Solid Waste Authority of Palm Beach County, Florida B?grii1 Studil March 2017 MASON TILLMAN ASSOCIATES, LTD Table of Contents CHAPTER 1: LEGAL ANALYSIS ................................................................................................ 1-1 I. INTRODUCTION ..................................................................................................................1-1 II. STANDARD OF REVIEW ......................................................................................................1-2 III. BURDEN OF PROOF ............................................................................................................1-6 A. INITIAL BURDEN OF PROOF ....................................................................................... 1-6 B. ULTIMATE BURDEN OF PROOF................................................................................... 1-7 IV. CROSON EVIDENTIARY FRAMEWORK ...............................................................................1-9 A. B. C. D. ACTIVE OR PASSIVE PARTICIPATION ......................................................................... 1-9 SYSTEMIC DISCRIMINATORY EXCLUSION ................................................................ 1-11 ANECDOTAL EVIDENCE ........................................................................................... 1-19 REMEDIAL STATUTORY SCHEME ............................................................................. 1-24 V. CONSIDERATION OF RACE-NEUTRAL OPTIONS ..............................................................1-27 VI. CONCLUSION....................................................................................................................1-28 VII. LIST OF AUTHORITIES .....................................................................................................1-29 CHAPTER 2: PROCUREMENT AND CONTRACTING POLICY REVIEW ...................................... 2-1 I. INTRODUCTION ..................................................................................................................2-1 II. DEFINITIONS ......................................................................................................................2-1 A. INDUSTRY DEFINITIONS ............................................................................................. 2-1 B. DEFINITIONS OF PROCUREMENT TYPES ..................................................................... 2-2 III. GOVERNING LAWS ............................................................................................................2-3 A. STATE OF FLORIDA STATUTES ................................................................................... 2-3 B. SOLID WASTE AUTHORITY OF PALM BEACH COUNTY PURCHASING MANUAL ......... 2-3 IV. PROCUREMENT PROCESS OVERVIEW ...............................................................................2-4 V. INFORMAL PROCUREMENT METHODS ..............................................................................2-4 i Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study A. CONSTRUCTION VALUED $50,000 AND UNDER ......................................................... 2-5 B. PROFESSIONAL SERVICES VALUED $50,000 AND UNDER .......................................... 2-5 C. COMMODITIES AND OTHER SERVICES AND TRADE SERVICES VALUED $5,000 AND UNDER ...................................................................................................................... 2-7 VI. COMPETITIVE PROCUREMENT METHODS ........................................................................2-8 A. INVITATION TO BID .................................................................................................... 2-8 B. REQUEST FOR PROPOSAL ......................................................................................... 2-11 C. REQUESTS FOR QUOTATIONS ................................................................................... 2-15 VII. ALTERNATIVE PROCUREMENT METHODS ......................................................................2-16 VIII. NON-COMPETITIVE PROCUREMENT METHODS ..............................................................2-16 A. B. C. D. E. F. IX. NEGOTIATED PROCUREMENT .................................................................................. 2-16 SOLE SOURCE PURCHASES ...................................................................................... 2-17 EMERGENCY PURCHASES ........................................................................................ 2-17 COOPERATIVE PURCHASES ...................................................................................... 2-18 STATE PURCHASING AGREEMENT ........................................................................... 2-18 EXEMPT FROM COMPETITION .................................................................................. 2-18 SMALL AND LOCAL BUSINESS ENTERPRISE PROGRAMS ................................................2-19 A. SMALL BUSINESS ENTERPRISE POLICY .................................................................... 2-19 B. LOCAL BUSINESS ENTERPRISE PREFERENCE POLICY ............................................... 2-20 CHAPTER 3: PRIME CONTRACTOR UTILIZATION ANALYSIS ................................................. 3-1 I. INTRODUCTION ..................................................................................................................3-1 II. PRIME CONTRACT DATA SOURCES ...................................................................................3-2 III. PRIME CONTRACT UTILIZATION THRESHOLDS................................................................3-3 IV. PRIME CONTRACTOR UTILIZATION ..................................................................................3-3 A. B. C. D. E. F. G. H. ALL PRIME CONTRACTORS ........................................................................................ 3-3 HIGHLY USED CONSTRUCTION PRIME CONTRACTORS .............................................. 3-4 HIGHLY USED PROFESSIONAL SERVICES PRIME CONTRACTORS ............................... 3-5 HIGHLY USED COMMODITIES AND OTHER SERVICES PRIME CONTRACTORS ............. 3-6 HIGHLY USED TRADE SERVICES PRIME CONTRACTORS ............................................ 3-7 ALL PRIME CONTRACTS BY INDUSTRY ...................................................................... 3-8 FORMAL CONTRACTS BY INDUSTRY ........................................................................ 3-16 INFORMAL CONTRACTS BY INDUSTRY ..................................................................... 3-24 ii Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study V. SUMMARY ........................................................................................................................3-32 CHAPTER 4: SUBCONTRACTOR UTILIZATION ANALYSIS ....................................................... 4-1 I. INTRODUCTION ..................................................................................................................4-1 II. DATA SOURCES ..................................................................................................................4-1 III. SUBCONTRACTOR UTILIZATION........................................................................................4-2 A. ALL SUBCONTRACTS ................................................................................................. 4-2 B. ALL SUBCONTRACTS BY INDUSTRY ........................................................................... 4-3 IV. SUMMARY ..........................................................................................................................4-7 CHAPTER 5: MARKET AREA ANALYSIS .................................................................................. 5-1 I. MARKET AREA DEFINITION ..............................................................................................5-1 A. APPLICATION OF THE CROSON STANDARD ................................................................ 5-1 II. MARKET AREA ANALYSIS .................................................................................................5-4 A. B. C. D. E. III. SUMMARY OF THE DISTRIBUTION OF ALL PRIME CONTRACTS AWARDED ................. 5-4 DISTRIBUTION OF CONSTRUCTION PRIME CONTRACTS.............................................. 5-5 DISTRIBUTION OF PROFESSIONAL SERVICES PRIME CONTRACTS............................... 5-6 DISTRIBUTION OF COMMODITIES AND OTHER SERVICES PRIME CONTRACTS ............ 5-7 DISTRIBUTION OF TRADE SERVICES PRIME CONTRACTS ........................................... 5-8 SUMMARY ..........................................................................................................................5-8 CHAPTER 6: PRIME CONTRACTOR AND SUBCONTRACTOR AVAILABILITY ANALYSIS ............ 1 I. INTRODUCTION ..................................................................................................................... 1 II. PRIME CONTRACTOR AVAILABILITY DATA SOURCES .....................................................6-1 A. B. C. D. III. IDENTIFICATION OF WILLING BUSINESSES WITHIN THE MARKET AREA ................... 6-1 PRIME CONTRACTOR SOURCES.................................................................................. 6-3 DETERMINATION OF WILLINGNESS ........................................................................... 6-6 DISTRIBUTION OF AVAILABLE PRIME CONTRACTORS BY SOURCE, ETHNICITY, AND GENDER..................................................................................................................... 6-7 CAPACITY ..........................................................................................................................6-9 iii Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study A. LARGEST M/WBE CONTRACT AWARDED BY INDUSTRY ......................................... 6-10 B. SIZE ANALYSIS ........................................................................................................ 6-10 C. BUSINESS CAPACITY ASSESSMENT .......................................................................... 6-11 IV. PRIME CONTRACTOR AVAILABILITY ANALYSIS.............................................................6-23 A. B. C. D. V. CONSTRUCTION PRIME CONTRACTOR AVAILABILITY ............................................. 6-24 PROFESSIONAL SERVICES PRIME CONTRACTOR AVAILABILITY .............................. 6-26 COMMODITIES AND OTHER SERVICES PRIME CONTRACTOR AVAILABILITY ............ 6-28 TRADE SERVICES PRIME CONTRACTOR AVAILABILITY ........................................... 6-30 SUBCONTRACTOR AVAILABILITY ANALYSIS ..................................................................6-32 A. B. C. D. VI. SOURCE OF WILLING AND ABLE SUBCONTRACTORS ............................................... 6-32 DETERMINATION OF WILLINGNESS AND CAPACITY ................................................. 6-32 CONSTRUCTION SUBCONTRACTOR AVAILABILITY .................................................. 6-33 PROFESSIONAL SERVICES SUBCONTRACTOR AVAILABILITY ................................... 6-35 SUMMARY ........................................................................................................................6-37 CHAPTER 7: ANECDOTAL ANALYSIS ....................................................................................... 7-1 I. INTRODUCTION ..................................................................................................................7-1 II. LEGAL STANDARD .............................................................................................................7-1 A. EVIDENCE OF ACTIVE OR PASSIVE PARTICIPATION ................................................... 7-2 B. ANECDOTAL PROCESS ............................................................................................... 7-2 III. EXCERPTS FROM THE ANECDOTAL INTERVIEWS..............................................................7-4 IV. ANECDOTAL FINDINGS ......................................................................................................7-4 A. B. C. D. E. F. G. H. I. V. COMMENTS ABOUT THE SMALL BUSINESS ENTERPRISE PROGRAM............................ 7-4 DIFFICULTY BREAKING INTO THE CONTRACTING COMMUNITY ................................. 7-8 “GOOD OLD BOY” NETWORK.................................................................................. 7-10 DIFFICULTY NAVIGATING THE BID PROCESS ........................................................... 7-10 EXCESSIVE CERTIFICATION REQUIREMENTS ........................................................... 7-12 PRIME CONTRACTORS AVOIDING SBE REQUIREMENTS .......................................... 7-13 PUBLIC VERSUS PRIVATE SECTOR EXPERIENCES .................................................... 7-14 EXEMPLARY PRACTICES BY THE AUTHORITY .......................................................... 7-15 BUSINESS OWNERS’ RECOMMENDATIONS TO IMPROVE CONTRACTING WITH SBES AND M/WBES ................................................................................................................. 7-15 CONCLUSION....................................................................................................................7-17 iv Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study CHAPTER 8: PRIME CONTRACT DISPARITY ANALYSIS .......................................................... 8-1 I. INTRODUCTION ..................................................................................................................8-1 II. DISPARITY ANALYSIS ........................................................................................................8-2 A. DISPARITY ANALYSIS: ALL FORMAL PRIME CONTRACTS, BY INDUSTRY .................. 8-3 B. DISPARITY ANALYSIS: ALL INFORMAL PRIME CONTRACTS, BY INDUSTRY ............. 8-15 III. DISPARITY ANALYSIS SUMMARY ....................................................................................8-27 A. B. C. D. CONSTRUCTION PRIME CONTRACTS ........................................................................ 8-27 PROFESSIONAL SERVICES PRIME CONTRACTS ......................................................... 8-27 COMMODITIES AND OTHER SERVICES PRIME CONTRACTS ...................................... 8-28 TRADE SERVICES PRIME CONTRACTS ...................................................................... 8-28 CHAPTER 9: SUBCONTRACT DISPARITY ANALYSIS ................................................................ 9-1 I. INTRODUCTION ..................................................................................................................9-1 II. DISPARITY ANALYSIS ........................................................................................................9-1 III. DISPARITY ANALYSIS: ALL SUBCONTRACTS, BY INDUSTRY ............................................9-3 A. CONSTRUCTION SUBCONTRACTS ............................................................................... 9-3 B. PROFESSIONAL SERVICES SUBCONTRACTS ................................................................ 9-6 IV. SUBCONTRACT DISPARITY SUMMARY ............................................................................9-11 CHAPTER 10: PRIVATE SECTOR REGRESSION ANALYSIS .................................................... 10-1 I. INTRODUCTION ................................................................................................................10-1 II. LEGAL ANALYSIS.............................................................................................................10-2 A. PASSIVE DISCRIMINATION ....................................................................................... 10-2 B. NARROW TAILORING ............................................................................................... 10-3 III. REGRESSION ANALYSIS METHODOLOGY .......................................................................10-4 IV. DATASETS ANALYZED .....................................................................................................10-4 V. REGRESSION MODELS DEFINED......................................................................................10-6 v Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study A. BUSINESS OWNERSHIP ANALYSIS............................................................................ 10-6 B. BUSINESS EARNINGS ANALYSIS .............................................................................. 10-7 C. BUSINESS LOAN APPROVAL ANALYSIS ................................................................... 10-8 VI. FINDINGS..........................................................................................................................10-9 A. B. C. D. E. F. VII. BUSINESS OWNERSHIP ANALYSIS............................................................................ 10-9 BUSINESS OWNERSHIP ANALYSIS SUMMARY ........................................................ 10-15 BUSINESS EARNINGS ANALYSIS ............................................................................ 10-16 BUSINESS EARNINGS ANALYSIS SUMMARY .......................................................... 10-22 BUSINESS LOAN APPROVAL ANALYSIS ................................................................. 10-23 BUSINESS LOAN APPROVAL ANALYSIS SUMMARY ................................................ 10-28 CONCLUSION..................................................................................................................10-28 CHAPTER 11: HISTORICAL REVIEW...................................................................................... 11-1 I. INTRODUCTION ................................................................................................................11-1 II. POLITICAL CONDITIONS AFFECTING NATIVE AND AFRICAN AMERICANS DURING THE COLONIAL AND ANTEBELLUM PERIODS, (1800S-1900S) ................................................11-2 A. THE FIRST RECONSTRUCTION .................................................................................. 11-3 III. SOCIO-ECONOMIC CONDITIONS CONFRONTING AFRICAN AMERICANS IN THE EARLY TWENTIETH CENTURY ....................................................................................................11-4 IV. PRE-WORLD WAR II SOCIO-ECONOMIC CONDITIONS FOR AFRICAN AMERICANS ......11-7 A. BARRIERS TO AFRICAN AMERICAN EDUCATIONAL, OCCUPATIONAL, AND PROFESSIONAL ADVANCEMENT .............................................................................. 11-8 B. URBAN RENEWAL POLICY AND MINORITY HOUSING ............................................ 11-11 C. AFRICAN AMERICAN ACCESS TO CAPITAL ............................................................ 11-13 V. CONCLUSION..................................................................................................................11-15 CHAPTER 12: RECOMMENDATIONS....................................................................................... 12-1 I. INTRODUCTION ................................................................................................................12-1 II. DISPARITY ANALYSIS FINDINGS ......................................................................................12-1 A. NUMBER OF PRIME CONTRACTS .............................................................................. 12-2 B. NUMBER OF SUBCONTRACTS ................................................................................... 12-2 C. PRIME CONTRACT DISPARITY FINDINGS ................................................................. 12-3 vi Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study D. SUBCONTRACTOR DISPARITY FINDINGS .................................................................. 12-5 III. RACE- AND GENDER-SPECIFIC RECOMMENDATIONS .....................................................12-6 A. B. C. D. E. IV. SMALL BUSINESS ENTERPRISE AND LOCAL PREFERENCE PROGRAM ASSESSMENT....12-17 A. B. C. D. V. PROMULGATE M/WBE POLICY ............................................................................... 12-6 ESTABLISH A MINORITY AND WOMAN-OWNED BUSINESS ENTERPRISE OFFICE ...... 12-7 ADOPT M/WBE PROGRAM ELIGIBILITY STANDARDS ............................................. 12-8 ESTABLISH RACE- AND GENDER-SPECIFIC GOALS................................................... 12-8 ESTABLISH M/WBE PROGRAM ADMINISTRATIVE PROCEDURES ........................... 12-12 SMALL BUSINESS ENTERPRISE POLICY .................................................................. 12-18 LOCAL BUSINESS PREFERENCE POLICY ................................................................. 12-19 SBE PROGRAM EFFECTIVENESS ............................................................................ 12-19 SBE PROGRAM ENHANCEMENTS ........................................................................... 12-21 RACE- AND GENDER-NEUTRAL RECOMMENDATIONS ..................................................12-24 A. PRE-AWARD PROCEDURES .................................................................................... 12-24 B. POST-AWARD PROCEDURES .................................................................................. 12-25 C. DATA MANAGEMENT PROCEDURES ...................................................................... 12-27 VI. WEBSITE ENHANCEMENT STRATEGIES ........................................................................12-27 A. STRUCTURAL ENHANCEMENTS .............................................................................. 12-28 B. FUNCTIONALITY .................................................................................................... 12-29 C. CONTENT ENHANCEMENTS.................................................................................... 12-30 vii Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study List of Tables Table 2.1: Governing Laws and Regulations ............................................................................... 2-3 Table 3.1: Business Ethnic and Gender Groups .......................................................................... 3-2 Table 3.2: Informal Contract Threshold ...................................................................................... 3-3 Table 3.3: Total Prime Contracts and Dollars Expended: All Industries, Fiscal Years 2009 Through 2013 ............................................................................................................. 3-4 Table 3.4: Construction Prime Contracts ..................................................................................... 3-4 Table 3.5: Construction Prime Contracts Distributed by Number of Vendors ............................ 3-4 Table 3.6: Top 1 Highly Used Construction Prime Contractor ................................................... 3-5 Table 3.7: Professional Services Prime Contracts ....................................................................... 3-5 Table 3.8: Professional Services Prime Contracts Distributed by Number of Vendors .............. 3-5 Table 3.9: Top 3 Highly Used Professional Services Prime Contractors .................................... 3-6 Table 3.10: Commodities and Other Services Prime Contracts .................................................. 3-6 Table 3.11: Commodities and Other Services Prime Contracts Distributed by Number of Vendors .................................................................................................................... 3-6 Table 3.12: Top 12 Highly Used Commodities and Other Services Prime Contractors ............. 3-7 Table 3.13: Trade Services Prime Contracts................................................................................ 3-7 Table 3.14: Trade Services Prime Contracts Distributed by Number of Vendors....................... 3-7 Table 3.15: Top 4 Highly Used Trade Services Prime Contractors ............................................ 3-8 Table 3.16: Construction Prime Contract Utilization: All Contracts, Fiscal Years 2009 Through 2013 .......................................................................................................................... 3-9 Table 3.17: Professional Services Prime Contract Utilization: All Contracts, Fiscal Years 2009 Through 2013 ......................................................................................................... 3-11 viii Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Table 3.18: Commodities and Other Services Prime Contract Utilization: All Contracts, Fiscal Years 2009 Through 2013 ...................................................................................... 3-13 Table 3.19: Trade Services Prime Contract Utilization: All Contracts, Fiscal Years 2009 Through 2013 ........................................................................................................................ 3-15 Table 3.20: Construction Prime Contract Utilization: Contracts Valued $600,000 and Under, Fiscal Years 2009 Through 2013 ........................................................................... 3-17 Table 3.21: Professional Services Prime Contract Utilization: Contracts Valued $175,000 and Under, Fiscal Years 2009 Through 2013 ............................................................... 3-19 Table 3.22: Commodities and Other Services Prime Contract Utilization: Contracts Valued $250,000 and Under, Fiscal Years 2009 Through 2013......................................... 3-21 Table 3.23: Trade Services Prime Contract Utilization: Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 ........................................................................... 3-23 Table 3.24: Construction Prime Contract Utilization: Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 ........................................................................... 3-25 Table 3.25: Professional Services Prime Contract Utilization: Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 ............................................................... 3-27 Table 3.26: Commodities and Other Services Prime Contract Utilization: Contracts Valued $5,000 and Under, Fiscal Years 2009 Through 2013............................................. 3-29 Table 3.27: Trade Services Contract Utilization: Contracts Valued $5,000 and Under, Fiscal Years 2009 Through 2013 ...................................................................................... 3-31 Table 4.1: Total Subcontracts Awarded and Dollars Expended by Industry, Fiscal Years 2009 Through 2013 ........................................................................................................... 4-2 Table 4.2: Construction Subcontractor Utilization, Fiscal Years 2009 Through 2013 ............... 4-4 Table 4.3: Professional Services Subcontractor Utilization, Fiscal Years 2009 Through 2013 .. 4-6 Table 5.1: Distribution of All Prime Contracts Awarded ............................................................ 5-5 Table 5.2: Distribution of Construction Prime Contracts ............................................................ 5-6 Table 5.3: Distribution of Professional Services Prime Contracts .............................................. 5-6 ix Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Table 5.4: Distribution of Commodities and Other Services Prime Contracts ............................ 5-7 Table 5.5: Distribution of Trade Services Prime Contracts ......................................................... 5-8 Table 5.6: Solid Waste Authority of Palm Beach County Contract Distribution ........................ 5-9 Table 6.1: Prime Contractor Availability Data Sources .............................................................. 6-3 Table 6.2: Distribution of Prime Contractor Availability Data Sources, Construction ............... 6-7 Table 6.3: Distribution of Prime Contractor Availability Data Sources, Professional Services . 6-8 Table 6.4: Distribution of Prime Contractor Availability Data Sources, Commodities and Other Services ...................................................................................................................... 6-8 Table 6.5: Distribution of Prime Contractor Availability Data Sources, Trade Services ............ 6-9 Table 6.6: Largest M/WBE Contracts Awarded by the Agency ............................................... 6-10 Table 6.7: Quartile Analysis by Size and Industry .................................................................... 6-10 Table 6.8: Ethnicity and Gender of Businesses ......................................................................... 6-12 Table 6.9: Primary Industry ....................................................................................................... 6-12 Table 6.10: Annual Gross Revenue ........................................................................................... 6-13 Table 6.11: Annual Gross Revenue Ordered Logistic Regression: Construction ..................... 6-14 Table 6.12: Annual Gross Revenue Ordered Logistic Regression: Professional Services ........ 6-15 Table 6.13: Annual Gross Revenue Ordered Logistic Regression: Commodities and Other Services .................................................................................................................. 6-16 Table 6.14: Annual Gross Revenue Ordered Logistic Regression: Non-M/WBEs ................... 6-17 Table 6.15: Annual Gross Revenue Ordered Logistic Regression: WBEs ................................ 6-18 Table 6.16: Annual Gross Revenue Ordered Logistic Regression: MBEs ................................ 6-19 Table 6.17: Current Number of Employees ............................................................................... 6-20 Table 6.18: Number of Annual Contracts .................................................................................. 6-21 x Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Table 6.19: Submitted a Bid or Qualifications to Government Agency .................................... 6-21 Table 6.20: Years in Business Operation ................................................................................... 6-22 Table 6.21: Education Level of Business Owners ..................................................................... 6-22 Table 6.22: Available Construction Prime Contractors, Fiscal Years 2009 Through 2013 ...... 6-25 Table 6.23: Available Professional Services Prime Contractors, Fiscal Years 2009 Through 2013 ................................................................................................................................ 6-27 Table 6.24: Available Commodities and Other Services Prime Contractors, Fiscal Years 2009 Through 2013 ......................................................................................................... 6-29 Table 6.25: Available Trade Services Prime Contractors, Fiscal Years 2009 Through 2013 ... 6-31 Table 6.26: Unique Subcontractor Availability Data Source .................................................... 6-32 Table 6.27: Available Construction Subcontractors, Fiscal Years 2009 Through 2013 ........... 6-34 Table 6.28: Available Professional Services Subcontractors, Fiscal Years 2009 Through 2013… ................................................................................................................................ 6-36 Table 8.1: Statistical Outcome Descriptions ................................................................................ 8-3 Table 8.2: Disparity Analysis: Construction Prime Contracts Valued $600,000 and Under, Fiscal Years 2009 Through 2013 ......................................................................................... 8-4 Table 8.3: Disparity Analysis: Professional Services Prime Contracts Valued $175,000 and Under, Fiscal Years 2009 Through 2013 ................................................................... 8-7 Table 8.4: Disparity Analysis: Commodities and Other Services Prime Contracts Valued $250,000 and Under, Fiscal Years 2009 Through 2013 .......................................... 8-10 Table 8.5: Disparity Analysis: Trade Services Prime Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 ............................................................................. 8-13 Table 8.6: Disparity Analysis: Construction Prime Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 ....................................................................................... 8-16 Table 8.7: Disparity Analysis: Professional Services Prime Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 ............................................................................. 8-19 xi Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Table 8.8: Disparity Analysis: Commodities and Other Services Prime Contracts Valued $5,000 and Under, Fiscal Years 2009 Through 2013 ......................................................... 8-22 Table 8.9: Disparity Analysis: Trade Services Prime Contracts Valued $5,000 and Under, Fiscal Years 2009 Through 2013 ....................................................................................... 8-25 Table 8.10: Disparity Summary: Construction Prime Contract Dollars, Fiscal Years 2009 Through 2013 ......................................................................................................... 8-27 Table 8.11: Disparity Summary: Professional Services Prime Contract Dollars, Fiscal Years 2009 Through 2013 ................................................................................................ 8-27 Table 8.12: Disparity Summary: Commodities and Other Services Prime Contract Dollars, Fiscal Years 2009 Through 2013 ........................................................................... 8-28 Table 8.13: Disparity Summary: Trade Services Prime Contract Dollars, Fiscal Years 2009 Through 2013 ......................................................................................................... 8-28 Table 9.1: Statistical Outcome Descriptions ................................................................................ 9-2 Table 9.2: Disparity Analysis: Construction Subcontracts, Fiscal Years 2009 Through 2013 ... 9-4 Table 9.3: Disparity Analysis: Professional Services Subcontracts, Fiscal Years 2009 Through 2013 .......................................................................................................................... 9-7 Table 9.4: Subcontract Disparity Summary, Fiscal Years 2009 Through 2013 ........................ 9-11 Table 10.1: Caucasian Males and M/WBE Business Loan Approval ....................................... 10-5 Table 10.2: Independent Variables Used for the Business Ownership Analysis ....................... 10-7 Table 10.3: Independent Variables Used for the Business Earnings Analysis .......................... 10-8 Table 10.4: Independent Variables Used for the Business Loan Approval Analysis ................ 10-9 Table 10.5: Construction Industry Logistic Model .................................................................. 10-10 Table 10.6: Professional Services Industry Logistic Model .................................................... 10-12 Table 10.7: Commodities and Other Services Industry Logistic Model ................................. 10-14 Table 10.8: Statistically Significant Business Ownership Disparities ..................................... 10-16 xii Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Table 10.9: Construction Industry OLS Regression ................................................................ 10-16 Table 10.10: Professional Services Industry OLS Regression ................................................ 10-18 Table 10.11: Commodities and Other Services Industry OLS Regression .............................. 10-20 Table 10.12: Statistically Significant Business Earnings Disparities ...................................... 10-22 Table 10.13: Construction Ordered Logistic Regression ......................................................... 10-23 Table 10.14: Professional Services Ordered Logistic Regression ........................................... 10-25 Table 10.15: Commodities and Other Services Ordered Logistic Regression ........................ 10-27 Table 10.16: Statistically Significant Business Loan Approval Disparities ............................ 10-28 Table 12.1: Total Prime Contracts and Dollars Expended: All Industries, Fiscal Years 2009 Through 2013 ......................................................................................................... 12-2 Table 12.2: Total Subcontracts and Dollars Expended: All Industries, Fiscal Years 2009 Through 2013 ......................................................................................................... 12-2 Table 12.3: Prime Contract Disparity Summary: Construction, Fiscal Years 2009 Through 2013 ................................................................................................................................ 12-3 Table 12.4: Prime Contract Disparity Summary: Professional Services, Fiscal Years 2009 Through 2013 ......................................................................................................... 12-4 Table 12.5: Prime Contract Disparity Summary: Commodities and Other Services, Fiscal Years 2009 Through 2013 ................................................................................................ 12-4 Table 12.6: Prime Contract Disparity Summary: Trade Services, Fiscal Years 2009 Through 2013 ........................................................................................................................ 12-5 Table 12.7: Subcontract Disparity Summary: Construction, Fiscal Years 2009 Through 2013… ................................................................................................................................ 12-6 Table 12.8: Subcontract Disparity Summary: Professional Services, Fiscal Years 2009 Through 2013 ........................................................................................................................ 12-6 Table 12.9: Groups Eligible for Construction Bid Discounts .................................................... 12-9 Table 12.10: Groups Eligible for Informal Construction Contracts .......................................... 12-9 xiii Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Table 12.11: Groups Eligible for Professional Services Evaluation Points............................. 12-10 Table 12.12: Groups Eligible for Commodities and Other Services Bid Discounts ............... 12-11 Table 12.13: Groups Eligible for Trade Services Bid Discounts............................................. 12-11 Table 12.14: M/WBE Subcontractor Construction Availability.............................................. 12-12 Table 12.15: M/WBE Professional Services Subcontractor Availability ................................ 12-12 Table 12.16: SBE Subcontractor Utilization by Ethnicity and Gender: All Industries ........... 12-20 Table 12.17: SBE Subcontractor Availability by Ethnicity and Gender: All Industries ......... 12-21 Table 12.18: Business Profile by Annual Revenue ................................................................. 12-22 Table 12.19: Unbundling Criteria ............................................................................................ 12-24 Table 12.20: Readability Result by Flesch-Kincaid Grade Reading Ease Score .................... 12-29 xiv Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study List of Charts Chart 6.1: Annual Gross Revenue ............................................................................................. 6-14 Chart 6.2: Current Number of Employees ................................................................................. 6-20 Chart 8.1: Disparity Analysis: Construction Prime Contracts Valued $600,000 and Under, Fiscal Years 2009 Through 2013 ........................................................................................................... 8-5 Chart 8.2: Disparity Analysis: Professional Services Prime Contracts Valued $175,000 and Under, Fiscal Years 2009 Through 2013 ................................................................... 8-8 Chart 8.3: Disparity Analysis: Commodities and Other Services Prime Contracts Valued $250,000 and Under, Fiscal Years 2009 Through 2013............................................ 8-11 Chart 8.4: Disparity Analysis: Trade Services Prime Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 ......................................................................................... 8-14 Chart 8.5: Disparity Analysis: Construction Prime Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 ......................................................................................... 8-17 Chart 8.6: Disparity Analysis: Professional Services Prime Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 .............................................................................. 8-20 Chart 8.7: Disparity Analysis: Commodities and Other Services Prime Contracts Valued 5,000 and Under, Fiscal Years 2009 Through 2013 ............................................................ 8-23 Chart 8.8: Disparity Analysis: Trade Services Prime Contracts Valued $5,000 and Under, Fiscal Years 2009 Through 2013 ......................................................................................... 8-26 Chart 9.1: Disparity Analysis: Construction Subcontracts, Fiscal Years 2009 Through 2013.... 9-5 Chart 9.2: Disparity Analysis: Professional Services Subcontracts, Fiscal Years 2009 Through 2013 ............................................................................................................................. 9-8 xv Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study CHAPTER 1: Legal Analysis I. Introduction This Chapter presents the constitutional standard utilized by federal courts to review local governments’ minority business enterprise contracting programs. The standard is set forth in the 1989 United States Supreme Court decision of City of Richmond v. J.A. Croson Co.1(“Croson”) and its progeny. Croson examined the City of Richmond’s locally funded Minority Business Enterprise (MBE) Program and established the most stringent evidentiary standard of review for race-based programs. Croson decided that programs employing racial classifications would be subject to “strict scrutiny,” the highest legal standard. Broad notions of equity or general allegations of historical and societal discrimination against minorities fail to meet the requirements of strict scrutiny. Where there are identified statistical findings of discrimination sufficient to warrant remediation, the remedy must also impose a minimal burden upon unprotected classes. The Governing Board of the Solid Waste Authority of Palm Beach County (Authority) adopted a Minority- and Woman-owned Business Enterprise Policy in September 1992, establishing a voluntary goal of fifteen percent participation of certified M/WBEs for all of the Authority’s discretionary expenditures. Twenty years later, the Board modified the Policy to eliminate the race- and gender-conscious initiatives and transition to a race- and gender-neutral Small Business Program. This Disparity Study will examine the utilization of available M/WBEs on Authority funded contracts during the fiscal year 2009 through 2013 study period. If there is evidence of statistically significant underutilization of available minority- and woman-owned businesses on the Authority’s prime or subcontracts the factual predicate will exist, thus the SBE program may be amended to employ race- and gender-conscious remedies to address the documented disparities. The legal standard Croson and its progeny require to implement a race based contracting program is presented in seven sections. The first section is the Introduction. Section II: Standard of Review, provides an overview of the constitutional parameters applicable to race- and gender-conscious programs. A factual predicate, as set forth in Section III: Burden of Proof, is documented evidence of past discrimination which must be demonstrated by the Authority before the implementation of race and gender remedial measures. The Croson Evidentiary Framework is discussed in Section IV. The framework must include a strong basis in evidence of past discrimination and “narrowly tailored” race-conscious remedies.2 A Consideration of Race-Neutral Options, offering remedial initiatives in addition to race and gender conscious remedies, is described in Section V. The Conclusion and List of Authorities are contained in Section VI and Section VII, respectively. 1 City of Richmond v. J.A. Croson Co., 488 U.S. 469, 495-96 (1989). 2 Croson, 488 U.S. at 486. 1-1 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis II. Standard of Review In this context, the standard of review refers to the level of scrutiny a court applies during its analysis of whether a particular law is constitutional. This Chapter discusses the standards of review applied to remedial programs based on various classifications, including the heightened standard of review that the United States Supreme Court set forth in Croson for race-conscious programs. 1. Minority Business Enterprise Programs In Croson, the United States Supreme Court affirmed that, pursuant to the Fourteenth Amendment, the proper standard of review for state and local race-based MBE programs is strict scrutiny.3 Specifically, the government must show that the race-conscious remedies are narrowly tailored to achieve a compelling state interest.4 The Court recognized that a state or local entity may take action, in the form of an MBE program, to rectify the effects of identified, systemic racial discrimination within its jurisdiction.5 Justice O’Connor, speaking for the majority, articulated various methods of demonstrating discrimination and set forth guidelines for crafting MBE programs that are “narrowly tailored” to address systemic racial discrimination.6 2. Women Business Enterprise Programs Since Croson, which dealt exclusively with the review of race-conscious plans, the United States Supreme Court has remained silent with respect to the appropriate standard of review for geographically based Women Business Enterprise (WBE) programs and Local Business Enterprise (LBE) programs. In other contexts, however, the United States Supreme Court has ruled that gender classifications are not subject to the rigorous strict scrutiny standard applied to racial classifications. Instead, gender classifications have been subject only to an “intermediate” standard of review, regardless of which gender is favored. Notwithstanding the fact that the United States Supreme Court has not ruled on a WBE program, the consensus among the federal circuit courts of appeals is that WBE programs are subject to intermediate scrutiny, rather than the more exacting strict scrutiny standard to which raceconscious programs are subject.7 Intermediate scrutiny requires the governmental entity to 3 Croson, 488 U.S. at 493-95. 4 Id. at 493. 5 Id. at 509. 6 Id. at 501-2. Cases involving education and employment frequently refer to the principal concepts applicable to the use of race in government contracting: compelling interest and narrowly tailored remedies. The Supreme Court in Croson and subsequent cases provides fairly detailed guidance on how those concepts are to be treated in contracting. In education and employment, the concepts are not explicated to nearly the same extent. Therefore, references in those cases to “compelling governmental interest” and “narrow tailoring” for purposes of contracting are essentially generic and of little value in determining the appropriate methodology for disparity studies. 7 See Coral Constr. Co. v. King Cnty., 941 F.2d 910, 930 (9th Cir. 1991); Contractors Ass’n of E. Pa. v. City of Philadelphia (“Philadelphia VI”), 91 F.3d 586, 596-98 (3d Cir. 1996); Eng’g Constr. Ass’n v. Metro. Dade Cnty. (“Dade County II”), 122 F.3d 895, 907-08 (11th Cir. 1997); see also Concrete Works of Colo. v. City & Cnty. of Denver, 321 F.3d 950, 960 (10th Cir. 2003)(“Concrete Works IV”); and H.B. Rowe Co. v. N.C. Dep’t of Transp, 615 F.3d 233, 236 (4th Cir. 2010) (“Rowe”). 1-2 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis demonstrate that the action taken furthers an “important governmental objective,” employing a method that bears a fair and substantial relation to the goal.8 The courts have also described the test as requiring an “exceedingly persuasive justification” for classifications based on gender.9 The United States Supreme Court acknowledged that in “limited circumstances a gender-based classification favoring one sex can be justified if it intentionally and directly assists the members of that sex who are disproportionately burdened.”10 Consistent with the United States Supreme Court’s finding with regard to gender classification, the Third Circuit in Contractors Association of Eastern Pennsylvania v. City of Philadelphia (“Philadelphia IV”) ruled in 1993 that the standard of review governing WBE programs is different from the standard imposed upon MBE programs.11The Third Circuit held that, whereas MBE programs must be “narrowly tailored” to a “compelling state interest,” WBE programs must be “substantially related” to “important governmental objectives.”12 In contrast, an MBE program would survive constitutional scrutiny only by demonstrating a pattern and practice of systemic racial exclusion or discrimination in which a state or local government was an active or passive participant.13 The Ninth Circuit in Associated General Contractors of California v. City and County of San Francisco (“AGCC I”) held that classifications based on gender require an “exceedingly persuasive justification.”14 The justification is valid only if members of the gender benefited by the classification actually suffer a disadvantage related to the classification, and the classification does not reflect or reinforce archaic and stereotyped notions of the roles and abilities of women.15 The Eleventh Circuit United States Court of Appeals (Eleventh Circuit) also applied intermediate scrutiny.16 In its review and affirmation of the district court’s holding, in Engineering Contractors Association of South Florida v. Metropolitan Dade County (“Dade County II”), the Eleventh Circuit cited the Third Circuit’s 1993 formulation in Philadelphia IV: “[T]his standard requires the [County] to present probative evidence in support of its stated rationale for the gender preference, discrimination against women-owned contractors.”17 Although the Dade County II appellate court ultimately applied the intermediate scrutiny standard, it queried whether the 8 Miss. Univ. for Women v. Hogan, 458 U.S. 718, 726 (1982); see also United States v. Virginia, 518 U.S. 515, 524 (1996) (“Virginia”). 9 Hogan, 458 U.S. at 751; see also Mich. Rd. Builders Ass’n, Inc. v. Milliken, 834 F.2d 583, 595 (6th Cir. 1987). 10 Hogan, 458 U.S. at 728; see also Schlesinger v. Ballard, 419 U.S. 498, 508 (1975) (“Ballard”). 11 Contractors Ass’n of E. Pa. v. City of Philadelphia (“Philadelphia IV”), 6 F. 3d 990, 1001 (3d Cir. 1993). 12 Philadelphia IV, 6 F.3d at 1009-10. 13 Id. at 1002. 14 Associated Gen. Contractors of Cal. v. City & Cnty. of San Francisco, 813 F.2d 922, 940 (9th Cir. 1987) (“AGCC I”). 15 Ballard, 419 U.S. at 508. 16 Ensley Branch N.A.A.C.P. v. Seibels, 31 F. 3d 1548, 1579-80 (11th Cir. 1994). 17 Dade County II, 122 F.3d at 909 (citing Philadelphia IV, 6 F.3d at 1010; see also Saunders v. White, 191 F. Supp. 2d 95, 134 (D.D.C. 2002) (stating “[g]iven the gender classifications explained above, the initial evaluation procedure must satisfy intermediate scrutiny to be constitutional.”). 1-3 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis United States Supreme Court decision in United States v. Virginia,18 finding the all-male program at Virginia Military Institute unconstitutional, signaled a heightened level of scrutiny.19 In the case of United States v. Virginia, the U.S. Supreme Court held that parties who seek to defend gender-based government action must demonstrate an “exceedingly persuasive justification” for that action.20 While the Eleventh Circuit United States Court of Appeals echoed that speculation, it concluded that “[u]nless and until the U.S. Supreme Court tells us otherwise, intermediate scrutiny remains the applicable constitutional standard in gender discrimination cases, and a gender preference may be upheld so long as it is substantially related to an important governmental objective.”21 In Dade County II, the Eleventh Circuit court noted that the Third Circuit in Philadelphia IV was the only federal appellate court that explicitly attempted to clarify the evidentiary requirement applicable to WBE programs.22Dade County II interpreted that standard to mean that “evidence offered in support of a gender preference must not only be ‛probative’ [but] must also be ‘sufficient.’”23 It also reiterated two principal guidelines of intermediate scrutiny evidentiary analysis: (1) under this test, a local government must demonstrate some past discrimination against women, but not necessarily discrimination by the government itself;24 and (2) the intermediate scrutiny evidentiary review is not to be directed toward mandating that gender-conscious affirmative action is used only as a “last resort”25 but instead ensuring that the affirmative action is “a product of analysis rather than a stereotyped reaction based on habit.”26 This determination requires “evidence of past discrimination in the economic sphere at which the affirmative action program is directed.”27 The court also stated that “a gender-conscious program need not closely tie its numerical goals to the proportion of qualified women in the market.”28 18 Virginia, 518 U.S. at 534. 19 Dade County II, 122 F.3d at 907-08. 20 Virginia, 518 U.S. at 534. 21 Dade County II, 122 F.3d at 908. 22 Id. at 909. 23 Id. at 910. 24 Id. (quoting Ensley Branch, 31 F.3d at 1580). 25 Id. (quoting Hayes v. N. State Law Enforcement Officers Ass’n., 10 F.3d 207, 217 (4th Cir. 1993) (racial discrimination case)). 26 Id. (quoting Philadelphia IV, 6 F.3d at 1010). 27 Id. (quoting Ensley Branch, 31 F.3d at 1581). 28 Id. at 929; cf, Builders Ass’n of Greater Chi. v. Cnty. of Cook, 256 F. 3d 642, 644 (7th Cir. 2001) (questioned why there should be a lesser standard where the discrimination was against women rather than minorities.). 1-4 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis 3. Local Business Enterprise Programs In AGCC I, a pre-Croson case, the Ninth Circuit Court of Appeals applied the rational basis standard when evaluating the City and County of San Francisco’s Local Business Enterprise (LBE) program, holding that a local government may give a preference to local businesses to address the economic disadvantages those businesses face in doing business within the City and County of San Francisco.29 To survive a constitutional challenge under a rational basis review, the government entity need only demonstrate that the governmental action or program is rationally related to a legitimate government interest.30 The Supreme Court cautioned government agencies seeking to meet the rational basis standard by advising that, if a race- and gender-neutral program is subjected to a constitutional attack, the facts upon which the program is predicated will be subject to judicial review.31 The rational basis standard of review does not have to be the government's actual interest. Rather, if the court can merely hypothesize a legitimate interest served by the challenged action, it will withstand the rational basis review.32 The term rational must convince an impartial lawmaker that the classification would serve a legitimate public purpose that transcends the harm to the members of the disadvantaged class.33 San Francisco conducted a detailed study of the economic disadvantages faced by San Franciscobased businesses as compared to businesses located in other jurisdictions. The study showed a competitive disadvantage in public contracting for businesses located within the City as compared to businesses from other jurisdictions. San Francisco-based businesses incurred higher administrative costs in doing business within the City. Such costs included higher taxes, rents, wages, insurance rates, and benefits for labor. In upholding the LBE Ordinance, the Ninth Circuit held “. . . the city may rationally allocate its own funds to ameliorate disadvantages suffered by local businesses, particularly where the city itself creates some of the disadvantages."34 4. Small Business Enterprise Programs A government entity may implement a Small Business Enterprise (SBE) program predicated upon a rational basis to ensure adequate small business participation in government contracting. Rational 29 AGCC I, 813 F.2d at 943; Lakeside Roofing Company v. State of Missouri, et al., 2012 WL 709276 (E.D.Mo. Mar. 5, 2012) (Note that federal judges will generally rule the way that a previous court ruled on the same issue following the doctrine of stare decisis – the policy of courts to abide by or adhere to principles established by decisions in earlier cases; however, a decision reached by a different circuit is not legally binding on another circuit court, it is merely persuasive and instructional on the issue). 30 Armour v. City of Indianapolis, Ind., 132 S. Ct. 2073, 2080 (2012) (quoting Heller v. Doe, 509 U.S. 312, 319–320 (1993)). 31 Id. 32 Lakeside Roofing, 2012 WL 709276; see KATHLEEN M. SULLIVAN& GERALD GUNTHER, CONSTITUTIONAL LAW FOUNDATION PRESS Chapter 9 (16th ed. 2007). 33 Croson, 488 U.S. at 515. 34 AGCC I, 813 F.2d at 943. 1-5 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis basis is the lowest level of scrutiny and the standard the courts apply to race- and gender-neutral public contracting programs.35 III. Burden of Proof The procedural protocol established by Croson imposes an initial burden of proof upon the government to demonstrate that the challenged MBE program is supported by a strong factual predicate, i.e., documented evidence of past discrimination. Notwithstanding this requirement, the plaintiff bears the ultimate burden of proof to persuade the court that the MBE program is unconstitutional. The plaintiff may challenge a government’s factual predicate on any of the following grounds:36     A. Disparity exists due to race-neutral reasons Methodology is flawed Data are statistically insignificant Controverting data exist Initial Burden of Proof Croson requires defendant jurisdictions to produce a “strong basis in evidence” that the objective of the challenged MBE program is to rectify the effects of past identified discrimination.37 Whether the government has produced a strong basis in evidence is a question of law.38 The defendant in a constitutional claim against a disparity study has the initial burden of proof to show that there was past discrimination.39 Once the defendant meets this initial burden, the burden shifts to the plaintiff to prove that the program is unconstitutional. Because the sufficiency of the factual predicate supporting the MBE program is at issue, factual determinations relating to the accuracy and validity of the proffered evidence underlie the initial legal conclusion to be drawn.40 The adequacy of the government’s evidence is “evaluated in the context of the breadth of the remedial program advanced by the [jurisdiction].”41 The onus is upon the jurisdiction to provide a factual predicate that is sufficient in scope and precision to demonstrate that contemporaneous discrimination necessitated the adoption of the MBE program.42 35 Doe 1 v. Lower Merion Sch. Dist., 689 F. Supp. 2d 742, 748 (E.D. Pa. 2010). 36 Contractors Ass'n v. City of Philadelphia, 893 F. Supp. 419, 430, 431, 433, 437 (E.D. Pa.1995) (“Philadelphia V”) (These were the issues on which the district court in Philadelphia reviewed the disparity study before it). 37 Philadelphia VI, 91 F.3d at 586 (citing Concrete Works of Colo. v. Denver, 36 F.3d 1513, 1522 (10th Cir. 1994)(“Concrete Works II”)); see Croson, 488 U.S. at 510. 38 Id. (citing Associated Gen. Contractors v.New Haven, 791 F. Supp. 941, 944 (D. Conn. 1992)). 39 Concrete Works II, 36 F.3d at 1521-22 (citing Wygant v. Jackson Bd. of Educ., 476 U.S. 267, 292 (1986)). 40 Concrete Works II, 36 F.3d at 1522. 41 Id. (citing Croson, 488 U.S. at 498). 42 See Croson, 488 U.S at 488. 1-6 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis B. Ultimate Burden of Proof The party challenging an MBE program will bear the ultimate burden of proof throughout the course of the litigation—despite the government’s obligation to produce a strong factual predicate to support its program.43 The plaintiff must persuade the court that the program is constitutionally flawed either by challenging the government’s factual predicate for the program or by demonstrating that the program is overly broad. Joining the majority in stating that the ultimate burden rests with the plaintiff, Justice O’Connor explained the nature of the plaintiff’s burden of proof in her concurring opinion in Wygant v. Jackson Board of Education (“Wygant”):44 [I]t is incumbent upon the nonminority [plaintiffs] to prove their case; they continue to bear the ultimate burden of persuading the court that the [government’s] evidence did not support an inference of prior discrimination and thus a remedial purpose, or that the plan instituted on the basis of this evidence was not sufficiently “narrowly tailored.”45 In Philadelphia VI, the Third Circuit Court of Appeals clarified this allocation of the burden of proof and the constitutional issue of whether facts constitute a “strong basis” in evidence for racebased remedies.46 That Court wrote that the allocation of the burden of persuasion is dependent upon the plaintiff’s argument against the constitutionality of the program. If the plaintiff’s theory is that an agency has adopted race-based preferences with a purpose other than remedying past discrimination, the plaintiff has the burden of convincing the court that the identified remedial motivation is a pretext and that the real motivation was something else.47 If, on the other hand, the plaintiff argues there is no existence of past discrimination within the agency, the plaintiff must successfully rebut the agency’s evidentiary facts and prove their inaccuracy. 48 However, the ultimate issue of whether sufficient evidence exists to prove past discrimination is a question of law. The burden of persuasion in the traditional sense plays no role in the court’s resolution of that ultimate issue.49 43 See Wygant, 476 U.S. at 277-78, 293. 44 Id. (O’Connor, S., concurrence). 45 Wygant, 476 U.S. at 277-78. 46 Philadelphia VI, 91 F.3d at 597. 47 Id. at 597. 48 Philadelphia VI, 91 F.3d at 597-598. 49 At first glance, the Third Circuit and the Eleventh Circuit positions appear to be inconsistent as to whether the issue at hand is a legal issue or a factual issue. However, the two courts were examining the issues in different scenarios. For instance, the Third Circuit was examining whether enough facts existed to determine if past discrimination existed, and the Eleventh Circuit was examining whether the remedy the agency utilized was the appropriate response to the determined past discrimination. Therefore, depending upon the Plaintiff’s arguments, a court reviewing an MBE program is likely to be presented with questions of law and fact. 1-7 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis Concrete Works VI made clear that the plaintiff’s burden is an evidentiary one; it cannot be discharged simply by argument. The court cited its opinion in Adarand Constructors Inc. v. Slater, 228 F.3d 1147, 1173 (10th Cir. 2000): “[g]eneral criticism of disparity studies, as opposed to particular evidence undermining the reliability of the particular disparity study, is of little persuasive value.”50 The requisite burden of proof needed to establish a factual predicate for raceand gender-conscious goals as set forth by Croson and its progeny is described below in Section IV. The Tenth Circuit and the Eleventh Circuit present alternative approaches to the legal evidentiary requirements of the shifting burden of proof in racial classification cases. This split among the circuits pertains to the allocation of the burden of proof once the initial burden of persuading the court is met, that persisting vestiges of discrimination exist.51 The Tenth Circuit’s opinion in Concrete Works VI states that the burden of proof remains with the plaintiff to demonstrate that an ordinance is unconstitutional.52On the other hand, the Eleventh Circuit in Hershell contends that the government, as the proponent of the classification, bears the burden of proving that its consideration of race- is narrowly tailored to serve a compelling state interest, and that the government must always maintain a “strong basis in evidence” for undertaking affirmative action programs.53Therefore, the proponent of the classification must meet a substantial burden of proof, a standard largely allocated to the government to prove that sufficient vestiges of discrimination exist to support the conclusion that remedial action is necessary. Within the Eleventh Circuit, judicial review of a challenged affirmative action program focuses primarily on whether the government entity can meet the burden of proof. In practice, the standards prescribed in the Eleventh Circuit for proving the constitutionality of a proposed M/WBE framework are rooted in Engineering Contractors Ass’n v. Metropolitan Dade County, the same Eleventh Circuit case that was cited to in the Tenth Circuit.54 In Dade County I, the court found that a municipality can justify affirmative action by demonstrating “gross statistical disparities” between the proportion of minorities awarded contracts and the proportion of minorities willing and able to do the work, or by presenting anecdotal evidence – especially if buttressed by statistical data.55 50 Concrete Works VI, 321 F.3d at 979. 51 Hershell Gill Consulting Eng’rs, Inc. v. Miami-Dade Cnty., 333 F. Supp. 2d 1305, 1325 (S.D. Fla. 2004). 52 Concrete Works VI, 321 F.3d at 959 (quoting Adarand v. Pena, 228 F.3d 1147, 1176 (10th Cir. 2000) (“We reiterate that the ultimate burden of proof remains with the challenging party to demonstrate the unconstitutionality of an affirmative-action program.”)). 53 Hershell, 333 F. Supp. 2d at 1305 (stating that Concrete Works is not persuasive because it conflicts with the allocation of the burden of proof stated by Eleventh Circuit precedent in Johnson v. Board of Regents of the University of Georgia, 263 F.3d 1234, 1244 (11th Cir. 2001)). 54 943 F. Supp. 1546 (S.D. Fla. 1996) (““Dade County I”). 55 Id. at 907. 1-8 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis IV. Croson Evidentiary Framework Government entities must construct a strong evidentiary framework to stave off legal challenges and ensure that the adopted MBE program comports with the requirements of the Equal Protection Clause of the United States Constitution. The framework must comply with the stringent requirements of the strict scrutiny standard. Accordingly, there must be a strong basis in evidence that tends to show past discrimination, and the race-conscious remedy must be “narrowly tailored,” as set forth in Croson.56 A summary of the appropriate types of evidence to satisfy the first element of the Croson standard follows. A. Active or Passive Participation Croson requires that the local entity seeking to adopt an MBE program must have perpetuated the discrimination to be remedied by the program.57 However, the local entity need not have been an active perpetrator of such discrimination. Passive participation will satisfy this part of the Court’s strict scrutiny review.58An entity will be considered an “active” participant if the evidence shows that it created barriers that actively exclude MBEs from its contracting opportunities. An entity will be considered to be a “passive” participant in private sector discriminatory practices if it has infused tax dollars into that discriminatory industry. 59 Until Concrete Works I, the inquiry regarding passive discrimination was limited to the subcontracting practices of government prime contractors. The Tenth Circuit, in Concrete Works I, considered a purely private sector definition of passive discrimination, holding that evidence of a government entity infusing its tax dollars into a discriminatory system can satisfy passive discrimination.60 In Concrete Works I, the district court granted summary judgment in favor of the City of Denver in 1993.61 Concrete Works appealed to the Tenth Circuit, in Concrete Works II, in which the summary judgment in favor of the City of Denver was reversed and the case was remanded to the district court for trial.62 The case was remanded with specific instructions permitting the parties “to develop a factual record to support their competing interpretations of the empirical data.”63 56 Croson, 488 U.S. at 486. 57 Id. at 488. 58 Id. at 509. 59 Id. at 492, accord Coral Constr., 941 F.2d at 916. 60 Concrete Works of Colo., Inc. v. City & Cnty. of Denver,823 F. Supp. 821, 824 (D. Colo. 1993)(“Concrete Works I”), rev’d, 36 F.3d 1513 (10th Cir. 1994), rev’d, 86 F. Supp. 2d 1042 (D. Colo. 2000), rev’d, 321 F.3d 950 (10th Cir. 2003). 61 Concrete Works I, 823 F. Supp.at 994. 62 Concrete Works II, 36 F.3d at 1530-31. 63 Id. 1-9 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis On remand, the district court entered a judgment in favor of the plaintiff holding that the City’s ordinances violated the Fourteenth Amendment.64 The district court in Concrete III rejected the four disparity studies the city offered to support the continuation of Denver's M/WBE program.65 The court surmised that (1) the methodology employed in the statistical studies was not “designed to answer the relevant questions,”66 (2) the collection of data was flawed, (3) important variables were not accounted for in the analyses, and (4) the conclusions were based on unreasonable assumptions.67 The court deemed that the “most fundamental flaw” in the statistical evidence was the lack of “objective criteria [to] define who is entitled to the benefits of the program and [which groups should be] excluded from those benefits.”68 The statistical analysis relied upon by the City to support its M/WBE program was conducted as a result of the ensuing litigation. The statistical evidence proffered by the City to the court was not objective in that it lacked a correlation to the current M/WBE program goals. The Tenth Circuit on appeal rejected the district court’s analysis because the district court’s queries required Denver to prove the existence of discrimination. Moreover, the Tenth Circuit explicitly held that “passive” participation included private sector discrimination in the marketplace. The court found that marketplace discrimination is relevant where the agency’s prime contractors’ practices are discriminatory against their subcontractors: The Court, however, did set out two conditions which must be met for the governmental entity to show a compelling interest. “First, the discrimination must be identified discrimination.” (citation omitted). The City can satisfy this condition by identifying the discrimination “public or private, with some specificity.” (internal quotes and citation omitted).69 In Concrete Works IV, the Tenth Circuit held that the governmental entity must also have a “strong basis in evidence to conclude that remedial action was necessary.” 70 The Tenth Circuit further held that the city was correct in its attempt to show that it “indirectly contributed to private discrimination by awarding public contracts to firms that in turn discriminated against MBE and/or WBE subcontractors in other private portions of their business.”71 While the Tenth Circuit noted that the record contained “extensive evidence” of private sector discrimination, the question 64 Concrete Works of Colo., Inc. v. City & Cnty. of Denver, 86 F. Supp. 2d 1042, 1079 (D. Colo. 2000)(“Concrete Works III”). 65 Concrete Works of Colo., Inc. v. City & Cnty. of Denver, 86 F. Supp. 2d 1042, 1065-68 (D. Colo. 2000)(“Concrete Works III”). 66 Id. at 1067. 67 Id. at 1057-58, 1071. 68 Id. at 1068. 69 Concrete Works IV, 321 F.3d at 975-76. 70 Concrete Works IV, 321 F.3d at 976 (quoting Shaw v. Hunt, 517 U.S. 804, 909 (1996)). 71 Id. at 976. 1-10 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis of the adequacy of private sector discrimination as the factual predicate for a race-based remedy was not before the court.72 Ten months after Concrete Works IV, the question of whether a particular public sector race-based remedy is narrowly tailored when it is based solely on business practices within the private sector was at issue in Builders Association of Greater Chicago v. City of Chicago.73The plaintiff in Builders Association of Greater Chicago challenged the City’s construction set-aside program. The court considered pre-enactment and post-enactment evidence in support of the six-year-old M/WBE program.74 The challenged program consisted of a 16.9 percent MBE subcontracting goal, a 10-percent MBE prime contracting goal, a 4.5 percent WBE subcontracting goal and a 1 percent WBE prime contracting goal.75 The district court found that private sector business practices offered by the city, which were based on United States Census data and surveys, constituted discrimination against minorities in the Chicago market area.76However, the district court did not find the City’s M/WBE subcontracting goal to be a narrowly tailored remedy given the factual predicate. The court found that the study did not provide a meaningful, individualized review of M/WBEs in order to formulate remedies “more akin to a laser beam than a baseball bat.”77 The City was ordered to suspend its M/WBE goals program. As recently as 2010, the Fourth Circuit in H.B. Rowe Co. v. Tippett ruled that the State of North Carolina could not rely on private-sector data to demonstrate that prime contractors underutilized women subcontractors in the general construction industry.78 The court found that the private sector data did not test whether the underutilization was statistically significant or just mere chance.79 B. Systemic Discriminatory Exclusion Croson established that a local government enacting a race-conscious contracting program must demonstrate identified systemic discriminatory exclusion on the basis of race or any other illegitimate criteria (arguably gender).80 Thus, it is essential to demonstrate a pattern and practice 72 Concrete Works IV, 321 F.3d at 959, 977, 990. 73 Builders Ass’n of Greater Chi. v. City of Chi., 298 F. Supp. 2d 725, 732 (N.D. III. 2003). 74 Id. at 726, 729, 733-34. 75 Id. at 729. 76 Id. at 735-37. 77 Id. at 737-39, 742. 78 Rowe, 615 F.3d at 236. 79 Id. 80 Croson, 488 U.S. at 492; see Monterey Mech. Co. v. Pete Wilson, 125 F.3d 702, 713 (9th Cir. 1997); see also W.H. Scott Constr. Co. v. City of Jackson, 199 F.3d 206, 218-20 (1999) (held the City’s MBE program was unconstitutional for construction contracts because minority participation goals were arbitrarily set and not based on any objective data. Moreover, the Court noted that had the City implemented the 1-11 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis of such discriminatory exclusion in the relevant market area.81 Using appropriate evidence of the entity’s active or passive participation in the discrimination, as discussed above, past discriminatory exclusion must be identified for each racial group to which a remedy would apply.82 Mere statistics and broad assertions of purely societal discrimination will not suffice to support a race- or gender-conscious program. Croson enumerates two ways an entity may establish the requisite factual predicate of discrimination. First, a significant statistical disparity between the number of qualified minority contractors willing and able to perform a particular service and the number of such contractors actually engaged by an entity or by the entity’s prime contractors may support an inference of discriminatory exclusion.83 In other words, when the relevant statistical pool is used, a showing of statistically significant underutilization “may constitute prima facie proof of a pattern or practice of discrimination[.]”84 The Croson Court made clear that both prime contract and subcontracting data were relevant.85 The Court observed that “[w]ithout any information on minority participation in subcontracting, it is quite simply impossible to evaluate overall minority representation in the city’s construction expenditures.”86 Subcontracting data is also an important means by which to assess suggested future remedial actions. Because the decision makers are different for the awarding of prime contracts and subcontracts, the remedies for discrimination identified at a prime contractor versus subcontractor level might also be different. Second, “evidence of a pattern of individual discriminatory acts can, if supported by appropriate statistical proof, lend support to a local government’s determination that broader remedial relief is justified.”87 Thus, if a local government has statistical evidence that non-minority contractors are systematically excluding minority businesses from subcontracting opportunities, it may act to end the discriminatory exclusion.88 Once an inference of discriminatory exclusion arises, the entity may act to dismantle the closed business system “by taking appropriate measures against those who discriminate on the basis of race or other illegitimate criteria.”89Croson further states, recommendations from the disparity study it commissioned, the MBE program may have withstood judicial scrutiny (the City was not satisfied with the study and chose not to adopt its conclusions)). 