tuck pointing”.8 So, a tuck pointing company ends up winning a bid to do steel erection. The tuck pointing company was a certified WBE and under your certification you are only allowed to do the work that’s in your category. In other words, if I’m a plumber and I’m certified as an MBE or a WBE, as a plumber, I can’t go out and bid electrical work. I can’t run wire. So here we have a tuck pointing company providing structured steel services. A Caucasian Male owner of an engineering professional services company believes the M/WBE Program has been valuable to the community: It is valuable to the community. It’s expanded the interaction between engineering company and hopefully added a potential method for mentoring smaller M/WBE company by helping them grow and understand business better. This same business owner also believes that the M/WBE Program should emulate the federal program where companies graduate after a certain time period: I wish the program emulated the federal DBE program and forced companies to graduate after a certain time period. They don’t graduate from the M/WBE program. I have found that the M/WBE program provides a springboard for those company that don’t need it because they are high performers. There are company that are M/WBEs whose services subcontract and they are three times the size of my company. I don’t think that’s right. This same business owner also reported that the M/WBE Program does not have enough qualified contractors. There is a mismatch as far as the number and quality of company available to match the MBE goals. In other words, there may be a number of M/WBE company out there, [but] not all of them are of the same quality. We want to meet the goals but we don’t have the qualified applicants to do it. And as a whole, this community doesn’t have the qualified applicants to meet the goals. 8 “Tuckpointing” is a method of using two contrasting colors of mortar in brickwork to where one color matches the bricks to give an artificial appearance of color in the mortar. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-32 XIV.XIV.XIV.XIV. EXEMPLARY BUSINESS PRACTICESEXEMPLARY BUSINESS PRACTICESEXEMPLARY BUSINESS PRACTICESEXEMPLARY BUSINESS PRACTICES A Minority Male owner of a construction company that provides services for CIRP projects reported on the positive assistance he received from MSD’s Diversity Programs Office: She got involved and came to my office and spoke to my staff. I give [name withheld] a lot of credit for her hard work. I think she needs a little bit more help in her department to get the engineering and purchasing department to understand how important it is to work with smaller contractors as opposed to the big general contractors. A Minority Male owner of a construction company that provides services for CIRP projects reported that he has had good experiences with several MSD inspectors: These guys, [names withheld], are inspectors and they are excellent. They say, “Hey dude you need to do it like this.” Or we can work with them and get a fair deal with if there are any overages or problems. I do not have to worry about them trying to beat me down on my numbers. A Minority Male owner of a construction company that provides services for CIRP projects reported that he had a positive experience with a MSD staff member: The one person who has been helpful is the person who provides the drawings. A Minority Male owner of a non-engineering professional services company cited two MSD managers who have helped his company: [Name withheld] in procurement, is honest and up front. She does not trying to mislead you. She just says, “You know this is not something that fits you.” And she will sit down with you and tell you if MSD has an interest in your project or not. A Caucasian male owner of a non-engineering professional services company reported that a manager in the public affairs department has been helpful to his company: [Name withheld], in the public affairs department, is professional and I feel like he has actually helped my company. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-33 A Minority Male owner of a contractual services company reported that a manager in the maintenance department has been helpful to his company: An employee by the name of [name withheld] in the Maintenance Department has been very helpful. A Minority Male owner of a construction company that provides services for CIRP projects cited a department manager as helpful to his company: She was in the department of supplies and her name is [name withheld]. I’ll tell you what she did. She sent me information about their coding system and a form where I could pick out the services that I provide and she helped me with the coding. She was very helpful. A Caucasian Male owner of an engineering professional services company found several MSD engineering managers helpful: Many of their engineering managers are helpful. I don’t think their engineering managers are an impediment. The engineering managers have the same goals as we do, which is to try to provide a good product. And most of them work with us to help that happen, not against us. This is the program management group and the planning group. A Caucasian Male owner of a construction company that provides services for CIRP projects reported that a MSD plant manager has been helpful to his company: The gentleman that runs a MSD plant is helpful. We have one gentleman who works at the different plants. He’s a non-minority and a plant manager for the plant. A Caucasian Male owner of a non-engineering professional services company also reported that he has received assistance from a MSD manager: As MSD we worked with [Name withheld] who was very helpful in guiding the proposal and scope of work process. A Minority Female owner of a non-engineering professional services company reported that most MSD managers have been helpful: I think most of MSD’s managers have been helpful. I won’t be able to give you titles but I can give you some names, [names withheld]. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-34 There are lots of others I just can’t remember their names, but they are all White males. XV.XV.XV.XV. RECOMMENDATIONS TO INCREASE RECOMMENDATIONS TO INCREASE RECOMMENDATIONS TO INCREASE RECOMMENDATIONS TO INCREASE M/WBEM/WBEM/WBEM/WBE PARTICIPATION PARTICIPATION PARTICIPATION PARTICIPATION A.A.A.A. Program Recommendations from Business Program Recommendations from Business Program Recommendations from Business Program Recommendations from Business Owners:Owners:Owners:Owners: A Minority Male owner of a construction company that provides services for CIRP projects recommended that MSD aid minority contractors seeking assistance with prime contractors: I think they can negotiate a better and faster pay for M/WBEs. We talked to [name withheld] about MSD stepping in and saying, “Hey, we have contractors who need a loan for mobilization cost. A Minority Male owner of a construction company that provides services for CIRP projects recommends more oversight of the M/WBE Program’s regulations: There are all of these fake companies running around here, and MSD is letting all this and other stuff go on. I think that this study can do a lot to help African Americans if they’re not just doing this to pacify people. The first thing they should do is they should start caring. Right now, they don’t care. They don’t hire black folks as engineers. MSD does not hire Black engineers or Black inspectors. And 37 percent of their customer base is African American, but they’re not hiring them. One of the inspectors called me one day and said “hey man, this company [name withheld], got the contract. I said, “Yeah, but [name withheld] is doing all the work. These truck drivers are being certified as sewer guys, and they give the work to the White boys. They may fulfill the minority portion of it, but no one Black is doing the work. And this is sad. You see it on the news every day. Our kids can’t get a job, but this is one of the reasons why. If you ask MSD right now for their roster, they’ll show you a roster full of women- owned businesses and these will be White women. There are loopholes and they’ve found their way through it. They are making a mockery of the MBE and WBE program. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-35 This same business owner reported that the M/WBE Program should have more sensitivity when assisting businesses: I called one day, and said [company name withheld] is not paying me in a timely fashion. I was told, “you and I can talk.” Do you know the company was called immediately thereafter? The people I do business with called me back and said, why would you go to MSD? If you got problem, why didn’t you come to me? I said, “I have six months of emails chasing checks with you guys, so don’t act like it’s a surprise.” But the whole point is MSD went to them and talked about stuff that was between us. Nothing got solved. Honestly, not a clue on anything. A Minority Male owner of a construction company that provides services for CIRP projects recommended that MSD take a more active role in working with the minority- owned business community to form a partnership with them: MSD needs to come out of the office and into our community and work our organizations to share information, resources, and to set up programs. And to make sure the contracts are getting into a pool for minorities to bid. This is not rocket science. If you want it to work, it will work. If you don’t want it to work, then you’ll do very little. It appears that MSD is doing very little at this time. This same business owner recommended that MSD offer bonding and financial assistance services: They can provide an OCIP or an Owner Control Insurance Program. There are smaller community banks that are a great opportunity for companies like mine. In particular, there is a $50 million fund that Prince George’s County government set up for minority business. They realize that the problem is a red line problem with the banks. So, the local government in Prince George’s County acts as the bank itself and they loan money directly to minority businesses. There is also the Link program, where they persuade banks that they deal with to loan money to minority businesses that had contracts with their procurement department. This same business owner offered additional recommendations: I think MSD needs oversight. MSD in my opinion needs to perhaps change some personnel. Get those folks out who are acting as obstacles to minority business participation. There should be Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-36 advocates for minority business participation. They need to follow the EPA rules and regulations as well. They need an online database where you can look at the opportunities and be able to make decisions without going through a second party. They also need an internal bid office where we are allowed to go in and review plans at no cost to M/WBE company. They should offer a mandatory pre-bid meeting for the primes only. The primes who are planning to bid must be required to show up. They could create a local program where certain contracts go specifically to local company. They should also break-up those contracts into different categories based on race as a result if the study. So, if African Americans are not receiving contracts, they should have a set-aside program for African Americans. A Minority Male owner of a construction company that provides services for CIRP projects recommended a mentor protégé program: The AGC has a four-year mentoring protégé program. It provides me with an opportunity to go into their offices and meet project managers, engineers, estimators, and executives. I found it helpful because it gave me a chance to meet people that I have never seen before, to build a report with them face-to-face rather than over the phone or via fax or via email. A Minority Male owner of a non-engineering professional services company also recommended that the M/WBE Program include a mentor/protégé program: I would like to see prime contractors working with subcontracts in a mentor or prodigy role. You don't have a lot of minority and women-owned businesses that can go underground 15 feet and do some of the things MSD requires. This would allow the majority- owned companies to assist in growing M/WBEs. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-37 This same business owner recommended that MSD incorporate a point system when evaluating bids: There should be a point system in place where a business would receive points if they are a M/WBE, their bid is the lowest, and they perform in a Hub-Zone. A Minority Female owner of an engineering professional services company recommended that MSD break up work into smaller packages: MSD should break some of the work up into smaller projects so smaller businesses can prove their worth and their competency. I don’t want to be favored because I’m a woman. I don’t want to be favored as a minority. I just want an even playing field to be able to compete. They bundle the projects in such a format that it’s impossible to compete. I think it would be really helpful if they could break down their projects to manageable pieces for the kinds of company they are looking to get work from. This same business owner recommended that MSD send email notices of contracts prior to the project’s design phase: Almost all of the information that I get relating to minority or women-owned services typically is after the design phase. It’s almost always construction. And so I will most of the time call just to make sure I wasn’t missing something, that there isn’t some ancillary drawing, but most of the time there really isn’t any. They should send the e-mail before the design phase. I need to check and make sure that they’ve got me recorded A Caucasian Male owner of a non-engineering professional services company recommended forming an advisory council to the DBE Program: An advisory council could to the certifying agencies and invite people to apply and strategically determine what opportunities are available to M/WBES. This same business owner recommended that MSD compile a list of certified businesses: They need to make sure that the certified businesses are available to the public Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-38 B.B.B.B. Trade and Business Association Trade and Business Association Trade and Business Association Trade and Business Association Representatives Representatives Representatives Representatives M/WBEM/WBEM/WBEM/WBE ProgramProgramProgramProgram COMMENTS COMMENTS COMMENTS COMMENTS The representatives from the trade and business association representatives provided the following comments regarding the District’s M/WBE Utilization Program: I think the M/WBE program breaks down the barriers, creates relationships, and it provides opportunities for minorities and women businesses to grow. The M/WBE program is valuable. I think what they have in the area of construction is absolutely valuable. They have to be pushed it seems by outside influence to really make changes. There is no way our members could compete without that program. Prime contractors would not take them seriously. The minority contracting goal concerns me because they can be very difficult to meet. They need to recruit more women and minorities in the engineering profession to meet the goals. The program allows minorities and women to work successful with MSD. However, the utilization numbers have not been great. I think the program is balanced in its approach to including M/WBEs in MSD’s contracts. I think they have a good objective which is to have greater participation by minority and women firms in their business. There goals are not realistic. A 40 percent minority participation goal is not feasible. Prime contractors want to make sure the industry can work towards a common, workable goal but they don't want to be handcuffed to something that's not reality. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 10-39 C.C.C.C. Trade and Business AssociationTrade and Business AssociationTrade and Business AssociationTrade and Business Association There was a pattern to the recommendations offered by trade and business association representatives. The recommendations are listed in Table 10.01 below: Table 10.01: Trade and Business Representatives Recommendations XVI.XVI.XVI.XVI. SUMMARYSUMMARYSUMMARYSUMMARY Anecdotes collected from business and trade association representatives revealed barriers in working with or seeking work from MSD. The representatives from the trade and business associations also reported on the experiences their members encountered working with or seeking work from MSD. MSD’s exemplary practices in utilizing M/WBEs were described by both groups of interviewees. Recommendations to improve access to MSD’s contract for M/WBEs and other small businesses were also offered. · Implement policies to grow the capacity of M/WBEs · Unbundle large contracts into smaller projects · Allow subcontractors to provide non-essential work, such as surveying or inspection work · Provide more lead time to respond to bid/proposal requests · Provide bonding and financial assistance to M/WBEs · Implement stricter certification requirements to prevent fraudulent M/WBEs · Consider reducing insurance requirements for M/WBEs · Set-asides for MBEs Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 11-40 CHAPTER 11: RACE AND GENDERRACE AND GENDERRACE AND GENDERRACE AND GENDER---- SPECIFIC SPECIFIC SPECIFIC SPECIFIC RECOMMENDATIONSRECOMMENDATIONSRECOMMENDATIONSRECOMMENDATIONS I.I.I.I. INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION This chapter is organized into three sections, beginning with the Introduction. The Statistical Findings Overview is presented in section two and the Race and Gender- Conscious Recommendations are provided in sections three. The race and gender- specific recommendations are industry specific and apply to the ethnic and gender groups where an underutilization of available minority and woman-owned business enterprises was at a statistically significant level. The statistical analysis includes a review of the prime and subcontracts. The prime contract statistical analysis includes a review of building construction, non-building construction, engineering professional services, non- engineering professional services, and supplies and contractual services awarded during the July 1, 2007 to January 31, 2012 study period. The subcontract analysis includes all of the industries except supplies and contractual services. The study period was also different. It covers the period May 1, 2010 to January 31, 2012. Race and gender-neutral recommendations apply to all ethnic and gender groups and industries. The race and gender-neutral recommendations are derived from an analysis of the Metropolitan St. Louis Sewer District (MSD) Procurement Manual, a review of MSD’s web page, anecdotal testimonials, regression analyses, and government and corporate best management practices intended to increase Minority, Woman-owned Business Enterprises’ (M/WBEs’) and small business enterprises’ (SBEs’) access to contracting. The recommendations for MSD’s contracting and acquisition process include administrative recommendations, a web page analysis, and a review of the 2012- 2013 Experience Questionnaire used to pre-qualify bidders for construction and engineering professional services work. These initiatives are presented in Chapter 12, Race and Gender-Neutral Recommendations. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 11-41 II.II.II.II. STATISTICAL FINDINGS OVERVIEWSTATISTICAL FINDINGS OVERVIEWSTATISTICAL FINDINGS OVERVIEWSTATISTICAL FINDINGS OVERVIEW The statistical analysis of M/WBE utilization is a critical component of the Study. The objective of the statistical analysis was to determine if M/WBEs were utilized at the level they were available in MSD’s geographic market area. Where an ethnic or gender group was underutilized and the underutilization was statistically significant, the finding constituted a disparity. Race and gender-specific recommendations are proposed for the ethnic and gender groups which had a finding of disparity. The statistical findings are presented by ethnicity and gender within each industry and at two different monetary threshold levels. For the analysis of formal contracts the threshold for all five industries–building construction, non-building construction, engineering professional services, non-engineering professional services, and supplies and contractual services–was limited to $500,000. The $500,000 threshold was designated because at that level, there was a demonstrated capacity within the pool of M/WBEs willing to perform on MSD’s contracts. An informal threshold is established in MSD’s procurement code for supplies and contractual services. The informal level, which only applied to the supplies and contractual services industry, was $25,000. A.A.A.A. Prime ContractsPrime ContractsPrime ContractsPrime Contracts As depicted in Table 11.01, MSD issued 40,868 contracts, purchase orders, and direct payments9, hereafter contracts, during the July 1, 2007 to January 31, 2012 study period. The 40,868 contracts included 27 for building construction, 772 for non-building construction, 186 for engineering professional services, 337 for non-engineering professional services, and 39,546 for supplies and contractual services. The payments made by MSD to prime contractors on the 40,868 contracts in the five industries during the study period totaled $914,888,875. The payments included $265,714,726 for building construction, $288,669,563 for non-building construction, $90,658,256 for engineering professional services, $59,704,115 for non-engineering professional services, and $210,142,214 for supplies and contractual services. The statistical analysis of disparity for each industry was limited to prime contracts valued under $500,000. 9 These three types of transactions are referred to as contracts in this Study. