Nashville Business Journal

Minority Businesses want parity

Metro purchasing policies need study, business owners say

By Elizabeth Niendorf

Metro’s purchasing policies will come under the microscope this week during the city’s annual Minority Enterprise Development Week festivities.

Some minority business owners are urging the city to conduct a $600,000 disparity study to determine the nature and number of minority-owned businesses in Nashville. From that study, they hope policies and programs can be developed to encourage more government contracts to be awarded to minority-owned companies.

In 1994, 0.37 percent of all Metro contracts were awarded to African American-owned businesses, according to figures from the Minority Business Development Center.

City officials say no such study is needed in Nashville and that the money could be used instead to more directly improve the level of spending with minority-owned firms.

A disparity study assesses the minority businesses population in a community and determines whether minority-owned businesses are under represented in local government contracting. It also determines whether the under representation is because of race or social disadvantages or as a result of government purchasing procedures.

The studies came into use after 1989, after a U.S. Supreme Court ruling in City of Richmond v. J.A. Croson Co. The court held that the city of Richmond, Va., failed to demonstrate "compelling government interest" for requiring construction contractors to subcontract at least 30 percent of the dollar amount of each contract to at least one "minority business enterprise."

Furthermore, the court held that the Richmond plan was not narrowly tailored enough to remedy the effects of prior discrimination.

A disparity study can be used to establish a legal basis for minority set-aside programs.

"It would help us develop policies and develop scientific instruments to determine what the patterns (of government contracting) are," says Marilyn Robinson, project director for the Nashville Minority Business Development Center. "We will know what the availability (of minority-owned businesses and the kind of work they do) is in this market."

Some minority business owners say that such a study, although it would not guarantee an increase in government purchasing from minorities, could be helpful.

"A disparity study will not make the playing field level, but it will tell us where the weak links are, particularly involving small and minority business in government contracts," says Arthur Overall, owner of Music City Telecom.

The price tag could be $600,000 or more to study Metro government, the Metro Transit Authority, the Metro Airport Authority, the Metro Board of Education and the Nashville Electric Service.

To Mayor Phil Bredesen, the cost is simply too high, says spokesperson Tam Gordon. Instead, he believes city funds could be better spent to directly increase the amount of business Metro government does with minority-owned companies, Gordon says.

Robinson says the Minority Business Development Center plans to seek corporate support to help fund the study.

But city officials say there is little need for a disparity study because the city is already committed to increasing the number of contracts awarded to minority-owned businesses. The current debate over affirmative action also raises concerns about the future of minority set-aside programs, city officials say.

Although Metro government does not have a set-aside program specifically for minority businesses, it does have a small and disadvantaged business program.

"We’re trying to be very aggressive in reaching out in a number of ways," says Metro purchasing agent Steve Gordon.

In June, for example, the Metro Council raised the cap on informal bids on city contracts from $1,000 to $10,000. Now the purchasing department can request quotes from three or more businesses over the telephone, instead of a few dozen, thereby decreasing the competition for small business owners.

City officials also meet monthly with a group of African American business owners to seek suggestions on doing business with minority-owned companies, city officials say. And Metro government provides a "Bidding Opportunities Bulletin" of commodities and bid times to be published in local newspapers.

"One of the greatest challenges we face is convincing minority and other small business people that we appreciate their bids and welcome them," says Gordon.

Gordon says the city has increased the amount of purchasing it does from African American owned businesses this year. For example, one contract for personal computers and related items was for more than $130,000.

"There’s a perception you can only do business on low-tech services," he says. "We’re demonstrating you can do it in high tech and construction."

Nevertheless some minority business owners say the city overlooks them.

Leatrice McKissack, owner and chief executive officer of McKissack & McKissack, the oldest African American owned architectural firm in the country, says her firm wins contracts in cities across the country. But she says she rarely receives requests for proposals from Metro government.

"I do work for HealthTrust. I do work for Columbia/HCA. I should be able to do work for the city," says McKissack.

McKissack unsuccessfully sued the city in 1984 over a contract dispute.

Compared with Atlanta, Nashville is not as aggressive in seeking out minority businesses, says Albert Gray, senior partner in Minorico, which has offices here and in Atlanta.

"I would attribute that to the fact they (Atlanta officials) have a certain percentage (of minority-owned companies) they go after to do business with," he says.

Minorico will do about $250,000 in business with the city of Nashville this year, says Gray.

Robinson says Nashville can learn from the experiences of cities like Memphis, which formed a consortium with Shelby County government, local government agencies and the Chamber of Commerce to begin a disparity study in 1993.

As a result of the study, the consortium set up a central agency to certify minority and female-owned companies to do business with the governments, their agencies and the local Chamber of Commerce, which marketed the disparity study to the Memphis business community, says Monice Hagler, co-chair of the consortium.

Corporations including Federal Express and International Paper use the same certification agency, which is a subsidiary of the Memphis Minority Purchasing Council, she says.

The study also led to the implementation of a diversity training program for people in government purchasing and management.

"For various reasons - inadequate technical assistance, barriers created by attitudes - minority and female businesses aren’t able to compete on the same playing field with others," says Hagler. "Educating people is necessary to helping that occur."

Copyright 1995 by Nashville Business Journal Inc. with all rights reserved.