M/WBE Disparity Study Update Status of Recommendations

1. M/WBE Disparity Study Update Status of Recommendations County Administration April 17, 2007

2. Presentation Outline • Background • Objectives, Scope, and Methodology • Legal Review • Consultant Recommendations • Status of Each Recommendation • Staff Recommendations.

3. Presentation Outline • Background • Objectives, Scope, and Methodology • Legal Review • Consultant Recommendations • Status of Each Recommendation • Staff Recommendations.

4. Background • Current M/WBE goals established in 1994 • Goals based on M/WBE availability statewide • Geographical area changed to Central Florida (Orlando MSA) in January 2002: Orange Seminole Lake Osceola • Number of available/eligible M/WBEs reduced • Goals unchanged.

5. Background (continued) • Additional M/WBE segments: • Graduation program • Implemented October 1998 • 27 Graduate firms • Sliding scale bid award process • Implemented October 1998 • Revised in January 2002 • Credit program • Implemented in January 2002 • M/WBE Ordinance requires an updated disparity study be completed every 5 years.

6. Presentation Outline • Background • Objectives, Scope, and Methodology • Legal Review • Consultant Recommendations • Status of Each Recommendation • Staff Recommendations.

7. Disparity Study Objectives • Previous Study analyzed: 1994 – 1999 • Current MGT Study • Analyzed M/WBE program: 2000 - 2004 • Reviewed the effectiveness of current programs • Recommended improvements to the M/WBE program.

8. Disparity Study Scope and Methodology • Legal Review • Review • County status reports • County expenditure reports • Anecdotal information from M/WBE Firms: • Written Surveys • 504 surveys • 104 responses • Focus Group (Roundtable) Discussions • 415 M/WBE firms invited • 56 M/WBE firms participated • Telephone Interviews with 8 M/WBE firms

9. Presentation Outline • Background • Objectives, Scope, and Methodology • Legal Review • Consultant Recommendations • Status of Each Recommendation • Staff Recommendations.

10. Legal Issues • Relevant Case Law • Legal Review Criteria • Standards of Review • Program Requirements

11. Governing Case Law • City of Richmond v. J.A. Croson Company, (1989) • Engineering Contractors Association of South Florida, Inc. v. Metropolitan Dade County, (11thCir. 1997) • Hershell Gill Consulting Engineers, Inc. v. Miami-Dade County, Florida, (S.D. Fl., 2004)

12. Legal Review • Program must be based upon compelling government interest and must be narrowly tailored to achieve that interest. • Local government must have sufficiently strong evidence of past or present discrimination within its own geographic boundaries. • Racial and ethnic conscious affirmative action programs reviewed under “strict scrutiny.” • Gender conscious affirmative action programs reviewed under “intermediate scrutiny.”

13. Standards of Legal Review • Strict Scrutiny (Maximum Scrutiny): The law is upheld if it is necessary to achieve a compelling government purpose. • Intermediate Scrutiny: The law is upheld if it is substantially related to an important government purpose. • To withstand a legal challenge, a program must be narrowly tailored.

14. Factors To Determine Narrowly Tailored • Necessity for relief and efficacy of alternative remedies • Flexibility and duration of relief, including the availability of waiver provisions • Relationship of numerical goals to the relevant labor market • Impact of the relief on the rights of innocent third parties

15. Evidence/Documentation of Discrimination • Sufficient for: • Creation and justification of race-conscious programs • To demonstrate governmental interests and need for remedial action

16. Program Requirements • Consideration of workable race-ethnicity neutral alternatives • Contract-by-Contract Waivers • Project-by-Project Goals • Goals Cannot be Quotas • Sunset Provision • Periodic Review/Goal Adjustments • Race-conscious programs used as a last resort

17. Associated General Contractors, et al v. Broward County • March 15, 2007 • Board members sued individually • Seeks to strike the M/WBE program in its entirety • Race/ethnicity based programs have recently been challenged in the courts

18. Presentation Outline • Background • Objectives, Scope, and Methodology • Legal Review • Consultant Recommendations • Status of Each Recommendation • Staff Recommendations.

19. Disparity Study • MGT Commended Orange County for Its Efforts in the Following Areas: • Graduation Program • Vendor Rotation on Term and Continuing A & E Contracts • Wrap-up Insurance on Large Construction Projects • Waiver Process on Specific Projects • M/WBE Program Data Management

20. Barriers to Conducting Business with the County • Size of Contracts Awarded by the County • Access to Loans and Capital • Business Start-up • Operating Capital • Equipment Loans • Performance Bonds • Restrictive Bid/RFP Specifications • Experience Requirements • Equipment Ownership • Slow Payment

21. Non-Policy Recommendations • Contract Size • M/WBE outreach • Technical Assistance • Banking Support • Bond Assistance • Training • Data Collection • Organization • Project Goals

22. And Contract Size and Contract Size Contract Size And Contract Size

23. Consultant Recommendation 1:Attempt to reduce contract size (to allow smaller M/WBE firms to compete) Status: Staff in Purchasing and Contracts and Business Development currently review each large procurement to identify projects where significant purchases can be separated into smaller pieces without affecting price or completion time.