81 Croson, 488 U.S. at 509. 82 Croson, 488 U.S. at 506. (The Court stated in Croson, “[t]he random inclusion of racial groups that, as a practical matter, may never have suffered from discrimination in the construction industry in Richmond suggests that perhaps the city’s purpose was not in fact to remedy past discrimination”); See N. Shore Concrete & Assoc. v. City of New York, 1998 U.S. Dist. LEXIS 6785 * 55 (E.D.N.Y. April 12, 1998) (rejected the inclusion of Native Americans and Alaskan Natives in the City’s program). 83 Croson, 488 U.S. at 509. 84 Id. at 501 (citing Hazelwood Sch. Dist. v. United States, 433 U.S. 299, 307-08 (1977)). 85 Id. at 502-03. 86 Id. 87 Croson, 488 U.S. at 509. 88 Id. 89 Id. (emphasis added). 1-12 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis “In the extreme case, some form of narrowly tailored racial preference might be necessary to break down patterns of deliberate exclusion.”90 In Coral Construction, the Ninth Circuit Court of Appeals further elaborated upon the type of evidence needed to establish the factual predicate that justifies a race-conscious remedy.91 The Court held that both statistical and anecdotal evidence should be relied upon in establishing systemic discriminatory exclusion in the relevant marketplace as the factual predicate for an MBE program.92 The court explained that statistical evidence, standing alone, often does not account for the complex factors and motivations guiding contracting decisions, many of which may be entirely race-neutral.93 Likewise, anecdotal evidence, standing alone, is unlikely to establish a systemic pattern of discrimination.94 Nonetheless, anecdotal evidence is important because the individuals who testify about their personal experiences bring “the cold numbers convincingly to life.”95 1. Geographic Market Croson did not speak directly to how the geographic market is to be determined. In Coral Construction, the Ninth Circuit Court of Appeals held that “an MBE program must limit its geographical scope to the boundaries of the enacting jurisdiction.”96 Conversely, in Concrete Works I, the district court specifically approved the Denver Metropolitan Statistical Area (MSA) as the appropriate market area since 80 percent of the construction contracts were based there.97 Read together, these cases support a definition of market area that is reasonable rather than dictated by a specific formula. Because Croson and its progeny did not provide a bright line rule for local market area, the determination should be fact-based. An entity may include consideration of evidence of discrimination within its own jurisdiction.98 Extra-jurisdictional evidence may be permitted, when it is reasonably related to where the jurisdiction contracts.99 90 Croson, 488 U.S. at 509. (emphasis added). 91 Coral Constr., 941 F.2d at 917-18, 920-26. 92 Id. at 919. 93 Id. 94 Id. 95 Id. (quoting Int’l Bhd. of Teamsters v. United States, 431 U.S. 324, 339 (1977) (“Teamster”)). 96 Coral Constr., 941 F.2d at 925. 97 Concrete Works I, 823 F. Supp. at 835-836 (D. Colo. 1993); rev’d on other grounds, 36 F.3d 1513 (10th Cir. 1994). 98 Cone Corp. v. Hillsborough Cnty., 908 F.2d 908, 915 (11th Cir. 1990); Associated Gen. Contractors v. Coal. for Econ. Equity, 950 F.2d 1401, 1415 (9th Cir. 1991) (“AGCC II”). 99 There is a related question of which firms can participate in a remedial program. In Coral Construction, the Court held that the definition of “minority business” used in King County’s MBE program was over-inclusive. The Court reasoned that the definition was overbroad because it included businesses other than those who were discriminated against in the King County business community. The program would have allowed, for instance, participation by MBEs who had no prior contact with the County. Hence, location within the geographic area is not enough. An MBE had to have shown that it previously sought business or is currently doing business in the market area. 1-13 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis 2. Current Versus Historical Evidence In assessing the existence of identified discrimination through demonstration of a disparity between MBE utilization and availability, the entity should examine disparity data both prior to and after the entity’s current MBE program was enacted. This is referred to as “pre-program” versus “post-program” data. Croson requires that an MBE program be “narrowly tailored” to remedy current evidence of discrimination.100 Thus, goals must be set according to the evidence of disparity found. For example, if there is a current disparity between the percentage of an entity’s utilization of Hispanic construction contractors and the availability of Hispanic construction contractors in that entity’s marketplace, then that entity can set a goal to bridge that disparity. It is not mandatory to examine a long history of an entity’s utilization to assess current evidence of discrimination. In fact, Croson indicates that it may be legally fatal to justify an MBE program based upon outdated evidence.101 Therefore, the most recent two or three years of an entity’s utilization data would suffice to determine whether a statistical disparity exists between current M/WBE utilization and availability.102 3. Statistical Evidence To determine whether statistical evidence is adequate to give rise to an inference of discrimination, courts have looked to the “disparity index,” which consists of the percentage of minority or women contractor participation in local contracts divided by the percentage of minority or women contractor availability or composition in the population of available firms in the local market area.103 Disparity indexes have been found highly probative evidence of discrimination where they ensure that the “relevant statistical pool” of minority or women contractors is being considered.104 100 See Croson, 488 U.S. at 509-10. 101 Croson, 488 U.S. at 499 (stating, “[i]t is sheer speculation how many minority firms there would be in Richmond absent past societal discrimination”). 102 See AGCC II, 950 F.2d at 1414 (consultant study looked at City’s MBE utilization over a one-year period). 103 Although the disparity index is a common category of statistical evidence considered, other types of statistical evidence have been taken into account. In addition to looking at Dade County’s contracting and subcontracting statistics, the district court also considered marketplace data statistics (which looked at the relationship between the race, ethnicity, and gender of surveyed firm owners and the reported sales and receipts of those firms), the County’s Wainwright study (which compared construction business ownership rates of M/WBEs to those of non-M/WBEs and analyzed disparities in personal income between M/WBE and non-M/WBE business owners), and the County’s Brimmer Study (which focused only on Black-owned construction firms and looked at whether disparities existed when the sales and receipts of Black-owned construction firms in Dade County were compared with the sales and receipts of all Dade County construction firms).The court affirmed the judgment that declared appellant's affirmative action plan for awarding county construction contracts unconstitutional and enjoined the plan's operation because there was no statistical evidence of past discrimination and appellant failed to consider race and ethic-neutral alternatives to the plan. 104 Rowe, 615 F.3d at 236; see Dade County I, 943 F. Supp. at 1546, aff’d, 122 F.3d 895 (11th Cir. 1997); see also Concrete Works II, 36 F.3d at 1513. 1-14 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis The Third Circuit Court of Appeals, in Philadelphia VI, ruled that the “relevant statistical pool” includes those businesses that not only exist in the marketplace but also are qualified and interested in performing the public agency’s work. In that case, the Third Circuit rejected a statistical disparity finding where the pool of minority businesses used in comparing utilization to availability was composed of those merely licensed to operate in the City of Philadelphia. A license to do business with the City, standing alone, does not indicate either willingness or capability to do work for the City. The Court concluded that this particular statistical disparity did not satisfy Croson.105 When using a pool of relevant statistical evidence, a disparity between the utilization and availability of M/WBEs can be shown in more than one way. First, the number of M/WBEs utilized by an entity can be compared to the number of available M/WBEs. This is a strict Croson “disparity” formula. A significant statistical disparity between the number of M/WBEs that an entity utilizes in a given industry and the number of available M/WBEs in the relevant market area specializing in the specified product/service category would give rise to an inference of discriminatory exclusion. Second, M/WBE dollar participation can be compared to M/WBE availability. This comparison could show a disparity between an entity’s award of contracts to available market area nonminority male businesses and the award of contracts to M/WBEs. Thus, in AGCC II, an independent consultant’s study “compared the number of available MBE prime construction contractors in San Francisco with the amount of contract dollars awarded by the City to San Francisco-based MBEs” over a one-year period.106 The study found that available MBEs received far fewer construction contract dollars in proportion to their numbers than their available nonminority counterparts.107AGCCII argued to the Ninth Circuit that the preferences given to MBEs violated the equal protection clause of the Fourteenth Amendment of the United States Constitution. The district court determined that AGCCII only demonstrated a possibility of irreparable injury on the ground that such injury is assumed where constitutional rights have been alleged to be violated, but failed to demonstrate a likelihood of success on the merits. On appeal, The Ninth Circuit affirmed the district court’s ruling.108 Whether a disparity index supports an inference that there is discrimination in the market area depends not only on what is being compared, but also on the statistical significance of any such disparity. In Croson, Justice O’Connor opined, “[w]here the gross statistical disparities can be shown, they alone, in a proper case, may constitute a prima facie proof of a pattern or practice of discrimination.”109 However, the Court has not assessed or attempted to cast bright lines for 105 Philadelphia VI, 91 F.3d at 601-602. The courts have not spoken to the non-M/WBE component of the disparity index. However, if only as a matter of logic, the “availability” of non-M/WBEs requires that their willingness to be government contractors be established. The same measures used to establish the interest of M/WBEs should be applied to non-M/WBEs. 106 AGCC II, 950 F.2d at 1414. 107 Id. at 1414. Specifically, the study found that MBE availability was 49.5 percent for prime construction, but MBE dollar participation was only 11.1 percent; that MBE availability was 36 percent prime equipment and supplies, but MBE dollar participation was 17 percent; and that MBE availability for prime general services was 49 percent, but dollar participation was 6.2 percent. 108 AGCC II, 950 F.2d at 1401. 109 Croson, 488 U.S. at 501 (quoting Hazelwood Sch. Dist., 433 U.S. at 307-308). 1-15 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis determining if a disparity index is sufficient to support an inference of discrimination. In the absence of such a formula, the Tenth Circuit determined that the analysis of the disparity index and the findings of its significance are to be judged on a case-by-case basis.110 Following the dictates of Croson, courts may carefully examine whether there is data that show MBEs are qualified, ready, willing, and able to perform.111 Concrete Works II made the same point: capacity—i.e., whether the firm is “able to perform”—is a ripe issue when a disparity study is examined on the merits: [Plaintiff] has identified a legitimate factual dispute about the accuracy of Denver’s data and questioned whether Denver’s reliance on the percentage of MBEs and WBEs available in the marketplace overstates “the ability of MBEs or WBEs to conduct business relative to the industry as a whole because M/WBEs tend to be smaller and less experienced than non-minority owned firms.” In other words, a disparity index calculated on the basis of the absolute number of MBEs in the local market may show greater underutilization than does data that takes into consideration the size of MBEs and WBEs.112 Notwithstanding that appellate concern, the disparity studies before the district court on remand did not examine the issue of M/WBE capacity to perform Denver’s public sector contracts. The Sixth Circuit Court of Appeals, in Associated General Contractors of Ohio, Inc. v. Drabik (“Drabik”), concluded that for statistical evidence to meet the legal standard of Croson, it must consider the issue of capacity.113 The State’s factual predicate study based its statistical evidence on the percentage of MBE businesses in the population. The statistical evidence “did not take into account the number of minority businesses that were construction firms, let alone how many were qualified, willing, and able to perform state contracts.”114 The court reasoned as follows: Even statistical comparisons that might be apparently more pertinent, such as with the percentage of all firms qualified in some minimal sense, to perform the work in question, would also fail to satisfy the Court’s criteria. If MBEs comprise 10 percent of the total number of contracting firms in the State, but only get 3 percent of the dollar value of certain contracts that does not alone show discrimination, or even disparity. It does not account for the relative size of the firms, either in terms 110 Concrete Works II, 36 F.3d at 1522. 111 The Philadelphia study was vulnerable on this issue. 112 Concrete Works II, 36 F.3d at 1528. 113 Associated Gen. Contractors of Ohio, Inc. v. Drabik, 214 F.3d 730, 734-38 (6th Cir. 2000) (“Drabik”). The Court reviewed Ohio’s 1980, preCroson, program, which the Sixth Circuit found constitutional in Ohio Contractors Ass’n v. Keip, 713 F.2d 167, 176 (6th Cir. 1983), finding the program unconstitutional under Croson. 114 Drabik, 214 F.3d at 736. 1-16 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis of their ability to do particular work or in terms of the number of tasks they have resources to complete.115 Drabik also pointed out that the State not only relied upon the wrong type of statistical data, but also that the datasets were more than twenty years old. Therefore, an entity must study current data that indicate the availability and qualifications of the MBEs. The opinions in Philadelphia VI116 and Dade County I,117 regarding disparity studies involving public sector contracting, are particularly instructive in defining availability. In Philadelphia VI, the earlier of the two decisions, contractors’ associations challenged a city ordinance that created set-asides for minority subcontractors on city public works contracts. A summary judgment was granted for the contractors.118 The Third Circuit upheld the third appeal, affirming that there was no firm basis in evidence for finding that race-based discrimination existed to justify a race-based program and that the program was not narrowly tailored to address past discrimination by the City.119 The Third Circuit reviewed the evidence of discrimination in prime contracting and stated that whether it is strong enough to infer discrimination is a “close call” which the court “chose not to make.”120 It was unnecessary to make this determination because the court found that even if there was a strong basis in evidence for the program, a subcontracting program was not narrowly tailored to remedy prime contracting discrimination.121 When the court looked at subcontracting, it found that a firm basis in evidence did not exist. The only subcontracting evidence presented was a review of a random 25 to 30 percent of project engineer logs on projects valued at more than $30,000.122 The consultant determined that no MBEs were used during the study period based upon recollections of the former general counsel to the General and Specialty Contractors Association of Philadelphia regarding whether the owners of the utilized firms were MBEs. The court found this evidence insufficient as a basis for finding that prime contractors in the market area were discriminating against subcontractors.123 115 Drabik, 214 F.3d at 736. 116 Philadelphia VI, 91 F.3d at 604-605. 117 Dade County I, 943 F. Supp. at 1582-83. 118 Philadelphia VI, 91 F.3d at 590. 119 Id. at 609-10. 120 Id. at 605. 121 Philadelphia VI, 91 F.3d at605. 122 Id. at 600. 123 Another problem with the program was that the 15 percent goal was not based on data indicating that minority businesses in the market area were available to perform 15 percent of the City’s contracts. The court noted, however, that “we do not suggest that the percentage of the preferred group in the universe of qualified contractors is necessarily the ceiling for all set-asides.” The court also found the program flawed because it did not provide sufficient waivers and exemptions, as well as consideration of race-neutral alternatives. 1-17 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis The Third Circuit has recognized that consideration of qualifications can be approached at different levels of specificity and that the practicality of the approach should also be weighed. The Court of Appeals found that “[i]t would be highly impractical to review the hundreds of contracts awarded each year and compare them to each and every MBE” and that it was a “reasonable choice” under the circumstances to use a list of M/WBE certified contractors as a source for available firms.124 Although theoretically it may have been possible to adopt a more refined approach, the court found that using the list of certified contractors was a rational approach to identifying qualified firms.125 In order to qualify for certification, the federal certification program required firms to detail their bonding capacity, size of prior contracts, number of employees, financial integrity, and equipment owned. According to the court, “the process by which the firms were certified [suggests that] those firms were both qualified and willing to participate in public works projects.” 126 The court found certification to be an adequate process of identifying capable firms, recognizing that the process may even understate the availability of MBE firms.127 Therefore, the court was somewhat flexible in evaluating the appropriate method of determining the availability of MBE firms in the statistical analysis of a disparity. Furthermore, the court discussed whether bidding was required in prime construction contracts as the measure of “willingness” and stated, “[p]ast discrimination in a marketplace may provide reason to believe the minorities who would otherwise be willing are discouraged from trying to secure work.”128 In Dade County I, the district court held that the County had not shown the compelling interest required to institute a race-conscious program, because the statistically significant disparities upon which the County relied disappeared when the size of the M/WBEs was taken into account.129 The Dade County district court accepted the disparity study’s limiting of “available” prime construction contractors to those that had bid at least once in the study period. However, it must be noted that relying solely on bidders to identify available firms may have limitations. If the solicitation of bidders is biased, then the results of the bidding process will be biased. 130 In addition, a comprehensive count of bidders is dependent on the adequacy of the agency’s recordkeeping.131 124 Philadelphia VI, 91 F.3d at 603. 125 Philadelphia VI, 91 F.3d at 603-605, 609. 126 Id. at 603. 127 Id. 128 Id. 129 Dade County I, 943 F. Supp. at 1560. 130 Cf. League of United Latin Am. Citizens v. Santa Ana, 410 F. Supp. 873, 897 (C.D. Cal. 1976); Reynolds v. Sheet Metal Workers, Local 102, 498 F. Supp. 952, 964 n. 12 (D. D.C. 1980), aff’d, 702 F.2d 221 (D.C. Cir. 1981) (involving the analysis of available applicants in the employment context). 131 Cf. EEOC v. Am. Nat’l Bank, 652 F.2d 1176, 1196-1197 (4th Cir. 1981), cert. denied, 459 U.S. 923 (1981) (in the employment context, actual applicant flow data may be rejected where race coding is speculative or nonexistent). 1-18 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis The appellate court in Dade County did not determine whether the County presented sufficient evidence to justify the M/WBE program. It merely ascertained that the lower court was not clearly erroneous in concluding that the County lacked a strong basis in evidence to justify race-conscious affirmative action.132 The appellate court did not prescribe the district court’s analysis or any other specific analysis for future cases. C. Anecdotal Evidence In Croson, Justice O’Connor opined that “evidence of a pattern of individual discriminatory acts can, if supported by appropriate statistical proof, lend support to a local government’s determination that broader remedial relief is justified.”133 Anecdotal evidence should be gathered to determine if minority contractors are systematically being excluded from contracting opportunities in the relevant market area. Remedial measures fall along a sliding scale determined by their intrusiveness on non-targeted groups. At one end of the spectrum are race-neutral measures and policies, such as outreach to all segments of the business community regardless of race. They are not intrusive and, in fact, require no evidence of discrimination before implementation. Conversely, race-conscious measures, such as set-asides, fall at the other end of the spectrum and require a larger amount of evidence.134 As discussed below, anecdotal evidence alone is insufficient to establish the requisite predicate for a race-conscious program. Its great value lies in pointing to remedies that are “narrowly tailored,” the second prong of a Croson study. The following types of anecdotal evidence have been presented to and relied upon by the Ninth Circuit in both Coral Construction and AGCC II, to justify the existence of an M/WBE program:    M/WBEs denied contracts despite being the low bidders —Philadelphia135 Prime contractors showing MBE bids to non-minority subcontractors to find a nonminority firm to underbid the MBEs —Cone Corporation v. Hillsborough County136 M/WBEs’ inability to obtain contracts for private sector work — Coral Construction137 132 Dade County I, 943 F. Supp. at 1557. 133 Croson, 488 U.S. at 509; see Teamsters, 431 U.S. at 338. 134 Cf. AGCC II, 950 F.2d at 1417-18 (in finding that an ordinance providing for bid preferences was narrowly tailored, the Ninth Circuit stated that the program encompassed the required flexibility and stated that “the burdens of the bid preferences on those not entitled to them appear relatively light and well distributed. . . . In addition, in contrast to remedial measures struck down in other cases, those bidding have no settled expectation of receiving a contract. [Citations omitted.]”). 135 Philadelphia IV, 6 F.3d at 1002. 136 Cone Corp., 908 F.2d at 916. 137 For instance, where a small percentage of an MBE or WBE’s business comes from private contracts and most of its business comes from race or gender-based set-asides, this would demonstrate exclusion in the private industry. Coral Constr., 941 F.2d at 933 (WBE’s affidavit indicated that less than 7 percent of the firm’s business came from private contracts and that most of its business resulted from gender-based set-asides). 1-19 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis  M/WBEs told that they were not qualified, although they were later found to be qualified when evaluated by outside parties — AGCC II138  Attempts to circumvent M/WBE project goals — Concrete Works II139  Harassment of M/WBEs by an entity's personnel to discourage them from bidding on an entity's contracts — AGCC II140 Courts must assess the extent to which relief measures disrupt settled “rights and expectations” when determining the appropriate corrective measures.141 Presumably, courts would look more favorably upon anecdotal evidence in support of a less intrusive program than it would in support of a more intrusive one. For example, if anecdotal accounts related experiences of discrimination in obtaining bonds, they may be sufficient evidence to support a bonding program that assists M/WBEs.142 However, these accounts would not be evidence of a statistical availability that would justify a racially limited program such as a set-aside. As noted above, the Croson Court found that the City of Richmond’s MBE program was unconstitutional, because the City failed to provide a factual basis to support its MBE program. However, the Court opined that “evidence of a pattern of individual discriminatory acts can, if supported by appropriate statistical proof, lend support to a local government’s determination that broader remedial relief is justified.”143 In part, it was the absence of statistical evidence that proved fatal to the program. The Supreme Court stated that “[t]here was no direct evidence of race discrimination on the part of the city in letting contracts or any evidence that the city’s prime contractors had discriminated against minority-owned subcontractors.”144 This was not the situation confronting the Ninth Circuit in Coral Construction. There, the 700plus page appellate records contained the affidavits of “at least 57 minority or women contractors, each of whom complain in varying degree of specificity about discrimination within the local construction industry . . . These affidavits certainly suggest that ongoing discrimination may be occurring in much of the King County business community.”145 Nonetheless, this anecdotal evidence alone was insufficient to justify King County’s MBE program since “[n]otably absent from the record, however, is any statistical data in support of the County’s MBE program.”146 After noting the Supreme Court’s reliance on statistical data in Title 138 AGCC II, 950 F.2d at 1415. 139 Concrete Works II, 36 F.3d at 1530. 140 AGCC II, 950 F.2d at 1415. 141 Wygant, 476 U.S. at 283. 142 Teamsters, 431 U.S. at 339; Coral Constr., 941 F.2d at 919. 143 Croson, 488 U.S. at 509 (citing Teamsters, 431 U.S. at 338). 144 Id. at 480. 145 Coral Constr., 941 F.2d at 917-18. 146 Id. at 918 (emphasis added) (additional statistical evidence gathered after the program had been implemented was also considered by the court and the case was remanded to the lower court for an examination of the factual predicate). 1-20 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis VII employment discrimination cases and cautioning that statistical data must be carefully used, the court elaborated on its mistrust of purely anecdotal evidence: Unlike the cases resting exclusively upon statistical deviations to prove an equal protection violation, the record here contains a plethora of anecdotal evidence. However, anecdotal evidence, standing alone, suffers the same flaws as statistical evidence. Indeed, anecdotal evidence may even be less probative than statistical evidence in the context of proving discriminatory patterns or practices.147 The court concluded its discourse on the potency of anecdotal evidence in the absence of a statistical showing of disparity by observing that “rarely, if ever, can such evidence show a systemic pattern of discrimination necessary for the adoption of an affirmative action plan.”148 Two other circuit courts also suggested that anecdotal evidence might be dispositive in rare and exceptional cases, if ever, while rejecting it in the specific case before them. For example, in Philadelphia IV, the Third Circuit Court of Appeals noted that the Philadelphia City Council had “received testimony from at least fourteen minority contractors who recounted personal experiences with racial discrimination,” which the district court had “discounted” because it deemed this evidence to be “impermissible” for consideration under Croson.149 The Third Circuit Court disapproved of the district court’s actions because in its view the court’s rejection of this evidence betrayed the court’s role in disposing of a motion for summary judgment. 150 “Yet,” the court stated: Given Croson’s emphasis on statistical evidence, even had the district court credited the City’s anecdotal evidence, we do not believe this amount of anecdotal evidence is sufficient to satisfy strict scrutiny [quoting Coral, supra]. Although anecdotal evidence alone may, in an exceptional case, be so dominant or pervasive that it passes muster under Croson, it is insufficient here.151 The District of Columbia Circuit Court echoed the Ninth Circuit’s acknowledgment of the rare case in which anecdotal evidence is singularly potent in O’Donnell Construction v. District of Columbia.152 The court found that, in the face of conflicting statistical evidence, the anecdotal evidence there was not sufficient: It is true that in addition to statistical information, the Committee received testimony from several witnesses attesting to problems they faced as minority contractors. Much of the testimony related to bonding requirements and other structural impediments any firm would have to overcome, no matter what the race 147 Coral Constr., 941 F.2d at 919. 148 Coral Constr., 941 F.2d at 919. 149 Philadelphia IV, 6 F.3d at 1002. 150 Id. at 1003. 151 Philadelphia IV, 6 F.3d at 1003.. 152 963 F. 2d 420, 427 (D.C. Cir. 1992). 1-21 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis of its owners. (internal citation omitted.) The more specific testimony about discrimination by white firms could not in itself support an industry-wide remedy (internal quotes and citation omitted). Anecdotal evidence is most useful as a supplement to strong statistical evidence—which the Council did not produce in this case.153 The Eleventh Circuit in Dade County II is also in accord. In applying the “clearly erroneous” standard to its review of the district court’s decision in Dade County II, it commented that “[t]he picture painted by the anecdotal evidence is not a good one.”154 However, it held that this was not the “exceptional case” where, unreinforced by statistics, the anecdotal evidence was enough.155 In Concrete Works II, the Tenth Circuit Court of Appeals described the anecdotal evidence that is most compelling as evidence within a statistical context. In approving of the anecdotal evidence marshaled by the City of Denver in the proceedings below, the court recognized that “[w]hile a fact finder should accord less weight to personal accounts of discrimination that reflect isolated incidents, anecdotal evidence of a municipality’s institutional practices carries more weight due to the systemic impact that such institutional practices have on market conditions.”156 The court noted that the City had provided such systemic evidence. The Ninth Circuit Court of Appeals has articulated what it deems to be permissible anecdotal evidence in AGCC II.157 There, the court approved a “vast number of individual accounts of discrimination,” which included (1) numerous reports of MBEs denied contracts despite being the low bidder, (2) MBEs told that they were not qualified although they were later found to be qualified when evaluated by outside parties, (3) MBEs refused work even after they were awarded the contracts as low bidder, and (4) MBEs being harassed by city personnel to discourage them from bidding on city contracts. On appeal, the City pointed to numerous individual accounts of discrimination to substantiate its findings that discrimination exists in the city’s procurement processes, an “old boy’s network” still exists, and racial discrimination is still prevalent within the San Francisco construction industry.158 Based on AGCC II, it would appear that the Ninth Circuit’s standard for acceptable anecdotal evidence is more lenient than other Circuits that have considered the issue. Taken together, these statements constitute a taxonomy of appropriate anecdotal evidence. Anecdotal evidence alone may, in exceptional cases, show a systemic pattern of discrimination necessary for the adoption of an affirmative action plan, but it must be so dominant and pervasive that it passes muster under the Croson standards.159 Pursuant to Croson and its progeny, case law 153 O’Donnell, 963 F.2d at 427. 154 Dade County II, 122 F.3d at 925. 155 Id. at 926. 156 Concrete Works II, 36 F.3d at 1530. 157 AGCC II, 950 F.2d at 1401. 158 AGCC II, 950 F.2d at 1415. 159 Philadelphia IV, 6 F.3d at 1003. The anecdotal evidence must be “dominant or pervasive.” 1-22 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis suggests that, to be optimally persuasive, anecdotal evidence collectively should satisfy six particular requirements. These requirements are that the accounts:       Are gathered from minority contractors, preferably those that are “qualified”160 Concern specific, verifiable instances of discrimination161 Involve the actions of governmental officials162 Involve events within the relevant jurisdiction’s market area163 Discuss the harm that the improper conduct has inflicted on the businesses in question164 Collectively reveal that discriminatory exclusion and impaired contracting opportunities are systemic rather than isolated or sporadic.165 Given that neither Croson, nor its progeny identify the circumstances under which anecdotal evidence alone will carry the day, it is not surprising that none of these cases explicate bright line rules specifying the quantity of anecdotal evidence needed to support an MBE program. However, the foregoing cases provide some guidance by implication. Philadelphia IV makes clear that 14 anecdotal accounts standing alone will not suffice.166 The court then turned to the statistical data.167 While the matter is not free of countervailing considerations, 57 accounts, many of which appeared to be of the type referenced above, were insufficient without statistical data to justify the program in Coral Construction. Therefore, no court has provided rules on the number of anecdotal evidence that is needed in conjunction with statistical evidence to pass constitutional muster. The quantum of anecdotal evidence that a court would likely find acceptable will depend on the proposed remedy. The remedies that are least burdensome to non-targeted groups would likely require a lesser degree of evidence. Those remedies that are more burdensome on the non-targeted groups would require a stronger factual basis likely extending to verification. 160 Philadelphia VI, 91 F.3d at 603. 161 Coral Constr., 941 F.2d at 917-18; but see Concrete Works IV, 321 F.3d at 989 (“There is no merit to [plaintiff’s] argument that the witnesses’ accounts must be verified to provide support for Denver’s burden.”). 162 Croson, 488 U.S. at 509. 163 Coral Constr., 941 F.2d at 925. 164 O’Donnell, 963 F.2d at 427. 165 Coral Constr., 941 F.2d at 919. 166 Philadelphia IV, 6 F.3d. at 1002-03. 167 Id. 1-23 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis D. Remedial Statutory Scheme H.B. Rowe Company v. Tippett, (“Rowe”) challenged the constitutionality of the North Carolina General Assembly’s Statute 136-28.4 (Statute), promulgated in 1983.168 The Statute set forth a general policy to promote the use of small, minority, physically handicapped, and women contractors in non-federally funded State construction projects.169 The 1983 Statute directed North Carolina Department of Transportation (NCDOT) to encourage and promote the policy.170 Seven years later, in 1990, the Statute was amended to include specific participation goals on state funded transportation construction contracts for minority and women-owned businesses.171 As a result of the amendment, NCDOT created a Minority Business Enterprise and Women Business Enterprise Program (M/WBE Program) for non-federally funded highway and bridge construction contracts.172 In 1991, the constitutionality of the Statute was challenged.173 The court ruled in favor of the plaintiff stating that, in order to implement race-conscious measures to remedy discrimination, the governmental entity must identify with “some specificity” the racial discrimination it seeks to remedy.174 As a result of the challenge, NCDOT suspended its M/WBE program in 1991.175 In 1993, NCDOT commissioned a disparity study on state-funded transportation construction contracts.176 The study determined that minority and women subcontractors were underutilized at a statistically significant level and the M/WBE Program was re-implemented.177 In 1998, the North Carolina General Assembly again commissioned an update to the 1993 study.178 The 1998 update study concluded that minority and women-owned businesses continued to be underutilized in state-funded road construction contracts.179 In 2002, H.B. Rowe Company was denied a NCDOT contract because the company’s bid included 6.6 percent women subcontractor participation and no minority subcontractor participation.180 NCDOT claimed that H.B. Rowe Company failed to meet the good faith effort requirements of 168 Rowe, 615 F.3d at 236. 169 Id. 170 Id. 171 Id. 172 Rowe, 615 F.3d at 236. 173 Id. at 237; see Dickerson Carolina, Inc. v. Harrelson, 114 N.C. App. 693 (1994). 174 Rowe, 615 F.3d at 237 (citing Croson, 488 U.S. at 504). 175 Id. 176 Id. 177 Rowe, 615 F.3d at 237. 178 Rowe, 615 F.3d at 237. 179 Id. 180 Id. 1-24 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis the M/WBE program.181 A third study was commissioned in 2004 to again study minority and women contractor participation in the State’s highway construction industry. 182 In 2006, relying on the 2004 study, the North Carolina General Assembly amended Statute 136-28.4.183 The principal modifications were:     Remedial action should be taken only when there is a strong basis in evidence of ongoing effects of past or present discrimination that prevents or limits disadvantaged minority and women-owned businesses from participating as subcontractors in State-funded projects. The minority/women classification was limited to those groups that suffered discrimination. A disparity study should be performed every five years to respond to changing conditions. Inclusion of a sunset provision.184 First, the court considered whether the statutory scheme as it relates to minorities survives the strict scrutiny standard. The Fourth Circuit Court of Appeals reviewed the statistical evidence detailed in the 2004 disparity study to determine if the statutory scheme was based on strong statistical evidence to implement race-conscious subcontractor goals.185 The statistical evidence was also examined to determine if the statute’s definition of minorities was over-inclusive by including minority groups that did not suffer discrimination pursuant to the statistical results of the 2004 disparity study.186 The court did not consider whether the statistical methodology employed in the 2004 disparity study was sufficient to support a compelling state interest. Rather, the court accepted the disparity index as the measure by which to determine the statistical significance of the underutilization of minorities in the State’s subcontracts.187 The methodology used in the 2004 disparity study calculated a disparity at .05 confidence level.188 A statistical calculation is significant at the .05 confidence level because the probability of that result occurring by chance is 5 percent or less.189 The .05 confidence level is used in social sciences as a marker of when a result is a product of some external influence, rather than ordinary variation or sampling error.190 181 Id. 182 Rowe, 615 F.3d at 238. 183 Id. 184 Rowe, 615 F.3d at 238-39. 185 Id. at 238. 186 Rowe, 615 F.3d at 239. 187 Rowe, 615 F.3d at 243-44. 188 Id. at 244. 189 Id. at 261 n.12 (citing SHERRI L. JACKSON, RESEARCH METHODS AND STATISTICS: A CRITICAL THINKING APPROACH 168-69 (3d ed. 2006) (noting that the .05 confidence level is generally used in the social sciences as indication that the result was produced as a consequence of an external influence)). 190 Rowe, 615 F.3d at 261 n. 12 (citing EARL BABBIE, THE PRACTICE OF SOCIAL RESEARCH 483 (11th ed. 2007)). 1-25 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis While the circuit court found that “the study itself sets out the standard by which one could confidently conclude that discrimination was at work[,]” the standard was not followed in the State’s statutory scheme.191 The statistical evidence in the 2004 disparity study demonstrated that African American and Native American subcontractors were underutilized at a disparity index of less than 80 and that Hispanic American and Asian American subcontractors also were underutilized, but not at a .05 confidence level.192 The 2004 Study determined that the underutilization of Hispanic American and Asian American contractors was not statistically significant. Therefore, the only statutory scheme ruled narrowly tailored to achieve the State’s compelling interest was the one related to African American and Native American subcontractors. The statutory scheme pertaining to Hispanic American and Asian American subcontractors was deemed unconstitutional.193 Thus, the State only provided a strong basis in evidence for the minority subcontractor participation goals pertaining to African American and Native American subcontractors. Second, the court considered whether the statutory scheme as it relates to women survives the intermediate scrutiny standard. The evidence demonstrated that the State’s prime contractors “substantially over-utilized” women-owned businesses on public road construction projects.194 The 2004 disparity study calculated the overutilization of women subcontractors as statistically significant at a .05 confidence level.195 The circuit court further noted that the private sector evidence was insufficient to overcome the strong evidence of overutilization.196 Consequently, the circuit court determined that the evidence in the 2004 disparity study did not provide “exceedingly persuasive justification” to include women-owned businesses in gender-based remedies.197 In light of the Rowe decision, caution should be exercised when determining which minority or gender group is appropriate for race-conscious or gender-conscious remedies. For an MBE program to be narrowly tailored there must be a statistical finding of underutilization of minority subcontractors. Where the underutilization of a minority group is not found to be statistically significant the minority group should not be included in race-conscious remedies. The intermediate scrutiny standard for gender classifications can be met with statistical evidence of underutilization that is not statistically significant. However, this does not apply when there is demonstrated overutilization. Women-owned businesses should be considered for gender-based 191 Rowe, 615 F.3d at 261. 192 Id. at 245. 193 Rowe, 615 F.3d at 254. 194 Rowe, 615 F.3d at 254. 195 Id. at 254-55. 196 Id. at 255. 197 Rowe, 615 F.3d at 255. 1-26 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis remedies when the statistical evidence demonstrates that the overutilization is not statistically significant. V. Consideration of Race-Neutral Options A remedial program must address the source of the disadvantage faced by minority businesses. If it is found that race discrimination places MBEs at a competitive disadvantage, an MBE program may seek to counteract the situation by providing MBEs with a counterbalancing advantage.198An MBE program cannot stand if the sole barrier to M/WBE participation is a barrier that is faced by all new businesses, regardless of ownership.199 If the evidence demonstrates that the sole barrier to M/WBE participation is that M/WBEs disproportionately lack capital or cannot meet bonding requirements, then only a race-neutral program of financing for all small firms would be justified.200 In other words, if the barriers to minority participation are race-neutral, then the program must be race-neutral. The requirement that race-neutral measures be considered does not mean that they must be exhausted before race-conscious remedies can be employed. The Supreme Court explained that although “narrow tailoring does not require exhaustion of every conceivable race-neutral alternative” it “does require serious, good faith consideration of workable race-neutral alternatives that will achieve ... diversity[.]”201 If the barriers appear race-related but are not systemic, then the remedy should be aimed at the specific arena in which exclusion or disparate impact has been found as detailed above in Section IV. If the evidence shows that in addition to capital and bonding requirements, which are raceneutral, MBEs also face race discrimination in the awarding of contracts, then a race-conscious program will stand, so long as it also includes race-neutral measures to address the capital and bonding barriers.202 The Ninth Circuit Court of Appeals in Coral Construction ruled that there is no requirement that an entity exhaust every possible race-neutral alternative.203 Instead, an entity must make a serious, good faith consideration of race-neutral measures in enacting an MBE program. Thus, in assessing MBE utilization, it is imperative to examine barriers to MBE participation that go beyond “small business problems.” The impact on the distribution of contract programs that have been implemented to improve MBE utilization should also be measured.204 198 AGCC II, 950 F.2d at 1404. 199 Croson, 488 U.S. at 508. 200 Croson, 488 U.S. at 507. 201 Grutter v. Bollinger, 539 U.S. 306, 339 (2003). 202 Croson, 488 U.S. at 507 (upholding MBE program where it operated in conjunction with race-neutral measures aimed at assisting all small businesses). 203 Coral Constr., 941 F.2d at 910. 204 Dade County II, 122 F.3d at 927. At the same time, the Eleventh Circuit’s caveat in Dade County should be kept in mind: “Supreme Court decisions teach that a race-conscious remedy is not merely one of many equally acceptable medications that a government may use to treat 1-27 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis VI. Conclusion The decision of the United States Supreme Court in the Croson case changed the legal landscape for local governments’ business affirmative action programs. The United States Supreme Court altered the authority of a local government to use local funds to institute remedial race-conscious public contracting programs. This Chapter has examined what Croson and its progeny require for a local government to institute a constitutional race- and/or gender-conscious public contracting program. Depending on the statistical findings of the Disparity Study, the Authority may consider race- and gender-based remedies in the award of its contracts. Given the case law discussed in this Chapter, any race- or gender-conscious affirmative action contracting program recommended in this Disparity Study will be based on a constitutionally sound factual predicate. race-based problems. Instead, it is the strongest of medicines, with many potentially harmful side-effects, and must be reserved to those severe cases that are highly resistant to conventional treatment.” For additional guidance, see supra section II, Standard of Review for the discussion of narrow tailoring in Concrete Works IV, Adarand, County of Cook, and City of Chicago. 1-28 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis VII. List of Authorities Cases Pages Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 (10th Cir. 2000) ....................................................................................... 9 Armour v. City of Indianapolis, Ind., 132 S. Ct. 2073 (2012) .................................................................................................... 6 Associated Gen. Contractors of Cal .v. City & Cnty. of San Francisco (“AGCC I”), 813 F.2d 922 (9th Cir. 1987) ....................................................................................... 4, 6 Associated Gen. Contractors v. Coal. for Econ. Equity (“AGCC II”), 950 F.2d 1401 (9th Cir. 1991) ................................................................................ passim Associated Gen. Contractors of Ohio, Inc. v. Drabik (“Drabik”), 214 F.3d 730 (6th Cir. 2000) ......................................................................................... 17 Associated Gen. Contractors v. New Haven, 791 F. Supp. 941 (D. Conn. 1992) .................................................................................. 7 Builders Ass’n of Greater Chi. v. City of Chi., 298 F. Supp. 2d 725 (N.D. Ill. 2003) ............................................................................. 12 Builders Ass’n of Greater Chicago v. Cnty. of Cook, 256 F.3d 642 (7th Cir. 2001) ........................................................................................... 5 City of Richmond v. J.A. Croson Co. (“Croson”), 488 U.S. 469 (1989) ............................................................................................... passim Concrete Works of Colo., Inc. v. City & Cnty. of Denver (“Concrete Works I”), 823 F. Supp. 821 (D. Colo. 1993) .......................................................................... passim Concrete Works of Colo., Inc. v. City & Cnty. of Denver (“Concrete Works II”), 36 F.3d 1513 (10th Cir. 1994) ................................................................................ passim Concrete Works of Colo., Inc. v. City & Cnty. of Denver (“Concrete Works III”), 86 F. Supp. 2d 1042 (D. Colo. 2000) ...................................................................... 10, 11 Concrete Works of Colo., Inc. v. City & Cnty. of Denver (“Concrete Works IV”), 321 F.3d 950 (10th Cir. 2003) ......................................................................... 4, 9, 10, 11 1-29 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis Cone Corp. v. Hillsborough Cnty., 908 F.2d 908 (11th Cir. 1990) ................................................................................. 14, 20 Contractors Ass’n of E. Pa. v. City of Philadelphia (“Philadelphia IV”), 6 F.3d 990 (3d Cir. 1993) .................................................................... 4, 5, 20, 22, 23, 24 Contractors Ass’n of E. Pa. v. City of Philadelphia (“Philadelphia V”), 893 F. Supp. 419 (E.D. Pa.1995) ..................................................................................... 7 Contractors Ass’n of E. Pa v. City of Philadelphia (“Philadelphia VI”), 91 F.3d 586 (3rd Cir. 1996) .................................................................................... passim Coral Constr. Co. v. King Cnty., 941 F.2d 910 (9th Cir. 1991) .................................................................................. passim Dickerson Carolina, Inc. v. Harrelson, 114 N.C. App. 693 (1994) ............................................................................................. 25 Doe 1 v. Lower Merion Sch. Dist., 689 F. Supp. 2d 742 (E.D. Pa. 2010) ............................................................................... 7 EEOC v. Am. Nat’l Bank, 652 F.2d 1176 (4th Cir. 1981) ....................................................................................... 19 Eng’g Contractors Ass’n v. Metro. Dade Cnty. (“Dade County I”), 943 F. Supp. 1546 (S.D. Fla. 1996) ......................................................... 9, 15, 18, 19, 20 Eng’g Contractors Ass’n v. Metro. Dade Cnty. (“Dade County II”), 122 F.3d 895 (11th Cir. 1997) ............................................................... 3, 4, 5, 15, 23, 28 Ensley Branch N.A.A.C.P. v. Seibels, 31 F.3d 1548 (11th Cir. 1994) ..................................................................................... 4, 5 Grutter v. Bollinger, 539 U.S. 306 (2003) ....................................................................................................... 28 Hayes v. N. State Law Enforcement Officers Ass’n, 10 F.3d 207 (4th Cir. 1993) ............................................................................................. 5 Hazelwood Sch. Dist. v. United States, 433 U.S. 299 (1977) ................................................................................................. 13, 16 H.B. Rowe Co. v. N.C. Dep’t of Transp. (“Rowe”), 615 F.3d 233 (4th Cir. 2010) .................................................................................. passim 1-30 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis Hershell Gill Consulting Eng’rs, Inc. v. Miami-Dade Cnty., 333 F. Supp. 2d 1305 (S.D. Fla. 2004) ............................................................................ 9 Int’l Bhd. of Teamsters v. United States (“Teamsters”), 431 U.S. 324 (1977) ................................................................................................. 14, 21 Johnson v. Board of Regents of the University of Georgia, 263 F.3d 1234, 1244 (11th Cir. 2001) ............................................................................. 9 Lakeside Roofing Company v. State of Missouri, et al., 2012 WL 709276 (E.D.Mo. Mar. 5, 2012) ...................................................................... 4 League of United Latin Am. Citizens v. Santa Ana, 410 F. Supp. 873 (C.D. Cal. 1976) ................................................................................ 19 Mich. Rd. Builders Ass’n v. Milliken, 834 F.2d 583 (6th Cir. 1987) ........................................................................................... 4 Miss. Univ. for Women v. Hogan, 458 U.S. 718 (1982) ......................................................................................................... 4 Monterey Mech. Co. v. Pete Wilson et al., 125 F.3d 702 (9th Cir. 1997) .......................................................................... 12 N. Shore Concrete & Ass’n v. City of N.Y., 1998 U.S. Dist. LEXIS 6785 (EDNY 1998) .................................................. 13 O’Donnell Constr. Co. v. D.C., 963 F.2d 420 (D.C. Cir. 1992) ........................................................................ 22,2, 24 Ohio Contractors Ass’n v. Keip, 1983 U.S. App. LEXIS 24185 (6th Cir. 1983)................................................ 17 Reynolds v. Sheet Metal Workers, Local 102, 498 F. Supp. 952 (D. D.C. 1980) .................................................................... 19 Schlesinger v. Ballard, 419 U.S. 498 (1975) ........................................................................................ 4 Shaw v. Hunt, 517 U.S. 899 (1996) ........................................................................................ 11 1-31 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis United States v. Virginia, 518 U.S. 515 (1996) ...............................................................................................4, 5 W.H. Scott Constr. Co. v. City of Jackson, 199 F.3d 206 (1999) .................................................................................................12 Wygant v. Jackson Bd. of Educ., 476 U.S. 267 (1986) .........................................................................................7, 8, 21 1-32 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Legal Analysis CHAPTER 2: Procurement and Contracting Policy Review I. Introduction This Chapter provides an overview of the policies that governed the Solid Waste Authority of Palm Beach County’s (Authority) procurement and contracting during the fiscal years 2009 to 2013 (October 1, 2008, to September 30, 2013) study period. The Disparity Study (Study) includes utilization and disparity analyses of Minority and Woman-owned Business Enterprises, hereinafter referred to as Minority and Caucasian Female-owned Business Enterprises (M/WBE), and Nonminority Male-owned Businesses (non-M/WBE) on construction, professional services including architecture and engineering (hereinafter referred to as professional services), commodities and other services, and trade services contracts awarded by the Authority. The Authority’s procurement is regulated by the Governing Board of the Solid Waste Authority of Palm Beach County (Governing Board). The Governing Board authorized the Office of the Executive Director to execute the Authority’s purchasing function in accordance with the Purchasing Manual. Florida State Statutes, including the Consultant’s Competitive Negotiation Act,205 and the Purchasing Manual serve as the standard for all Authority procurement activities. The documents reviewed in preparation of this Chapter include:    II. Florida State Statutes Solid Waste Authority of Palm Beach County, Purchasing Manual Solid Waste Authority of Palm Beach County, Minority/Women/Small Business Enterprise Policy Definitions A. Industry Definitions Commodities: tangible personal property other than services or real property. Construction: building, altering, improving, demolishing, repairing, or renovating any structure or building, or other improvements of any kind to any real property, or other activity specifically related to, or part of, these services. Professional Services: the services of attorneys, consultants, appraisers, etc.;206 any narrow discipline wherein a known practitioner has developed expert advisory and programming skills as a vocation through education and experience, any service performed primarily by vocational 205 FLA. STAT. tit. XIX, § 287.055(2)(a) (2014). 206 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § DEFINITIONS (2014). 2-1 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review personnel which requires the analysis or certification of a professional before the services are acceptable to the user of the service, any other advisory study, or programming activity where the Director of Purchasing determines that the levels of skills or creativity of the potential or known practitioner(s) warrants a competitive proposal or submittal process. The Consultant’s Competitive Negotiation Act (CCNA) specifically governs architecture, professional engineering, landscape architecture, registered surveying and mapping, and services performed by any architect, professional engineer, landscape architect, or registered surveyor and mapper in connection with professional employment or practice.207 Trade Services: services of welders, printers, mechanics, and janitors, etc.208 B. Definitions of Procurement Types Blanket Purchase Order (BPO): agreement for repetitive purchases of commodities and other services and trade services which utilizes catalog references to set prices or discounts, the terms and conditions applicable to the transaction, and the length of the contract.209 Consultant Services Authorization (CSA): agreement that authorizes a specific scope of work under the terms and conditions of the Master Agreement. Cooperative Agreement: purchase of commodities and other services and trade services using another government’s competitively negotiated contract where the vendor extends the same terms and conditions to the Authority as afforded the originating agency.210 Field Purchase Order (FPO): purchase of commodities and other services and trade services when a requisition or purchase order has not been issued, immediate delivery is required, and the purchase is valued $1,000 or under. Master Agreement: continuing contract, without an encumbered amount, to provide construction, professional services, commodities and other services and trade services for multiple years. A CSA must be issued on an as needed basis to authorize a specific scope of work. Personal Services Agreement (PSA): contract with simplified terms and conditions authorizing purchases of professional services valued $20,000 and under per fiscal year. State Purchasing Agreement: cooperative agreement purchases for commodities and other services and trade services on competitively bid state contracts valued $35,000 and under.211 207 FLA. STAT. tit. XIX, § 287.055(2)(a) (2014). 208 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § DEFINITIONS (2014). 209 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.8(A)-(B) (2014). 210 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 12 (2014). 211 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 28 (2014); FLA. STAT. tit. XIX, § 287.042(1)(a)-(2)(a) (2014). 2-2 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review III. Governing Laws The applicable state laws and policy governing the Authority’s purchase of construction, professional services, commodities, and trade services are included in Table 2.1 below. Table 2.1: Governing Laws and Regulations STATE OF FLORIDA STATUTES Title XIX, Chapter 287 Chapter 2001-331 SOLID WASTE AUTHORITY OF PALM BEACH COUNTY February 2014 Purchasing Manual of Solid Waste Authority of Palm Beach County Section 6 Minority/Women/Small Business Enterprise Policy A. State of Florida Statutes 1. Title XIX, Chapter 287, Part I, Section 287.055 Title XIX, Chapter 287 of the State of Florida Statutes, referred to as the Consultant’s Competitive Negotiation Act (CCNA), governs the procurement of design professional services and other professional services related to construction projects.212 The CCNA defines the solicitation standards for the procurement of construction-related professional services and constructionrelated services. The solicitation standards establish guidelines for the negotiation, solicitation, and selection process. Section 287.055 applies to the procurement of architecture and engineering, design-build, landscape architecture, and registered surveying and mapping. CCNA requires that a contract is negotiated with the most qualified business for compensation that is fair, competitive, and reasonable. To determine a firm’s qualifications to provide the needed services, statements of qualifications, proposals and price are solicited through a competitive process.213 2. Chapter 2001-331 State of Florida Statutes, Chapter 2001-331 granted the Authority the authorization to acquire construction, professional services, commodities and other services, and trade services contracts. The Governing Board delegated the responsibility to acquire personal and real property to the Office of the Executive Director. B. Solid Waste Authority of Palm Beach County Purchasing Manual The Purchasing Manual serves as the legal framework for the Authority’s procurement of construction, professional services, commodities and other services, and trade services that are not governed by the CCNA. The Governing Board delegated responsibility to the Office of the 212 Professional services that do not meet the thresholds established in the CCNA, or non-CCNA professional services, are governed by the standards set forth in the Purchasing Manual. 213 FLA. STAT. tit. XIX, § 287.055(5)(A) (2014). 2-3 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review Executive Director to develop and maintain a Purchasing Manual to execute the purchasing and procurement standards set forth in State law.214 The Purchasing Services Department’s mission is to procure commodities and other services and trade services for the best value in an efficient manner, while ensuring that fair and equal opportunity is provided to all qualified vendors.215 IV. Procurement Process Overview The Purchasing Manual establishes the procedures and standards for the purchase of construction, professional services, commodities and services, and trade services.216 The solicitation methods include competitive solicitation, prequalification list, sole source, purchases from other governments’ contracts, and negotiated agreements.217 The Purchasing Services Department assists the Office of the Executive Director in executing the appropriate solicitation method based on the contract type.218 The solicitation method used for competitive procurement is determined by Purchasing Services based upon the type of the contract. The solicitation method is determined by the nature of the transaction, the circumstances surrounding the transaction, the relative complexity of the transaction, and time constraints.219 Informal procurement methods do not require competition, and are utilized for construction and professional services contracts valued $50,000 and under, and for commodities and other services and trade service contracts valued $5,000 and under.220 Acquisition of construction and professional services contracts valued over $50,000, and commodities and other services and trade services contracts valued over $5,000 must be procured through competition.221 Exempt solicitation methods are permissible without competition, and include negotiated procurements, sole source purchases, emergency purchases, cooperative agreements, and state purchasing agreements. V. Informal Procurement Methods Acquisition of construction and professional services contracts valued $50,000 and under, and commodities and other services and trade services contracts valued $5,000 and under are procured 214 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 1.1 (2014). 215 How To Do Business with the Solid Waste Authority of Palm Beach County 216 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 1.1 (2014). 217 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 1.1 (2014). 218 Id. 219 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(A) (2014). 220 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(A) (2014); FLA. STAT. CH. 2001331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.16(B) (2014); FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.10(B) (2014). 221 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(A) (2014). 2-4 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review without competition.222 The informal procurement methods that the Purchasing Department utilizes to procure construction, professional services, commodities and other services, and trade services are set forth in the Purchasing Manual. A. Construction Valued $50,000 and Under Construction contracts valued $50,000 and under do not require competition.223 The procurement of construction contracts may be procured as specifically directed by the Governing Board.224 Otherwise, construction procurements must first be requested through a Contract Request or Purchase Requisition, and approved under the applicable authority prior to the transaction, as determined by threshold.225 The procurement of construction contracts valued over $50,000 require competition, and are further defined in Section VI: Competitive Procurement Methods below. 1. Authorization Requirements The required signatory approval of the purchase depends on expenditure levels, and is determined by dollar threshold. The authorization levels are as follows: (1) Construction contracts valued $5,000 to $10,000 must be approved by the purchasing supervisor. (2) Construction contracts valued $10,000 to $25,000 must be approved by the purchasing manager. (3) Construction contracts valued from $25,000 to $50,000 must be approved by the Director of the Purchasing Department.226 B. Professional Services Valued $50,000 and Under Professional Services contracts valued $20,000 and under do not require competition.227 Professional Services contracts valued $20,000 through $50,000 per vendor per fiscal year do not require competition, but may be solicited through either a mini RFP or an RFP at the discretion of the Director of Purchasing Services.228 Professional services must first be requested through a Contract Request, and approved under the applicable authority prior to the transaction, as determined by threshold.229 The procurement of professional services contracts valued over 222 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(A) (2014); FLA. STAT. CH. 2001331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.16(B) (2014); FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.10(B) (2014). 223 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17 (2014). 224 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.12 (2014). 225 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.5 (2014). 226 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.5(G)-(B) (2014); FLA. STAT. CH. 2001331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.12 (2014). 227 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.10(B)(1) (2014). 228 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.10(B)(2) (2014); FLA. STAT. CH. 2001331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.16(A) (2014). 229 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.5(H) (2014). 2-5 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review $50,000 require competition, and are further defined in Section VI: Competitive Procurement Methods below. 1. Professional Services Agreements Personal Services Agreements (PSA) are utilized to procure professional services when the format and language of the short form agreement can properly express the contractual obligation, and the contract is valued $20,000 and under per year. A PSA may only be used for contracts where total expenditures do not exceed $20,000 per fiscal year per vendor. The PSA must be approved by Purchasing Services.230 2. Request for Quotations The Request for Quotations (RFQ) competitive solicitation process may be utilized for professional services valued $20,000 to $50,000, at the discretion of the Director of Purchasing Services. An RFQ ensures that professional services are procured in a cost-effective competitive process.231 A RFQ may be used for professional services contracts that will not cumulatively exceed $50,000 per vendor, per fiscal year.232 Quotations from a minimum of three responsible vendors shall be solicited by a written quotation on an acceptable vendor form or an Authority quotation form. 233 Additional vendors must be contacted whenever there is “no quote” response, if reasonable and practicable. RFQs are approved by the Director of Purchasing Services. 234 3. Mini Request for Proposal Professional Services contracts estimated at $20,000 through $50,000 per vendor per fiscal year require competition by mini RFP, or a down-sized written quotes process. A mini RFP is a scaled down RFP that does not require advertising. The Director of Purchasing Services has the discretionary authority to determine if a mini RFP is the appropriate method of procurement on a case-by-case basis.235 a. Selection Process A minimum of three requests must be sent to firms selected from the Authority’s vendor registration directory. Unlike the full RFP process, which is detailed above in Section VI: 230 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.10(E)(1)-(2) (2014). 231 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.16(A) (2014). 232 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.16(B) (2014). 233 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.16(C) (2014). 234 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.16(C) (2014). 235 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.10(B)(2) (2014). 2-6 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review Competitive Procurement Methods below, the mini RFP does not require participation by the Citizens Advisory Committee or members of the Governing Board in the selection process.236 C. Commodities and Other Services and Trade Services Valued $5,000 and Under Commodities and other services and trade services contracts valued $5,000 and under are procured without competition, and are requested through a Purchase Requisition. Commodities and other services and trade services contracts valued $5,000 and under must be approved by the buyer.237 The procurement of commodities and other services and trade services contracts valued over $5,000 requires competition, as discussed above in Section VI: Competitive Procurement Methods below. 1. Authorization Documents Multiple types of procurement documents, which are generally used to purchase commodities and other services and trade services, are initiated by the user department These procurement documents provide authorization to the vendors to provide the goods or services, and represent the commitment of funds for these transactions. Three primary procurement documents are utilized by the Authority: Purchase Orders, Blanket Purchase Orders, and Field Purchase Orders. a. Purchase Order Purchase Orders, which are generally used to purchase commodities and other services and trade services, are initiated by the user department. The user department submits a requisition to Purchasing Services that stipulates the specific quantities and conditions. A purchase order is issued and must be approved before it can be issued. Purchasing Services is responsible for approving the purchase order, which is determined by the dollar value of the purchase order. b. Blanket Purchase Order Blanket Purchase Orders (BPO) are used when the commodities and other services or trade services are expected to be consistently and repetitively procured. A vendor catalog may be used to set prices or discounts, the terms and conditions, and the length of the contract. BPOs are procured without competition.238 Requests for BPOs are approved by Purchasing Services. 236 The Citizen’s Advisory Committee serves the Authority as an advisory board to the Governing Board. Eleven members are appointed by the Governing Board, with each Governing Board member appointing one member from their district, and the other four members appointed atlarge. 237 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.5(G)-(B) (2014). 238 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.8(D)(2) (2014). 2-7 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review c. Field Purchase Order Field Purchase Orders (FPO) are used to purchase commodities and other services or trade services made without a requisition. An FPO is not to exceed $1,000. An FPO is submitted after the purchase is complete and must contain the following elements: a full description of the commodity or trade service, complete and accurate account coding, proper unit of measure, complete vendor information, and the transaction date.239 FPOs may not be utilized for the purchase of repairs, maintenance, or computer hardware and software.240 FPOs are approved by an employee authorized by the Executive Director.241 The FPO process occurs through the use of FPO books that are issued by Purchasing Services. Purchasing Services issues FPO books to authorized personnel; these authorized personnel in turn, are permitted to make FPO purchases by completing the transaction forms in the FPO book, and providing a copy to Accounts Payable within two business days.242 Expended booklets must be approved by the director of the supervising department.243 VI. Competitive Procurement Methods Acquisition of construction and professional services contracts valued over $50,000, and commodities and other services and trade services contracts valued over $5,000 must be procured through competition.244 The solicitation method used for competitive procurement is determined by Purchasing Services based upon the type of the contract. The solicitation method is determined by the nature of the transaction, the circumstances surrounding the transaction, the relative complexity of the transaction, and time constraints.245 A. Invitation to bid The Purchasing Manual establishes three Invitation to Bid (ITB) procurement methods: (1) the Sealed Bid, (2) the Two-step Sealed Bid, and (3) the Construction Sealed Bid. The applicable standards for each ITB procurement type are set forth in the Purchasing Manual. 239 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.9(C) (2014). 