2017 Minnesota Joint Disparity Study February 16 Public Forum Annette Humm Keen, Principal David Keen, Principal Blanca Monter, Senior Consultant Keen Independent Research LLC February 16, 2018
Agenda 1. Introduction 2. Team members and roles 3. Why conduct a disparity study? 4. Qualitative analysis 5. Marketplace analysis 6. Utilization, availability and disparity analyses 7. Recommendations 8. Input from the public 2
Introduction Participating entities include: State of Minnesota, including the Department of Transportation Metropolitan Council Metropolitan Airports Commission Minnesota State Mosquito Control District Hennepin County City of Minneapolis City of Saint Paul, including the Housing and Redevelopment Authority The study determined whether there are disparities between: Percentage of contract dollars going to minority- and women-owned businesses Percentage of contract dollars those firms might receive if a “level playing field” (“availability analysis”) 3
Team members and roles 4
Why conduct a disparity study? U.S. Supreme Court established the need for the types of information in a disparity study to enact a legally-defensible minority business program (1989 Croson decision) 2017 Minnesota Joint Disparity Study examined whether there is evidence of disparities and qualitative evidence of discrimination affecting minority- and women-owned firms in the marketplace Disparity study provides information to help each participating entity: Determine if current programs, alone, are an effective remedy Whether additional or different measures are needed Study also examined marketplace conditions for businesses owned by: Persons with disabilities Veterans 5
Qualitative analysis Conducted in-depth personal interviews, focus groups, telephone interviews and public meetings — input from 2,449 business owners and others Key themes from qualitative information include: Challenges in starting up a business Limited access to capital, “I’ve only ever used personal resources” Difficulty with bonding Public contracting processes and requirements that disadvantage small businesses Good ol’ boy network that is hard to break through Unfair treatment, unfavorable work environment or other disadvantages for MBE/WBEs Disadvantages for businesses owned by persons with disabilities 6
Marketplace analysis Minority- and women-owned firms Fewer MBE/WBE firms in business today than would be if a level playing field for people of color and women Compared with majority-owned firms, MBE/WBEs more likely to be small Outcomes for MBE/WBEs differ from white male-owned companies, even after controlling for other factors (especially for WBEs) Relatively more MBE/WBEs report difficulties with access to capital, bonding, obtaining relationships with customers, suppliers, primes and others Businesses owned by persons with disabilities and veterans Persons with disabilities and veterans more likely than others to own businesses Businesses owned by persons with disabilities earn less than other firms Veteran-owned businesses earn slightly less than other firms 7
Utilization, availability and disparity analyses Obtained procurement data from each entity (6 million+ records) for July 2011 - June 2016: prime contracts, subcontracts, purchase orders Complemented subcontractor data using IC134 Contractor Affidavit (180,000 records) Coded primary type of work involved in each contract and subcontract Determined relevant geographic market area for each entity’s procurement Determined firm owners for businesses receiving contracts Calculated percentage of contract dollars going to MBE/WBEs Conducted availability analysis: Availability survey (20,000+ firms successfully contacted) Contract-by-contract availability analysis Performed disparity analysis 8
Example of component of availability analysis Subcontract for concrete work ($1,325,243) in 2015 Examined firms that: a. Were in business in 2015 b. Indicated that they performed concrete work c. Reported working or bidding on subcontracts on public sector projects in Minnesota in the past 6 years d. Reported qualifications and interest in working as a subcontractor on public sector contracts e. Reported bidding on work similar or greater size in the past 6 years f. Reported ability to perform work in the Twin Cities area 61 businesses in the availability database met those criteria and 11 were MBE/WBE, so MBE/WBE availability was 18% (11/61 = 18%) Dollar-weighted result added to availability calculations that included all other entity contracts and subcontracts 9
