News Column

Texas County Not Meeting Minority Contractor Goals

Nov. 26, 2012

Tony Plohetski, Austin American-Statesman

For at least two years, Travis County, Texas, officials have fallen far short of long-held goals in hiring minority-owned firms for work such as construction, food vending and janitorial services, an American-Statesman analysis of county records shows.

Officials tapped into only a fraction of available services operated by Hispanics, blacks, women and other minorities in 2010 and 2011 -- nearly 20 years after adopting a policy to hire more companies operated by those groups.

Last year, for instance, the county had a goal of hiring construction firms owned by minorities other than women for 13.7 percent of construction work. Instead, it employed them for just 4.3 percent.

Officials also had a goal of hiring companies owned by women for 13.8 percent of construction work, but employed them for only 3.6 percent.

The county over the years has taken far fewer steps than the city of Austin to ensure the success of its minority hiring program. Austin adopted its program more than two decades ago and has since invested millions into the effort. The city has met some of its goals in recent years, although it continues to struggle in certain areas.

The Statesman also found that, unlike their counterparts at the city, county leaders have never sought an outside study into whether minority businesses have experienced historical race or gender discrimination in the county's contracting process.

Such a study, which could cost as much as $1 million, could lead to more minority hires by giving the county more leverage in weeding out large contract bidders who don't hire enough minority subcontractors.

"I'm not disappointed in our staff," Travis County Commissioner Sarah Eckhardt said. "I think they have worked their tails off to get what we have gotten. But I am disappointed that we have not reached our goals. In the county, as an organization, we sometimes move slower than we ought to."

Commissioners push for more minority hiring

Despite years of on-again, off-again interest, the issue has begun building momentum among several county officials. Eckhardt in recent weeks has begun working with Commissioner Ron Davis to study what the county can -- and should -- do to attract and hire more minority businesses.

Eckhardt said in an interview last week that she thinks broader use of such firms for government work could help create more successful minority- and women-owned businesses -- and an economy with an equal playing field for all.

This month, Davis and Eckhardt conducted a lengthy, specially called meeting among county officials who presented city and county data about the success and costs of their programs.

The comparisons looked at the number of minority firms the two governments had hired for construction jobs, commodities (such as food and office supply companies), services (such as pest control and lawn care) and professional services (such as engineering and architecture design).

Last year, the county had a goal of hiring minority firms for 13.7 percent of construction work, but did so only 4.3 percent of the time -- an improvement of 2.5 percentage points from 2010.

The county also fell far short of its goal of hiring minority companies for 14.1 percent of services and 15.8 percent for professional services. The county last year hired minority companies for 2.2 percent of professional services contracts and 3.8 percent for other services.

By comparison, the city of Austin met -- or nearly met -- its goals in three of the four categories last year. It fell somewhat, however, in its effort to hire minority firms for 14.1 percent of city services. It only awarded about 10 percent of contracts to such businesses.

The city also fell short of its goal in services in 2010, but like last year, exceeded its goals in other categories.

In 2011, both governments failed to meet several goals for hiring women-owned businesses.

For instance, the county wanted to hire women-owned companies for 13.8 percent of construction work last year, but did so for only 3.6 percent.

The city had the same goal, but did so for 4.2 percent last year.

Veronica Lara, director of the city's program, said part of the reason the city didn't meet certain goals was because the city conducted fewer projects and because those projects might not have included the need for particular types of services.

She also said the city's program primarily targets construction and professional services for minority contracts.

"There are more opportunities in those two procurement areas," Lara said.

Lack of studies hobbles county effort

In 1987, Austin became the first of the two governments to develop an ordinance aimed at hiring minority-owned businesses. The county followed about seven years later.

During the past two years, county officials estimate that they have awarded about $33 million to minority- and women-owned businesses, despite not having met their overall goals for at least two years. City officials have granted $187 million in such work.

Over the years, the city also has far outpaced the county in building an internal agency to help recruit minority business for government work and to monitor how often such firms are hired.

The city's Small and Minority Business Resource Department has 27 employees and an annual budget of about $3 million. The county's Historically Underutilized Business Program has three employees and a $192,000 budget.

But officials said one of the biggest differences in the programs -- and one that has likely led to more city success -- has been the use of independent studies to bolster the strength of their efforts.

Amid legal challenges of such programs nationally, federal courts have ruled that governments can address race and gender discrimination in awarding contracts if they are able to demonstrate historic disparities through "statistical and anecdotal evidence." Such studies generally also must show that government was a "passive participant" in discrimination in the marketplace.

Austin officials hired an outside firm to conduct its first such study in 1992 and has since updated it several times, most recently in 2007.

By having such studies, the city can establish a system of race-based preference in awarding large contracts, deeming bidders "non-compliant" -- and not accepting their offer -- if they don't meet the city's goals for minority hiring or prove that they made an honest attempt to do so.

But Travis County officials have never undertaken such a study. Among Texas counties, only Bexar County has.

Part of the reason has been cost, which could top $1 million for a single study, officials said.

Eckhardt said officials might have also worried such a study could actually make it more difficult to hire minority businesses.

"You might have a study and find no statistically significant evidence of racial discrimination," she said. "But that's good news if that is what you find."

But with no study, the county is permanently locked into its "good faith effort" system, through which they can only ask contractors to use minority firms, but can't reject their bids if they don't.

"You can't kick anybody out of the process," County Purchasing Agent Cyd Grimes said.

Adrian Neely, who is African-American and the owner of Triad Building Maintenance, which specializes in janitorial service and the recycling of construction and demolition debris, said the potential for county work has sometimes slipped past without his knowing about it. He said the city has made better efforts at reaching out to minority companies about government work.

"We would have the opportunity toward growth (with more county work)," he said. "No business wants to remain stagnant. They want to grow, and government is a good stepping stone for people to grow a sustainable business."

Andy Martinez, president of the Greater Austin Hispanic Chamber of Commerce, said, "(Government work) is steady work. They can depend on that. And once you get the bid or you become a subcontractor, you can pretty much count on the money coming in, as opposed to working in the private sector where things are still kind of sluggish in the economy."

Eckhardt and Davis said that in coming weeks, they want county staff to look into the possibilities of working with other local governments to partner on a study, allowing them to potentially split the cost.

They also want to consider whether the county could find ways to bolster the use of minority-owned firms without such studies.

"There is room for improvement, there is no doubt about it," Davis said. "I think we have owned up to that, and that is what we are trying to do."



Source: (c)2012 Austin American-Statesman, Texas Distributed by MCT Information Services