240 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.9(E) (2014). 241 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.9(C)(5) (2014). 242 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.9(D) (2014). 243 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.9(D)(7) (2014). 244 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(A) (2014). 245 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(A) (2014). 2-8 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review 1. Sealed Bid A sealed bid is used where the statement of work is clearly defined, and price is the principal deciding factor for the award.246 The ITB must include instructions to bidders, specifications, and contractual terms and conditions applicable to the procurement at a minimum.247 a. Advertisement of Invitation to Bid The ITB must be publicly advertised for not less than 14 calendar days prior to the bid opening date.248 The notice may be published for a reasonable time prior to bid opening. The public notice should be published in a newspaper of general circulation and must state the place, date, and time of bid opening. b. Pre-bid Conference A pre-bid meeting is strongly recommended prior to bid opening but is not required.249 Mandatory pre-bid conferences are permissible, and failure to attend one may constitute grounds for finding a bidder non-responsive.250 c. Bid Opening The bid must be opened publicly and in the presence of one or more witnesses at the time and place designated in the ITB. The amount of each bid, the name of each bidder, and all other information deemed relevant by Purchasing Services must be recorded. Bids, proposals, or replies received pursuant to a competitive solicitation are exempt from public inspection until such time as the agency provides notice of an intended decision or until 30 days after opening the bids, proposals or final replies, whichever is earlier.251 The bid opening requirement may be waived by Purchasing Services. Public inspection can be delayed until one of the following circumstances is met, whichever is earlier: (a) the Authority provides notice of a decision or intent to award, or (b) within thirty days after bid opening.252 d. Bid Evaluation Bid evaluation must be based on the requirements set forth in the ITB. These requirements may include criteria such as inspection, testing, quality, workmanship, delivery, and suitability for a 246 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(B) (2014). 247 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.20(A)(2)(2014). 248 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.20(A)(3) (2014). 249 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.20(A)(2) (2014). 250 Id. 251 FLA. STAT. tit. XIX, § 119.071(2) (2014). 252 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.20(A)(4) (2014). 2-9 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review particular purpose. Criteria that will affect the bid price and the criteria considered in the evaluation for award must be objectively measurable. Evaluation criteria that are not set forth in the ITB may not be used.253 e. Approval of Award The award must be made to the lowest responsible and responsive bidder whose bid meets the requirements and criteria set forth in the ITB. The responsive and responsible bidder standard consists of two elements. To be responsive, a bid must conform in all material respects to the requirements set forth in the ITB. To be responsible, the bidder must have the capability to fully perform the contract requirements; this requires the firm to have the capacity, experience, facilities, equipment, and finance and credit to assure good faith performance of the contract.254 The Purchasing Services Department and the user department must make a collaborative effort to negotiate for bid reductions if the bid exceeds the allocated amount of available funds. When the lowest responsive and responsible bid exceeds the available funds by less than ten percent, the Purchasing Services is authorized to enter into negotiations with the bidder, when time or economic considerations preclude re-advertising the project with a reduced scope of work. Items specified in the original ITB can be eliminated in the price adjustment negotiation.255 2. Two-Step Sealed Bid The two-step sealed bid method of competition is used when the user department cannot produce a definitive statement of work. This procurement method is a modified form of sealed bid competition, where Requests for Information are first obtained to provide the user department with a clearer understanding of the specifications or the statement of work that the acquisition would require. Therefore, the two-step sealed bid process allows for the user department to first obtain a full understanding of the elements of the proposed contract prior to receiving any bids. The first step requires contacting prospective bidders by using a Requests for Information, reviewing the responses, and preparing a definitive scope of work. The second step involves requesting sealed bids with pricing data. Price is the principal deciding factor for the award.256 3. Construction Sealed Bid A construction sealed bid is a specialized type of procurement process employed for complex projects. The solicitation is developed jointly by Purchasing Services and the Engineering Department. In developing the bid, outside firms may be used to assist with the technical engineering sections of the bid. 257 253 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.20(A)(5) (2014). 254 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § DEFINITIONS (2014). 255 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.20(A)(7) (2014). 256 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(B) (2014). 2-10 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review Where the State of Florida Statutes are silent on bonding requirements, the Director of Purchasing Services must determine appropriate bonding measures with the Engineering Department and the engineer of record. This determination is made on a project-by-project basis, and is based upon a risk versus cost analysis.258 B. Request for Proposal The Request for Proposal (RFP) is used to procure complex professional services when sealed bidding is neither practical nor advantageous. There are two processes for procuring professional services. If the procurement meets the thresholds designated by the CCNA, the transaction is governed by the statutory requirements set forth in the CCNA. The procurement of professional services valued below the thresholds designated by the CCNA is governed by the standards set forth in the Purchasing Manual. 1. Professional Services – CCNA The selection process for professional architect, engineer, landscape architect, and land surveying services for construction is dictated by CCNA. Procurement for all design professional services selected for construction projects valued at $325,000 and over, and all design professional services selected for a planning or a study valued at $35,000 and over must follow the solicitation established in the CCNA.259 The CCNA acquisition process is broken down into three statutorilydefined steps: (1) Public Announcement and Qualification Procedures; 260 (2) the Competitive Selection Process;261 and (3) the Competitive Negotiation Process.262 Professional services estimated at below the CCNA threshold amounts must be procured using the standards set forth in the Authority’s Purchasing Manual.263 Services estimated at below the CCNA threshold amounts must be procured using the Authority’s Purchasing Manual’s standard procurement procedures.264 257 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(D)(6) (2014). 258 Id. 259 FLA. STAT. tit. XIX, § 287.055 (2014). 260 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.10(B)(4) (2014); Id. at § 287.055(3). 261 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.10(B)(4) (2014). 262 Id. at § 287.055(5). 263 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.10(B)(4) (2014) (“Services which are subject to the Consultants’ Competitive Negotiations Act (CCNA) shall be procured in accordance with Florida Statute 287.055, as amended. Services estimated at below the CCNA threshold amounts to be procured using this Manual’s procurement procedures.”) ; FLA. STAT. tit. XIX, § 287.055 (2014). 264 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.10(B)(4) (2014); FLA. STAT. tit. XIX, § 287.055 (2014). 2-11 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review a. Advertisement of Request for Proposals The RFP must be publicly advertised in a manner that complies with the uniform requirements dictated by the CCNA.265 The CCNA requires that an assessment of good faith efforts be made by the Authority.266 b. Competitive Selection Process The competitive selection process is performed in two primary steps. First, vendors are selected by an appointed selection committee. Second, short-listed vendors that advance in the process give oral presentations to the selection committee. i. Vendor Selection A Selection Committee must be formed to evaluate the submitted proposals.267 The Selection Committee is required to review proposals and prepare a short-list of ranked proposers. Three or more firms must be selected for the short-list, if the number or quality of proposers permit. The evaluation must consider factors such as capability of the business, the adequacy of the personnel, the past record and past experience of the business, whether the business is M/W/SBE certified, and the location of the firm.268 ii. Oral Presentations Short-listed firms may be provided with the opportunity to make oral presentations to the Selection Committee regarding their qualifications.269 Committee members will then evaluate each shortlisted finalist on both the oral presentation and the submitted proposal. 270 After the oral presentations, the selection committee is required to prepare a short-list of ranked proposers. c. Negotiation with the Most Qualified Firm After the most qualified firms are ranked, the Authority shall enter into the competitive negotiation with the number one ranked firm in order to negotiate a contract that is fair, competitive, and reasonable.271 In the event that an agreement cannot be negotiated with the number one ranked firm, the Director of Engineering shall negotiate a contract in the preferential order of the ranked 265 FLA. STAT. tit. XIX, § 287.055(3)(a). 266 FLA. STAT. tit. XIX, § 287.055(3)(A)(2) (Under the CCNA, this good faith effort standard requires community outreach efforts, enumerated in sections (3)(a)-(d)). 267 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.19(B)(5) (2014). 268 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.19(A) (2014); FLA. STAT. tit. XIX, § 287.055(4)(a) (2014). 269 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.19(B)(6) (2014). 270 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.19(B)(6) (2014). 271 FLA. STAT. tit. XIX, § 287.055(5) (2014). 2-12 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review short-list firms.272 The Authority must conduct a detailed cost analysis of the services required, in addition to considering the scope of services and complexity in order to make this determination.273 In the event that the Authority is unable to negotiate a satisfactory contract with the most qualified firm, negotiations with that firm will be formally terminated and will commence with the next most qualified firm in the ranked order. i. Award and Contract Administration The Director of Engineering is required to prepare the Board Agenda Item upon the close of negotiations. The contract award requires Board Approval.274 2. Professional Services – non-CCNA The solicitation process that the Purchasing Department utilizes to procure non-CCNA professional services are implemented by the Purchasing Manual. 275 If the procurement is for design professional services and other professional services related to construction projects, the solicitation may be governed by the CCNA depending on the contract value.276 a. Advertisement for Request for Proposals The RFP must be advertised for no less than 21 calendar days, prior to the proposal due date.277 The public notice must state the place, date, and time of RFP opening. The notice may be published in a newspaper of general circulation. b. Pre-Proposal Conference A pre-proposal meeting is strongly recommended for all RFPs.278 Pre-proposal conferences are not required, but are recommended for complex RFPs. Mandatory pre-proposal conferences are permissible, and failure to attend may constitute grounds for vendor disqualification or a finding of non-responsiveness.279 272 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.20(B)(3) (2014). 273 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.19(B)(9) (2014). 274 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.19(B)(7) (2014). 275 See generally FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.19 (2014). 276 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(C) (2014). 277 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.19(B)(3) (2014). 278 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.18(B)(1)-(14) (2014). 279 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.20(B)(2) (2014). 2-13 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review c. Receive and Review Proposals A selection committee must be formed for the purposes of evaluating the submitted proposals. The Committee must be minimally composed of the following members:     Project manager and user department Staff member with special expertise Staff member with business and financial expertise Purchasing Services non-voting staff280 The Committee may include a Citizen Advisory Committee Member, an Authority consultant, and any additional staff members or outside representatives who possess the desired expertise. The Director of Purchasing Services and the Executive Director have the authority to approve the composition of the Committee.281 Committee members must independently read and evaluate the proposals prior to the Committee’s first meeting in accordance with the criteria and specifications contained in the RFP. The RFP shall state the relative importance of price and the evaluation factors. The Committee must evaluate according to the published standards.282 When the Committee completes its evaluation, it submits a recommendation of award to Purchasing Services.283 d. Proposer Interviews Discussions and interviews may be conducted with responsible proposers for the purposes of providing clarification, and ensuring the full understanding of, and conformance to, the solicitation requirements.284 In the evaluation of the interviews, proposers must be accorded fair and equal treatment. Proposers must be provided the opportunity for discussion and revisions of proposals in order to provide the best and final offers. Revisions may be permitted after submission but prior to award.285 280 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.18(B)(8) (2014). 281 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.18(B)(13)-(14) (2014). 282 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.20(B)(5) (2014). 283 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.18(B)(6) (2014). 284 The responsive and responsible bidder standard applicable to RFPs maintains the same requirements as the standard that is applied to ITBs, as defined above. This standard consists of two different elements. To be responsive, a firm must submit a bid which conforms in all material respects to the requirements set forth in the RFP. To be responsible, a firm must have the capability to fully perform the contract requirements; this requires the firm to have the capacity, the experience, the facilities and equipment, and the financial responsibility and credit to assure good faith performance of the contract. 285 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.20(B)(6) (2014). 2-14 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review e. Contract Award The Authority is required to award the contract to the most responsive and responsible proposer who is determined to be the most advantageous to the Authority. Bids are awarded to the lowest responsive, responsible bidder based upon price. The RFP process requires the evaluation of weighted criteria, including price, and results in an award to the highest ranked proposer. The determination of which proposal is the most advantageous to the Authority is made by taking price and other evaluative factors set forth in the RFP into consideration.286 No other factors or criteria may be considered in the evaluation. C. Requests for Quotations The solicitation processes that the Department of Purchasing Services utilizes to procure commodities and other services and trade services are set forth in the Purchasing Manual. The primary method of procuring commodities and other services and trade services contracts is the Requests for Quotations (RFQ) process. The RFQ process is monitored through a series of authorization procedures which include: Purchase Orders, Blanket Purchase Orders (BPO), and Field Purchase Orders (FPO).287 An RFQ is the solicitation method utilized to ensure that commodities and other services and trade services are procured in a cost-effective competitive process.288 Commodities and other services and trade services valued from $5,000 to $50,000 are solicited through an RFQ and must be procured through competitive bidding. The competitive requirements applied are dependent upon the value of the contract. Commodities and other services and trade services valued from $5,000 to $50,000 require an RFQ prior to award. However, there are specific RFQ requirements depending on the total value of the solicitation. 1. Commodities and Other Services and Trade Services Valued $5,000 and Over Commodities and other services and trade services valued $5,000 and over require an RFQ prior to award. Quotations must be solicited from a minimum of three responsible vendors and documented with a verbal, telephone, or written quotation.289 Competitive quotations must be solicited from a minimum of three responsible vendors through a written quotation on an acceptable vendor form.290 Additional vendors must be contacted if no quotations are received. The commodities and trade services may be procured without competition if it is not practicable to solicit additional quotes. An RFQ may only be used for commodities and other services and 286 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.20(B)(7) (2014). 287 See generally FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.8(A)-(B) (2014). 288 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.16(A) (2014). 289 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.16(C) (2014). 290 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.16(C) (2014). 2-15 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review trade services contracts that will cumulatively exceed $5,000 per unit, per item, and per fiscal quarter.291 a. Authorization Requirements Commodities and other services and trade services must be requested through a Purchase Requisition. The required signatory approval of the purchase depends on expenditure levels, and is determined by dollar threshold. The authorization levels are as follows: (1) Commodities and other services and trade services contracts valued from $5,000 to $10,000 must be approved by the purchasing supervisor. (2) Commodities and other services and trade services contracts valued from $10,000 to $25,000 must be approved by the purchasing manager. (3) Commodities and other services and trade services contracts valued from $25,000 to $50,000 must be approved by the Director of the Department of Purchasing Services.292 VII. Alternative Procurement Methods Any modification or combination of the methods described above may be employed as an alternative procurement method at the discretion of the Director of Purchasing Services when necessary, so long as minimum requirements are met.293 An alternative method may be established on a case-by-case basis by the Director of Purchasing Services in conjunction with the purchasing department. 294The selected method must abide by the principles of open advertised competition, and the contract must be awarded to the firm that can provide the best value. VIII. Non-competitive Procurement Methods The Purchasing Manual specifies four procurement types that are exempt from competition: (1) Negotiated Procurement, (2) Sole Source Purchases, (2) Emergency Purchases, (3) Cooperative Purchases, and (4) State Purchasing Agreements. The applicable standards for each noncompetitive procurement type are set forth in the Purchasing Manual. A. Negotiated Procurement Negotiated procurement is a non-competitive solicitation method that is utilized when it is determined that a vendor is a sole source, or when competitive bidding has failed to produce an acceptable result.295 Under these circumstances, Purchasing Services may commence the bidding process with a truncated solicitation process that involves one identified contractor.296 291 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.16(B) (2014). 292 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.5(G)-(B) (2014). 293 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(B) (2014). 294 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(D)(7) (2014). 295 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(B) (2014). 296 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(D)(3) (2014). 2-16 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review This process involves six steps.297 First, the potential contractor must be interviewed by either the Requesting Department or the Department of Purchasing Services. Second, the Requesting Department must request a written proposal from the potential contractor. Third, the Requesting Department must evaluate the proposal on its technical merit. Fourth, the Department of Purchasing Services must request pricing data from the potential contractor, and evaluate the technical merit of the proposal and the pricing data. Fifth, the Purchasing Services Department and the Requesting Department award the contract. Finally, contract administration is performed by the Requesting Department.298 B. Sole Source Purchases The sole source procurement method provides a mechanism for the procurement of construction, professional services, commodities and other services, and trade services that are available from only one source.299 To qualify as a sole source, a request must meet two prerequisites. First, the commodity or trade service is the only one that fulfills the need. Second, the proposed vendor is the only source of supply for this commodity or trade service. Purchasing Services determines whether the procurement qualifies for the sole source standard, and must present a comprehensive file or record of sole source purchases to the Governing Board on a quarterly basis.300 C. Emergency Purchases Emergency purchases may be made when the procurement of construction, professional services, commodities and other services or trade services is immediately necessary as the result of an emergency. An emergency is defined as a situation that causes an immediate risk to the health or safety of person(s) or if the normal operation of the Authority, or major portions of the Authority, would cease or be seriously impaired if immediate action were not undertaken to correct a contingency.301 In the case of a natural disaster, emergency situation, or threat of such, the Executive Director may declare that an emergency situation exists and implement the Emergency Management Plan. 302 If there is time to process the requisite procurement paperwork to initiate the purchase, then a purchase requisition or a contract request must be prepared along with an Emergency Purchase Data Sheet.303 The supervisor, foreman, or other personnel who identified the situation and obtained authorization from the highest-ranking available official must prepare the emergency procurement documentation.304 297 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(D)(3) (2014). 298 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.17(D)(3) (2014). 299 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.15(A) (2014). 300 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.15(C)(1)-(3) (2014). 301 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.14(A) (2014). 302 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.14(B)(1) (2014). 303 Id. at § 2.14(D)(4). 2-17 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review If there is insufficient time to process the documentation, then it may be completed after the emergency situation is remedied. It is the responsibility of the supervisor, foreman, or leadman to execute all necessary documentation and submit the documentation to Purchasing Services within one working day of the emergency declaration.305 D. Cooperative Purchases The Director of Purchasing Services may purchase commodities and other services and trade services from vendors under negotiated contracts with another government entity, including the United States General Services Administration (GSA). There are no dollar limitations placed on cooperative purchases. The Authority is permitted to participate in, sponsor, conduct, or administer a cooperative purchase under a GSA contract when the state and local governments are permitted to use such contracts under federal law, and the Director of Purchasing Services specifically authorizes the purchase and declares, in writing, that the use of the contract is in the Authority’s best interest.306 E. State Purchasing Agreement The Authority is permitted to participate in the State Purchasing Agreements pursuant to the State of Florida procurement program titled “State Purchasing Agreements.”307 The Director of Purchasing Services is required to review and monitor the use of State Purchasing Agreements. Additionally, the Director of Purchasing Services must advise the user department and the Chief Financial Officer of any concerns that may arise regarding the application of the program and its ability to meet the Authority’s needs and requirements.308 F. Exempt from Competition The Director of Purchasing Services may exempt certain transactions valued $10,000 and under from the competitive requirements of the Purchasing Manual. An exemption may be granted when the purchase presents a set of unusual circumstances that preclude the successful application of the standard purchasing policies and procedures prescribed in the Purchasing Manual. Exemptions granted by the Director of Purchasing Services shall be reported to the Governing Board quarterly.309 In addition, expenditures exempt from the competition requirements are set forth in the Purchasing Manual, due to the nature of the purchase. 310 304 Id. at §2.14(D)(4). 305 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 12 (2014). 306 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.14(D)(5) (2014). 307 FLA. STAT. tit. XIX, § 287.042(1)(a) (2014); FLA. STAT. tit. XIX, § 287.042(2)(a) (2014). 308 Id. 309 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2.2 (2014). 310 See generally FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 2 (2014). 2-18 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review IX. Small and Local Business Enterprise Programs There are two business enterprise programs specifically intended to increase participation of small and local businesses in the Authority’s procurement process. The two business enterprise programs are the Small Business Enterprise Program (SBE) and the Local Preference Policy. In 2012, the Purchasing Manual was revised to eliminate the voluntary 15% participation goal applied to Minority and Woman-owned Business Enterprises (M/WBE) in favor of a voluntary 15% SBE goal. Although M/WBE contracting preferences were eliminated, M/WBE certification is used to track M/WBE availability and participation in contracts awarded by the Authority. 311 A. Small Business Enterprise Policy The Small Business Enterprise Policy was promulgated to ensure that small businesses had an equitable opportunity to participate in the Authority’s procurement opportunities. The policy is intended to prevent the exclusion of SBEs from participating in Authority contracts, and discrimination against SBEs on the basis of race, national origin, gender, or ability in the award and performance of any Authority contract.312 1. SBE Goal To meet the SBE Program objectives, a 15% voluntary goal for SBE participation in the Authority’s contracts was enacted.313 The voluntary program relies on good faith efforts to meet the 15% voluntary goal. The Authority is required to take all reasonable steps permissible by law to ensure that SBEs have maximum opportunity to participate in the competitive procurement process.314 2. Certification Procedures The Authority does not certify, but accepts certifications issued by other governments. The Authority encourages businesses that are SBE eligible to maintain M/WBE certification so that the Authority may track availability and the contracts awarded to African Americans, Asian Americans, Native Americans, Hispanic Americans, and Caucasian females.315 3. Application of the SBE Goal The application of the SBE preference can be applied in the evaluation process. A maximum of 10 points can be applied in the evaluation process of a competitive bid solicitation. The allocation of 311 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 6.1 (2014). 312 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 6.1 (2014). 313 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 6.3(2014). 314 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 6.2(2014). 315 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 6.2(2014). 2-19 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review preference points awarded during the evaluation process is determined by the proposer’s and the subconsultant’s status. An SBE prime contractor will be awarded a total of 10 points when the proposer prime consultant provides more than 50% of the services solicited. An SBE prime contractor will be awarded 5 points when providing less than 50% of the work. A non-SBE prime contractor may receive a maximum of 5 points if one or more SBE subconsultant(s) are utilized to meet the Authority’s voluntary 15% goal.316 B. Local Business Enterprise Preference Policy The Authority gives a preference to firms certified as Local Business Enterprises (LBE).317 Preference is accorded to a business in the order of rank. Local Business Enterprises are accorded the highest rank because the Local Presence Preference is ranked higher than the SBE preference. A bidder certified as both SBE and LBE cannot receive both preferences. 1. Local Preference To receive the Local Preference, businesses must be certified as LBE. To be certified, the business must: (a) have its headquarters or branch office located within Palm Beach County for a minimum of one (1) year, and (b) have been incorporated or legally commenced business under a fully operational license for at least one (1) year prior to the issuance of the solicitation.318 a. Application of the Local Preference to Requests for Proposals and Requests for Quotes For all RFPs, RFQs, or other similar formats other than bids, the maximum 10 points will be awarded to a local firm if all of the individuals assigned to the Authority’s project work out of the local office. The maximum 10 points will be awarded to a local firm if all the individuals assigned to the SWA project work out of the local office. Committee members will have latitude in assigning fewer points to LBEs with assigned personnel working out of non-local offices.319 b. Application of the Local Preference to Invitations to Bid The Local Preference permits LBEs to resubmit a best and final bid if their bid is within 5% of the lowest non-local bidder. The LBE may offer a best and final bid along with the non-local lowest bidder. The award will be made to the lowest best and final bid. In case of a tie for the lowest best and final bid, the contract will be awarded to the lowest best and final bid offered by the local bidder. Ties between local bidders will be determined by a coin toss, which will be conducted at a public proceeding where both the affected firms are specifically invited to attend. 320 The award will be made to the winner of the coin toss. 316 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 7.5 (2014). 317 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 7.1 (2014). 318 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 7.4 (2014). 319 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 7.2(2014). 320 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 7.2(2014). 2-20 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review CHAPTER 3: Prime Contractor Utilization Analysis I. Introduction This Chapter documents Solid Waste Authority of Palm Beach County’s (Authority) utilization of Minority and Woman Business Enterprise prime contractors, hereinafter referred to as Minority and Caucasian Female-owned Businesses (M/WBE), by ethnicity and gender during the fiscal years 2009 through 2013 (October 1, 2008, to September 30, 2013) study period. The analysis of the Authority’s expenditures during the study period focuses on four industries — construction, professional services including architecture and engineering (hereinafter referred to as professional services), commodities and other services, and trade services. Construction includes building, altering, improving, demolishing, repairing, or renovating any structure or building, or other improvements of any kind to any real property, or other activity specifically related to, or part of, these services. Consultant’s Competitive Negotiation Act (CCNA) professional services include architecture, professional engineering, landscape architecture, registered surveying and mapping, and services performed by any architect, professional engineer, landscape architect, or registered surveyor and mapper in connection with professional employment or practice.321 Non-CCNA professional services include the services of attorneys, consultants, appraisers, etc.;322 these professional services are otherwise defined as any narrow discipline wherein a known practitioner has developed expert advisory and programming skills as a vocation through education and experience, any service performed primarily by vocational personnel which requires the analysis or certification of a professional before the services are acceptable to the user of the service, any other advisory study, or programming activity where the Director of Purchasing determines that the levels of skills or creativity of the potential or known practitioner(s) warrants a competitive proposal or submittal process. Commodities and other services include tangible personal property, and other services other than or real property. Trade services include services of welders, printers, mechanics, and janitors, etc.323 The data in the Disparity Study (Study) is disaggregated into six ethnic and gender groups. The six groups are listed in Table 3.1. 321 FLA. STAT. tit. XIX, § 287.055(2)(a) (2014). 322 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § DEFINITIONS (2014). 323 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § DEFINITIONS (2014). 3-1 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.1: Business Ethnic and Gender Groups Ethnicity and Gender Category Definition African Americans Businesses owned by male and female African Americans Asian Americans Businesses owned by male and female Asian Americans Hispanic Americans Businesses owned by male and female Hispanic Americans Native Americans Businesses owned by male and female Native Americans Caucasian Females Businesses owned by Caucasian females Non-minority Males Businesses owned by Caucasian males, and businesses that could not be identified as minority or female-owned324 II. Prime Contract Data Sources The prime contract data consists of contract records extracted from the Authority’s financial system, Finance Plus Fiscal Management by Sungard Pentamation, Inc. The payments were issued during the fiscal years 2009 through 2013 study period. Contracts were grouped by either a contract number, purchase order number, or consultant services agreement number. Each contract was classified into one of the four industries. Non-profits, government agencies, and utilities were excluded from the analysis from the Study. The industry classifications were reviewed and approved by the Authority. During the study period, the Authority awarded a design-build contract valued at $647,841,239 to KBR, Inc. for the design and construction of the Palm Beach Renewable Energy Facility No. 2. The Palm Beach Renewable Energy Facility No. 2 is the first project of its kind to be built in the United States in more than 20 years. Because this project is an outlier in scale and scope to the Authority’s standard contracting, it will not be analyzed in the prime contractor utilization analysis. This project will be analyzed separately to determine its level of subcontracting with M/WBE businesses. Research was undertaken in an effort to verify the ethnicity and gender of each prime contractor. The prime contractor’s name was cross-referenced with certification lists, chambers of commerce directories, and trade organization membership directories. Where ethnicity/gender could not be verified through published sources, the prime contractor’s website was reviewed for ethnicity and gender of the business owner. Prime contractors whose ethnicity and gender could not be verified 324 See Section II: Prime Contract Data Sources for the methodology employed to identify the ethnicity and gender of the Solid Waste Authority of Palm Beach County’s utilized prime contractors. 3-2 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis through a public source were surveyed. Any contractor who could not be verified as a minority or woman was defaulted to Non-minority male. Once the ethnicity and gender assignment was completed, the contract records were cleaned and the utilization analysis was performed. III. Prime Contract Utilization Thresholds Contracts within each of the four industries were analyzed at three dollar thresholds. One threshold included all prime contracts regardless of award amount. A second threshold included all formal prime contracts valued $600,000 and under for construction; $175,000 and under for professional services; $250,000 and under for commodities and other services; and $50,000 and under for trade services. The third threshold, as depicted in Table 3.2, included informal prime contracts valued $50,000 and under for construction and professional services, and $5,000 and under for commodities and other services and trade services. The threshold for informal contracts was defined by the Authority’s contracting practices. Table 3.2: Informal Contract Threshold Industry Construction Professional Services Commodities and Other Services Trade Services IV. Informal Contract Threshold $50,000 and Under $50,000 and Under $5,000 and Under $5,000 and Under Prime Contractor Utilization A. All Prime Contractors As depicted in Table 3.3, the Authority issued 4,225 prime contracts during the study period. The 4,225 total number of prime contracts included 84 for construction, 513 for professional services, 3,404 for commodities and other services, and 224 for trade services. The payments made by the Authority during the study period totaled $284,235,436 for all 4,225 prime contracts. Payments included $154,447,422 for construction, $42,656,198 for professional services, $86,132,650 for commodities and other services, and $999,166 for trade services. 3-3 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.3: Total Prime Contracts and Dollars Expended: All Industries, Fiscal Years 2009 Through 2013 Industry Construction Professional Services Commodities and Other Services Trade Services Total Expenditures B. Total Number of Contracts 84 513 3,404 224 4,225 Total Dollars Expended $154,447,422 $42,656,198 $86,132,650 $999,166 $284,235,436 Highly Used Construction Prime Contractors The Authority awarded a total of 84 construction contracts during the study period. As depicted in Table 3.4, the Authority’s 84 construction prime contracts were received by 22 unique vendors. Table 3.4: Construction Prime Contracts Total Prime Contracts Total Utilized Vendors Total Expenditures 84 22 $154,447,422 Table 3.5 presents the distribution of the Authority’s construction prime contracts by the number of vendors. One of the 22 vendors received $109,139,984 or 71% of the total construction prime contract dollars. The findings illustrate that one prime contractor received the majority of the construction prime contract dollars spent by the Authority. Table 3.5: Construction Prime Contracts Distributed by Number of Vendors Vendors 1 Highly Used Vendor 21 Vendors 22 Total Vendors Total Dollars $109,139,984 $45,307,438 $154,447,422 Percent of Dollars325 71% 29% 100% Number of Contracts Percent of Contracts326 1 83 84 1% 99% 100% Table 3.6 presents the ethnicity and gender of the most highly used construction prime contractor who received approximately 71% of the construction prime contract dollars. The most highly used prime contractor was a Non-minority male-owned business. The business KBR Construction Co LLC received 1 contract. The largest contract was valuated at $109,139,983. This contract is listed in Table 3.6. 325 Percentages are rounded to the nearest whole number. 326 Percentages are rounded to the nearest whole number. 3-4 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.6: Top 1 Highly Used Construction Prime Contractor Ethnicity/ Gender327 Non-minority Males C. Total Dollars Percent of Dollars Number of Contracts Percent of Contracts $109,139,984 70.66% 1 1.19% Highly Used Professional Services Prime Contractors The Authority awarded a total of 513 professional services contracts during the study period. As depicted in Table 3.7, the Authority’s 513 professional services prime contracts were received by 79 unique vendors. Table 3.7: Professional Services Prime Contracts Total Prime Contracts Total Utilized Vendors Total Expenditures 513 79 $42,656,198 Table 3.8 presents the distribution of the Authority’s professional services prime contracts by the number of vendors. Five of the 79 vendors received $31,154,657 or 73% of the total professional services prime contract dollars. The findings illustrate that a small group of prime contractors received the majority of the professional services prime contract dollars spent by the Authority. Table 3.8: Professional Services Prime Contracts Distributed by Number of Vendors Vendors 5 Highly Used Vendors 74 Vendors 79 Total Vendors Total Dollars Percent of Dollars328 Number of Contracts Percent of Contracts329 $31,154,657 $11,501,541 $42,656,198 73% 27% 100% 239 274 513 47% 53% 100% Table 3.9 presents the ethnicity and gender of the most highly used professional services prime contractors, who received approximately 51% of professional services prime contract dollars. The three most highly used prime contractor were Non-minority male-owned businesses. The contracts received by these three businesses ranged from $3,500 to $3,376,504. 327 African Americans, Asian Americans, Hispanic Americans, Native Americans, and Caucasian Females were omitted form the table because they were not highly used. 328 Percentages are rounded to the nearest whole number. 329 Percentages are rounded to the nearest whole number. 3-5 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.9: Top 3 Highly Used Professional Services Prime Contractors Ethnicity/ Gender330 Non-minority Males D. Total Dollars Percent of Dollars Number of Contracts Percent of Contracts $21,612,719 50.67% 194 37.81% Highly Used Commodities and Other Services Prime Contractors The Authority awarded a total of 3,404 commodities and other services contracts during the study period. As depicted in Table 3.10, the Authority’s 3,404 commodities and other services prime contracts were received by 646 unique vendors. Table 3.10: Commodities and Other Services Prime Contracts Total Prime Contracts Total Utilized Vendors Total Expenditures 3,404 646 $86,132,650 Table 3.11 presents the distribution of the Authority’s commodities and other services prime contracts by the number of vendors. Thirty-two of the 646 vendors received $60,076,914 or 70% of the total commodities and other services prime contract dollars. The findings illustrate that a small group of prime contractors received the majority of commodities and other services prime contract dollars spent by the Authority. Table 3.11: Commodities and Other Services Prime Contracts Distributed by Number of Vendors Vendors 32 Highly Used Vendors 614 Vendors 646 Total Vendors Total Dollars $60,076,914 $26,055,736 $86,132,650 Percent of Dollars331 Number of Contracts Percent of Contracts332 70% 30% 100% 404 3,000 3,404 12% 88% 100% Table 3.12 presents the ethnicity and gender of the most highly used commodities and other services prime contractors who received approximately 50% of commodities and other services prime contract dollars. Twelve of the most highly used prime contractors were Non-minority maleowned businesses. The contracts received by these 12 businesses ranged from $1,078 to $5,972,078. 330 African Americans, Asian Americans, Hispanic Americans, Native Americans, and Caucasian Females were omitted from the table because they were not highly used. 331 Percentages are rounded to the nearest whole number. 332 Percentages are rounded to the nearest whole number. 3-6 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.12: Top 12 Highly Used Commodities and Other Services Prime Contractors Ethnicity/ Gender333 Non-minority Males E. Total Dollars Percent of Dollars Number of Contracts Percent of Contracts $42,409,306 49.24% 121 3.56% Highly Used Trade Services Prime Contractors The Authority awarded a total of 224 trade services contracts during the study period. As depicted in Table 3.13, the Authority’s 224 trade services prime contracts were received by 39 unique vendors. Table 3.13: Trade Services Prime Contracts Total Prime Contracts Total Utilized Vendors Total Expenditures 224 39 $999,166 Table 3.14 presents the distribution of the Authority’s trade services prime contracts by the number of vendors. Seven of the 39 vendors received $695,032 or 70% of the total trade services prime contract dollars. The findings illustrate that a small group of prime contractors received the majority of the trade services prime contract dollars spent by the Authority. Table 3.14: Trade Services Prime Contracts Distributed by Number of Vendors Vendors 7 Highly Used Vendors 32 Vendors 39 Total Vendors Total Dollars $695,032 $304,135 $999,166 Percent of Dollars334 70% 30% 100% Number of Contracts Percent of Contracts335 110 114 224 49% 51% 100% Table 3.15 presents the ethnicity and gender of the most highly used trade services prime contractors who received approximately 53% of trade services prime contract dollars. The four most highly used prime contractors were Hispanic Americans and Non-minority male-owned businesses. The contracts received by these 4 businesses ranged from $7,740 to $193,201. 333 African Americans, Asian Americans and Native Americans were omitted from the table because they were not highly used. 334 Percentages are rounded to the nearest whole number. 335 Percentages are rounded to the nearest whole number. 3-7 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.15: Top 4 Highly Used Trade Services Prime Contractors Ethnicity/ Gender336 Hispanic Americans Non-minority Males F. Total Dollars Percent of Dollars Number of Contracts Percent of Contracts $144,675 $384,860 14.48% 38.51% 17 20 7.59% 8.92% All Prime Contracts by Industry 1. Construction Prime Contract Utilization: All Contracts Table 3.16 summarizes all prime contract dollars expended by the Authority on construction prime contracts. Minority-owned Business Enterprises (MBE) received 0.16% of the construction prime contract dollars; Caucasian Female-owned Businesses (WBE) received 2.31%; and Non-minority Male-owned Businesses (Non-M/WBE) received 97.52%. African Americans received 2 or 2.38% of all construction prime contracts awarded during the study period, representing $104,664 or 0.07% of all construction prime contract dollars. Asian Americans received 1 or 1.19% of all construction prime contracts awarded during the study period, representing $4,091 or less than 0.01% of all construction prime contract dollars. Hispanic Americans received 1 or 1.19% of all construction prime contracts awarded during the study period, representing $141,105 or 0.09% of all construction prime contract dollars. Native Americans received 0 or 0.00% of all construction prime contracts awarded during the study period, representing $0 or 0.00% of all construction prime contract dollars. Caucasian Females received 28 or 33.33% of all construction prime contracts awarded during the study period, representing $3,573,507 or 2.31% of all construction prime contract dollars. Non-minority Males received 52 or 61.90% of all construction prime contracts awarded during the study period, representing $150,624,055 or 97.52% of all construction prime contract dollars. 336 African Americans, Asian Americans, Native Americans and Caucasian Females were omitted from the table because they were not highly used. 3-8 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.16: Construction Prime Contract Utilization: All Contracts, Fiscal Years 2009 Through 2013 Ethnicity African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males TOTAL Ethnicity and Gender Number Percent of Contracts of Contracts Amount of Dollars Percent of Dollars 2 1 2.38% 1.19% $104,664 $4,091 0.07% 0.00% 1 0 28 1.19% 0.00% 33.33% $141,105 $0 $3,573,507 0.09% 0.00% 2.31% 52 84 Number 61.90% 100.00% Percent $150,624,055 $154,447,422 Amount 97.52% 100.00% Percent of Contracts of Contracts of Dollars of Dollars African American Females African American Males 0 2 0.00% 2.38% $0 $104,664 0.00% 0.07% Asian American Females Asian American Males 0 1 0.00% 1.19% $0 $4,091 0.00% 0.00% Hispanic American Females Hispanic American Males Native American Females 0 1 0 0.00% 1.19% 0.00% $0 $141,105 $0 0.00% 0.09% 0.00% 0 28 52 84 0.00% 33.33% 61.90% 100.00% $0 $3,573,507 $150,624,055 $154,447,422 0.00% 2.31% 97.52% 100.00% Native American Males Caucasian Females Non-minority Males TOTAL 3-9 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis 2. Professional Services Prime Contract Utilization: All Contracts Table 3.17 summarizes all prime contract dollars expended by the Authority on professional services prime contracts. MBEs received 14.99% of the professional services prime contract dollars; WBEs received 0.82%; and Non-M/WBEs received 84.19%. African Americans received 32 or 6.24% of all professional services prime contracts awarded during the study period, representing $5,035,783 or 11.81% of all professional services prime contract dollars. Asian Americans received 8 or 1.56% of all professional services awarded during the study period, representing $138,949 or 0.33% of all professional services prime contract dollars. Hispanic Americans received 40 or 7.80% of all professional services prime contracts awarded during the study period, representing $978,150 or 2.29% of all professional services prime contract dollars. Native Americans received 7 or 1.36% of all professional services prime contracts awarded during the study period, representing $240,802 or 0.56% of all professional services prime contract dollars. Caucasian Females received 36 or 7.02% of all professional services prime contracts awarded during the study period, representing $351,467 or 0.82% of all professional services prime contract dollars. Non-minority Males received 390 or 76.02% of all professional services prime contracts awarded during the study period, representing $35,911,047 or 84.19% of all professional services prime contract dollars. 3-10 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.17: Professional Services Prime Contract Utilization: All Contracts, Fiscal Years 2009 Through 2013 Ethnicity Number Percent of Contracts of Contracts Amount of Dollars Percent of Dollars African Americans Asian Americans 32 8 6.24% 1.56% $5,035,783 $138,949 11.81% 0.33% Hispanic Americans Native Americans Caucasian Females 40 7 36 7.80% 1.36% 7.02% $978,150 $240,802 $351,467 2.29% 0.56% 0.82% 390 513 Number 76.02% 100.00% Percent $35,911,047 $42,656,198 Amount 84.19% 100.00% Percent Non-minority Males TOTAL Ethnicity and Gender African American Females African American Males of Contracts of Contracts of Dollars of Dollars 1 31 0.19% 6.04% $4,900 $5,030,883 0.01% 11.79% 0 8 8 0.00% 1.56% 1.56% $0 $138,949 $122,151 0.00% 0.33% 0.29% 32 0 6.24% 0.00% $855,999 $0 2.01% 0.00% Native American Males Caucasian Females Non-minority Males 7 36 390 1.36% 7.02% 76.02% $240,802 $351,467 $35,911,047 0.56% 0.82% 84.19% TOTAL 513 100.00% $42,656,198 100.00% Asian American Females Asian American Males Hispanic American Females Hispanic American Males Native American Females 3-11 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis 3. Commodities and Other Services Prime Contract Utilization: All Contracts Table 3.18 summarizes all contract dollars expended by the Authority on commodities and other services prime contracts. MBEs received 2.20% of the commodities and other services prime contract dollars; WBEs received 3.55%; and Non-M/WBEs received 94.25%. African Americans received 18 or 0.53% of all commodities and other services prime contracts awarded during the study period, representing $146,627 or 0.17% of all commodities and other services prime contract dollars. Asian Americans received 60 or 1.76% of all commodities and other services prime contracts awarded during the study period, representing $823,114 or 0.96% of all commodities and other services prime contract dollars. Hispanic Americans received 164 or 4.82% of all commodities and other services prime contracts awarded during the study period, representing $921,589 or 1.07% of all commodities and other services prime contract dollars. Native Americans received 0 or 0.00% of all commodities and other services prime contracts awarded during the study period, representing $0 or 0.00% of all commodities and other services prime contract dollars. Caucasian Females received 309 or 9.08% of all commodities and other services prime contracts awarded during the study period, representing $3,060,843 or 3.55% of all commodities and other services prime contract dollars. Non-minority Males received 2,853 or 83.81% of all commodities and other services prime contracts awarded during the study period, representing $81,180,477 or 94.25% of all commodities and other services prime contract dollars. 3-12 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.18: Commodities and Other Services Prime Contract Utilization: All Contracts, Fiscal Years 2009 Through 2013 Ethnicity African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males TOTAL Ethnicity and Gender African American Females African American Males Number Percent of Contracts of Contracts Amount of Dollars Percent of Dollars 18 60 0.53% 1.76% $146,627 $823,114 0.17% 0.96% 164 0 309 4.82% 0.00% 9.08% $921,589 $0 $3,060,843 1.07% 0.00% 3.55% 2,853 3,404 Number 83.81% 100.00% Percent $81,180,477 $86,132,650 Amount 94.25% 100.00% Percent of Contracts of Contracts of Dollars of Dollars 0 18 0.00% 0.53% $0 $146,627 0.00% 0.17% 51 9 141 1.50% 0.26% 4.14% $467,779 $355,335 $291,777 0.54% 0.41% 0.34% 23 0 0.68% 0.00% $629,812 $0 0.73% 0.00% Native American Males Caucasian Females Non-minority Males 0 309 2,853 0.00% 9.08% 83.81% $0 $3,060,843 $81,180,477 0.00% 3.55% 94.25% TOTAL 3,404 100.00% $86,132,650 100.00% Asian American Females Asian American Males Hispanic American Females Hispanic American Males Native American Females 3-13 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis 4. Trade Services Prime Contract Utilization: All Contracts Table 3.19 summarizes all contract dollars expended by the Authority on trade services prime contracts. MBEs received 15.10% of the trade services prime contract dollars; WBEs received 8.34%; and Non-M/WBEs received 76.56%. African Americans received 0 or 0.00% of all trade services prime contracts awarded during the study period, representing $0 or 0.00% of all trade services prime contract dollars. Asian Americans received 0 or 0.00% of all trade services prime contracts awarded during the study period, representing $0 or 0.00% of all trade services prime contract dollars. Hispanic Americans received 27 or 12.05% of all trade services prime contracts awarded during the study period, representing $150,844 or 15.10% of all trade services prime contract dollars. Native Americans received 0 or 0.00% of all trade services prime contracts awarded during the study period, representing $0 or 0.00% of all trade services prime contract dollars. Caucasian Females received 26 or 11.61% of all trade services prime contracts awarded during the study period, representing $83,376 or 8.34% of all trade services prime contract dollars. Non-minority Males received 171 or 76.34% of all trade services prime contracts awarded during the study period, representing $764,946 or 76.56% of all trade services prime contract dollars. 3-14 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.19: Trade Services Prime Contract Utilization: All Contracts, Fiscal Years 2009 Through 2013 Ethnicity African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males TOTAL Ethnicity and Gender Percent Number of Contracts of Contracts Percent of Dollars Amount of Dollars 0 0 0.00% 0.00% $0 $0 0.00% 0.00% 27 0 26 12.05% 0.00% 11.61% $150,844 $0 $83,376 15.10% 0.00% 8.34% 171 224 Number 76.34% 100.00% Percent $764,946 $999,166 Amount 76.56% 100.00% Percent of Contracts of Contracts of Dollars of Dollars 0 0 0.00% 0.00% $0 $0 0.00% 0.00% Asian American Females Asian American Males Hispanic American Females 0 0 17 0.00% 0.00% 7.59% $0 $0 $144,675 0.00% 0.00% 14.48% Hispanic American Males Native American Females 10 0 4.46% 0.00% $6,169 $0 0.62% 0.00% Native American Males Caucasian Females Non-minority Males 0 26 171 0.00% 11.61% 76.34% $0 $83,376 $764,946 0.00% 8.34% 76.56% TOTAL 224 100.00% $999,166 100.00% African American Females African American Males 3-15 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis G. Formal Contracts by Industry 1. Construction Prime Contract Utilization: Contracts Valued $600,000 and Under Table 3.20 summarizes all contract dollars expended by the Authority on construction prime contracts valued $600,000 and under. MBEs received 5.65% of the construction prime contract dollars; WBEs received 21.23%; and Non-M/WBEs received 73.12%. African Americans received 2 or 2.56% of the construction prime contracts valued $600,000 and under awarded during the study period, representing $104,664 or 2.37% of the construction prime contract dollars. Asian Americans received 1 or 1.28% of the construction prime contracts valued $600,000 and under awarded during the study period, representing $4,091 or 0.09% of the construction prime contract dollars. Hispanic Americans received 1 or 1.28% of the construction prime contracts valued $600,000 and under awarded during the study period, representing $141,105 or 3.19% of the construction prime contract dollars. Native Americans received 0 or 0.00% of the construction prime contracts valued $600,000 and under awarded during the study period, representing $0 or 0.00% of the construction prime contract dollars. Caucasian Females received 27 or 34.62% of the construction prime contracts valued $600,000 and under awarded during the study period, representing $939,220 or 21.23% of the construction prime contract dollars. Non-minority Males received 47 or 60.26% of the construction prime contracts valued $600,000 and under awarded during the study period, representing $3,234,801 or 73.12% of the construction prime contract dollars. 3-16 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.20: Construction Prime Contract Utilization: Contracts Valued $600,000 and Under, Fiscal Years 2009 Through 2013 Ethnicity African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males TOTAL Ethnicity and Gender Number Percent of Contracts of Contracts Amount of Dollars Percent of Dollars 2 1 2.56% 1.28% $104,664 $4,091 2.37% 0.09% 1 0 27 1.28% 0.00% 34.62% $141,105 $0 $939,220 3.19% 0.00% 21.23% 47 78 Number 60.26% 100.00% Percent $3,234,801 $4,423,880 Amount 73.12% 100.00% Percent of Contracts of Contracts of Dollars of Dollars African American Females African American Males 0 2 0.00% 2.56% $0 $104,664 0.00% 2.37% Asian American Females Asian American Males Hispanic American Females 0 1 0 0.00% 1.28% 0.00% $0 $4,091 $0 0.00% 0.09% 0.00% Hispanic American Males Native American Females 1 0 1.28% 0.00% $141,105 $0 3.19% 0.00% Native American Males Caucasian Females Non-minority Males 0 27 47 0.00% 34.62% 60.26% $0 $939,220 $3,234,801 0.00% 21.23% 73.12% TOTAL 78 100.00% $4,423,880 100.00% 3-17 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis 2. Professional Services Prime Contract Utilization: Contracts Valued $175,000 and Under Table 3.21 summarizes all contract dollars expended by the Authority on professional services prime contracts valued $175,000 and under. MBEs received 17.39% of the professional services prime contract dollars; WBEs received 2.25%; and Non-M/WBEs received 80.36%. African Americans received 28 or 5.83% of the professional services prime contracts valued $175,000 and under awarded during the study period, representing $1,359,491 or 8.70% of the professional services prime contract dollars. Asian Americans received 8 or 1.67% of the professional services prime contracts valued $175,000 and under awarded during the study period, representing $138,949 or 0.89% of the professional services prime contract dollars. Hispanic Americans received 40 or 8.33% of the professional services prime contracts valued $175,000 and under awarded during the study period, representing $978,150 or 6.26% of the professional services prime contract dollars. Native Americans received 7 or 1.46% of the professional services prime contracts valued $175,000 and under awarded during the study period, representing $240,802 or 1.54% of the professional services prime contract dollars. Caucasian Females received 36 or 7.50% of the professional services prime contracts valued $175,000 and under awarded during the study period, representing $351,467 or 2.25% of the professional services prime contract dollars. Non-minority Males received 361 or 75.21% of the professional services prime contracts valued $175,000 and under awarded during the study period, representing $12,556,246 or 80.36% of the professional services prime contract dollars. 3-18 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.21: Professional Services Prime Contract Utilization: Contracts Valued $175,000 and Under, Fiscal Years 2009 Through 2013 Ethnicity Percent Number of Contracts of Contracts Amount of Dollars Percent of Dollars African Americans Asian Americans 28 8 5.83% 1.67% $1,359,491 $138,949 8.70% 0.89% Hispanic Americans Native Americans Caucasian Females 40 7 36 8.33% 1.46% 7.50% $978,150 $240,802 $351,467 6.26% 1.54% 2.25% 361 480 Number 75.21% 100.00% Percent $12,556,246 $15,625,106 Amount 80.36% 100.00% Percent Non-minority Males TOTAL Ethnicity and Gender of Contracts of Contracts of Dollars of Dollars 1 27 0.21% 5.63% $4,900 $1,354,591 0.03% 8.67% 0 8 8 0.00% 1.67% 1.67% $0 $138,949 $122,151 0.00% 0.89% 0.78% 32 0 6.67% 0.00% $855,999 $0 5.48% 0.00% Native American Males Caucasian Females Non-minority Males 7 36 361 1.46% 7.50% 75.21% $240,802 $351,467 $12,556,246 1.54% 2.25% 80.36% TOTAL 480 100.00% $15,625,106 100.00% African American Females African American Males Asian American Females Asian American Males Hispanic American Females Hispanic American Males Native American Females 3-19 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis 3. Commodities and Other Services Prime Contract Utilization: Contracts Valued $250,000 and Under Table 3.22 summarizes all contract dollars expended by the Authority on commodities and other services prime contracts valued $250,000 and under. MBEs received 3.46% of the commodities and other services prime contract dollars; WBEs received 7.70%; and Non-M/WBEs received 88.84%. African Americans received 18 or 0.54% of the commodities and other services prime contracts valued $250,000 and under awarded during the study period, representing $146,627 or 0.37% of the commodities and other services prime contract dollars. Asian Americans received 60 or 1.80% of the commodities and other services prime contracts valued $250,000 and under awarded during the study period, representing $823,114 or 2.07% of the commodities and other services prime contract dollars. Hispanic Americans received 163 or 4.88% of the commodities and other services prime contracts valued $250,000 and under awarded during the study period, representing $403,638 or 1.02% of the commodities and other services prime contract dollars. Native Americans received 0 or 0.00% of the commodities and other services prime contracts valued $250,000 and under awarded during the study period, representing $0 or 0.00% of the commodities and other services prime contract dollars. Caucasian Females received 309 or 9.25% of the commodities and other services prime contracts valued $250,000 and under awarded during the study period, representing $3,060,843 or 7.70% of the commodities and other services prime contract dollars. Non-minority Males received 2,791 or 83.54% of the commodities and other services prime contracts valued $250,000 and under awarded during the study period, representing $35,307,609 or 88.84% of the commodities and other services prime contract dollars. 3-20 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.22: Commodities and Other Services Prime Contract Utilization: Contracts Valued $250,000 and Under, Fiscal Years 2009 Through 2013 Ethnicity African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males TOTAL Ethnicity and Gender African American Females African American Males Number Percent of Contracts of Contracts Amount of Dollars Percent of Dollars 18 60 0.54% 1.80% $146,627 $823,114 0.37% 2.07% 163 0 309 4.88% 0.00% 9.25% $403,638 $0 $3,060,843 1.02% 0.00% 7.70% 2,791 3,341 Number 83.54% 100.00% Percent $35,307,609 $39,741,831 Amount 88.84% 100.00% Percent of Contracts of Contracts of Dollars of Dollars 0 18 0.00% 0.54% $0 $146,627 0.00% 0.37% 51 9 141 1.53% 0.27% 4.22% $467,779 $355,335 $291,777 1.18% 0.89% 0.73% 22 0 0.66% 0.00% $111,861 $0 0.28% 0.00% Native American Males Caucasian Females Non-minority Males 0 309 2,791 0.00% 9.25% 83.54% $0 $3,060,843 $35,307,609 0.00% 7.70% 88.84% TOTAL 3,341 100.00% $39,741,831 100.00% Asian American Females Asian American Males Hispanic American Females Hispanic American Males Native American Females 3-21 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis 4. Trade Services Prime Contract Utilization: Contracts Valued $50,000 and Under Table 3.23 summarizes all contract dollars expended by the Authority on trade services prime contracts valued $50,000 and under. MBEs received 20.10% of the trade services prime contract dollars; WBEs received 11.11%, and Non-M/WBEs received 68.78%. African Americans received 0 or 0.00% of the trade services prime contracts valued $50,000 and under awarded during the study period, representing $0 or 0.00% of the trade services prime contract dollars. Asian Americans received 0 or 0.00% of the trade services prime contracts valued $50,000 and under awarded during the study period, representing $0 or 0.00% of the trade services prime contract dollars. Hispanic Americans received 27 or 12.16% of the trade services prime contracts valued $50,000 and under awarded during the study period, representing $150,844 or 20.10% of the trade services prime contract dollars. Native Americans received 0 or 0.00% of the trade services prime contracts valued $50,000 and under awarded during the study period, representing $0 or 0.00% of trade services prime contract dollars. Caucasian Females received 26 or 11.71% of the trade services prime contracts valued $50,000 and under awarded during the study period, representing $83,376 or 11.11% of the trade services prime contract dollars. Non-minority Males received 169 or 76.13% of the trade services prime contracts valued $50,000 and under awarded during the study period, representing $516,103 or 68.78% of the trade services prime contract dollars. 3-22 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.23: Trade Services Prime Contract Utilization: Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 Ethnicity African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males TOTAL Ethnicity and Gender Percent Number of Contracts of Contracts Percent of Dollars Amount of Dollars 0 0 0.00% 0.00% $0 $0 0.00% 0.00% 27 0 26 12.16% 0.00% 11.71% $150,844 $0 $83,376 20.10% 0.00% 11.11% 169 222 Number 76.13% 100.00% Percent $516,103 $750,324 Amount 68.78% 100.00% Percent of Contracts of Contracts of Dollars of Dollars 0 0 0.00% 0.00% $0 $0 0.00% 0.00% Asian American Females Asian American Males Hispanic American Females 0 0 17 0.00% 0.00% 7.66% $0 $0 $144,675 0.00% 0.00% 19.28% Hispanic American Males Native American Females 10 0 4.50% 0.00% $6,169 $0 0.82% 0.00% Native American Males Caucasian Females Non-minority Males 0 26 169 0.00% 11.71% 76.13% $0 $83,376 $516,103 0.00% 11.11% 68.78% TOTAL 222 100.00% $750,324 100.00% African American Females African American Males 3-23 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis H. Informal Contracts by Industry 1. Construction Prime Contract Utilization: Contracts Valued $50,000 and Under Table 3.24 summarizes all contract dollars expended by the Authority on construction prime contracts valued $50,000 and under. MBEs received 1.26% of the construction prime contract dollars; WBEs received 54.95%, and Non-M/WBEs received 43.79%. African Americans received 1 or 1.64% of the construction prime contracts valued $50,000 and under awarded during the study period, representing $3,711 or 0.60% of the construction prime contract dollars. Asian Americans received 1 or 1.64% of the construction prime contracts valued $50,000 and under awarded during the study period, representing $4,091 or 0.66% of the construction prime contract dollars. Hispanic Americans received 0 or 0.00% of the construction prime contracts valued $50,000 and under awarded during the study period, representing $0 or 0.00% of the construction prime contract dollars. Native Americans received 0 or 0.00% of the construction prime contracts valued $50,000 and under awarded during the study period, representing $0 or 0.00% of the construction prime contract dollars. Caucasian Females received 25 or 40.98% of the construction prime contracts valued $50,000 and under awarded during the study period, representing $340,943 or 54.95% of the construction prime contract dollars. Non-minority Males received 34 or 55.74% of the construction prime contracts valued $50,000 and under awarded during the study period, representing $271,674 or 43.79% of the construction prime contract dollars. 3-24 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.24: Construction Prime Contract Utilization: Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 Ethnicity Percent Number of Contracts of Contracts Amount Percent of Dollars of Dollars African Americans 1 1.64% $3,711 0.60% Asian Americans 1 1.64% $4,091 0.66% Hispanic Americans 0 0.00% $0 0.00% 0 0.00% $0 0.00% Caucasian Females 25 40.98% $340,943 54.95% Non-minority Males 34 55.74% $271,674 43.79% 61 Number 100.00% Percent $620,419 Amount 100.00% Percent Native Americans TOTAL Ethnicity and Gender of Contracts of Contracts of Dollars of Dollars African American Females 0 0.00% $0 0.00% African American Males 1 1.64% $3,711 0.60% Asian American Females 0 0.00% $0 0.00% Asian American Males 1 1.64% $4,091 0.66% Hispanic American Females 0 0.00% $0 0.00% Hispanic American Males 0 0.00% $0 0.00% Native American Females 0 0.00% $0 0.00% Native American Males 0 0.00% $0 0.00% Caucasian Females 25 40.98% $340,943 54.95% Non-minority Males 34 55.74% $271,674 43.79% TOTAL 61 100.00% $620,419 100.00% 3-25 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis 2. Professional Services Prime Contract Utilization: Contracts Valued $50,000 and Under Table 3.25 summarizes all contract dollars expended by the Authority on professional services prime contracts valued $50,000 and under. MBEs received 17.72% of the professional services prime contract dollars; WBEs received 4.17%; and Non-M/WBEs received 78.10%. African Americans received 18 or 4.71% of the professional services prime contracts valued $50,000 and under awarded during the study period, representing $415,578 or 6.05% of the professional services prime contract dollars. Asian Americans received 7 or 1.83% of the professional services prime contracts valued $50,000 and under awarded during the study period, representing $58,796 or 0.86% of the professional services prime contract dollars. Hispanic Americans received 36 or 9.42% of the professional services prime contracts valued $50,000 and under awarded during the study period, representing $608,129 or 8.86% of the professional services prime contract dollars. Native Americans received 5 or 1.31% of the professional services prime contracts valued $50,000 and under awarded during the study period, representing $134,614 or 1.96% of the professional services prime contract dollars. Caucasian Females received 35 or 9.16% of the professional services prime contracts valued $50,000 and under awarded during the study period, representing $286,653 or 4.17% of the professional services prime contract dollars. Non-minority Males received 281 or 73.56% of the professional services prime contracts valued $50,000 and under awarded during the study period, representing $5,363,727 or 78.10% of the professional services prime contract dollars. 3-26 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.25: Professional Services Prime Contract Utilization: Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 Ethnicity Number Percent of Contracts of Contracts Amount Percent of Dollars of Dollars African Americans 18 4.71% $415,578 6.05% Asian Americans 7 1.83% $58,796 0.86% 36 9.42% $608,129 8.86% 5 1.31% $134,614 1.96% Hispanic Americans Native Americans Caucasian Females 35 9.16% $286,653 4.17% Non-minority Males 281 73.56% $5,363,727 78.10% 382 Number 100.00% Percent $6,867,498 Amount 100.00% Percent TOTAL Ethnicity and Gender African American Females of Contracts of Contracts of Dollars of Dollars 1 0.26% $4,900 0.07% African American Males 17 4.45% $410,678 5.98% Asian American Females 0 0.00% $0 0.00% Asian American Males 7 1.83% $58,796 0.86% Hispanic American Females 8 2.09% $122,151 1.78% Hispanic American Males 28 7.33% $485,977 7.08% Native American Females 0 0.00% $0 0.00% Native American Males 5 1.31% $134,614 1.96% Caucasian Females 35 9.16% $286,653 4.17% Non-minority Males TOTAL 281 382 73.56% 100.00% $5,363,727 $6,867,498 78.10% 100.00% 3-27 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis 3. Commodities and Other Services Prime Contract Utilization: Contracts Valued $5,000 and Under Table 3.26 summarizes all contract dollars expended by the Authority on commodities and other services prime contracts valued $5,000 and under. MBEs received 5.56% of the commodities and other services prime contract dollars; WBEs received 8.68%; and Non-M/WBEs received 85.77%. African Americans received 10 or 0.46% of the commodities and other services prime contracts valued $5,000 and under awarded during the study period, representing $14,902 or 0.36% of the commodities and other services contract dollars. Asian Americans received 35 or 1.60% of the commodities and other services prime contracts valued $5,000 and under awarded during the study period, representing $80,932 or 1.98% of the commodities and other services prime contract dollars. Hispanic Americans received 147 or 6.73% of the commodities and other services prime contracts valued $5,000 and under awarded during the study period, representing $131,224 or 3.21% of the commodities and other services prime contract dollars. Native Americans received 0 or 0.00% of the commodities and other services prime contracts valued $5,000 and under awarded during the study period, representing $0 or 0.00% of the commodities and other services prime contract dollars. Caucasian Females received 199 or 9.12% of the commodities and other services prime contracts valued $5,000 and under awarded during the study period, representing $354,484 or 8.68% of the commodities and other services prime contract dollars. Non-minority Males received 1,792 or 82.09% of the commodities and other services prime contracts valued $5,000 and under awarded during the study period, representing $3,504,514 or 85.77% of the commodities and other services prime contract dollars. 