Utilization analysis — combined entity procurement dollars, July 2011–June 2016 Percent of Number of dollars $1,000s procurements Business ownership African American-owned 1,170 $ 72,014 0.60 % Asian American-owned 1,643 167,006 1.39 Hispanic American-owned 638 38,688 0.32 Native American-owned 493 83,623 0.70 Unknown MBE 37 1,286 0.01 Total MBE 3,981 $ 362,616 3.02 % WBE (white women-owned) 15,181 877,963 7.32 Total MBE/WBE 19,162 $ 1,240,579 10.35 % Majority-owned 106,312 10,750,902 89.65 Total 125,474 $ 11,991,481 100.00 % Certified MBE 1,886 $ 212,204 1.77 % WBE (white women-owned) 5,800 373,319 3.11 Majority-owned 2,439 257,049 2.14 Total certified 10,125 $ 842,574 7.03 % Non-certified 115,349 11,148,906 92.97 Total 125,474 $ 11,991,481 100.00 % 10
Utilization and availability for combined entity procurement, July 2011–June 2016 30% 100% MBE/WBE 25% 19.85% 20% 15% 10.35% 10% 5% 0% Utilization Availability 11
Utilization analysis — percentage of entity procurement dollars going to MBEs and WBEs, July 2011–June 2016 100% 25% WBE MBE 20% 16.2% 15% 11.6% 11.5% 11.2% 10.6% 10% 7.5% 7.0% 5.8% 5% 3.0% 0% MMCD Met C MnDOT MnSt Henn Mpls Admin MAC St Paul 12
Availability analysis — percentage of procurement dollars that would go to MBEs and WBEs if a level playing field 100% 25% WBE 22.3% 21.1% 20.5% MBE 19.9% 19.9% 20% 17.7% 17.6% 16.6% 15% 10% 7.3% 5% 0% MMCD Met C MnDOT MnSt Henn Mpls Admin MAC St Paul 13
Disparity index for each participating entity’s procurement, July 2011–June 2016 Disparity index = utilization / availability multiplied by 100 100 is “parity” 10000% 100 77 8000% 80 63 60 58 60 6000% 51 41 40 38 4000% 35 34 20 2000% 0 0% MMCD Met C MnDOT MnSt Henn Mpls Admin MAC St Paul 14
Disparity index for each participating entity for construction and professional services, by MBE/WBE group Minnesota MMCD Admin State MnDOT MAC Construction African American-owned Substantial Substantial Substantial Substantial Substantial Asian American-owned Substantial No disparity No disparity Small disparity Substantial Hispanic American-owned Substantial Substantial Substantial Substantial Substantial Native American-owned Substantial Substantial Substantial Substantial Substantial WBE (white women-owned) Substantial Substantial Substantial Small disparity Substantial Total MBE/WBE Substantial Substantial Substantial Substantial Substantial Professional services African American-owned Substantial Substantial Substantial Substantial Substantial Asian American-owned No disparity Substantial No disparity No disparity Substantial Hispanic American-owned Substantial Substantial No disparity Substantial Substantial Native American-owned Substantial Substantial Substantial Substantial Substantial WBE (white women-owned) Substantial Substantial Substantial Substantial Substantial Total MBE/WBE Substantial Substantial Substantial Substantial Substantial 15
Disparity index for each participating entity for construction and professional services, by MBE/WBE group (continued) City of City of Hennepin Met Council Minneapolis Saint Paul County Construction African American-owned Substantial Substantial Substantial Substantial Asian American-owned No disparity No disparity No disparity No disparity Hispanic American-owned Substantial Substantial Substantial Small disparity Native American-owned Substantial No disparity Substantial Substantial WBE (white women-owned) Substantial Substantial Small disparity Substantial Total MBE/WBE Substantial Small disparity Small disparity Substantial Professional services African American-owned Substantial Substantial Substantial Substantial Asian American-owned No disparity Substantial Substantial No disparity Hispanic American-owned Substantial Substantial Substantial Substantial Native American-owned Substantial Substantial Substantial Substantial WBE (white women-owned) Substantial Substantial No disparity Small disparity Total MBE/WBE Substantial Substantial Substantial Substantial 16
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