A study released Friday found that the Metropolitan Sewer District (MSD) had not been employing as many African-American subcontractors as they could have on construction contracts from 2007 to 2012.
The release of the disparity study marks the end of a long debate on whether or not MSD needs to increase its goals in hiring minority- and women-owned businesses, especially in light of the $4.7 billion in mandated improvements the district will be making over the next 23 years.
The disparity study, conducted by Mason Tillman, recommends that MSD increase its goal for hiring minority-owned b usinesses (MBE) to 30 percent on building construction contracts over $50,000 and to 17 percent on non-building construction contracts over $50,000.
These numbers are higher than the interim goals that labor-union and construction leaders fought against last March, when MSD’s Board of Trustees voted to set the goals at 25 percent on building construction contracts and 15 percent for both women- and minority-owned businesses on non-building construction contracts.
The study also recommends higher goals for boots-on-the-ground workforce than the interim goals of 25 percent minority and 6.9 percent women for construction contracts more than $500,000. The study recommends a 30 percent goal for minorities and seven percent goal for women in construction contracts. For professional services, the workforce goal recommended is 18 percent minorities and 32 percent women, and the interim goals were a combined 30 percent goal for both women and minorities.
Many labor and construction organization leaders argued that St. Louis does not have the “capacity” to hire more minorities. The disparity study dismisses that argument.
The study shows that in building construction, African-American businesses are capable of carrying 28.5 percent of the load on contracts and Hispanics 1.21 percent. In non-building construction, African Americans are available for 17.3 percent of contracts.
For professional services and goods and services contracts, the study did not find any disparity for minorities or women. Hence, spokesman Lance LeComb said MSD proposes to remove its interim goal of 30 percent combined goal for women and minorities for professional services contracts of $50,000 or more. If the district kept the goal in place, it could be challenged in court.
For women subcontractors, the study did not find any disparity in any category. For this reason, MSD proposes to not set any goals for women in any category.
In order to build up future capacity, MSD proposes to set goals for 40 percent apprentices and 30 percent local residents.
“The diversity goals recommended by the report may change how some firms do business with MSD,” MSD leaders said in a statement to the public. “And change will often times be perceived as a scary prospect and create uncertainty.”
However, to not implement the report’s recommendations would violate the Equal Protection Clause of the constitution, according to the statement.
MSD will hold public meetings to discuss the study’s findings. The first will be at 9 a.m. Monday, February 25 in the multi-purpose room of the student center at St. Louis Community College – Florissant Valley, 3400 Pershall Road in Ferguson.
Many minority engineering firms were shocked to learn that the disparity study found no disparities among MWBEs in professional services or other business services.
“As engineers we are taught not to panic or assume when project conditions change or differ from what we expected,” said Nicole Adewale, co-founder and president of ABNA Engineering, Inc.
Adewale said the long-held supplier diversity programs are the very reason why the study found a lack of disparity in professional services. If that is discontinued, it could easily launch them “back to the days when we had severe disparities in contracting opportunities,” she said.
Yaphett El-Amin, executive director of MOKAN, said her phone has been ringing nonstop with those who could be affected by the lack of professional service goals.
“Many of these entities have participated in the inclusion programs for many years and feel the goals were the door openers for them,” said El-Amin, has been a constant advocate for minority businesses and workers in the discussion for higher MSD minority participation. MSD will have to ensure these opportunities continue to preserve equality, she said.
“You can see many of the recommendations exceeded their interim goals,” El-Amin said. “The study shows that the capacity is higher than the agency initially projected or tried to satisfy. We were excited about that.”
On Tuesday, MSD gave El-Amin all of its 2012 MSD contracts, and she will be reviewing them to see whether or not the contractors met the interim goals.
“A law that’s put in place is only as good as its enforcement,” she said. “We still remain concerned about that.”
Since spring 2011, MSD staff and trustees have been working with stakeholders – including the Associated General Contractors of St. Louis (AGC), NAACP, various engineering associations and minority contractors – to create new minority participation goals.
Yet, right before the trustees were set to vote on the goals in October 2011, AGC leaders expressed some last-minute concerns and urged board trustees to wait. At the Dec. 8, 2011 board meeting, trustees failed to pass new minority participation goals largely because labor and construction leaders threatened to sue MSD without a disparity study to back up the goals.
Hence, the board decided to commission a disparity study that would give their goals some legal teeth. In the meantime, they announced that they would implement interim goals.
On March 6, 2012, just two days before the trustees were set to vote on the interim goals, the AGC held a discussion group and released a “St. Louis Construction Industry Study,” which showed that the workforce capacity for minorities was only about eight percent.
Consequently, stakeholders ended up recommending comparably low interim goals to the board. Despite this, Vice Board Chair James H. Buford successfully urged the board to vote for higher interim goals in March 2012.
Had Buford let the union and construction leaders prevail in their influence of capacity, the proposed workforce goals would have been 14.7 percent minorities and 6.9 percent women.
The results of MSD’s disparity study will affect policies in both St. Louis City and St. Louis County.
In fact, the St. Louis City Board of Aldermen recently passed a bill, sponsored by Alderman Terry Kennedy, that allows the city to conduct a joint disparity study with the city, MSD and St. Louis County. The city is just waiting on St. Louis County to pass its legislation to move forward with the disparity study agreement.