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.
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.”
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.
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.”