(This guest blog post from John Sullivan, Esquire, a Baltimore lawyer who specializes in DBE and MWBE disparity studies. John’s website is Croson Legal Services. He can be reached via email at jcharlessullivan@yahoo.com)
For more than two decades it has been true that subcontracting goals – Disadvantaged Business Enterprise goals on federal work and Minority and Women Owned Business Enterprise goals on state and local contracts – must be supported by a disparity study. More than 300 of these studies have been completed around the country to support various DBE and MWBE programs. Without a viable disparity study, DBE programs are subject to constitutional challenge. However, just how credible are the disparity studies that state and local government rely upon?
Take for example the Austin, Texas based economic consulting firm, NERA, who finds itself is serious trouble for the disparity studies it produced. NERA produced dozens of the disparity studies for state and local agencies such as SEPTA, the City of Baltimore, New York State, Hawaii DOT, and the City of Cleveland.
Cleveland awarded NERA a $758,000 no bid contract to complete a disparity study intended to support the city’s MWBE program. It turns out that large chunks of the study were cut and pasted from other NERA studies.In fact, the 36 page legal section of NERA’s Cleveland study is a word for word copy of the legal section done for the Missouri DOT. NERA did not conduct new surveys for Cleveland, instead relying on survey answers for a study done on behalf of the Northeast Ohio Regional Sewer District. One sentence in the Cleveland study referred to the “Houston market area” when the study meant to be discussing Cleveland.
The Cleveland Plain Dealer has run a series of articles on the NERA study. The president of the local Black Contractors Association announced, “Fraud has been perpetrated here.” The Plain Dealer dismissed the study as “slickly repackaged recycling.”
The heart of all disparity studies is the determination of availability – what percentage of contractors who are qualified, willing and able to complete public work are MWBEs or DBEs? NERA disparity studies apply a headcount approach to availability. All construction firms, regardless of size, are considered the same. The reality that only big construction firms can complete the biggest construction contracts is ignored.
The NERA disparity study for Cleveland concluded that there was sufficient evidence of discrimination to justify continuation of the city’s MWBE program. The City Council agreed. Two lessons are to be learned here.
The first is that a disparity study cut and pasted together is not, or at least should not be, evidence of discrimination justifying preferences in public construction contracts. The law and a sense of fairness require that if there are to be preferences in local contracting, evidence of discrimination in local contracting is needed. Evidence from other parts of the country should not suffice.
The other lesson is that politicians voting on disparity study-based programs don’t really understand what they are voting on. To be fair, disparity studies are often long (the Cleveland study exceeds 700 pages) and complicated documents. Few decision makers have the time, interest, or expertise to read the studies.
Wally Zimolong
Wally represents contractors (and subcontractors) and developers. His clients build and develop residential, commercial, and industrial properties nationwide. Wally enjoys working with the owners of the businesses he represents because they tend to be entrepreneurs and all around interesting people.
