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CITY EMBARKS ON DISPARITY STUDY
by RICK OUTZEN

Few will argue that economic disparities don’t exist in Pensacola between men and women, whites and African-Americans and other minorities. For over two decades, Pensacola city government has been aware of them and done little about it.

This week Mayor Ashton Hayward took a step towards finally dealing with the issue by proposing that the city hire MGT of America to perform a disparity study that, if its results can document the disparities in the city’s contracting and procurement, establish the foundation for a women-owned business enterprise (WBE) and minority-owned business enterprise (MBE) procurement program.

At its June 20 Committee of the Whole meeting, the Pensacola City Council approved the study, which will cost $250,000. It is on the agenda of the council’s regular meeting on June 23 for final approval.

For Mayor Hayward, the study fulfills a campaign promise. He realized that the recommendation would be controversial and attract criticism. He told IN, “This is the right thing to do. We have excluded a large part of our community from the process for too long.”

The mayor also sees the disparity study as part of his economic development plan. “I’m proud to sponsor this initiative so we as a community can get some real data on where our tax dollars are being spent, and to develop some solutions to make sure that all of our vendors and contractors have an opportunity to build their business and expand their ability to create jobs,” said Hayward.

For Councilman Ronald Townsend, the disparity study has been needed for a long time. “It’s unfortunate that in 2011 we are talking about this,” Townsend told his fellow council members at the Committee of the Whole meeting. “You would have thought we would be past this. I have long felt we have systematic exclusion. When you continue to use the same patterns of hiring and procurement, you get the same results.”

TOO MUCH TALK, TOO LITTLE ACTION
Townsend is right about how long the city has been talking about disparities. In February 2003, city staff presented to the Pensacola City Council a report titled “Profile of Pensacola: Demographic, Housing and Economic Characteristics.”

The report lamented the migration of population to the suburbs. It pointed out the problems in African-American neighborhoods.

“Poverty, unemployment, economic dependency and poor housing conditions continue to plague many areas of the City and region but are particularly prevalent in the Black or African-American community,” staff told the council.

For the city to maintain its position as the regional center, “the City of Pensacola must continue efforts to expand its population and economic base with particular attention to expanding educational, housing and economic opportunities in the Black or African-American community,” according to the report.

In 2007, the City of Pensacola engaged in a “pre-disparity study,” which found that the participation of minority businesses, especially African-American-owned businesses, in city contracts was lower than expected. From FY 2005-FY 2007, the City of Pensacola used 1,616 vendors. Only 12 were minorities (less than 1 percent)–Eight African-American vendors, one Asian-American, one Hispanic-American, and two Native Americans. Of the 1,542 white-owned vendors, 16 were owned by women, and one by a physically disabled individual.

That study, and the citizen panel that reviewed it, recommended some minor contracting reforms to give minority businesses more access to City contracts. The citizen panel also recommended the City undertake a full disparity study. The city council balked and didn’t act on that recommendation.

Mayor Ashton Hayward made the disparity study part of his campaign, and in less than six months since being sworn into office, he has brought it before the council. “The reality is that the more jobs we can help small businesses create, that puts more money in people’s pockets, and more money gets turned around in our local economy. So while this initiative is geared towards helping minority businesses, those business owners and their employees spend their money with other businesses across the community, so we all benefit,” said Hayward.

REVERSE DISCRIMINATION?
Hayward’s proposal has not gone unchallenged. The Center for Equal Opportunity, a conservative think tank based in Falls Church, Va., sent a letter to all the city council members strongly urging that the city leaders not do the study.
Roger Clegg, the organization’s president and general counsel, wrote, “The only reason to conduct a disparity study is to attempt to justify discriminatory measures, but such measures are bad policy and, in fact, also cannot be justified legally in 2011—even by a disparity study.  Therefore, we urge the City to adopt only nondiscriminatory measures and not to waste money on a disparity study.”