24. Consultant Recommendation 2: Increase M/WBE outreach • Bid advertising/notification • M/WBE web site information • Advance notification of upcoming projects • Presentations by M/WBE firms to County project managers Status: Staff has completed a technology solution to address items A. and B, and working with local agencies to address C. Business Development is planning to arrange meetings to address item D.

25. Consultant Recommendation 3:Provide more technical assistance • The Alliance, NEC, SBDC, MBDC, BBIF, and HBIF • Assist with bidding and estimating Status: Staff is working with The Alliance, SBDC, BBIF, HBIF, and surety companies to address both items A. and B. The Alliance, BBIF and HBIF provide assistance with business plans, forecasting, accounting, management strategies, and other workshops.

26. Consultant Recommendation 4:Seek banking institution support • Assure fair consideration is given to loan applications by M/WBE firms • Consider “Linked Deposit Loan Program” Status: Staff is working with The Alliance, SBDC, BBIF, and HBIF and several banks to address Item A. Item B. requires working with the County’s bank and The Comptroller’s Office.

27. Consultant Recommendation 5:Increase construction bond limit • Current County limit: $100,000; Statutory limit: $200,000 • Review Bonding Assistance Programs • Improve Payment Processes for Contractors Status: Item A. Requires an Procurement Ordinance change. Item B. Staff is working with several surety firms to identify alternatives to assist companies with the current bond requirements. Item C. Staff teams are working on ways to improve payment processes.

28. Consultant Recommendation 6:Consider an internal training program for County project managers • Improve communication with M/WBE firms • Encourage primes to subcontract with M/WBE firms • Positive actions toward M/WBE firms Status: Staff from Purchasing & Contracts and Business Development work on an individual basis with each Project Manager to encourage increased communication. No formal training program has been developed.

29. Consultant Recommendation 7:Improve data collection • Coding and classifying transactions • Tracking expenditures compared to awards Status: Staff has completed a technology solution to facilitate tracking, categorizing, analyzing and reporting.

30. Consultant Recommendation 8: Consider establishing an internal M/WBE steering committee • County Administration • Major County Departments • Business Development Division • Purchasing and Contracts Division • County Attorney’s Office Status: Internal coordination has been achieved through the County Administrator’s Office on an “as needed” basis.

31. Consultant Recommendation 9:Establish goals based on % of M/WBE availabilityon a project-by-project basis for large projects where applicable Status: This recommendation has been implemented by Business Development in conjunction with user departments whereby the goals based on availability for each project are determined individually.

32. Policy Recommendations • M/WBE Goals • M/WBE Sliding Scale • Good Faith Efforts • Small Business Enterprise (SBE) Program

33. Policy Recommendations • M/WBE Goals • M/WBE Sliding Scale • Good Faith Efforts • Small Business Enterprise (SBE) Program

34. Consultant Recommendation 10:Re-establish over-all goals on a regular basis, based on availability “Narrow tailoring under the City ofRichmond vs. J. A. Croson standard requires that remedial goals be in line with measured availability. M/WBE goals need to be adjusted on a regular basis as well.” – MGT of America, Inc. Status: Staff concurs. This recommendation is a policy decision requiring Board approval. (See the following slides regarding availability for more detail).

35. Definitions • Vendor Availability – percentage of M/WBE vendors listed on our bidders’ list • Bidder Availability – percentage of M/WBE vendors who have submitted at least one bid or proposal as a prime or sub during the past five years

36. Construction Total Awards: $723M (55%)

37. Professional Services (A & E) Total Awards: $219M (16%)

38. Goods/Commodities Total Awards: $316M (23%)

39. Other Services Total Awards: $85M (6%)

40. New Goal Possibilities • Establish new goals for Construction and A & E Services based on the average of bidder availability and vendor availability • Continue current goals for Commodities and Other Services • Benefits • More realistic goals • Legally defensible

41. Recommended New M/WBE Goals* *Rounded to nearest percentage (%)

42. Overall M/WBE Goals for Each Category

43. Policy Recommendations • M/WBE Goals • M/WBE Sliding Scale • Good Faith Efforts • Small Business Enterprise (SBE) Program

44. Sliding Scale

45. Sliding Scale – FindingsRandom Sampling of Construction Contracts

46. Consultant Recommendation 11:Increase sliding scale limits Status: This recommendation is a policy decision requiring Board approval.

47. Policy Recommendations • M/WBE Goals • M/WBE Sliding Scale • Good Faith Efforts • Small Business Enterprise (SBE) Program

48. Consultant Recommendation 12:Consider rejecting bids that do not meet M/WBE goals and do not have sufficient documentation of good faith efforts to show attempts to obtain M/WBE participation. Status: The County still uses good faith efforts in the bidding process, however it has largely been augmented by the sliding scale process. This recommendation is a policy decision requiring Board approval.

49. Good Faith Efforts Definition The efforts undertaken by a contractor to obtain M/WBE participation in a contract, and shall include all the following actions: • Advertisement in a general circulation media at least seven (7) calendar days prior to opening • Written notice to potential subcontractors advising them of subcontracting opportunities • Providing M/WBE participation in areas not traditionally performed by M/WBE firms where appropriate • Direct follow-up and contact with M/WBE firms • Submittal of quotes received from M/WBE subs in comparison to non-M/WBE subs

50. Policy Recommendations • M/WBE Goals • M/WBE Sliding Scale • Good Faith Efforts • Small Business Enterprise (SBE) Program