3-28 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.26: Commodities and Other Services Prime Contract Utilization: Contracts Valued $5,000 and Under, Fiscal Years 2009 Through 2013 Ethnicity Number Percent of Contracts of Contracts Amount Percent of Dollars of Dollars African Americans 10 0.46% $14,902 0.36% Asian Americans 35 1.60% $80,932 1.98% 147 6.73% $131,224 3.21% 0 0.00% $0 0.00% Hispanic Americans Native Americans Caucasian Females Non-minority Males TOTAL Ethnicity and Gender African American Females 199 9.12% $354,484 8.68% 1,792 82.09% $3,504,514 85.77% 2,183 Number 100.00% Percent $4,086,055 Amount 100.00% Percent of Contracts of Contracts of Dollars of Dollars 0 0.00% $0 0.00% African American Males 10 0.46% $14,902 0.36% Asian American Females 32 1.47% $75,539 1.85% 3 0.14% $5,392 0.13% Asian American Males Hispanic American Females 132 6.05% $100,228 2.45% Hispanic American Males 15 0.69% $30,996 0.76% Native American Females 0 0.00% $0 0.00% Native American Males 0 0.00% $0 0.00% Caucasian Females 199 9.12% $354,484 8.68% Non-minority Males 1,792 82.09% $3,504,514 85.77% TOTAL 2,183 100.00% $4,086,055 100.00% 3-29 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis 4. Trade Services Prime Contract Utilization: Contracts Valued $5,000 and Under Table 3.27 summarizes all contract dollars expended by the Authority on trade services prime contracts valued $5,000 and under. MBEs received 13.16% of the trade services prime contract dollars; WBEs received 11.17%; and Non-M/WBEs received 75.67%. African Americans received 0 or 0.00% of the trade services prime contracts valued $5,000 and under awarded during the study period, representing $0 or 0.00% of the trade services contract dollars. Asian Americans received 0 or 0.00% of the trade services contracts valued $5,000 and under awarded during the study period, representing $0 or 0.00% of the trade services prime contract dollars. Hispanic Americans received 20 or 10.93% of the trade services prime contracts valued $5,000 and under awarded during the study period, representing $34,416 or 13.16% of the trade services prime contract dollars. Native Americans received 0 or 0.00% of the trade services prime contracts valued $5,000 and under awarded during the study period, representing $0 or 0.00% of the trade services prime contract dollars. Caucasian Females received 22 or 12.02% of the trade services prime contracts valued $5,000 and under awarded during the study period, representing $29,201 or 11.17% of the trade services prime contract dollars. Non-minority Males received 141 or 77.05% of the trade services prime contracts valued $5,000 and under awarded during the study period, representing $197,896 or 75.67% of the trade services prime contract dollars. 3-30 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis Table 3.27: Trade Services Contract Utilization: Contracts Valued $5,000 and Under, Fiscal Years 2009 Through 2013 Ethnicity Percent Number of Contracts of Contracts Amount Percent of Dollars of Dollars African Americans 0 0.00% $0 0.00% Asian Americans 0 0.00% $0 0.00% 20 10.93% $34,416 13.16% Hispanic Americans 0 0.00% $0 0.00% Caucasian Females 22 12.02% $29,201 11.17% Non-minority Males 141 77.05% $197,896 75.67% 183 Number 100.00% Percent $261,513 Amount 100.00% Percent Native Americans TOTAL Ethnicity and Gender of Contracts of Contracts of Dollars of Dollars African American Females 0 0.00% $0 0.00% African American Males 0 0.00% $0 0.00% Asian American Females 0 0.00% $0 0.00% 0 0.00% $0 0.00% Hispanic American Females 10 5.46% $28,247 10.80% Hispanic American Males 10 5.46% $6,169 2.36% Native American Females 0 0.00% $0 0.00% Native American Males 0 0.00% $0 0.00% Caucasian Females 22 12.02% $29,201 11.17% Non-minority Males 141 77.05% $197,896 75.67% TOTAL 183 100.00% $261,513 100.00% Asian American Males 3-31 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis V. Summary The prime contract utilization analysis examined $284,235,436 of the Authority’s expenditures on prime contracts awarded during the fiscal years 2009 through 2013 study period. The $284,235,436 expended included $154,447,422 for construction, $42,656,198 for professional services, $86,132,650 for commodities and other services, and $999,166 for trade services. A total of 4,225 prime contracts were analyzed, which included 84 for construction, 513 for professional services, 3,404 for commodities and other services, and 224 for trade services. Contracts within each of the four industries were analyzed at three dollar thresholds. One threshold included all prime contracts regardless of award amount. A second threshold included all formal prime contracts valued $600,000 and under for construction; $175,000 and under for professional services; $250,000 and under for commodities and other services; and $50,000 and under for trade services. The third threshold, as depicted in Table 3.2, included informal prime contracts valued $50,000 and under for construction and professional services, and $5,000 and under for commodities and other services and trade services. The threshold for informal contracts was defined by the Authority’s contracting practices. Chapter 8: Prime Contract Disparity Analysis presents the statistical analysis of disparity in each of the four industries. 3-32 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor Utilization Analysis CHAPTER 4: Subcontractor Utilization Analysis I. Introduction As discussed in Chapter 3: Prime Contractor Utilization Analysis, a disparity study, as required under Croson, documents Minority and Woman-owned Business Enterprises’, hereinafter referred to as Minority and Caucasian Female Business Enterprises (M/WBE), and Non-minority Maleowned Businesses’ (non-M/WBE) contracting history in the Solid Waste Authority of Palm Beach County’s (Authority) market area. The objective of this Chapter is to determine the level of M/WBE and non-M/WBE subcontractor utilization by ethnicity and gender. In this Study, the construction and professional services, including architecture and engineering (hereinafter referred to as professional services) subcontracts issued by the Authority’s prime contractors during the fiscal years 2009 through 2013 (October 1, 2008, through September 30, 2013) study period were analyzed. II. Data Sources Extensive research was undertaken to reconstruct the construction and professional services subcontracts issued by the Authority’s prime contractors. The subcontract data were compiled by the Authority in conjunction with Mason Tillman Associates, Ltd. (Mason Tillman). Project files were examined for awards, payments, and related documents that identified subcontractors, subconsultants, suppliers, and truckers. Prime contractors were also surveyed by Mason Tillman to secure their subcontractors’, subconsultants’, suppliers’, and truckers’ awards and payment data. All identified subcontractors, subconsultants, suppliers, and truckers were surveyed to verify their payments. Data verifying ethnicity and gender were compiled from certification lists, minority and woman business organization membership directories, Internet research, and telephone surveys. The sources used to verify contractor ethnicity and gender are defined in Table 3.1 of Chapter 3: Prime Contractor Utilization Analysis. 4-1 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Subcontractor Utilization Analysis III. Subcontractor Utilization A. All Subcontracts As depicted in Table 4.1 below, 175 subcontracts were analyzed, which included 76 construction and 99 professional services subcontracts. There were $31,458,475 total subcontract dollars expended during the fiscal years 2009 through 2013 study period. These dollars included $25,203,428 for construction and $6,255,047 for professional services subcontracts. Table 4.1: Total Subcontracts Awarded and Dollars Expended by Industry, Fiscal Years 2009 Through 2013 Total Number of Subcontracts Total Dollars Expended Construction 76 $25,203,428 Professional Services 99 $6,255,047 Total 175 $31,458,475 Industry 4-2 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Subcontractor Utilization Analysis B. All Subcontracts by Industry 1. Construction Subcontracts Table 4.2 depicts the construction subcontracts awarded by the Authority’s prime contractors. Minority-owned Business Enterprises (MBE) received 1.97%; Caucasian Female-owned Businesses (WBE) received 30.57%; and Non-minority Male-owned Businesses (Non-M/WBE) received 67.46% of the construction subcontract dollars. African Americans received 1 or 1.32% of the Authority’s construction subcontracts during the study period, representing $121,650 or 0.48% of the construction subcontract dollars. Asian Americans received 1 or 1.32% of the Authority’s construction subcontracts during the study period, representing $1,310 or less than 0.01% of the construction subcontract dollars. Hispanic Americans received 8 or 10.53% of the Authority’s construction subcontracts during the study period, representing $373,560 or 1.48% of the construction subcontract dollars. Native Americans received 0 or 0.00% of the Authority’s construction subcontracts during the study period, representing $0 or 0.00% of the construction subcontract dollars. Caucasian Females received 15 or 19.74% of the Authority’s construction subcontracts during the study period, representing $7,705,055 or 30.57% of the construction subcontract dollars. Non-minority Males received 51 or 67.11% of the Authority’s construction subcontracts during the study period, representing $17,001,853 or 67.46% of the construction subcontract dollars. 4-3 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Subcontractor Utilization Analysis Table 4.2: Construction Subcontractor Utilization, Fiscal Years 2009 Through 2013 Number of Contracts Ethnicity African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males TOTAL Ethnicity and Gender Percent of Contracts Amount of Dollars Percent of Dollars 1 1 1.32% 1.32% $121,650 $1,310 0.48% 0.01% 8 0 15 10.53% 0.00% 19.74% $373,560 $0 $7,705,055 1.48% 0.00% 30.57% 51 76 Number 67.11% 100.00% Percent $17,001,853 $25,203,428 Amount 67.46% 100.00% Percent of Contracts of Contracts of Dollars of Dollars African American Females African American Males 0 1 0.00% 1.32% $0 $121,650 0.00% 0.48% Asian American Females Asian American Males Hispanic American Females 0 1 1 0.00% 1.32% 1.32% $0 $1,310 $196,910 0.00% 0.01% 0.78% Hispanic American Males Native American Females 7 0 9.21% 0.00% $176,650 $0 0.70% 0.00% Native American Males Caucasian Females Non-minority Males 0 15 51 0.00% 19.74% 67.11% $0 $7,705,055 $17,001,853 0.00% 30.57% 67.46% TOTAL 76 100.00% $25,203,428 100.00% 4-4 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Subcontractor Utilization Analysis 2. Professional Services Subcontracts Table 4.3 depicts the professional services subcontracts issued by the Authority’s prime contractors. MBEs received 24.38%; WBEs received 2.96%; and Non-M/WBEs received 72.66% of the professional services subcontract dollars. African Americans received 2 or 2.02% of the Authority’s professional services subcontracts during the study period, representing $61,664 or 0.99% of the professional services subcontract dollars. Asian Americans received 7 or 7.07% of the Authority’s professional services subcontracts during the study period, representing $363,603 or 5.81% of the professional services subcontract dollars. Hispanic Americans received 13 or 13.13% of the Authority’s professional services subcontracts during the study period, representing $1,099,787 or 17.58% of the professional services subcontract dollars. Native Americans received 0 or 0.00% of the Authority’s professional services subcontracts during the study period, representing $0 or 0.00% of the professional services subcontract dollars. Caucasian Females received 13 or 13.13% of the Authority’s professional services subcontracts during the study period, representing $185,009 or 2.96% of the professional services subcontract dollars. Non-minority Males received 64 or 64.65% of the Authority’s professional services subcontracts during the study period, representing $4,544,985 or 72.66% of the professional services subcontract dollars. 4-5 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Subcontractor Utilization Analysis Table 4.3: Professional Services Subcontractor Utilization, Fiscal Years 2009 Through 2013 Number of Contracts Ethnicity African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males TOTAL Ethnicity and Gender Percent of Contracts Amount of Dollars Percent of Dollars 2 7 2.02% 7.07% $61,664 $363,603 0.99% 5.81% 13 0 13 13.13% 0.00% 13.13% $1,099,787 $0 $185,009 17.58% 0.00% 2.96% 64 99 Number 64.65% 100.00% Percent $4,544,985 $6,255,047 Amount 72.66% 100.00% Percent of Contracts of Contracts of Dollars of Dollars African American Females African American Males 1 1 1.01% 1.01% $1,688 $59,976 0.03% 0.96% Asian American Females Asian American Males Hispanic American Females 0 7 0 0.00% 7.07% 0.00% $0 $363,603 $0 0.00% 5.81% 0.00% Hispanic American Males Native American Females 13 0 13.13% 0.00% $1,099,787 $0 17.58% 0.00% Native American Males Caucasian Females Non-minority Males 0 13 64 0.00% 13.13% 64.65% $0 $185,009 $4,544,985 0.00% 2.96% 72.66% TOTAL 99 100.00% $6,255,047 100.00% 4-6 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Subcontractor Utilization Analysis IV. Summary The Authority’s subcontractor utilization analysis examined $31,458,475 expended on subcontracts awarded by the Authority’s prime contractors during the fiscal years 2009 through 2013 study period. The $31,458,475 expended included $25,203,428 for construction and $6,255,047 for professional services. A total of 175 subcontracts were analyzed, which included 76 for construction and 99 for professional services. 4-7 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Subcontractor Utilization Analysis CHAPTER 5: Market Area Analysis I. Market Area Definition The Supreme Court’s decision in City of Richmond v. J.A. Croson Co. (Croson) held that programs established by local governments to set goals for the participation of Minority Business Enterprises (MBE) must be supported by evidence of past discrimination I n the award of their contracts. 337 Prior to the Croson decision, local agencies could implement race-conscious programs without developing a detailed public record to document the underutilization of MBEs in their award of contracts. Instead, they relied on widely recognized societal patterns of discrimination.338 Croson established that a local government could not rely on society-wide discrimination as the basis for a race-based program. Instead, a local government was required to identify discrimination within its own contracting jurisdiction.339 In Croson, the United States Supreme Court found the City of Richmond, Virginia’s MBE construction program to be unconstitutional because there was insufficient evidence of discrimination in the local construction market. Croson was explicit in saying that the local construction market was the appropriate geographical framework within which to perform statistical comparisons of business availability to business utilization. Therefore, the identification of the local market area is particularly important because it establishes the parameters within which to conduct a disparity study. A. Application of the Croson Standard While Croson emphasized the importance of the local market area, it provided little assistance in defining its parameters. However, it is informative to review the Court’s definition of the City’s market area. In discussing the geographic parameters of the constitutional violation that must be investigated, the Court interchangeably used the terms “relevant market,” “Richmond construction industry,”340 and “City’s construction industry.”341 These terms were used to define the proper scope for examining the existence of discrimination within the City. This interchangeable use of terms lends support to a definition of market area that coincides with the boundaries of a contracting jurisdiction. 337 City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989). 338 United Steelworkers v. Weber, 433 U.S. 193, 198, n. 1 (1979). 339 Croson, 488 U.S. at 497. 340 Croson, 488 U.S. at 500. 341 Id. at 470. 5-1 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Market Area Analysis An analysis of the cases following Croson reveals a pattern that provides additional guidance for defining the market area. The body of cases examining the reasonable market area definition is fact-based, rather than dictated by a specific formula.342 In Cone Corporation v. Hillsborough County,343 the United States Court of Appeals for the Eleventh Circuit considered a study in support of Hillsborough County, Florida’s MBE Program, which used minority contractors located in Hillsborough County as the measure of available firms. The program was found to be constitutional under the compelling governmental interest element of the strict scrutiny standard. Hillsborough County’s program was based on statistics indicating that specific discrimination existed in the construction contracts awarded by Hillsborough County, not in the construction industry in general. Hillsborough County extracted data from within its own jurisdictional boundaries and assessed the percentage of minority businesses available in Hillsborough County. The Court stated that the disparity study was properly conducted within the “local construction industry.”344 Similarly, in Associated General Contractors v. Coalition for Economic Equity (AGCCII),345 the United States Court of Appeals for the Ninth Circuit found the City and County of San Francisco, California’s MBE Program to have the factual predicate necessary to survive strict scrutiny. The San Francisco MBE Program was supported by a study that assessed the number of available MBE contractors within the City and County of San Francisco, California. The Ninth Circuit found it appropriate to use the City and County as the relevant market area within which to conduct a disparity study.346 In Coral Construction v. King County, the Ninth Circuit held that “a set-aside program is valid only if actual, identifiable discrimination has occurred within the local industry affected by the program.”347 In support of its MBE program, King County, Washington offered studies compiled by other jurisdictions, including entities completely within the County, others coterminous with the boundaries of the County, as well as a jurisdiction completely outside of King County. The plaintiffs contended that Croson required King County, Washington, to compile its own data and cited Croson as prohibiting data sharing. The Court found that data sharing could potentially lead to the improper use of societal discrimination data as the factual basis for a local MBE program and that innocent third parties could be unnecessarily burdened if an MBE program were based on outside data. However, the Court also found that the data from entities within King County and from coterminous jurisdictions 342 See e.g., Concrete Works of Colorado v. City of Denver, Colorado, 36 F.3d 1513, 1528 (10th Cir. 1994) (“Concrete Works”). 343 Cone Corporation v. Hillsborough County, 908 F.2d 908 (11th Cir. 1990). 344 Id. at 915. 345 Associated General Contractors of California v. Coalition for Economic Equity and City and County of San Francisco, 950 F.2d 1401 (9th Cir. 1991). 346 AGCC II, 950 F.2d at 1415. 347 Coral Construction Co. v. King County, 941 F.2d 910 (9th Cir. 1991). 5-2 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Market Area Analysis were relevant to discrimination in the County. They also found that the data posed no risk of unfairly burdening innocent third parties. The Court concluded that data gathered by a neighboring county could not be used to support King County’s MBE program. The Court noted, “It is vital that a race-conscious program align itself as closely to the scope of the problem sought to be rectified by the governmental entity. To prevent overbreadth, the enacting jurisdiction should limit its factual inquiry to the presence of discrimination within its own boundaries.”348 However, the Court did note that the “world of contracting does not conform itself neatly to jurisdictional boundaries.”349 There are other situations where courts have approved a market area definition that extended beyond a jurisdiction’s geographic boundaries. In Concrete Works v. City and County of Denver,350 (Concrete Works) the United States Court of Appeals for the Tenth Circuit directly addressed the issue of whether extra-jurisdictional evidence of discrimination can be used to determine the “local market area” for a disparity study. In Concrete Works, the defendant relied on evidence of discrimination in the six-county Denver, Colorado Metropolitan Statistical Area (MSA) to support its MBE program. Plaintiffs argued that the federal constitution prohibited consideration of evidence beyond jurisdictional boundaries. The Court of Appeals disagreed. Critical to the Court’s acceptance of the Denver MSA as the relevant local market, was the finding that more than 80% of construction and design contracts awarded by the City and County of Denver were awarded to contractors within the MSA. Another consideration was that the City and County of Denver’s analysis was based on United States Census data, which was available for the Denver MSA but not for the City of Denver itself. There was no undue burden placed on nonculpable parties, as the City and County of Denver had expended a majority of its construction contract dollars within the area defined as the local market. Citing AGCCII,351 the Court noted “that any plan that extends race-conscious remedies beyond territorial boundaries must be based on very specific findings that actions that the city has taken in the past have visited racial discrimination on such individuals.”352 Similarly, New York State conducted a disparity study in which the geographic market consisted of New York State and eight counties in northern New Jersey. The geographic market was defined as the area encompassing the location of businesses that received more than 90% of the dollar value of all contracts awarded by the agency.353 348 Coral Construction Co. v. King County, 917 F.2d 910 (9th Cir. 1991). 349 Id. 350 Concrete Works, 36 F.3d at 1528. 351 AGCC II, 950 F.2d at 1401. 352 Concrete Works, 36 F.3d at 1528. 353 Opportunity Denied! New York State’s Study, 26 Urban Lawyer No. 3, Summer 1994. 5-3 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Market Area Analysis State and local governments must pay special attention to the geographical scope of their disparity studies. Croson determined that the statistical analysis should focus on the number of qualified minority business owners in the government’s marketplace.354 The text of Croson itself suggests that the geographical boundaries of the government entity comprise an appropriate market area and other courts have agreed with this finding. It follows then that an entity may limit consideration of evidence of discrimination to discrimination occurring within its own jurisdiction. II. Market Area Analysis Although Croson and its progeny do not provide a bright line rule for the delineation of the local market area, taken collectively, the case law supports a definition of the market area as the geographical boundaries of the government entity. Given the Solid Waste Authority of Palm Beach County’s (Authority) jurisdiction, the Disparity Study’s (Study) market area is determined to be the geographical boundaries of Palm Beach County. A. Summary of the Distribution of All Prime Contracts Awarded The Authority awarded 4,225 prime contracts valued at $284,235,436 from the fiscal years 2009 through 2013 (October 1, 2008, to September 30, 2013) study period. The distribution of all prime contracts awarded and dollars received by all firms domiciled inside and outside of the market area is depicted in Table 5.1. 354 Croson, 488 U.S. at 501. 5-4 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Market Area Analysis Table 5.1: Distribution of All Prime Contracts Awarded Total Dollars County PALM BEACH PINELLAS HILLSBOROUGH BROWARD BAY ORANGE MIAMI-DADE POLK MARTIN HERNANDO PASCO LAKE HIGHLANDS SARASOTA SAINT LUCIE LEON SEMINOLE BREVARD DUVAL LEE ALACHUA OKEECHOBEE MARION VOLUSIA OSCEOLA INDIAN RIVER OKALOOSA JACKSON ST. JOHNS OUT OF STATE OUT OF COUNTRY TOTAL B. $76,672,892 $26,597,978 $13,506,799 $13,238,625 $3,184,798 $1,730,490 $1,293,292 $1,041,492 $994,751 $987,626 $667,412 $549,269 $467,804 $324,736 $269,065 $175,188 $163,230 $138,282 $106,327 $95,048 $89,074 $89,029 $31,202 $28,690 $22,796 $22,428 $20,940 $13,266 $11,970 $141,145,843 $555,094 $284,235,436 Number of Contracts 2,208 11 76 544 8 102 161 35 27 19 13 2 6 22 28 18 23 22 21 10 13 6 3 4 2 4 2 4 5 806 20 4,225 Percent of Dollars 26.98% 9.36% 4.75% 4.66% 1.12% 0.61% 0.46% 0.37% 0.35% 0.35% 0.23% 0.19% 0.16% 0.11% 0.09% 0.06% 0.06% 0.05% 0.04% 0.03% 0.03% 0.03% 0.01% 0.01% 0.01% 0.01% 0.01% 0.00% 0.00% 49.66% 0.20% 100.00% Percent of Contracts 52.26% 0.26% 1.80% 12.88% 0.19% 2.41% 3.81% 0.83% 0.64% 0.45% 0.31% 0.05% 0.14% 0.52% 0.66% 0.43% 0.54% 0.52% 0.50% 0.24% 0.31% 0.14% 0.07% 0.09% 0.05% 0.09% 0.05% 0.09% 0.12% 19.08% 0.47% 100.00% Distribution of Construction Prime Contracts The Authority awarded 84 construction prime contracts valued at $154,447,422 during the study period. Businesses located in the market area received 39.29% of the construction prime contracts and 3.84% of the dollars. The distribution of the construction prime contracts awarded and dollars received by all firms domiciled inside and outside of the market area is depicted in Table 5.2. 5-5 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Market Area Analysis Table 5.2: Distribution of Construction Prime Contracts PINELLAS HILLSBOROUGH PALM BEACH BROWARD LAKE HIGHLANDS ORANGE Total Dollars $26,551,882 $9,851,592 $5,938,410 $1,200,128 $546,657 $436,935 $145,195 OUT OF STATE TOTAL $109,776,624 $154,447,422 County C. Number of Contracts 1 1 33 43 1 1 2 Percent of Dollars 17.19% 6.38% 3.84% 0.78% 0.35% 0.28% 0.09% Percent of Contracts 1.19% 1.19% 39.29% 51.19% 1.19% 1.19% 2.38% 2 84 71.08% 100.00% 2.38% 100.00% Distribution of Professional Services Prime Contracts The Authority awarded 513 professional services, including architecture and engineering (hereinafter referred to as professional services) prime contracts valued at $42,656,198 during the study period. Businesses located in the market area received 74.85% of the professional services prime contracts and 79.47% of the dollars. The distribution of the professional services prime contracts awarded and dollars received by all firms domiciled inside and outside of the market area is depicted below in Table 5.3. Table 5.3: Distribution of Professional Services Prime Contracts County PALM BEACH BROWARD MARTIN ORANGE MIAMI-DADE HILLSBOROUGH OKEECHOBEE LEON BREVARD SARASOTA SEMINOLE OKALOOSA INDIAN RIVER MARION OUT OF STATE OUT OF COUNTRY TOTAL Total Dollars $33,898,801 $4,675,220 $914,490 $834,582 $99,928 $89,272 $88,872 $76,838 $58,998 $42,247 $28,389 $20,940 $4,883 $240 $1,509,753 Number of Contracts 384 26 6 22 3 5 5 6 5 5 2 2 1 1 33 $312,745 $42,656,198 7 513 Percent of Percent of Dollars Contracts 79.47% 74.85% 10.96% 5.07% 2.14% 1.17% 1.96% 4.29% 0.23% 0.58% 0.21% 0.97% 0.21% 0.97% 0.18% 1.17% 0.14% 0.97% 0.10% 0.97% 0.07% 0.39% 0.05% 0.39% 0.01% 0.19% 0.00% 0.19% 3.54% 6.43% 0.73% 100.00% 1.36% 100.00% 5-6 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Market Area Analysis D. Distribution of Commodities and Other Services Prime Contracts The Authority awarded 3,404 commodities and other services prime contracts valued at $86,132,650 during the study period. Businesses located in the market area received 47.71% of the commodities and other services prime contracts and 42.07% of the dollars. The distribution of the commodities and other services prime contracts awarded and dollars received by all firms domiciled inside and outside of the market area is depicted below in Table 5.4. Table 5.4: Distribution of Commodities and Other Services Prime Contracts PALM BEACH BROWARD HILLSBOROUGH BAY MIAMI-DADE HERNANDO POLK ORANGE PASCO SARASOTA SAINT LUCIE SEMINOLE DUVAL LEON LEE ALACHUA BREVARD MARTIN PINELLAS MARION HIGHLANDS VOLUSIA INDIAN RIVER JACKSON ST. JOHNS LAKE OSCEOLA OKEECHOBEE OUT OF STATE Total Dollars $36,238,152 $7,263,983 $3,565,936 $3,184,798 $1,193,365 $987,626 $842,124 $748,864 $667,412 $282,488 $269,065 $134,841 $106,327 $98,351 $95,048 $89,074 $79,284 $57,339 $46,096 $30,962 $30,870 $28,690 $17,546 $13,266 $11,970 $2,612 $1,457 $157 $29,802,601 OUT OF COUNTRY TOTAL $242,349 $86,132,650 County Number of Percent of Percent of Contracts Dollars Contracts 1,624 42.07% 47.71% 440 8.43% 12.93% 70 4.14% 2.06% 8 3.70% 0.24% 158 1.39% 4.64% 19 1.15% 0.56% 33 0.98% 0.97% 77 0.87% 2.26% 13 0.77% 0.38% 17 0.33% 0.50% 28 0.31% 0.82% 21 0.16% 0.62% 21 0.12% 0.62% 12 0.11% 0.35% 10 0.11% 0.29% 13 0.10% 0.38% 17 0.09% 0.50% 14 0.07% 0.41% 10 0.05% 0.29% 2 0.04% 0.06% 5 0.04% 0.15% 4 0.03% 0.12% 3 0.02% 0.09% 4 0.02% 0.12% 5 0.01% 0.15% 1 0.00% 0.03% 1 0.00% 0.03% 1 0.00% 0.03% 760 34.60% 22.33% 13 3,404 0.28% 100.00% 0.38% 100.00% 5-7 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Market Area Analysis E. Distribution of Trade Services Prime Contracts The Authority awarded 224 trade services prime contracts valued at $999,166 during the study period. Businesses located in the market area received 74.55% of the trade services prime contracts and 59.80% of the dollars. The distribution of the trade services prime contracts awarded and dollars received by all firms domiciled inside and outside of the market area is depicted below in Table 5.5. Table 5.5: Distribution of Trade Services Prime Contracts County PALM BEACH POLK BROWARD MARTIN OSCEOLA ORANGE OUT OF STATE TOTAL Total Dollars $597,529 $199,368 $99,294 $22,922 $21,339 $1,848 $56,866 $999,166 Number of Percent of Percent of Contracts Dollars Contracts 167 59.80% 74.55% 2 19.95% 0.89% 35 9.94% 15.63% 7 2.29% 3.13% 1 2.14% 0.45% 1 0.18% 0.45% 11 224 5.69% 100.00% 4.91% 100.00% III. Summary During the study period, the Authority awarded 4,225 construction, professional services, commodities and other services, and trade services prime contracts valued at $284,235,436. The Authority awarded 52.26% of the prime contracts and 26.98% of the dollars to businesses domiciled within the market area. Table 5.6 presents an overview of the number of construction, professional services, commodities and other services, and trade services prime contracts that the Authority awarded and the dollars spent in the market area. Construction Prime Contracts: 33 or 39.29% of the construction prime contracts were awarded to market area businesses. Construction prime contracts in the market area accounted for $5,938,410 or 3.84% of the total construction prime contract dollars. Professional Services Prime Contracts: 384 or 74.85% of the professional services prime contracts were awarded to market area businesses. Professional services prime contracts in the market area accounted for $33,898,801 or 79.47% of the total professional services prime contract dollars. Commodities and Other Services Prime Contracts: 1,624 or 47.71% of the commodities and other services prime contracts were awarded to market area businesses. Commodities and other services prime contracts in the market area accounted for $36,238,152 or 42.07% of the total commodities and other services prime contract dollars. 5-8 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Market Area Analysis Trade Services Prime Contracts: 167 or 74.55% of the trade services prime contracts were awarded to market area businesses. Trade services prime contracts in the market area accounted for $597,529 or 59.80% of the total trade services prime contract dollars. Table 5.6: Solid Waste Authority of Palm Beach County Contract Distribution Number of Contracts County Palm Beach County Outside Market Area TOTAL Palm Beach County Outside Market Area TOTAL Palm Beach County Outside Market Area TOTAL Palm Beach County Outside Market Area TOTAL Palm Beach County Outside Market Area TOTAL Percent of Contracts Total Dollars All Industries 2,208 52.26% $76,672,892 2,017 47.74% $207,562,544 4,225 100.00% $284,235,436 Construction 33 39.29% $5,938,410 51 60.71% $148,509,012 84 100.00% $154,447,422 Professional Services 384 74.85% $33,898,801 129 25.15% $8,757,397 513 100.00% $42,656,198 Commodities and Other Services 1,624 47.71% $36,238,152 1,780 52.29% $49,894,498 3,404 100.00% $86,132,650 Trade Services 167 74.55% $597,529 57 25.45% $401,637 224 100.00% $999,166 Percent of Dollars 26.98% 73.02% 100.00% 3.84% 96.16% 100.00% 79.47% 20.53% 100.00% 42.07% 57.93% 100.00% 59.80% 40.20% 100.00% 5-9 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Market Area Analysis CHAPTER 6: Prime Contractor and Subcontractor Availability Analysis I. Introduction Availability is defined, according to Croson, as the number of qualified businesses in the jurisdiction’s market area that are willing and able to provide goods or services.355 To determine availability, Minority and Woman-owned Business Enterprises prime contractors, hereinafter referred to as Minority and Caucasian Female-owned Business Enterprises (M/WBE), and Nonminority Male-owned Businesses Enterprises (non-M/WBEs) within the jurisdiction’s market area that are ready, willing, and able to provide the goods and services need to be enumerated. The market area for the four industries – construction, professional services, including architecture and engineering (hereinafter referred to as professional services), commodities and other services, and trade services as defined in Chapter 5: Market Area Analysis – is the geographical boundaries of Palm Beach County. When considering sources for determining the number of willing and able M/WBEs and nonM/WBEs in the market area, the selection must be based on whether two aspects about the population in question can be gauged from the sources. One consideration is a business’s interest in contracting with the jurisdiction, as implied by the term “willing.” The other is the business’s ability or capacity to provide a service or good, as implied by the term “able.” II. Prime Contractor Availability Data Sources A. Identification of Willing Businesses Within the Market Area Mason Tillman used four types of sources to identify businesses in the market area that provide the goods and services that Solid Waste Authority of Palm Beach County (Authority) procured. One source was the Authority’s records, including vendors and bidders lists from federal and local certifying governmental entities. The Authority does not have a certification program but accepts certification issued by any governmental agency.356 The second source was government certification directories. The third source was business association membership lists. The fourth source was the Dun & Bradstreet Information Report (D&B). Only businesses determined to be willing were added to the availability list. Any business identified as “willing” from more than one source was 355 City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989). 356 Solid Waste Authority, available at Bids?pk_campaign=Home%20Buttons&pk_kwd=Business%20Op0portunities. (Last accessed July 2016). http://swa.org/279/Purchasing- 1 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis counted only once in an industry. A business that was willing to provide goods or services in more than one industry was listed uniquely in each relevant industry’s availability list. The four sources were ranked, with the highest rank assigned to the utilized businesses, including vendors and bidders lists governmental entities. Government certification lists ranked second, business association membership lists ranked third, and D&B ranked fourth. Therefore, the first document used to build the availability list was the Authority’s utilized businesses. Bidders and vendor lists were then appended to the availability database. Businesses identified from federal and local government certification agencies were thereafter appended to the availability database. The local certification lists included small, minority, and woman-owned business enterprises (S/M/WBEs). Businesses identified from association membership lists and D&B lists which affirmed their willingness through a survey were also appended to the availability database. The business associations included trade organizations, professional organizations, and chambers of commerce. Extensive targeted outreach to business associations in the market area was performed to identify and secure business membership directories. From the four sources, 2,203 unique market area businesses that can provide goods or services in one or more of the four industries were identified. An accounting of the willing businesses derived by source is listed below: 1. Authority Records 1,241 unique market area businesses were added to the availability database from federal and local Authority records. 2. Government Certification Lists 509 unique market area businesses were added to the availability database from government certification lists. 3. Business Association Membership Lists 2,037 unique market area businesses were identified from business association membership lists. These businesses were surveyed to determine their willingness to contract with the Authority. Of the 2,037 surveyed businesses, 784 refused to participate, 394 did not respond, 290 telephone numbers were disconnected, and 569 businesses completed the survey. Of the 569 businesses that completed the survey, 448 were deemed willing and added to the availability database. 4. Dun and Bradstreet List The D&B list contained 76 businesses domiciled in the market area. Of the 64 unique market area businesses that were surveyed, 5 unique businesses were deemed willing and added to the availability database. 6-2 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis B. Prime Contractor Sources Table 6.1 lists the sources from which the list of willing businesses was compiled. Table 6.1: Prime Contractor Availability Data Sources Source Type of Information Authority Records Office of Small Business Assistance Report Office of Small Business Assistance Vendor Database M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs Government Certification Directories All Minority/Woman-Owned Business Enterprise Certified Vendors Broward County Florida Certified Firm Directory Broward County Florida Small Business Enterprise Certification City of West Palm Beach Small Business Enterprise Directory Federal Aviation Administration Certification Federal Aviation Administration Disadvantaged Business Enterprise and Airport Concessions Disadvantaged Business Enterprise Program Federal Aviation Administration Disadvantaged Business Enterprise Program M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs Federal Transit Administration Disadvantaged Business Enterprise Program M/WBEs Florida Department of Management Services M/WBEs Florida Department of Management Services Office of Supplier Diversity Directory of Certified Business Enterprises M/WBEs Florida Department of Transportation Disadvantaged Business Enterprise Program M/WBEs and non-M/WBEs Florida Department of Transportation Disadvantaged Business Enterprise Program Federal Aviation Administration Certified Businesses M/WBEs Florida Department of Transportation Minority Business Enterprise as Certified by the State of Florida M/WBEs Miami-Dade County Community Business Enterprise Certification List Miami-Dade County Community Small Business Enterprise Certification List Miami-Dade County Public Schools Minority/Women Business Enterprise Certified Firms Miami-Dade County Small Business Development Certification List M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs 6-3 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Source Miami-Dade County Small Business Enterprise Certification List School District of Palm Beach County_SBE_MWBE Certification List Small Business Administration Palm Beach County Veteran Owned Small Business Administration Palm Beach County Woman Owned South Florida Water Management District Small Business Enterprise Directory The School District of Palm Beach County Minority/Women owned Business Enterprise Programs The School District of Palm Beach County Small Business Enterprise US Small Business Administration HUBZone Certification U.S. Small Business Administration 8(a) Certified or 8(a) Joint Venture, Broward County, Florida U.S. Small Business Administration 8(a) Certified or 8(a) Joint Venture, Palm Beach County, Florida Type of Information M/WBEs and non-M/WBEs M/WBEs M/WBEs and non-M/WBEs M/WBEs M/WBEs and non-M/WBEs M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs U.S. Small Business Administration Small Disadvantaged Business, Broward County, Florida M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs U.S. Small Business Administration Small Disadvantaged Business, Palm Beach County, Florida M/WBEs and non-M/WBEs U.S. Small Business Administration Veteran Owned Small Business, Palm Beach County, Florida M/WBEs and non-M/WBEs U.S. Small Business Administration Woman Owned Small Business, Palm Beach County, Florida M/WBEs U.S. Small Business Administration HUBZone Certification, Broward County, Florida U.S. Small Business Association M/WBEs and non-M/WBEs Business Association Membership Lists Air Conditioning Contractors of America American Council of Engineering Companies, Florida American Institute of Architects, Florida Associated General Contractors of America Florida East Coast Chapter Aventura Sunny Isles Beach Florida Chamber of Commerce Belle Glade Chamber of Commerce M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs Black Chamber of Commerce of Palm Beach County M/WBEs Brazilian Chamber of Commerce of Florida M/WBEs 6-4 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Source Broward County Minority Builders Coalition, Inc. Building Trades Association Business Network International, Miami Dade Central Palm Beach County Chamber of Commerce Chamber of Commerce of the Palm Beaches Chamber South Cold Spring Area Chamber of Commerce Davie-Cooper City Chamber of Commerce Florida Irrigation Society Florida Roofing Sheet Metal and Air Conditioning Contractors Association Florida Transportation Builders Association, Inc. Greater Boca Raton Chamber of Commerce Greater Boynton Beach Chamber of Commerce Greater Delray Beach Chamber of Commerce Greater Fort Lauderdale Chamber of Commerce Greater Kendall Business Association Greater Plantation Chamber of Commerce Greater Pompano Beach Chamber of Commerce Hollywood Chamber of Commerce Independent Electrical Contractors Florida West Coast Chapter Jamaica U.S.A Chamber of Commerce Key Biscayne Chamber of Commerce Lantana Chamber of Commerce Margate Chamber of Commerce Masonry Association of Florida, Inc. Type of Information M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs 6-5 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Source Mechanical Contractor Association of South Florida Miami Beach Latin Chamber of Commerce Miramar Pembroke Pines Regional Chamber of Commerce National Association of Women Business Owners Fort Lauderdale/Broward County National Utility Contractors Association of Central Florida Northern Palm Beach County Chamber of Commerce Nursery Growers and Landscape Association Palm Beach Chamber of Commerce Palm Beach County Roofing and Sheet Metal Contractors Association Puerto Rican/Hispanic Chamber of Commerce for Palm Beach County Roofing Contractors Association of South Florida South Dade Chamber of Commerce South Florida Minority Pages Type of Information M/WBEs and non-M/WBEs M/WBEs M/WBEs and non-M/WBEs M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs Tamarac Chamber of Commerce The Greater Sunrise Chamber of Commerce Wellington Chamber of Commerce West Boca Chamber of Commerce Women Chamber Commerce of Palm Beach County M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs and non-M/WBEs M/WBEs Company and Industry Reports M/WBEs and non-M/WBEs Dun and Bradstreet C. Determination of Willingness All businesses included in the availability analysis were determined to be willing to contract with the Authority. “Willingness” is defined in Croson and its progeny as a business’ interest in contracting with the government. To be classified as willing, each business either bid on a government contract, secured government certification, or was listed on a business organization’s membership list and affirmed an interest in contracting with the Authority through the willingness survey. Businesses identified from the four sources listed in Table 6.1 demonstrated their willingness to perform on public contracts. 6-6 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis D. Distribution of Available Prime Contractors by Source, Ethnicity, and Gender Table 6.2 through Table 6.5 present the distribution of willing prime contractors by source. The highest ranked source was the prime contractors utilized by the Authority. Each ranked business is counted only once. For example, a utilized prime contractor counted in the prime contractor utilization source was not counted a second time as a bidder, certified business, or company identified from a business association list. A distribution of available businesses by source also was calculated for each industry. As noted in Table 6.2, 85.50% of the construction businesses identified were derived from the Authority’s records, other government agencies’ records, and government certification lists. Companies identified through the business association membership lists represent 14.50% of the willing businesses. Table 6.2: Distribution of Prime Contractor Availability Data Sources, Construction M/WBEs Non-M/WBEs Source Percentage Percentage Percentage Sources Prime Contractor Utilization 27.35% 44.44% 37.36% 0.90% 0.32% 0.56% Certification Lists 38.57% 14.60% 24.54% Bidders Lists 27.35% 20.00% 23.05% 94.17% 79.37% 85.50% Community Meeting Attendees 0.45% 0.00% 0.19% Willingness Survey 5.38% 20.63% 14.31% 5.83% 20.63% 14.50% 100.00% 100.00% 100.00% Pre-Qualified Firms Subtotal Subtotal Grand Total* *The percentages may not total 100 percent due to rounding Table 6.3 depicts the data sources for the available professional services prime contractors. As noted, 72.97% of the professional services businesses identified were derived from the Authority’s records, government agencies’ records, and government certification lists. Companies identified through the business association membership lists represent 27.03%of the willing businesses. 6-7 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Table 6.3: Distribution of Prime Contractor Availability Data Sources, Professional Services M/WBEs Non-M/WBEs Source Percentage Percentage Percentage Sources Prime Contractor Utilization 20.80% 34.45% 27.97% 1.42% 0.00% 0.68% Certification Lists 47.01% 14.91% 30.14% Bidders Lists 18.23% 10.54% 14.19% 87.46% 59.90% 72.97% 0.85% 0.00% 0.41% 11.68% 40.10% 26.62% Subtotal 12.54% 40.10% 27.03% Grand Total* 100.00% 100.00% 100.00% Pre-Qualified Firms Subtotal Community Meeting Attendees Willingness Survey *The percentages may not total 100 percent due to rounding Table 6.4 depicts the data sources for the available commodities and other services prime contractors. As noted, 85.27% of the commodities and other services businesses identified were derived from the Authority’s records, other government agencies’ records, and government certification lists. Companies identified through the business association membership lists represent 14.73% of the willing businesses. Table 6.4: Distribution of Prime Contractor Availability Data Sources, Commodities and Other Services M/WBEs Percentage Sources Non-M/WBEs Percentage Source Percentage Prime Contractor Utilization 32.37% 68.84% 55.39% Certification Lists 39.96% 7.95% 19.75% Bidders Lists 16.52% 6.39% 10.12% 88.84% 83.18% 85.27% Community Meeting Attendees 1.34% 0.26% 0.66% Willingness Survey 9.82% 16.56% 14.07% Subtotal 11.16% 16.82% 14.73% Grand Total* 100.00% 100.00% 100.00% Subtotal *The percentages may not total 100 percent due to rounding 6-8 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Table 6.5 depicts the data sources for the available trade services prime contractors. As noted, 83.82% of the trade services businesses identified were derived from the Authority’s records, other government agencies’ records, and government certification lists. Companies identified through the business association membership lists represent 16.18% of the willing businesses. Table 6.5: Distribution of Prime Contractor Availability Data Sources, Trade Services M/WBEs Non-M/WBEs Source Percentage Percentage Percentage Sources Prime Contractor Utilization 48.00% 65.12% 58.82% Certification Lists 32.00% 6.98% 16.18% Bidders Lists 12.00% 6.98% 8.82% 92.00% 79.07% 83.82% 8.00% 20.93% 16.18% 8.00% 20.93% 16.18% 100.00% 100.00% 100.00% Subtotal Willingness Survey Subtotal Grand Total* *The percentages may not total 100 percent due to rounding III. Capacity The second component of the availability requirement set forth in Croson is the capacity or ability of a business to perform the contracts that a jurisdiction awards.357 However, capacity requirements are not delineated in Croson. In those cases where capacity has been considered, the matter has involved large, competitively bid construction prime contracts. Nevertheless, the capacity of willing market area businesses to perform the Authority contracts was assessed using several measures. The analysis included an analysis of contract size and vendor capacity. 357  Largest Awards: The analysis classified the largest contracts that the Authority awarded by ethnicity and gender within industry to determine M/WBEs’ capacity to perform large formal purchase orders.  Size Analysis: Contract size is a determinant of the capacity that a willing business needs to be competitive. The distribution of contracts by size within industry was calculated using a quartile analysis to determine the range of the Authority’s contracts by award amount. The quartile analysis was used to set the threshold in which the analysis was performed. The contracts analyzed were limited by dollar value, representing 75% of the Authority’s contracts awarded in each of the four industries. Croson, 488 U.S. 469. 6-9 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis  Capacity Assessment: The capacity assessment questionnaire was designed to elicit information on economic indicators of a business’s ability to perform the Authority’s contracts. The questionnaire was administered to assess the relative capacity of M/WBEs and similarly situated non-M/WBEs. The findings from this analysis are described in Section C below. A. Largest M/WBE Contract Awarded by Industry M/WBEs were awarded large contracts in each industry. The distribution of the largest contracts the Authority awarded to M/WBEs is depicted in Table 6.6. The utilization analysis shows that M/WBEs demonstrated the capacity to successfully compete for contracts as large as $2,634,288 in construction, $1,632,124 in professional services, $517,951 in commodities and other services, and $39,475 in trade services. Table 6.6: Largest M/WBE Contracts Awarded by the Agency Ethnic/Gender Group Construction Professional Services Commodities and Other Services African American Female ---$4,900 ---African American Male $100,952 $1,632,124 $28,800 Asian American Female ------$62,876 Asian American Male $4,091 $80,153 $95,206 Hispanic American Female ---$26,240 $105,995 Hispanic American Male $141,105 $143,748 $517,951 Native American Female ---------Native American Male ---$54,324 ---Caucasian Female $2,634,288 $64,814 $185,668 Largest Dollar Amounts MBEs $141,105 $1,632,124 $517,951 Largest Dollar Amounts WBEs $2,634,288 $64,814 $185,668 (----) Denotes a group that was not awarded any contracts within the respective industry B. Trade Services ------------$39,475 $1,375 ------$21,339 $39,475 $39,475 Size Analysis Table 6.7: Quartile Analysis by Size and Industry Quantiles Minimum 25% 50% Quantile Mean 75% Maximum All Industries Combined $50,003 $70,748 $106,688 $618,058 $238,555 $109,139,983 Construction Professional Services $51,619 $109,931 $232,475 $6,688,130 $591,648 $109,139,983 $50,003 $69,020 $99,986 $273,196 $166,470 $3,376,504 Commodities and Other Services $50,187 $71,247 $110,354 $257,258 $246,970 $5,972,078 6-10 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis C. Business Capacity Assessment Neither Croson nor its progeny have given guidance on how to determine if a business is qualified or able to perform public contracts. A firm’s revenue, business size, number of employees, bonding and insurance, equipment, and bidding history are factors that can be used as indicators of capacity. Although these indicators themselves are subject to the effects of marketplace discrimination. The presence of discrimination in the Authority’s marketplace is documented in Chapter 8: Prime Contract Disparity Analysis, and Chapter 9: Subcontract Disparity Analysis. To determine the capacity of the M/WBEs and non-M/WBEs enumerated in the availability analysis, an eSurvey was administered to willing businesses. The analysis of business capacity considered annual gross revenue as a proxy for business capacity. Revenue was selected because it is an industry standard depiction of a business’s volume or capacity. This analysis found that comparable minority male, minority female, and Caucasian female business revenue was less than Caucasian males even when bidding on contracts at a similar frequency. None of the indicators assessed accounted for the Authority’s disproportionate award of contracts to Caucasian males. The findings below illustrate the impact of independent business characteristics on business capacity. 1. Methodology a. Data Sample Inferences about the capacity of businesses identified in the Study were made from a stratified sample of businesses included in the availability analysis. The stratified sample of M/WBEs and non-M/WBEs willing to contract with the Authority was drawn from the businesses in the availability and utilization databases. b. Data Analysis An ordered logistic regression analysis and an analysis of cumulative frequencies were used to analyze the survey data. A statistically significant finding indicates that there is a non-random relationship between the dependent variable and the independent variable. The cumulative frequencies illustrate the distribution of responses by ethnicity, gender, and, in some cases, industry. A Chi-square test of independence was conducted to determine if there was a statistically significant difference in the frequency of responses by ethnicity and gender.  In the regression coefficient tables, a finding of statistical significance is denoted by an asterisk (*) when the independent variable is significant at or above the 95% confidence level. Tables of regression results indicate the sign of each variable’s coefficient from the regression output. If the coefficient sign is positive, it indicates that there is a positive relationship between the dependent variable and that independent variable. If the coefficient sign for the independent variable is negative, this implies an inverse relationship 6-11 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis between the dependent variable and that independent variable. When the correlation coefficient is close to zero, it indicates that no linear relationship exists.  In the cumulative frequency summary tables, a finding of statistical significance is denoted by the p-value. If the p-value is equal to or less than 0.05, the difference is statistically significant at the 95% confidence level. 2. Profile of Respondents The business capacity survey was completed by 158 unique businesses; 17.09% were African American, 3.80% were Asian American, 13.92% were Hispanic American, 0.00% were Native American, 3.80% were other minorities, and 61.39% were Caucasian American. Of the 158 surveys, 40.51% were completed by females of all ethnicities and 59.49% were completed by males of all ethnicities. Due to the limited number of responses, ethnic groups were combined and were analyzed as “minority males” and “minority females.” in the cumulative frequency tables. Regression coefficient tables are presented by industry, MBEs (which includes minority males and minority females), WBEs (which includes Caucasian females) and non-M/WBEs (which includes Caucasian males). Table 6.8: Ethnicity and Gender of Businesses African Asian American American Female 5.06% 1.27% Male 12.03% 2.53% Total 17.09% 3.80% χ²=2.5223, df=4, p-value=0.6407 Response Caucasian American 25.32% 36.08% 61.39% Hispanic American 6.96% 6.96% 13.92% Native American 0.00% 0.00% 0.00% Other Minority 1.90% 1.90% 3.80% Total 40.51% 59.49% 100.00% As shown in Table 6.9, 27.85% of businesses provided construction; 39.87% of businesses provided professional services; and 32.28% of businesses provided goods and services. Table 6.9: Primary Industry Response Minority Females Construction 3.16% Professional 6.96% Services Goods and 5.06% Services Total Percent 15.19% χ²=17.9101, df=6, p-value=0.0065 Minority Males Caucasian Females Caucasian Males Total 7.59% 5.06% 12.03% 27.85% 13.92% 8.23% 10.76% 39.87% 1.90% 12.03% 13.29% 32.28% 23.42% 25.32% 36.08% 100.00% 6-12 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis 3. Capacity Analysis Several independent economic indicators were examined to determine the effect of independent business characteristics on M/WBEs and non-M/WBEs’ reported annual gross revenue. a. Business Annual Gross Revenue by Industry Business annual gross revenue regression coefficient tables were prepared by industry for construction, professional services, and goods and services. As shown in Table 6.10, 50.33% of businesses earned $500,000 and under; 11.26% of businesses earned $500,001 to $1,000,000; 18.54% of businesses earned $1,000,001 to $3,000,000; 6.62% of businesses earned $3,000,001 to $5,000,000; 4.64% of businesses earned $5,000,001 to $10,000,000; and 8.61% of businesses earned over $10 million. Also, 14.81% of Caucasian males and 5.26% of Caucasian females earned over $10 million dollars, whereas only 8.33% of minority males and 0.00% of minority females earned over $10 million. Table 6.10: Annual Gross Revenue Minority Females 73.91% Minority Males 58.33% Caucasian Females 52.63% Caucasian Males 33.33% $500,001 to $1,000,000 4.35% 11.11% 13.16% 12.96% 11.26% $1,000,001 to $3,000,000 8.70% 13.89% 23.68% 22.22% 18.54% $3,000,001 to $5,000,000 13.04% 0.00% 2.63% 11.11% 6.62% $5,000,001 to $10,000,000 0.00% 8.33% 2.63% 5.56% 4.64% Over $10,000,000 0.00% 8.33% 5.26% 14.81% 8.61% 100.00% 100.00% 100.00% 100.00% 100.00% Response $500,000 and Under Total Percent χ²=34.9374, df=15, p-value=0.0693 Total 50.33% Chart 6.1 illustrates that minority male, minority female, Caucasian female, and Caucasian male revenue is most similar at the $500,000 and under level. This finding infers that the majority of businesses, no matter the ethnicity and gender of the owner, are small. 6-13 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Chart 6.1: Annual Gross Revenue 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% $500,000 and Under $500,001 to $1,000,000 Minority Females $1,000,001 to $3,000,001 to $5,000,001 to $3,000,000 $5,000,000 $10,000,000 Minority Males Caucasian Females Over $10,000,000 Caucasian Males i. Business Annual Gross Revenue: Construction Table 6.11 presents the results of the ordered logistic regression conducted to determine how the annual gross revenue of construction businesses is impacted by independent business characteristics. Table 6.11: Annual Gross Revenue Ordered Logistic Regression: Construction Annual Gross Revenue Number of Contracts Years of Operation Number of Employees Bonding Amount Private Sector Revenue Associate's Degree (a) Bachelor's Degree Advanced Degree Caucasian Female (b) Minority Coefficient 0.414638 0.117008 2.828586 -0.074185 0.010416 2.498398 1.847249 2.652025 -3.189711 -1.626643 Significance * * * * * * Standard Error 0.223459 0.410401 0.604624 0.147312 0.011442 1.142555 0.896031 1.096765 1.063076 0.819972 Z-score P> z 1.86 0.29 4.68 -0.50 0.91 2.19 2.06 2.42 -3.00 -1.98 0.064 0.776 0.000 0.615 0.363 0.029 0.039 0.016 0.003 0.047 (a) For the degree variables, the baseline variable is no degree. (b) For the ethnicity variables, the baseline variable is Caucasian male. (P> z ) of 0.05 and less denotes findings of statistical significance. (*) denotes a statistically significant variable with 95% confidence. 6-14 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis       Construction businesses that have more employees have statistically significant higher annual gross revenue. Construction businesses that are owned by associate’s degree holders have statistically significant higher annual gross revenue. Construction businesses that are owned by bachelor’s degree holders have statistically significant higher annual gross revenue. Construction businesses that are owned by advanced degree holders have statistically significant higher annual gross revenue. Construction businesses that are owned by Caucasian females have statistically significant lower annual gross revenue. Construction businesses that are owned by minorities have statistically significant lower annual gross revenue. ii. Business Annual Gross Revenue: Professional Services Table 6.12 presents the results of the ordered logistic regression conducted to determine how the annual gross revenue of professional services businesses is impacted by independent business characteristics. Table 6.12: Annual Gross Revenue Ordered Logistic Regression: Professional Services Annual Gross Revenue Number of Contracts Coefficient Significance 0.284645 1.478937 * Years of Operation 1.828459 * Number of Employees -0.145479 Bonding Amount -0.013859 Private Sector Revenue -0.136261 Associate's Degree (a) 0.743735 Bachelor's Degree 0.717045 Advanced Degree -1.426238 Caucasian Female (b) -2.180107 * Minority (a) For the degree variables, the baseline variable is no degree. (b) For the ethnicity variables, the baseline variable is Caucasian male. (P> z ) of 0.05 and less denotes findings of statistical significance. (*) denotes a statistically significant variable with 95% confidence.    Standard Error 0.219697 0.338184 0.413375 0.289572 0.007400 1.489914 0.964212 0.917620 0.860757 0.807459 Z-score P> z 1.30 4.37 4.42 -0.50 -1.87 -0.09 0.77 0.78 -1.66 -2.70 0.195 0.000 0.000 0.615 0.061 0.927 0.441 0.435 0.098 0.007 Professional services businesses whose annual gross revenue is derived from more individual contracts are more likely to have higher annual gross revenue, but not at a statistically significant level. Professional services businesses that have been in operation longer have statistically significant higher annual gross revenue. Professional services businesses that have more current employees have statistically significant higher annual gross revenue. 6-15 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis    Professional services businesses that are owned by bachelor’s degree holders and advanced degree holders are more likely to have higher annual gross revenue, but not at a statistically significant level. Professional services businesses that are owned by Caucasian females are more likely to have lower annual gross revenue, but not at a statistically significant level. Professional services businesses that are owned by minorities have statistically significant lower annual gross revenue. iii. Business Annual Gross Revenue: Commodities and Other Services Table 6.13 presents the results of the ordered logistic regression conducted to determine how the annual gross revenue of commodities and other services businesses is impacted by independent business characteristics. Table 6.13: Annual Gross Revenue Ordered Logistic Regression: Commodities and Other Services Annual Gross Revenue Coefficient Significance Number of Contracts -0.248191 Years of Operation 1.043033 * Number of Employees 1.176422 * Bonding Amount 0.038999 Private Sector Revenue 0.001035 Associate's Degree (a) 1.986798 Bachelor's Degree 0.725685 Advanced Degree 1.141060 Caucasian Female (b) -1.753922 Minority -0.554194 (a) For the degree variables, the baseline variable is no degree. (b) For the ethnicity variables, the baseline variable is Caucasian male. (P> z ) of 0.05 and less denotes findings of statistical significance. (*) denotes a statistically significant variable with 95% confidence.      Standard Error 0.163213 0.409829 0.352226 0.202590 0.010648 1.425917 0.852086 1.047884 0.915810 0.906213 Z-score P> z -1.52 2.55 3.34 0.19 0.10 1.39 0.85 1.09 -1.92 -0.61 0.128 0.011 0.001 0.847 0.923 0.164 0.394 0.276 0.055 0.541 Commodities and other services businesses that have been in operation longer have statistically significant higher annual gross revenue. Commodities and other services businesses that have more current employees have statistically significant higher annual gross revenue. Commodities and other services businesses that are owned by associate’s degree holders, bachelor’s degree holders, and advanced degree holders are more likely to have higher annual gross revenue, but not at a statistically significant level. Commodities and other services businesses that are owned by Caucasian females are more likely to have lower annual gross revenue, but not at a statistically significant level. Commodities and other services businesses that are owned by minorities are more likely to have lower annual gross revenue, but not at a statistically significant level. 6-16 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis b. Business Annual Gross Revenue by Business Classification The business annual gross revenue of was analyzed for MBEs358, WBEs,359 and 360NonM/WBEs. i. Business Annual Gross Revenue: Non-M/WBEs Table 6.14 illustrates how the annual gross revenue of businesses owned by Caucasian males is impacted by independent business characteristics. Table 6.14: Annual Gross Revenue Ordered Logistic Regression: Non-M/WBEs Annual Gross Revenue Coefficient Significance Number of Contracts -0.023939 Years of Operation 0.874728 * Number of Employees 2.036119 * Bonding Amount 0.078467 Private Sector Revenue 0.003665 Associate's Degree (a) 2.240450 * Bachelor's Degree 1.081607 Advanced Degree 1.307933 (a) For the degree variables, the baseline variable is no degree. (P> z ) of 0.05 and less denotes findings of statistical significance. (*) denotes a statistically significant variable with 95% confidence.     Standard Error 0.150252 0.331403 0.385150 0.158598 0.007929 1.102121 0.720549 0.825787 Z-score P> z -0.16 2.64 5.29 0.49 0.46 2.03 1.50 1.58 0.873 0.008 0.000 0.621 0.644 0.042 0.133 0.113 Non-M/WBEs that have been in operation longer have statistically significant higher annual gross revenue. Non-M/WBEs that have more current employees have statistically significant higher annual gross revenue. Non-M/WBEs owned by associate’s degree holders have statistically significant higher annual gross revenue. Non-M/WBEs owned by bachelor’s degree holders and advanced degree holders are more likely to have higher annual gross revenue, but not at a statistically significant level. ii. Business Annual Gross Revenue: WBEs Table 6.15 illustrates how the annual gross revenue of Caucasian female owned businesses is impacted by independent business characteristics. 358 MBEs are businesses owned by African American, Asian American, Hispanic American, and Native American males and females. 359 WBEs are businesses owned by Caucasian females. 360 Non-M/WBEs are businesses owned by Caucasian males. 6-17 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Table 6.15: Annual Gross Revenue Ordered Logistic Regression: WBEs Annual Gross Revenue Number of Contracts Years of Operation Number of Employees Bonding Amount Private Sector Revenue Associate's Degree (a) Bachelor's Degree Advanced Degree Coefficient 0.306694 1.358971 1.350152 0.148720 0.022109 3.678975 1.296217 4.050808 Significance * * * * Standard Error 0.239725 0.514466 0.637095 0.250501 0.013538 1.786608 1.219605 1.607561 Z-score P> z 1.28 2.64 2.12 0.59 1.63 2.06 1.06 2.52 0.201 0.008 0.034 0.553 0.102 0.039 0.288 0.012 (a) For the degree variables, the baseline variable is no degree. (P> z ) of 0.05 and less denotes findings of statistical significance. (*) denotes a statistically significant variable with 95% confidence.      WBEs that have been in operation longer have statistically significant higher annual gross revenue. WBEs that have more current employees have statistically significant higher annual gross revenue. WBEs owned by associate’s degree holders have statistically significant higher annual gross revenue. WBEs owned by bachelor’s degree holders are more likely to have higher annual gross revenue, but not at a statistically significant level. WBEs owned by advanced degree holders have statistically significant higher annual gross revenue. iii. Business Annual Gross Revenue: MBEs Table 6.16 illustrates how the annual gross revenue of businesses owned by minority males and minority females is impacted by independent business characteristics361. 361 Minority denotes African Americans, Asian Americans, Hispanic Americans, and Native Americans. 6-18 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Table 6.16: Annual Gross Revenue Ordered Logistic Regression: MBEs Annual Gross Revenue Number of Contracts Years of Operation Number of Employees Bonding Amount Private Sector Revenue Associate's Degree (a) Bachelor's Degree Advanced Degree Coefficient 0.039455 0.970785 1.401196 0.057626 0.003190 0.695292 0.726805 -0.068588 Significance * * Standard Error 0.187967 0.297347 0.337435 0.158456 0.006302 1.094112 0.776324 0.734608 Z-score P> z 0.21 3.26 4.15 0.36 0.51 0.64 0.94 -0.09 0.834 0.001 0.000 0.716 0.613 0.525 0.349 0.926 (a) For the degree variables, the baseline variable is no degree. (*) denotes a statistically significant variable with 95% confidence.      MBEs whose annual gross revenue is derived from more individual contracts are more likely to have higher annual gross revenue, but not at a statistically significant level. MBEs that have been in operation longer have statistically significant higher annual gross revenue. MBEs that have more current employees have statistically significant higher annual gross revenue. MBEs owned by associate’s degree holders and bachelor’s degree holders are more likely to have higher annual gross revenue, but not at a statistically significant level. MBEs owned by advanced degree holders are more likely to have lower annual gross revenue, but not at a statistically significant level. 4. Current Employees by Ethnicity, All Industries The number of employees had a positive correlation with annual gross revenue for all businesses. As shown in Table 6.17, there is no significant difference (p=0.17) in the frequencies of numbers of employees; 43.67% of business had less than five employees; 18.35% had 6 to 10 employees; 17.72% had 11 to 20 employees; 10.13% had 21 to 50 employees; and 10.13% had more than 50 employees. 17.54% of Caucasian males and 5.00% of Caucasian females have over 50 employees whereas only 10.81% of minority males and 0.00% of minority females have over 50 employees. 6-19 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Table 6.17: Current Number of Employees Minority Females Minority Males Caucasian Females Caucasian Males Total 0 to 5 Employees 58.33% 48.65% 52.50% 28.07% 43.67% 6 to 10 Employees 8.33% 18.92% 17.50% 22.81% 18.35% 11 to 20 Employees 16.67% 16.22% 17.50% 19.30% 17.72% 21 to 50 Employees 16.67% 5.41% 7.50% 12.28% 10.13% Over 50 Employees 0.00% 10.81% 5.00% 17.54% 10.13% 100.00% 100.00% 100.00% 100.00% Response Total Percent 100.00% χ²=16.3208, df=12, p-value=0.1770 Chart 6.2 illustrates that MBEs and WBEs have fewer employees than Non-MWBEs. MBEs and WBEs are more likely to have 0 to 5 employees than Non-MWBEs. Chart 6.2: Current Number of Employees 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 0 to 5 Employees Minority Females 5. 6 to 10 Employees Minority Males 11 to 20 Employees 21 to 50 Employees Caucasian Females Over 50 Employees Caucasian Males Number of Contracts, All Industries Table 6.18 illustrates that 48.15% of Caucasian males and 33.33% of Caucasian females were awarded over 20 contracts, compared to 27.03% of minority males and 25.00% of minority females. 6-20 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Table 6.18: Number of Annual Contracts Minority Females Minority Males Caucasian Females Caucasian Males Total Not Applicable 16.67% 10.81% 28.21% 16.67% 18.18% 1 Contract 4.17% 5.41% 2.56% 1.85% 3.25% 2 to 5 Contracts 25.00% 27.03% 15.38% 14.81% 19.48% 6 to 10 Contracts 16.67% 8.11% 10.26% 9.26% 10.39% 11 to 20 Contracts 12.50% 21.62% 10.26% 9.26% 12.99% Over 20 Contracts 25.00% 27.03% 33.33% 48.15% 35.71% Total Percent 100.00% χ²=14.7742, df=15, p-value=0.4678 100.00% 100.00% 100.00% 100.00% Response 6. Frequency of Bidding, All Industries Table 6.19 illustrates that there is no significant difference (p=0.06) in the frequencies of bid submission; 56.76% of minority males submitted bids or qualifications to a government agency within the past year; 45.83% of minority females submitted bids or qualifications to a government agency within the past year; 58.97% of Caucasian females submitted bids or qualifications to a government agency within the past year; and 71.93% of Caucasian males submitted bids or qualifications to a government agency within the past year. Table 6.19: Submitted a Bid or Qualifications to Government Agency Minority Females Minority Males Caucasian Females Caucasian Males Total Yes 45.83% 56.76% 58.97% 71.93% 61.15% No 50.00% 43.24% 33.33% 28.07% 36.31% Not Applicable 4.17% 0.00% 7.69% 0.00% 2.55% 100.00% 100.00% 100.00% 100.00% 100.00% Response Total Percent χ²=11.7341, df=6, p-value=0.0682 7. Years in Business Operation, All Industries As shown in Table 6.20, there is a significant difference (p=0.04) in the frequencies of years in business operation; 0.00% of minority males have operated businesses for over 50 years; 0.00% of minority females have operated businesses for over 50 years; 2.50% of Caucasian females have operated businesses for over 50 years; while 15.79% of Caucasian males have operated businesses for over 50 years. 6-21 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Table 6.20: Years in Business Operation Minority Females Minority Males Caucasian Females Caucasian Males Total Less than 5 Years 20.83% 21.62% 15.00% 5.26% 13.92% 6 to 10 Years 20.83% 16.22% 20.00% 15.79% 17.72% 11 to 20 Years 37.50% 29.73% 22.50% 28.07% 28.48% 21 to 50 Years 20.83% 32.43% 40.00% 35.09% 33.54% Over 50 Years 0.00% 0.00% 2.50% 15.79% 6.33% 100.00% 100.00% 100.00% 100.00% 100.00% Response Total Percent χ²=21.6831, df=12, p-value=0.0412 8. Education Level of Business Owners, All Industries Table 6.21 illustrates that 52.78% of minority males had graduate or professional degrees; 29.16% of minority females had graduate or professional degrees; 28.95% of Caucasian females had graduate or professional degrees; and 24.08% of Caucasian males had graduate or professional degrees. Table 6.21: Education Level of Business Owners Response High School Degree or Equivalent Trade/Technical Certificate or Degree Associate's Degree Bachelor's Degree Graduate Degree Professional Degree Total Percent χ²=19.0596, df=15, p-value=0.211 9. Minority Females Minority Males Caucasian Females Caucasian Males Total 16.67% 2.78% 7.89% 18.52% 11.84% 4.17% 11.11% 2.63% 11.11% 7.89% 12.50% 37.50% 20.83% 8.33% 100.00% 8.33% 25.00% 30.56% 22.22% 100.00% 15.79% 44.74% 18.42% 10.53% 100.00% 9.26% 37.04% 18.52% 5.56% 100.00% 11.18% 36.18% 21.71% 11.18% 100.00% Conclusion The analysis shows that the number of employees has a statistically significant relationship with the business’s annual gross revenue in construction, professional services, and goods and services for all ethnic and gender groups. In addition, the years of operation have a statistically significant relationship with the business’s annual gross revenue for all ethnic and gender groups. This finding supports an inference that all businesses, regardless of ethnicity or gender, witness an increase in revenue when they have more employees and when the business is older. 