GDOT awards pennies on the dollar to women- and minority-owned firms: GDOT report

Editor’s note: This is the first of two stories that will examine a disparity report prepared for Georgia’s Department of Transportation. Part 2: Business owners comment on GDOT’s current practices.

By David Pendered

Georgia’s Department of Transportation could be deemed guilty of racial and gender discrimination when it comes to the purchase of goods and services, according to a little-noted disparity report delivered to GDOT in August 2016. The Equal Access Committee of GDOT’s board is to get an update on the report at its meeting Wednesday.

GDOT, Cobb County

GDOT awards the lion’s share of contracts for goods and services to majority-owned companies, including the project to build managed toll lanes along I-75 and I-575 in Cobb and Cherokee counties. according to a disparity report created for GDOT. Credit: David Pendered

In an email exchange Jan. 13, GDOT officials did not expound on the material to be presented to the committee by Kim King, director of GDOT’s equal employment opportunity program.

The disparity study was completed by a consultant GDOT hired to review its spending in the period from July 1, 2011 through June 30, 2014. The source of the data is primarily GDOT, but outside sources were utilized as well in an attempt to neutralize any bias in the GDOT data, according to the report.

The consultant examined GDOT’s compliance with federal laws and regulations and found:

  • “[S]ufficient statistically significant underutilization of minority and woman owned firms as prime contractors and consultants, and subcontractors in federal contracting to indicate an inference of discrimination which may be present discrimination or the present effects of past discrimination.
  • “Further, from [the consultant’s] analysis of the Private Sector in the State of Georgia, an inference of discrimination can be made in the relevant construction, professional services, and manufacturing industries.”

According to the report, “GDOT spent $3,066,334,607 with prime contractors in the Relevant Market during the Study Period with 2.25 percent of this amount, or $69,044,066 spent with MWBE/DBE firms as primes. GDOT prime contractors spent $122,736,937 on subcontracting with MWBE/DBE firms, roughly 17 percent of all subcontracting dollars.”

GDOT, DBE programs

A disparity report created for GDOT credited the agency for enhancing efforts to enable women- and minority-owned businesses to compete for roadway projects. Credit: GDOT

MWBE refers to a minority and women-owned business enterprise. DBE refers to a disadvantaged business enterprise, defined as a small business where, “socially and economically disadvantaged individuals own at least a 51 percent interest and also control management and daily business operations,” according to a report by the U.S. Department of Transportation.

Georgia is required by federal law to establish and implement a DBE program, according to the report. President George W. Bush signed the 2005 transportation funding bill, which required, “race- and gender-based preferences in the transportation contracting industry in response to pervasive and ongoing discrimination.” The law requires the federal transportation secretary to ensure that 10 percent of the money provided by the federal government to states and cities be expended with DBEs. The law did not establish a national affirmative action program, but called on each state to devise a disparity program that complies with federal regulations, according to the report.

GDOT hired Atlanta-based Griffin & Strong, P.C. to conduct the disparity study. Rodney Griffin founded the company in 1992. The company practices law and consults on governmental and private matters, according to a profile of the company contained in the report.

The report concluded the possible discriminatory situation is likely to be exacerbated as time passes.

GDOT, small business

GDOT should extend federal disparity regulations to future roadway projects that are funded entirely by the state, according to a disparity study completed for GDOT. Credit: GDOT

Because of the passage in 2015 of legislation to provide a $1 billion funding package for transportation, Georgia intends to fund an ever-increasing number of road projects with state dollars that are not subject to the federal disparity laws.