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 11-42 Table 11.01: Total Prime Contracts and Dollars Expended: All Industries, July 1, 2007 through January 31, 2012 Industry Number of Contracts Total Award Dollars Building Construction 27 $265,714,726 Non-Building Construction 772 $288,669,563 Engineering Professional Services 186 $90,658,256 Non-Engineering Professional Services 337 $59,704,115 Supplies & Contractual Services 39,546 $210,142,214 Total Expenditures 40,868 $914,888,875 B.B.B.B. SubcontractsSubcontractsSubcontractsSubcontracts As indicated in Table 11.02, a total of 1,489 subcontracts were identified in the four industries, for the May 1, 2010 to January 31, 2012 study period. Specifically, the subcontracts identified included 389 building construction subcontracts, 1,031 non- building construction subcontracts, 51 engineering professional services subcontracts, and 18 non-engineering professional services subcontracts . The total subcontract dollars analyzed were $143,099,473. This total included $97,035,474 for building construction subcontracts; $42,383,416 for non-building construction subcontracts; $2,505,118 for engineering professional services subcontracts; and $1,175,465 for non-engineering professional services subcontracts. Table 11.02: Total Subcontracts Awarded and Dollars Expended, All Industries, May 1, 2010 to January 31, 2012 Industry Total Number of Subcontracts Total Amount Expended Building Construction 389 $97,035,474 Non-Building Construction 1,031 $42,383,416 Engineering Professional Services 51 $2,505,118 Non-Engineering Professional Services 18 $1,175,465 Total Expenditures 1,489 $143,099,473 Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 11-43 C.C.C.C. Prime Contract Disparity FindingsPrime Contract Disparity FindingsPrime Contract Disparity FindingsPrime Contract Disparity Findings 1. Building Construction Contracts As indicated in Table 11.03, statistically significant underutilization was not found for any group on building construction contracts. Table 11.03: Disparity Summary: Building Construction Prime Contract Dollars, July 1, 2007 through January 31, 2012 Ethnicity/Gender Contracts under $500,000 African Americans No Asian Americans No Hispanic Americans No Native Americans No Minority Business Enterprises No Women Business Enterprises ** Minority and Women Business Enterprises ** Yes = The analysis is statistically significant. No = The analysis is not statistically significant or there are too few available firms to test statistical significance. (**) = The analysis does not statistically test the overutilization of M/WBEs. 2. Non-Building Construction As indicated in Table 11.04, African American, Asian American, and Minority Business Enterprise non-building construction prime contractors were determined to be underutilized at a statistically significant level. Table 11.04: Disparity Summary: Non-Building Construction Prime Contract Dollars, July 1, 2007 through January 31, 2012 Ethnicity/Gender Contracts under $500,000 African Americans Yes Asian Americans Yes Hispanic Americans No Native Americans No Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 11-44 Ethnicity/Gender Contracts under $500,000 Minority Business Enterprises Yes Women Business Enterprises ** Minority and Women Business Enterprises ** Yes = The analysis is statistically significant. No = The analysis is not statistically significant or there are too few available firms to test statistical significance. (**) = The analysis does not statistically test the overutilization of M/WBEs. 3. Engineering Professional Services As indicated in Table 11.05, Asian American, Minority Business Enterprise, Women Business Enterprise, and Minority and Women Business Enterprise engineering professional services prime contractors were determined to be underutilized at a statistically significant level. Table 11.05: Disparity Summary: Engineering Professional Services Prime Contract Dollars, July 1, 2007 through January 31, 2012 Ethnicity/Gender Contracts under $500,000 African Americans No Asian Americans Yes Hispanic Americans ** Native Americans No Minority Business Enterprises Yes Women Business Enterprises Yes Minority and Women Business Enterprises Yes Yes = The analysis is statistically significant. No = The analysis is not statistically significant or there are too few available firms to test statistical significance. (**) = The analysis does not statistically test the overutilization of M/WBEs. 4. Non-Engineering Professional Services As indicated in Table 11.06, African American, Asian American, Hispanic American, Minority Business Enterprise, Women Business Enterprise, and Minority and Women Business Enterprise non-engineering professional services prime contractors were determined to be underutilized at a statistically significant level. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 11-45 Table 11.06: Disparity Summary: Non-Engineering Professional Services Prime Contract Dollars, July 1, 2007 through January 31, 2012 Ethnicity/Gender Contracts under $500,000 African Americans Yes Asian Americans Yes Hispanic Americans Yes Native Americans No Minority Business Enterprises Yes Women Business Enterprises Yes Minority and Women Business Enterprises Yes Yes = The analysis is statistically significant. No = The analysis is not statistically significant or there are too few available firms to test statistical significance. (**) = The analysis does not statistically test the overutilization of M/WBEs. 5. Supplies and Contractual Services As indicated in Table 11.07, African American, Asian American, Minority Business Enterprise, and Minority and Women Business Enterprise supplies and contractual services prime contractors were determined to be underutilized at a statistically significant level at both the formal and informal contract levels. Women Business Enterprise supplies and contractual services prime contractors were also determined to be underutilized at a statistically significant level at the formal level. Table 11.07: Disparity Summary: Supplies and Contractual Services Prime Contract Dollars, July 1, 2007 through January 31, 2012 Ethnicity/ Gender Supplies and Contractual Services Contracts under $500,000 Contracts $25,000 and under African Americans Yes Yes Asian Americans Yes Yes Hispanic Americans ** ** Native Americans No No Minority Business Enterprises Yes Yes Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 11-46 Ethnicity/ Gender Supplies and Contractual Services Contracts under $500,000 Contracts $25,000 and under Women Business Enterprises Yes ** Minority and Women Business Enterprises Yes Yes Yes = The analysis is statistically significant. No = The analysis is not statistically significant or there are too few available firms to test statistical significance. (**) = The analysis does not statistically test the overutilization of M/WBEs. D.D.D.D. Subcontract Disparity FindingsSubcontract Disparity FindingsSubcontract Disparity FindingsSubcontract Disparity Findings As indicated in Table 11.08, African American, Hispanic American, Minority Business Enterprise, and Minority and Women Business Enterprise building construction subcontractors were determined to be underutilized at a statistically significant level. African American and Minority Business Enterprise non-building construction subcontractors were determined to be underutilized at a statistically significant level. There were no statistically significant findings of underutilization for engineering and non-engineering professional services subcontractors. Table 11.08: Subcontractor Disparity Summary, May 1, 2010 to January 31, 2012 Ethnicity / Gender Building Construction Non-Building Construction Engineering Professional Services Non-Engineering Professional Services African Americans Yes Yes ** ** Asian Americans No No ** No Hispanic Americans Yes No ** No Native Americans No No No No Minority Business Enterprises Yes Yes ** ** Women Business Enterprises ** ** ** ** Minority and Women Business Enterprises Yes No ** ** Yes = The analysis is statistically significant. No = The analysis is not statistically significant or there are too few available firms to test statistical significance. ** = The analysis does not statistically test the overutilization of M/WBEs. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 11-47 III.III.III.III. RACE AND GENDERRACE AND GENDERRACE AND GENDERRACE AND GENDER----CONSCIOUS REMEDIESCONSCIOUS REMEDIESCONSCIOUS REMEDIESCONSCIOUS REMEDIES The factors that determine whether a race-conscious remedy pursuant to Croson is “narrowly tailored” are: (1) statistical findings necessitate such a remedy; (2) it has a limited duration; (3) it is flexibly administered, including the provision of a waiver if the goal cannot be met; and (4) there is a minimal burden on innocent third parties. The most recent United States Court of Appeals for the Fourth Circuit opinion in H.B. Rowe Company, Incorporated v. W. Lindo Tippett, et. al.10 (Rowe) applied the Croson standard for “narrowly tailored” race-based subcontracting remedies to the North Carolina Department of Transportation (NCDOT) M/WBE Program. The court found that NCDOT’s race and gender-based subcontracting goals were not limited to ethnic groups where there was statistically significant underutilization. Rowe also found that private sector discrimination could not be used as a proxy for discrimination by NCDOT or its prime contractors. Rowe determined the NCDOT M/WBE Program was unconstitutional in applying the remedy to WBEs who were overutilized, which did not meet the intermediate scrutiny standard of gender discrimination. In the United States Court of Appeals for the Ninth Circuit, Western States 11 found that Washington’s Disadvantaged Business Enterprise (DBE) program was not narrowly tailored to a finding of statistically significant underutilization for each of the respective minority groups. Therefore, the State’s application of the DBE regulations was deemed unconstitutional. This decision is applicable to DBE programs. Several race and gender-conscious remedies are recommended to address the statistically significant findings of disparity for M/WBEs at the prime contract and the subcontract levels. The formal level of $500,000 for the prime contract analysis was selected to ensure that within the pool of available businesses there was capacity to perform the prime contracts analyzed. Remedial options to address disparity at the prime contract level are limited by the fact that the State of Missouri’s Public Contract Law requires that construction contracts over $3,000 be awarded to the low bidder. At the prime contract level every industry, except building construction, had a statistically significant ethnic and gender group disparity. These findings are especially notable since the decisions to award prime contracts are made by MSD, in contrast to the selection of subcontractors, which are made by the prime contractors. 10 H.B. Rowe Company, Incorporated v. W. Lindo Tippett, et. al., 589 F. Supp. 2d 587; December 9, 2008, Decided, Affirmed in part and reversed in part by, Remanded by H.B. Rowe Co. v. Tippett, 2010 U.S. App. LEXIS 15141 (4th Cir. N.C., July 22, 2010). 11 Western States Paving v. Washington State DOT, 407 F.3d 983 (9th Cir. 2005). Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 11-48 A.A.A.A. Prime ContractPrime ContractPrime ContractPrime Contract RemediesRemediesRemediesRemedies 1. Incentive Credits for Engineering and Non-Engineering Professional Service Contracts Incorporating incentive credits in the evaluation process for the groups determined to have a statistically significant underutilization in the evaluation process for the award of engineering and non-engineering professional services prime contracts would be one remedy. In addition, incentive credits would be given to Asian American and Women Business Enterprises in the evaluation process for prime contract awards in engineering professional services, and African American, Asian American, Hispanic American, and Women Business Enterprise prime contractors in non-engineering professional services. Ten percent of the evaluation points could be assigned to the incentive credits when the selection process includes a proposal or statement of qualifications but not when the selection process is by low bid. Including incentive points in the evaluation criteria can counterbalance the competitive disadvantage experienced by the groups underutilized at a statistically significant level. Offsetting this disadvantage could mitigate the disparity in the award of engineering and non-engineering professional services prime contracts. B.B.B.B. Subcontract RemediesSubcontract RemediesSubcontract RemediesSubcontract Remedies 1. Set Overall M/WBE Subcontracting Goal There are statistically significant findings of underutilization for African American and Hispanic American subcontractors for building construction, and statistically significant findings of underutilization for African American subcontractors for non-building construction. An overall M/WBE subcontracting goal should be established to remedy the documented disparity in the two industries where there was a finding of statistically significant underutilization. The overall subcontracting goal should reflect the availability of the specific groups the Study found to be underutilized at a statistically significant level, as set forth in Table 11.09. Table 11.09: Subcontractor Availability Underutilized Groups Building Construction Non-Building Construction Availability Percentage Availability Percentage African Americans 28.50 17.3 Hispanic Americans 1.21 --- Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 11-49 2. Set Contract-Specific M/WBE Construction Subcontracting Goal A subcontracting goal should be set on all construction prime contracts over $50,000 for the ethnic and gender groups that had statistically significant underutilization. The subcontract goals could be set on an individual basis for each ethnic and gender group that had statistically significant underutilization, or as a joint goal for all ethnic and gender groups that had statistically significant underutilization. The prime contractor should be required to meet the subcontracting goal at the time of bid opening. The goal must be met with one or more certified businesses providing a commercially useful function or the prime must document a good faith effort. 3. Conduct M/WBE Subcontracting Goal Attainment Reviews Goal attainment reviews should be conducted for all prime bid submittals prior to the recommendation for award to ascertain whether or not the bidder has met the M/WBE subcontracting goal(s). MSD should review the stated participation of certified M/WBEs, in each bid submittal and assess whether or not the bidder has met the M/WBE subcontracting goal. If the bidder does not meet the M/WBE subcontracting goal, the bidder must submit a Good Faith Effort (GFE) or be deemed unresponsive. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-1 CHAPTER 12: RACE AND RACE AND RACE AND RACE AND GENDERGENDERGENDERGENDER----NEUTRAL NEUTRAL NEUTRAL NEUTRAL RECOMMENDATIONSRECOMMENDATIONSRECOMMENDATIONSRECOMMENDATIONS I.I.I.I. INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION The race and gender-specific recommendations previously presented apply to the ethnic and gender groups that were underutilized at a statistically significant level. The race and gender-neutral recommendations presented in this Chapter are proposed to enhance MSD’s current business practices related to the procurement of building construction, non-building construction, engineering professional services, non-engineering professional services, and supplies and contractual services. The recommendations apply to all ethnic and gender groups which provide goods and services in the five industries. The recommendations are derived from an analysis of MSD’s procurement procedures, a review of the website, and consideration of best management practices utilized by the local governments and corporations. Implementation of these recommendations could improve access to MSD contracts for all businesses. II.II.II.II. RACE AND GENDERRACE AND GENDERRACE AND GENDERRACE AND GENDER----NEUTRAL NEUTRAL NEUTRAL NEUTRAL RECOMMENDATIONSRECOMMENDATIONSRECOMMENDATIONSRECOMMENDATIONS A.A.A.A. PrePrePrePre----Award Recommendations Award Recommendations Award Recommendations Award Recommendations 1. Expand Unbundling Policy MSD should unbundle its contracts into smaller projects to increase the number of businesses participating at both the prime contracting and subcontracting levels. The substantial size of MSD’s procurements is an impediment to small, minority, and women-owned business participation in the contracting opportunities. A result of the current practice of bundling contracts, 50 percent of the “There are five watersheds in the MSD district boundaries… So [MSD] selects a team of consultants for each one of the watersheds and that team controls subcontracting within that watershed over the next 10- year period.” Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-2 contract dollars were issued to just nine of the 2,068 utilized businesses. Moreover, when the contract term for work orders are multi-year, a single vendor controls a substantial number of MSD contract dollars and subcontract opportunities. An agency’s ability to meaningfully sanction a non-compliant contractor that has a long term contract is compromised by the prime’s virtual inextricable control over the project’s critical path. Large projects should be routinely evaluated for unbundling into smaller contracts. Conditions that are conducive to unbundling include the following: · Purchase orders requiring multiple contracts for different services at various times · Projects with phased delivery of the work · Projects conducted at multiple locations · Contracts with specifications for multiple goods and/or services · Blanket order purchases for goods and/or services · Contract amendments and change orders Capital Improvement and Replacement Plan (CIRP) projects, for example, can be unbundled to present more opportunities for M/WBEs. Site preparation, landscaping, trucking, and lateral work could create smaller contracts for M/WBEs. Additionally, engineering professional services should not be lumped together with construction services. Smaller engineering professional services contractors often do not provide construction services. Lumping design and construction together can limit contracting opportunities for M/WBE engineering professional services businesses that provide surveying, testing, planning, and other construction-related services. A contract amendment or change order that is not within the scope of the original contract should be considered a competitive procurement. Once unbundled the procurement should comply with the appropriate procurement process. 2. Establish a Direct Purchase Program for Construction Contracts A Direct Purchase Program is recommended because it would allow MSD to procure construction materials and supplies directly from the supplier. The bid would include the estimate and MSD would make the purchase and pay the vendor’s invoice directly. For the purpose of bonding a job, the cost of supplies could be subtracted from the bid price, thereby reducing the amount of the contractor’s bond. In addition, with the existence of this Program the construction supplies and materials quotes that M/WBEs and small businesses receive should also be lower. It is anticipated that the supplier, knowing that it would receive direct payment from MSD, would also quote a more competitive price, reducing the overall bid amount and allowing M/WBEs to be more competitive. The cash flow required to pay suppliers in advance of receiving reimbursement from MSD is also eliminated. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-3 3. Promote Diversity in Distributorships Manufacturers seeking business with MSD should be required to document their efforts to authorize M/WBE distributors to sell its product line at the regional or the national level. This factor should be incorporated into the prequalification standards for suppliers and manufacturers. 4. Advertise Small Contracts Bond Provisions MSD should promote its progressive procurement policy which waives the bonding requirement when the engineer’s estimate is less than $25,000. These contract opportunities should be broadly advertised. Since bonding requirements can be a significant disincentive and a barrier to M/WBE and small business bidders, MSD’s Small Contracts Bond Provision, could serve as a significant incentive for small businesses to bid on MSD projects, thereby increasing the number of M/WBEs awarded small contracts. 5. Pay Mobilization to Subcontractors Under circumstances where mobilization payments are approved for the prime contractor the subcontractor should be paid an amount equal to their participation percentage no later than five (5) business days before they are required to mobilize to perform their work. To ensure transparency, subcontractors should be notified when prime contractors receive mobilization payments from MSD. Notification should be provided through facsimile, or e-mail. The information should also be posted on the MSD website. For subcontractors, project start-up costs can also be significant. A subcontractor that has limited resources and access to credit may find that expenses inhibit its ability to bid on MSD contracts. “The majority owned companies work with the suppliers or manufacturers to make sure small to medium-sized companies cannot become a distributor.” “We used to sit down and talk … about MSD stepping in and saying, ‘Hey, we’ve got contractors who’ve got work, give them a loan, you know?’ If not a loan for mobilization, a loan after the work is done.” Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-4 6. Clarify the Pre-qualification Application for Construction and Architectural, Engineering and Surveying Contracts The pre-qualification requirements for construction and architectural, engineering, and surveying contracts should be clarified. The minimum pre-qualification requirements should be published on the website and in the pre-qualification applications for construction and architectural, engineering, and surveying. The number of required experience categories and years of experience should be clearly defined. MSD should be more transparent concerning the evaluation criteria. The pre-qualification staffing levels should be unambiguous in all categories so applicants understand what is required. The minimum staff required for each level should be specified and the weight given to each category or combination of categories in the pre-qualification process should be quantified. MSD should be more transparent as to how much weight is given to each category in the pre-qualification process. These modifications should make the pre- qualification requirement more explicit and increase the pool of qualified construction and architectural, engineering, and surveying services pre-qualification applicants. 