6-22 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Because Caucasian males employ more people, these results may lead to an assumption that Caucasian males’ capacity is greater. However, in North Shore Concrete & Association v. City of New York, the court stated in reference to construction contractors that the “firm size is not a reliable indicator of the kind of work a firm can perform.”362 The court further stated that “it is relatively easy to obtain ‘qualifications’ by hiring additional employees.” Although this court’s opinion specifically references the construction industry, the same elasticity characterizes the professional services industry. In the presence of contracting opportunities, professional services firms have the elasticity to expand their capacity to perform more and larger contracts through subcontracting, joint ventures, and staff augmentation. Therefore, the number of employees is not a reliable indicator of business capacity for either industry. The age of a business is an indicator of the business’s experience and competency in a given field. While M/WBEs tend to be younger than non-M/WBEs, this analysis also illustrated that M/WBEs have documented competency reflected in education level of the owner and the ability to perform multiple contracts concurrently. So while M/WBEs are less mature than non-M/WBEs, their qualifications to perform public contracts have been documented. IV. Prime Contractor Availability Analysis Considering the metrics reviewed in this analysis, Caucasian males are not necessarily awarded contracts more frequently because of any single business economic indicator or combination of measures. The fact that Caucasian males have higher annual gross revenue is likely a function of public and private sector business practices. The size of the Authority’s contracts demonstrates that the majority of the contracts are small, requiring limited capacity to perform. Furthermore, the awards the Authority has made to M/WBEs demonstrate that the capacity of the available businesses is considerably greater than needed to bid on the majority of the contracts awarded in the four industries studied. Nevertheless, as noted in Chapter 3: Prime Contractor Utilization Analysis, the decision was made to limit the prime contracts subject to the disparity analysis to those valued $600,000 and under for construction prime contracts, $175,000 and under for professional services prime contracts, $250,000 and under for commodities and other services, and $50,000 and under for trade services. The prime contractor availability findings for the Authority’s market areas are listed below. 362 N. Shore Concrete & Assoc. v. City of New York, No. 94-cv-4017, 1998 U.S. Dist. LEXIS 6785 * 25 (E.D.N.Y. Apr. 12, 1998). 6-23 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis A. Construction Prime Contractor Availability The distribution of available construction prime contractors is summarized in Table 6.22. African Americans account for 12.45% of the construction prime contractors in the Authority’s market area. Asian Americans account for 1.49% of the construction prime contractors in the Authority’s market area. Hispanic Americans account for 13.20% of the construction prime contractors in Authority’s market area. Native Americans account for 0.56% of the construction prime contractors in the Authority’s market area. Caucasian Females account for 13.75% of the construction prime contractors in the Authority’s market area. Non-minority Males account for 58.55% of the construction prime contractors in the Authority’s market area. 6-24 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Table 6.22: Available Construction Prime Contractors, Fiscal Years 2009 Through 2013 Ethnicity Percent of Businesses African Americans Asian Americans 12.45% 1.49% Hispanic Americans Native Americans Caucasian Females 13.20% 0.56% 13.75% Non-minority Males TOTAL Ethnicity and Gender African American Females African American Males 58.55% 100.00% Percent of Businesses 1.67% 10.78% Asian American Females Asian American Males Hispanic American Females 0.74% 0.74% 3.72% Hispanic American Males Native American Females 9.48% 0.19% Native American Males Caucasian Females Non-minority Males TOTAL 0.37% 13.75% 58.55% 100.00% 6-25 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis B. Professional Services Prime Contractor Availability The distribution of available professional services contractors is summarized in Table 6.23. African Americans account for 11.76% of the professional services prime contractors in the Authority’s market area. Asian Americans account for 4.59% of the professional services prime contractors in the Authority’s market area. Hispanic Americans account for 11.62% of the professional services prime contractors in the Authority’s market area. Native Americans account for 0.14% of the professional services prime contractors in the Authority’s market area. Caucasian Females account for 19.32% of the professional services prime contractors in the Authority’s market area. Non-minority Males account for 52.57% of the professional services prime contractors in the Authority’s market area. 6-26 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Table 6.23: Available Professional Services Prime Contractors, Fiscal Years 2009 Through 2013 Ethnicity Percent of Businesses African Americans Asian Americans 11.76% 4.59% Hispanic Americans Native Americans Caucasian Females 11.62% 0.14% 19.32% Non-minority Males TOTAL Ethnicity and Gender 52.57% 100.00% Percent of Businesses African American Females African American Males 4.46% 7.30% Asian American Females Asian American Males Hispanic American Females 1.35% 3.24% 4.46% Hispanic American Males Native American Females 7.16% 0.00% Native American Males Caucasian Females Non-minority Males TOTAL 0.14% 19.32% 52.57% 100.00% 6-27 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis C. Commodities and Other Services Prime Contractor Availability The distribution of available commodities and other services prime contractors is summarized in Table 6.24. African Americans account for 7.49% of the commodities and other services prime contractors in the Authority’s market area. Asian Americans account for 1.81% of the commodities and other services prime contractors in the Authority’s market area. Hispanic Americans account for 8.64% of the commodities and other services prime contractors in the Authority’s market area. Native Americans account for 0.08% of the commodities and other services prime contractors in the Authority’s market area. Caucasian Females account for 18.85% of the commodities and other services prime contractors in the Authority’s market area. Non-minority Males account for 63.13% of the commodities and other services prime contractors in the Authority’s market area. 6-28 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Table 6.24: Available Commodities and Other Services Prime Contractors, Fiscal Years 2009 Through 2013 Ethnicity African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males TOTAL Ethnicity and Gender Percent of Businesses 7.49% 1.81% 8.64% 0.08% 18.85% 63.13% 100.00% Percent of Businesses African American Females African American Males 2.63% 4.86% Asian American Females Asian American Males Hispanic American Females 1.07% 0.74% 3.46% Hispanic American Males Native American Females 5.19% 0.00% Native American Males Caucasian Females Non-minority Males TOTAL 0.08% 18.85% 63.13% 100.00% 6-29 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis D. Trade Services Prime Contractor Availability The distribution of available trade services prime contractors is summarized in Table 6.25. African Americans account for 8.82% of the trade services prime contractors in the Authority’s market area. Asian Americans account for 0.00% of the trade services prime contractors in the Authority’s market area. Hispanic Americans account for 7.35% of the trade services prime contractors in the Authority’s market area. Native Americans account for 0.00% of the trade services prime contractors in the Authority’s market area. Caucasian Females account for 20.59% of the trade services prime contractors in the Authority’s market area. Non-minority Males account for 63.24% of the trade services prime contractors in the Authority’s market area. 6-30 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Table 6.25: Available Trade Services Prime Contractors, Fiscal Years 2009 Through 2013 Ethnicity Percent of Businesses African Americans 8.82% Asian Americans 0.00% Hispanic Americans 7.35% Native Americans 0.00% Caucasian Females 20.59% Non-minority Males 63.24% TOTAL Ethnicity and Gender 100.00% Percent of Businesses African American Females 1.47% African American Males 7.35% Asian American Females 0.00% Asian American Males 0.00% Hispanic American Females 4.41% Hispanic American Males 2.94% Native American Females 0.00% Native American Males 0.00% Caucasian Females Non-minority Males TOTAL 20.59% 63.24% 100.00% 6-31 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis V. Subcontractor Availability Analysis A. Source of Willing and Able Subcontractors All available prime contractors were included in the calculation of the subcontractor availability. Additional subcontractors in the Authority’s market area were identified using the source in Table 6.26. Subcontractor availability was not calculated for commodities and other services and trade services, as the subcontracting activity in those industries was limited. Table 6.26: Unique Subcontractor Availability Data Source Type of Record Type of Information Subcontract Awards Provided by the Authority M/WBEs and Non-M/WBEs B. Determination of Willingness and Capacity Subcontractor availability was limited to the utilized prime contractors and the unique businesses utilized as subcontractors. Therefore, the determination of willingness and capacity was achieved. Furthermore, Croson does not require a separate measure of subcontractor capacity in the analysis of subcontractor availability. 6-32 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis C. Construction Subcontractor Availability The distribution of available construction subcontractors is summarized in Table 6.27 below. African Americans account for 11.16% of the construction subcontractors in the Authority’s market area. Asian Americans account for 1.79% of the construction subcontractors in the Authority’s market area. Hispanic Americans account for 11.61% of the construction subcontractors in the Authority’s market area. Native Americans account for 0.45% of the construction subcontractors in the Authority’s market area. Caucasian Females account for 12.65% of the construction subcontractors in the Authority’s market area. Non-minority Males account for 62.35% of the construction subcontractors in the Authority’s market area. 6-33 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Table 6.27: Available Construction Subcontractors, Fiscal Years 2009 Through 2013 Ethnicity African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males TOTAL Ethnicity and Gender African American Females African American Males Asian American Females Asian American Males Hispanic American Females Hispanic American Males Native American Females Native American Males Caucasian Females Non-minority Males TOTAL Percent of Businesses 11.16% 1.79% 11.61% 0.45% 12.65% 62.35% 100.00% Percent of Businesses 1.93% 9.23% 0.74% 1.04% 2.98% 8.63% 0.15% 0.30% 12.65% 62.35% 100.00% 6-34 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis D. Professional Services Subcontractor Availability The distribution of available professional services subcontractors is summarized in Table 6.28 below. African Americans account for 11.04% of the professional services subcontractors in the Authority’s market area. Asian Americans account for 4.27% of the professional services subcontractors in the Authority’s market area. Hispanic Americans account for 11.04% of the professional services subcontractors in the Authority’s market area. Native Americans account for 0.13% of the professional services subcontractors in the Authority’s market area. Caucasian Females account for 18.95% of the professional services subcontractors in the Authority’s market area. Non-minority Males account for 54.58% of the professional services subcontractors in the Authority’s market area. 6-35 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis Table 6.28: Available Professional Services Subcontractors, Fiscal Years 2009 Through 2013 Ethnicity African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males TOTAL Ethnicity and Gender African American Females African American Males Asian American Females Asian American Males Hispanic American Females Hispanic American Males Native American Females Native American Males Caucasian Females Non-minority Males TOTAL Percent of Businesses 11.04% 4.27% 11.04% 0.13% 18.95% 54.58% 100.00% Percent of Businesses 4.14% 6.90% 1.25% 3.01% 4.14% 6.90% 0.00% 0.13% 18.95% 54.58% 100.00% 6-36 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis VI. Summary This chapter provided the availability analysis for the Authority’s market area. A total of 2,609 unique businesses that provided goods and services during the study period in one or more of the four industries were identified. Prime contractor and subcontractor availability were analyzed by ethnicity and gender. Minorityowned Businesses account for 21.79% of prime contractors within the four industries, Caucasian females account for 17.16% of prime contractors, and Non-minority Males account for 61.05% of prime contractors. Minority-owned Businesses account for 25.99% of subcontractors within the two industries, Caucasian females account for 17.20% of subcontractors, and Non-minority Males account for 56.82% of subcontractors. 6-37 Mason Tillman Associates, Ltd. March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Prime Contractor and Subcontractor Availability Analysis CHAPTER 7: Anecdotal Analysis I. Introduction This Chapter presents anecdotal evidence that was analyzed to supplement the statistical findings. The analysis disclosed both discriminatory and race-neutral barriers that might affect Minority and Woman-owned Business Enterprises, hereinafter referred to as Minority and Caucasian Femaleowned Businesses (M/WBE), access to the Solid Waste Authority’s (Authority) construction, professional services including architecture and engineering (hereinafter referred to as professional services), commodities and other services, and trade services contracts. The anecdotal evidence was gathered in a fair and equitable manner through in-depth, one-on-one interviews, public comments gathered from two business community meetings, and business owner responses to an anecdotal eSurvey. II. Legal Standard The importance of anecdotal testimony in assessing the presence of discrimination in a geographic market was determined in the landmark case of City of Richmond v. J.A. Croson. Co.363 The United States Supreme Court, in its 1989 Croson decision, specified the use of anecdotal testimony as a means to determine whether remedial, race-specific relief may be justified in a local government’s market area. The Court stated that a pattern of individual discriminatory acts can offer an explanation of the findings of disparity.364 However, the discriminatory acts cannot be used to determine the presence of discrimination in M/WBE’s access to a government entity’s contracting opportunities. However, anecdotal testimony of individual discriminatory acts can document the routine practices affecting M/WBE access to contracting opportunities within a given market area. While the statistical data must be used to measure the existence of discriminatory practices, anecdotal testimony provides the human context through which the numbers can be understood. Anecdotal testimony from business owners provides information on the barriers businesses perceive in a government’s market area. This information can be used to define best management practices that could improve M/WBE access to the government’s contract opportunities. 363 City of Richmond V. J.A. Croson Co., 488 U.S. 469 (1989). 364 Id. 7-1 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis A. Evidence of Active or Passive Participation Croson authorizes anecdotal inquiries along two lines. The first approach investigates active government discrimination or acts of exclusion committed by representatives of a governmental entity. The purpose of this examination is to determine whether the government has committed acts that have prevented M/WBEs from obtaining contracts. The second line of inquiry examines the government’s passive support of discriminatory practices in the market area where its funds are infused. Passive exclusion occurs when government contracts are awarded to companies that discriminate against M/WBEs, or when the government fails to take corrective measures to prevent discrimination by prime contractors.365 Although anecdotal evidence of discrimination is entitled to less evidentiary weight than statistical evidence, when paired with appropriate statistical data, anecdotal evidence of either active or passive discrimination can support the imposition of a race- or gender-specific remedial program.366 As a result, anecdotal testimony used in combination with statistical data to support a race- or gender-specific program has value in the Croson framework. As Croson notes, jurisdictions have at their disposal “a whole array of race-neutral devices to increase the accessibility of City contracting opportunities to small entrepreneurs of all races.”367 These narratives, according to Croson, can identify practices that should be enhanced or eliminated in order to increase contracting opportunities for M/WBEs. B. Anecdotal Process The method used in gathering anecdotal testimony afforded the researcher an opportunity to garner eyewitness accounts and perceptions of the effects of exclusionary practices. Allowing interviewees to describe the barriers they have experienced in conducting business informs an understanding of how barriers occur, who creates them, and their effect on business development. Thus, the information obtained from the one on one interviews, business community meetings and the anecdotal eSurvey can offer the Authority vital insights on the need for an M/WBE program or policy changes to its Small Business Enterprise Program (SBE) and Local Business Enterprise (LBE) Preference Policy. 365 Croson, 488 U.S. at 491-93, 509. 366 Croson, 488 U.S. at 509. 367 Croson, 488 U.S. at 509. 7-2 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis 1. In-depth Interviews The objective of the in-depth interviews was to question businesses domiciled in Palm Beach County. The anecdotal questions elicited descriptions of barriers encountered working with or seeking work from the Authority, positive experiences working with the Authority and its prime contractors, knowledge of the Authority’s SBE Program, and recommendations to enhance the program. The business owners that provided the one-on-one interviews were identified from contract and certification records, the business community meeting, and outreach. Potential interviewees were screened to determine if they operated within the market area and were willing to commit to the interview process. 2. Business Community Meetings The outreach efforts for the two business community meetings targeted firms from the construction, professional services, commodities and other services, and trade service industries. The meetings were held to inform the business community on the Disparity Study’s purpose, and to allow the attendees an opportunity to provide information about their experiences working with or seeking work from the Authority. The two business community meeting were held at the Solid Waste Authority Administration Building Auditorium on October 8, 2015. The first business community meeting was held at 9:00 A.M., and the second was held at 12:00 P.M. The meeting was attended by the Authority’s Executive Director, the Director of Purchasing Services, and business representatives. The meeting was recorded and transcribed. The public comment session is incorporated in this Chapter. 3. eSurvey An Anecdotal eSurvey was emailed to all businesses in the availability database. The distribution list included 3,110 African American, Asian American, Hispanic American, Native American, Caucasian female, and Non-minority male-owned businesses to supplement the one-on-one indepth interviews. All of the surveyed businesses provided goods or services in one of the industries included in the Study. The survey questions were designed to elicit from the respondents (1) general background information; (2) experience submitting bids/proposals; (3) experience working with the Authority; (4) utilization of supportive services; and (5) recommendations to help businesses obtain work from the Authority. Responses to the eSurvey were summarized and included in Section IV, Anecdotal eSurvey Findings. 7-3 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis III. Excerpts from the Anecdotal Interviews The practices and barriers identified by the interviewees are grouped into ten categories: 1. 2. 3. 4. 5. 6. 7. 8. 9. Comments About the SBE Program Difficulty Breaking into the Contracting Community Good Old Boy Network Difficulty Navigating the Bid Process Excessive Certification Requirements Prime Contractors Avoiding SBE Program Requirements Public v. Private Sector Experiences Exemplary Practices by the Authority Business Owners’ Recommendations to Improve Contracting With SBEs and M/WBEs Excerpts from the interviewee accounts illustrate a pattern of practices that have adversely affected M/WBE participation in the Authority’s contracting opportunities. IV. Anecdotal Findings A. Comments about the Small Business Enterprise Program Business owners familiar with the Authority’s SBE Program shared their experiences and provided comments on the program’s benefits to small businesses. The Authority has two business enterprise initiatives, (SBE) Program and the Local Preference Policy, which are intended to increase the participation of small and local businesses in the Authority’s procurement process. Currently, the Authority has a voluntary 15% SBE goal. Additionally, the SBE Program and Local Preference Policy is designed to ensure that SBEs have an equitable opportunity to participate in the Authority’s procurement opportunities. Preference is given to firms that qualify for the Local Preference or the SBE Preference. A minority female owner of a construction business explained why she has not benefitted from the Authority’s SBE program. She also believes that an M/WBE program is needed to increase contracting opportunities for minorities: The Authority does not demand that prime contractors use SBEs. They set goals for small businesses but if you don't demand that the prime meet it then it doesn’t mean anything. Sometimes contractors meet the goals with the wife and then [Caucasian Female-owned Businesses (WBE)] become the minority. So now they qualify as a M/WBE and that cuts us out. Small businesses like mine are out of the picture. But if we had a 10 percent or 5 percent African American goal then we could participate on their contracts. I think the Authority should implement an M/WBE program because as a 7-4 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Black business we don’t get the opportunities. We are the last ones to get anything. A minority male owner of a professional services business believes that the SBE program is not beneficial to M/WBEs because they do not have relationships with majority-owned contractors: An M/WBE program could provide opportunities to local small businesses that don’t receive any work because they don't know the right people. Many minorities don't have the relationships with the Authority’s contractors to showcase their talent to get more work and grow their businesses and thrive. An M/WBE Program would be a win-win for minority business owners in Palm Beach County. Why not keep your money in Palm Beach County? Why not help companies who are located here that will employ local people and help them thrive? A minority female owner of a professional services business explained why she believes the Authority’s SBE program is ineffective: The problems that I have encountered have been as a subcontractor. The Authority’s contract language with the primary contractor does not protect the SBE who helped that business qualify to win the award. The Solid Waste Authority released a bid for solid waste and recycling. It is the Authority’s largest procurement that they advertise every five years. In the last award, it was a mandatory small business SBE requirement of 15 percent and the SBE had to be domiciled in Palm Beach County. It was a mandatory requirement in order to prequalify otherwise they could not proceed to the second stage of the bid process. The Authority stated that the prequalifying SBE must be incorporated into the executed contract. The contract and the bid also stated that if you did not show a bona fide effort of implementing the SBE plan, it would be considered a material breach of the contract and the contractor could be deemed disbarred from future procurements. The Authority has refused to enforce their policy. The SBE and my business who helped the prime prequalify were not utilized. We were eliminated by [business name withheld] without them demonstrating that we were unwilling or unable to provide those services. If they are not utilizing our services, then they have materially breached the contract because they did not comply with the SBE requirement. 7-5 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis This same business owner expressed her concern regarding the importance of enforcement for compliance when implementing an M/WBE program: If their only SBE mandatory requirement was issued in the 21st century in 2013, and they, as an elected official governing body have no commitment to it, an M/WBE program is going to be fruitless. It’s not going to render the results that you anticipate it will render if there is no commitment to enforcing the participation requirements. I think they should have an MBE program, but a program without a real commitment that is strictly enforced means nothing. It’s just on paper, like their SBE program. It is meaningless. [Business name withheld] failed to comply with SBE participation. All of the other companies that have Caucasian SBEs are complying. A minority male owner of a construction business explained why he believes an M/WBE Program would be more beneficial for minorities than an SBE Program: Basically anyone can qualify as an SBE. It takes away a preference for minorities which can give us a little edge. We need as much of an edge as we can get. They say that minorities have caught up. Not so. We are still running far behind. And we have gotten further behind since they changed the diversity program to an SBE Program. A Caucasian female owner of a professional services business explained how mentoring of large businesses to smaller businesses in the SBE Program helped grow their capacity: I think the SBE Program is valuable. I think it is good that larger companies are encouraged to take small companies under their wing and give them opportunities to grow their business. This same business owner supports the implementation of a WBE Program: I think they should also implement a WBE Program. The Authority is not very rigorous about the SBE Program but a WBE Program for the Solid Waste Authority would be good. It would be good for me too. It would give me an opportunity to team on larger projects where the consultant would ordinarily do [the work] themselves. A minority male owner of a professional services business recommends stricter monitoring of the SBE goals: I believe that the Authority has to be focused within the organization to ensure that their contractors are meeting their goals. They also must make the call to see what they can do to get those goals met. 7-6 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis This same business owner recommends an M/WBE Program to increase the participation of minorities on the Authority’s contracts: I absolutely believe that the Authority should implement an M/WBE Program because it's not a level playing field. Minority businesses are not getting a lion's share of the contracts that are being let. And where millions and millions of dollars are being let, the work force should be representative of the community. And I'm not so sure that’s happening. A minority female owner of a professional services business also suggests stricter and systematic monitoring of the SBE Program requirements: There is no incentive for a business like mine to want to compete because the Authority is simply using lip service and have no intentions of enforcing compliance regarding their primary haulers. We were required to sign a letter of intent that we would provide the services and the rates in which we would provide the services. The primary hauler was required to sign an affidavit stating under perjury and threat of disqualification from the bid process that I was to provide services in one of the four service areas. He prequalified using my SBE certification. All of those compliance requirements are in the bid but the governing body and staff refuses to enforce their own rules. It is a waste of my time and money to bid as a small business. They merely use me as a token Black feet warmer. So I recommend that the Authority enforce its own policies. I agreed to be an SBE with the Authority because I thought they would enforce compliance. That’s the only reason why I agreed to do it. The contract provided that it can only be modified by amendment. But the prime contractor was allowed to eliminate us without complying with the SBE requirements. A minority male owner of a construction business believes an M/WBE Program would be more beneficial for minorities than an SBE Program: I think that there is a 15 percent SBE preference on some jobs. But I don’t believe that is really being enforced. And when the Authority began the SBE Program they went away from diversity goals, a decision which hurt us instead of helped us. Anybody can qualify as a SBE contractor or a small business. I would like for the Authority and all agencies to look at the best qualified contractor, not the lowest bidder, and then take the lowest bidder. The next thing is to get away from the SBE goals and go back to the M/WBE goals because that was more beneficial for small businesses. Anyone out there can be a SBE which means these guys come and bid in low just to get the job. Once they get the work, a lot of them can’t even do the work but they continue to reward them more work. 7-7 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis B. Difficulty Breaking into the Contracting Community Several of the interviewees reported difficulty securing prime contracts with the Authority. Some interviewees believe that a majority of the Authority’s contracts are awarded to a few contractors. The prime contractor utilization analysis revealed that the Authority’s 84 construction prime contracts were awarded by 22 unique vendors. Three vendors received $109,139,984 or 71 percent of the total construction prime contract dollars. Additionally, the analysis revealed that 513 professional services contracts were received by 79 unique vendors and 3,404 commodities and other services prime contracts were received by 646 vendors during the fiscal years 2009 through 2013 study period. A minority female owner of a commodities and other services business reported that her business has not been successful obtaining work with the Authority although they are a local firm: We have not been able to obtain work and we're literally around the corner from the Authority. So financially, it has impacted our revenue because we have not been able to obtain work, but it's hard to put a dollar amount. A minority male owner of an architecture and engineering business reported that he has been able to obtain work with other local agencies but not with the Authority: It's always been very difficult to get work. We provide subconsultant services to sheet metal fabricators and air conditioning companies. Any metal work, we can do. Although we have done work for school districts and Palm Beach County, it's been very difficult to get work with the Authority. A minority female owner of a construction business reported that she experienced difficulty establishing a relationship with general contractors at networking events: When I go to meetings the general contractors like roofing and air conditioning companies don’t speak to us. It’s a waste of my time. The only time I spoke to anyone was at the community meeting for the disparity study. A minority male owner of an architecture and engineering business believes that the Authority prefers working with companies located outside of Palm Beach County over local firms: There was a project completed recently and we wanted to be involved on the project. We are a local firm where there is a large talent pool. We have the skill set locally to do the work, so why go outside. Outside firms should only be used if they can't find the talent within the County. So far, we haven't had any benefits or any positive experiences from our networking attempts with the Authority. 7-8 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis A minority female owner of a professional services business reported that she was able to get on the Authority’s bidder’s list, but was unable to secure work: I never received work from the Solid Waste Authority. Getting on their bidder’s list is never a problem. It’s being used once you’re on the list, that’s the problem. A minority female owner of a commodities and other services business believes that the Authority utilizes preferred contractors on their fleet management and construction projects: The Authority has preferred contractors for their fleet management and construction contracts. I have spoken to other subcontractors at networking events and they have the same challenges. We would love to be a subcontractor on those projects. They could be another avenue of revenue for us. I believe it's [business name withheld] is their fleet person. It's frustrating not only as a minority, or a woman-owned business, but also as small local business. A minority male owner of a construction business explained that he attends networking events although he does not find them beneficial for securing future work: To be honest, I don’t consider networking important. I’m going to a networking event coming up soon but I’m only going because someone asked me to come, but I have never received anything from them. There are people that are handpicked to get certain jobs, especially the big jobs. They’re basically friends and so forth. Networking is good for large construction and landscaping companies. They are the ones that get most of the leads. A Caucasian female owner of a professional services business reported that preferred consultants are used on the Authority’s architecture and engineering contracts: The Authority uses the same contractors for the same two or three different projects. I think it is more prevalent within the Engineering Department. And the services that I typically provide are usually under the Engineering Department. The same contractors get selected each time. When we ask questions upfront at networking events we get an idea of whether or not it’s worth responding to a RFP. It’s difficult to get in because the client is happy with their selected consultant and really doesn’t want this to change. I was told by several people within the Solid Waste Authority that they weren’t happy with their current consultant and wanted to make a change. But when the results of the bid came out they selected the same consultant again. That was probably the third or fourth time that they used that same consultant. 7-9 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis C. “Good Old Boy” Network Several interviewees reported established business and contracting relationships, otherwise known as the “good old boy network,” that prevent new and small contractors from working as prime contractors on public contracts. A minority male owner of an architecture and engineering business reported that the same few firms receive the majority of the Authority’s contracts in his industry: There is a preconceived notion that the jobs will go to an old boy or old friend network. It is hard for new talent or new companies to break that glass ceiling and get into the marketplace and thrive. There are no opportunities for small fish. And the small fish don't have the right contacts and don't know the right people. I consistently see the same people getting the same work. There are three big firms that get most of the work. A minority male owner of a professional services business believes that the good old boy network is primarily majority-owned businesses: I think there is a good old boys network because in business that's just the way that it works. Unfortunately, it's not always about the quality of the individual, or what they bring to the table. And folks do business with who they have relationships with. This typically does not happen in the minority community, but the majority community. The decision-makers are mostly the majority community. It's had a negative impact on my business because we are not the predominant group. And you have to be a big firm to get a lot of the work. A minority female owner of a commodities and other services business reported that she has experienced difficulty obtaining work due to her gender: When it comes to vehicle repairs there is a belief that women do not know anything. It's actually fun to see the shock on their face after we have had an intelligent conversation about vehicle repair and then we meet face-toface. And now they are not just hearing my voice over the phone. Then, they say we don't need that service anymore. D. Difficulty Navigating the Bid Process Some interviewees provided anecdotes concerning the Authority’s bidding process. Several business owners reported unfair bidding practices and the Authority’s failure to communicate with potential bidders. 7-10 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis A minority female owner of a construction business comments on the lack of outreach efforts from the Authority to minority businesses regarding contracting opportunities: I think I got on the Authority’s list last year. The Authority is an agency that really doesn't reach out. I feel that they don't reach out enough to minorities. I will get cards from people at the Authority. I try to call and make an appointment, but nothing really happens. I don't know what they are doing. They need to reach out to small businesses and implement certain policies that work. I don't see what they're trying to do to help small businesses whether they are women, Black, or minority. The jobs are always going out to big companies that are out of town or state. I also hear this from my colleagues. A minority male owner of an architecture and engineering business reported that he is uncertain whether the outreach efforts of the Authority include notifications of bid opportunities, and has been unable to locate upcoming bid opportunities on the Authority’s website: A lot on the municipalities post contracting opportunities on their website. Others send out notices, we do work for the Port of Palm Beach and they email their notices. If the Authority is posting bid notices, it's not clear to us from their website. And if they are sending the notices out, we're not receiving them. A minority female owner of a commodities and other services business reported when she attempted to navigate the bidding process, she was informed that subcontractors and suppliers are excluded on fleet contracts: I tried to find out how to become a vendor to provide auto glass replacement for their fleet vehicles that were managed by a fleet business. We were told that they were not using subcontractors or suppliers at that time. And our services wouldn't be necessary because it was handled by the fleet management. A minority male owner of a construction business reported that his bid was denied for being a few minutes late. He also believes that the Authority’s anticipated budgets for their construction projects are not realistic: I took my bid in and they refused to take it because I was told that I was two minutes past the time that it was due. But by my watch, which was standard time, their clock was five minutes fast. I didn’t complain. To be honest, if you complain about something you can be put on a black list. Then I would be known as a troublemaker. That is why a lot of people don’t complain about anything. So I just said, maybe it wasn’t meant for me to have it. I would say that the bids are put together pretty good but their budget is not realistic. I’ve 7-11 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis been doing this work for decades and I know what it takes to do a job. I can walk to a jobsite and determine how many guys I will need, how long it’s going to take me, and the equipment needed. I look at some contractor’s bid and I say there’s no way they can do the job for that amount. But they will get awarded the job, and when they do a bad job they still get to finish the job. E. Excessive Certification Requirements The Governing Board of the Authority established a goal of 15% SBE goal for participation on the Authority’s contracts. The SBE Program is voluntary and the goal is achieved through good faith efforts. The Authority does not certify businesses but accepts certifications issued by any other government. Many business owners reported issues seeking certification from local agencies. The issues ranged from excessive paperwork, overly broad business size limitations, and unnecessary requirements. A minority male owner of an architecture and engineering business reported on what he considers excessive requirements to obtain MBE certification, including proof of ethnicity: The amount of documentation needed for certification is excessive. The amount of stuff we need, just prove that we're an African American firm was unnecessary. It shouldn't be that much paperwork to prove we're an African American firm. Some of the financial requirements and paperwork we had to submit were cumbersome, tedious, and unnecessary. We had to go through hoops and hurdles to prove our ethnicity. Also, some of the things that they wanted to see in our financial statements didn't make sense. At first, our general inclination was not to go down that road and forget it. Even though we had to jump through hoops to prove that we're African American, we realized we had to play their game. A minority female owner of a commodities and other services business reported on the excessive and confusing paperwork required by the Authority for which she had to submit several times to obtain certification for her small business: I actually provided a lot of documentation. And then received a letter saying that things were missing. But I had already gone through the requirements with them when I went there for about an hour or two. I had to redo the application and it took me three times longer to complete it. But we have not recertified and are inactive right now. A minority male owner of a construction business believes that the size limitation for SBE certification is too high because much larger companies can meet the eligibility requirements: 7-12 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis I’m getting ready to renew my SBE certification this month. The SBE applications requires three years of tax returns. I think that is a little bit ridiculous. They want to make sure that your revenues are below the $5 million range. There are no SBE contractors in Palm Beach County doing work in the $5 million range. It is only the big $30 to $80 million contractors that are getting most of the contracts in all industries. A Caucasian female owner of a professional services business reported that she felt discouraged from applying for SBE certification because she was not a minority: My initial application submittal was quite laborious and I haven’t decided if I will do the renewal. I had done quite a lot of work for the Palm Beach County Utility Department as well as the Solid Waste Authority, so I wanted to get the County certification. I went to the Small Business Office but I was discouraged from becoming certified. They suggested that I take business classes and come back a couple of years later. The person in the Small Business Office gave me a business card of someone she knew that taught at the state college. I decided that I wasn’t going to mess with it but I came back a couple of years later. I decided to apply for the SBE certification. I have been a consultant for 30 years so it wasn’t like I didn’t have any experience running a business or have project management experience. So I was somewhat offended by the Small Business Office. Now they treat me well and have included me in some small business activities. Nowadays it seems better, but when I first applied I was pretty disgusted. F. Prime Contractors Avoiding SBE Requirements A minority female owner of a construction business feels that some prime contractors purposely give her and other small businesses an inadequate amount of time to submit a quote for a subcontract as a tactic to avoid working with them: A lot of times prime contractors will reach out to us at the last minute because they know we are small and it may be difficult for us to come up with a bid that quick. They deliberately try not to reach out to us in time for them to do business with us. We work really hard and sometimes overnight, to do our best to participate as a subcontractor. This same business owner also reported that oftentimes when awarded a subcontract, her scope of work is reduced: After having my quote accepted, I was able to work on two contracts. One prime contractor kept his word and I was able to do the full job. The other prime contractor was absolutely ridiculous. They found a way for us not to do the whole job. But we were able to do some work because they used us to 7-13 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis get the work. There have been many times when prime contractors say they will use us. They will claim that we will do the work and then ask us to send our certification. So we will send all the paperwork regarding our certification. People will use our names knowing they were not willing to do business with us. A minority female owner of a professional services business believes that the Authority fails to hold prime contractors accountable to the SBE compliance requirements: In fact, [business name withheld] is in breach of their contract and the Authority is not enforcing their compliance requirements. The Authority has the power to enforce their compliance requirements because the contract specifically says that if you do not show a bona fide effort to implement your SBE plan, that is considered a material breach of the contract and you will be disbarred from future procurements. It states this unequivocally in the bid documents as well as in the executed agreements. Before 2013, the Authority did not have a mandatory SBE participation requirement and Black-owned companies were not benefitting from the Authority’s public dollars that are issued every year. My belief is that the Authority has refused to enforce its own compliance policies concerning small businesses. G. Public Versus Private Sector Experiences Business owners compared their experiences working in the public versus private sectors. A minority male owner of an architecture and engineering business explained that he has had more success working in the private sector with less barriers than he has experienced in the public sector: Breaking into the public sector has been a little bit harder than the private sector. We're thriving in the private sector, but in the public sector, it seems that we haven't really been able to be as consistent. The private sector doesn't have as many hoops and circles to jump through in order to get work. They understand that we provide a good service and they consistently come back to us over and over again. A minority male owner of a construction business explained he prefers working in the private sector. Due to the prevalence of late payments: The private sector is a lot better. Some inspectors for government agencies have a tendency to play games. For instance, they are supposed to sign off on an invoice, they will use their authority as a weapon against you and pretend like they never received the invoice. Or they will lose your invoice and that can sometimes cause us to wait for 60 to 90 days for payments. I’m speaking from experience because I have had an invoice that was so-called lost for 90 days. That is the game that was played. 7-14 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis H. Exemplary Practices by the Authority Some interviewees lauded Authority managers for their assistance when seeking work and performing their projects. A minority male owner of a construction business reported that the Authority’s management team on its construction projects were very helpful to his firm: The management team that supervised some of the sites that we took care of was very helpful. They made sure we had access to certain areas by telling us how to get there and scheduling. We worked as a team together. The management team on their sites are excellent. I can tell you that they are very good. A minority male owner of a professional services business reported that he enjoyed working on a project with the Finance Department. The assistance from the Authority was instrumental in the successful completion of the contract: The Finance Department has been helpful. We have enjoyed a working relationship with the Authority and they provided clear cut directions in terms of the work product they wanted. We had open discussions with them to develop solutions for what they wanted. Thus we've had a positive relationship with the Authority. A minority female owner of a construction business compliments the Authority’s SBE Program for keeping small businesses informed of upcoming contract opportunities: Palm Beach County also has a department for small businesses and they're really great. They send emails all the time so we know what is happening. If there is a bid that is going out, they keep you informed. I don't know if the Authority has an office for small businesses. I never received an email from them. I. Business Owners’ Recommendations to Improve Contracting with SBEs and M/WBEs Recommendations were offered to improve access to the Authority’s contracts for small, minority, and women-owned businesses. A minority male owner of a construction business recommends separating roofing, metal work, or plumbing from large contracts to create opportunities for SBEs: I cannot grow if I don't get work. I cannot hire people if I don't know if I will have a contract waiting for me next year. They should unbundle large projects. If they have construction projects with roofing and metal work, they should separate those items to create smaller jobs. That would help minorities, maybe get 10 percent of the roofing job. Or they could unbundle some of the plumbing or piping work so more businesses can begin to bid on different things. Unbundling would make seeking work at the Authority very 7-15 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis attractive for small businesses. If you have a multi-million-dollar contract, what is it going to cost you to subcontract 10 percent to a small business? But people are not willing to do that. A minority female owner of a commodities and other services business recommends unbundling large fleet maintenance contracts into smaller projects: I would recommend pulling out portions of large contracts for fleet maintenance to create additional contracting opportunities. They could separate parts or air condition services for vehicles. There are different suppliers that provide different services, like mechanics don't necessarily provide air conditioning services on vehicles. But they bundle everything into fleet management which can negatively impact the capabilities of minority business owners. They could also unbundle the auto glass portion of the bid or have an open supplier list with pricing that is established based on the top two or three competitors in the area. A minority male owner of a construction business recommends the Authority create more opportunities for local companies: I have noticed that a lot of the agencies in Palm Beach County are working with the large companies. I’m talking about the 30 million operations. I do not think this is good because those are not local companies. They are taking money from Palm Beach County businesses. Everything I do stay in Palm Beach County so we should really have first preference of those jobs. I also think they should break the jobs down to create more work. A Caucasian female owner of a professional services business recommends a more streamlined certification process for SBEs: The Authority’s general Request for Proposal process is somewhat burdensome. They require consultants to produce eight copies of certain documents. If we could send it in electronically it would have been easier because it requires a lot of time and effort for a small business to put together significant RFP. This same business owner recommends networking events that provide opportunities for SBEs to meet decision-makers at the Authority: I think meet and greets are a good thing. I suggest that they have some qualified SBE consultants get introduced to the staff at the Authority so that they are aware of SBEs that could potentially be used on their projects. 7-16 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis A minority female owner of a commodities and other services business suggested the Authority sponsor networking events similar to other local agencies: The Palm Beach Matchmaker program which is part of the South Florida Minority Diversity Council has been very beneficial. They also have different programs and seminars that I found educational as well as networking opportunities. V. Conclusion The business owners that participated in the eSurvey described what they believe are obstacles for small businesses working with the Authority or prime contractors. Favoritism was mentioned as a major barrier for small contractors. Some business owners felt that they were unable to secure work from the Authority because certain departments and contractors preferred to work with known companies. Other business owners lamented that their SBE certification had not been beneficial in assisting them to secure work from the Authority. Better communication that disseminates information to the business community was recommended by respondents to the eSurvey. In particular, one business owner reported that, “It's frustrating year after year, when we submit a proposal and don't hear back and can only assume that we were not awarded the contract.” Stricter monitoring of the SBE Program was also suggested to improve access to small businesses on the Authority’s contracts. Mason Tillman completed one-on-one anecdotal interviews with business owners that were domiciled in Palm Beach County. The interviewees were identified from two business community meetings, media outreach, bidder lists, trade and professional business organizations’ membership rosters, and the list of utilized businesses. The interviewees’ anecdotes revealed their experiences working with or seeking work from the Authority and the private sector. The business owners reported on their personal knowledge of barriers they perceive as preventing contractors from successfully competing for public contracts. Comments about the Authority’s SBE Program were offered to increase the participation of small, minority, and women-owned businesses on the Authority’s contracts. Some business owners provided examples of what they believe are tactics by prime contractors to avoid the Authority’s SBE Program requirements. Exemplary practices of the Authority in utilizing M/WBEs were described as well. Recommendations to improve access for M/WBEs and other small businesses were also presented. 7-17 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis CHAPTER 8: Prime Contract Disparity Analysis I. Introduction The objective of the disparity analysis is to determine the levels at which Minority and Womanowned Business Enterprises, hereinafter referred to as Minority and Caucasian Female Business Enterprises (M/WBE), are utilized on the Solid Waste Authority of Palm Beach County’s (Authority) prime contracts. Under a fair and equitable system of awarding prime contracts, the proportion of prime contract dollars awarded to M/WBEs should be relatively close to the corresponding proportion of available M/WBEs368 in the relevant market area. If the ratio of utilized M/WBE prime contractors to available M/WBE prime contractors is less than one, a statistical test is conducted to calculate the probability of observing the empirical disparity ratio or any event which is less probable. This analysis assumes a fair and equitable system. 369 Croson states that an inference of discrimination can be made prima facie if the disparity is statistically significant. Under the Croson model, Non-minority Male-owned Businesses (non-M/WBE) are not subject to a statistical test of underutilization. The first step in conducting the statistical test is to calculate the contract value that each ethnic and gender group is expected to receive. This value is based on each group’s availability in the market area and shall be referred to as the expected contract amount. The next step computes the difference between each ethnic and gender group’s expected contract amount and the actual contract amount received by each group. The disparity ratio is then computed by dividing the actual contract amount by the expected contract amount. For parametric and non-parametric analyses, the p-value takes into account the number of contracts, amount of contract dollars, and variation in contract dollars. If the difference between the actual and expected number of contracts and total contract dollars has a p-value equal to or less than 0.05, the difference is statistically significant.370 368 Availability is defined as the number of ready, willing, and able firms. The methodology for determining willing and able firms is detailed in Chapter 6: Prime Contractor and Subcontractor Availability Analysis. 369 When conducting statistical tests, a confidence level must be established as a gauge for the level of certainty that an observed occurrence is not due to chance. It is important to note that a 100-percent confidence level or a level of absolute certainty can never be obtained in statistics. A 95-percent confidence level is considered by the statistical standard to be an acceptable level in determining whether an inference of discrimination can be made. Thus, the data analysis here was done within the 95-percent confidence level. 370 A statistical test is not performed for underutilization of Non-minority Males or when the ratio of utilized to available is greater than one for M/WBEs. 8-1 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review In the simulation analysis, the p-value takes into account a combination of the distribution formulated from the empirical data and the contract dollar amounts or contract rank. If the actual contract dollar amount, or actual contract rank, falls below the fifth percentile of the distribution, it denotes a p-value less than 0.05, which is statistically significant. Our statistical model employs all three methods simultaneously for each industry. Findings from one of the three methods are reported. If the p-value from any one of the three methods is less than 0.05, the finding is reported in the disparity tables as statistically significant. If the p-value is greater than 0.05, the finding is reported as not statistically significant. II. Disparity Analysis A prime contract disparity analysis was performed on construction, professional services, including architecture and engineering (hereinafter referred to as professional services), commodities and other services, and trade services contracts during the fiscal years 2009 through 2013 (October 1, 2008, to September 30, 2013) study period. As demonstrated in Chapter 6: Prime Contractor and Subcontractor Availability Analysis, the majority of the Authority’s contracts were small. Construction prime contracts valued at $50,000 and under constituted 72.62% of all construction prime contracts. Professional services prime contracts valued $50,000 and under constituted 74.46% of all professional services prime contracts. Commodities and other services prime contracts valued $5,000 and under constituted 64.13% of all commodities and other services prime contracts. Trade services prime contracts valued $5,000 and under constituted 81.70% of all trade services prime contracts. The threshold levels for the disparity analysis were set to ensure that there was documented capacity to perform the formal contracts analyzed within the pool of willing businesses. Contracts within each of the four industries were analyzed at three dollar thresholds. One threshold included all prime contracts regardless of award amount. A second threshold included all formal prime contracts valued $600,000 and under for construction, $175,000 and under for professional services, $250,000 and under for commodities and other services, and $50,000 and under for trade services. The third threshold included informal prime contract valued $50,000 and under for construction and professional services, and all informal prime contracts valued $5,000 and under for commodities and other services and trade services, according to the Authority’s procurement standards. The findings from the three methods employed to calculate statistical significance as discussed on page 8-1 are presented in the subsequent sections. The outcomes of the statistical analyses are presented in the “P-Value” column of the tables. A description of the statistical outcomes in the disparity tables is presented in Table 8.1. 8-2 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Table 8.1: Statistical Outcome Descriptions P-Value Outcome < .05 * not significant ---** < .05 † A. Definition of P-Value Outcome This underutilization is statistically significant. This underutilization is not statistically significant. There are too few available firms to test statistical significance. The statistical test is not performed for the overutilization of M/WBEs or the underutilization of Non-minority Males. This overutilization is statistically significant. Disparity Analysis: All Formal Prime Contracts, by Industry 1. Construction Prime Contracts Valued $600,000 and Under The disparity analysis of construction prime contracts valued $600,000 and under is described below and depicted in Table 8.2 and Chart 8.1. African Americans represent 12.45% of the available construction businesses and received 2.37% of the dollars on construction prime contracts valued $600,000 and under. This underutilization is statistically significant. Asian Americans represent 1.49% of the available construction businesses and received 0.09% of the dollars on construction prime contracts valued $600,000 and under. This underutilization is not statistically significant. Hispanic Americans represent 13.20% of the available construction businesses and received 3.19% of the dollars on construction prime contracts valued $600,000 and under. This underutilization is statistically significant. Native Americans represent 0.56% of the available construction businesses and received 0.00% of the dollars on construction prime contracts valued $600,000 and under. There are too few available firms to test statistical significance of this underutilization. Caucasian Females represent 13.75% of the available construction businesses and received 31.58% of the dollars on construction prime contracts valued $600,000 and under. The statistical test is not performed for the overutilization of M/WBEs. Non-minority Males represent 58.55% of the available construction businesses and received 62.77% of dollars on construction prime contracts valued $600,000 and under. This overutilization is not statistically significant. 8-3 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Table 8.2: Disparity Analysis: Construction Prime Contracts Valued $600,000 and Under, Fiscal Years 2009 Through 2013 Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio Ethnicity 0.19 -$446,266 $550,929 12.45% 2.37% $104,664 African Americans 0.06 -$61,692 $65,783 1.49% 0.09% $4,091 Asian Americans 0.24 -$442,716 $583,821 13.20% 3.19% $141,105 Hispanic Americans 0.00 -$24,668 $24,668 0.56% 0.00% $0 Native Americans 2.30 $788,648 $608,489 13.75% 31.58% $1,397,137 Caucasian Females 1.07 $186,694 $2,590,190 58.55% 62.77% $2,776,884 Non-minority Males $4,423,880 100.00% 100.00% $4,423,880 TOTAL Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio Ethnicity and Gender 0.00 -$74,005 $74,005 1.67% 0.00% $0 African American Females 0.22 -$372,260 $476,924 10.78% 2.37% $104,664 African American Males 0.00 -$32,891 $32,891 0.74% 0.00% $0 Asian American Females 0.12 -$28,801 $32,891 0.74% 0.09% $4,091 Asian American Males 0.00 -$164,456 $164,456 3.72% 0.00% $0 Hispanic American Females 0.34 -$278,260 $419,364 9.48% 3.19% $141,105 Hispanic American Males 0.00 -$8,223 $8,223 0.19% 0.00% $0 Native American Females 0.00 -$16,446 $16,446 0.37% 0.00% $0 Native American Males 2.30 $788,648 $608,489 13.75% 31.58% $1,397,137 Caucasian Females 1.07 $186,694 $2,590,190 58.55% 62.77% $2,776,884 Non-minority Males $4,423,880 100.00% 100.00% $4,423,880 TOTAL ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) this study does not test statistically the overutilization of M/WBEs or the underutilization of Non-minority Males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. P-Value < .05 * not significant < .05 * ---** not significant P-Value not significant < .05 * ------not significant < .05 * ------** not significant 8-4 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Chart 8.1: Disparity Analysis: Construction Prime Contracts Valued $600,000 and Under, Fiscal Years 2009 Through 2013 $3,000,000 $2,500,000 Dollars $2,000,000 $1,500,000 Actual Dollars Expected Dollars $1,000,000 $500,000 $0 African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males Ethnic/Gender Groups 8-5 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis 2. Professional Services Prime Contracts Valued $175,000 and Under The disparity analysis of professional services prime contracts valued $175,000 and under is described below and depicted in Table 8.3 and Chart 8.2. African Americans represent 11.76% of the available professional services businesses and received 8.70% of the dollars on professional services prime contracts valued $175,000 and under. This underutilization is statistically significant. Asian Americans represent 4.59% of the available professional services businesses and received 0.89% of the dollars on professional services prime contracts valued $175,000 and under. This underutilization is statistically significant. Hispanic Americans represent 11.62% of the available professional services businesses and received 6.26% of the dollars on professional services prime contracts valued $175,000 and under. This underutilization is statistically significant. Native Americans represent 0.14% of the available professional services businesses and received 1.54% of the dollars on professional services prime contracts valued $175,000 and under. The statistical test is not performed for the overutilization of M/WBEs. Caucasian Females represent 19.32% of the available professional services businesses and received 2.25% of the dollars on professional services prime contracts valued $175,000 and under. This underutilization is statistically significant. Non-minority Males represent 52.57% of the available professional services businesses and received 80.36% of the dollars on professional services prime contracts valued $175,000 and under. This overutilization is statistically significant. 8-6 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Table 8.3: Disparity Analysis: Professional Services Prime Contracts Valued $175,000 and Under, Fiscal Years 2009 Through 2013 P-Value Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio Ethnicity < .05 * 0.74 -$477,515 $1,837,006 11.76% 8.70% $1,359,491 African Americans < .05 * 0.19 -$578,961 $717,910 4.59% 0.89% $138,949 Asian Americans < .05 * 0.54 -$837,740 $1,815,891 11.62% 6.26% $978,150 Hispanic Americans ** 11.40 $219,687 $21,115 0.14% 1.54% $240,802 Native Americans < .05 * 0.12 $3,019,446 -$2,667,979 19.32% 2.25% $351,467 Caucasian Females < .05 † 1.53 $4,342,508 $8,213,738 52.57% 80.36% $12,556,246 Non-minority Males $15,625,106 100.00% 100.00% $15,625,106 TOTAL P-Value Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio Ethnicity and Gender < .05 * 0.01 -$691,895 $696,795 4.46% 0.03% $4,900 African American Females ** 1.19 $214,381 $1,140,210 7.30% 8.67% $1,354,591 African American Males < .05 * 0.00 -$211,150 $211,150 1.35% 0.00% $0 Asian American Females < .05 * 0.27 -$367,811 $506,760 3.24% 0.89% $138,949 Asian American Males < .05 * 0.18 -$574,644 $696,795 4.46% 0.78% $122,151 Hispanic American Females not significant 0.76 -$263,097 $1,119,095 7.16% 5.48% $855,999 Hispanic American Males ------$0 $0 0.00% 0.00% $0 Native American Females ** 11.40 $219,687 $21,115 0.14% 1.54% $240,802 Native American Males < .05 * 0.12 $3,019,446 -$2,667,979 19.32% 2.25% $351,467 Caucasian Females < .05 † 1.53 $8,213,738 $4,342,508 52.57% 80.36% $12,556,246 Non-minority Males $15,625,106 100.00% 100.00% $15,625,106 TOTAL ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) this study does not test statistically the overutilization of M/WBEs or the underutilization of Non-minority Males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. 8-7 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Chart 8.2: Disparity Analysis: Professional Services Prime Contracts Valued $175,000 and Under, Fiscal Years 2009 Through 2013 $14,000,000 $12,000,000 $10,000,000 Dollars $8,000,000 Actual Dollars $6,000,000 Expected Dollars $4,000,000 $2,000,000 $0 African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males Ethnic/Gender Groups 8-8 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis 3. Commodities and Other Services Prime Contracts Valued $250,000 and Under The disparity analysis of commodities and other services prime contracts valued $250,000 and under is described below and depicted in Table 8.4 and Chart 8.3. African Americans represent 7.49% of the available commodities and other services businesses and received 0.37% of the dollars on commodities and other services prime contracts valued $250,000 and under. This underutilization is statistically significant. Asian Americans represent 1.81% of the available commodities and other services businesses and received 2.07% of the dollars on commodities and other services prime contracts valued $250,000 and under. The statistical test is not performed for the overutilization of M/WBEs. Hispanic Americans represent 8.64% of the available commodities and other services businesses and received 2.17% of the dollars on commodities and other services prime contracts valued $250,000 and under. This underutilization is statistically significant. Native Americans represent 0.08% of the available commodities and other services businesses and received 0.00% of the dollars on commodities and other services prime contracts valued $250,000 and under. There are too few available firms to test statistical significance of this underutilization. Caucasian Females represent 18.85% of the available commodities and other services businesses and received 7.70% of the dollars on commodities and other services prime contracts valued $250,000 and under. This underutilization is statistically significant. Non-minority Males represent 63.13% of the available commodities and other services businesses and received 87.69% of the dollars on commodities and other services prime contracts valued $250,000 and under. This overutilization is statistically significant. 8-9 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Table 8.4: Disparity Analysis: Commodities and Other Services Prime Contracts Valued $250,000 and Under, Fiscal Years 2009 Through 2013 Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio Ethnicity 0.05 $2,976,443 -$2,829,816 7.49% 0.37% $146,627 African Americans 1.14 $103,534 $719,580 1.81% 2.07% $823,114 Asian Americans 0.25 $3,434,357 -$2,571,791 8.64% 2.17% $862,567 Hispanic Americans 0.00 -$32,708 $32,708 0.08% 0.00% $0 Native Americans 0.41 $7,490,170 -$4,429,327 18.85% 7.70% $3,060,843 Caucasian Females 1.39 $9,760,107 $25,087,163 63.13% 87.69% $34,847,270 Non-minority Males $39,740,421 100.00% 100.00% $39,740,421 TOTAL Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio Ethnicity and Gender 0.00 $1,046,661 -$1,046,661 2.63% 0.00% $0 African American Females 0.08 $1,929,782 -$1,783,155 4.86% 0.37% $146,627 African American Males 1.10 $42,573 $425,206 1.07% 1.18% $467,779 Asian American Females 1.21 $60,961 $294,373 0.74% 0.89% $355,335 Asian American Males 0.21 $1,373,743 -$1,081,966 3.46% 0.73% $291,777 Hispanic American Females 0.28 $2,060,614 -$1,489,825 5.19% 1.44% $570,790 Hispanic American Males ---$0 $0 0.00% 0.00% $0 Native American Females 0.00 -$32,708 $32,708 0.08% 0.00% $0 Native American Males 0.41 $7,490,170 -$4,429,327 18.85% 7.70% $3,060,843 Caucasian Females 1.39 $9,760,107 $25,087,163 63.13% 87.69% $34,847,270 Non-minority Males $39,740,421 100.00% 100.00% $39,740,421 TOTAL ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) this study does not test statistically the overutilization of M/WBEs or the underutilization of Non-minority Males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. P-Value < .05 * ** < .05 * ---< .05 * < .05 † P-Value < .05 * < .05 * ** ** < .05 * < .05 * ------< .05 * < .05 † 8-10 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Chart 8.3: Disparity Analysis: Commodities and Other Services Prime Contracts Valued $250,000 and Under, Fiscal Years 2009 Through 2013 $35,000,000 $30,000,000 $25,000,000 Dollars $20,000,000 Actual D ollars $15,000,000 Expected Dollars $10,000,000 $5,000,000 $0 African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males Ethnic/Gender Groups 8-11 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis 4. Trade Services Prime Contracts Valued $50,000 and Under The disparity analysis of trade services prime contracts valued $50,000 and under is described below and depicted in Table 8.5 and Chart 8.4. African Americans represent 8.82% of the available trade services businesses and received 0.00% of the dollars on trade services prime contracts valued $50,000 and under. This underutilization is statistically significant. Asian Americans represent 0.00% of the available trade services businesses and received 0.00% of the dollars on trade services prime contracts valued $50,000 and under. There are too few available firms to test statistical significance of this underutilization. Hispanic Americans represent 7.35% of the available trade services businesses and received 20.10% of the dollars on trade services prime contracts valued $50,000 and under. The statistical test is not performed for the overutilization of M/WBEs. Native Americans represent 0.00% of the available trade services businesses and received 0.00% of the dollars on trade services prime contracts valued $50,000 and under. There are too few available firms to test statistical significance of this underutilization. Caucasian Females represent 20.59% of the available trade services businesses and received 11.11% of the dollars on trade services prime contracts valued $50,000 and under. This underutilization is statistically significant. Non-minority Males represent 63.24% of the available trade services businesses and received 68.78% of the dollars on trade services prime contracts valued $50,000 and under. This overutilization is not statistically significant. 