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Baltimore’s MBE program: New obstacles to an old goal

Nestled among patches of trees on North Rolling Road in Catonsville is a brick building that looks much like the surrounding residences, except for the white trucks in the driveway with “AWA Mechanical Inc.” painted on the sides.

Inside the home, AWA’s owner, Alphonso Washington, has set up his office desk next to the kitchen. Across the hallway in the dining room, there’s a large conference table where Washington and Shirley Thompson sat last week, fretting about the state of minority-owned businesses in Baltimore.

Since the late 1980s, the city charter has included requirements meant to steer a more proportionate amount of city contracts to Minority-owned Business Enterprises (MBEs) and Women-owned Business Enterprises (WBEs). But over the last two years, the city did not reach its stated goals of 27 percent procurements to MBEs and 10 percent to WBEs.

Meanwhile, the current requirements are set to expire in June. Under Supreme Court precedent, the city must conduct a “disparity study” to justify extending them for another five years. But it has not yet commissioned the study.

The disparity study is meant to determine whether significant discrimination against MBEs and WBEs still exists. Washington understands the legal need for it. But as far as he’s concerned, there’s no debate.

“There’s a whole group of folks who, if this program wasn’t there, they would not pick up the phone and reach out to one MBE,” Washington said. “That’s a guarantee.”

Short of the goal

Even with the program, waivers and reductions have kept Baltimore from reaching its stated goals.

According to data provided by the city law department’s Minority and Women’s Business Opportunity Office, the city awarded 9 percent of its $1.4 billion in contracts to MBE prime contractors from July 1, 2009, to June 30, 2011. It awarded another 13 percent to MBE subcontractors.

WBE prime contractors got 1 percent of the procurements and WBE subcontractors got 5 percent.

“We’re not getting a slice of the pie,” said Thompson, the former executive director of the Maryland Minority Contractors Association. “We’re getting the crumbs.”

Baltimore City Solicitor George A. Nilson, who heads the law department, had a different take on the numbers. He said the goals were for a combination of prime contracting and subcontracting, and therefore the city is close to meeting them.

“I think the city has been pretty aggressive in requiring compliance with MWBE regulations,” Nilson said. “Some would say we’ve been too aggressive. … Goals are goals. They’re not stated requirements, they’re aspirational.”

But during an unrelated media event Wednesday, Mayor Stephanie Rawlings-Blake said those goals should be treated as baselines.

“We are in very tough times, which makes the work that we do around minority- and women-owned businesses ever more important,” she said. “We set these goals not as a top but as a minimum, so when we’re not getting there, it makes us work even harder. I’ve determined that we’re going to have a strong office of minority and women development and we’re going to work very hard to partner with minority- and women-owned businesses to grow Baltimore.”

If that effort is to include the city’s minority contracting requirements, she and the City Council will have to act soon. If the requirements expire in June they cannot be renewed for another five years without a disparity study — the last of which was done in 2007.

Nilson said the City Council is working on a temporary one-year extension of the current requirements to allow time to complete the study, which he estimated will cost about $1 million and could take close to a year.

A similar study recently performed for the state took a little over a year and cost nearly twice the city’s estimate.

The Maryland Department of Transportation commissioned Texas-based NERA Economic Consulting to do the disparity study for state contracts in December 2009. The results, which found “both statistical and anecdotal evidence of business discrimination,” were delivered in February of this year in a report that totaled almost 600 pages.

According to Richelle Thomas of MDOT’s Office of Minority Business Enterprise, the state signed a $2 million contract with NERA, the bulk of which was for the disparity study.

Thomas said that while “each utilization study is very specific to the entity,” there might be some limited data within the state study specific to Baltimore that the city could re-appropriate.

Leadership in flux

Meanwhile, both Nilson and Rawlings-Blake are searching for new leaders for MBE/WBE agencies within their offices. Nilson confirmed that Shirley Williams, chief of the law department’s Minority and Women’s Business Opportunity Office, is stepping down at the end of January. That office is responsible for certifying businesses as minority-owned or woman-owned and for examining requests to waive MBE/WBE requirements for specific contracts.

Williams said she didn’t want to discuss the reasons for her resignation. Nilson said he thought it was basically a retirement and added that he expects to hire a replacement before she leaves.

“It’s a very important position,” Nilson said. “She’s very good at it, she will be missed and we’ll replace her with a person of quality and competence.”

Rawlings-Blake is also on the hunt, looking for a new director of the city’s Office of Minority and Women-Owned Business Development. The previous director, Carla Nelson, was let go recently in what spokesman Ian Brennan described as part of routine post-election agency shake-ups.

Nelson could not be reached for comment. Brennan said the mayor simply wanted to go in another direction.

“She’s absolutely, 100 percent committed to increasing opportunities for minority businesses,” he said. “Nobody should read a change of leadership in that office as a weakening commitment to it.”

Hoping for more

Washington, the contractor, hopes the mayor’s commitment goes beyond maintaining the status quo. A former treasurer of the Maryland Minority Contractors Association, Washington was speaking for himself last week, but said he hopes the organization’s current president will urge the mayor to get the new disparity study done “as quickly as possible.” (Pless B. Jones Sr., the association’s president, did not return a phone message before press time last week.)

Washington says the MBE/WBE requirements, if followed properly, keep city dollars local and in small businesses that pay higher wages. But he says that effort has become increasingly undermined by wealthy, non-minority business owners gaming the system by buying up to 49 percent of MBEs.

He’d like to see the contracting initiative not only continue, but overhauled to include more-stringent requirements for minority and female ownership.

“Madame Mayor has a structure in place and I know she has a vision in place,” Washington said. “But I hope that vision includes the MBE program and changes to it to make it more like what it was intended to be.”