7. Establish Local Pre-qualification Standards MSD should establish a local pre-qualification evaluation standard for construction pre- qualification. MSD’s current architectural, engineering and surveying application requires applicants to have a fully functioning office within MSD’s boundaries; however, MSD does not require applicants for construction pre-qualification to have a fully functioning office within the City of St. Louis or St. Louis County. The requirement to have a functioning office within MSD’s boundaries should be extended to construction pre-qualification for business working at the $300,000 and under level. At this level the applicant should also be required to be a small business with its owner(s) domiciled in the service area. 8. Provide Training for Pre-qualification Certification Program for Sewer Construction Work MSD should participate in a training program to increase the number of businesses pre- qualified for sewer construction and deep sewer construction work. In order to become pre-qualified in sewer and deep sewer construction, a company must have a drain layers license from the City of St. Louis or St. Louis County. Therefore, M/WBEs and other small businesses without a drain layers license cannot apply for pre-qualification in sewer and deep sewer construction. A review of MSD’s 2009, 2010, and 2011 construction pre-qualification lists revealed only one MBE and no WBEs were pre-qualified. In fact, “Nobody wants to confront MSD in writing. But they need to lift it. There is no reason to have a restricted list. If I can meet the requirements as a prime on a project, then I should be allowed to bid. If that means that I have to add staff then that’s what I’m supposed to do.” Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-5 prequalified businesses accounted for only 16.4 percent of the available non-building construction businesses, and only 0.8 percent of the available non-building construction businesses are pre-qualified M/WBEs. MSD has a United States Department of Labor, Employment & Training Administration registered joint apprenticeship program for collections systems construction operators, collections systems maintenance operators, and collections systems cross training operators. While this program is certified as an apprentice program, it does demonstrate that MSD has the capacity to provide training in the relevant construction trades. MSD should consider a consortium partnership to provide training for the drain layers license. A partnership to provide the necessary training for the drain layers license might involve construction educational institutions and unions. The number of licensed drain layer holders certified as M/WBEs domiciled in the St. Louis Region should be determined. This information can be derived by securing the names of the drain layers license holders from the City of St. Louis and St. Louis County’s licensing board, and then cross referencing the names with the MSD approved M/WBE certifications. MSD should establish goals for the M/WBE and local businesses that are targeted to receive the training needed for the drain layers license. The training program should be advertised to sewer construction businesses that are certified as either an M/WBE or small local business, but not pre-qualified with MSD in sewer and deep sewer construction. 9. Maintain Virtual Plan Room MSD should consider purchasing software that would allow bidders to obtain digitized plans and specifications on its website at no cost. Online access to plans and specifications could reduce the cost for MSD to produce the documents and the contractor to acquire them. Plan rooms located in trade and business associations’ headquarters and at MSD should be established. The plan rooms should be outfitted with computers for electronic access to the plans and specifications. Hard copies of the documents should also be made available. 10. Revise Insurance Requirements Insurance requirements should be evaluated to ensure that smaller contracts do not require a disproportionately high level of coverage. When there is an insurance requirement on small contracts the type and level of coverage should be set in relation to the actual contract liability. Risk management should carefully consider the impact on M/WBEs and small “They need to have an internal bid office where we are allowed to go in and review plans at no cost to the DBE or the M/WBE firms” “It’s beginning to become difficult because certain contracts require additional insurance.” Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-6 businesses when contemplating insurance rate increases. Criteria should be developed for insurance waivers for smaller contracts. The process to apply for a reduction of MSD’s insurance requirements could be made available on the MSD website. 11. Form Partnerships with Financial Institutions MSD’s relationships with financial institutions should be leveraged to assist M/WBEs and small businesses with project financing and operating capital. Financial institutions currently providing services to MSD could offer financial assistance to M/WBEs and small businesses that typically face barriers to commercial capital, as evidenced by Chapter 9: Regression Analysis’ business loan approval analysis. The evaluation criteria MSD uses to select financial institutions should include points for evidence of prior experience providing credit card, operating capital, line of credit, capital improvement loans and related financial services to M/WBEs and small businesses. Table 12.01 summarizes the findings of the business loan approval disparities by ethnicity, gender, and location of business owners as reported in the 2003 Federal Reserve Board’s National Survey of Small Business Finances and analyzed Chapter 9: Regression Analysis. As documented in the Regression Analysis, M/WBE owned businesses located in the St. Louis Metropolitan Statistical Area (MSA) had statistically significant lower rates of business loan approval than similarly situated non-Minority Male businesses. Table 12.01: Statistically Significant Business Loan Approval Disparities Race, Gender and Location Construction Services Professional Services Supplies and Contractual Services Caucasian Female Yes Minority Yes Yes Located in MSA Yes Yes = Statistically Significant Lower Rates of Business Loan Approval than Non-Minority Males The recommended partnership can also benefit the financial institutions in meeting their Community Reinvestment requirements. 12. Review Selection Panel Process The evaluation panel members for engineering professional services and non-engineering professional services contracts should have accountability for their individual scores. The panel members should be required to sign their evaluation form. The evaluation score of the panel members should be released when the Intent to Award is issued. The Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-7 bidders should have access to the evaluation forms promptly, so that they may assess their performance and engage in protest procedures, if necessary. 13. Publish Bid Protest Procedures The bid protest procedures should be referenced in all solicitation documents and on MSD’s website. All businesses that submit a response to a solicitation should receive a Notice of Intent to Award at least ten (10) days before the decision is scheduled to be made. The Letter of Intent should detail the steps and timetable that must be adhered to when submitting a protest. The Letter of Intent should be published and submitted to each business that submitted a proposal, bid, or statement of qualification. The release of the Intent to Award should mark the beginning of the protest period. 14. Enhance M/WBE Outreach Campaign MSD’s existing outreach campaign should be enhanced to promote the M/WBE Program’s objectives and policy goals. The outreach campaign should communicate the goals and objectives of the Program to local M/WBE businesses and other market area businesses. Additionally, MSD’s outreach campaign should include information about some of its more innovative programs, like the Small Sewer Contractor’s program. A well-planned and executed outreach campaign is essential to increasing M/WBE participation. Therefore, a comprehensive outreach campaign should be initiated to promote the enhancements from the Disparity Study. The following outreach and marketing objectives should be considered: (a) Disseminate press releases and public service announcements to inform the media and community regarding MSD’s Diversity Programs Office; (b) Pursue quarterly interviews with local radio and television stations and partner with local business organizations to discuss opportunities for collaboration that will benefit M/WBEs and small businesses; (c) Make print and electronic information on MSD’s diversity programs readily available; (d) Draft a business development brochure and manual for MSD’s diversity programs; (e) Provide E-notifications for programs and events; Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-8 (g) Promote cross marketing strategies with other jurisdictions and trade and professional associations; and (h) Develop a quarterly newsletter that includes contracting information pertaining to M/WBEs and highlight MSD’s M/WBE Program’s success. B.B.B.B. PostPostPostPost----Award Recommendations Award Recommendations Award Recommendations Award Recommendations 1. Implement M/WBE Subcontractor Substitution Standards When an M/WBE is substituted out of a contract, the replacement should also be an M/WBE. Prime contractors should provide written justification when seeking approval to substitute another subcontractor for one already identified in the contract. The grounds for which MSD may consider allowing a prime contractor to substitute another entity for a listed M/WBE subcontractor should minimally include: · Subcontractor listed in the bid fails or refuses to execute a written subcontract after having had a reasonable opportunity to do so · Subcontractor becomes bankrupt or financially insolvent · Subcontractor fails or refuses to perform its subcontract · Subcontractor fails to obtain the necessary licenses, bonding, insurance, or other statutory requirements to perform the work detailed in the contract · MSD or prime contractors determines that the work performed by the listed subcontractor is unsatisfactory, not in substantial accordance with drawings, specifications, or scope of work or substantially delays or causes the disruption of the progress of work Due process should be afforded to the subcontractor before the requested substitution is approved. Written procedures should regulate the process. 2. Develop an Expedited Subcontractor Payment Program Expand the expedited payment program to require MSD prime contractors to pay M/WBE subcontractors, subconsultants, truckers, and suppliers in a timely manner. Prime contractors should be required to pay their M/WBE subcontractors within five (5) days of their receipt of payment. If there is a disputed invoice between a prime contractor and its subcontractor, the prime contractor should issue written notice within three (3) days, and disputed invoices should be paid within five (5) days of being resolved. MSD should not release final payment to a prime contractor until an audit of previous subcontractor payments has been satisfactorily completed. “… this company is not paying me in a timely fashion … I got six months of emails chasing checks with [them]…” Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-9 3. Institute a Payment Verification Program MSD should modify the M/WBE Involvement Reporting web-based application to capture all subcontractors and verify their payments. Each subcontractor listed as paid for the previous billing cycle should be contacted electronically to verify the payment was received. If a subcontractor reports a discrepancy in the amount actually received from the prime contractor the discrepancy should be resolved before any additional payments are made to the prime contractor. The simplest resolution would be to have the prime contractor submit to MSD the front and back of the cancelled check written to the subcontractor. This payment verification program should be advertised on MSD’s website, in solicitation documents, and in contract documents. 