8-12 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Table 8.5: Disparity Analysis: Trade Services Prime Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio Ethnicity 0.00 -$66,205 $66,205 8.82% 0.00% $0 African Americans ---$0 $0 0.00% 0.00% $0 Asian Americans 2.73 $95,673 $55,171 7.35% 20.10% $150,844 Hispanic Americans ---$0 $0 0.00% 0.00% $0 Native Americans 0.54 -$71,102 $154,478 20.59% 11.11% $83,376 Caucasian Females 1.09 $41,634 $474,469 63.24% 68.78% $516,103 Non-minority Males $750,324 100.00% 100.00% $750,324 TOTAL Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio Ethnicity and Gender 0.00 -$11,034 $11,034 1.47% 0.00% $0 African American Females 0.00 -$55,171 $55,171 7.35% 0.00% $0 African American Males ---$0 $0 0.00% 0.00% $0 Asian American Females ---$0 $0 0.00% 0.00% $0 Asian American Males 4.37 $111,573 $33,103 4.41% 19.28% $144,675 Hispanic American Females 0.28 -$15,899 $22,068 2.94% 0.82% $6,169 Hispanic American Males ---$0 $0 0.00% 0.00% $0 Native American Females ---$0 $0 0.00% 0.00% $0 Native American Males 0.54 -$71,102 $154,478 20.59% 11.11% $83,376 Caucasian Females 1.09 $41,634 $474,469 63.24% 68.78% $516,103 Non-minority Males $750,324 100.00% 100.00% $750,324 TOTAL ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) this study does not test statistically the overutilization of M/WBEs or the underutilization of Non-minority Males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. P-Value < .05 * ---** ---< .05 * not significant P-Value not significant < .05 * ------** not significant ------< .05 * not significant 8-13 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Chart 8.4: Disparity Analysis: Trade Services Prime Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 $600,000 $500,000 Dollars $400,000 $300,000 Actual Dollars Expected Dollars $200,000 $100,000 $0 African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males Ethnic/Gender Groups 8-14 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis B. Disparity Analysis: All Informal Prime Contracts, by Industry 1. Construction Prime Contracts Valued $50,000 and Under The disparity analysis of construction prime contracts valued $50,000 and under is described below and depicted in Table 8.6 and Chart 8.5. African Americans represent 12.45% of the available construction businesses and received 0.60% of the dollars on construction prime contracts valued $50,000 and under. This underutilization is statistically significant. Asian Americans represent 1.49% of the available construction businesses and received 0.66% of the dollars on construction prime contracts valued $50,000 and under. This underutilization is not statistically significant. Hispanic Americans represent 13.20% of the available construction businesses and received 0.00% of the dollars on construction prime contracts valued $50,000 and under. This underutilization is statistically significant. Native Americans represent 0.56% of the available construction businesses and received 0.00% of the dollars on construction prime contracts valued $50,000 and under. There are too few available firms to test statistical significance of this underutilization. Caucasian Females represent 13.75% of the available construction businesses and received 61.02% of the dollars on construction prime contracts valued $50,000 and under. The statistical test is not performed for the overutilization of M/WBEs. Non-minority Males represent 58.55% of the available construction businesses and received 37.72% of the dollars on construction prime contracts valued $50,000 and under. The statistical test is not performed for the underutilization of Non-minority Males. 8-15 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Table 8.6: Disparity Analysis: Construction Prime Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 Ethnicity Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African Americans $3,711 0.60% 12.45% $77,264 -$73,553 0.05 < .05 * Asian Americans $4,091 0.66% 1.49% $9,226 -$5,135 0.44 not significant Hispanic Americans $0 0.00% 13.20% $81,877 -$81,877 0.00 < .05 * Native Americans $0 0.00% 0.56% $3,460 -$3,460 0.00 ---Caucasian Females $378,595 61.02% 13.75% $85,336 $293,259 4.44 ** Non-minority Males $234,022 37.72% 58.55% $363,257 -$129,235 0.64 ** TOTAL $620,419 100.00% 100.00% $620,419 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African American Females $0 0.00% 1.67% $10,379 -$10,379 0.00 not significant African American Males $3,711 0.60% 10.78% $66,885 -$63,174 0.06 < .05 * Asian American Females $0 0.00% 0.74% $4,613 -$4,613 0.00 ---Asian American Males $4,091 0.66% 0.74% $4,613 -$522 0.89 ---Hispanic American Females $0 0.00% 3.72% $23,064 -$23,064 0.00 not significant Hispanic American Males $0 0.00% 9.48% $58,813 -$58,813 0.00 < .05 * Native American Females $0 0.00% 0.19% $1,153 -$1,153 0.00 ---Native American Males $0 0.00% 0.37% $2,306 -$2,306 0.00 ---Caucasian Females $378,595 61.02% 13.75% $85,336 $293,259 4.44 ** Non-minority Males $234,022 37.72% 58.55% $363,257 -$129,235 0.64 ** TOTAL $620,419 100.00% 100.00% $620,419 ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) this study does not test statistically the overutilization of M/WBEs or the underutilization of Non-minority Males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. 8-16 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Chart 8.5: Disparity Analysis: Construction Prime Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 $400,000 $350,000 $300,000 Dollars $250,000 $200,000 Actual Dollars Expected Dollars $150,000 $100,000 $50,000 $0 African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males Ethnic/Gender Groups 8-17 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis 2. Professional Services Prime Contracts Valued $50,000 and Under The disparity analysis of professional services prime contracts valued $50,000 and under is described below and depicted in Table 8.7 and Chart 8.6. African Americans represent 11.76% of the available professional services businesses and received 6.05% of the dollars on professional services prime contracts valued $50,000 and under. This underutilization is statistically significant. Asian Americans represent 4.59% of the available professional services businesses and received 0.86% of the dollars on professional services prime contracts valued $50,000 and under. This underutilization is statistically significant. Hispanic Americans represent 11.62% of the available professional services businesses and received 8.86% of the dollars on professional services prime contracts valued $50,000 and under. This underutilization is not statistically significant. Native Americans represent 0.14% of the available professional services businesses and received 1.96% of the dollars on professional services prime contracts valued $50,000 and under. The statistical test is not performed for the overutilization of M/WBEs. Caucasian Females represent 19.32% of the available professional services businesses and received 4.17% of the dollars on professional services prime contracts valued $50,000 and under. This underutilization is statistically significant. Non-minority Males represent 52.57% of the available professional services businesses and received 78.10% of the dollars on professional services prime contracts valued $50,000 and under. This overutilization is statistically significant. 8-18 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Table 8.7: Disparity Analysis: Professional Services Prime Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 P-Value Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio Ethnicity < .05 * 0.51 -$391,817 $807,395 11.76% 6.05% $415,578 African Americans < .05 * 0.19 -$256,738 $315,534 4.59% 0.86% $58,796 Asian Americans not significant 0.76 -$189,986 $798,115 11.62% 8.86% $608,129 Hispanic Americans ** 14.51 $125,334 $9,280 0.14% 1.96% $134,614 Native Americans < .05 * 0.22 $1,327,098 -$1,040,444 19.32% 4.17% $286,653 Caucasian Females < .05 † 1.49 $1,753,651 $3,610,077 52.57% 78.10% $5,363,727 Non-minority Males $6,867,498 100.00% 100.00% $6,867,498 TOTAL P-Value Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio Ethnicity and Gender < .05 * 0.02 -$301,353 $306,253 4.46% 0.07% $4,900 African American Females not significant 0.82 -$90,464 $501,142 7.30% 5.98% $410,678 African American Males < .05 * 0.00 -$92,804 $92,804 1.35% 0.00% $0 Asian American Females < .05 * 0.26 -$163,934 $222,730 3.24% 0.86% $58,796 Asian American Males < .05 * 0.40 -$184,102 $306,253 4.46% 1.78% $122,151 Hispanic American Females not significant 0.99 -$5,884 $491,861 7.16% 7.08% $485,977 Hispanic American Males ------$0 $0 0.00% 0.00% $0 Native American Females ** 14.51 $125,334 $9,280 0.14% 1.96% $134,614 Native American Males < .05 * 0.22 $1,327,098 -$1,040,444 19.32% 4.17% $286,653 Caucasian Females < .05 † 1.49 $1,753,651 $3,610,077 52.57% 78.10% $5,363,727 Non-minority Males $6,867,498 100.00% 100.00% $6,867,498 TOTAL ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) this study does not test statistically the overutilization of M/WBEs or the underutilization of Non-minority Males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. 8-19 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Chart 8.6: Disparity Analysis: Professional Services Prime Contracts Valued $50,000 and Under, Fiscal Years 2009 Through 2013 $6,000,000 $5,000,000 Dollars $4,000,000 $3,000,000 Actual Dollars Expected Dollars $2,000,000 $1,000,000 $0 African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males Ethnic/Gender Groups 8-20 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis 3. Commodities and Other Services Prime Contracts Valued $5,000 and Under The disparity analysis of commodities and other services prime contracts valued $5,000 and under is described below and depicted in Table 8.8 and Chart 8.7. African Americans represent 7.49% of the available commodities and other services businesses and received 0.36% of the dollars on commodities and other services prime contracts valued $5,000 and under. This underutilization is statistically significant. Asian Americans represent 1.81% of the available commodities and other services businesses and received 1.98% of the dollars on commodities and other services prime contracts valued $5,000 and under. The statistical test is not performed for the overutilization of M/WBEs. Hispanic Americans represent 8.64% of the available commodities and other services businesses and received 3.25% of the dollars on commodities and other services prime contracts valued $5,000 and under. This underutilization is statistically significant. Native Americans represent 0.08% of the available commodities and other services businesses and received 0.00% of the dollars on commodities and other services prime contracts valued $5,000 and under. There are too few available firms to test statistical significance of this underutilization. Caucasian Females represent 18.85% of the available commodities and other services businesses and received 8.68% of the dollars on commodities and other services prime contracts valued $5,000 and under. This underutilization is statistically significant. Non-minority Males represent 63.13% of the available commodities and other services businesses and received 85.73% of the dollars on commodities and other services prime contracts valued $5,000 and under. This overutilization is statistically significant. 8-21 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Table 8.8: Disparity Analysis: Commodities and Other Services Prime Contracts Valued $5,000 and Under, Fiscal Years 2009 Through 2013 Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio Ethnicity 0.05 -$291,026 $305,928 7.49% 0.36% $14,902 African Americans 1.09 $6,971 $73,961 1.81% 1.98% $80,932 Asian Americans 0.38 -$220,357 $352,994 8.64% 3.25% $132,637 Hispanic Americans 0.00 -$3,362 $3,362 0.08% 0.00% $0 Native Americans 0.46 -$415,379 $769,863 18.85% 8.68% $354,484 Caucasian Females 1.36 $923,154 $2,578,537 63.13% 85.73% $3,501,691 Non-minority Males $4,084,645 100.00% 100.00% $4,084,645 TOTAL Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio Ethnicity and Gender 0.00 -$107,579 $107,579 2.63% 0.00% $0 African American Females 0.08 -$183,447 $198,349 4.86% 0.36% $14,902 African American Males 1.73 $31,835 $43,704 1.07% 1.85% $75,539 Asian American Females 0.18 -$24,864 $30,257 0.74% 0.13% $5,392 Asian American Males 0.71 -$40,969 $141,198 3.46% 2.45% $100,228 Hispanic American Females 0.15 -$179,388 $211,796 5.19% 0.79% $32,408 Hispanic American Males ---$0 $0 0.00% 0.00% $0 Native American Females 0.00 -$3,362 $3,362 0.08% 0.00% $0 Native American Males 0.46 -$415,379 $769,863 18.85% 8.68% $354,484 Caucasian Females 1.36 $923,154 $2,578,537 63.13% 85.73% $3,501,691 Non-minority Males $4,084,645 100.00% 100.00% $4,084,645 TOTAL ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) this study does not test statistically the overutilization of M/WBEs or the underutilization of Non-minority Males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. P-Value < .05 * ** < .05 * ---< .05 * < .05 † P-Value < .05 * < .05 * ** ---< .05 * < .05 * ------< .05 * < .05 † 8-22 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Chart 8.7: Disparity Analysis: Commodities and Other Services Prime Contracts Valued 5,000 and Under, Fiscal Years 2009 Through 2013 $4,000,000 $3,500,000 $3,000,000 Dollars $2,500,000 $2,000,000 Actual Dollars Expected Dollars $1,500,000 $1,000,000 $500,000 $0 African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males Ethnic/Gender Groups 8-23 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis 4. Trade Services Prime Contracts Valued $5,000 and Under The disparity analysis of trade services prime contracts valued $5,000 and under is described below and depicted in Table 8.9 and Chart 8.8. African Americans represent 8.82% of the available trade services businesses and received 0.00% of the dollars on trade services prime contracts valued $5,000 and under. This underutilization is statistically significant. Asian Americans represent 0.00% of the available trade services businesses and received 0.00% of the dollars on trade services prime contracts valued $5,000 and under. There are too few available firms to test statistical significance of this underutilization. Hispanic Americans represent 7.35% of the available trade services businesses and received 13.16% of the dollars on trade services prime contracts valued $5,000 and under. The statistical test is not performed for the overutilization of M/WBEs. Native Americans represent 0.00% of the available trade services businesses and received 0.00% of the dollars on trade services prime contracts valued $5,000 and under. There are too few available firms to test statistical significance of this underutilization. Caucasian Females represent 20.59% of the available trade services businesses and received 11.17% of the dollars on trade services prime contracts valued $5,000 and under. This underutilization is statistically significant. Non-minority Males represent 63.24% of the available trade services businesses and received 75.67% of dollars on trade services prime contracts valued $5,000 and under. This overutilization is statistically significant. 8-24 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Table 8.9: Disparity Analysis: Trade Services Prime Contracts Valued $5,000 and Under, Fiscal Years 2009 Through 2013 P-Value Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio Ethnicity < .05 * 0.00 -$23,075 $23,075 8.82% 0.00% $0 African Americans ------$0 $0 0.00% 0.00% $0 Asian Americans ** 1.79 $15,187 $19,229 7.35% 13.16% $34,416 Hispanic Americans ------$0 $0 0.00% 0.00% $0 Native Americans < .05 * 0.54 -$24,640 $53,841 20.59% 11.17% $29,201 Caucasian Females < .05 † 1.20 $32,527 $165,369 63.24% 75.67% $197,896 Non-minority Males $261,513 100.00% 100.00% $261,513 TOTAL P-Value Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio Ethnicity and Gender not significant 0.00 -$3,846 $3,846 1.47% 0.00% $0 African American Females < .05 * 0.00 -$19,229 $19,229 7.35% 0.00% $0 African American Males ------$0 $0 0.00% 0.00% $0 Asian American Females ------$0 $0 0.00% 0.00% $0 Asian American Males ** 2.45 $16,710 $11,537 4.41% 10.80% $28,247 Hispanic American Females not significant 0.80 -$1,523 $7,692 2.94% 2.36% $6,169 Hispanic American Males ------$0 $0 0.00% 0.00% $0 Native American Females ------$0 $0 0.00% 0.00% $0 Native American Males < .05 * 0.54 -$24,640 $53,841 20.59% 11.17% $29,201 Caucasian Females < .05 † 1.20 $32,527 $165,369 63.24% 75.67% $197,896 Non-minority Males $261,513 100.00% 100.00% $261,513 TOTAL ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) this study does not test statistically the overutilization of M/WBEs or the underutilization of Non-minority Males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. 8-25 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Chart 8.8: Disparity Analysis: Trade Services Prime Contracts Valued $5,000 and Under, Fiscal Years 2009 Through 2013 $200,000 $180,000 $160,000 $140,000 Dollars $120,000 $100,000 Actual D ollars Expected Dollars $80,000 $60,000 $40,000 $20,000 $0 African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males Ethnic/Gender Groups 8-26 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis III. Disparity Analysis Summary A. Construction Prime Contracts As indicated in Table 8.10 below, disparity was found for African American and Hispanic American prime contractors on construction contracts valued $600,000 and under and African American and Hispanic American prime contractors on construction contracts valued $50,000 and under. Table 8.10: Disparity Summary: Construction Prime Contract Dollars, Fiscal Years 2009 Through 2013 Construction Ethnicity/Gender African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females B. Contracts Valued $600,000 and Under Disparity No Disparity Disparity No Disparity No Disparity Contracts Valued $50,000 and Under Disparity No Disparity Disparity No Disparity No Disparity Professional Services Prime Contracts As indicated in Table 8.11 below, disparity was found for African American, Asian American, Hispanic American, and Caucasian Female prime contractors on contracts valued $175,000 and under and African American, Asian American, and Caucasian Female prime contractors on professional services contracts valued $50,000 and under. Table 8.11: Disparity Summary: Professional Services Prime Contract Dollars, Fiscal Years 2009 Through 2013 Professional Services Ethnicity/Gender African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Contracts Valued $175,000 and Under Disparity Disparity Disparity No Disparity Disparity Contracts Valued $50,000 and Under Disparity Disparity No Disparity No Disparity Disparity 8-27 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis C. Commodities and Other Services Prime Contracts As indicated in Table 8.12 below, disparity was found for African American, Hispanic American, and Caucasian Female prime contractors on commodities and other services contracts valued $250,000 and under and African American, Hispanic American, and Caucasian Female prime contractors on commodities and other services contracts valued at $5,000 and under. Table 8.12: Disparity Summary: Commodities and Other Services Prime Contract Dollars, Fiscal Years 2009 Through 2013 Commodities and Other Services Ethnicity/Gender African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females D. Contracts Valued $250,000 and Under Disparity No Disparity Disparity No Disparity Disparity Contracts Valued $5,000 and Under Disparity No Disparity Disparity No Disparity Disparity Trade Services Prime Contracts As indicated in Table 8.13 below, disparity was found for African American and Caucasian Female prime contractors on trade services contracts valued $50,000 and under and African American and Caucasian Female prime contractors on trade services contracts valued $5,000 and under. Table 8.13: Disparity Summary: Trade Services Prime Contract Dollars, Fiscal Years 2009 Through 2013 Trade Services Ethnicity/Gender African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Contracts Valued $50,000 and Under Disparity No Disparity No Disparity No Disparity Disparity Contracts Valued $5,000 and Under Disparity No Disparity No Disparity No Disparity Disparity 8-28 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis CHAPTER 9: Subcontract Disparity Analysis I. Introduction The objective of this chapter is to determine if there was any underutilization of Minority and Woman-owned Business Enterprise (M/WBE) subcontractors on Solid Waste Authority of Palm Beach County’s (Authority) contracts during the fiscal years 2009 through 2013 (October 1, 2008, to September 30, 2013) study period. A detailed discussion of the statistical procedures for conducting a disparity analysis is set forth in Chapter 8: Prime Contract Disparity Analysis. The same statistical procedures are used to perform the subcontract disparity analysis. Under a fair and equitable system of awarding subcontracts, the proportion of subcontracts and subcontract dollars awarded to M/WBE subcontractors should be relatively close to the proportion of available M/WBE subcontractors in the Authority’s market area. Availability is defined as the number of willing and able businesses. The methodology for determining willing and able businesses is detailed in Chapter 6: Prime Contractor and Subcontractor Availability Analysis. If the ratio of utilized M/WBE subcontractors to available M/WBE subcontractors is less than one, a statistical test is conducted to calculate the probability of observing the empirical disparity ratio or any event which is less probable.371 Croson states that an inference of discrimination can be made prima facie if the observed disparity is statistically significant. Under the Croson model, Non-minority Male-owned Business Enterprises are not subjected to a statistical test. II. Disparity Analysis As detailed in Chapter 4: Subcontractor Utilization Analysis, extensive efforts were undertaken to obtain subcontractor records for the Authority’s construction, professional services including architecture and engineering (hereinafter referred to as professional services), commodities and other services, and trade services contracts. However, the industries studied were limited to construction and professional services for the purposes of subcontract analyses. The commodities and other services and trade services industries do not generally employ subcontracts due to the type of goods and services solicited. Therefore, there are too few available businesses and the sample of subcontracts is too small to produce a reliable finding. The disparity analysis was performed on construction and professional services subcontracts issued during the fiscal years 2009 through 2013 study period. 371 When conducting statistical tests, a confidence level must be established as a gauge for the level of certainty that an observed occurrence is not due to chance. It is important to note that a 100-percent confidence level or a level of absolute certainty can never be obtained in statistics. A 95-percent confidence level is considered by statistical standards to be an acceptable level in determining whether an inference of discrimination can be made. Thus, the data analysis here was done within the 95-percent confidence level. 9-1 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis The subcontract disparity findings in the two industries under consideration are summarized below. The outcomes of the statistical analyses are presented in the “P-Value” column of the tables. A description of the statistical outcomes in the disparity tables are presented below in Table 9.1. Table 9.1: Statistical Outcome Descriptions P-Value Outcome < .05 * not significant ---** < .05 † ^ Definition of P-Value Outcome This underutilization is statistically significant. This underutilization is not statistically significant. There are too few available firms to test statistical significance. The statistical test is not performed for the overutilization of M/WBEs or the underutilization of Non-minority Males. This overutilization is statistically significant. Denotes an underutilized group where there are too few available businesses and the sample is too small to produce a reliable finding. 9-2 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis III. Disparity Analysis: All Subcontracts, By Industry A. Construction Subcontracts The disparity analysis of construction subcontracts is described below and depicted in Table 9.2 and Chart 9.1. African Americans represent 11.16% of the available construction businesses and received 0.47% of the construction subcontract dollars. This underutilization is statistically significant. Asian Americans represent 1.79% of the available construction businesses and received 0.01% of the construction subcontract dollars. This underutilization is not statistically significant. Hispanic Americans represent 11.61% of the available construction businesses and received 1.45% of the construction subcontract dollars. This underutilization is not statistically significant. Native Americans represent 0.45% of the available construction businesses and received 0.00% of the construction subcontract dollars. There are too few available firms to test statistical significance of this underutilization. Caucasian Females represent 12.65% of the available construction businesses and received 30.02% of the construction subcontract dollars. The statistical test is not performed for the overutilization of M/WBEs. Non-minority Males represent 62.35% of the available construction businesses and received 68.05% of the construction subcontract dollars. This overutilization is not statistically significant. 9-3 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Table 9.2: Disparity Analysis: Construction Subcontracts, Fiscal Years 2009 Through 2013 Ethnicity Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African Americans $121,650 0.47% 11.16% $2,869,395 -$2,747,745 0.04 < .05 * Asian Americans $1,310 0.01% 1.79% $459,103 -$457,793 0.00 not significant Hispanic Americans $373,560 1.45% 11.61% $2,984,170 -$2,610,611 0.13 not significant Native Americans $0 0.00% 0.45% $114,776 -$114,776 0.00 ---Caucasian Females $7,717,543 30.02% 12.65% $3,251,981 $4,465,562 2.37 ** Non-minority Males $17,495,713 68.05% 62.35% $16,030,351 $1,465,362 1.09 not significant TOTAL $25,709,776 100.00% 100.00% $25,709,776 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African American Females $0 0.00% 1.93% $497,362 -$497,362 0.00 not significant African American Males $121,650 0.47% 9.23% $2,372,033 -$2,250,383 0.05 < .05 * Asian American Females $0 0.00% 0.74% $191,293 -$191,293 0.00 ---Asian American Males $1,310 0.01% 1.04% $267,810 -$266,500 0.00 not significant Hispanic American Females $196,910 0.77% 2.98% $765,172 -$568,262 0.26 not significant Hispanic American Males $176,650 0.69% 8.63% $2,218,999 -$2,042,349 0.08 not significant Native American Females $0 0.00% 0.15% $38,259 -$38,259 0.00 ---Native American Males $0 0.00% 0.30% $76,517 -$76,517 0.00 ---Caucasian Females $7,717,543 30.02% 12.65% $3,251,981 $4,465,562 2.37 ** Non-minority Males $17,495,713 68.05% 62.35% $16,030,351 $1,465,362 1.09 not significant TOTAL $25,709,776 100.00% 100.00% $25,709,776 ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) denotes that this study does not test statistically the overutilization of M/WBEs or the underutilization of Non-minority Males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. 9-4 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Chart 9.1: Disparity Analysis: Construction Subcontracts, Fiscal Years 2009 Through 2013 $18,000,000 $16,000,000 $14,000,000 Dollars $12,000,000 $10,000,000 Actual Dollars $8,000,000 Expected Dollars $6,000,000 $4,000,000 $2,000,000 $0 African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males Ethnic/Gender Groups 9-5 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis B. Professional Services Subcontracts The disparity analysis of professional services, including architecture and engineering, subcontracts is described below and depicted in Table 9.3 and Chart 9.2. African Americans represent 11.04% of the available professional services businesses and received 1.33% of the professional services subcontract dollars. This underutilization is statistically significant. Asian Americans represent 4.27% of the available professional services businesses and received 5.48% of the professional services subcontract dollars. The statistical test is not performed for the overutilization of M/WBEs. Hispanic Americans represent 11.04% of the available professional services businesses and received 17.61% of the professional services subcontract dollars. The statistical test is not performed for the overutilization of M/WBEs. Native Americans represent 0.13% of the available professional services businesses and received 0.00% of the professional services subcontract dollars. There are too few available firms to test statistical significance. Caucasian Females represent 18.95% of the available professional services businesses and received 2.96% of the professional services subcontract dollars. This underutilization is statistically significant. Non-minority Males represent 54.58% of the available professional services businesses and received 72.62% of the professional services subcontract dollars. This overutilization is statistically significant. 9-6 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Table 9.3: Disparity Analysis: Professional Services Subcontracts, Fiscal Years 2009 Through 2013 Ethnicity Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African Americans $83,024 1.33% 11.04% $689,732 -$606,708 0.12 < .05 * Asian Americans $342,243 5.48% 4.27% $266,487 $75,756 1.28 ** Hispanic Americans $1,099,787 17.61% 11.04% $689,732 $410,055 1.59 ** Native Americans $0 0.00% 0.13% $7,838 -$7,838 0.00 ---Caucasian Females $185,009 2.96% 18.95% $1,183,518 -$998,509 0.16 < .05 * Non-minority Males $4,536,716 72.62% 54.58% $3,409,471 $1,127,245 1.33 < .05 † TOTAL $6,246,778 100.00% 100.00% $6,246,778 Ethnicity and Gender Actual Dollars Utilization Availability Expected Dollars Dollars Lost Disp. Ratio P-Value African American Females $1,688 0.03% 4.14% $258,650 -$256,962 0.01 not significant African American Males $81,336 1.30% 6.90% $431,083 -$349,747 0.19 not significant Asian American Females $0 0.00% 1.25% $78,379 -$78,379 0.00 not significant Asian American Males $342,243 5.48% 3.01% $188,109 $154,134 1.82 ** Hispanic American Females $0 0.00% 4.14% $258,650 -$258,650 0.00 < .05 * Hispanic American Males $1,099,787 17.61% 6.90% $431,083 $668,704 2.55 ** Native American Females $0 0.00% 0.00% $0 $0 ------Native American Males $0 0.00% 0.13% $7,838 -$7,838 0.00 ---Caucasian Females $185,009 2.96% 18.95% $1,183,518 -$998,509 0.16 < .05 * Non-minority Males $4,536,716 72.62% 54.58% $3,409,471 $1,127,245 1.33 < .05 † TOTAL $6,246,778 100.00% 100.00% $6,246,778 ( * ) denotes a statistically significant underutilization. ( † ) denotes a statistically significant overutilization. ( ** ) denotes that this study does not test statistically the overutilization of M/WBEs or the underutilization of Non-minority Males. ( ---- ) denotes an underutilized group with too few available firms to test statistical significance. 9-7 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Chart 9.2: Disparity Analysis: Professional Services Subcontracts, Fiscal Years 2009 Through 2013 $5,000,000 $4,500,000 $4,000,000 $3,500,000 Dollars $3,000,000 $2,500,000 Actual Dollars Expected Dollars $2,000,000 $1,500,000 $1,000,000 $500,000 $0 African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females Non-minority Males Ethnic/Gender Groups 9-8 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis IV. Subcontract Disparity Summary As indicated in Table 9.4, disparity was found for African American construction subcontractors and African American and Caucasian Female professional services subcontractors. Table 9.4: Subcontract Disparity Summary, Fiscal Years 2009 Through 2013 Ethnicity / Gender Construction Professional Services African Americans Disparity Disparity Asian Americans No Disparity No Disparity Hispanic Americans No Disparity No Disparity Native Americans No Disparity No Disparity Caucasian Females No Disparity Disparity 9-11 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis CHAPTER 10: Private Sector Regression Analysis I. Introduction Private sector business practices are not subject to the legal standards that local agency’s Minority and Woman-owned Business Enterprise Programs, hereinafter referred to as Minority and Caucasian Female-owned Business Enterprise (M/WBE). However private sector business practices are indicators of marketplace conditions that could adversely affect the formation and growth of M/WBEs. Adverse private sector marketplace conditions could depress the current availability of M/WBEs. Concrete Works of Colorado v. City and County of Denver (Concrete Works III)372 sets forth regression analysis as an analytical framework for assessing discrimination in private sector business practices. In accordance with Concrete Works III, the regression analyses examined three outcome variables—business ownership, business earnings, and business loan approval—to determine whether the Solid Waste Authority of Palm Beach County (Authority) is passively participating in private sector ethnic and gender discrimination. The three regression analyses examined possible impediments to minority and woman business ownership, business earnings, and business loan approval. The third regression analysis examined M/WBE business loan approval rates. Each regression analysis compared minority group members373 and Caucasian females to Caucasian males by controlling for race- and gender-neutral explanatory variables, such as age, education, marital status, and access to capital. The findings present the impact of the explanatory variables on the outcome variables. These findings also elucidate the socioeconomic conditions in the Authority’s market area that could adversely affect the relative availability of M/WBEs and Non-M/WBEs. Patterns of discrimination that might result in disproportionately lower numbers of willing and able M/WBEs are indicated by findings of statistically significant underutilization. The United States Census Public Use Microdata Sample (PUMS) data were used to compare the probability of minority males, minority females, and Caucasian females owning a business to the probability of Caucasian males owning a business. Logistic regression was used to determine if race and gender have had a statistically significant effect on the probability of business ownership. The PUMS data were also used to compare the business earnings of M/WBEs to Caucasian males. Ordinary Least Squares (OLS) regression was utilized to analyze the PUMS data for disparities in owner-reported incomes when controlling for race- and gender-neutral factors. The Kauffman Firm Survey (KFS) data were used to compare the probability of minority males’, minority females’, and Caucasian females’ loan approval to the probability of Caucasian males’ 372 Concrete Works of Colo., Inc. v. Denver, 86 F. Supp. 2d 1042, 1057-61 (D. Colo. 2000); rev'd on other grounds, 321 F.3d 950 (10th Cir. 2003), cert. denied, 540 U.S. 1027 (2003) (“Concrete Works III”). 373 Minority group members include both males and females. 10-1 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review loan approval. Ordered logistic regression was utilized to analyze the KFS data for disparities in business loan approval when controlling for race- and gender-neutral factors. The applicable limits of the private sector discrimination findings, are set forth in Builders Association of Greater Chicago v. City of Chicago (City of Chicago). 374 The court established that even when there is evidence of private sector discrimination, the findings cannot be used as the factual predicate for a government-sponsored, race-conscious M/WBE program unless there is a nexus between the private sector data and the public agency’s actions. The private sector findings, however, can be used to develop race-neutral programs to address barriers to the formation and development of M/WBEs. Given the case law, caution must be exercised in the interpretation and application of the regression findings. Case law regarding the application of private sector discrimination is discussed below. II. Legal Analysis A. Passive Discrimination The controlling legal precedent is set forth in the 1989 City of Richmond v. J.A. Croson Co (Croson)375 decision; where the Court authorized state and local governments to remedy discrimination in the award of subcontracts by its prime contractors on the grounds that the government is a “passive participant” in such discrimination. In January 2003, Concrete Works IV376 and City of Chicago377 extended the scope private sector analysis to include the investigation of discriminatory barriers that M/WBEs encountered in the formation and development of businesses, and the consequences of state and local remedial programs. Concrete Works IV set forth a framework for considering such private sector discrimination as a passive participant model for analysis. However, the obligation of presenting an appropriate nexus between the government remedy and the private sector discrimination was first addressed in City of Chicago. The Tenth Circuit Court decided in Concrete Works IV that business activities conducted in the private sector, if within the government’s market area, are also appropriate areas to explore the issue of passive participation.378 Given the finding of private sector discrimination, however, the appropriateness of the City’s remedy was not at issue before the court. The question before the court was whether sufficient facts existed to determine if the private sector business practices under consideration constituted discrimination. For technical legal reasons,379 the court did not examine whether a consequent public sector remedy that involved a goal requirement on the City of 374 Builders Ass’n of Greater Chicago v. Chicago, 298 F. Supp. 2d 725 (N.D. III. 2003). 375 488 U.S. 469 (1989). 376 Concrete Works of Colo., Inc. v. Denver, 321 F.3d 950, 965-69 (10th Cir. 2003) (“Concrete Works IV”). 377 City of Chicago, 298 F. Supp. 2d at 738-39. 378 Concrete Works IV, 321 F.3d at 966-67. 379 Plaintiff had not preserved the issue on appeal. Therefore, it was no longer part of the case. 10-2 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Denver’s contracts was “narrowly tailored” or otherwise supported by the City’s private sector findings of discrimination. B. Narrow Tailoring The question of whether a particular public sector remedy is narrowly tailored when it is based solely on business practices within the private sector was at issue in City of Chicago. Decided ten months after Concrete Works IV, City of Chicago found that certain private sector business practices constituted discrimination against minorities in the Chicago, Illinois market area. However, the district court did not find the City of Chicago’s M/WBE subcontracting goal to be a “narrowly tailored” remedy to address the documented private sector discriminatory business practices that had been discovered within the City’s market area.380 The court explicitly stated that certain discriminatory business practices documented by regression analyses constituted private sector discrimination.381 It is also notable that the documented discriminatory business practices reviewed by the court in City of Chicago were similar to those reviewed in Concrete Works IV. Notwithstanding the fact that discrimination in the City’s market area was documented, the City of Chicago determined that the evidence was insufficient to support the City’s race-based subcontracting goals.382 The court ordered an injunction to invalidate the City’s race-based program.383 The following statements from that opinion are noteworthy: Racial preferences are, by their nature, highly suspect, and they cannot be used to benefit one group that, by definition, is not either individually or collectively the present victim of discrimination . . . There may well also be (and the evidence suggests that there are) minorities and women who do not enter the industry because they perceive barriers to entry. If there is none, and their perception is in error, that false perception cannot be used to provide additional opportunities to M/WBEs already in the market to the detriment of other firms who, again by definition, neither individually nor collectively, are engaged in discriminatory practices.384 Given these distortions of the market and these barriers, is the City’s program narrowly tailored as a remedy? It is here that I believe the program fails. There is no “meaningful individualized review” of M/WBEs. Gratz v. Bollinger, 539 U.S. 244, 156 L. Ed. 2d 257, 123 S.Ct. 2411, 2431 (2003) (Justice O’Connor concurring). Chicago’s program is more expansive and more rigid than plans that have been sustained in the courts. It has no termination date, nor has it any means for determining a termination date. The “graduation” revenue amount is very high, $27,500,000, and very few have graduated. There is no net worth threshold. A third-generation Japanese-American from a wealthy family, with a graduate degree from MIT, qualifies (and an Iraqi immigrant does not). Waivers are rarely or never granted on construction contracts, but “regarding flexibility, ‘the availability of waivers’ is of particular importance . . . a ‘rigid numerical quota’ particularly disserves the cause of narrow tailoring.” Adarand Constructors v. Slater, supra, at 1177. The City’s program is a “rigid 380 City of Chicago, 298 F. Supp. 2d at 739. 381 Id. at 731-32. 382 Id. at 742. 383 Id. 384 Id. at 734-35. 10-3 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis numerical quota,” a quota not related to the number of available, willing, and able firms but to concepts of how many of those firms there should be. Formalistic points did not survive strict scrutiny in Gratz v. Bollinger, supra, and formalistic percentages cannot survive scrutiny. 385 As established in City of Chicago, private sector discrimination cannot be used as the factual basis for a government-sponsored, race-based M/WBE program without a sufficient nexus to the government's actions. Therefore, the discrimination that might be revealed in this regression analysis will not be sufficient factual predicate for the Authority to establish a race-based M/WBE program since a nexus cannot be established between the Authority and this private sector data. The economic indicators revealed in this regression analysis, albeit not a measure of passive discrimination, are illustrative of private sector discrimination and can support the Authority sponsored, race-neutral programs. III. Regression Analysis Methodology The three regression analyses focus on the construction, professional services, including architecture and engineering (hereinafter referred to as professional services), and commodities and other services industries. The datasets used for the regression analyses did not allow for an exact match of the industries used in the Authority’s Disparity Study (Study). Therefore, the three industries were selected to most closely mirror the industries used in the Authority’s Study. As noted, three separate regression analyses were conducted. 386 They are the Business Ownership Analysis, the Business Earnings Analysis, and the Business Loan Approval Analysis. These analyses take into consideration race- and gender-neutral factors, such as age, education, and creditworthiness, in assessing whether the explanatory factors examined are disproportionately affecting minorities and Caucasian females when compared to similarly situated Caucasian males. IV. Datasets Analyzed The 2009 to 2013 PUMS dataset produced by the United States Census Bureau was used to analyze business ownership and business earnings within Palm Beach County, Florida. The 2009 to 2013 PUMS dataset represents the data within the fiscal years 2009 through 2013 study period. The data for Palm Beach County, Florida were identified using Public Use Microdata Areas (PUMA) variables within the PUMS dataset; this dataset reports data for segmented areas within counties and states. The dataset includes information on personal profile, industry, work characteristics, and family structure. The PUMS data allowed for an analysis by an individual’s race and gender. The 2009 to 2011 KFS dataset was considered to examine business loan approval rates. These data represent the most recent information available on access to credit and contain observations for business and business owner characteristics, including the business owner’s credit and resources and the business’s credit and financial health. While the KFS data are available by Census Division, data for the South Region, which consists of the East South Central Division, West South 385 City of Chicago, 298 F.Supp.2d at 739-40. 386 Detailed description of the steps taken to clean and merge data are listed in Regression Analysis Technical Appendix. 10-4 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Central Division, and South Atlantic Division, were utilized. It should be noted that the ethnicity and gender of the responding businesses were categorized based upon the ownership percentages of the majority owners. There were many businesses who refused to respond with the business loan approval rate they received, or responded that they do not know in the KFS dataset. In the case, it is assumed that the business is sometimes approved and sometimes denied a loan. Table 10.1 depicts the percentage of Caucasian males and M/WBEs by industry and their response to whether they were always, sometimes, or never approved for a business loan. Table 10.1: Caucasian Males and M/WBE Business Loan Approval Caucasian Male Loan Variable Caucasian Female Minority Male and Female South Region, Construction Always Approved Sometimes Approved/Sometimes Denied Always Denied 9.68% 10.08% 4.08% 85.48% 87.39% 95.92% 4.84% 2.52% 0.00% 2.99% 7.75% 3.45% 96.41% 91.47% 94.40% 0.60% 0.78% 2.16% 4.26% 7.58% 3.45% 95.74% 89.90% 91.95% 0.00% 2.53% 4.60% South Region, Professional Services Always Approved Sometimes Approved/Sometimes Denied Always Denied South Region, Commodities and Other Services Always Approved Sometimes Approved/Sometimes Denied Always Denied In the construction industry, 10.08% of Caucasian females and 4.08% of minority males and females were always approved for a loan, and 2.52% of Caucasian females and 0.00% of minority males and females were always denied a loan. In contrast, 9.68% of Caucasian males were always approved for a loan and 4.84% of Caucasian males were always denied a loan. Likewise, in the professional services industry, 7.75% of Caucasian females and 3.45% of minority males and females were always approved for a loan, and 0.78% of Caucasian females and 2.16% of minority males and females were always denied a loan. In contrast, 2.99% of Caucasian males were always approved for a loan and 0.60% of Caucasian males were always denied a loan. In the commodities and other services industry, 7.58% of Caucasian females and 3.45% of minority males and females were always approved for a loan, and 2.53% of Caucasian females and 4.60% of minority males and females were always denied a loan. In contrast, 4.26% of Caucasian males were always approved for a loan and 0.00% of Caucasian males were always denied a loan. 10-5 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis V. Regression Models Defined A. Business Ownership Analysis The Business Ownership Analysis examines the relationship between the likelihood of being a business owner and independent socioeconomic variables. Business ownership, the dependent variable, includes business owners of incorporated and unincorporated firms. The business ownership variable utilizes two values. A value of “1” indicates that a person is a business owner, whereas a value of “0” indicates that a person is not a business owner. When the dependent variable is defined this way, it is called a binary variable. In this case, a logistic regression model is utilized to predict the likelihood of business ownership using independent socioeconomic variables. Three logistic models were run to predict the probability of business ownership in each of the three industries examined in the Authority’s Study. Categories of the independent variables analyzed include educational level, citizenship status, personal characteristics, and race/gender. In Tables 10.5 to 10.7, a finding of disparity is denoted by an asterisk (*) when the independent variable is significant at or above the 95-percent confidence level. A finding of disparity indicates that there is a non-random relationship between the probability of owning a business and the independent variable. The tables of regression results indicate the sign of each variable’s coefficient from the regression output. If the coefficient sign is positive, it indicates that there is a positive relationship between the dependent and independent variables. For example, having an advanced degree is positively related to the likelihood of being a business owner, holding all other variables constant. If the coefficient sign for the independent variable is negative, this implies an inverse relationship between the dependent and independent variables. For instance, an individual with children under the age of six has a lower likelihood of owning a business, holding all other variables constant. For each of the three industries, the logistic regression is used to identify the likelihood that an individual owns a business given his or her background, including race, gender, and race- and gender-neutral factors. The dependent variables in all regressions are binary variables coded as “1” for individuals who are self-employed and “0” for individuals who are not self-employed.387 Table 10.2 presents the independent variables used for the Business Ownership Analysis. 387 Note: The terms “business owner” and “self-employed” are used interchangeably throughout this chapter. 10-6 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Table 10.2: Independent Variables Used for the Business Ownership Analysis Personal Characteristics Educational Attainment Ethnicity Age Bachelor's Degree Caucasian American Age-squared Advanced Degree African American Home Ownership Asian American Home Value Hispanic American Monthly Mortgage Payment Native American Interest and Dividends Other Minority* Gender Female Language Spoken at Home A Child Under the Age of Six in the Household Marital Status (*) Other Minority includes individuals who belong to two or more racial groups. B. Business Earnings Analysis The Business Earnings Analysis examines the relationship between the annual self-employment income and independent socioeconomic variables. “Wages” are defined as the individual’s total dollar income earned in the previous 12 months. Categories of independent socioeconomic variables analyzed include educational level, citizenship status, personal characteristics, business characteristics, and race/gender. All of the independent variables are regressed against wages in an OLS regression model. The OLS model estimates a linear relationship between the independent variables and the dependent variable. This multivariate regression model estimates a line similar to the standard y = mx+b format, but with additional independent variables. The mathematical purpose of a regression analysis is to estimate a best-fit line for the model and assess which findings are statistically significant. In Tables 10.9 to 10.11, a finding of disparity is denoted by an asterisk (*) when an independent variable is significant at or above the 95-percent confidence level. A finding of disparity indicates that there is a non-random relationship between wages and the independent variable. Tables of regression results indicate the sign of each variable’s coefficient from the regression output. If the coefficient sign is positive, it means there is a positive relationship between the dependent and independent variables. For example, if age is positively related to wages, this implies that older business owners tend to have higher business earnings, holding all other variables constant. If the coefficient sign for the independent variable is negative, this implies an inverse relationship between the dependent and independent variables. For example, if the coefficient for having a child under the age of six is negative, this implies that business owners with children under the age of six tend to have lower business earnings. 10-7 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis An OLS regression analysis is used to assess the presence of business earning disparities. OLS regressions have been conducted separately for each industry. Table 10.3 presents the independent variables used for the Business Earnings Analysis.388 Table 10.3: Independent Variables Used for the Business Earnings Analysis Personal Characteristics Educational Attainment Ethnicity Age Bachelor's Degree Caucasian American Age-squared Advanced Degree African American Incorporated Business Asian American Home Ownership Hispanic American Home Value Native American Monthly Mortgage Payment Other Minority* Gender Female Interest and Dividends Language Spoken at Home A Child Under the Age of Six in the Household Marital Status (*) Other Minority includes individuals who belong to two or more racial groups. C. Business Loan Approval Analysis The Business Loan Approval Analysis examines the relationship between the probability of obtaining a business loan and variables related to socioeconomic factors and business characteristics. The model is an Ordered Logistic model where the dependent variable is the reported probability of obtaining a business loan. The KFS data was commissioned by the Ewing Marion Kauffman Foundation and was conducted every year by Mathematica Policy Research, Inc. (MPR). The KFS data provides detailed longitudinal information on businesses and multiple owners' characteristics on 4,928 businesses started in 2004 in the United States. The most recent year the KFS data contains is 2011. In Tables 10.13 to 10.15, a finding of disparity is denoted by an asterisk (*) when the independent variable is significant at or above the 95-percent confidence level. A finding of disparity indicates that there is a non-random relationship between obtaining a business loan and each independent variable. The tables containing the regression results also indicate the sign of each variable's coefficient from the regression output. If the coefficient sign is positive, it means there is a positive relationship between the dependent and independent variables. For example, if having a bachelor’s degree has a positive coefficient, the business owners with a bachelor’s degree are more probable to obtain a business loan, holding all other variables constant. If the coefficient for the independent variable is negative, this implies an inverse relationship between the dependent and independent 388 If an independent variable is a binary variable, it will be coded as “1” or “0” if the individual has that variable present (i.e. for the Hispanic American variable, it is coded as “1” if the individual is Hispanic American and “0” if not). If an independent variable is a continuous variable, that variable will be used (i.e. one’s age can be labeled as 35). 10-8 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis variables. For instance, if having larger liabilities has a negative coefficient, this implies an indirect relationship between having larger liabilities and obtaining a business loan. Therefore, a firm that has larger liabilities has a decreased probability of obtaining a business loan (or a higher probability of being denied a business loan). An Ordered Logistic regression is used to examine the factors that might explain loan approvals for the business owners. The dependent variable is a categorical variable where “2” denotes always being approved a business loan, “1” denotes sometimes being denied a business loan, and “0” signifies always being denied a business loan.389 The independent variables describe the sets of factors below:    Business’s credit and financial health Business owner’s credit and resources Business owner’s ethnicity and gender group classification Table 10.4 presents the independent variables used for the Business Loan Approval Analysis.390 Table 10.4: Independent Variables Used for the Business Loan Approval Analysis Firm's Credit and Financial Health Owner's Credit and Resources Ethnicity Organization Type Work Experience Caucasian American Credit Risk Use of Owner's Personal African American Total Liabilities Credit Card for Business Asian American Annual Revenue Expenses Hispanic American Comparative Advantage Bachelor's Degree Native American Advanced Degree Other Minority* Gender Female (*) Other Minority includes individuals who belong to two or more racial groups and multiracial businesses VI. Findings A. Business Ownership Analysis The business ownership variable is defined by the number of self-employed individuals in each of the three industries: construction, professional services, and commodities and other services. The analysis considered incorporated and unincorporated businesses. The data in this section come from Palm Beach County, Florida, which was specified using a PUMA.391 As noted in Section IV, 389 An Ordered Logistic model could be used differently for this model by assessing the numbers: 1= always denied a loan, 2= sometimes denied a loan, and 3= never denied a loan. 390 If an independent variable is a binary variable, it will be coded as “1” if the individual has that variable present and “0” if otherwise (i.e. for the Hispanic American variable, it is coded as “1” if the individual is Hispanic American and “0” if otherwise). If an independent variable is a continuous variable, a value will be used (i.e. one’s age can be labeled as 35). 391 The PUMS data were collected by the United States Census Bureau from a five-percent sample of United States households. The observations were weighted to preserve the representative nature of the sample in relation to the population as a whole. 10-9 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis because each PUMA is determined by the United States Census, the region analyzed in the regression analyses could be limited to Palm Beach County, Florida. Previous studies have shown that many non-discriminatory factors, such as education, age, and marital status, are associated with self-employment. In this analysis, race- and gender-neutral factors are combined with race- and gender-specific factors in a logistic regression model to determine whether observed race or gender disparities are independent of the race- and genderneutral factors known to be associated with self-employment. It must be noted that many of these variables, such as having an advanced degree, while seeming to be race- and gender-neutral, may in fact be correlated with race and gender. For example, if Caucasian females are less likely to have advanced degrees and the regression results show that individuals with advanced degrees are significantly more likely to own a business, Caucasian females may be disadvantaged in multiple ways. First, Caucasian females may have statistically significant lower business ownership rates, so they face a direct disadvantage as a group. Second, they are indirectly disadvantaged as fewer of them tend to have advanced degrees, which significantly increase one’s chances of owning a business. 1. Logistic Model Results for Construction Business Ownership Table 10.5 presents the logistic regression results for the likelihood of owning a business in the construction industry based on the 21 variables analyzed in this model. Table 10.5: Construction Industry Logistic Model Business Ownership Model 0.1346293 -0.0011736 0.3674479 0.1396470 0.2192812 0.0000005 Age Age-squared Bachelor's Degree (a) Advanced Degree Home Owner Home Value Monthly Mortgage Payment Interest and Dividends Speaks English at Home Has a Child under the Age of Six Married Caucasian Female (b) African American Asian American Hispanic American Native American Coefficient Significance Standard Error Z-score P> z 0.0251361 0.0002534 0.1412541 0.3438004 0.1379876 0.0000002 5.36 -4.63 2.60 0.41 1.59 2.98 0.000 0.000 0.009 0.685 0.112 0.003 0.0001146 0.0000639 1.79 0.073 0.0000003 -0.2718622 0.0000002 0.1870737 1.30 -1.45 0.194 0.146 0.1737182 0.5242909 0.33 0.740 0.1335569 -1.0102420 -0.9324530 -0.3594702 -0.7800401 -0.2735266 0.1216190 0.2281602 0.2380504 0.6970605 0.2164677 1.2232500 1.10 -4.43 -3.92 -0.52 -3.60 -0.22 0.272 0.000 0.000 0.606 0.000 0.823 * * * * * * * 10-10 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Business Ownership Model Other Minority Year 2010 (c) Year 2011 Year 2012 Year 2013 Constant Coefficient Significance -1.1387360 0.1548495 0.4258999 0.1402890 0.1036100 -4.6476160 * * * Standard Error Z-score 0.5738827 0.1702087 0.1749946 0.1845421 0.1701798 0.6573587 -1.98 0.91 2.43 0.76 0.61 -7.07 P> z 0.047 0.363 0.015 0.447 0.543 0.000 (a) For the variables bachelor's degree and advanced degree, the baseline variable is no degree. (b) For the ethnicity variables, the baseline variable is Caucasian Male. (c) For the year variables, the baseline variable is Year 2009. (P> z ) of less than 0.05 denotes findings of statistical significance. (*) denotes a statistically significant variable with 95% confidence. The construction industry logistic regression results indicate the following:392  The likelihood of construction business ownership is positively associated with increased age. Older individuals are significantly more likely to be business owners in the construction industry. However, as individuals age the likelihood of being a business owner significantly decreases in the construction industry.  Individuals with a bachelor’s degree are significantly more likely to be business owners in the construction industry. Individuals with an advanced degree are more likely to be business owners in the construction industry, but not at a significant level.  Individuals who have higher-valued home are significantly more likely to be business owners in the construction industry.  Caucasian females, African Americans, Hispanic Americans, and other minorities393 are significantly less likely to be business owners in the construction industry than Caucasian males.  Asian Americans and Native Americans are less likely to be business owners than Caucasian males in the construction industry, but not at a significant level. Individuals are significantly more likely to be business owners in year 2011 than year 2009 in the construction industry.  392 For the Business Ownership Analysis, the results are presented for the age, education, race, and gender variables only. 393 Other minorities include individuals who belong to two or more racial groups. 10-11 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis 2. Logistic Model Results for Professional Services Business Ownership Table 10.6 presents the logistic regression results for the likelihood of owning a business in the professional services industry based on the 21 variables analyzed in this model. Table 10.6: Professional Services Industry Logistic Model Business Ownership Model Age-squared Bachelor's Degree (a) Advanced Degree Home Owner Home Value Monthly Mortgage Payment Interest and Dividends Speaks English at Home Has a Child under the Age of Six Caucasian Female (b) African American Asian American Hispanic American Native American Other Minority Year 2010 (c) Year 2011 Year 2012 Year 2013 Constant Significance 0.0800290 -0.0004350 0.2041372 0.4628726 0.0171376 0.0000003 Age Married Coefficient Standard Error Z-score P> z 0.0191903 0.0001775 0.1041162 0.1153673 0.1200081 0.0000001 4.17 -2.45 1.96 4.01 0.14 3.39 0.000 0.014 0.050 0.000 0.886 0.001 0.0000261 0.0000417 0.63 0.531 0.0000001 -0.1685960 0.0000001 0.1371807 0.61 -1.23 0.544 0.219 * * * * * 0.4556297 * 0.2053335 2.22 0.026 0.1899077 -0.2509934 -0.6563642 -0.6673867 -0.1218543 -0.6373581 0.2999633 0.3807634 0.2845310 0.0071056 -4.1397620 * 0.0937091 0.1016079 0.1853569 0.3949246 0.1757003 0.3886902 0.1335666 0.1343911 0.1353866 0.1298353 0.5438180 2.03 -2.47 -3.54 -1.69 -0.69 -1.64 2.25 2.83 2.10 0.05 -7.61 0.043 0.014 0.000 0.091 0.488 0.101 0.025 0.005 0.036 0.956 0.000 * * * * * * (a) For the variables bachelor's degree and advanced degree, the baseline variable is no degree. (b) For the ethnicity variables, the baseline variable is Caucasian Male. (c) For the year variables, the baseline variable is year 2009. (P> z ) of less than 0.05 denotes findings of statistical significance. (*) denotes a statistically significant variable with 95% confidence. (-) denotes a variable with too few available data to determine statistical significance. 10-12 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis The professional services industry logistic regression results indicate the following: 394  The likelihood of professional services business ownership is positively associated with increased age. Older individuals are significantly more likely to be business owners in the professional services industry. However, as individuals age the likelihood of being a business owner significantly decreases in the professional services industry.  Individuals with a bachelor’s degree or an advanced degree are significantly more likely to be business owners in the professional services industry.  Individuals who have higher-valued home are significantly more likely to be business owners in the professional services industry.  Individuals who have a child under the age of six are significantly more likely to be business owners in the professional services industry.  Married individuals are significantly more likely to be business owners in the professional services industry.  Caucasian females and African Americans are significantly less likely to be business owners in the professional services industry than Caucasian males.  Asian Americans, Hispanic Americans, and other minorities395 are less likely to be business owners in the professional services industry than Caucasian males, but not at a significant level.  Individuals are significantly more likely to be business owners in years 2010, 2011, and 2012 than year 2009 in the professional services industry. 3. Logistic Model Results for Commodities and Other Services Business Ownership Table 10.7 presents the logistic regression results for the likelihood of owning a business in the commodities and other services industry based on the 21 variables analyzed in this model. 394 For the Business Ownership Analysis, the results are presented for the age, education, race, and gender variables only. 395 Other minorities include individuals who belong to two or more racial groups. 10-13 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Table 10.7: Commodities and Other Services Industry Logistic Model Business Ownership Model Coefficient 0.1185084 -0.0010138 -0.0782887 -0.4015653 0.5802071 -0.0000001 Age Age-squared Bachelor's Degree (a) Advanced Degree Home Owner Home Value Monthly Mortgage Payment 0.0000999 Interest and Dividends Speaks English at Home 0.0000005 0.3504819 Has a Child under the Age of Six 0.1121459 Married Caucasian Female (b) African American Asian American Hispanic American Native American Other Minority Year 2010 (c) Year 2011 Year 2012 Year 2013 Constant Significance 0.3910946 -0.5885150 -0.2708584 -0.5281926 -0.1998500 0.8205156 0.1232615 -0.0728590 -0.0333882 0.0950652 -5.4312230 * * * * * * * Standard Error Z-score P> z 0.0267104 0.0002721 0.1538808 0.3313926 0.1715238 0.0000003 4.44 -3.73 -0.51 -1.21 3.38 -0.58 0.000 0.000 0.611 0.226 0.001 0.565 0.0000734 1.36 0.173 0.0000002 0.2216520 2.33 1.58 0.020 0.114 0.4555570 0.25 0.806 0.1443080 0.1923859 0.2253142 0.6010035 0.2593878 0.4900823 0.2000878 0.2104764 0.2055721 0.2017539 0.6899173 2.71 -3.06 -1.20 -0.88 -0.77 1.67 0.62 -0.35 -0.16 0.47 -7.87 0.007 0.002 0.229 0.379 0.441 0.094 0.538 0.729 0.871 0.638 0.000 (a) For the variables bachelor's degree and advanced degree, the baseline variable is no degree. (b) For the ethnicity variables, the baseline variable is Caucasian Male. (c) For the year variables, the baseline variable is year 2009. (P> z ) of less than 0.05 denotes findings of statistical significance. (*) denotes a statistically significant variable with 95% confidence. (-) denotes a variable with too few available data to determine statistical significance. 10-14 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis The commodities and other services industry logistic regression results indicate the following: 396  The likelihood of commodities and other services business ownership is positively associated with increased age. Older individuals are significantly more likely to be business owners in the commodities and other services industry. However, as individuals age the likelihood of being a business owner significantly decreases in the commodities and other services industry.  Home owners are significantly more likely to be business owners in the commodities and other services industry.  Individuals who have higher interest and dividends income are significantly more likely to be business owners in the commodities and other services industry.  Married individuals are significantly more likely to be business owners in the commodities and other services industry.  Caucasian females significantly less likely to be business owners in the commodities and other services industry than Caucasian males.  African Americans, Asian Americans, and Hispanic Americans less likely to be business owners in the commodities and other services industry than Caucasian males, but not at a significant level.  Other minorities397 are more likely to be business owners than Caucasian males in the commodities and other services industry, but not at a significant level. B. Business Ownership Analysis Summary The Business Ownership Analysis examined the different explanatory variables’ impact on an individual’s likelihood of owning a business in the construction, professional services, and commodities and other services industries. Controlling for race- and gender-neutral factors, the Business Ownership Analysis results show that statistically significant disparities in the likelihood of owning a business exist for minorities and Caucasian females when compared to similarly situated Caucasian males. Caucasian females experience the greatest disparity, because they are significantly less likely to own a business in the construction, professional services, and commodities and other services industries than similarly situated Caucasian males. African Americans are also significantly less likely to own a business in the construction and professional services industries. Hispanic Americans are also significantly less likely to own a business in the construction industry. Other 396 For the Business Ownership Analysis, the results are presented for the age, education, race, and gender variables only. 397 Other minorities include individuals who belong to two or more racial groups. 10-15 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis minorities are significantly less likely to own a business in the construction industry. Table 10.8 depicts the business ownership regression analysis results by ethnicity, gender, and industry. Table 10.8: Statistically Significant Business Ownership Disparities Construction Professional Services Caucasian Female Disparity Disparity Disparity African American Disparity Disparity No Disparity No Disparity No Disparity No Disparity Disparity No Disparity No Disparity No Disparity No Disparity No Disparity Disparity No Disparity No Disparity Ethnicity/Gender Asian American Hispanic American Native American Other Minority398 C. Commodities and Other Services Business Earnings Analysis The business earnings variable is identified by self-employment income399 from 2009 to 2013 for the three industries: construction, professional services, and commodities and other services. The analysis considered incorporated businesses. Previous studies have shown that many non-discriminatory factors, such as education, age, and marital status, are associated with self-employment income. In this analysis, race- and genderneutral factors are combined with race and gender groups in an OLS regression model to determine whether observed race or gender disparities were independent of the race- and gender-neutral factors known to be associated with self-employment income. 1. OLS Regression Results in the Construction Industry Table 10.9 depicts the results of the OLS regression for business earnings in the construction industry based on the 22 variables analyzed in this model. Table 10.9: Construction Industry OLS Regression Business Earnings Model Age Age-squared Incorporated Business Bachelor's Degree (a) Advanced Degree Home Owner Coefficient 2253.832 -21.113 -4063.436 14699.540 8935.633 1483.214 Significance * * * 398 Other minority includes individuals who belong to two or more racial groups. 399 The terms “business earnings” and “self-employment income” are used interchangeably. Standard Error 564.686 6.947 3453.794 3403.814 6434.244 1969.167 t-value 3.99 -3.04 -1.18 4.32 1.39 0.75 P> t 0.000 0.002 0.240 0.000 0.165 0.451 10-16 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Business Earnings Model Coefficient Significance Standard Error t-value P> t Home Value 0.026 * 0.008 3.38 0.001 Monthly Mortgage Payment 4.214 * 2.115 1.99 0.046 * 0.021 2260.009 1.84 2.06 0.066 0.040 7446.160 0.82 0.411 1815.890 3352.821 2057.511 9738.352 2308.067 7426.632 3133.324 3002.048 3157.904 2832.462 3386.043 11256.150 3.93 -5.29 -7.21 -1.44 -4.31 -0.95 -2.44 -1.12 -0.82 -2.21 -0.62 -2.23 0.000 0.000 0.000 0.151 0.000 0.343 0.015 0.263 0.413 0.027 0.533 0.026 Speaks English at Home 0.038 4654.501 Has a Child under the Age of Six 6123.754 Interest and Dividends Married Caucasian Female (b) African American Asian American Hispanic American Native American Other Minority Year 2010 (c) Year 2011 Year 2012 Year 2013 Constant 7138.289 -17725.280 -14837.890 -13993.950 -9936.375 -7042.356 -7643.716 -3360.449 -2585.048 -6265.491 -2109.039 -25111.140 * * * * * * * (a) For the variables bachelor's degree and advanced degree, the baseline variable is no degree. (b) For the ethnicity variables, the baseline variable is Caucasian Male. (c) For the year variables, the baseline variable is year 2009. (P> t ) of less than 0.05 denotes findings of statistical significance. (*) denotes a statistically significant variable with 95% confidence. The OLS regression results for business earnings in the construction industry indicate the following:400 400  Older business owners have significantly higher business earnings in the construction industry. However, as business owners age, they have significantly lower business earnings in the construction industry.  Business owners with a bachelor’s degree have significantly higher business earnings in the construction industry. Business owners with an advanced degree have higher business earnings in the construction industry, but not at a significant level.  