City looks to expand opportunities for smaller firms
Winston-Salem’s leaders have spent several weeks this summer discussing plans to closely examine the number of women and minorities who own small businesses or are contracted to work in construction and leasing.
As part of its Minority and Women owned Business Enterprise (MWBE) program the city plans to implement a disparity study that will look at how many firms there are that employ MWBEs, the racial and gender breakdown, and the amount of money spent on contracts. MWBE firms are at least 51 percent controlled by minority groups or women. The program defines minority groups as African Americans, Hispanic Americans, Pacific Rim Asian Americans and American Indians.
Greensboro conducted a study in 2012 which included this information along with a set of recommendations on how to better utilize MWBEs. Winston-Salem MWBE coordinator Walter Farabee said that starting in October city leaders will begin looking at the Greensboro study in addition to ones conducted in Charlotte, Memphis and Columbia in order to determine the best approach.
“We’re still just gathering information to try to make the best decision fiscally responsible,” he said.
Farabee said once the committee finishes this, he will report his findings to the finance committee. He said disparity studies typically cost between $200,000 and $350,000.
The city’s website includes a directory of all HUB-certified businesses along with data from the last 11 years that show how much the city spent on MWBE subcontracting activities.
“In any given year, depending on the scope of the projects, the goals achieved may be higher or lower,” Farabee said.
Spending rose from $2.3 million in Fiscal Year ’06-’07 to $4.1 million in Fiscal Year ’12-’13. The city has a goal of at least 10 percent spending on MWBE subcontracts every year. There are additional goals for the specific number of each minority group employed on each project, but that data is not given.
“When we do construction projects we set goals for minority and women participation,” Assistant City Manager Derwick Paige said. “When those goals are established the general contractors on those projects will then try to meet those goals.”
Paige said state MWBE guidelines require subcontractors to demonstrate that they have made a “good faith effort” at reaching the target goals of MWBE numbers. He said this can take the form of the subcontractor sending out notices, advertising in publications, making phone calls and offering quick pay or insurance. If a subcontractor fails to meet its stated goals, a citizens review committee determines whether he or she made a “good faith effort.” Paige, who served as MWBE coordinator in the mid 1990s, said there has never been a case where a subcontractor did not make a good faith effort.
Despite the effort Winston-Salem leaders have made, some residents think they city ought to take a more comprehensive look at what areas of the economy have the greatest need for MWBE employment. Evon Smith, president of the development firm Sustainable Community Resources, hopes to play a role in commissioning the disparity study.
“Our goal is to help the minority and women businesses to get more opportunities for our contracting,” she said.
Smith thinks the city needs to pay more attention to the checks that have been written by the city in order to determine exactly who has been contracted on different projects. She wants the disparity study to be conducted by a professional group.
“Right now there’s no system that we know of being utilized to capture that data except for the check processing system which will tell them immediately who’s been contracted to do work,” she said.
Smith said input from the community, including larger businesses, is crucial to the success of a disparity study.
“Economic parity and economic balance is good for all cities and communities,” she said. “And offering access to opportunity and offering access for small business to grow, we’ve all seen it.”
Smith said she thinks small businesses tend to have a greater impact than large corporations because there is less risk involved. She said investments like the Dell assembly plant that operated from 2005-2010 are not beneficial in the long run because, if they end up not lasting, they yield only short-term results.
“When you grow small businesses in a local economy, then you’re able to spread the wealth among many, and therefore you share the risk,” she said. “And if you have a loss it tends to be less of an impact.”
Business Development Manager Anwar Rasheed said a disparity study can help determine the population of MWBE firms in a city, and how big of a geographic region it may need to draw from. He said a city the size of Charlotte has enough businesses within the city to handle all city projects, but the Greensboro study showed that its leaders needed to reach out to firms within a 10-county metropolitan statistical area.
“Winston-Salem has the same issue,” Rasheed said. “There aren’t enough firms inside the city of Winston-Salem to do all of the city projects. So they need to pull from their MSA, which includes Guilford, to help build their capacity and make the city more attractive to MWBE firms to open an office.”
Smith and Rasheed addressed the city council at its August 18 meeting to express their urgency for the disparity study. They are hoping the city will move somewhat faster.
“Winston has been slow to recognize what the meaning of disparity study is and why it’s important to commission one, and also why it’s important to the MWBE community and the city of Winston-Salem as a whole,” Rasheed said.
Rasheed said ultimately, the results of an MWBE disparity study can lead to practices that leave Winston-Salem better off economically as a whole.
“If you don’t know how good or how bad you’re doing with the sector of this community than you could be leaving a sector of your city out of the marketplace, and these folks could be paying more taxes to the city so the city can help fund more initiatives and projects,” he said. “Everyone should want their tax base to grow.” !