4. Publish Prime Contractor Payments. All prime contractor payments should be posted on MSD’s website as a means of addressing the late payment problem. Late payments can be a disincentive for M/WBEs wanting to perform as a subcontractor. To facilitate use of the published postings, the website should be updated weekly on the same day of the week. Subcontractors should be able to view prime payments made for all projects $100,000 and greater. This system will provide subcontractors with information on payments made to prime contractors, thereby reducing subcontractors’ inquiries about payment. 5. Track All Subcontractors Prime contractors should be required to record all M/WBE and non-M/WBE subcontractors, suppliers and truckers on the M/WBE Involvement Report web application. Currently, the web application only tracks payments made to M/WBE subcontractors. MSD solicitations for bids, proposals and qualifications should require the prime contractors to list all subcontractors, suppliers and truckers in their bid, proposal or statement of qualifications and the web application should track all listed subcontractors, suppliers, and truckers. 6. Conduct Routine Post-Award Contract Compliance Monitoring Monthly contract compliance monitoring should be conducted to ensure that the subcontractor participation listed in bids, proposals, and statements of qualification is achieved for the contract duration. After the contract is awarded regular compliance monitoring should verify the prime contractor’s post award subcontracting. Consistent contract compliance monitoring could minimize the hardships experienced by all subcontractors due to unauthorized substitutions and late payments. “MSD really does not have compliance monitors in place.” Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-10 The following contract compliance monitoring methods are recommended: · Track and report subcontractor utilization in an electronic database utilizing the updated M/WBE involvement reporting web-based payment application · Impose penalties for failure to pay a listed subcontractor for work performed or for unauthorized substitution 7. Publish M/WBE Utilization Reports Utilization reports that measure the effectiveness of the M/WBE Program should present year-to-date payment, original award, and modified award by change order or amendment. This data should be depicted by industry and department. The report should also present the awards and payments by ethnicity, gender and certification status. Change orders, amendments, and substitutions should be reported by prime contractors. Waivers to the subcontracting goals should also be published in the quarterly M/WBE Utilization Report. Customized reports should be used by the Manager of Diversity Programs to generate the quarterly utilization reports. The fourth quarter report should also include an assessment of program activities and an annual Diversity Programs Office evaluation and recommendations regarding MSD’s compliance with the equity requirements. MSD’s exemplary practices and achievements should also be noted in the fourth quarter report. All utilization reports should be posted on MSD’s website and made available to businesses by e-mail. 8. Develop Contract Opportunities Forecast MSD should publish a 12 to 24 month contract opportunities forecast annually. The forecast should identify the industries within which contract opportunities are anticipated to be awarded. This forecast should be distributed to business and trade associations and incorporated into MSD’s outreach events and published on MSD’s website. Anticipated contract opportunities, where there are no pre-qualified M/WBEs, should be considered targets of opportunity. Targeted recruitment should be undertaken to increase the number of pre-qualified M/WBEs in the industries with anticipated opportunities. 9. Provide Debriefing Sessions for Unsuccessful Bidders Debriefing sessions should be made available to any unsuccessful bidders. This option should be published on MSD’s website and included in the Notice of Intent to Award that is sent to unsuccessful bidders. The proposal, statement of qualifications or bid of the business recommended for award should be available upon written request. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-11 III.III.III.III. CONTRACTING ANCONTRACTING ANCONTRACTING ANCONTRACTING AND ACQUISITION PROCESS D ACQUISITION PROCESS D ACQUISITION PROCESS D ACQUISITION PROCESS RECOMMENDATIONSRECOMMENDATIONSRECOMMENDATIONSRECOMMENDATIONS A.A.A.A. Procurement Process Enhancements Procurement Process Enhancements Procurement Process Enhancements Procurement Process Enhancements 1. Standardize and Publish MSD’s Procurement Procedures Standards should be established to make MSD’s procurement procedures and M/WBE Program policies more accessible to the business community. MSD’s District Procurement Procedures should be updated on an annual basis to reflect new policies and procedures adopted by MSD, instead of periodically issuing addenda. The District Procurement Procedures has an M/WBE section which currently includes web links to the M/WBE policies. While the links are beneficial, the complete and current description of the Diversity Programs contracting policies should be included. It is also important that the District Procurement Procedures clearly identifies the formal and informal thresholds for each industry and the specific solicitation process used to solicit responses to invitation for bids, request for proposals, and request for statements of qualification. The District Procurement Procedures should also be made searchable so that specific information businesses seek can be located easily. Annual training should be conducted to ensure that all staff members are knowledgeable about MSD’s procurement policies and procedures. Training will also help avoid discrepancies in the information provided to the public regarding the Diversity Programs requirements. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-12 2. Implement a Commercially Useful Function Requirement MSD should require evidence that all certified subcontractors, supplier and truckers listed on a bid or proposal to meet a M/WBE goal are proposed to perform a Commercially Useful Function (CUF). The responsibility for listing businesses to perform a CUF is the sole responsibility of the prime contractor. The purpose of the CUF requirement is to prevent certified M/WBEs businesses from acting as a “pass through” or “front” when identified as a subcontractor to meet a contract goal. Participation that is artificial or incidental in order to meet the contract goal does not meet the commercially useful standard. When CUF is not verified, there is a potential for obtaining unwarranted MSD preference advantages. The CUF requirement should apply to all procurement activity including change orders, substitutions, and task orders. Minimally, a business performing a CUF does all of the following: · Is responsible for the execution of a distinct element of the work of the contract · Carries out its obligation by actually performing, managing, or supervising the work involved and in the case of a supplier warehousing its materials, supplies, and equipment · Performs work that is normal business practice for its industry, service, and function · Is not further subcontracting a portion of the work that is greater than that expected to be subcontracted by normal industry practices · Maintains an inventory and a business establishment In contrast a subcontractor, trucker, or supplier is not considered performing a CUF if its role is limited to that of an extra participant in a transaction, contract or project through which funds are passed in order to obtain the appearance of M/WBE participation. “They said from here on out, if you’re a supplier, you can’t take that whole $876,000 because all they did was run materials… If you got somebody who’s just running material and the cost of the material comes up to be $800,000 and you give him a $10, $15, $20,000 check for letting you run it through, then who did that work for?” Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-13 3. Authorization to Approve Subcontractor Waivers The authority to approve a waiver to a contract M/WBE goal should be delegated to the Diversity Programs Office. The intent to grant a waiver should describe the project, listing the MSD project manager, the prime contractor, and findings of the Good Faith Effort review. All M/WBE certified businesses with the relevant NAICS codes should receive the notice by e-mail prior to award. The notice should be advertised for a minimum of ten (10) days. If prior to the close of the advertisement period a qualified M/WBE is identified the prime contractor must negotiate in good faith with the M/WBE subcontractor. The award process should proceed if it is documented that the contractor negotiated in good faith but a contract could not be consummated. 4. Quantified Good Faith Effort MSD currently has good faith effort requirements for prime contractors that do not meet a M/WBE subcontracting goal. MSD should quantify the good faith effort criteria in its policy in order to measure a prime contractor’s efforts to secure the participation of M/WBEs when a goal is applied to a contract. For example, a prime contractor would earn five points for advertising at least twice in the general circulation media, minority-focused media, or trade-related publications, ten (10) days prior to submission. Requisite documentation, such as dated copies of the advertisement or an affidavit from the periodical verifying these efforts, would be required from the prime contractors. The quantified process would require a minimum overall score for the prime contractor to demonstrate a good faith effort in lieu of meeting the M/WBE goal. Table 12.02 below describes the criteria to quantify good faith efforts. Table 12.02: Quantified Good Faith Effort Criteria Criterion Effort Documentation Advertising (5 points) Advertise at least twice in the general circulation media, minority-focused media, or trade-related publications ten days prior to submission Dated copies of the advertisement or an affidavit from the periodical Bonding Requirements (5 points) Waive or reduce bonding requirements for subcontractors Copies of bid solicitations waiving or reducing bond requirements Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-14 Criterion Effort Documentation Timely Written Notification (20 points) Solicit subcontract bids and material quotes from relevant M/WBEs in writing and in a timely manner to reasonably result in the M/WBE targeted goal being met Copies of the written correspondence with