Business owners who have higher-valued home have significantly higher business earnings in the construction industry. For the Business Earnings Model, the results are presented for the age, education, race, and gender variables only. 10-17 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis  Business owners paying higher monthly mortgages have significantly higher business earnings in the construction industry.  Business owners speaking English at home have significantly higher business earnings in the construction industry.  Married Business owners have significantly higher business earnings in the construction industry.  Caucasian female, African American, Hispanic American, and other minority401 business owners have significantly lower business earnings than Caucasian males in the construction industry.  Asian American and Native American business owners have lower business earnings than Caucasian males in the construction industry, but not at a significant level.  Business owners have significantly lower adjusted business earnings in year 2012 than year 2009 in the construction industry. Business owners have lower adjusted business earnings in years 2010, 2011, and 2013 than year 2009 in the construction industry, but not at a significant level. 2. OLS Regression Results in the Professional Services Industry Table 10.10 depicts the results of the OLS regression for business earnings in the professional services industry based on the 22 variables analyzed in this model. Table 10.10: Professional Services Industry OLS Regression Business Earnings Model Age Age-squared Incorporated Business Bachelor's Degree (a) Advanced Degree Home Owner Home Value Monthly Mortgage Payment Interest and Dividends Speaks English at Home 401 Coefficient Significance 4189.508 -42.794 -8938.705 18685.030 55854.010 3346.962 0.031 * 6.411 0.018 10941.720 Standard Error t-value P> t * 408.305 4.629 4205.009 2385.652 4599.833 2534.793 0.006 10.26 -9.24 -2.13 7.83 12.14 1.32 5.14 0.000 0.000 0.034 0.000 0.000 0.187 0.000 * 1.945 3.30 0.001 * 0.010 3433.489 1.73 3.19 0.084 0.001 * * * * Other minority includes individuals who belong to two or more racial groups. 10-18 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Business Earnings Model Has a Child under the Age of Six Married Caucasian Female (b) African American Asian American Hispanic American Native American Other Minority Year 2010 (c) Year 2011 Year 2012 Year 2013 Constant Coefficient Significance 4281.232 11755.950 -34033.170 -31004.050 -24454.880 -27430.280 -26979.210 -21018.830 -2249.139 4654.695 2144.243 6161.180 -63777.990 * * * * * * * Standard Error t-value P> t 5931.405 0.72 0.470 2558.565 3092.296 3244.775 7348.412 4149.833 16869.250 9789.187 3822.392 4073.247 4026.931 4060.689 8940.510 4.59 -11.01 -9.56 -3.33 -6.61 -1.60 -2.15 -0.59 1.14 0.53 1.52 -7.13 0.000 0.000 0.000 0.001 0.000 0.110 0.032 0.556 0.253 0.594 0.129 0.000 (a) For the variables bachelor's degree and advanced degree, the baseline variable is no degree. (b) For the ethnicity variables, the baseline variable is Caucasian Male. (c) For the year variables, the baseline variable is year 2009. (P> t ) of less than 0.05 denotes findings of statistical significance. (*) denotes a statistically significant variable with 95% confidence. The OLS regression results for business earnings in the professional services industry indicate the following:402 402  Older business owners have significantly higher business earnings in the professional services industry. However, as business owners age, they have significantly lower business earnings in the professional services industry.  Incorporated business owners have significantly lower business earnings in the professional services industry.  Business owners with a bachelor’s degree or an advanced degree have significantly higher business earnings in the professional services industry.  Business owners paying higher monthly mortgages have significantly higher business earnings in the professional services industry.  Business owners speaking English at home have significantly higher business earnings in the professional services industry. For the Business Earnings Model, the results are presented for the age, education, race, and gender variables only. 10-19 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis  Married business owners have significantly higher business earnings in the professional services industry.  Caucasian female, African American, Asian American, Hispanic American, and other minority403 business owners have significantly lower business earnings than Caucasian males in the professional services industry.  Native American business owners have lower business earnings than Caucasian males in the professional services industry, but not at a significant level.  Business owners have lower adjusted business earnings in year 2010 than year 2009 in the professional services industry, but not at a significant level. Business owners have higher adjusted business earnings in years 2011, 2012, and 2013 than year 2009 in the professional services industry, but not at a significant level. 3. OLS Regression Results in the Commodities and Other Services Industry Table 10.11 depicts the results of the OLS regression for business earnings in the commodities and other services industry based on the 22 variables analyzed in this model. Table 10.11: Commodities and Other Services Industry OLS Regression Business Earnings Model Coefficient Significance P> t * 5.68 -4.73 -1.44 7.15 6.41 -0.06 2.58 0.000 0.000 0.149 0.000 0.000 0.954 0.010 4.472 * 2.056 2.18 0.030 * Speaks English at Home 0.086 6225.385 0.015 2761.952 5.91 2.25 0.000 0.024 Has a Child under the Age of Six 2790.986 4870.704 0.57 0.567 1923.521 2992.132 2617.119 6205.906 2.09 -4.23 -5.15 -2.42 0.037 0.000 0.000 0.015 Age-squared Incorporated Business Bachelor's Degree (a) Advanced Degree Home Owner Home Value Monthly Mortgage Payment Interest and Dividends Married Caucasian Female (b) African American Asian American 403 * t-value 406.453 4.858 3929.719 2770.481 9165.310 2241.772 0.010 Age 2308.084 -22.958 -5674.405 19803.090 58734.830 -130.491 0.027 Standard Error 4024.460 -12653.590 -13466.490 -15049.090 * * * * * * * * Other minority includes individuals who belong to two or more racial groups. 10-20 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Business Earnings Model Hispanic American Native American Other Minority Year 2010 (c) Year 2011 Year 2012 Year 2013 Constant Coefficient Significance -10051.010 -12620.140 -8462.622 -4956.761 -2539.068 -52.809 -24126.430 * * * Standard Error t-value 3096.500 6584.823 2563.321 2871.470 2889.187 2828.306 9403.267 -3.25 -1.92 -3.30 -1.73 -0.88 -0.02 -2.57 P> t 0.001 0.055 0.001 0.084 0.380 0.985 0.010 (a) For the variables bachelor's degree and advanced degree, the baseline variable is no degree. (b) For the ethnicity variables, the baseline variable is Caucasian Male. (c) For the year variables, the baseline variable is year 2009. (P> t ) of less than 0.05 denotes findings of statistical significance. (*) denotes a statistically significant variable with 95% confidence. (-) denotes a variable with too few available data to determine statistical significance. The OLS regression results for business earnings in the commodities and other services industry indicate the following:404 404  Older business owners have significantly higher business earnings in the commodities and other services industry. However, as business owners age, they have significantly lower business earnings in the commodities and other services industry.  Business owners with a bachelor’s degree or an advanced degree have significantly higher business earnings in the commodities and other services industry.  Business owners who have higher-valued home have significantly higher business earnings in the commodities and other services industry.  Business owners paying higher monthly mortgages have significantly higher business earnings in the commodities and other services industry.  Business owners speaking English at home have significantly higher business earnings in the commodities and other services industry.  Married business owners have significantly higher business earnings in the commodities and other services industry. For the Business Earnings Model, the results are presented for the age, education, race, and gender variables only. 10-21 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis  Caucasian female, African American, Asian American, and Hispanic American business owners have significantly lower business earnings than Caucasian males in the commodities and other services industry.  Other minority405 business owners have lower business earnings than Caucasian males in the commodities and other services industry, but not at a significant level.  Business owners have significantly lower adjusted business earnings in year 2010 than year 2009 in the commodities and other services industry. Business owners have lower adjusted business earnings in years 2011, 2012, and 2013 than year 2009 in the commodities and other services industry, but not at a significant level. D. Business Earnings Analysis Summary Controlling for race- and gender-neutral factors, the Business Earnings Analysis documented statistically significant disparities in business earnings for minorities and Caucasian Females when compared to similarly situated Caucasian males. Caucasian females have significantly lower business earnings in the construction, professional services, and commodities and other services industries. African Americans have significantly lower business earnings in the construction, professional services, and commodities and other services industries. Asian Americans have significantly lower business earnings in the professional services and commodities and other services industries. Hispanic Americans have significantly lower business earnings in the construction, professional services, and commodities and other services industries. Other minorities have significantly lower business earnings in the construction and professional services industries. Table 10.12 depicts the business earnings regression results by ethnicity, gender, and industry. Table 10.12: Statistically Significant Business Earnings Disparities Construction Professional Services Caucasian Female Disparity Disparity Commodities and Other Services Disparity African American Disparity Disparity Disparity No Disparity Disparity Disparity Disparity Disparity Disparity No Disparity No Disparity No Disparity Disparity Disparity No Disparity Ethnicity/Gender Asian American Hispanic American Native American Other Minority 406 405 Other minority includes individuals who belong to two or more racial groups. 406 Other minority includes individuals who belong to two or more racial groups. 10-22 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis E. Business Loan Approval Analysis Access to business capital in the form of loans is measured by the Business Loan Approval Analysis. The probability of business loan approval variable is a score that reflects the reported probability of experiencing business loan approval. The data in this section comes from the KFS dataset. Previous studies have shown that many non-discriminatory factors, such as education, experience of the business owner, and firm characteristics, could lead to differences in a business owner’s loan approval rate. In this analysis race- and gender-neutral factors are combined with race and gender groups in an ordered logistic regression model to determine whether observed race or gender disparities were independent of the race- and gender-neutral factors known to be associated with business loan approval. Access to business capital in the form of loans is measured by the probability of obtaining a business loan in three industries: construction, professional services, and commodities and other services. The dataset does not contain sufficient information on all ethnic groups to allow for a separate examination of each group. Therefore, results are provided for all minority males and females combined, and for Caucasian females, hereinafter referred to as Minority Business Enterprises (MBEs) and Woman Business Enterprises (WBEs), or collectively as M/WBEs. The KFS records the geographic location of the firm by the Census Division. Due to this, the sampling region was expanded to the South Region as defined by the Census. This region includes: Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Virginia, Tennessee, Texas, and West Virginia. 1. Ordered Logistic Regression Results in the Construction Industry Table 10.13 depicts the results of the ordered logistic regression for business loan approval in the construction industry based on the 17 variables analyzed in this model. Table 10.13: Construction Ordered Logistic Regression Business Loan Approval Model Work Experience Coefficient Significance Standard Error Z-score P> z 0.020060 0.02882 0.70 0.486 Corporation -0.768312 0.52392 -1.47 0.143 Credit Risk -0.433388 0.33428 -1.30 0.195 Total Liabilities -0.101250 0.13300 -0.76 0.446 Annual Revenue -1.07E-08 9.28E-07 -0.01 0.991 Use of Owner's Personal Credit Card for Business -0.339974 0.50469 -0.67 0.501 0.405362 0.60392 0.67 0.502 Competitiveness Bachelor's Degree (a) 0.466531 0.66249 0.70 0.481 Advanced Degree -0.041001 1.03059 -0.04 0.968 Caucasian Female (b) -0.054122 0.81109 -0.07 0.947 10-23 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Business Loan Approval Model African American Asian American Hispanic American Native American Coefficient Significance Standard Error Z-score P> z 0.075312 0.97116 0.08 0.938 - - - - 0.367451 0.81516 0.45 0.652 -1.401232 0.97650 -1.43 0.151 Other Minority 0.079234 1.62078 0.05 0.961 Year 2010 (c) 0.434023 0.68357 0.63 0.525 Year 2011 0.028273 0.70250 0.04 0.968 (a) For the variables bachelor's degree and advanced degree, the baseline variable is no degree. (b) For the ethnicity variables, the baseline variable is Caucasian Male. (c) For the year variables, the baseline variable is year 2009. (P> z ) of 0.05 and less denotes findings of statistical significance. (*) denotes a statistically significant variable with 95% confidence. (-) denotes a variable with too few available firms to determine statistical significance. The ordered logistic regression results for business loan approval in the construction industry indicate the following:407 407  Business owners with longer work experience have a higher probability of obtaining a business loan in the construction industry, but not at a significant level.  Businesses with higher credit risk have a lower probability of obtaining a business loan in the construction industry, but not at a significant level.  Businesses with higher total liabilities have a lower probability of obtaining a business loan in the construction industry, but not at a significant level.  Business owners with a bachelor’s degree have a higher probability of obtaining a business loan in the construction industry, but not at a significant level.  Caucasian females and Native Americans have a lower probability of obtaining a business loan than Caucasian males in the construction industry, but not at a significant level.  African Americans, Hispanic Americans, and other minorities have a higher probability of obtaining a business loan than Caucasian males in the construction industry, but not at a significant level. For the Earnings Disparity Model, the results are presented for the age, education, race, and gender variables only. 10-24 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis 2. Ordered Logistic Regression Results in the Professional Services Industry Table 10.14 depicts the results of the ordered logistic regression for business loan approval in the professional services industry based on the 17 variables analyzed in this model. Table 10.14: Professional Services Ordered Logistic Regression Business Loan Approval Model Coefficient Significance Standard Error Z-score P> z Work Experience 0.033645 0.022590 1.49 0.136 Corporation 0.031147 0.422538 0.07 0.941 Credit Risk -0.233389 0.266474 -0.88 0.381 Total Liabilities 0.146526 0.098125 1.49 0.135 Annual Revenue 0.000002 * 0.000001 2.10 0.036 -1.327779 * 0.563326 -2.36 0.018 Use of Owner's Personal Credit Card for Business Competitiveness 0.146313 0.472537 0.31 0.757 Bachelor's Degree (a) 0.743278 0.564797 1.32 0.188 Advanced Degree 0.767361 0.661610 1.16 0.246 Caucasian Female (b) 0.372767 0.586276 0.64 0.525 1.139355 -2.84 0.005 0.901443 1.004505 0.90 0.370 0.104149 0.962759 0.11 0.914 -0.812983 0.894525 -0.91 0.363 1.135319 2.13 0.033 African American Asian American Hispanic American Native American -3.230413 * Other Minority 2.419427 Year 2010 (c) 0.092887 0.523461 0.18 0.859 -0.868614 0.603807 -1.44 0.150 Year 2011 * (a) For the variables bachelor's degree and advanced degree, the baseline variable is no degree. (b) For the ethnicity variables, the baseline variable is Caucasian Male. (c) For the year variables, the baseline variable is year 2009. (P> z ) of 0.05 and less denotes findings of statistical significance. (*) denotes a statistically significant variable with 95% confidence. 10-25 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis The ordered logistic regression results for business loan approval in the professional services industry indicate the following:408  Business with larger annual revenue have a significantly higher probability of obtaining a business loan in the professional services industry.  Businesses owners who use their personal credit cards for business expenses have a significantly lower probability of obtaining a business loan in the professional services industry.  Businesses with equipment loans have a significantly lower probability of obtaining a business loan in the professional services industry.  Business owners with a bachelor’s degree or an advanced degree have a higher probability of obtaining a business loan in the professional services industry, but not at a significant level.  African Americans have a significantly lower probability of obtaining a business loan than Caucasian males in the professional services industry.  Other minorities have a significantly higher probability of obtaining a business loan than Caucasian males in the professional services industry.  Native Americans have a lower probability of obtaining a business loan than Caucasian males in the professional services industry, but not at a significant level.  Caucasian females, Asian Americans, and Hispanic Americans have a higher probability of obtaining a business loan than Caucasian males in the professional services industry, but not at a significant level. 3. Ordered Logistic Regression Results in the Commodities and Other Services Industry Table 10.15 depicts the results of the ordered logistic regression for business loan approval in the commodities and other services industry based on the 17 variables analyzed in this model. 408 For the Earnings Disparity Model, the results are presented for the age, education, race, and gender variables only. 10-26 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis Table 10.15: Commodities and Other Services Ordered Logistic Regression Business Loan Approval Model Work Experience Coefficient Significance -0.012491 Z-score P> z 0.031367 -0.40 0.690 0.624541 3.05 0.002 Corporation 1.906481 Credit Risk 0.265187 0.211038 1.26 0.209 Total Liabilities 0.132203 0.115292 1.15 0.252 Annual Revenue -0.000001 0.000001 -0.56 0.577 Use of Owner's Personal Credit Card for Business -0.597078 0.731719 -0.82 0.415 0.935738 0.661337 1.41 0.157 Competitiveness Bachelor's Degree (a) * Standard Error 0.641658 0.688103 0.93 0.351 Advanced Degree -0.164884 0.552008 -0.30 0.765 Caucasian Female (b) -1.005444 0.679949 -1.48 0.139 African American -0.611235 1.113520 -0.55 0.583 - - - - Hispanic American -0.430881 0.751352 -0.57 0.566 Native American -4.278914 1.333018 -3.21 0.001 - - - - 0.261296 0.738399 0.35 0.723 -0.258811 0.496322 -0.52 0.602 Asian American Other Minority Year 2010 (c) Year 2011 * (a) For the variables bachelor's degree and advanced degree, the baseline variable is no degree. (b) For the ethnicity variables, the baseline variable is Caucasian Male. (c) For the year variables, the baseline variable is year 2009. (P> z ) of 0.05 and less denotes findings of statistical significance. (*) denotes a statistically significant variable with 95% confidence. (-) denotes a variable with too few available firms to determine statistical significance. The ordered logistic regression results for business loan approval in the commodities and other services industry indicate the following:409 409  Corporations have a significantly higher probability of obtaining a business loan in the commodities and other services industry.  Business owners with a bachelor’s degree have a higher probability of obtaining a business loan in the commodities and other services industry, but not at a significant level.  Native Americans have a significantly lower probability of obtaining a business loan than Caucasian males in the commodities and other services industry. For the Earnings Disparity Model, the results are presented for the age, education, race, and gender variables only. 10-27 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis  Caucasian females, African Americans, and Hispanic Americans have a lower probability of obtaining a business loan than Caucasian males in the commodities and other services industry, but not at a significant level. F. Business Loan Approval Analysis Summary Controlling for race- and gender-neutral factors, the Business Loan Approval Analysis documented statistically significant disparities in business loan approval rates for African Americans and Native Americans when compared to similarly situated Caucasian males. African Americans have a significantly lower probability of obtaining a business loan in the professional services. Native Americans have a significantly lower probability of obtaining a business loan in the commodities and other services. Table 10.16 depicts the business loan approval disparity regression results by ethnicity, gender, and industry. Table 10.16: Statistically Significant Business Loan Approval Disparities Construction Professional Services Caucasian Female No Disparity No Disparity Commodities and Other Services No Disparity African American No Disparity Disparity No Disparity Asian American No Disparity No Disparity No Disparity Hispanic American No Disparity No Disparity No Disparity Native American No Disparity No Disparity Disparity Other Minority No Disparity No Disparity No Disparity Ethnicity/Gender VII. Conclusion Three regression analyses were conducted to determine whether there were factors in the private sector that might help explain the current levels of M/WBE availability and any statistical disparities between M/WBE availability and utilization identified in the Study. The analyses examined the following outcome variables: business ownership, business earnings, and business loan approval rates. These analyses were performed for the three industries—construction, professional services, and commodities and other services—included in the Authority’s Study. The regression analyses examined the effect of race and gender on the three outcome variables. The Business Ownership Analysis and the Business Earnings Analysis used data from the 2009 to 2013 PUMS datasets for Palm Beach County, Florida and compared business ownership rates and earnings for M/WBEs to those of similarly situated Caucasian males. The Business Loan Approval Analysis used the 2009 to 2011 KFS dataset for the South Region and compared business loan approval rates for M/WBEs to those of similarly situated Caucasian males. The analyses of the three outcome variables document disparities that could adversely affect the formation and growth of M/WBEs within the construction, professional services, and commodities 10-28 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis and other services industries. In the absence of a race- and gender-neutral explanation for the disparities, the regression findings point to racial and gender discrimination that depressed business ownership, business earnings, and business loan approval. Such discrimination is a manifestation of economic conditions in the private sector that impedes minorities’ and Caucasian females’ efforts to own, expand, and sustain businesses. It can reasonably be inferred that these private sector conditions are manifested in the current M/WBEs’ experiences and likely contributed to lower levels of willing and able M/WBEs. It is important to note that there are limitations to using the regression findings in order to access disparity between the utilization and availability of businesses. No matter how discriminatory the private sector is, the findings cannot be used as the factual basis for a local government-sponsored, race-conscious M/WBE program. Therefore, caution must be exercised in the interpretation and application of the regression findings in a legally sound disparity study. The findings’ greatest utility is in the formulation of race-neutral recommendations for the Study. 10-29 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Anecdotal Analysis CHAPTER 11: Historical Review I. Introduction The findings from this socio-economic historical review contextualize the statistical analysis detailed in Chapter 8: Prime Contract Disparity Analysis and Chapter 9: Subcontract Disparity Analysis. The statistics presented in the two chapter’s document that Solid Waste Authority (Authority) and its prime contractors discriminated against African Americans and Native Americans in award of construction prime contracts and subcontracts. This chapter presents an examination of historical, social, and economic data, which provide evidence of systemic racial discrimination in the history of Palm Beach County (County). Given the relatively recent historical documentation of factors affecting business formation presence of Hispanic American and Asian Americans in the County, this analysis is limited to Native Americans and African Americans. In particular, this historical analysis focuses on the social and economic factors affecting the formation and development of African American and Native American businesses, coincidentally, these two ethnic groups were also found to be the most underutilized in the statistical analysis presented in Chapter 8: Prime Contract Disparity Analysis and Chapter 9: Subcontract Disparity Analysis. The research spans the period from the Spanish Era, beginning in 1521 through the 1960s following the passage of the Civil Rights Act of 1964. The analysis provides a substantive context for understanding the current availability and utilization of minority businesses and the evidence of business discrimination, documented in the statistical analysis presented in Chapter 8: Prime Contract Disparity Analysis and Chapter 9: Subcontract Disparity Analysis. This chapter examines structural conditions affecting the access of African Americans and Native Americans to the economic and educational resources needed to form, grow, and operate businesses. The impact of historical patterns and practices of institutional discrimination on the formation, growth, and utilization of ethnic businesses is identified and analyzed with respect to developments in government, finance, and civil society. In particular, this analysis of structural racism over two centuries is focused on government efforts to enslave and eradicate Native Americans and African Americans from the colonial and antebellum periods through the 1960s. The First Reconstruction is examined through the beginning of the twentieth century. Employment before, during, and following World War II, and barriers to education, and occupational and professional training codified in laws are examined throughout the 1960s. In addition, urban renewal policies, community displacement, residential segregation, and predatory lending practices are examined in concert with barriers to the financial capital necessary for entrepreneurial activity. 11-1 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review The invidious institutionalized socio-economic and legal discrimination against Native Americans and African Americans for over two centuries in the public and private sectors has had enduring effects upon these groups’ access to fair and equal treatment when competing for private sector, the Authority, and other government contracts. Discrimination in contracting which endures even when the businesses have the same or greater capacity than Caucasian- owned businesses is revealed in the statistical analysis of disparity in the Authority’s award of contracts to available African American and Native American businesses. II. Political Conditions Affecting Native and African Americans during the Colonial and Antebellum Periods, (1800s-1900s) Caught between the ravages of war, disease, and the progressive loss of livelihood and habitat resulting from European colonial expansion into Florida, an estimated 200,000 Seminoles of thirteen Native American nations410 were subject to a long and brutal cultural decline as European settlers encroached further into their territory in the 1800s. Well known are the harrowing details of the Seminole struggle as their homeland passed between various claims of ownership issued by Spanish, British, and American colonists, though the well documented conditions of Seminole collaboration with African Americans resisting their Western oppressors. These historic events merit particular mention. Although Africans were often purchased or stolen from their Caucasian slave-owners by Native American traders and captors, many African Americans fleeing enslavement voluntarily headed South to the relatively safe haven provided by the Seminole community, which extended rights and degrees of autonomy not to be found elsewhere. During the early nineteenth century with the onset of the first of three Seminole Wars in 1817 and the eventual ceding of Spanish Florida to the United States, an institutional wedge was driven into the natural and strategic allegiance between the two groups when a series of government treaties were introduced with clauses demanding the return of all runaway slaves. 411 Tensions between African Americans and their Native American allies worsened as American settlers moved deeper into Seminole territory, laying claim to agricultural and grazing land, usurping resources, and appropriating African American slaves and free-born Black Seminoles alike.412 Following the failure of the 1823 Treaty of Moultrie Creek to resolve the conflict, increasing political pressure by influential, landed slave-owners resulted in the Indian Removal Act of 1830. This act was a crucial factor precipitating the Second Seminole War, and made manifestly clear that governmental efforts were made to displace, relocate, and remove the indigenous population from the Florida territory entirely. Throughout the numerous battles during the long war of attrition, many African Americans chose to remain with and fight on the side of the Seminole as they retreated deeper into the Everglade wilderness, estranged from both their traditional economic 410 “History: Where We Came From,” Seminole Tribe of Florida, Accessed August 11, 2016, http://www.semtribe.com/History/Introduction.aspx 411 Adam Wasserman, A People’s History of Florida 1513-1876 How Africans, Seminoles, Women, and Lower Class Whites Shaped the Sunshine State, 3rd Edition. (United States of America: Adam Wasserman, 2009), 270-271. 412 ”Florida Seminole Wars Heritage Trail,” Florida Division of Historical http://dos.myflorida.com/media/695430/seminole_war_heritage_trail.pdf (pp. 2-12) Resources, Accessed August 11, 2016, 11-2 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Procurement and Contracting Policy Review means and routes of trade, as well as the contemporary trade routes established by the emerging economy. By the end of the Third Seminole War in 1858, it was estimated that a mere 300 Seminoles remained in Florida,413 where they and their allies were subjected to forms of social, economic, and political marginalization from which they are still struggling to recover. A. The First Reconstruction Though a Union military victory at the end of the Civil War signaled for African Americans the hope of freedom, citizen’s rights, and new opportunities, these aspirations went largely unfulfilled in the decades that followed. The enactment of the Emancipation Proclamation on January 1, 1863, was extremely limited in its immediate effect, applying only to states that had seceded. The institution of slavery remained unchallenged in regions still considered loyal to the Union. Key provisions to the proclamation delimiting its legal consequences, such as those granting the admittance of African Americans to workers’ unions, were undermined by federal and state policies designed to preserve and reinforce existing economic relations. The positive systemic effects of the passage and ratification of the 13th Amendment to the United States Constitution on African American economic involvement were vitiated likewise by the institution of “Black Codes”. The Black Codes were laws that defined people of African descent as two thirds of a person and therefore not entitled to any rights of citizenship. Black Codes enforced inequitable yearly contracts for work and facilitated unfair rationing and peonage practices that limited access to public and private monetary funds to effectively secure African Americans’ enduring dependence on existing systems of labor exploitation. If an African American refused work, African Americans were classified as vagrants and could be arrested, fined, or jailed according to law, often forcing upon them the undesirable decision between joining the military and returning to the plantations. Under vagrancy laws, any “able-bodied person […] wandering or strolling or leading an idle, profligate, or immoral course of life” could be arrested upon citizen complaint and be held for trial before a justice of peace or in circuit court. Penalties included imprisonment, monetary fines, or indentured servitude to the highest bidder for as long as 12 months. The State of Florida’s policy toward African American economic integration during Reconstruction codified the Black Code in its laws. A July 1865 report from Federal General Isreal Vogdes confirms that Floridians were generally opposed to the freeing of their slaves. 414 While many African Americans harbored the lingering hope that equitable systems of compensation and apprenticeship would be established for the few trades to which they had access, an August 1865 report from the Gainesville New Era testifies to public sentiment at the time415: “… there are quite a number of persons who seem to hope that the next Congress will reestablish slavery. Their hopes for future happiness and prosperity are wrapped up in this idea.” With respect to the historical circumstances at issue, the federal government’s formal recognition of African Americans as 413 ”Florida Seminole Wars Heritage Trail,” Florida Division of Historical http://dos.myflorida.com/media/695430/seminole_war_heritage_trail.pdf (pp. 2-12) 414 Joe M. Richardson, “Florida Black Codes,” in The Florida Historical Quarterly, Vol. 47, No. 4 (Apr. 1969), pp. 365-379. 415 Ibid. at 366. Resources, Accessed August 11, 2016, 11-3 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review human beings was belied by the fact, reported in the Florida Quarterly by a bureau agent of the State, that “freed people [were] looked upon as an inferior and distant race.”416 As the antebellum period drew to a close, efforts in the State of Florida to equitably integrate freed African Americans into society and the economy were particularly frustrated by the institution of its 19 “Jim Crow” laws. The laws contributed to the establishment of a racial caste system operating primarily, but not exclusively, in the southern and bordering states during the century following the Civil War. As instances of state-sanctioned racism, the laws rationalized and reaffirmed pernicious popular beliefs alleging African American inferiority and the subordinated status of second-class citizen. Pro-segregation groups formed throughout Florida to suppress the influence of equalizing Reconstruction efforts. In addition to barring African Americans access to public education, Jim Crow laws in Florida restricted where and how African Americans could live, travel, work, and the jobs for which they could be employed. Working professionals were confined to practicing their trade only in African American communities, and within the trades not reserved for “whites only”. Skilled jobs were reserved for whites only, leaving the lower-paying and more dangerous occupations to workers of African descent. The socio-economic and legal tenets in Florida during the Reconstruction Era, in conjunction with the highest per capita lynching rate in the United States, were by far the worst conditions African Americans faced in any state at the end of the nineteenth century. III. Socio-Economic Conditions Confronting African Americans in the Early Twentieth Century Despite white supremacist rhetoric and a general sense of resignation on the part of most white Floridians, who considered racial segregation to be an immutable element of the State’s social order, African Americans persevered in their struggle for economic and social equality. By the end of the First World War; a few African Americans, within their own communities, and particularly in less rural environments, had edged their way into middle- and lower-middle class occupations and standards of living. However, of the many impediments and regular setbacks to such advancement, systemic disparities perpetuated by inequitable legislation and law enforcement were but a few. In the case of the burgeoning African American community of Rosewood, Florida, located near the white town of Sumner, an accusation regarding the assault and possible rape of a Caucasian woman in Sumner by a drifter of African descent led to the lynching of a Rosewood resident. When African American citizens of the town defended themselves against further provocation, several hundred Caucasians combed the countryside for those who resisted, rioting and razing to the ground almost every building of the community. Fleeing survivors sought the swamps as once did their African Seminole forbears, and were eventually evacuated by train and car to larger towns. Although state and local authorities were aware of the lawless violence, no arrests were made for the extensive destruction of life and property in Rosewood, the town to which its former 416 Joe M. Richardson, “Florida Black Codes,” in The Florida Historical Quarterly, Vol. 47, No. 4 (Apr. 1969), p. 368. 11-4 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review residents never returned.417 It was not until 1994, after 70 years of unsuccessful legal action against the State on the part of the survivors and their descendants,418 that the Rosewood victims were some compensation for the unpunished crimes.419 For African Americans in the State of Florida, the onset of the Great Depression introduced a period of intensified economic struggle, exacerbated by the housing market crash, and by state and local political resistance to allow African Americans to benefit from the New Deal measures. Measures the federal government had taken to alleviate financial strain by promoting and providing for regionally specific opportunities for growth. In light of the abundance of Public Works jobs opened up by the infrastructural destruction wreaked by the “Great Hurricane” of September 1926,420 the New Deal represented a genuine chance for the State of Florida to ameliorate and generate an impact on the social problems concomitant with disproportionate minority unemployment, inequitably low wages, and unfair working conditions. However, historical trends toward political conservativism and persistent fears of federal government intrusion deterred the State’s electorate from extending the needed economic measures to African Americans. Although the Roosevelt administration accommodated Florida conservatives by placing their preferred representatives on key congressional committees, support waned when reforms were proposed regarding wage minimums and the improvement of working conditions, both of which threatened cheap labor and signaled the beginning of more stringent regulations concerning employer responsibility for equitable pay and fair treatment 421. The Agriculture Adjustment Act (AAA) of 1933, one law that favored Florida’s African American community in some regards, only exaggerated existing economic disparities between the large farming land-owners that it supported and their predominantly African American tenant and sharecropping laborers.422 Introduced to raise crop prices by subsidizing reduced production, the AAA Act required due payment to the former laborers of designated fallow lands. However, under increasing political pressure by Southern Democrats, the Secretary of Agriculture reinterpreted sections of the legislation pertaining to the direct sending of checks to sharecroppers, 423 allowing local AAA committees, dominated by white plantation owners, to circumscribe rights of common law and withhold fair compensation from the unrepresented laborers,424 often altering their 417 Michael D’Orso, Like Judgment Day: The Ruin and Redemption of a Town Called Rosewood (New York: G.P. Putnam’s Sons, 1996). 418 R. Thomas Dye, “Rosewood, Florida: The Destruction of an African American Community,” Historian: A Journal of History 58, no. 3 (Spring 1996): 605-622. 419 Cf. Florida House bill HR 591, 1994; Florida Senate bill SB 1774, 1994. 420 “Memorial Web Page for the 1926 Great Miami Hurricane, National Weather Service, Weather Forecast Office, Miami, Florida, last modified September 16th, 2014, accessed August 10th, 2016, http://www.srh.noaa.gov/mfl/?n=miami_hurricane. 421 “New Deal a Square Deal for the Negro?” Public Broadcasting http://www.pbs.org/wgbh/americanexperience/features/primary-resources/fdr-square-deal/. 422 Fred C. Frey and T. Lynn Smith, "The Influence of the AAA Cotton Program upon the Tenant, Cropper, and Laborer," Rural Sociology 1, no. 4 (1936): 483–505. 423 David Henderson, “Galbraith and the Southern Sharecroppers,” Library of Economics and Liberty, accessed August 10th, 2016, http://econlog.econlib.org/archives/2013/08/galbraith_and_t.html. 424 Jerold S. Auerbach, "Southern Tenant Farmers: Socialist Critics of the New Deal," Labor History 7 (Winter 1966): 4-5. Service, accessed August 14th, 2016, 11-5 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review workers’ occupational status toward that end.425 In disrupting production and failing to secure established channels of compensation to unused labor, such legislation resulted in higher levels of poverty and unemployment for farming wage workers, particularly amongst African Americans, who were forced to make do with worsening employment conditions as opportunities disappeared, and as mobility levels plummeted year to year. As the last southern state to enact unemployment insurance measures compliant with the Social Security Act of 1935, Depression-Era Florida offered especially little economic relief to the conditions of impoverished rural African Americans. Weakening the quickly floundering federal efforts to ameliorate the situation with the BankheadJones Farm Tenant Act of 1937, State authorities balked at pressure from the Federal Emergency Relief Administration to raise insufficient relief payments to the destitute, who often received less than seven dollars per month per family.426 The history, extent, and unique nature of African American involvement in agricultural industries also fostered the disadvantages of limited access to technical training and to skilled and professional jobs, which were largely unavailable in rural areas. To improve their situation, many African Americans moved during the 1930s from rural towns into urban areas, where the construction and manufacturing industries were growing. However, equal involvement in upward mobility-enabling labor organizations was likewise strained in these environments by institutionalized racism and political obstructionism at the state and local levels. Against the aim of the National Labor Relations Act of 1935, union segregation and exclusion undermined worker solidarity and bargaining power, dimming the already poor prospects African Americans had of securing skilled and professional positions with better pay. Among the many racially motivated obstacles inhibiting effective organization, minority union activity in Florida was often beleaguered by similarly impoverished and desperate strikebreakers. A situation confounded by employers who refused to recognize worker demands on the presupposition of the ipso facto unskilled constituency of unions comprised of minorities. The agricultural industry, in particular was excluded from the protection of legislation like the Fair Labor Standards Act (1938). Historical barriers combined with high work seasonality and lower wage rates made unionization particularly costly for laboring African Americans, of whom an estimated 40% were employed in agriculture in the region by 1940.427 Minimal and only fleeting progress in bettering their bargaining position was made by the Southern Tenant Farmers Union, whose leadership regularly faced racial violence and intimidation tactics on behalf of Caucasian plantation owners.428 425 James Gilbert Cassedy, “African Americans and the Labor Movement,” Federal Records and African American History 29, no. 2, (Summer 1997), accessed August 10th, 2016, http://www.archives.gov/publications/prologue/1997/summer/american-labor-movement.html. 426 “Florida in the Depression,” The Florida History Internet Center, accessed August 10th, 2016, http://floridahistory.org/depression.htm. 427 U.S. Department of Labor, Bureau of Labor Statistics, Labor Unionism in American Agriculture, Bulletin 836 (1945), by Stuart Jamieson. Cf. Jessie Carney Smith and Carrell Peterson Horton, eds., Historical Statistics of Black America (New York: Gale Research, 1995), 1:115. 428 Donald Grubbs, Cry from the Cotton: the Southern Tenant Farmers Union and the New Deal (North Carolina: The University of North Carolina Press, 1971), 137-161. 11-6 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review IV. Pre-World War II Socio-Economic Conditions for African Americans In spite of the extensive and peculiar role that Florida played in making wartime preparations as a garrison state, increased militarization and agricultural production brought little respite from the discrimination and economic strife afflicting African Americans.429 Of the factors affecting the development of African Americans during this period, particularly significant were those perpetuating, and contributing to iniquitous opportunity, unfair compensation, and the punitive application of racially prejudiced legislation. Despite the abundance of jobs that opened up or were made available to Caucasian women by the demands of war and by an increasingly absent traditional work force, minority men and women were commonly denied work eligibility, refused equal compensation, and relegated to the most menial and dangerous occupations. Amongst women, strained and embittered race relations between African Americans and their Caucasian counterparts also obstructed union collaboration in the interest of securing equitable and genderneutral employment opportunity. Under “Work, Fight, or Jail” policies similar to those instituted during the First World War, 430 prejudicial enforcement of vagrant laws in Florida and in Palm Beach County criminalized the minorities it targeted as a potential labor resource, resulting in numerous unlawful arrests, coerced displacement and relocation, and subjection to inequitable conditions and terms of employment with lasting economic repercussions. If not involuntarily relocated, minorities were often financially indentured on employment terms in which they had no say; transportation fines and extortionate hiring fees were commonly imposed to indebt, and indefinitely bind minority workers to their employers, who pressured with threats, abuse, and violence those attempting to leave in search of more favorable opportunities. After the war’s end, retirees moved to Florida by the thousands, quickly doubling the population of Palm Beach County. In an attempt to reintegrate an estimated 15 million persons to the workforce nationwide, the Federal government passed the Servicemen’s Readjustment Act in 1944. Commonly known as the G.I. Bill, the Bill was designed to help soldiers adjust to civilian life, secure jobs, purchase homes, develop businesses, and pursue educational advancement. The benefits of the Bill were disproportionately withheld from servicemen and women of African descent.431 Compounding the effects of higher levels of deferment from military service on the basis of illiteracy several vitiating factors bore on the limited efficacy of the G.I. Bill in ameliorating race-specific disparities in access to education and its attendant economic opportunities. As a portable grant aid program, the effectiveness of the Bill depended upon an equitable supply of education that was conspicuously lacking in the State of Florida as it was across the South. The closed public higher education system, in conjunction with the limitations that were available to African Americans, who numbered twice the contemporary average in Florida at 27%, 429 Gary Mormino. The New History of Florida. Edited by Michael Gannon. (1996). University Press of Florida. 430 Cindy Hahamovitch, The Fruits of their Labor: Atlantic Coast Farmworkers and the Making of Migrant Poverty, 1870-1945 (Chapel Hill: University of North Carolina Press, 1997), 103. 431 Brown, F. (1946) Educational Opportunities for Veterans. American Council on Education. 11-7 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review disproportionately stymied their access to the employment benefits that higher education brought432. Underfunded and overcrowded, Historically Black Colleges and Universities (HBCUs) accounted for only eight % of total state expenditures made across private and public institutions in the South, and for a mere six % across public institutions alone.433 In the South, the ranks of those denied entrance to HBCUs are estimated at some 20,000 veterans434, a grossly disproportionate number of which were turned away for lack of space.435 Wedged between the self-perpetuating effects of historical disadvantage on already unfavorable patterns of educational supply and demand, African American veterans in the South reaped comparatively little long-term benefits from the monetary influx provided by the G.I. Bill. Empirical studies verify that the G.I. Bill “exacerbated rather than narrowed the economic and educational differences between blacks and whites.”436 A. Barriers to African American Educational, Occupational, and Professional Advancement In the wake of a century of institutionalized inequity, the demographic developments ushered in by Wartime employment conditions would inaugurate only the first feeble beginnings of remediation efforts to equalize access to education. In Florida, a history of inequitable application and administration of laws concerning the fair distribution of educational funds and resources to county and state schools reinforced decades of minority disadvantage, abridging citizen privileges granted by the equal protection clause of the 14th Amendment. Florida’s 1868 Constitution granted to the state superintendent “the oversight, charge, and management of all matters pertaining to […] libraries, textbooks and [the educational] apparatus,” and to the County Boards the authority “to do whatever they may judge expedient” in these regards. The amendment failed to ensure that minority schools were equipped with the same means for attaining success. Commenting on educational disparity in West Palm Beach, William Holland, the region’s first African American attorney, famous for having filed a series of class-action law suits in the 1950s and 1960s to enforce state compliance with federal desegregation mandates, noted that “[e]ven the textbooks for white and ‘Negro’ students were kept in different warehouses. […] [A]ll of our supplies were handed down from white schools.”437 Politically and economically hindered as they were, African American educational institutions in Florida were beset from the start with problems of overcrowding, understaffing, and inadequate learning facilities and materials. “Separate but Equal” standards of funding public education were 432 Anthony, Atwood, “A State of War: Florida from 1939 to 1945,” FIU Electronic Thesis and Dissertations, Paper 777, (2012). Cf. US Census of Florida 1940, Table 4 – Race, by Nativity and Sex, for the State, 14. 433 M. Jenkins, “The Availability of Higher Education for Negroes in Southern States,” Journal of Negro Education 16, no. 3 (1947): 459-473. 434 Keith W. Olson, The G.I. Bill, the Veterans, and the Colleges, (Lexington: University Press of Kentucky), 1974. 435 Ibid. 436 Sarah Turner and John Bound, “Closing the Gap or Widening the Divide: the Effects of the G.I. Bill and World War II on the Educational Outcomes of Black Americans,” in the NBER Working Paper Series, National Bureau of Economic Research, Cambridge, 2002, p. 25. 437 “School Desegregation”, Historical Society of Palm Beach County, accessed August 10th, 2016, http://www.pbchistoryonline.org/page/schooldesegregation. 11-8 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review instituted to preserve and justify segregated learning conditions, and to demonstrate Florida’s “good faith” in addressing these problems.438 The standards failed to translate into equal levels of educational progress and attainment. Historically conditioned ties to agriculture in largely undereducated rural areas, compounded by a lack of transportation to and from schools,439 further discouraged attendance by African American children, whose families were already financially encumbered by existing labor laws authorizing prejudicial contracting and peonage. In regions where the school term was defined by major harvesting seasons, African American children were rarely given access to schooling beyond the eighth grade. The lawmakers’ assumption was that those belonging to a laboring class bound for unskilled agricultural work required no additional knowledge. Even after the landmark case of Brown vs. Board of Education of Topeka (1954), which notably supplied no federally mandated timetable for school integration, de facto segregation conditions, exacerbated by state and local resistance to equalizing federal initiatives, had repercussions on African American schools at all levels of learning. Concurrent with the departure of some 3,300 Caucasian American students from public school during the first year of desegregation were pervasive displays of anti-integration violence; explosives on a school bus in Riviera Beach, fires at Twin Lakes High in West Palm Beach, armed assault at Boca Raton High, and bomb threats at Atlantic High School in Delray Beach were among the incidents recorded. To provide a loophole for schools attempting to avoid desegregation, the Florida Pupil Assignment Law of 1955 was put into effect on the same day that the United States Supreme Court charged southern districts with responsibility for desegregating schools.440 Such legal maneuvers reflected much of public sentiment in its severe feelings of reservation regarding racial integration; in an article dated February 21st, 1959 from the Florida Star, House Speaker Tom Beasley was quoted as having expressed his “outrage” over the developments, threatening to vote for a “last resort” bill which would permit schools to close down rather than integrate.441 For years, barrier-free public education in Florida existed only in name. By 1965, of Palm Beach County’s 15,000 minority students, a mere 137 attended predominantly Caucasian schools.442 Despite threats from the United States Commissioner of Education to withhold federal funding from schools non-compliant with the Civil Rights Act of 1964, only Jupiter High School of Palm Beach County had achieved full desegregation standards by 1967. Describing desegregation inaction at a 1969 United Guidance Council meeting, Deputy School Superintendent Russel Below attested to the fact that “[m]ost plans have been developed to circumvent integration nationwide and […] I am one of the educators who hasn’t had guts enough to stand up to the man on the street 438 Florida State Archives, Present Status of Negro Education in Florida’s Public Schools (February 6th, 1952), by T. Bailey, quoted in Kathryn M. Borman, et. al., “Accountability in a Postdesegregation Era: the Continuing significance of Racial Segregation in Florida’s Schools,” American Educational Research Journal 41, no. 3 (Fall 2004): 610. 439 B.J. Shircliffe, “Desegregation and the historically Black High School,” Urban Review 34 (2002): 135-158, quoted in Borman, et. al., 610. 440 Kathryn M. Borman, et. al., “Accountability in a Postdesegregation Era: the Continuing significance of Racial Segregation in Florida’s Schools,” American Educational Research Journal 41, no. 3 (Fall 2004): 605-631. 441 Associated Press, “Political Reaction ‘Mixed Over Dade School Decision’,” Florida Star, February 21st, 1959. 442 “School Desegregation”, Historical Society of Palm Beach County, accessed August 10th, 2016, http://www.pbchistoryonline.org/page/schooldesegregation. 11-9 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review and say it has got to go this way for good education programs; but instead we stood aside and let [the Department of Health, Education, and Welfare] become god.”443 As state- and locally defined accountability criteria gradually replaced federally directed desegregation efforts as equalizing mechanisms at public schools, re-segregation and the perpetuation of inequitable access to resources detracted from what meager progress had been made. Although a 1973 United States District Court ruling declared the Palm Beach County School District officially integrated, the Office for Civil Rights continued to monitor the County’s schools until 1999. Since then, the minority rate has increased at Florida’s 158 lowest-performing schools, 13 of which are situated in the County of Palm Beach.444 In keeping with Gaines v. Canada (1938) and McLaurin v. Oklahoma State Regents (1950), universities in the South started admitting African Americans in the post-War period. Florida, however, was by 1952 among the remaining five states whose public universities continued to refuse admittance to students of African descent. Until 1958, Florida state law banned public university attendance by African American students, 85 of which had applied and were rejected from admission to various programs of the University of Florida between 1945 and 1958. Because study opportunities and resources at state institutions of higher learning—which were free of charge to Caucasian American attendees alone—remained withheld throughout the century following emancipation, the African American community in Florida relied heavily on the limited means of its own private colleges and universities, and on those afforded by federal government allocations. Although the Second Morrill Act of 1890 required that African American colleges receive equal amounts of federally sponsored land grant funding, it included provisions allowing for the disproportionate distribution of funds by the state. While the University of Florida and the historically African American college of Florida Agricultural & Mechanical (FAMU) both received comparable amounts of federal funding, the former regularly received five to seven times the amount of the latter from the State on an annual basis—a trend which continued into the postWar era. Racially motivated financial constraints of this kind had significant consequences for what graduate, occupational, and professional programs could be established and made available to burgeoning working professionals of African descent. Notwithstanding federal funding, FAMU, for its part, struggled to develop its programs until mid-century, after which it finally established a fully accredited School of Architecture in 1975, along with a School of Business and Industry in 1974. Although joint funding with Florida State University facilitated the 1982 founding of FAMU’s now nationally ranked College of Engineering,445 the belated establishment of its College of Law in 2002 testifies to its history of social and financial disadvantage. Such institutional barriers were encountered ubiquitously in Florida by African American students seeking training, accreditation, and licensing for professional employment. 443 “School Desegregation”, Historical Society of Palm Beach County, accessed August 10th, 2016, http://www.pbchistoryonline.org/page/schooldesegregation. 444 Florida Department of Education, Florida’s Original 158 Critically Low Performing Schools (2003), by Lenair Henriquez, 1-6. 445 “Florida A&M University – Florida State University College of Engineering,” U.S. News and World Report, accessed August 10th, 2016, http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-engineering-schools/florida-am-university-florida-stateuniversity-02215. 11-10 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review Characteristic of these conditions is the case of African American lawyer Virgil Hawkins, who endured a decade of court appeals and state judiciary resistance to United States Supreme Court orders demanding his admission on racially neutral criteria to the University of Florida College of Law,446 before finally turning northward to complete his education.447 As an under-represented minority group whose first handful of alumni graduated only some forty to fifty years ago, 448 the African American community was deprived, in this sector of the commercial exchange of goods and services as it was in many others, of a broad foundation of qualified professionals upon which to build. B. Urban Renewal Policy and Minority Housing Post-war educational segregation of African American and the concomitant widening of racespecific economic disparity are highly correlated with developments in public policy regarding the administration and regulation of the housing sector in Palm Beach County and the State of Florida.449 While federal initiatives like the Housing Acts of 1949, 1954, 1965, and 1968 were designed to renew and improve the infrastructure of dilapidated urban slums to which African Americans were relegated, a combination of factors—from State and local administration to ideologically motivated federal program restructuring and cutbacks—rendered these efforts largely ineffective. As evidenced by Palm Beach County’s redevelopment plans, and by 1990 census data documenting demographic changes in regions originally designated for funding as especially impoverished Neighborhood Strategy Areas (NSA), the County’s characteristic concentration of poor minorities in urban slums was mostly unaffected in the intervening years.450 Historically situated on the urban fringe of coastal development since the early part of the twentieth century and constrained by racially prejudiced residential covenants which prohibited the sale of certain properties to African Americans, the African American communities in the County found themselves wedged within the so-called I-95 corridor of blight, and to the east there was the rising waterfront property prices fueled by tourism and gentrification and to the west rapidly sprawling industrial and mid to high-income suburban residential zoning. Of the County’s 206 census tracts, 22 high-poverty tracts were still home to 63 % of its African American population as late as 1990.451 When slum-razing policies of urban renewal were undertaken in the early 1960s, replacement public housing, which was not legally required until 1970, was often slated for construction within the same condemned areas in which African Americans disproportionately dwelled. Although Department of Transportation regulations entailed in the Highway, Relocation 446 Hawkins v. Bd. of Control of Fla., 162 F. Supp. 851, 853 (1958). 447 Betty W. Taylor, A History of Race and Gender at the University of Florida Levin College of Law 1909-2001, 54 Fla. L. Rev. 495 (2002), 508. 448 Ibid. at 510. 449 Lands, LeeAnn B. “Belt of Blight: Public Policy and Housing Segregation in Palm Beach County, 1960-1986,” thesis submitted to the Faculty of the Schmidt College of Arts and Humanities of Florida Atlantic University, Boca Raton, Florida, 1995, 107-108. 450 Palm Beach County Division of Housing and Community Development, Six Year Redevelopment Plan for HCD Planning Areas: Community Development Block Grant Program (West Palm Beach: Palm Beach County Division of Housing and Community Development, 1991), 5, quoted in Lands, 18. 451 U.S. Department of Commerce, Bureau of the Census, 1990 Census of Population and Housing: Census Tracts: West Palm Beach – Boca Raton, Florida (Washington: U.S. Government Printing Office, 1993). 11-11 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review Assistance (1968), and Real Property Acquisitions Acts (1970) later required the offering of replacement housing options, appraisals were based on the buildings and not the properties, which had increased in value because of the surrounding development. The relocation assistance for African Americans was based on comparably valued homes, which were usually situated in comparable slums, perpetuating poor African American living conditions. Despite Palm Beach County’s historically large and increasing low-income population, it was not until 1980 that “the [housing] needs of citizens at all income levels in the County” were even included as items of action in reports on its Comprehensive Plans.452 While the Housing and Community Development (HCD) Act of 1974 held the promise of a more directly targeted approach to locally specific housing needs, subsequent amendments and provisions to the law allowed for a misuse of funds outside of the minority-dense, low-income NSA communities that it was designed to serve. In Palm Beach County, an estimated 26 % of the Community Development Block Grants (CDBG) provided by the HCD Act went to neighborhoods and activities beyond the domain and scope of these disadvantaged communities.453 Meanwhile, Florida as a whole, despite being one of the national leaders in population growth, had lagged behind 35 other states in establishing a housing financing agency capable of supporting new construction under Section 8 of the HCD Act454. By the end of 1980s, legislative compromises had modified the act, cutting in half the percentage of CDBG funds benefiting economically disadvantaged persons and eliminating allocations to Section 8 new construction. Each of these measures resulted in worsened conditions of disparity in Palm Beach County’s low-income minority enclaves. Concurrently, floundering efforts in the County to institute the Multi-Family Guaranteed Loan Program yielded a mere 97 additional units of housing.455 The few accommodations made available by the County’s housing finance authority were often beyond the means of the low-income families for which they were meant. “The reality of the situation,” according to a subsequent assessment made by the County’s Affordable Housing Task Force, was “that the PBCHFA ha[d] been a bonanza for private developers of housing for moderate-income families and individuals.”456 Bottom-up implementations of and revisions to the opportunity-enabling federal legislation of the 1960s had benefited realtors, bankers, and politicians at the expense of the impoverished African Americans in the interest of whom the laws were originally written. 452 Palm Beach County, Department of Planning, Zoning and Building, 1980 Comprehensive Plan: Palm Beach County (West Palm Beach: Palm Beach County, 1980), 177. 453 Area Planning Board of Palm Beach County, Strategies for Neighborhood Rehabilitation/Revitalization (West Palm Beach: Area Planning Board of Palm Beach County, 1980), 98. 454 Palm Beach County Division of Housing and Community Development, Six Year Redevelopment Plan for HCD Planning Areas: Community Development Block Grant Program (West Palm Beach: Palm Beach County Division of Housing and Community Development, 1991), 5, quoted in Lands, 18. 455 State of Florida, Department of Community Affairs, Special report to the House of Representatives: Department Program Summary (Tallahassee: Department of Community Affairs, 1984), 2-0-9. 456 Palm Beach County Affordable Housing Task Force, Palm Beach County Affordable Housing Task Force Preliminary Report (West Palm Beach: Palm Beach County Affordable Housing Task Force, 1986), D-5. 11-12 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review Without appropriate governmental oversight delimiting land-use guidelines or establishing enforcement regulations, the disadvantaged African Americans were at the mercy of private housing market profiteers. In this misfortunate confluence of discriminatory factors, “poverty works together with the housing market and with the operation of various major institutions so that those who have the least get the worst housing in the most dangerous neighborhoods […]. With the worst housing comes the worst schools and the most devastating social climate for children to grow up in,”457 all of which dims employment prospects, perpetuating economic and social inequality.458 As described in LeeAnn B. Lands’ comprehensive examination of the social, political and legal institutional suppression of African Americans during the period of 1960 to 1986, the housing market demonstrated the following qualities: Slums that existed in Palm Beach County showed little change over the period studied. Home ownership in those enclaves decreased. Businesses increasingly moved to the suburbs. Indeed, segregation of low-income minorities in slums continued in Palm Beach County […], just as they had in the older urban areas; the new “suburban freeway corridor” just held a new form. […] Economic growth did not ensure adequate resources, in this case housing, for all; the benefits of growth did not “trickle down.” Yet, public policy makers continued to relegate low-income minorities to areas, which limited their educational attainment, their job availability, their ability to attain wealth through home ownership, and their mere right to safe and healthy shelter.459 These longstanding institutional barriers persisting through the 1980’s created the socio-economic environment in which the African American entrepreneur enumerated in this Study formed and developed their businesses. Despite oppressive conditions that barred generations of African Americans access to the many government subsidized economic benefits that have supported the growth of Caucasian businesses there are African American businesses in Authority’s market area which provide the construction, professional services, and goods which Authority procures. C. African American Access to Capital Many of the historically aggregating factors of discrimination afflicting the African American community in the housing market have impinged upon its capacity to accumulate the entrepreneurial capital that derives from homeownership. The financial consequences of generations of employment prejudice, educational restrictions, and social segregation that produced the County’s growing neighborhoods of economic blight also culminated in, and were perpetuated by discrimination encountered in the credit market. For decades, financial institutions implemented inequitable redlining practices in African American communities, refusing loans and home financing to the families whose residences were situated in localities receiving few and 457 Gary Orfield and Carole Ashikanize, The Closing Door: Conservative Policy and Black Opportunity (Chicago: University of Chicago Press, 1991), 225. 458 Urban Institute, Housing America: Learning from the Past, Planning for the Future (Washington, D.C.: The Urban Institute, 1990), 16. 459 Lands, LeeAnn B. “Belt of Blight: Public Policy and Housing Segregation in Palm Beach County, 1960-1986,” 112-113. 11-13 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review substandard government services.460 In withholding loans and restricting home ownership, such practices prevented potential business owners in lower-income African American restricted communities from credit building term-compliant payment history with their banks, and from using their homes as equity for business investment. Recognizing the long-term effects of credit shortage and unfair financing terms on the formation and success of local businesses,461 Congress, in keeping with a 1961 report by the United States Commission on Civil Rights,462 passed the Home Mortgage Disclosure Act (1975) and the Community Reinvestment Act (1977). These laws were promulgated to increase lending transparency and governmental oversight. Although these much-needed measures were hardly enough, on their own, to roll back the compounding historical repercussions of the difficulties faced by minorities in lending markets.463 With newer and smaller businesses, less established credit histories, and characteristically lower levels of personal net worth for loan collateral,464 African American business owners were consistently subject to more unfavorable loan terms, including: lower disbursement amounts, shorter terms of repayment, higher interest rates, and more stringent covenant conditions. All of these obstacles to fair financing increasingly exposed the African American business owner to greater likelihood of default and poorer credit ratings. Loan application rejection rates, compared with those of white entrepreneurs, testify to persistent prejudicial discrepancies.465 Loan denial rate remained nearly twice as high for borrowers of African descent into recent history. 466 Even when accounting for variables of credit-worthiness, studies have shown that African Americans were on the order of 28% more likely, relative to their non-minority counterparts, to be denied a business loan. While high personal net worth may increase credit-worthiness by lowering reliance on credit, the comparatively few African American entrepreneurs who laid claim to this resource were still not safeguarded by their relative wealth from discriminatory practices in a lending market which set them two steps back for every one step taken forward.467 Aggravating these discriminatory conditions was a general trend in the financial sector toward more frequent bank consolidations, acquisitions, and takeovers, which resulted in the closure of many small community banks with a history of providing credit to burgeoning small businesses.468 In industries with high entry costs like manufacturing, business services, construction, and 460 David G. Blanchflower, Phillip B. Levine, and David J. Zimmerman, “Discrimination in the Small-Business Credit Market,” The Review of Economics and Statistics 85, no. 4 (2003): 930-943. 461 Consumer Financial Protection Bureau, CFPB Supervision and Examination Manual, (2012). 462 42 U.S.C. 69. 463 Blanchflower, et. al., 11-21. 464 R.A. Cole and J.D. Wolken, “Financial Services Used by Small Businesses: Evidence from the 1993 National Survey of Small Business Finances,” Federal Reserve Bulletin 81 (July 1995): 630-637. 465 K.S. Cavalluzzo and L.C. Cavalluzzo, “Market Structure and Discrimination: The Case of Small Businesses,” Journal of Money, Credit, and Banking 30, no. 4 (November 1998). 466 National Survey of Small Business Finances, (1993, 1998), quoted in Blanchflower, et. al., 3-6. 467 Ibid. 468 Karen Gordon Mills and Brayden McCarthy, “The State of Small Business Lending: Credit Access during the Recovery and How Technology May Change the Game,” Harvard Business School, Working Paper 15-004 (July 22, 2014): 6. 11-14 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review architecture and engineering, greater initial quantities of capital are required to cover sunk costs. Therefore, the availability of credit is especially crucial in delimiting the industries into which an entrepreneur can realistically and competitively enter. However, even in industries with lowbarriers to entry like maintenance, repair, and personal services access to credit is needed for building and maintaining inventory and working capital. 