Minority- and woman-owned firms still struggle to compete for private-sector jobs in New Orleans, although their chances of getting public work have improved in recent years under Mayor Mitch Landrieu’s administration, a recent study shows.
At the same time, the study, which was commissioned by Landrieu, proposes ways in which the city can improve its efforts, such as denying the “disadvantaged” label to firms that are doing well financially and by making prompt city payments to contractors.
The Keen Independent Research review, which examines whether racial or gender disparities exist in the awarding of lucrative public and private contracts, fulfills a promise Landrieu made at the start of his administration to look into that matter.
It examined more than $1 billion worth of city contracts over four years, and at least $15.6 billion in non-city contracts over that same time.
Its results are unlikely to surprise critics who have long said that discrimination against certain businesses persists in New Orleans, despite city efforts to ensure everyone has a fair shake.
Notably, it underscores that government set-asides alone will not be enough to improve people’s economic prospects, for public work is only a small portion of the overall economic activity in the New Orleans area.
“The report told us an uncomfortable truth: that progressive government policies and practices can be impactful, but without full buy-in and partnership from the private community ... it is not going to have an economic impact,” Landrieu said Wednesday as he announced the study's findings at the People’s Health New Orleans Jazz Market in Central City.
Among the key points in the draft study, which is expected to be finalized later this spring:
- An examination of more than 2,000 non-city construction contracts totaling $15.6 billion over four years revealed that general contracting firms owned by minorities received less than 3 percent of total contract dollars. However, they could have received nearly six times that amount, based on how many of them were qualified for and interested in the work. (To determine qualifications, researchers asked about firms' largest contract awards, their staff size and similar information.)
- Of the less than 3 percent of dollars that minorities received, only 1 percent went to black-owned firms. Nearly 10 times that amount could have gone to those companies.
- Construction design firms owned by white women received more than 3 percent of the more than 1,400 non-city construction design contracts available over a four-year period, although they could have received more than three times that amount.
- Meanwhile, the city in recent years has paid minority- and women-owned firms even more public dollars — 47 percent of $538 million in government contract dollars — than researchers would have expected, based on those firms’ availability for the work. That percentage is up 18 points since 2013.
The data on the city’s efforts are a win for Landrieu, who has prioritized economic opportunity for minorities throughout his tenure and who signed executive orders in 2010 to look into whether public contracts were reaching disadvantaged businesses, amid complaints that the city’s DBE program wasn’t working as intended.
Those orders also made contract awards more transparent in a bid to ensure awards were made based on merit not connections.
Landrieu's team also stepped up enforcement of a city goal to steer 35 percent of public work toward DBEs and later enacted a hiring policy to ensure that still more city work goes to local and disadvantaged residents, among other reforms.
Even with those policies, researchers found some disparities when examining public dollars going to DBEs, particularly when they segregated the data on disadvantaged firms by race, gender or contract type.
Although nearly half of all government dollars over a recent two-year period went to DBEs, for example, only 11 percent of public construction contract dollars went to black-owned firms. Those firms could have gotten more than twice that amount, based on their qualifications and interest, researchers said. Firms owned by white women, meanwhile, were overutilized in that area.
Black-owned firms received close to what might be expected in professional services contracts but far less in supplying goods. They were significantly overutilized in other kinds of contracts.
Meanwhile, white women, Latinos and Asian-Americans could have gotten slightly more of certain kinds of contracts than they did, the data show.
Still, the work seems to point to more problems in the private sector than in city contracts. Annette Keen, a lead researcher for the study, said women contractors her team interviewed described struggling to find work “in a man’s world,” and minority contractors believe they were denied jobs in the private sector because of their skin color.
“For women-owned firms ... sometimes they are the secretary in the room, rather than the business owner, even when they are the business owner,” Keen said.
The work also referenced societal discrimination that has worked to hold minority contractors back, such as banks that more frequently deny business or home loans to black applicants, and unequal advancement opportunities for black, Latino and white construction workers, among other issues.
The Keen firm, which the city paid nearly $500,000 to produce the report, recommended that officials change the eligibility criteria for disadvantaged businesses to more closely mirror those of the federal government, which examines a business’s economic standing before giving it a disadvantaged label.
Such economic reviews could prevent a scenario in which a minority- or woman-owned firm is certified as a DBE but has substantial financial resources and does not actually need the program, the consultants said. On the flip side, the city should move to ensure that firms owned by white men who are economically or socially disadvantaged can continue to benefit.
The city also should consider speeding up the average time it takes to pay a prime contractor or a subcontractor so that DBEs — already burdened by limited resources — aren’t waiting months to get paid, the study said.
Although the study offered opinions on potential improvements only to the city's DBE program, Landrieu himself had some pointed words for private firms that haven’t made more opportunities available for minorities and women.
“Some may view an inclusionary contracting process as burdensome, as something that might weigh them down when they need to be agile,” he said. “To those people, I would say look at the facts. There has been no drop-off in the quality of the work since we beefed up our DBE program.”
Moreover, “this is not about charity,” he said. “We are helping people to realize the potential that they already had, and that which makes them valuable to the community.”