The consult suggested that Georgia extend federal DBE provisions to state spending. This is the second-highest priority out of 13 recommendations contained in the report. The first recommendation was for GDOT to continue the current federal DBE program. The second recommendation states:

  • Extend the current DBE Program to State-Funded Projects Administered by GDOT
  • “Again, GDOT has instituted a new State Supportive Services Program in 2016, after the completion of the Study Period. However, during the Study Period, an inference of discrimination can be drawn from the statistically significant disparity in LMIG [local maintenance and improvement grants] contracting which is supported by the regression analysis performed in Chapter V – Private Sector. “Although the federal DBE Program is only required for federally funded projects, GSPC recommends that GDOT extend the DBE Program to cover state funded programs in this respect:
    • “GDOT should require DBE certification for state funded projects in the same manner as federally funded projects.
    • “GDOT should administer and monitor DBE participation in the same manner.
    • “Administer goals in the same manner as the federal DBE Program. In setting goals however, GDOT has used a weighted availability in each of the work group categories (which is then adjusted) to determine its DBE goal. The weighting uses GDOT’s budget and not the weighting that would be applicable to LMIG or perhaps other state funded projects. Therefore, GDOT should set a separate unweighted goal for state-funded contracts (subject to adjustment) based upon overall availability factors which may be adjusted.
    • “By utilizing the same administration and methods for both DBE Programs, each Program is likely to operate most effectively, rather than attempting to establish two separate programs.”

 

 

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

7 replies
  1. Wormser Hats says:

    Having been a partner in a MWBE/DBE contractor to Georgia and metro-area counties, I can attest that the MWBE/DBE program is a nice idea and should be leveraged where competitive and competent service is available from such firms.  However, such set-asides have a tendency to induce quality-issues where a MWBE/DBE is either not exquisitely qualified (becoming a pass-through in the name of compliance) or rests on its laurels (providing an inferior product on reliance that the state and or prime contractor MUST employ its services) Few uniquely-positioned MWBE/DBE firms are exquisitely qualified in the performance of their menu of services (Why there here are ample examples where MWBE/DBE preferences are a solution creating its-own set of problems.).

    At least at this time, rather than make MWBE/DBE contracting an imperative, it might be better to celebrate it when achieved in order to demonstrate that it is a worthwhile pursuit, instead of an entitled, protected-class of business.
    Particularly in this day after the MLK observance, it bears considering that Georgia should seek performance excellence based on the content of a corporation’s character, and not the color (or gender) of its officers; who – while being majority shareholders on paper – may not even be its true owners.Report

    Reply
  2. EmilWalcek says:

    While numbers may be a red flag, they do nothing to prove discrimination. Nor do they uncover any perfidy in firms who “rig the books” to gain a MWBE/DBE competitive advantage in project bids. A spending practices report like this is no basis to expand a culture of victomhood, especially in business.Report

    Reply
  3. bcngator63 says:

    Does the study address whether or not there are sufficient qualified MBWE/DBE firms available to meet the 10% goal?  How much of the parking deck fiasco at Doraville result from using under qualified minority firms?  I watched the City of Atlanta program morph from required minority participation into requiring participation by the right minority, which is just as discriminatory.Report

    Reply
  4. GAEngineer says:

    I own a small DBE Engineering firm, and all we seek is opportunities which are fair. We have been placed on numerous contracts, only to have all the work given to “White Women DBE Firms.” Please spare me the incapability nonsense. How is it that we are sensible and capable enough to pay taxes, but when it comes time to partake in opportunities which our taxes help fund, we’re less than qualified.Report

    Reply
  5. bcngator63 says:

    GAEngineer
    You answered my first question, the professionally qualified base is adequate.  Your next step is to become politically qualified.  How many state legislator re-election campaigns have you contributed to, how many DOT people have you taken to lunch?  You just need to work on your marketing plan.Report

    Reply
  6. Oscillate128 says:

    GDOT ran our American female owned construction DBE out of business with unfair liquidated damages.GDOT never paid us for a completed contract claiming we went over the deadline at no fault of ours. We had to wait for the prime contractor to complete work before we could complete our contract.Therefore we did not have enough time to complete our work before the deadline only by a few days. Our DBE is the only company charged liquidated damages even though we were not the last company working on the contract.We lost everything and are still stuck owing vendors for materials.Report

    Reply

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