African-American Firms Get Less Work

Dave Umhoefer, Milwaukee Journal Sentinel, September 28, 2007

African-American businesses are lagging in the competition for City of Milwaukee contracts, a reality that should lead to consideration of a return to race-specific contracting at City Hall, a report commissioned by the city concludes.

The city’s current race-neutral program is meeting its goal to help small and economically disadvantaged businesses get city work. But African-American contractors are underused by the city program compared with their numbers in the market, Mason Tillman Associates Ltd., an Oakland, Calif.-based consulting firm, says in a report.

That suggests a disparity that, if confirmed by further study, would allow the city to use race-conscious remedies to boost the use of African-American firms, the report says.

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The city’s Emerging Business Enterprise program works to meet the city’s requirement that 18% of city contracts go to firms that struggle with capital, credit and bonding problems, and whose owners are at a disadvantage by such measures as education, employment, place of residence or lack of business training.

Many firms certified as disadvantaged are minority- or woman-run. But the NAACP and minority-contracting officials say the race-neutral program has become too watered-down to help enough African-American firms. White male business owners who are deemed disadvantaged can participate in the program.

In 2005, Milwaukee Mayor Tom Barrett announced that the city would conduct a program review aimed at increasing the number of firms certified to share in city contracts. That led to the hiring of Mason Tillman last year. The study was completed this month after about a year of review.

Now, key aldermen and the NAACP are urging Barrett to support funding for a full-blown disparity study to document past racial discrimination in contracting.

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A disparity study would identify all disadvantaged groups that are not fully benefiting from the city’s program. The Mason Tillman report says more than one disadvantaged group was underused, but singles out African-American contractors.

A pattern needed

If a disparity study proved a pattern of discrimination, the city could meet legal tests set out by the U.S. Supreme Court as prerequisites for an explicitly race-based contracting program.

The city hired Mason Tillman at a cost of $165,000. The review included an examination of city records, a survey of contractors and interviews with business owners, some of whom complained of racial discrimination.

Mason Tillman is a minority, woman-owned firm that bills itself as a national expert in performing disparity studies and designing business programs for government agencies. As part of its review, Mason Tillman hired a subcontractor, Milwaukee consultant Randy Crump of Prism Technical Management & Marketing Services.

A 1989 U.S. Supreme Court ruling held that government goal-setting programs for minority and woman-owned firms must be supported by evidence of past discrimination.

Not fully documented

The report did not attempt to fully document a racial disparity. But it offered statistical and anecdotal evidence that it says suggested a real disparity might exist.

It finds that on city construction contracts in 2005, only one prime contract out of 169 went to a disadvantaged African-American owned firm. In the city’s market area, the report finds, African-Americans own 18% of the construction firms.

On construction subcontracts, Hispanic-American-owned firms earned the most on city contracts among disadvantaged firms, followed by firms owned by white males and white females. African-American firms were next, the report shows.

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