Clegg argues that programs that discriminate on the basis of race, ethnicity and sex are divisive and unfair, and any system that awards contracts to those other than the lowest qualified bidder will cost the City and its taxpayers money.
He warned the best way to fight discrimination is not through more discrimination, and hinted that there would be a legal challenge to any WBE/MBE program established by the city.

City Attorney Jim Messer sent out a memorandum to the city council that on this he appeared to agree with Clegg. He told the council that any race-based program is “presumptively unconstitutional.”

He wrote the basic purpose of the disparity study is to establish if discrimination has occurred at the level to warrant a program to award City contracts utilizing race-based remedies. He pointed out that the J.A. Croson Company v. City of
Richmond (1989) was the “seminal” case that supported the implementation of a MBE program.

However, Messer warned that our Federal Circuit has not upheld a MBE program in the last decade. He said that litigation is possible. “The legal consequences of implementing a disparity study range from no exposure to being the defendant in a lengthy lawsuit,” Messer told the council.

He also pointed out that the some courts have denied qualified immunity to elected officials implementing a MBE program, unless the factual findings can survive strict judicial scrutiny and are used to “implement narrowly tailored remedies utilizing race based criteria as a last resort.”

The loss of qualified immunity caught the attention of several council members and had them wondering whether the study was worth the risk. They waited to see how MGT of America, the company who did the pre-disparity study and was being recommended for the full study, would respond.

LEGALLY DEFENSIBLE
MGT of America was represented by Tallahassee-based partner Reggie Smith and its legal counsel Dr. J. Vincent Eagan at the Committee of the Whole meeting. Smith, a Pensacola native who graduated from Pensacola High, heads Disparity Research for MGT. He told the council that his company has conducted over 140 disparity studies since 1990, and they have successfully withstood court challenges, the latest being H.B. Rowe Company, Inc. v. W. Lyndo Tippett  (2010) involving the North Carolina Department of Transportation.

Eagan, a Harvard law graduate, attacked the assertions by Clegg and the concerns of Messer head on. According to Eagan, the Center for Equal Opportunity is a relatively small organization that writes letters discouraging disparity studies and threatens lawsuits. “They always cause a ruckus,” said Eagan, “and try to get everybody upset.”

An IN review of the 2009 tax forms for the organization revealed it lost $39,702 and has a net fund balance of $130,000. Clegg’s salary, $143,750, is its largest expenditure. The statement of functional expenses shows no legal expenses being paid.

According to Smith, the Center sent a similar letter to the City of Dayton, Ohio. “The council approved that study,” said Smith. “We have completed the study, and the council has approved its implementation.”

Eagan addressed Messer’s concerns about our Federal Circuit not having approved a MBE program. He pointed out the Rowe case was in the much more conservative U.S. Court of Appeals for the Fourth Circuit.

The three-judge panel of the Fourth Circuit unanimously held in July 2010 that the state produced strong evidence that its narrowly-tailored program was necessary to remedy discrimination against African-American and Native-American subcontractors.  The Court found compelling the statistical and anecdotal evidence compiled by MGT that African-American and Native-American businesses were “grossly underutilized” by prime contractors and “disadvantaged by a racially exclusive ‘old boys network.’”

“We are very confident that our study will be upheld in court,” said Eagan.

As far as the risk of losing immunity, Eagan told the council that he was only aware of one such case in Miami, in which the courts repeatedly rejected a MBE program that wasn’t supported by data.

UNANIMOUS SUPPORT
After listening to the MGT presentation, several of the council members spoke in favor of the disparity study.

“I’m in full support,” said Councilman Brian Spencer. “It will effect a reformation of disparity practices.”

Townsend agreed, “It’s needed to ensure all citizens are included.”

The Pensacola City Council approved the recommendation for the disparity study unanimously, 8-0, with Councilman Sam Hall absent.

The IN contacted Mayor Hayward late Monday while he was en route to the U.S. Conference of Mayors in Baltimore.

“I’m proud of the Council for joining me in this initiative to finally address some of the issues that have divided our community. This should have happened a long time ago, and I’m glad I was able to be a part of this effort to help all businesses in Pensacola succeed.”

rick@inweekly.net