469 In the public and private sectors alike, African Americans have encountered the obstacles to credit at the same time being the victims of consistently higher unemployment rates, inequitable compensation, and restrictions to housing and public education. V. Conclusion This Chapter has reviewed and analyzed the socio-economic and political history of discrimination affecting the formation and growth of African American and Native American businesses in Palm Beach County and the State of Florida. The narrative has focused on the experiences of African Americans and secondarily on those of Native Americans, on account of their long-established presence in the County, and of the historically unique and particularly severe forms of discrimination that the two ethnic groups have endured through the 1960’s. Existing African American and Native American business enterprises in Palm Beach County have emerged despite being the survivors of an environmentally systemically hostile to members of their ethnic groups. This environment was one in which African Americans seeking training as engineers, architects, lawyers, accountants, or craftspeople of various kinds – all providers of, important services utilized by the Authority and other governmental bodies, were not admitted to state universities and colleges prior to 1974. The African American businesses identified in the statistical analysis have emerged despite these generations of institutional barriers. As illustrated in the capacity assessment, reported in Chapter 6: Prime Contractor and Subcontractor Availability Analysis, the available minority businesses surveyed in the Authority’s market area, established businesses at a comparable rate as nonminority males. The findings show that 32.43% of minority male businesses are older than 20 years, whereas 35.09% of Caucasian male businesses are older than 20 years.470 In recent history, programs were established after the passage of the Civil Rights Act of 1964, such as the United States Department of Transportation’s Disadvantaged Business Enterprise Program,471 the Small Business Administration’s 8(a) Program,472 the Everglades Restoration 469 Magnus Lofstrom, Timothy Bates, and Simon C. Parker, “Transitions to entrepreneurship and industry-specific barriers,” Institute for the Study of Labor, Discussion Paper 6103 (2011). 470 The business formation data reported in Chapter 6: Prime Contractor and Subcontractor Availability Analysis could not be disaggregated by ethnicity. 471 “History of the DOT DBE Program,” United States Department of Transportation, https://www.transportation.gov/civil-rights/disadvantaged-business-enterprise/history-dot-dbe-program. 472 “About the 8(a) Business Development Program,” United States. Small Business Administration, accessed August 10th, 2016, https://www.sba.gov/contracting/government-contracting-programs/8a-business-development-program/about-8a-business-developmentprogram. accessed August 10th, 2016, 11-15 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review Initiative,473 the Glades Local Preference Program,474 and the Program for Indian Employment Preference on Federal-Aid Highway Projects,475. These programs have been established to mitigate the financially debilitating consequences of discriminatory legislation in the domains of employment, education, housing, and lending. Although the programs have delivered to African Americans some means of attaining and cultivating income-generating opportunities, the aggregating effects of institutional racism continue to undermine entrepreneurial growth. Evidence of these lingering effects of institutional racism are manifest in the statistical findings of the Study, which measured the disparity in utilization by the Authority and its prime contractors of available African American and Native American-owned businesses as prime and subcontractors. With respect to M/WBE development, particularly in those industries examined by the disparity study, the historical factors reviewed have fostered to the institutional barriers, which business owners recounted in the anecdotal interviews conducted. Weak enforcement of compliance with the Authority’s programs, prejudicial political obstructionism, exclusionary networking, industryspecific gender and racial profiling, and disproportionate, preferential contracting to already large, well-established, Caucasian vendors are the legacy of a history of institutional discrimination— one which will also be tomorrow’s history in the absence of a due course of action legislated and enforced. Notwithstanding the documented history of structural impediments to African American businesses development, the Study’s statistical findings provide the factual predicate for legislative action to implement race- and gender-based remedies. The recommended race and gender-specific M/WBE Program legislation is based on constitutionally sound findings, narrowly tailored to the statistical evidence that this Historical Review buttressed. 473 “Seminoles and the Land,” Tribal Council of the http://www.semtribe.com/Culture/SeminolesandtheLand.aspx. 474 Palm Beach County, Fl., Ordinance CW-L-008 (IV) (B) (2-5), (April 23, 2012). 475 “Indian Employment Preference on Federal-aid Projects,” United States Department of Transportation, last modified January 28th, 2016, accessed August 10th, 2016, https://www.fhwa.dot.gov/construction/cqit/indian.cfm. Seminole tribe of Florida, accessed August 10th, 2016, 11-16 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Historical Review CHAPTER 12: Recommendations I. Introduction This Chapter presents recommendations for the Solid Waste Authority of Palm Beach County (Authority) to address the disparity documented in the Study. These race- and gender-specific recommendations are narrowly tailored to remedy the documented statistically significant disparity in the utilization of the available market area Minority and Woman-owned Business Enterprises, hereinafter referred to as Minority and Caucasian Female-owned Business Enterprises (M/WBEs). Race- and gender-neutral recommendations, which can be implemented without a finding of disparity, are also presented. The recommendations include strategies to eliminate barriers to M/WBE and small businesses’ access to the Authority’s construction, professional services including architecture and engineering (hereinafter referred to as professional services), commodities and other services, and trade services prime contracts and subcontracts. This Chapter is organized into six sections. The first section is this Introduction. Section two, Disparity Analysis Findings, presents the statistically significant findings of disparity. Race- and gender-specific recommendations predicated on the statistically significant findings are presented in the third section, which provides policies designed to remedy the documented disparity. An assessment of the effectiveness of the Authority’s Small Business Enterprise (SBE) Program and Local Preference Program is presented in the fourth section. Race- and gender-neutral recommendations are presented in the fifth section. Section six presents website and contract management recommendations. II. Disparity Analysis Findings The statistically significant findings of disparity in the award of both prime and subcontracts were calculated in compliance with the constitutional parameters set forth in City of Richmond v. J.A. Croson (Croson),476 and its progeny. The statistical findings of disparity summarized in this Chapter are detailed in Chapter 8: Prime Contract Disparity Analysis and Chapter 9: Subcontract Disparity Analysis. 476 City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989). 12-1 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations A. Number of Prime Contracts As depicted in Table 12.1, the Authority issued 4,225 prime contracts during the October 1, 2008, to September 30, 2013, study period. The 4,225 prime contracts included 84 for construction, 513 for professional services, 3,404 for commodities and other services, and 224 for trade services. The payments made by the Authority during the study period totaled $284,235,436 for the 4,225 prime contracts. Prime contract payments included $154,447,422 for construction, $42,656,198 for professional services, $86,132,650 for commodities and other services, and $999,166 for trade services contracts. Table 12.1: Total Prime Contracts and Dollars Expended: All Industries, Fiscal Years 2009 Through 2013 Industry Total Number of Subcontracts Total Dollars Expended Construction Professional Services Commodities and Other Services Trade Services Total Expenditures 84 513 3,404 224 4,225 $154,447,422 $42,656,198 $86,132,650 $999,166 $284,235,436 B. Number of Subcontracts As depicted in Table 12.2, 177 subcontracts were analyzed. The analysis included 78 construction and 99 professional services subcontracts. The subcontract dollars expended during the study period totaled $34,041,671, including $27,786,624 for construction subcontracts and $6,255,047 for professional services subcontracts. Table 12.2: Total Subcontracts and Dollars Expended: All Industries, Fiscal Years 2009 Through 2013 Industry Total Number of Subcontracts Total Dollars Expended Construction Professional Services Total 78 99 177 $27,786,624 $6,255,047 $34,041,671 12-2 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations C. Prime Contract Disparity Findings 1. Construction Prime Contract Disparity Findings Table 12.3 depicts the construction prime contract disparity findings at three contract thresholds: all prime contracts, formal contracts valued $600,000 and under, and informal contracts valued $50,000 and under. Disparity was found for African American and Hispanic American businesses on all construction prime contracts. On formal prime contracts valued $600,000 and under, disparity was found for African American and Hispanic American businesses. On informal contracts valued $50,000 and under, which did not require advertisement, disparity was found for African American and Hispanic American businesses. Table 12.3: Prime Contract Disparity Summary: Construction, Fiscal Years 2009 Through 2013 Construction Ethnicity/Gender African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females 2. All Contracts Disparity No Disparity Disparity No Disparity No Disparity Contracts Valued $600,000 and Under Disparity No Disparity Disparity No Disparity No Disparity Contracts Valued $50,000 and Under Disparity No Disparity Disparity No Disparity No Disparity Professional Services Prime Contract Disparity Findings Table 12.4 depicts the professional services prime contract disparity findings at three contract thresholds: all prime contracts, formal contracts valued $175,000 and under, and informal contracts valued $50,000 and under. Disparity was found for Asian American, Hispanic American, and Caucasian female businesses on all professional services prime contracts. On formal prime contracts valued $175,000 and under, disparity was found for African American, Asian American, Hispanic American, and Caucasian female businesses. On informal contracts valued $50,000 and under, which did not require advertisement, disparity was found for African American, Hispanic American, and Caucasian female businesses. 12-3 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations Table 12.4: Prime Contract Disparity Summary: Professional Services, Fiscal Years 2009 Through 2013 Ethnicity/Gender African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females 3. Professional Services Contracts Contracts Valued Valued All Contracts $175,000 and $50,000 and Under Under No Disparity Disparity Disparity Disparity Disparity Disparity No Disparity Disparity Disparity No Disparity No Disparity No Disparity Disparity Disparity Disparity Commodities and Other Services Prime Contract Disparity Findings Table 12.5 depicts the commodities and other services prime contract disparity findings at three contract thresholds: all prime contracts, formal contracts valued $250,000 and under, and informal contracts valued $5,000 and under. Disparity was found for African American, Asian American, Hispanic American, and Caucasian female businesses on all commodities and other services prime contracts. On formal prime contracts valued $250,000 and under, disparity was found for African American, Asian American, Hispanic American, and Caucasian female businesses. On informal contracts valued $5,000 and under, which did not require advertisement, disparity was found for African American, Asian American, Hispanic American, and Caucasian female businesses. Table 12.5: Prime Contract Disparity Summary: Commodities and Other Services, Fiscal Years 2009 Through 2013 Ethnicity/Gender African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females 4. Commodities and Other Services Contracts Contracts Valued All Contracts Valued $5,000 $250,000 and and Under Under Disparity Disparity Disparity Disparity Disparity Disparity Disparity Disparity Disparity No Disparity No Disparity No Disparity Disparity Disparity Disparity Trade Services Prime Contract Disparity Findings Table 12.6 depicts the trade services prime contract disparity findings at three contract thresholds: all prime contracts, formal contracts valued $50,000 and under, and informal contracts valued $5,000 and under. Disparity was found for African American and Caucasian female businesses on all trade services prime contracts. On formal prime contracts valued $50,000 and under, disparity was found for African American and Caucasian female businesses. On informal contracts valued $5,000 and under, which did not require advertisement, disparity was found for African American and Caucasian female businesses. 12-4 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations Table 12.6: Prime Contract Disparity Summary: Trade Services, Fiscal Years 2009 Through 2013 Trade Services Ethnicity/Gender African Americans Asian Americans Hispanic Americans Native Americans Caucasian Females D. All Contracts Disparity No Disparity No Disparity No Disparity Disparity Contracts Valued $50,000 and Under Disparity No Disparity No Disparity No Disparity Disparity Contracts Valued $5,000 and Under Disparity No Disparity No Disparity No Disparity Disparity Subcontractor Disparity Findings The disparity analysis was limited to construction and professional services subcontracts issued during the fiscal years 2009 through 2013 study period. As detailed in Chapter 4: Subcontractor Utilization Analysis, extensive efforts were undertaken to obtain the subcontracts awarded by the Authority’s construction and professional services prime contractors. The subcontract data were compiled in conjunction with the Authority. Project files were examined by Mason Tillman for awards, payments, and related documents that identified subcontractors, subconsultants, suppliers, and truckers. Prime contractors were also surveyed to secure their subcontractors’, subconsultants’, suppliers’, and truckers’ awards and payment data. All identified subcontractors, subconsultants, suppliers, and truckers were surveyed to verify their payments. Data verifying ethnicity and gender were compiled from certification lists, minority and woman business organization membership directories, Internet research, and telephone surveys. The sources used to verify contractor ethnicity and gender are defined in Table 3.1 of Chapter 3: Prime Contractor Utilization Analysis. The disparity findings for construction and professional services subcontracts are summarized below. 1. Construction Contract Disparity Findings As indicated in Table 12.7, disparity was found in the award of construction subcontracts to African American businesses. 12-5 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations Table 12.7: Subcontract Disparity Summary: Construction, Fiscal Years 2009 Through 2013 2. Ethnicity/Gender Construction African Americans Disparity Asian Americans No Disparity Hispanic Americans No Disparity Native Americans No Disparity Caucasian Females No Disparity Professional Services Prime Contract Disparity Findings As indicated in Table 12.8, disparity was found in the award of professional services subcontracts to African American and Caucasian female businesses. Table 12.8: Subcontract Disparity Summary: Professional Services, Fiscal Years 2009 Through 2013 Ethnicity/Gender Professional Services African Americans Disparity Asian Americans No Disparity Hispanic Americans No Disparity Native Americans No Disparity Caucasian Females Disparity III. Race- and Gender-specific Recommendations The findings of statistically significant underutilization of Minority and Caucasian females on the Authority’s prime contracts and subcontracts constitute a legally sound predicate for the implementation of a Minority and Woman-owned Business Enterprise (M/WBE) Program. The statistical findings of disparity are detailed in Chapter 8: Prime Contract Disparity Analysis and Chapter 9: Subcontract Disparity Analysis. A. Promulgate M/WBE Policy The Governing Board of the Solid Waste Authority (Governing Board) should promulgate an ordinance to establish an M/WBE Policy and institute an M/WBE Program with contract goals to 12-6 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations remedy the documented statistically significant disparity. The remedies should be narrowly tailored to address the documented disparity by ethnicity and gender group within each industry. The M/WBE Program should have a sunset provision five (5) years from its inception. An updated disparity study should be conducted prior to the sunset date. An M/WBE Program could improve the Authority’s effectiveness in eliminating the statistically significant underutilization of M/WBEs documented in the Study. Implementation of these strategies should significantly improve M/WBE access to Authority contracting opportunities. B. Establish a Minority and Woman-owned Business Enterprise Office The M/WBE Program should be facilitated and managed by an M/WBE Office. The M/WBE Office should report to the Executive Director. The Office should have the resources to ensure that the M/WBE Program’s objectives and administrative procedures are implemented and all departments are in compliance. The number of staff in the M/WBE Office should have the requisite skills, knowledge, and ability to meet the objectives and responsibilities of the M/WBE Program. Staff functions needed to fulfill the functions of a comprehensive M/WBE Office minimally include the following positions. 1. M/WBE Program Staff a. Executive Staff Director: Acts as the M/WBE Program Manager. Possess the authority to direct the office staff and ensure that departments comply with the by-laws and regulations implemented by the Governing Board and the Executive Director. b. Technical Staff Contract Compliance Manager: Assists the Director in managing the M/WBE Program. The Contract Compliance Manager oversees pre-award compliance with the M/WBE Program requirements, monitors post-contract compliance to ensure that the contract provisions are adhered to during the term of a contract, advises applicants regarding their certification application status and suitability for evaluation, and performs site visits. The Contract Compliance Manager must demonstrate knowledge of construction and construction-related procurement processes, and the ability to work with businesses having diverse interests and backgrounds. Data Analyst: Handles contract compliance and data analysis. The Data Analyst compiles, verifies, and reports data measuring the department’s compliance with contract goals and reporting requirements. Management of all solicitations received from the user departments is handled and comprehensive outreach strategies are designed and implemented to meet the M/WBE goals using digital media vehicles. The Data Analyst must demonstrate; knowledge of databases, data collection, and manipulation, and the ability to work with individuals having diverse interests and backgrounds. 12-7 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations C. Adopt M/WBE Program Eligibility Standards 1. Ethnic Group Definitions The ethnic groups should be defined in accordance with the ethnic categories in the United States Department of Commerce Small Business Administration (SBA) standards, as set forth in CFR 124.103. The ethnic categories defined by the SBA are African American, Hispanic American, Asian American, and Native American male and female business owners. According to the SBA standard, an eligible ethnic business must be a for-profit enterprise that is 51% or more owned and controlled by one or more minority individuals. In addition, the business must be authorized to do business under the laws of the State of Florida, and licensed to do business in Palm Beach County. 2. Women-Owned Business Definition A woman-owned business should also be defined in accordance with the SBA standard. The business must be at least 51% owned and controlled by one or more women and authorized to do business under the laws of the State of Florida and licensed to do business in Palm Beach County. 3. Reciprocal Certification The Authority should establish reciprocity with the Palm Beach County agencies that conduct certification. A reciprocal certification policy would reduce redundancy in the certification applications that a business must complete. It would increase the number of eligible businesses available to contract with the Authority without an increase in the cost to certify the additional vendors. The cost for an eligible business to be certified with more than one agency would also be significantly reduced. D. Establish Race- and Gender-specific Goals The findings of statistically significant underutilization documented in this Study constitute a legal predicate to implement race- and gender-specific goals. These race- and gender-specific goals are narrowly tailored to remedy the documented statistically significant disparity in the utilization of the available market area M/WBEs. 1. Prime Contract Race and Gender Remedies: Construction Race- and gender-specific construction prime contract remedies should apply to contracts valued $600,000 and under. a. Apply Bid Discount to Construction Prime Contracts The Authority should apply a 10% bid discount on low bid construction prime contracts. The bid discount, when applied, would reduce the bidder’s price by 10% for evaluation purposes only. The bid discount should apply to groups with statistically significant underutilization. The groups with 12-8 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations statistically significant underutilization that would therefore be eligible for the bid discount are listed in Table 12.9. Table 12.9: Groups Eligible for Construction Bid Discounts African Americans All Contracts Disparity Construction Formal Contracts Under $600,000 Disparity Informal Contracts Under $50,000 Disparity Hispanic Americans Disparity Disparity Disparity Ethnicity/Gender b. Revise Informal Bid Process for Construction Contracts The Authority should limit the solicitation of quotes for contracts under $50,000 to the groups with statistically significant underutilization. Quotes for informal contracts under $50,000 should be solicited from a rotation list. Eligible businesses should be placed on the rotation list according to their date of certification. Businesses with the same certification date and construction specialty are placed on the list alphabetically by company name. When a new business is appended to the eligibility list, its placement should follow the same procedures. After a business in the rotation receives a contract, it should be placed at the end of the eligibility list. On a regular schedule, there should be an open enrollment period for eligible contractors to be placed on the list. There should be separate contract rotation lists for each construction specialty. The groups with statistically significant underutilization that would therefore be eligible for the informal construction contracts rotation program are listed in Table 12.10. Table 12.10: Groups Eligible for Informal Construction Contracts Ethnicity/Gender African Americans Hispanic Americans Construction Informal Contracts Under $50,000 Disparity Disparity Informal construction contracts under $50,000 awarded to a non-M/WBE should be approved by the M/WBE Program Manager. An award to a non-M/WBE should also be reported to the Governing Board and the Executive Director with an explanation for the decision. 2. Prime Contract Remedies: Professional Services Race- and gender-specific professional services prime contract remedies should apply to contracts valued $175,000 and under. 12-9 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations a. Assign Evaluation Points Given the finding of statistically significant disparity in the award of professional service prime contracts, evaluation points should be assigned during the selection process to the ethnic groups with statistically significant underutilization. The points should be assigned during the evaluation of the proposals and statements of qualification. The assignment should be 15% of the available evaluation points.477 The groups with statistically significant underutilization that would therefore be eligible for the evaluation points are listed in Table 12.11. Table 12.11: Groups Eligible for Professional Services Evaluation Points Ethnicity/Gender All Contracts No Disparity African Americans Professional Services Formal Contracts Informal Contracts Under $175,000 Under $50,000 No Disparity Disparity Disparity Disparity Asian Americans Disparity Hispanic Americans Disparity Disparity No Disparity Caucasian Females Disparity Disparity Disparity The request for proposals and statement of qualification should clearly define the evaluation criteria, and the assigned evaluation points for each criterion. The recommendation for award should include a narrative report explaining the assignment of points for each proposer. A signed copy of each evaluator’s scores and comments should be attached to the narrative report. The evaluation scores should reflect the points assigned for each criterion. 3. Prime Contract Remedies: Commodities and Other Services Race- and gender-specific commodities and other services prime contract remedies should apply to contracts valued $250,000 and under. a. Apply Bid Discount to Commodities and Other Services Prime Contracts The Authority should apply a 10% bid discount on low bid commodities and other services prime contracts. The bid discount, when applied, would reduce the bidder’s price by 10% for evaluation purposes only. The maximum bid discount would be $50,000. The groups with statistically significant underutilization that would therefore be eligible for the bid discount are listed in Table 12.12. 477 Currently under the Local Presence Preference, the Authority awards LBEs a maximum 10 points to a local firm if all of the individuals assigned to the Authority’s project work out of the local office. 12-10 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations Table 12.12: Groups Eligible for Commodities and Other Services Bid Discounts African Americans Commodities and Other Services All Formal Contracts Informal Contracts Contracts Under $250,000 Under $5,000 Disparity Disparity Disparity Asian Americans Disparity Disparity Disparity Hispanic Americans Disparity Disparity Disparity Caucasian Females Disparity Disparity Disparity Ethnicity/Gender 4. Prime Contract Remedies: Trade Services Race- and gender-specific trade services prime contract remedies should apply to contracts valued $50,000 and under. a. Apply Bid Discount to Trade Services Prime Contracts The Authority should apply a 10% bid discount on low bid trade services prime contracts. The bid discount, when applied, would reduce the bidder’s price by 10% for evaluation purposes only. The maximum bid discount would be $50,000. The groups with statistically significant underutilization that would therefore be eligible for the bid discount are listed in Table 12.13. Table 12.13: Groups Eligible for Trade Services Bid Discounts African Americans All Contracts Disparity Trade Services Formal Contracts Under $50,000 Disparity Informal Contracts Under $5,000 Disparity Caucasian Females Disparity Disparity Disparity Ethnicity/Gender 5. Subcontract Remedies Race- and gender-specific remedies should apply to subcontracts awarded in the construction and professional services industries. a. Construction Subcontract Goals African Americans had a statistically significant disparity on the construction subcontracts awarded by the Authority’s prime contractors. A Minority Business Enterprise (MBE) subcontract goal should be set to remedy the documented disparity. The MBE goal should apply to African Americans. To meet the narrowly tailored standard, the subcontract goal should be based on the availability of African Americans in the market area. Table 12.14 depicts the African American construction subcontractor availability documented in the Study. 12-11 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations Table 12.14: M/WBE Subcontractor Construction Availability M/WBE Construction Subcontractor Availability Ethnicity/Gender Construction African Americans 10.50% b. Professional Services Subcontract Goals African American and Caucasian female businesses had a statistically significant disparity on the professional services subcontracts awarded by the Authority’s prime contractors. A minority (MBE) and Caucasian Female-owned Business Enterprise (WBE) subcontract goal should be set to remedy the statistically significant underutilization. The MBE goal should apply to African Americans while the WBE goal should apply to African American and Caucasian female-owned businesses. To meet the narrowly tailored standard, the subcontract goals should be based on the availability of African Americans and Caucasian females in the market area. Table 12.15 depicts the professional services subcontractor availability documented in the Study for African Americans and Caucasian females. Table 12.15: M/WBE Professional Services Subcontractor Availability M/WBE Professional Services Subcontractor Availability E. Ethnicity/Gender Professional Services African Americans 11.92% Caucasian Females 20.40% Establish M/WBE Program Administrative Procedures There are several administrative recommendations offered to implement the M/WBE Program objectives in the four industries. 1. Require Goal Attainment at Bid Opening The prime contractor should be required to meet the M/WBE subcontract goal at the time of bid opening. Submitted with the bid should be a Subcontractor Commitment Form listing all subcontractors, suppliers, and truckers that the prime contractor proposes to utilize to meet the subcontract goal. The Form should detail each M/WBE business’s percentage of the prime contractor’s bid amount. The prime contractor and each subcontractor should also be required to 12-12 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations sign a Letter of Intent specifying the dollar amount of the contract, scope of work, and certification at the time of bid opening. A responsive bid should meet the M/WBE goal or document a good faith effort. A prime contractor that fails to meet the goal at the time of bid opening would be required to document a good faith effort. In the event that the good faith effort documentation is not submitted with the bid or the submittal is not approved, the Authority should move to the next lowest bidder. The next lowest bidder’s response to the goal will be reviewed until a responsive bidder is identified. If no bidder is found to be responsive, the solicitation will be cancelled and re-advertised. 2. Quantify Good Faith Effort Criteria A contractor that fails to meet the contract goal with a certified M/WBE must document that a good faith effort was made to meet the goals. Bidders should submit documentation of a good faith effort with the bid. The Authority should determine whether the prime contractor complied with all requirements of the solicitation documents and made the required good faith effort. The Authority should assign a value to each good faith effort element, thus quantifying the good faith effort analysis. The maximum score should be 100 points. A prime contractor should achieve a minimum score of 80 points to demonstrate a bona fide good faith effort. The following are examples of good faith elements and recommended point assignments: c. Advertising (5 points) Effort: Contractors should advertise opportunities for M/WBEs in three (3) print or digital media outlets during the three (3) weeks prior to the bid opening. Contractors should be required to publish these opportunities in the general circulation media, minority-focused media, trade association publications, or trade-related publications at least twice unless the Authority waives this requirement due to time constraints. Documentation: The advertisement should include the project name, name of the bidder, areas of work available for subcontracting, contact person’s name and phone number, information on the availability of plans and specifications, date that the subcontractor’s written bid is due to the prime contractor, and bidder’s assistance available to subcontractors, suppliers, and vendors in obtaining bonds, financing, and/or insurance. d. Bidders Outreach to Identify M/WBEs (15 points) Effort: Contractors should communicate with M/WBEs through personal, frequent, and persistent contact. The contractor should also be required to promptly return telephone calls, facsimiles, and emails. Documentation: Correspondence logs should list the names of the businesses, the representatives who have been contacted, and the dates of contact. Copies of correspondence provided to the contacted businesses and the responses received should be provided. Documentation can also 12-13 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations include facsimile transmittal confirmation slips and written confirmation of receipt via email with the date of the transmission. The contractor should contact at least three businesses. However, the number should be sufficient to reasonably result in a viable subcontract. e. Attend the Pre-bid Meeting (5 points) Effort: Attendance at the pre-bid meeting(s) should be mandatory to comply with the good faith effort requirement. Documentation: The contractor’s name on the pre-bid meeting sign-in sheet can serve as documentation. f. Provide Timely Written Notification (20 points) Effort: Contractors should solicit subcontract bids and material quotes from relevant eligible businesses in writing at least two (2) weeks prior to the bid opening. Relevant businesses are those that could feasibly provide the goods or services required for completing the scope of services provided in the Authority’s solicitation. In soliciting bids, quotes, and proposals, the contractor should furnish: project name, bidder name, subcontract items, prime contact person’s name and phone number, information on the availability of plans and specifications, date that the subcontractor’s written bid is due to the prime contractor, and bidder’s assistance available to subcontractors, suppliers, and vendors in obtaining bonds, financing, and/or insurance. Documentation: Written notification should include verification of the transmission date, the recipient’s name, and the company name. Documentation can also include facsimile transmittal confirmation slips and written confirmation of receipt via email with the date of the transmission. g. Contact Follow-up (15 points) Effort: Contractors should return telephone calls, facsimiles, and emails promptly after the initial solicitation. The follow-up should take the form of a telephone call, facsimile, or email during normal business hours and must occur at least two (2) weeks prior to the bid opening. The contact should be within a reasonable amount of time to allow the prospective subcontractor an opportunity to submit a competitive sub-bid, but not less than two (2) weeks prior to the bid opening. Documentation: Correspondence logs should contain the list of subcontractors who were contacted, including results of that contact, and should be documented with a telephone log, email print-out, or facsimile transmittal confirmation slip. The list should also include names of the eligible businesses, telephone numbers, contact persons, dates of contact, and note the outcome of the contact. The record should also identify the scope of work each contacted subcontractor was asked to bid. 12-14 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations h. Identify Items of Work (15 points) Effort: Subcontracts should be broken down into discrete items or packages that M/WBEs may find economically feasible to perform. Smaller portions or quantities of work should be identified in order to maximize M/WBE participation. Documentation: The documentation should include a list with description of the specific items of work, which were solicited from eligible businesses. Documentation can include notices and advertisements targeting M/WBE subcontractors. i. Negotiate in Good Faith (15 points) Effort: Contractors should negotiate fairly with interested M/WBEs even if the selection of an M/WBE would increase costs or the contractor could self-perform the work. A contractor should not unjustifiably reject sub-bids, quotes, or proposals prepared by eligible businesses based on the subcontractor’s standing within its industry, membership in a specific group, organization, or association, and political or social affiliation. Documentation: A written statement with the names, addresses, and telephone numbers of subcontractors contacted and the negotiated price and services should be submitted. This list should include dates of the negotiations and the results, and document the bids received from the businesses that could provide a commercially useful function. j. Offer Assistance in Securing Financing, Bonding, Insurance, or Competitive Supplier Pricing (10 points) Effort: Contractors must provide M/WBEs with technical assistance regarding plans, specifications, and requirements of the contract in a timely manner in order to respond to a solicitation. Contractors should not deny a subcontract solely because a necessary and certified M/WBE cannot obtain a bond. In addition, the contractor should also advise and make efforts to assist interested businesses in obtaining bonds, financing, and insurance required by the Authority, as well as providing competitive pricing. Documentation: The contractor should provide a written description of the type of assistance, the name, contact person, and telephone number of the agency, the name of the person who provided the assistance, and the supplier that offered competitive pricing. 3. Maintain an M/WBE Directory The Authority should maintain an electronic listing of certified M/WBEs.478 The listing should include the business address, telephone number, email address, website address, and industry classification. The directory should be updated monthly to report newly certified businesses and revocations of certification status. The directory should be posted on the Authority’s website and 478 Currently, the bidders list is organized into two modules that documents: the construction and professional services module, and the commodities and other services and trade services module. 12-15 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations an electronic copy should be available upon request. The webpage file should be searchable and downloadable in Excel format. 4. Implement an Oversight Committee The Authority should create an Oversight Committee to serve in an advisory capacity to the Governing Board with the responsibility for reviewing the attainment of the M/WBE goals. The Oversight Committee should be comprised of representatives from the Governing Board, the M/WBE Office, the M/WBE community, and trade and business organizations. The Oversight Committee should submit a Monthly M/WBE Utilization Report to the Governing Board, including the M/WBE goal attainment on the Authority’s construction, professional services, commodities and other services, and trade services prime contracts. Prime contracts awarded to M/WBEs in the four industries should be reported quarterly. 5. Conduct Routine Post-Award Contract Compliance Monitoring Monthly contract compliance monitoring should be conducted to ensure that the subcontractor participation listed in bids, proposals, and statements of qualification is achieved for the contract duration. After the contract is awarded, regular compliance monitoring should verify the prime contractor’s post award subcontracting levels. Consistent contract compliance monitoring could minimize the hardships experienced by all subcontractors due to unauthorized substitutions and late payments. The following contract compliance monitoring methods are recommended:    Perform job site visits in order to verify actual subcontractor participation on the contract Conduct certification reviews in order to ensure that only eligible firms are meeting the M/WBE goals Impose penalties for failure to pay a listed subcontractor for work performed or for unauthorized substitution. 6. Implement an Expedited Payment Verification Program The Authority has a prompt payment policy. However, the policy should be updated to require verification of payments made to M/WBE subcontractors. Under the Florida Prompt Payment Act, the Authority requires that prime contractors receive payment pursuant to authorization and timely processing of vendor invoices. The Authority defines a timely processing period to be within 30 days of receipt of the invoice. Expedited payment standards should be implemented in order to remove the most significant barrier to small businesses—late payments from prime contractors. Payments to prime contractors would be made within fifteen (15) days of the Authority receiving an undisputed invoice, and prime contractors should be required to pay their subcontractors within five (5) days of receipt of their invoice payment. The Authority should also implement measures that encourage prime contractors to quickly resolve disputed invoices between the subcontractor and prime contractor. 12-16 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations a. Verify Subcontractor Payment In order to monitor compliance with the subcontractor prompt payment provision, the Authority should verify payments made to M/WBE subcontractors. The payment verification program would allow subcontractors to notify the Authority of late payments or non-payments in real time. Each subcontractor listed in the prime contractor’s invoice as paid for the previous billing cycle should be contacted electronically to verify that payment was received. This verification procedure would eliminate reliance on self-reporting by the prime contractors. If a subcontractor reports a discrepancy in the amount actually received from the prime contractor, the discrepancy should be resolved before any additional payments are made to the prime contractor. The Authority should require that prime contractor submit with each invoice an image of the cancelled check written to the subcontractor to pay for the previous invoice. The payment verification program should be published on the Authority’s website. The prime contractor’s compliance with the payment verification program should be a mandatory provision of the prime contract. 7. Conduct Targeted Outreach to Minority and Woman-owned Business Enterprises When soliciting bids, proposals, and statements of qualifications, the Authority should adhere to the following affirmative steps:     IV. Ensure that the gender and ethnic groups with statistically significant underutilization are solicited to respond to solicitations Request lists of potential prime contractors from the M/WBE Program Office when soliciting response to solicitations Perform community outreach to M/WBEs before the solicitation is released to notify them of the upcoming opportunity Encourage, where economically and technically feasible, the formation of joint ventures, partnerships, and other similar arrangements among the ethnic and gender groups with a disparity Small Business Enterprise and Local Preference Program Assessment The Authority has two business enterprise programs intended to increase contracting with small and local businesses. The two enterprise programs are the Small Business Enterprise Program (SBE) and the Local Preference Policy. In 2012, the Governing Board suspended the voluntary 15% M/WBE participation goal in favor of a voluntary 15% SBE goal. 12-17 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations A. Small Business Enterprise Policy The Small Business Enterprise Policy was established to ensure that small businesses have an opportunity to participate on the Authority’s contracts. The Policy was promulgated to prevent the exclusion of SBEs from participating in Authority contracting, the denial of benefits to SBEs, and discrimination against SBEs on the basis of race, national origin, gender, or ability in connection with the award and performance of any Authority contract.479 1. Eligibility Standards The Authority does not define SBE edibility standards, or conduct certification. Certification issued by any other certifying government agency is accepted.480 2. SBE Goal The Authority established a 15% voluntary goal for SBE participation in the Authority’s contracts.481 The voluntary program relies on good faith efforts. The Authority is required to take all reasonable steps permissible by law to ensure that SBEs have maximum opportunity to participate in the Authority’s procurement processes.482 3. Application of Program Goals The Authority awards a maximum of ten (10) points to a certified SBE in the cumulative evaluation process. The maximum 10 points will be awarded to a certified SBE if the SBE serves as the prime consultant and provides more than 50% of the services solicited. Certified SBEs will be awarded a total of 5 points when the SBE serves as the prime consultant, but provides less than 50% of the work. A non-certified SBE may receive a maximum of 5 points if the business utilizes one or more certified SBE subconsultant(s) to meet the Authority’s voluntary 15% goal.483 4. Program Management The Department of Purchasing Services is responsible for managing the SBE Program and Local Preference Policy. The Department has responsibility to promote the participation of SBEs in Authority contracting as prescribed by the Governing Board’s policies.484 479 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 6.1 (2014). 480 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 6.2 (2014). 481 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 6.3(2014). 482 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 6.2(2014). 483 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 7.5 (2014). 484 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 1.4(O) (2014). 12-18 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations B. Local Business Preference Policy The Authority gives procurement and contracting preference to businesses certified as Local Business Enterprises (LBE).485 Preference is accorded to a business in the order of rank. LBEs are accorded the highest rank because the Local Presence Preference is ranked higher than the SBE presence. A bidder certified as both SBE and LBE cannot receive both preferences. 1. Certification To receive the Local Preference, businesses must be certified as LBE. To be certified, the business must have: (a) its headquarters or branch office located within Palm Beach County for a minimum of one (1) year, and (b) been incorporated or legally commenced business under a fully operational license for at least one (1) year prior to the issuance of the solicitation.486 2. Local Preference A maximum of 10 points is awarded to local businesses in the Request for Proposals (RFP) or Request for Qualifications (RFQ) process. A 5% price preference is offered to local businesses in the low bid process. 3. Application c. Application of the Local Preference to Requests for Proposals and Requests for Quotes The maximum 10 points will be awarded during the cumulative evaluation process to an LBE if all of the individuals assigned to the contract work out of the business’ local office. The Evaluation Committee will have latitude in assigning fewer points to LBEs with assigned personnel working out of a non-local office.487 d. Application of the Local Preference to Invitations to Bid The Local Preference permits a LBE bidder to submit a best and final offer when the bid is within 5% of the lowest non-local bidder. The award will be made to the lowest bid. In case of a tie for the lowest bid, the contract will be awarded to the lowest local bidder. Ties between local bidders will be determined by a coin toss, which will be conducted at a public proceeding where both the affected firms are invited to attend.488 The award will be made to the winner of the coin toss. C. SBE Program Effectiveness 485 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 7.1 (2014). 486 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 7.4 (2014). 487 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 7.2(2014). 488 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 7.2(2014). 12-19 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations The SBE Program was established in 2012 after the suspension of the voluntary 15% M/WBE participation goal. The SBE Program was enacted to provide an effective method to prevent discrimination on the basis of race, national origin, gender, or ability. 489 The effectiveness of the SBE Program, in preventing discrimination in the award of the Authority’s contracts, was measured by analyzing the subcontracts awarded to SBEs, and measuring the number of the contracts awarded to minority businesses certified as SBEs.490 Table 12.16 presents the SBE subcontract utilization during the fiscal year 2009 to fiscal year 2013, as reported in the Authority’s Master Report. Table 12.16: SBE Subcontractor Utilization by Ethnicity and Gender: All Industries Number Percent Amount Percent of Contracts of Contracts of Dollars of Dollars African Americans 33 8.71% $1,029,383 3.32% Asian Americans 61 16.09% $1,348,521 4.34% Hispanic Americans 60 15.83% $7,243,675 23.33% Native Americans 0 0.00% $0 0.00% Caucasian Females 110 29.02% $10,483,714 33.77% Non-minority Males 115 30.34% $10,941,630 35.24% TOTAL 379 100.00% $31,046,923 100.00% Ethnicity The findings in Table 12.16 demonstrate that a majority of the contracts reported in the Master Report were awarded to Caucasian female and Non-minority male certified SBEs. The majority of the dollars were also awarded to certified SBE Caucasian females and Non-minority males certified SBEs. These two groups received 59.36% of the contracts and 69.01% of the dollars awarded to certified SBEs. The findings are notable when compared to the availability of certified SBEs. Table 12.17 presents the availability of SBEs compiled from certification databases maintained by Palm Beach County agencies which certify SBEs. In accordance to the SBE count from these sources, the percent of MWBE certified as SBEs is 61.18%. The SBE certified MBE percentage is 33.18%, and the Caucasian female percentage is 28.00%. While the availability percentage of Caucasian females is approximately equal to the Authority’s utilization of Caucasian female certified SBEs, the utilization of African American and Native American certified minority SBEs is considerably lower than their availability percentages. 489 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 6.1 (2014). 12-20 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations Table 12.17: SBE Subcontractor Availability by Ethnicity and Gender: All Industries Percent Ethnicity of Businesses African Americans Asian Americans Hispanic Americans Native Americans 14.12% 4.24% 14.35% 0.47% Caucasian Females 28.00% Non-minority Males 38.82% TOTAL 100.00% The underutilization of available African American and Native American businesses reflects the statistical findings in the Disparity Study. In the Disparity Study, minority businesses were underutilized at a statistically significant level. This assessment of the effectiveness of the SBE Program is additional evidence that the SBE Program has not achieved its objective of safeguarding businesses from being excluded or experiencing discrimination in the award of Authority contracts.491 Although the SBE Program has not proven to be an effective method to prohibit discrimination, it should be enhanced and continued because it offers subcontracting opportunities to local small businesses. However, in light of the assessment and the Disparity Study findings in order to achieve the objective of eliminating discrimination in the award of Authority contracts to minority businesses an enhanced SBE Program should be implemented in concert with the M/WBE Program. D. SBE Program Enhancements 1. Establish Eligibility Standards for the Small Business Program Certification standards should be adopted and clearly defined. The SBE Program certification criteria should include: (a) annual gross revenue limits; (b) ownership and control criteria; and (c) commercially useful function standards. The Authority should consider defining its eligibility standards in accordance with other County agencies that have small business programs. 12-21 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations a. Proposed Eligibility Standards iv. Annual Gross Revenue Limits The Authority should define the eligibility size threshold for SBE certification to businesses with an annual gross revenue valued under $500,000. As illustrated in Table 12.18, the majority of businesses in Palm Beach County have an annual revenue under $500,000. The percent of businesses with annual revenue valued under $500,000 is 58.77%. Palm Beach County has a higher percentage of small businesses than both the State of Florida, at 58.09%, and the United States, at 51.64%. Table 12.18: Business Profile by Annual Revenue Annual Revenue Less than $500,000 $500,000-$999,999 $1,000,000-$2,500,000 $2,500,001-$4,999,999 $5,000,000-$10,000,000 More than $10,000,000 TOTAL United States 51.64% 18.74% 15.77% 6.22% 3.70% 3.93% State of Florida 58.09% 19.64% 13.67% 4.23% 1.89% 2.47% Palm Beach County 58.77% 20.62% 13.48% 4.23% 1.41% 1.50% 100.00% 100.00% 100.00% *Source: Reference USA 2009-2013, Study Period v. Ownership and Control The Authority should adopt ownership and control standards in accordance with Palm Beach County’s certification requirements. Palm Beach County requires that ownership and control must be real, substantial, continuing and shall go beyond the “pro forma” ownership.492 The SBE owners must share in the risks and profits to an extent that is commensurate with their ownership interests. The measurement of ownership and control is demonstrated by an examination of the substance of the business and the ownership document, rather than the form of the business’ arrangements.493 vi. Residency Requirement The Authority should adopt residency standards in accordance with Palm Beach County’s and the City of West Palm Beach’s certification requirements. The business must be domiciled in Palm Beach County.494 A business is considered to be domiciled in Palm Beach County if it has continuously maintained the physical address within the County for at least six months prior to the time of application.495 492 Palm Beach County, Fl., PPM CW-O-043(7.14) (January 1, 2011). 493 Id. 494 Palm Beach County, Fl., PPM CW-O-043(7.11) (January 1, 2011). 495 West Palm Beach, Florida Code of Ordinances, Ord. No. 66-225 § (a)(1)-(7) (2015). 12-22 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations vii. Commercially Useful Function The Authority should adopt commercially useful function standards in accordance with Palm Beach County’s certification requirements. The business must perform a value-added commercially useful function by maintaining storage and being responsible for the execution of distinct elements of work.496 The business must have the personnel and experience necessary to perform, manage, and supervise the work. 2. Establish Mandatory SBE Goals The Authority should modify the voluntary goal for SBE participation and require that prime contractors meet a mandatory 15% SBE subcontracting goal.497 If a bidder cannot meet the 15% subcontracting goal, the Authority should require the bidder to demonstrate a good faith effort to contract with an SBE subcontractor or deem the bidder or proposer non- responsive. 3. Require Goal Attainment at Bid Opening The prime contractor should be required to meet the SBE subcontract goal at the time of bid opening. Submitted with the bid should be a Subcontractor Commitment Form listing all subcontractors, suppliers, and truckers proposed to meet the SBE subcontract goal. The Form should detail each SBE business’s percentage of the prime contract bid amount. Prime contractors and all subcontractors should be required to sign letters of intent specifying the dollar amount of the subcontract, scope of work, and the certification agency. In the event that the good faith effort documentation is not submitted with the bid or the submittal is not approved, the Authority should move to the next lowest bidder. The next lowest bidder’s response to the goal will be reviewed until a responsive bidder is identified. If no bidder is found to be responsive, the contract will be cancelled and re-advertised. 4. Institute SBE Bid Discounts The Authority should apply a 5% bid discount on contracts that are subject to a low-bid selection process, for evaluation purposes only. The bid discount, when applied, would reduce the bidder’s price by 5%, as opposed to requiring the local bidder to resubmit a best and final offer. 5. Report Compliance with SBE Goals A SBE Utilization Report should be published quarterly, and should documented for all current prime contracts, the original award, and contract modifications and year to date payments for prime and subcontracts by department, ethnicity and gender. Currently, the Authority sets a voluntary 15% SBE participation goal for Authority contracting.498 496 Palm Beach County, Fl., PPM CW-O-043(7.11) (January 1, 2011). 497 FLA. STAT. CH. 2001-331, Purchasing Manual of the Solid Waste Authority of Palm Beach County § 6.3(2014). 498 Section 6, Small Business Enterprise (SBE) Policy 12-23 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations V. Race- and Gender-Neutral Recommendations The race- and gender-neutral recommendations presented in this section apply to the four industries examined in the Disparity Study: construction, professional services, commodities and other services, and trade services. By applying the proposed recommendations to the procurement process, the Authority can address some administrative barriers that market area minority, women, and small businesses encounter while trying to do business with the Authority. A. Pre-Award Procedures 1. Establish Unbundling Policy Bundling occurs when small purchases are consolidated into one contract, or when goods or services are grouped together into a single solicitation. Bundling also occurs when projects that are on separate sites—or on discrete areas of the same site—are included in one solicitation. Design-build and Master Agreement systems, task order contracts, and multi-year price agreements are types of bundled contracts. The Authority should expand its efforts to unbundle large and multi-year contracts into smaller projects to provide additional opportunities for small firms to compete. While the Authority has implemented measures to unbundle its contracts, one of the Authority’s vendors received 71% of the total construction prime contract dollars or $109,139,984. This one vendor represented only 1% of the Authority’s 22 utilized prime contractors. The 22 vendors received $154,447,422. Given the concentration of contract awards with a few contractors, the Authority should make a greater effort to unbundle its contracts to increase the number of businesses participating at both the prime contract and subcontract levels. Smaller prime contracts would result in smaller first tier subcontracts and reduce the use of second tier subcontracts. The Authority should review all solicitations involving large or multi-year contracts to determine if they can be unbundled. In determining whether large procurements should be unbundled, the following criteria should be considered: Table 12.19: Unbundling Criteria CRITERIA TO BE USED IN UNBUNDLING Size and Complexity of the Project Number of Locations in the Project Sequencing and Delivery of the Work Similarity of the Construction, Professional Services, Commodities and Other Services, and Trade Services Procured Public Safety Issues and Convenience Procurement Division Options Size of the Purchase Orders or Consultant Services Agreements Issued Against the Procurement Availability of SBEs, LBEs, or M/WBEs to Perform Parts of the Procurement 12-24 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations a. Establish Procedures to Designate a Reasonable Number of Small Prime Contracts that MWBEs and SBEs can Perform The Authority should institute procedures to ensure that a reasonable number of prime contracts are of a size that small businesses can perform. The larger construction and professional services projects should be reviewed to identify items of work that can be unbundled into contracts that small businesses can perform as prime contractors. b. Use Direct Contracting to Award Small Contracts Specialty or non-license services which might otherwise be included as an item of work in a construction contract or within the scope of an architecture and engineering contract can be unbundled and awarded as direct contracts. Direct contracting would increase the opportunities for and build the capacity of small businesses. Direct contracting allows small businesses to work as prime contractors on a greater variety of contracts. In the construction industry, trucking, demolition, surveying, and landscaping could be awarded as direct contracts instead of in the general construction contract. Design services, which are not required to be performed by a licensed engineer or architect, might also be awarded as direct contracts. These services include planning, environmental assessments, ecological services, cultural resource services, surveying, and testing services. If these professional services specialties were separated from large design contracts and awarded as prime contracts, it would increase opportunities for small firms to be prime contractors. 2. Limit Use of Master Agreements The Authority can procure construction and professional services contracts through master agreements. A master agreement can be used by more than one department to award multiple projects, with additional multi-year renewal options. The Authority should limit the use of master agreements, and advertise for all contracts. B. Post-Award Procedures 1. Provide Debriefing Sessions for Unsuccessful Bidders Debriefing sessions for unsuccessful bidders should be held by the project manager or the appropriate user department. Additionally, bids should state that the debriefing sessions are an option and the procedure for scheduling the debriefing should be set forth in the solicitation and the bid award notice. These sessions could provide vital information to help small businesses prepare more competitive submittals in the future. 2. Institute Mobilization Payment for Subcontractors Whenever a mobilization payment is made to a prime contractor, the subcontractor should be paid the appropriate share of its bid when directed to mobilize, and prior to commencing work. 12-25 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations Subcontractors should receive the mobilization payment because project start-up costs are also significant for a subcontractor. Mobilization payments on construction projects cover site location costs including equipment, supplies, trailers, and other operations which must be performed or cost incurred prior to beginning work on the project site. 3. Give Five-day Notice of Invoice Disputes Invoice disputes are a source of delayed invoice payments. While the Authority has informal means to resolve payment disputes, the resolution process should be formalized. Within five (5) days of receiving a disputed invoice, the Authority should provide the contractor with an Invoice Dispute Notification detailing all items in dispute. Undisputed invoice amounts should be paid within fifteen (15) days and disputed items should be resolved in a timely manner and thereafter paid promptly. The prime contractor should have the same obligation to give notice to the subcontractor within five (5) days of receiving a disputed invoice. The prime contractor should pay the subcontractor within five (5) days of receiving payment from the Authority. The prime contractor should be penalized if the subcontractor is not paid timely. 4. Implement Dispute Resolution Standards Dispute resolution standards should be established to allow businesses to resolve issues relating to work performance after a contract award. A dispute resolution process should apply to disputes between prime contractors and the Authority, as well as disputes between subcontractor and prime contractor, certification denial, and other contract issues. The dispute resolution process should include provisions for an ombudsperson. The ombudsperson could handle disputes, as needed, to achieve timely and cost-effective resolution. The first step in the dispute resolution process would be the submission of written complaint by the aggrieved party to the ombudsperson. The ombudsperson would then aid the parties in resolving the dispute by investigating the claim and making initial contact with the Authority, prime contractor, and if relevant the subcontractor. If the dispute is not resolved through these means within twenty (20) working days, the ombudsperson will assist the aggrieved party in filing a request for a dispute resolution meeting. Any party that does not respond to requests by the ombudsperson will be placed on a suspension list until the matter is resolved. The suspension list should be monitored and approved by the Executive Director and the Governing Board. The dispute resolution meeting would be the second step in the resolution process. Neither party may involve legal representation during this informal process in order to avoid significant legal costs for both parties. If the parties are not able to reach a mutually agreed upon resolution through meeting, the dispute may proceed to formal mediation or arbitration. A dispute must be taken to mediation before it can proceed to arbitration. 12-26 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations Arbitration is the final step to resolving a dispute. The decision reached by the arbitrator is final and binding. The parties may retain legal representation during the mediation or arbitration process. C. Data Management Procedures 1. Implement a Centralized and Uniform Data Management System All contracting activity should be tracked with a comprehensive data collection system. The financial system should have the capacity to capture each contract award and the purchase order or work order linked to the contract. The system should allow for linking the subcontractor data to the appropriate prime contract. The prime contract should be coded by industry classification using North American Industry Classification System (NAICS) codes. Government agencies and notfor-profit organizations should also be coded so they can be differentiated in the financial system from for profit entities and excluded from the utilization analysis and reports of prime contractor commitments and payments. The system should track each purchase order and work order by a unique number that links to the unique prime contract number. The contract record should include the unique contract number, the contract name, award amount and date, payment amounts and dates, and vendor name and contact information. 2. Report, Track and Monitor Subcontractor Participation The Authority should report and track all subcontractor payment information in an electronic database utilizing a web-based payment application. A subcontract monitoring system should be incorporated into a relational database application to allow for linking the subcontractor data to the appropriate prime contract. The system should have the functionality to track contract amounts and payments to all subcontractors, sub consultants, suppliers, and truckers. The subcontractor tracking system should capture all subcontractors, suppliers and truckers used listed on a prime contract at the time of award. The information should be collected on a Subcontractor Utilization Form submitted with the prime contractor's bid, proposal, and statement of qualifications. The Subcontractor Utilization Form should capture the contract number, the contract name, award amount, the subcontractor's name, address, telephone number, and contact person. A copy of the form reporting year-to-date payment to each subcontractor listed on the Subcontractor Commitment Form should accompany each prime contractor’s invoice. VI. Website Enhancement Strategies The Authority’s website (http://swa.org/) was evaluated in May 2016 to assess its usability, functionality, and informational value for contractors inquiring about doing business with the Authority. The goal of the review was to assess the presentation of information relevant to businesses (content) and the ease of use (structure). The website was found to be visually appealing, professionally formatted, and informative. There was a good use of color and a 12-27 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations consistent layout. The website quickly loaded within 10 seconds using Google Chrome, Google Chrome for Mobile, Mozilla Firefox, Microsoft Internet Explorer, and Safari. The website was error-free, with no spelling or grammatical errors detected. Additionally, the website offered a mobile-optimized view. A. Structural Enhancements Recommendations presented in this section are intended to enhance the utility and functionality of the Authority’s website’s for its business users. The structure of the Authority’s website requires users to search through various indexes to locate procurement information. The website also lacks important descriptive information that should be prominently placed at the top of the website. 1. Readability Recommendations The website was found to be explanatory, but the website was placed at a Flesch-Kincaid 43.8 reading ease score. Flesch-Kincaid is a readability test that measures the grade level required to read the text, and is designed to indicate how difficult a reading passage is to understand, measured by grade level. Table 12.20 below identifies the reading difficulty of the Authority’s website. Given its Flesch-Kincaid reading ease score, the Authority’s website is measured as “Difficult,” indicating that the Authority’s website is accessible to business users whose education level is at the high school or some college level or higher. The Authority therefore provides a website that is only accessible to an estimated 33% of adults. The Authority should take measures to modify the website’s content so that it is more concise and accessible to a larger pool of businesses. The Authority’s website content should aim to be measured at the “standard” level that is accessible to an estimated 83% of U.S. adults, which requires a 60 to 70 reading ease score. 12-28 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations Table 12.20: Readability Result by Flesch-Kincaid Grade Reading Ease Score499 B. Functionality a. Provide Accessibility for Persons with Disabilities The Authority should provide website options and accommodations for users with disabilities so that the content may be accessible. Currently, there is no specific information or utilities by which users with disabilities may contact the Authority for reasonable accommodations in navigating the website. Users with disabilities should be permitted to contact the Authority for reasonable accommodations. The Authority should establish an accessible telephone line for website users with disabilities. Additionally, the Authority should consider a text-to-speech feature to provide immediate access to the website without staff assistance. The text-to-speech feature reads text on the webpage aloud, thereby removing a barrier for visually impaired individuals. A text-to-speech feature would also reduce the need for staff to respond to inquiries regarding accessibility. b. Provide an Intuitive, Easy to Navigate Website A business considering contracting with the Authority is able to arrive at the Business Opportunities webpage by clicking on the Business Opportunities tab at the top of the Authority’s website. The Business Opportunities webpage provides a menu bar with links to bid postings, and permits the user to locate purchasing and bid information, and vendor registration information. 499 Flesch, Rudolf. "How to Write Plain English". University of Canterbury. Retrieved February 2016. 12-29 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations However, the menu bar links lead to webpages on the Authority’s website with titles different from those listed on the menu bar. The Authority should make the navigational tools uniform. Upon navigating to the Business Opportunities webpage, a user should reach a webpage with a title identical to the one on the menu bar in order to avoid undue confusion. C. Content Enhancements 1. Consolidate Bid Information Within a Single Webpage The Authority should consolidate all procurement information into a single Purchasing and Bid webpage so that users are not required to perform extensive research into multiple indexes to gather relevant procurement information. 2. List All Certified Vendors on the Website All Authority certified vendors should be listed on the Business Opportunities webpage. A searchable database should be developed to ensure that information on certified vendors is made readily accessible. The database should also include all vendors that are certified by the local governmental entities that the Authority recognizes for certification purposes. The database should be equipped with a keyword search function that permits users to target their search with keywords such as business name, industry, business address, and ethnicity of the business owner. The directory should be downloadable in both PDF and Excel formats. 3. Enable Website Interaction The Business Opportunities webpage should include a search function allowing users to search for solicitations using keywords. Also, there should be a web interface that enables interactive communication between users and Authority staff. This feature would reduce the amount of time Authority staff would expend to respond to inquiries regarding solicitations. 4. Publish Prime Contract Awards The Authority posts bid and contract opportunities on the “Bid Postings” webpage. However, a comprehensive, searchable list containing information on contractor name, award date, and award amount should also be published. 5. Publish Prime Contractor Payments Prime contractor payment should be posted on the Authority’s website to allow subcontractors to track the payments of their prime contractor’s invoices. Payment data should be updated weekly or bi-weekly on the same day of the week. The reported prime contract payment information should be searchable by contract number, project name, and prime contractor name. This system will enable subcontractors, suppliers and truckers to track the disbursements to their prime contractors. 12-30 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations 6. Publish Utilization Reports The quarterly Utilization Reports should be posted on the Business Opportunities webpage. They should also be downloadable in both PDF and Excel formats. 12-31 Mason Tillman Associates, Ltd., March 2017 Final Report Solid Waste Authority of Palm Beach County, Florida Disparity Study Recommendations A MASON TILLMAN ASSOCIATES, LTD