VOL. 131 | NO. 213 | Tuesday, October 25, 2016
Increasing Firms Eligible for Contracts Could Propel More Minority Businesses
By Bill Dries
City Hall’s effort to improve the level of business Memphis does with minority-owned firms has to meet up with the broader local effort to improve the growth of minority businesses in private, business-to-business contracts, says one of the leaders of the 2-year-old renewed push on both fronts.
“I can see movement, but as I’ve said before, I think what we need is momentum,” said Darrell Cobbins, president and CEO of Universal Commercial Real Estate, on the WKNO/Channel 10 program “Behind The Headlines.” “What we have to have is a locking of arms across the private and public sectors.”
In the last two weeks, the administration of Memphis Mayor Jim Strickland has rolled out more of its plan to boost the percentage of city government contracts that go to minority-owned businesses.
On each city contract, the administration will set separate percentage goals for minority-owned businesses and women-owned businesses – both categories within the broader designation of MWBEs – minority and women-owned business enterprises.
Contractors who get the city contract can use any combination of MWBE businesses to meet the percentage goal.
A recently released disparity study of city contracting practices, completed this summer by Griffin & Strong PC of Atlanta, allows the city to make a distinction and set separate goals, said Joann Massey, the city’s director of business diversity and compliance.
“In being fair, we are going to be setting goals based on that percentage of minority businesses that are qualified, willing and able to do the business and then a goal for women businesses,” Massey said. “We think that will allow us to target opportunities more to those groups that are disadvantaged in city contracting and allow us to really meet the No. 1 goal of addressing the disparities that we have in contracting.”
“Behind The Headlines,” hosted by Eric Barnes, publisher of The Daily News, can be seen on The Daily News Video page, video.memphisdailynews.com.
The city policy is one Cobbins hopes spreads to the private sector and other public agencies – specifically EDGE – Economic Development Growth Engine.
Last year, EDGE granted a payment-in-lieu-of-taxes agreement for Ikea to build its first furniture store in the region. Ikea met the goals for MWBE contracting with Linkous Construction because Linkous is considered a women-owned business under the rules for such certification.
“The outcome was that there was no African-American firms that received contracts on that signature project that we actually made an exception for in the EDGE PILOT process,” Cobbins said.
The Ikea PILOT was the first tax freeze granted for a retail project.
The minority business numbers on the Ikea project drew the attention of the Memphis City Council, which doesn’t vote on such PILOTs but which has been vocal about the need for minority business growth.
Some council members who agreed the rules should change for those projects also defended Linkous for following the rules as they are.
Some on the council have also complained about the process to become certified as a minority-owned business, and thus, become eligible to bid on city contracts.
Massey said the city is moving to “reciprocal certification” where a business certified under Shelby County government’s process will be considered certified for city contracts.
Some kind of certification process is necessary, Massey said.
“Otherwise you open the door for potential fraud and fronts,” she said. “We have to know that companies are who they say they are. … We want to make it easier for minority and women-owned businesses to do business especially with government and we don’t want to create undue barriers.”
Massey’s office is working on a different certification process
Minority and women-owned businesses accounted for 11 percent of the city’s business through contracts as of June 2015. Ten months later, the new Strickland administration has increased that to 14 percent, according to Massey.
The percentage is probably higher because of minority-owned businesses that refuse to participate in the certification process, but are nonetheless winning city contracts.
“We can see it, but it needs to be documented properly on paper in order for us to actually count it,” Massey said.
Still other minority-owned businesses avoid competing for city contracts altogether because of the certification process. Cobbins said a government contract can make a lot of difference for a business seeking work in the public and private sectors and seeking to grow from a small start.
“If you have two (employees) you can’t do a whole lot,” he said. “But when you can build up your experience and your track record and expertise and garner larger contracts, you are able to grow your capacity.”
The city is also working with Start Co., the start-up business accelerator, on a “Propel” accelerator specifically for minority-owned businesses. And the city has organized a “Sub Meets Prime” luncheon series where prime contractors treat potential subcontractors to lunch and talk about what they are looking for in subcontractors and how to do business with them.