VOL. 131 | NO. 62 | Monday, March 28, 2016
Two City Entities Thriving in MWBE Participation
By Madeline Faber
Recently released disparity studies say that minority- and women-owned businesses are only getting a sliver of contracts in the local business world.
Of all $128.6 billion in revenue flowing through Memphis in 2012, black-owned firms garnered 0.83 percent of those receipts. In Shelby County, 88.3 percent, or $168.2 million, of county contracts went to white-owned businesses between 2012 and 2014.
While MWBE participation city-wide has decreased, two Memphis groups have increased their contracts with MWBEs year-over-year.
Public utility provider Memphis Light, Gas and Water Division and Downtown’s independent development entity, the Downtown Memphis Commission, are soaring in their own diversity programs.
“I think it's because we're intentional,” said Jaske Goff, director of development & diversity outreach, on the success of DMC’s equal business opportunity program. “It's because we're committed to the program and it's because we use the resources we have here in Memphis.”
Since launching the program in 2006, the DMC has averaged 25 percent diversity inclusion across the development projects it has financially supported.
“And I know that with the projects since 2010, we’ve been at 30 percent, so we’ve been going up steadily,” he added.
Projects still under construction have reached $32 million in diversity spend or 34 percent of the project costs going to MWBEs. Goff said one of those success stories is the Crosstown Concourse construction. The project is halfway completed and has averaged 34 percent of the project cost, or $23 million, in contracts with MWBE firms.
Because the DMC is an independent group, reaching a diversity benchmark is voluntary, but the DMC recommends to applicants a best-faith effort to designate 20 percent of controllable local spend with MWBEs. A qualified applicant will still receive a grant or tax break if those benchmarks aren’t reached.
Goff said diversity participation is woven into the application process from the very beginning. Rather than an afterthought, it’s one of the first things discussed with an applicant seeking financial aid for a Downtown development.
“We go into excruciating detail about that on the front end, and as we’re talking to these folks as their nascent development plans start to flesh out, we’re always talking about it. They’re inundated with it, so it’s just a regular thing,” he said.
Jozelle Booker, manager of MLGW procurement, agrees that built-in infrastructure and intentionality are key to a healthy diversity participation program.
She helped design MLGW’s supplier diversity program in 1998. In 2015, the program reached its highest volume in diverse supplier contracts with 37 percent, or $47 million, going to MWBEs and local businesses. In 2014, diversity participation was 24 percent.
Booker attributes the increase to the recently adopted sheltered market program. Under the program, any procurement under $100,000 has to first be advertised and solicited among local small businesses. In the program’s first year in 2014, MLGW spent $6.9 million with locally certified businesses. Last year, the program hit $9.6 million.
Many of those contracts are going to second-tier distributors who resell products from established manufacturers. With their participation in the sheltered market program, many companies have gone on to be first-tier suppliers and have entered new markets to sell to other utility companies.
“That’s the economic development side of it,” she said.
Booker added that diversity participation is built in to the company’s internal operations and the bids it sends out. MLGW does the legwork on the front end, identifying a target diversity goal and recommending firms for each project based on rosters from the Mid-South Minority Business Council Consortium, the Black Business Association and other support groups.
In a 60-page bid, a third of the document is related to the supplier diversity program, she said.
“We have support and commitment from the top of our organization all the way to the employee that writes the requisition for the supply,” Booker said.
She added that diversity participation is integrated into every business process of the organization. There is an internal advisory council with representatives from each division, a supplier diversity committee within the board of directors, and an external advisory council with members who are from the minority business community.
“We do it without spending a lot of money and without a lot of employees,” she added. “It can be done. It takes accountability throughout an organization.”