the name, address, contact person of the subcontractor, and the date of the written notice. Written notification should be dated as transmitted at least ten (10) business days prior to the bid due date and include verification of transmission date. Such verification may include copies of certified mail-return receipts and automated fax journals Follow-Up Contact (15 points) Follow up on initial solicitations by contracting the M/WBE subcontractors prior to the bid opening to confirm subcontractor’s interest in performing specific items of work on the project List of subcontractors contacted by telephone including results of the contact documented with a telephone log, e-mail print-out, automated fax journal, or fax transmittal documents Identifying Items of Work (15 points) Identify specific items of the work to be performed by subcontractors List of the specific items of work solicited including identification of M/WBE firms Negotiating in Good Faith (15 points) Negotiate in good faith with the M/WBEs and not unjustifiably reject as unsatisfactory sub-bids, quotes, and proposals prepared by M/WBEs Written statements of the names, addresses, and telephone numbers of subcontractors contacted by the contractor to negotiate price or services including dates of the negotiations and the results 5. Enhance the Goal Attainment Review Goal attainment should be verified before a Notice of Intent to award the contract is issued. The intent to award should be published on MSD’s website at least ten (10) days prior to issuing an award. It should list the prime name, award amount, and subcontractors. The notice should be sent by e-mail and U.S. Postal Service to each bidder. The standard should be followed for all prime contracts including the non- competitive procurements. The goal attainment review should first determine if the MSD Form A indicates whether the goal was met or a good faith effort statement was provided. When the form states the Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-15 goal was met MSD must verify the certification status of the listed subcontractors with the MSD-approved certification listings. The certification verification should also determine if the certified businesses are proposed to fulfill a commercially useful function. The work to be performed should be within a NAICS code for which the business is certified. The information needed for the goal attainment review must be part of documentation provided at time of bid opening or as specified in the good faith effort requirements. B.B.B.B. M/WBEM/WBEM/WBEM/WBE Program Enhancements Program Enhancements Program Enhancements Program Enhancements 1. Expand Small Sewer Contracts Program MSD should consider enhancing its Diversity Programs to include an expanded Small Sewer Contracts Program. This change would expand the contracts to include all industries and limit the participation to small local businesses (SLBE). The program would be renamed, “Expanded Small Business Sewer Program”. The statistical evidence shows that during the study period, July 1, 2007 to January 31, 2012, 20 out of the 29 businesses receiving non-building construction contracts valued at $25,000 and under also got contracts over $25,000. In fact, 15 contracts valued at greater than $1 million dollars were awarded to contractors who also were awarded contracts less than $25,000. Table 12.03 below depicts the contract size distribution of the contracts valued at $25,000 and under. Table 12.03: Contract Size Distribution of Contractors Receiving Contracts $25,000 and under Size Number of Contracts $1 - $25,000 254 $25,001 - $50,000 43 $50,001 - $100,000 37 $100,001 - $250,000 30 $250,001 - $500,000 23 $500,001 - $1,000,000 15 $1,000,001 - $3,000,000 8 $3,000,001 and greater 7 Total 417 Moreover, four of the 20 contractors receiving contracts over $25,000 received $68,393,090.72 total non-building construction contract dollars. Table 12.04 below “One thing I think that I see happening across the country that could help local minority businesses: They need to create a local program where certain contracts go specifically to local firms…” Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-16 depicts each of these contractors by the total dollars they were awarded in the non- building construction industry, and their smallest and largest contracts. Table 12.04: Contract Size Distribution of Contractors Receiving Contracts $25,000 and under Total Contract Dollars Smallest Contract Largest Contract Number of Contracts Contractor One $24,736,171.35 $22,903.90 $5,893,112.11 19 Contractor Two $18,211,086.00 $1,862.00 $5,350,417.75 31 Contractor Three $15,708,640.02 $23,451.05 $6,320,947.00 25 Contractor Four $9,737,193.35 $379.50 $5,013,502.00 12 Total $68,393,090.72 87 Alternatively, it could be argued that MSD’s current Small Sewer Contracts Program serves as a feeder program, allowing new sewer contractors to gain necessary experience to conduct larger MSD sewer contracts. However, an examination of the size of contracts and the date contracts were awarded to the four contractors depicted above clearly demonstrates that large contractors are getting small sewer contracts after they were awarded large sewer contracts. Table 12.05 below indicates the minimum and maximum contract size each contractor was awarded for each year of the study period. Table 12.05: Contract Size Distribution of Contractors Receiving Contracts $25,000 and under Year Contractor One Contractor Two Contractor Three Contractor Four Min Max Min Max Min Max Min Max 2007 $301,254 $2,355,479 $180,309 $359,805 --- --- $3,403 $3,403 2008 $131,110 $1,216,856 $84,250 $929,123 $28,979 $145,230 $61,250 $5,013,502 2009 $22,904 $5,638,209 $2,500 $5,350,418 $23,451 $4,156,574 $7,959 $63,313 2010 $851,468 $5,893,112 $1,862 $3,153,371 $168,841 $6,320,947 $22,520 $715,565 2011 $159,257 $1,909,605 $16,563 $737,707 $28,900 $348,910 $380 $691,900 2012 --- --- --- --- $57,221 $62,328 --- --- Each contractor but one received a sewer contract in excess of $25,000 before receiving a sewer contract less than $25,000. Perhaps most telling, some contractors received contracts in excess of $2 million before receiving a contract less than $25,000. In some cases, the large contractors have received contracts valued in excess of $5 million. Thus, it is clear that MSD’s current Small Sewer Contractors Program, while good intentioned Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-17 and intended as a feeder program to larger more substantial contracts, is instead benefitting large contractors who have the ability to bond contracts well above $25,000. Therefore, MSD should require businesses participating in the program to be certified as a small local business to be eligible to participate in the Small Business Contracts Program. One of MSD’s accepted M/WBE certification sources, the City of St. Louis, certifies local businesses. MSD should consider using the City of St. Louis certification as one possible source for SLBE certification. MSD might need to sponsor a local Small Business Enterprise certification program within the District or in conjunction with one or more agencies. At a minimum, certified SLBEs should meet the following criteria: · Business headquarters or principal place of business is located in the City of St. Louis or St. Louis County; · Business owner(s) or officers domiciled in the City of St. Louis or St. Louis County; · Three year average annual gross l receipts of no more than one million dollars ($1,000,000) and · Business established at least 12 months prior to submitting an application for SLBE certification 2. Certification Requirements MSD should reconsider the agencies from which M/WBE certification is accepted. The certification policy should state that accepted certification agencies must conduct certification based on verification of the application documentation and the service must not be fee-based or one under the jurisdiction of a trade or professional organization. Neutrality is essential to ensure fronts and businesses that do not provide commercially useful functions are not certified. Currently, MSD accepts M/WBE certifications from the City of St. Louis, Illinois Department of Transportation, METRO (formerly Bi-State Transit), Missouri Department of Transportation, Missouri Office of Equal Opportunity, Missouri Department of Administration, St. Louis Minority Business Council, the Women’s Business Enterprise National Council, and other agencies on a case-by-case basis. Moreover, effective July 1, 2013, MSD will no longer accept certification from agencies that only certify DBEs. MSD’s updated M/WBE Program should further stipulate that M/WBE certifications are only accepted from agencies located within the State of Missouri. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-18 3. Evaluate Staff Compliance with the M/WBE Program Staff compliance should be evaluated through both department-level reports of M/WBE utilization and staff performance reviews. The M/WBE quarterly monitoring reports should describe the level of M/WBE contracting by department. The performance evaluation of all managers should include criteria on the department’s M/WBE utilization and compliance with M/WBE program requirements. Staff members who comply with program requirements to utilize M/WBEs on informal contracts should be recognized in the quarterly utilization report. Formal recognition would provide staff with an additional incentive to meet program requirements and reward those who consistently demonstrate a commitment to diversity. In addition, MSD’s Diversity Programs’ compliance should be included as part of a manager’s performance evaluation. 4. Fully Staff Diversity Programs Office The Diversity Programs office should be further supported with additional professional positions. At a minimum, the additional staff should be capable of performing the compliance monitoring and reporting, goal attainment, good faith effort reviews, and provide outreach services to M/WBEs and certified small businesses. The additional staff would allow the Diversity Programs Office manager to better focus on the long-term goals of MSD’s diversity policies. 5. Establish a M/WBE Ombudsperson Position MSD should authorize the appointment of an Ombudsperson as a resource to support the Diversity Programs Office. The Ombudsperson would have the authority to receive, investigate and mediate complaints concerning the actions of MSD staff, its prime contractors, and subcontractors. The Ombudsperson would operate independently of the Diversity Programs Office and should be appointed by the MSD Board of Trustees. C.C.C.C. Website Enhancements Website Enhancements Website Enhancements Website Enhancements The website is aesthetically pleasing, user-friendly and provides useful information on a logical platform for customers and businesses. There are, however, some modifications which could enhance its functionality and facilitate simpler navigation for businesses seeking information on contracting opportunities and MSD’s Diversity Programs. These include user-friendly Internet interfaces that facilitate simple navigation. The following website enhancements are offered: 1. Publish Useful Information on Homepage “I think [MSD] needs a little bit more help in the [Diversity Programs] department to get the engineering and purchasing department to understand how important it is to work with smaller contractors as opposed to the big general contractors.” Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-19 A number of recommendations in the preceding sections have included making the information publically available on MSD’s website. At a minimum, the following items should be available on the MSD’s website: · Virtual Plan Rooms · Upcoming Informal Contracts · Utilization Reports · Procurement Procedures · Diversity Programs Policies and Procedures · Protest Procedures · Debriefing Process · Prequalification Requirements Additionally, changes to MSD’s M/WBE Involvement Reporting web application have also been recommended in previous sections, and will be further discussed in Section D. Data Management Enhancements. 2. Publish Small Contracts Contracts under $25,000 should be listed and published on MSD’s website. During the study period contracts under $25,000 represented 96.61 percent of MSD awards. The Diversity Programs Office should receive timely notice of upcoming informal projects to enable the Office to identify M/WBEs and small businesses capable of providing the required goods or services. Each opportunity should be published on MSD’s website and opportunities should also be e-mailed to M/WBE and small registered businesses with the requisite NAICS code designation. The threshold for informal contracts should be posted on MSD’s website and M/WBEs and small businesses should be requested to register their interest in performing the small contracts. “We are unaware of bids and that creates a problem for us. They have found a way to keep me off of the pre-qualification list, so I never receive calls from any of the primes.” Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-20 3. Link MSD’s Logo to the Homepage The MSD logo on every webpage should link to the homepage. This standard is applied to all but three pages: · I am a customer I want to view/pay my bill online https://myaccount.msd.st- louis.mo.us/ · I am a customer I need a title quote https://titlequote.stlmsd.com/TitleLien/LogOn.aspx · About MSD Diversity Information MWBE Involvement Reporting http://mwbe.stlmsd.com/ 4. Maintain Navigation to MSD Website Any domain outside of MSD should be loaded in a new window or new tab. Currently, the external links on the “Supplier Diversity” page are loaded on the MSD parent window. The user will lose navigation of MSD’s page once these pages are loaded. The same is true for external links to MSD’s social media sites. The links to MSD’s WordPress, YouTube, Facebook and Twitter pages should open in a new tab or window. 5. Develop Mobile-Optimized Website Given the popularity of small handheld devices, it is recommended that a mobile- optimized website be implemented for a more efficient experience for handheld device users. Although smartphones can display full websites, having quickly accessible features with essential information can make the mobile web-browsing experience more user- friendly. 6. Rename Button on Home Page Change “I am Bidding on a Project” to “I Want to Bid on a Project.” “I want to bid on a project,” is more reflective of the content provided. 7. Display the Contracting Telephone Number on the Homepage The telephone number for the purchasing department should be listed next to Billing and Customer Service on the homepage and entitled, purchasing. MSD should afford the same assistance to its contractors as it does to its rate payers. 8. List Complete Contact Information for Procurement and Diversity Program Departments Names, telephone numbers, email addresses, and facsimile numbers for key staff within Diversity Programs and Procurement should be published for the convenience of vendors and customers. MSD’s website provides telephone numbers for offices. However, office Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-21 location, operating/office hours, e-mail addresses, and individual contact persons are omitted from the listing, Also, the Diversity Programs information is not prominently displayed within the ‘Contact Us’ associated pages. Complete contact information for the Diversity Programs should be listed. 9. Clearly Advertise CIRP Project Opportunities Because CIRP projects require pre-qualification, these solicitations should be specified on the Bid Opportunities page. MSD already advertises CIRP opportunities; however, it is not always designated which projects are CIRPs. Also, MSD should consider reorganizing the entire Bid Opportunities page using a table to aid users in finding information more easily. 10. Publicize the Entire Scope of MSD’s Diversity Programs MSD currently has programs in place to support small businesses which should be publicized prominently on the website. The Small Sewer Contractors Program is not advertised anywhere on the site The website provides a platform for MSD to advertise its diversity, outreach and small business efforts, but the platform is not being maximized. 11. Provide Bidding History on all Contracts over $50,000 The content provided in the “CIRP Overview” listing past and current businesses that have bid and/or been awarded CIRP projects should be a standard. It is comprehensive and should be used to provide the same information for all MSD contracts valued over $50,000. 12. Promote Business Outreach Efforts While MSD’s website has an events calendar and blog, it should provide links to market area events, conferences, and training sessions as well. Additionally, outreach events within the market area should be posted and detailed on MSD’s website. MSD makes good use of social media tools, such as Facebook and Twitter. 13. Offer Links to Small Business Enterprise Supportive Service Program The MSD website should offer links to local governments and its trade and business association partners in the market area that offer small business enterprise supportive services. MSD has a fairly comprehensive list of resources for M/WBE suppliers, and should consider the same for small businesses. The U.S. Small Business Administration provides a plethora of information on securing loans, bonding capital, and contracting. There is also considerable information on starting and managing a small business. External links to this information would be a helpful addition for SBEs in the St. Louis Region. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-22 14. Create Functionality for MSD Contractors to Advertise Employment Opportunities Information contained within “I am seeking a job” should allow MSD contractors to post open positions. This could create a centralized location for CIRP-related employment opportunities. 15. Create Functionality to Advertise Pre-Apprentice and Apprentice Programs Training Opportunities Information contained within “I am seeking a job” should allow pre-apprentice and apprentice programs to post training information. The application criteria for the apprentice programs should be published on this page by trade. This could be a centralized location for CIRP-related training opportunities. 16. Separate the Links under Each Heading on the Main Menu It is recommended to only list the sub-headings in the drop down menu and create a hover function to expose the links related to that heading. The links in the drop down menu under each main menu heading are separated by commas. This can be confusing for consumers. For example, under the heading “About MSD” are six sub-headings: What’s Going On at MSD?, Organization, Charter, Fiscal & Investor Relations, Diversity Information and Ordinances and Resolutions. Each have associated links separated by commas. This could be re-organized to only include the sub-headings and when the sub- headings are hovered over the associated links appear. For example hovering one’s cursor over “What’s Going On at MSD?” would allow “What’s New” and “MSD Calendar” to appear. Figure 12.01 below demonstrates this issue. Figure 12.01 MSD Website Display Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-23 D.D.D.D. Data Management Data Management Data Management Data Management EnhancementsEnhancementsEnhancementsEnhancements 1. Use a Unique Identifier for all Contracts Regardless of Procurement Type MSD should utilize the same numbering scheme for all purchase types in order to eliminate duplicate contract numbers. MSD’s Oracle system utilizes a different set of contract numbers dependent on the procurement type. For example, the contract numbers for purchase orders are assigned from a different set of contract numbers than prime contracts or blanket purchase orders. This system allows for different contracts to have the same number because the procurement type differs. 2. Add Source of Certification in the Prime Contractor Profile Currently the Oracle system only captures the certification status. A field should be added to the prime contractor profile to capture the certifying agency or source. 3. Utilize a Uniform Industry Code Classification System It is recommended to use only one classification system, the NAICS code, for uniformity in the classification of contracts. This is the standard used by the Federal Statistical Agencies in classifying business establishments for purpose of publishing statistical data related to the U. S. business economy. The prime contractor profile has a field to capture industry code; therefore, the industry code should be captured uniformly on all contracts regardless of procurement type. 4. Create a System to Report, Track, and Collect all Subcontractor Information MSD’s M/WBE Involvement Reporting system to report and track M/WBE subcontractor payment information should be uniformly applied to all subcontractors regardless of M/WBE status. This system should be enhanced to have the functionality to track contract amounts and payments to all subcontractors, subconsultants, suppliers and truckers. Additionally, prime contract solicitation documents used in procurement should be updated to require submitting names and all pertinent subcontractor, subconsultant, supplier, and trucker contract information with bids, proposals and statements of qualifications. Mason Tillman Associates, Ltd. December 2012 Draft Metropolitan St. Louis Sewer District Disparity Study 12-24 5. Create a Field to Capture Prime and Sub E-mail and URL Adding an email and URL field in Oracle will help to facilitate communication when necessary. Electronic communication is a simple way to establish contact between MSD and its prime contractors. 6. Uniformly Capture Ethnicity and Gender for Contractors/Vendors It is recommended that the gender and ethnicity of contractors are uniformly captured by requesting this information regardless of the procurement type. Currently, the ethnicity and gender is captured differently for purchase orders, blanket purchase orders, and prime contracts. 7. Accept Electronic Signature on M/WBE Involvement Report Web Application The M/WBE Involvement Report web application should be modified to eliminate redundancies and reduce the efforts of MSD staff and contractors. While the M/WBE Involvement Report Form is easily accessible online, the current structure requires that the form be completed and submitted online, as well as printed, signed and faxed to MSD. This creates the doubling of efforts and can be resolved by adding an electronic signature function. -A-1 MASON TILLMAN ASSOCIATES, LTD www.mtaltd.com